Consumer Behaviour, Communications and Internet Technologies - Essay Example

Consumer behaviour 2006 I. Introduction In general, communication refers to exchange of ideas between two people or more and it is slightly different from that of telecommunication. According to National Telecommunication and Information Administration in United States, telecommunication relates to any transmission, emission, or reception of signs, signals, writing, images and sounds or intelligence of any nature by wire, radio, optical or other electromagnetic systems. In fact, telecommunication supports the way people communicate and vice versa, especially in digital era. The coming of digital technology, known as the representation of two binary digits: ‘0’ and ‘1’, few decades ago has enabled us to convert any kind of information (voice, data, and video) into other forms. This advantage of digital age, in turn, enables us to experience the era where people can communicate in many forms: voice (through telephone, handy talky etc), data (short message services/SMS, facsimile etc), and video (video streaming, video conference etc). This situation refers to the era people call as the convergence in digital technologies. The maturity of communications and internet technologies has spawn a new model of the world’s economy, borderless economy. The terminology refers to the existence of cross-nations or even cross-continents trade and commerce. Under such circumstances, in internet era, companies need to remember that a corporate website is inherently global since when a company launches a Web site, it is accessible by worldwide audiences. All above information are facts about the development of telecommunication technologies. Thanks to the improvement and maturity in networking technologies that helps people to communicate one to another across the cities, lands, or even continents. All advanced technology is useless if carriers or operators cannot employ the benefits of the technology to serve the market. In order to serve the market well, a carrier should understand what the customers want and needs. Concerning the target market of telecommunication services, in this paper, I will identify, compare and contrast consumer behaviour of Generation Y that includes beliefs, feelings and actions, towards adopting and integrating mobile 3G services in Australia. Generation Y are people who were born within 1979-1988 or currently they are in 18–27 year-old. This demographic segment becomes an important segment in marketing strategy since the Generation Y are potential markets that have particular characteristics. This generation also shows great interest but slow adoption in technology-related services that suggests mobile carriers should smartly define their needs and how to market services to them (Gainsford, 2005) In addition, Peter Sheahan also emphasizes the important to market in this demographic segment since Generation Y that accounts for 4.5 million Australian has become the frontline in Australia workforce, considering other issues such as the aging population and the declining number of Generation X. Concerning the issue, in this paper, I would like to discuss about the development of 3G services in Australia, which aim at targeting the “20-something” consumer (Generation Y). The focus of this paper is to identify the consumer behaviour of the 20-something consumer segment (Generation Y) that includes demographics, lifestyle choices, values, social influence and aspirations factors. II. Aims and Objectives 1. This paper intends to implement consumer behaviour theory, principles and concepts to identify and describe a “20-something” consumer group (Generation Y) in terms of their demographics, lifestyle choices, values, social influence and aspirations. 2. Using the non-participant observation method, collecting data and analyzing qualitative information from journal, books, magazine and other online materials, this paper is to identify and explore the characteristics of Generation Y in adopting the mobile 3G services. 3. In addition, the paper aims at analyzing the Generation Y behavior (Motivation and Perception) that includes beliefs, feelings, and actions towards adopting and integrating mobile phone technology in one mobile carriers and Australia, Telstra 4. Finally, I will also address the justification the two consumer behaviour-based marketing strategies, through marketing mix, that Telstra could employ to attract their target market, especially those who are members of Generation Y in using mobile Internet services. III. Research Question Understanding consumer behavior becomes keyword for any companies in order to suitably win a fierce competition by delivering products or services that are exactly fit the consumers’ needs that are different from competitors have. The reason of incorporating consumer behavior in marketing strategy is to attain a competitive advantage by creating a product (good or service) that is perceived by customers to be unique in some important way. The research statements or questions are therefore”...as telecommunication industry especially mobile Internet services industry continues shows fierce competition, will the use of consumer behavior