The Hindu Business Line : Reading consumer’s mind

Now, when it is essential to bolster confidence in the working of the market, more than ever, is the time to have a peek into the consumer’s mind. It is near-impossible to figure out even in the best of times the rationale of his choice of one product, service or vendor over another. Sometimes he behaves as if he is moved by the herd instinct; sometimes he acts the contrarian, swimming against the current. He may patronise a shop others pass by, and vice-versa. Somet imes he is an individualist, at other times he is a conformist. He will be what he has always been — a mystery.

No psychologist or sociologist, and no market survey, however diligently carried out, can assert with certitude what weighs on a consumer’s mind when he sets out to make a purchase: Is it price, quality, after-sales service, brand name, packaging, design, freebies, keeping up with the Joneses, backing by favourite film star or cricketer, familiarity, habit, trust, friendly welcome, distance, prompt attention to complaints, ambience, or what? If only the advertisers could put a finger on it, they would mint millions!

Difficult to typecast

A high-end product, say a Blackberry , a camera or a flat TV may be entirely out of his reckoning for years, but suddenly, he takes off to bring one back home, even though his family, career or financial circumstances may have been the same or similar all that time.

Cultural characteristics too determine the consumer’s responses. A product named after, say, Ravan or Judas, is sure to be shunned. Often, the puzzlement of others over consumer behaviour is matched by consumer’s own inability to decipher with precision his motivations and impulses. In short, inscrutability and unpredictability of the consumer’s mind stymie all attempts to typecast it.

Notwithstanding all these mystifying features, even the closest approximation to knowing how the consumer’s mind works is of vital importance to business because the bottom line hinges on it. Researchers are hard at work refining their methodologies and fashioning models to get as near the truth as possible.

Choice modeling method

One such technique that has shown great promise is known as consumer choice modelling developed by Daniel McFadden, who won the 2000 Nobel Prize in economics. By pressing into service all the tools and facilities of information technology and advances in statistical analysis and interpretation, users of the technique have been able to make a reasonable prediction of consumer behaviour in the matter of mobile phones, automobiles and hybrid electric vehicles.

From what one is able to gather from an article published in the strategy+business of November 11, the model holds great possibilities. The claim made for it is alluring: “….. consumer choice modelling is ideally suited for analysis of the most complex consumer decision processes and that it yields valuable insights for demand-driven strategy development by providing customer value segmentation maps, measuring market share impact of new product–service combinations, and assessing overall brand equity.

Perhaps most important, choice modelling can reveal salient differences between managers’ beliefs about customers’ needs and preferences and customers’ actual needs and preferences. For managers seeking reliable feedback on how customers view their products and services, consumer choice modelling provides a rigorous way to turn customer-driven feedback into profitable and sustainable tactics for retaining or capturing market share.”

In any event, the time is not far off when business decisions and marketing strategies will no longer be a matter of playing blind man’s buff with the consumer. Consumer mind mapping would have widely come into vogue, helping producers and providers of goods and services to ascertain his preferences and requirements, and direct their investments and operations accordingly.

B. S. RAGHAVAN

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