Consumer Behaviour Analysis : Apple iPod

A global success.

 Current US Economy:

Recession has given rise to a new consumer trend in the US, called the “The New Frugality”. According to the Gallup’s poll “32% consumers have said that they were spending less in recent months that their normal pattern of consumption. 48% consumers have become more sensitive to price and only 23% have exhibited brand loyalty. 70% of consumers have changed their mix of providers in the recent moths” (Busch, 2010, p.2).

As can be seen from Fig 1 the main sectors that have experienced a decline in consumer spending are food away from home, consumer electronics and apparel & clothing (Egol et.al, 2010).  Fig 2 further demonstrates various consumer segments the 65 % are choosing best prices over best brands (Booze & Co 2010). Deal-hunters and shoppers are posing the highest risk of changing brand and companies for best price. PricewaterhouseCoopers report that the new consumer behavior paradigm has shifted from luxury products to goods that have “qualities of timeliness, usefulness, and versatility” (Schooler, 2010).

There are certain implications for every industry including the digital music devices sector which is now being considered a luxury according to Pricegrabber who report that, in these days of recession only 18% of the consumers believed that spending on digital music devices was a necessity, while 72% believed that it was an item of luxury and consumption could be curtailed until the recession ended in the US (Pricegrabber.com 2009)

Issues in the Portable Digital Music Device Industry

Consumer Behavior Analysis: According to the demographic analysis of the consumer behavior it was found that consumers between the age of18-24 years believed that digital music devices were a necessity the demand for which decreased as the age dimension of the consumer behavior increased. Based on gender, it was found that 18% men as compared to 13% women believed that expenditure on portable digital music devices was a necessity. This report will be analyzing consumer behavior and buying motivations in the portable music devices industry, and particularly with Apple’s iPod which is the current market leader in this market. Other players of note are Microsoft Zune and Creative Zen, Sandisk Sansa.

According to Kivetz (2003):

Consumer behavior is as an instance of risk-taking and risk-reducing behavior. Consumers often encounter dilemmas in their everyday choices as there is a need to trade off between the probability of success and the magnitude of the rewards they might earn for investing effort

It is highly risky to buy an MP3 player, the perceived risks are:”

a.      Financial: This is perceived loss of money on product.

b.     Performance: Perceived risk of functional failure of product after purchase

c.      Psychological:  Possible loss of self-image due to purchase>

d.     Social: Potential loss of self-esteem from significant other due to the purchase of the product. Physical: Potential loss of health due to the purchase of the product

e.      Time related: Loss of convenience due to the purchase of the product.” (Quintal et.al 2009, p.2).

Apple iPod was launched in 2001 after which it became the un-disputed market leader of mp3 players in the world. However due to the arrival of me-too brands in the market and the present recession, the sales of Apple iPods has decreased, though it still remains the un-disputed leader in the industry of portable digital music players.

Consumer Behavior Model

There are a number of differential and uni-lineal models of consumer behavior (see Fig 4). Of note are the Nicosia Model, the Howard-Sheth model and the most contemporary of all these frameworks is the Engel Kollat &Blackwell Model of Consumer Behavior that exhibits a complex cybernetic framework of processes and factors that influence a consumer when he purchases a product or service. According to Hoyer et.al (2008, p.13) Consumer Behavior encompasses four domains  (ref to Fig 4):

1.     Psychological Core (Internal Influences):

a.      Perception: Consumer behavior is also affected by the manner in which they perceive the product or service. This perception is often affected by sense of sight, smell, sound and experiential senses.

       i.          Selective Attention: Selective attention means that marketers have to work hard to get the consumers attention

     ii.          Selective Distortion: Selective distortion means that the consumer has a tendency to distort information to suit his own needs and experiences.

    iii.          Selective Retention: Consumers have a tendency to only retain only that information which they believe is relevant to them (Young et.al, 2008).