theory can help Telstra to attract consumers in Generation Y?” IV. Literature Review: Theory of Generation Y Characteristics Peter Sheahan (2005) in his book titled Generation Y – Thriving (and surviving) with Generation Y at Work says that Generation Y must be considered as the ambassadors of a company’s brands. This is because they consume much of today’s products and services and they are hungry for new and distinctive ideas. Therefore, Sheahan suggests that a company should properly manage the Generation Y or else they become enemies that are ready to destroy the company’s brands. Sheahan (2005) also emphasizes that a company does not only learn who the Generation Y is but also how to attract them. For this reason, it is important that a service provider understands the characteristics of the Generation Y. Below is the findings of Generation Y’s spending behaviour based on their lifestyle choices, values, social influence and aspirations. IV.1 Lifestyle choices Zollo (1997) explains that according to estimation from Teenage Research Unlimited (TRU) the reason to target the Generation Y is because they spent about $63 billion in 1994. Moreover, the TRU also found that average teenage boys of the Generation Y spent at least $44 a week while the girls spent about $34. In addition, Rosenthal (1998) also found interesting findings telling us that the Generation Y accounted for 46 percent of total adults spending on audio equipment. Rosenthal also found that the Generation Y also represented 48 percent on athletic shoes. IV.2 Values As a generation that plays a significant role in Australian communities today, the Generation Y are eagerly to lead the societies in terms of becoming trendsetters. In this manner, it is found that some younger kids consider members of Generation Y (people who were born within 1973-1988) as their model (Neuborne, 1999). In terms of personal finance, we also find that most Generation Y expect and enjoy a higher level of financial securities that those of Generation X. Romeo (1999) says that this financial expectation drives the Generation Y to conduct high-class lifestyle. For example, it is common to find out high school students that have various credit cards in their wallets that are co-signed by their parents. IV.3 Economic, Social, Political, Cultural, and Environmental Beck (1997) found that the Generation Y also influenced by several factors such as economic, social, political, cultural, and environmental changes. The findings are as following: One-third births in 1990s (upper level of Generation Y) were to an unmarried women. In addition, one-third marriage ends in divorce. It means that most members of Generation Y will spend their childhood in a single-parent situation (Beck 1997). Generation Y are considering societal and family structures, coupled with advancement in technology, as driving force that shape the development of Generation Y (Radice, 1998). Most Generation Y are brought up in the situation where their have working mothers (Neuborne, 1999). Mostly, Generation Y grows up in multiculturalism where they live in ethnically diverse and mixed socio-economic groups (Coeyman, 1998). IV.4 Aspirations Concerning the aspiration, majority Generation Y in Australia can be found their aspiration by studying their behavior and thinking over the spirituality. In a research conducted by three scholars in Australia -Webber, Mason, and Singleton- in 2004, it is found that individuals that have different spirituality type will have different social attitudes, social actions, and personal capacities and skills. The survey used samples that have diverse range of age within the Generation Y. Most of them were students in private, public school, and tertiary students; some were employees in corporations, others were unemployed, and they come from both high and low socio-economic backgrounds. Table 1 shows the demographic composition that Webber, Mason, and Singleton (2004) took in their research. Table 1 Age Group No. % 13-14 12 19 15-19 43 67 20-24 4 6 25-29 5 8 Total 64 100 Source: Webber, Ruth., Mason, Michael., and Singleton, Andrew. 2004, ‘The Spirit of Generation Y – The Spirituality of Australian Youth and Young People aged 13-29. Australia The survey resulted in several findings that fall into three elements; they are spirituality, social attitudes, and social actions. Spirituality. This element of research took into account varieties of religious and spiritual experience among young Australians aged 13 to 29 years. In consumer behaviour theory, the study of spirituality gives information about how people define themselves and interpreting their lives. Schiffman, Kanuck (2000, p. 350-352) revealed that the religion revival like spiritual guideline has also impacts on consumer behaviours and values of all kinds Social attitudes. In the study of consumer behaviour, social attitudes explains the connectedness with it social neighbourhood such as friends, family, and other members of a community. Social action. This element shows individual preferences in playing role in a community. For example, a person with characteristics of being a secular might be interested in volunteerism, helping others, and working with