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Modern marketing concept

4398 words (18 pages) Essay in Marketing

5/12/16 Marketing Reference this

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Section 1

1. Data collection

1.1 The function of data collection

The modern marketing concept can be expressed as: the achievement of corporate goals through meeting and exceeding customer needs and expectations better than the competition (David Jobber 2007). Based on this definition, we can find the most important factor in marketing: customer needs. When a company aims to enter a market and compete with other companies which have already existed there. What they should do first is to find out which kind of products or services are most popular with the consumers and then they can produce or offer the most popular products or services, in other words, meet customer needs. In order to achieve this goal, the company needs the exact information of the consumer needs. That is the value of data/information collection which offers a direction for the company to follow and it can enhance the effectiveness and efficiency of marketing. In other words, the company could be more competitive and have more opportunities to survive in the market through data/information collection.

1.2 The process

During our research, each group member conducted 4 to 5 questionnaires. Yin Huang and Xi Chang tried to approach people who were sitting on the bench to have a rest at town centre. Most of them were elderly, because these people had time and were more willing to help us to finish the questionnaires. Li Wang went to the University of London and conducted the survey with the students there. Qiaoli Bao and Yating Xiao chose the people in the library as the respondents. Because the questionnaires were too long or boring for someone, Yating bought some small presents for the respondents as motivations.

1.3 The difficulties

During the operations of collecting data, difficulties can not be avoided. We found lots of respondents were unwilling or reject to participate in the research, and it always happened that the respondents lost their patience after filling in a few questions. It means that we had to face some invalidated questionnaires which were not completed.

Besides these problems, a few people were not sure about the actual meaning of the questions. For example, some people asked us what is the exact difference between grade 3 and 4, or 4 and 5, and it is not easy to explain all the details of the questionnaires.

1.4 The improvement

We spent about 1 week to collect the questionnaires data altogether. After finishing the data collecting work, we realized that there should be some ways which are more efficient for us. For instance, a good, warm self-introduction and explanation of the academic research can help us become more acceptable to the respondents. Because it was the first time for us to do questionnaires data collecting work in English language in the street, we were nervous when facing the respondents. However, we found it was unnecessary to be nervous after we talked to some respondents. It was just chatting and we even had a nice chatting with these people after finishing the questionnaire. So if we could be more confident to ask people whether they could participate in the research at the very first, we would have a better job in collecting the questionnaire data.

1.5 The views of respondents

Most of the respondents were happy and willing to complete the questionnaires for us, seriously and rationally. And they gave us some very good advices and opinions, which were very helpful for our future research and essay writing. However, there were some people who thought our questionnaire was too long and some questions were difficult to understand.

Section 2

Introduction

For the purpose of this essay is to analyze the consumer decision making and brand loyalty, which divides into three factors, factors influences consumer decision making, the behavioral intentions, the actual behavioral. The later two factors are the vital to establish the brand loyalty.

1. Consumer decision making

1.1 The Definition of Consumer decision making

The Definition ofConsumer decision making is theprocess by which (1) consumers identify their needs, (2) collect information, (3) evaluate alternatives, and (4) make the purchase decision. These actions are determined by psychological and economical factors, and are influenced by environmental factors such as cultural, group, and social values. (Business Dictionary, 2007)

1.2 Factors influencing consumer decision making

Making a purchase is not an easy, routine matter of going to a shop and picking up something. As showed in Figure 1, consumer’s decision is affected by many personal factors, for example, situational factors, time pressure or shopping orientation. In addition, the store environment also has a major influence: shopping is like a stage performance, with the consumer involved either as a member of the audience or as an active participant. The quality of the performance is affected by the other cast members (sales people or other shoppers), as well as by the setting of the play (the image of a particular store) and props (store fittings and promotional material which try to influence the shopper’s decisions). In the end, the consumer activity satisfaction occurs after a product has been purchased and brought home. After using a product, the consumer must decide whether he or she is satisfied with it. The satisfaction process is very important to marketers, who realize that the key to success is not selling a product once, but rather forging a relationship with the consumer so that he or she will continue to buy in the future. (Bamossy, Askegaard, Hogg,Solomon, 2006)

Antecedent states

Purchase environment

Post-purchase processes

situational factors

The shopping experience

consumer satisfaction

usage context

point-of-purchase stimuli

product disposal

mood

sales interactions

alternative markets

shopping orientation

Source: Michael Solomon, Gary Bamossy, Soren Askegaard, Margaret K. Hogg, ‘ Consumer Behavior- A European Perspective’ third edition,2006:300

1.3 Focus on consumer commitment, consumer trust and customer satisfaction

After generally talking about the personal factors that influence consumer’s decision making, we will pay close attention to the following elements which are the cores in personal factors: consumer commitment, consumer trust and customer satisfaction.