According to iBummed (2009) there are several sensory factors affecting the purchase of an iPod. The wheel below the screen is innovative; it has a wide screen and is simple in design and product features making it a very user-friendly product. The material of the product is also smooth to touch and of high quality. Behavioral pricing has been used for this product with the self-image of the status for the product as it is characterized by hedonic consumption on part of the target segment.

b.     Attitude: According to Hoyer et.al (2008), attitude has been described as, an overall expression of how much we like or dis-like an object, product or service, which is based on the consumers person experience.

       i.          Affective: are attitudes based on the feelings and emotions of the consumer, these attitudes are formed due to the psychological influences on the client, including his temperament, mood, and emotional state. The affective attitude can be manipulated by adding an emotional appeal to the product or service.

     ii.          Cognitive: Are attitudes which are formed based on actual or imagined by the consumer, these are value-driven, based on analogy or based on social and environmental influences.

   iii.           Behavioral: Attitudes are more likely to predict behavior when cognitive involvement is high and consumer elaborate or think extensively about the information that is going to lead to the purchase of the product or service.

Based on these descriptions, we can safely state that the utilitarian function of rewards and punishments would clearly define the apple iPod. The reward for the consumer would be to listen to music, storage of a huge amount of music, group affiliation and positive self-image. Punishments would include a high degree of dis-comfort for the client. A high level of cognition, which transforms to belief and motivations to buy the iPod    (iBummed, 2009, para 8).

c.      Learning and Memory: Learning describes changes in a consumer’s behavior arising from experience. A person’s learning is a product of impulses, motivation, stimuli, cues, responses and motivation

       i.          Drive: Is a strong internal impetus to a certain action.

     ii.          Cue: are minor impetuses to a certain action

    iii.          Reinforcement: Takes place when the product experience coincides with the expectations of the consumer (Young et.al, 2008).

According to iBummed, positive reinforcement plays an important role in the consumer loyalty demonstrated for apple iPod. This product is considered to be young, trendy and attractive and helps boost the self – image of the consumer. Observational learning is also dominant as the consumer watch community role models like celebrities and sports –people using the apple iPod as a part of their daily lifestyle. In fact, the hold of the apple iPod is so strong that the portable digital music player industry has become associated with the iPod (2009, para 5). IPods has further been described, as a product of high involvement therefore the standard learning hierarchy is applicable to it.

d.Motivation: Need satisfaction and drive to act. A person has various needs that have to be satisfied at a certain point of time. These needs are

i.     Biogenic: These needs are physiological in nature and are related hunger, thirst and discomfort.

ii.     Psychogenic: Psychogenic needs are those wants that arise from these needs and can be described as esteem and recognition and usually arise after or with various biogenic needs (Young et.al, 2008, p.118).

The main motivation for buying an iPod is to listen to music, store vast amount of amount of data and as a status symbol. These are the primary drives for an iPod consumer. The drive in this case is the pressure that is created on the client by his peer groups and the want is the final fulfillment of purchase cycle.

The motivational strength can be measured by the expectancy theory as the iPod fulfills the expectancy of the client to listen to clear quality music at anytime and anyplace.  The iPod fulfills the hedonistic needs of the client for excitement, and pleasure. According to the Maslow Theory of Need Hierarchy, the consumer buys an iPod in order to fulfill the needs of achievement and affiliation as the iPod is considered a luxury item that makes the user feel trendy and technologically savvy. Online and actual communities who exchange digital music also make the user a part of the community.

2.     Consumer Culture (External Influences):

Culture: According to Young et al “culture is the communal aggregation and convergence of the country’s philosophy, beliefs, traditions, values, attitudes, aspirations and practices which has evolved since its inception“(2008, p.78).

a. Sub culture:  Throughout the history of the US different cultures with unique national cultures have settled down and these have become sub-cultural groups or ethnic background of the consumers

i.  Nationalities: These ethnic groups have been identified as Hispanic, African American, Italian, Asian   and Irish etc. According to Hoyer et al (2008) the major ethnic groups in America are African-American, Hispanics and Asians. However, there have been  no valid research done , that decide the consumer behavior of each of these segments when it comes to iPods

a.     Social Class: The social class of the iPod user has been identified as middle level, upper level and affluent, who buy the various models of iPod depending upon the premium pricing and level of uniqueness allowed by the gadget.