organizations for the good of others (Webber, Mason, and Singleton, 2004). IV.5 Major Theories of Consumer Behavior Basically, theories of consumer behavior compose of four major elements; they are motivation, perception, learning, and attitudes. However, this paper only deals with the implementation of two theories; motivation and perception IV.5.1 Motivation There are many definitions about motivation. Schiffman, Bednall, Watson & Kanuk (1997), for example, define motivation as the driving force within individuals that push them to take action. Therefore, every action that individual takes, involving motivation. Concerning the motivation, there are two main characteristics of motivation as suggested by Sharpe & Ross in Living Psychology; they are as following: Motivation energizes behavior. It means when people are motivated, they are likely to be curious, be aroused and often be restless Motivation guides people to achieve a designated goal; For example, people who need pair of shoes will have motivation that drive them to walk around at shopping centers to find the shoes IV.5.2 Perception By definition, perception is insight, intuition, or knowledge, which is gained by perceiving. People usually consider perception as merely results of human senses. It turns out that perception is a combination of physical stimuli (such as sight, smell, and hearing) and inherent predispositions (such as expectation, motives, and learning). Under such circumstances, there are no people who share similar perception over a product or service. IV.5.3 Relationship of Motives and Perception There are relationship between motivation and perception. The relation can be described through following flow: People are likely to perceive things they want or need In the process of forming a perception, people, unconsciously, tend to concentrate and pay attention to elements of the environment that are important to them Under such circumstances, it is found that marketers work on comprehending consumers’ inner motives and tap into the perceived elements of environment that are important to them when marketers market their products/services V. Methodology In general, there are two approaches to research: Qualitative and Quantitative. Qualitative approaches are research that is carried out through interviews and observations. This kind of research enables a researcher to investigate in little more detail on the individual perceptions of a phenomenon. Since the research deals with the personal, therefore, such an investigation is limited in its scope. Moreover, observation becomes an important technique for collecting data concerning what occurs in a real-life situation. This method also helps us to reach an understanding about the perceptions of those who are being studied, in that situation. To be specific, we employ non-participant observation method especially by analyzing qualitative information from journals, books, magazines and many more. The most important of conducting observation is it provides researchers with an understanding about the perceptions about things or people we observe. However, since observation deals with someone’s perception, we plan to avoid preconceptions since it would provide this research with some bias. The method does not involve direct interviews which will slightly reduce objectivity and the accuracy of information. We are retrieving more reliable data from experts’ analysis, journals and various publications from available media. Using the data resources above, we are hoping to present an independent and objective analysis toward the contemporary issue. VI. Discussion: Consumer Behavior-based marketing on Telstra Marketing consists of the measures we use to reach and persuade our prospects that consist of advertising, public relations, brand marketing, viral marketing, online marketing, and direct mail (Schneider, 2001). In addition to Schneider definition on marketing terminology, S. Carter defines marketing as process of building lasting relationships through planning, executing and controlling the conception, pricing, promotion and distribution of ideas, goods and services to create mutual exchange that satisfy individual and organisational needs and objectives (1997). Marketing involves every aspect of business from the manufacturing of a product to actual point of sale. In order to reach the target customer, the Generation Y, effectively, Telstra should pay attention to consumer behaviour theory that composes of lifestyle choices; values; Economic, Social, Political, Cultural, and Environmental; and aspirations. However, this paper will consider only marketing strategy bases on two aspects: lifestyle choices, economic, social, political, cultural, and environmental. VI. Implementation of Consumer Behavior Theory on Telstra VI.1 Company Background: Telstra VI.1.1 Corporate Data Telstra is globally known as the Australia’s largest telecommunications and information carriers. The company becomes a full network and service provider in which Telstra has a full range of services and compete in all telecommunications markets throughout Australia from fixed telephone to mobile broadband. In total, the company is now serving over 10.3 million subscribers