Firstly, consumer commitment. It is recognized as an essential element for successful long-term relationships (Dwyer, Schurr, and Oh 1987; Morgan and Hunt 1994). Commitment has been defined as “an enduring desire to maintain a valued relationship” (Moorman, Zallman, and Deshpande 1993, p. 316). Gundlach, Achrol, and Mentzer (1995) argued that commitment has three components: “an instrumental component of some form of investment, an aititudinal component that may be described as affective commitment or psychological attachment, and a temporal dimension indicating that the relationship exists over lime”. One approach for defining the nature of a consumer’s commitment to an organization is to apply models from organization theory that pertain to an employee’s commitment to an organization. The employee commitment literature suggests several facts, such as personal identification with the organization, psychological attachment, concern for the future welfare of the organization, and loyalty. Consumer commitment shares the similar way. The various relationships established between customers and a retail firm may differ in strength. Therefore, it would be very useful for the retailers to know the level of commitment of the clients. This would enable them to segment the market and direct different strategies towards each group, trying to obtain, maintain and/or increase their commitment. In this way, not only the organizational and marketing literatures have paid attention to this concept; it has also been analyzed from a social psychological perspective (Becker 1960; Kanter 1968; Salancik 1977) and an economical point of view (Cook and Emerson 1978; Williamson 1983). Consequences of its existence have also been studied from a legal and ethical perspective (Gummerson 1987; Gundlach and Murphy 1993; Schalk and Freese 1997). These works have generated some diversity in the concept of commitment and its consideration as a multidimensional concept integrated by several components. (Figure 2)However, a generally accepted structure does not exist.

Secondly, trust. It generally is defined as a necessary element for successful relationships (Berry 1995; Dwyer, Schurr, and Oh 1987; Moomian, Deshpande. and Zaltman 1993; Morgan and Hunt 1994). Moorman, Desbpande, and Z;Utman (1993. p. 82) defined trust as “a willingness to rely on an exchange partner in whom one has confidence”. They propose that an expectation of trustworthiness results from the ability to perform (expertise), reliability, and intentionality. Morgan and Hunt (1994, p. 23) define trust as the perception of “confidence in the exchange partner’s reliability and integrity“. Both definitions focus on the importance of confidence and reliability in the conception of trust. Some research has tended to emphasize trust as confidence in the honesty and integrity of the other party, such as in a salesperson (e.g., Crosby, Evans, and Cowles 1990). Using a similar definition of trust, Gwinner, Gremler, and Bitner (1998) find the psychological benefit of confidence and trust to be more important than special treatment or social benefits in consumer relationships with service firms.

Thirdly, satisfaction. It is “an overall evaluation based on the total purchase and consumption experience with a good or service over time” (Anderson, Fornell, and Lehmann 1994, p. 54). Cumulative satisfaction can be distinguished from transaction-specific customer satisfaction, which is an immediate postpurchase evaluative judgment or an affective reaction to the most recent transactional experience with the firm (Oliver 1993). Rather than capturing the transient and encounter-specific evaluations and emotions, applied market research tends to measure customer satisfaction as the consumer’s general level of satisfaction based on all experiences with the firm. This overall satisfaction is a cumulative construct, summing satisfaction with specific products and services of the organization and satisfaction with various facets of the firm, such as the physical facilities (Czepiel, Rosenberg, and Akerele 1974).

2. Behavioral intentions

Customer loyalty composes of both behavioural intentions and actual behaviours (Schiffman and Kanuk, 2004, p.241), reflecting customers’ high commitment, trust and satisfaction to re-purchase the most favourite brand regardless of switching actions from outside environment and attractiveness of alternatives (Oliver, 1997, p.392). Baloglu (2002) stated that customers with truly brand loyalty are those highly attitudinal and behavioural loyalty ones. Behavioural intentions only focus on customers’ attitudes to re-purchase while actual behaviours would truly affect their performances to repeat purchase (Oliver, 1999, p.36), giving publicity to others about benefits of the brand and resisting rivals’ products and services (Kotler, P., et al, 1999, p.259).

Therefore, based on the above correlation between behavioural intention, actual behaviours and the true brand loyalty, the hypotheses could be described as follows:

Hypothesis 1: Behavioural intentions and actual behaviours relate positively with customer loyalty.

2.1 Definition of loyalty to behavioral intentions

Oliver(1999, p.35)stated that behavioral intentions loyalty, also named conative loyalty, are customers’ expectation to repeat purchase the same brand, which is highly related with their commitment. However, Oliver also explained that this intention would not be an actual behaviour because of its unrealization.