b.     Demographics: Age groups of the iPod buyers ranger between 18-24, who display the highest degree of consumption and the next age bracket is 25- 39 the graph goes downward as the age factor increases. In the lifecycle stage, the user has been identified as single student or mid level executives with or without partners. Consumers are involved in a high degree of activity. Nowadays, the trend is also inclining towards leisure activities i.e. reading, exercising or relaxing.

i.     Occupation: The target consumers are normally people who are constantly traveling or need instruments of group regard and affiliation.  Therefore , these are groups in need of social confirmation. Executives, students and software people would be the targeted consumer segment.

ii.     Economic situation:

·  Spending:  The iPod consumer usually belongs to the Gen Y and has a comparative higher disposable income. The brand of apple is kept in such high regard that the target segment does not mind spending a premium for the latest model of the iPod

·  Saving: The target segment of the iPod is very young therefore spending is very low, but the brand image of the iPod is so high that   most consumers also save to buy the latest version of the iPod.

iii.     Lifestyles:

The iPod consumer has a vast lifestyle and an be used for a variety of occasions including vacations, work, outdoor activities, all of which have the USP of listening to music while going varied activities. It is ideal for individuals who don’t like carrying CD’s and desire convenience, simplicity and user-friendly features.

iv.                    Personality and Self Concept Image:

The iPod personality is associated with trendy, attractive, passion and innovation. iBummed describes the personality of the Ipod user as individualistic and social climber : As the iPods features aloe the user to not only make the product unique with accessories, it also improve  the aspirational group affiliation needs of the client. Other personality archetypes that have been identified are Queen and Actress.

Which have the characteristics of relaxing, comforting and sociable, glamour and drama. The consumer observes various opinion leaders i.e. celebrities and successful people carrying the iPod at various places of social interaction. The iPod conforms to the ideal self-concept image of the consumer, as this product is a high aspirational luxury item.

b.Social Factors:

i.  Group Factors:

·       Primary: Family, relative, co-workers: These groups are informal and highly interactive, they have a high influence on the buying behavior of the consumer.

·       Secondary: Professional Groups: These are groups of individuals that the consumer has a limited interaction with. These groups are formal.

·       Aspirational: These are groups that the buyer aspires to belong to at certain levels.

·       Dissociative: These groups consist of people whose opinions and values the buyer does not agree with.

·       Opinion Leaders: Opinion leaders are people who have a considerable influence on the buying decisions of a target segment and their actions and beliefs, are imitated by the target consumers of a product  (Pennstate, 2010).

ii.               Status and Role:  Apple iPod has a degree of affiliation to the positive reinforcement of the social image of the consumer.  Most iPods are bough for hedonistic and self-centered needs. Their role in the family is usually, of a dependant or that of a new provider, they are not the main decision makers when it comes to spending for the family. They are mainly the self –centered, hedonistic   segment of the community.

3.     The Process of Making Decisions:

The decision making process as can be identified is a mix of the social  and personal factors , that influences the buying behavior. The buyer decision-making process is based on the experiential experience of the buyer during the selling process. A high degree of cognition,  is used by the consumer while evaluating the best product to be purchased, while buying an mp3 player.

A high degree of actual and online research takes place and the consumer usually takes the opinion of family and friends including peers and opinion leaders before buying the correct model to suit the consumer pocket and status requirements. Apple iPod is a market leader as it gives the best quality and the most innovative features therefore an entire assortment of models are available that a potential consumer  (Ref to Fig 5)

4. Consumer Behavior Outcomes:

The iPod purchaser has normally shown a high degree of satisfaction with the product and has often been a repeat purchaser and brand advocate. In this regard apple iPod has successfully manipulated its marketing strategy to suits the behavioral patterns aspirations of its targeted consumer.

