Essay on "How Does Firms Affect Consumer Decision?"

Essay 5 pages (1626 words) Sources: 4

[EXCERPT] . . . .

Consumer Behavior

Consumers use a wide range of criteria in their decision-making process. The role of the firm, especially the marketing department, is to find ways to influence consumer behavior. There are a number of levers by which firms can influence consumer behavior, including information, merchandising and the marketing message. By combining these different levers, firms can exert influence over consumer behavior, guiding consumers to their products. Information aids in the decision-making process so the firm controls the amount of type of information that is provided. Merchandising allows the firm to play on consumers' impulses when shopping. The marketing message is also powerful as it helps to position the product in the mind of the consumer, which again exerts influence over consumer behavior. This paper will examine each of these levers in turn, exploring the ways in which they impact on the consumer decision making process. Literature will be provided to support the contentions contained within this paper about the different levers and the ways in which they work. The audience for this paper is the business that is interesting in learning more about the ways it can impact consumer behavior.

The decisions that consumers make are influenced by a number of different factors that have been described as a stimulus situation, meaning that each member of this set of conditions on aggregate acts to stimulate behavior (Mullen & Johnson, 1990). Consumer decisions, whether consciously or unconsciously, take into account a number of different factors: the product's cost, its packaging, past experiences, the consumer's perception of the product, product placement, the consumer's perceptions of competing and substitute products and a wide range of other choices. Many of these different variables can be influenced in some way by the company that produces or markets the product. This implies that when a consumer makes a purchasing decision, that decision does not arise in a vacuum. Indeed, a number of steps occurred to bring the consumer to that point of purchase, and to purchase that product. The actual purchase, therefore, is the outcome of a cumulative process by which the firms involved in the marketing have sought to influence the behavior of that consumer. Companies that can influence consumer behavior on a broad scale are often the companies that are best-positioned to succeed in business. While this revelation about consumer behavior may imply that the product is irrelevant when compared to the powerful impact of the marketing, that is not the case. The consumer's perception of the product is very much relevant, and the quality of the product is but one of the variables that contributes to that perception. The different levers that companies use to help shape or mould consumer behavior can reasonably be classed into three categories; this paper will focus on each three in turn. The first of the three is the amount of information that the consumer has with respect to the product and with respect to the competing and substitute products.

Information control is perhaps the most important means by which companies can impact consumers' decisions. In his seminal work, Philip Nelson (1970) lays out the framework for our understanding of the relationship between information and consumer behavior. Consumers in general lack information about the products they purchase -- they lack knowledge of the price of the inputs and they lack true information about quality variation between products. Even today, with the higher degree of information density, these conditions still hold. Nelson described that the limitations of consumer information have significant impacts on the market for consumer goods. Companies can control information about their goods in a number of ways. The most important is that they own that information and even today retain a high degree of control over much of that information. The ease with which information about the product is acquired by the consumer also makes a difference. For example, the price of a one-way car rental can sometimes be obtained online but with some companies a phone call to an agent is required. In the former situation, the company is operating under the belief that by making the information easy to obtain the consumer will use that service rather than take the time to acquire the same information from the second company. By contrast, the second company is the withholding of information to perform one of two functions. It may be seeking to draw the customer in, to speak directly with a sales representative, which would serve the purpose of discouraging comparison shopping on a high margin add-on (the one-way surcharge). Alternatively, the company could be dissuading the consumer from using its services for an added service on which it is unlikely to make a profit. In either case, the car rental companies are adopting different strategies with respect to the disclosure of information in order to encourage specific behaviors on the part of the consumer.

In addition to information, merchandising is another key lever by which firms can impact consumer behavior. It is well-established that visual merchandising is a key element of consumer decision-making. This includes everything from the appearance of the premises to the displays, the store layout and even the fixtures. Visual merchandising affects sensory pleasure, affective pleasure and cognitive pleasure (Law & Yip, no date). The ways in which the goods are positioned within the store, therefore, can impact on the buying decision. Firms often have some ability to work with the retailers to ensure that their products are well-positioned within the store. For example, in the supermarket candy bars, chewing gum and gossip magazines are always positioned near the cash register as they are impulse purchase items and this positioning discourages thought on the part of the consumer with respect to these purchases. Conversely, dairy items are often placed at the back of the store. Such essential items often bring customers into the store; by placing them at the back the consumer is compelled to pass other items along the way, leading into an increase in purchases, especially if those other items include stylish displays at the butcher or enticing smells at the bakery. Each merchandising decision helps to encourage consumers on the subconscious level. Thus, it is important for the company that makes the product to focus on learning consumer behavior so that placement within stores -- or even the choice of stores in which to place -- is congruent with consumer behavior patterns for that type of product, ultimately leading to optimal sales.

The bakery example above illustrates another key way in which firms influence consumer behavior -- the marketing message. The marketing message of a good-smelling bakery is clear -- that the products at the bakery department are delicious and will give you the same comfort you get when you smell the bakery as you walk past. The medium is the message in this case, but more often the message is contained in advertising, promotional material or even publicity material. The marketing message helps to position the product in the marketplace, defining a set of attributes and ideals for the product. The consumer understands the attributes as the functional value of the product; the ideals are intended to align with the consumer's desired state (Vinson, Scott & Lamont, 1977). For example, the ideal of fun and relaxation is the focal point of the marketing message for Corona beer. Fun and relaxation are certainly not a direct attribute of the product, but the brewery seeks to associate fun and relaxation with the product. The consumer also seeks to associate his or her beer drinking with fun and relaxation so the product's message about ideals is highly congruent with the message that many consumers wish to receive. This allows Corona to overcome its shortcomings with respect to the attribute-price proposition, being an ordinary beer with a premium price. Consumers… READ MORE

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