Attitudinal strength and attitudinal differentiation are key determinants of behavioural intentions, which are defined as relative attitude from Dick and Basu’s (1994, p.101) perspective. As shown in the figure 2.1.1, strong attitude strength and differentiation from various brands lead to the highest relative attitude, affecting customers’ behavioral intentions to buy a specific product. On the contrary, relative attitude would be at its lowest if it is connected with a weak attitude strength and unclear perception of different brands.

Attitudinal Differentiation

No Yes

Low relative attitude

Highest relative attitude

Lowest relative attitude

High relative attitude

Strong

Attitude Strength

Weak

Source: Dick, A.S. and Basu, k. (1994) ‘Customer Loyalty: Toward an Integrated Conceptual Framework’, Journal of the Academy of Marketing Science, Spring94, Vol. 22 ,Issue 2, p.101.

2.2 Involvement

Involvement has significant influence on customers’ evaluation for a brand, including high involvement and low involvement (Jobber, 2007, p.123).

In terms of high involvement situations, reasoned action theory (Ajzen and Fishbein, 1980) illustrates that it is the purchase intentions to make the further purchase as shown in figure 2.1.2(a). As can be seen from the figure, behavioural intentions consist of attitude towards the behaviour and subjective norm (Fill, 2002, p.78). In the analysis of Suh and Yi’s (2006, p.147)research, past experience, advertisements and corporate image are key variables influencing both the evaluations and beliefs, leading to the attitude towards the behaviour. All these determinants come from individual beliefs and evaluation from other people (Jobber, 2007, p.123). In other words, once a person determines to purchase a product and gets agreement from others especially those important people such as close friends and family members could he or she forms intention to purchase.

Ehrenberg and Goodhart model clearly reflects low involvement purchases as shown in the figure 2.1.2(b), which simply illustrates that customers would re-buy a product through satisfactory trial without too many considerations. In such situation, consumers would rather choose a most quick and convenient product than purchase a costly and time-consuming but the most suitable one (Jobber, 2007, pp.123-125).

2. 3 Effects of satisfaction on behavioral intentions

Recent studies suggested that customer satisfaction play a key role in customer behavioural intentions. (Leisen, 2006,p.44;Anderson and Sullivan, 1993; Cronin and Taylor, 1992)

According to Oliver (1997), “satisfaction is the consumer’s fulfillment response” (p.13), which is closely connected with service quality and behavioral intentions to repeat purchases (Brady and Robertson, 2001). Similarly, Stank et al. (1997) explained that “satisfaction is the customer’s after-purchase judgement or evaluation of a specific product or service.” Thus, Re-purchase intentions are highly dependent on customers’ product decision (Schiffman and Kanuk, 2004, p.571) and previous experience through post-purchase evaluation (Egan, 2007, p.54), affecting their later re-purchase decisions and behavioural intentions (Schiffman and Kanuk, 2004, p.571). When a product’s performance meets or surpasses customers’ expectations, the customers feel satisfied (Schiffman and Kanuk, 2004, p.570), and they would be likely to re-buy the same product next time (Egan, 2007, p.54). On the contrary, customers would probably end up buying the dissatisfactory product (Egan, 2007, p.54) or changing to a more appropriate brand (Schiffman and Kanuk, 2004, p.571) if its performance could not meet their expectations, which means “negative disconfirmation of expectations” (Schiffman and Kanuk, 2004, p.570).

2. 4 Attractiveness of alternatives

Undoubtedly, it is customers’ habits and characteristics to try various competitors’ products that are attractive and fresh (Oliver, 1999, p.36). Thus, the fewer the numbers of alternative brands, the more likely to keep the customers’ loyalty to purchase the same product (Schiffman and Kanuk, 2004, p.243)

Oliver (1999) illustrates that “Conatively loyal consumer has not developed the resolve to avoid consideration of competitive brands intentionally” (p.37). On his opinion, behavioral intentions would probably reduce owning to a diversity of competitors’ offerings such as small gifts, coupons and discounted prices, especially arising from both the past disappointed expectations and competitors’ attractiveness (Fill, 2002, p.92). Additionally, customers’ loyalty to one specific brand would not be affected by experiencing new alternatives.

Under these circumstances, customers would evaluate present product and alternatives associated with diverse attributes that is choice criteria, including technical, economic, social and personal criteria. Apparently, choice criteria would be consistent with individuals’ situations over difference periods in their life (Jobber, 2007, p.126-127).

To sum up, behavioral intentions reflect a level of customers’ loyalty to re-purchase, but this desire to buy the same product would not always exist due to competitions from rival brands.

3. Customer Loyalty

In terms of the customer loyalty, we can consider deeply from two situations, the first time purchase and repurchase.

3.1 The first purchase

3.1.1The process

When consumers will purchase a new product, generally, they will pass through five stages to reach a purchase decision. These five stages are need recognition, information search, evaluation of alternatives, purchase decision and post purchase behavior (Kotler. P, et. al., 2005).