of fixed lines and more than 6.5 million subscribers of mobile services. VI.1.2 Telstra 3G Services In Telstra, mobile services contributes significant portions to the company revenue; and like other telecommunications carriers, developing mobile services is becoming competitive advantage for Telstra since customers today tend to get mobile. In Telstra there are two mobile services that can be considered as 3G (Third Generation) services; they are CDMA 2000 1x and BigPond Services. The second services are becoming new idol since it provides customers with ability to make a video call. In addition, customers who buy BigPond Mobile Services are enable to browse and purchase a broad range of up-to-date information and entertainment services such as Weather info, downloading ring tones & Pictures, and playing games. One of favorites feature that Telstra offers is mobile internet (Telstra, 2006). VI.2 Behaviour #1: Beliefs In this section, I found that the discussion of beliefs in Generation Y relates to their Lifestyle Choices. Concerning the issue of beliefs on Telstra case, I suggest that the company should immediately provide customer loyalty program with obvious benefits such as special price discount or bundling services. For example, if a customer subscribes a call plan from Telstra for two year, he/she will get complimentary 3G mobile handset. The above action is essential since the belief of Generation Y towards a product is characterized by the need to express themselves in innumerable ways. As discussed in earlier section, it is found that Generation Y represents large part of spending in some consumer goods and home appliances such as audio and athletic shoes. Since Telstra 3G products have their own fans and buyers, therefore, I recommend Telstra to target special market as well as following: Brand of Products : products or services that address the Generation Y needs that can be obtained through customer gathering Customers’ Preferences: customers who concern about products that are classy and best represents their characteristics. Ages : 18-27 (this is the age where people buy a product based on their characteristics or product’s representation) In terms of product design, for example, Telstra must conduct consumer gathering to inform about the benefits of their product and explain why the customers should buy their services. In Telstra, the mobile internet service is called i-mode. For mobile phones fans, this brand reminds us to the successful 3G services in Japan from NTT DoCoMo. Since Telstra realizes that selling to Generation Y is somewhat tricky, it is obvious that Telstra offers a wide range of 3G services in order to assess which kind of features the members of Generation Y can adopt. Therefore, it is essential that Telstra offers including various contents for their 3G services that involve the customers in the design process. For example, since Generation Y is having fun to make friends, it is imperative that Telstra enrich their 3G services with mobile entertainment services such as email, news, sport, shopping, banking and music content. In addition, subscriber also enable to access email like Hotmail, Yahoo and BigPond. In addition, Telstra should also realize that in order to reach Generation Y, they should consider emotional aspects of their customers in which they are emotionally involved with products/services. This characteristic can be used by Telstra in promoting their 3G services. Concerning the promotion, it is found that Generation Y spends much of their time to watch television and they become heavy users of Internet including checking their e-mail. It means that Telstra should promote their 3G services (i-mode) mainly in television and in Internet if they seriously target the members of Generation Y. this is important to increase the effectiveness and the efficiency of conducting promotion. To increase the effectiveness of their promotional strategy, Telstra had better choose models that best represent the idol of Generation Y such as Lindsay Lohan or Paris Hilton for example. In addition, as Schiffman, Kanuck (2000, p. 350-352) suggested, Telstra should also consider the spirituality of their customers since religious requirements or practices often take on an extended meaning beyond believers, i.e. Telstra customers. VI.3 Behaviour #2: Feelings The feelings part in consumer behaviour is best represented by the fact that Generation Y has its own perception towards a product. Therefore, value of a product becomes important for Generation Y since they can assess whether the product feels good for them or not. In marketing point of view, this characteristic becomes underlying factor that creates customer value. The basis of value creation is creating customers satisfaction. The key question is whether all the strategy, product features, adds on and value creation lead to ultimate customer satisfaction. Lower price does not have to lead customers into increasing satisfaction nor does the bundling products. Therefore, it is important to dig what customers really want and how to deliver the products based on the customers’ needs. In the section IV.2, it is found that Generation Y is characterized by expectation and enjoyment