In the growing market competition today, eighty percent of companies jump into the global marketplace with twenty percent of these companies with complete knowledge on consumer behavior. However, consumers are the pivot of business, but the power of resources and technology often overrides the consumer psychodynamics and make them perplexed in the marketplace towards making appropriate buying decisions.
Companies often apply consumer marketing solutions without realizing that such strategies only drive the acquisition of consumers, they might not protect the interest of the company towards retention of profitable customers. Therefore, a company in a competitive marketplace must manage customers by catering to their preferences and values, and exhibiting how products or services can help solve each buyer's problems. Consumers just do not buy products, they buy solutions today. And it is a must for managers to learn to reap the enormous benefits of loyalty by developing individual relationships with customers to make a right decision in marketing.
In my recent book, Contemporary Marketing Strategy: Analyzing Consumer Behavior to Drive Managerial Decision Making(Palgrave Macmillan, 2019), I discuss strategies for managing competitive market interventions through advanced marketing-mix elements and several consumer-centric strategies to co-create new businesses in new markets by associating consumers.
Strategies derived from consumer behavior
In order to pursue consumer-centric marketing strategies, managers should be able to understand the dynamics of consumer behavior and derive benefits from behavioral analytics in making appropriate marketing decisions. Emerging companies with innovative products and services either overrate customer loyalty or reject further possibilities of marketing in a specific market. Such abrupt decisions might pull down the competitiveness of the company and restrict the expansion of business in future. In the right perspective, companies should lean towards co-creation and customization of products and services in association with consumers.
Geo-demographic explosion of middle-mass segment of consumers, aging consumers, gender imbalance of consumers in the marketplace, urbanization, income polarization in the society, millennial trends, and the shrinking corporate values have been the major factors influencing volatility in the consumer behavior. In addition to the socio-economic indicators, the attributes corresponding to changes in the consumption patterns have occurred due to increase in convenience shopping, focus on wellness and green consumption. The consumer behavior in the global-local marketplace is also affected by the discretionary spending and buying local low-cost products.
The increasing role of big data and machine learning
In addition to various internal and external variables influencing consumer behavior, companies with advanced technologies could also explore the dynamics of consumer preferences using digital data analytics, social media-driven consumption patterns, and consumer experience through virtual reality. Big Data and machine learning experiments are converging virtual reality and the personal value of consumers to determine the consumer behavior and preferences in the contemporary marketplaces.
The visual appeal of the product and services no longer attracts the consumer to make a purchase decision. They buy experiences and emotions, which a brand can offer. Digitalization of markets has trained consumers to expect continuous excitement and value additions to their experiences. The rapid shifts in the consumer behavior has also become noticeable as the growth among aging populations in developed markets is outpacing growth in the number of younger consumers in the emerging markets. However, elderly consumers are inclined towards learning the new consumption patterns of the millennials in the emerging markets.
Co-creating strategies with customers
Companies must continually update their business models, strategies, and communications to respond to the explosion of consumer options. Although the theory of cumulative advantage makes sense in predictable industries, consumer behavior tends to shift continuously. Companies need to balance the power of cumulative advantage with the need to refresh their approach on managing consumers.
One of the strategies in this front is to leverage company's core capabilities in a new format accentuating to work with consumers. LEGO Group developed its cumulative advantage by mining the emotional perceptions of consumers with colorful blocks, which delivers the legendary message to young managers that the value of a brand can be built as a part of someone's identity. Such market decision delivers a powerful competitive advantage for the companies.
Companies expanding to emerging markets need to improve their customer-centric performance and break into the new geo-demographic segments. The customer oriented managerial discussion can be developed in a pyramidal paradigm to interlink four variables that include behavioral concerns of consumers at the top followed by competitive push needed in marketing decisions, functional performance of the marketing decisions at the bottom, and then social impact of business at the peak.
Most companies are inculcating radical buying behavior among consumers by generating brand literacy though the interactions of consumer communities on social media. Facebook, Twitter, and Instagram have been the principal platforms of consumer networking for most of the consumer-centric companies. Companies explore the consumer needs and preferences on the digital platforms and tend to meet consumers’ rising expectations on the products and services they intend to buy. Simultaneously, to reaffirm their purchase intentions, consumers also stay critical to the multichannel experience of peers on their preferred brands.
The consumer experience is diffused by the user-generated contents on social media, which help them to review their perceptions, attitude, and behavior towards a brand in the marketplace. For example, Nordstrom customers can buy products not only in the physical and on the virtual stores, but also through a mobile app, on Instagram, or via text message. Consumers can pick, return, or exchange their online purchases at Nordstrom stores. Such convenience of digital marketing to access reviews and referrals, develop purchase intensions, and the possibility of decision reversals in case of change in the value perceptions has strengthened the consumer attitude and the behavior towards the brand.