After recognizing the needs, consumers will go straight to the second and third stages, which have a vital effect on the purchase decision. These two stages seem like the prepurchase preparation that buyers will obtain information as much as they can. There are several sources to gather information: personal sources, commercial sources, public sources and experiential sources (Kotler. P,et.al., 2005). Due to the first purchase, most buyers rely on the personal source, which are the attitudes of others on the products. The reason for it may lie on that people believe the information obtaining directly from their relatives, friends or people they know tending to be more reliable than other commercial channels. The exchange of consumers’ attitudes also can be considered as the word-of-month communication.

3.1.2 WOM

The word-of-month (WOM) communication, Mowen and et.al (2001) have mentioned, means an exchange of comments, thoughts, or ideas with other consumers, representing the individual opinion, not the marketing source. They also said word-of-month communications plays an extremely strong import on purchase behavior.

The effect of WOM has high connection with the relationship between consumers’ expectation and products’ performance. To be more explored, when the products’ actual performance is above consumers’ expectation, they will feel satisfied and probably recommend the products to others; if it is equal to their expectation, consumers feel good; but if it is below their expectation, complaint and other negative words toward the products or the shop will be spread quickly, which result in losing many prospect consumers for marketers, even breaking the shop.

It is clearly showed the importance of other people’s attitude (WOM) for trying one product. Once receiving negative information from other users, most of consumers will give up trying. Ironically, Solomon and et.al (2006) have mentioned that, consumers are more likely to spread the complaints or negative services and information than the positive occurrences. And for the intention of establishing the brand loyalty, the trial purchase is the first step. Therefore, having a good effect of word-of-month is the strong evidence to persuade consumers the first (trial) purchase.

3.1.3 Suggestions for WOM

In order to persuade consumers the trial purchase, there are some suggestions for marketers and companies for receiving a good reflection of the WOM and eliminate spreading the negative information. First, it is essential to have a high quality and service, which guarantees consumers to repeat purchase and establish a brand loyalty. Second, in terms of the complaints, Schiffman and Kanuk (2004) have provided a specific measure, that is some marketers use toll-free telephone numbers (like 800 numbers) to receive negative WOM into their own company, instead of spreading their complaint to others.

3.2 Repurchase

3.2.1 The process

Repurchase is also a kind of customer behavior which follows the five stages of purchase decision. The difference from the first time purchase is that the customers in this situation make the consumer behavior under the experience. The experience of postpurchase influences much in the processes of information search and evaluation of alternatives.

Based on S-O-R model (stimulus-organism-response) developed by Mehrabian and Russell (1974) and social exchange theory (George Homans, 1958) the repurchase behavior can be analyzed as follows:

As what has been discussed above, the customer will have the experience of their first time purchase. Customer experience is examined as a moderator that influences the link between repurchase intention and brand loyalty (Youjae Yi, Taeshik Gong, 2007). Brand loyalty is based on the experience of repetitive experience of consumer satisfaction. The satisfaction of customer plays the role of inside stimulus for repurchase behaviors leading to brand loyalty. Although the marketers want to create positive experiences beyond the customer’s expectation, which will lead to consumer satisfactions, it is common for customers to experience some post-purchase concerns called cognitive dissonance (David Jobber, 2009), especially in high involvement purchases. The dissonance obviously has a negative influence toward the customer satisfactions, which will reduce the chances of repurchases, so the consumers may look for alternatives.

3.2.2 Evaluation of alternatives

A key determinant of the extent to which consumers evaluate a brand with alternatives is their level of involvement (David Jobber, 2009). The customers with high-involvement purchases such as that of high-end pubs, dental clinics, BT are more likely to implement detailed evaluations of alternatives within an evoked set (David Jobber, 2009) complying their own criteria. They will compare different alternatives which supply the similar products and services, especially when the first purchase or the WOM from others are negative. So the customer satisfaction directly influences the brand loyalty. David Jobber (2009) also mentions that customers of low-involvement purchase such as Mc Donald’s and Amazon use simple choice tactics, so their evaluations for alternatives are less than high-involvement. So the loyalty to this kind of business is comparatively low.

Repeat Patronage

Relative

Attitude

High

Low

High

Loyalty

Latent loyalty

Low

Spurious loyalty

No loyalty

4. Results and Conclusions

As we have discussed in part2 and part3, the brand loyalty of customer is influenced by intention and actual behavior for a brand and that both must be considered (Schiffman.L.G and Kanuk L, 2004). It reflects on the table that brand loyalty is influenced from two dimensions of the strength of attitude and the purchase frequency compared with different alternatives. It also can be found in the framework the relationship between consumer involvement and brand loyalty. So we can assume from the analysis above, the consumer brand loyalty is influenced by consumer intention, consumer expression and consumer involvement involving WOM.

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