of a higher level of financial securities that those of Generation X. For example, it is common to find out high school students that have various credit cards in their wallets that are co-signed by their parents. Under such circumstances, it is likely that Telstra should offer classy 3G service to their Generation Y customers since price does not become the barriers as long as the products best represent the Generation Y value of being financially freedom. Since Generation Y marks characters as highly important, therefore, any service provider like Telstra should also consider where they should offer their products. Steve Wunker, CEO of Brainstorm Marketing Solutions, creator of the WAP Promotion reveals in Communicate magazine that mobile services is just about the most targeted form of mass market advertising imaginable. In this situation, it is found that pull-based mobile marketing can reach a wide customers group effectively. The coming of mobile 3G services are very beneficial since carriers like Telstra is enable to send vivid promotional messages to customers that are suitable for the Generation Y. In addition, in case of Telstra 3G Services, location-based marketing could also means that Telstra should pay attention to where product launch or the product will be conduct. It is found that members of Generation Y are those who share similar things such as wear the same models of clothes, enjoy playing similar kinds of games that can be played over the Internet, and share similarities in type of leisure activities. Therefore, the best place to offer Telstra 3G mobile services (Mobile Internet) is in café, malls, shopping centers and clubs. The reason is the places represent values that members of Generation Y attain. This is in compliance with the consumer behavior theory that explains social actions of Generation Y are likely to involve community activities individually and within a group, love to help others and work with organizations for the good of others. VI.4 Behaviour #3: Actions There are many factors that influence the actions of Generation Y when dealing with purchasing a product/service. Beck (1997) found that the Generation Y also influenced by several factors such as economic, social, political, cultural, and environmental changes. In this circumstances, Generation Y are considering societal and family structures, coupled with advancement in technology, as driving force that shape the development of Generation Y (Radice, 1998). Concerning the issue, Telstra should offer products are overwhelmingly technological. In addition, Telstra should consider the use of television as promotional media since Generation Y is likely to become the cult of television. According to one research, it is found that the Generation Y spends 63 percent of their media time for watching television such as MTV. In addition, the Generation Y also spends 28 percent of media time for listening to radios that play popular music. Moreover, their spending on other type of media such as magazines and newspapers only accounts for six percent and three percents, respectively. Moreover since Generation Y is likely to be the cult of technology, Telstra should also promote its products over the Internet. This is because the Generation Y considers the use of Internet for browsing and e-mail is more important that the use of telephone. This is due to they mostly have laptop computers and handheld devices that they can bring anywhere by their backpacks. The intense use of computer also underlies the finding that the members of Generation Y have great interests in using computers and the Internet for technological learning. The virtual communities as provided in the Internet through instant messaging services, blogging, friendsters services, etc are found to form new culture as they now listen to the same kind of music, wear the same models of clothes, enjoy playing similar kinds of games that can be played over the Internet, and share similarities in type of leisure activities (Omelia, 1998). VII. Conclusion This paper has discussed the use of two major theories of consumer behaviour (Motivation and Perception) in analysing consumer behaviour (including beliefs, feelings and actions. Concerning the impact of theories of consumer behaviour on Telstra in delivering 3G services, I see that the biggest telecommunication carrier in Australia has many things to do when targeting the Generation Y. There is one common reason why we witness ever-increasing developments in data communication, esp. in mobile services, across the Asia-Pacific countries. The clear path into next generation of mobile messaging services has pushed carriers to provide various applications and related contents to enrich their mobile data offering and give their customers new mobile experiences (Prabudi, 2003). In conclusion, selling 3G services to Generation Y is not s simple task since these members of Generation Y have their own characteristics such as they are hungry for new and distinctive ideas. Therefore, a company like Telstra should properly manage the Generation Y or else they become enemies that are ready to destroy the company’s brands. 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