5. Implications

Accenture Global Services believe that value has become a watchword in understanding consumer buyer behavior in the US.  Based on the income of the consumer, it was found that the Gen Y had more discretionary income as they had fewer debts and more disposable income.       They are characterized by impulse buying and instant gratification. Their inclination towards technology staple will give tech-oriented retailers a boost post-recession (Schooler 2010). According to ibummed.com the marketing strategies for the apple iPod are not adequate as the number of players in the mp3 player market has increased. The following consumer behavioral aspects can be utilized in order to increased apple iPods declining sales revenue:

i.          Group Influences: Apple iPod has its own online community of iPod users who share music pod casts and music. Awareness of this community , would increase group affinity amongst users of the apple iPod.

ii.     Perceived Risk: Apple’s perceived risk is low therefore its association with quality and status can be re-affirmed among new and existing users.

iii.   Emotional Appeal: The emotional appeal for apple iPod has decreased due to its sales of its accessories from third parties. It is suggested that interactive marketing strategies encouraging customer involvement in product customization could help in improving consumer appeal.

iv.   Demographics and Lifestyle: The consumers for apple iPod have so far only been teenagers and people who travel. This product can also be targeted towards all segments on the move and various activities can be pointed out consumers for using the apple iPod.

v.     Status and Role: Apple has the USP of being trend setters , this product appeals to consumers for whom status and the need to conform are high. These characteristics could help iPod in adjusting its consumer strategies.

vi.   Aesthetics: Apple’s gadgets are known to appeal consumers for the simplicity of its design and usage. This trend should be maintained and be considered while designing the marketing strategy (2009, para.11).

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Appendix:

Fig 1

Fig: 2   (Booze & Co 2010,p 6)

Fig: 3

Fig 4: (Hawkins, 1986, p.26)

 

 

Fig: 5

 

 

References

Busch, J (2010 Sept 2) Selling in the new economy. Pittsburgh Pennysaver .  Retrieved from http://www.paperchainnetwork.net/images/53.pdf

Egol,M., Clyde,A., Rangan,K & Sanderson,R( 2010 Oct 3). Retrieved from

           http://www.booz.com/media/uploads/The_New_Consumer_Frugality.pdf

Hawkins, Dl Best, I Coney, R., Mookerjee, K. (1986) .A Consumer behavior :Building marketing strategy    New York, NY: Tata McGraw-Hill.

Hoyer,  W., Macinnis, D ., &  Dasgupta, P. (2008).Consumer Behaviour 2008 edition . New York, NY : Houghton Mifflin Co.

iBummed  (2009). Consumer Behavior Report – Apple iPod. Retrieved from http://ibummed.com/uncategorized/consumer-behavior-report-apple-ipod/

Marketing Intelligence & Planning Journal of Marketing Practice: Applied Marketing Science..Internet-induced changes in consumer music procurement behavior: a German perspective. ISSN: 0263-4503  (2008) Retrieved from  http://www.emeraldinsight.com/journals.htm?articleid=854641&show=html. Doi: 10.1108/02634500310490256

Pricegrabber.com (2009 Jun 2 ). Consumer behavior report : Economic trends in consumer spending .Retrieved from. :https://mr.pricegrabber.com/Economic_Trends_in_Consumer_Spending_June_2009_CBR_1.pdf.

Schooler , L .(2010 March 9) . Shopping behavior to change as a result of new marketplace realities.WPP. Retrieved from http://www.wpp.com/wpp/press/press/default.htm?guid={8c494ab2-357a-4c5b-baf7-d9de070bb44c}.

Quintal,V.,  Phau, P & Sims D (2009, March 11) Exploring Risk Perceptions between Pioneer and Me-Too Brands of MP3 Players. Curtin University. Retrieved from

http://www.duplication.net.au/ANZMAC09/papers/ANZMAC2009-106.pdf.

Young,  F.M &  Pogaso , C. (2008) Principles of Marketing’ 2008 Ed. Florentino city: Rex Book Store Inc  

comments powered by Disqus
Loading