Megan Ursic's Blog

Does what you buy define you or do you define what you buy?

I’ve realized that the answer to this probably shapes your consumer behaviour.

In our market research class, we learned that consumer behaviour is affected by three factors

Culture————–Social——————-Personal

In trying to identify my own consumer behaviours, I reviewed what what I have bought, and why. It seems to be a combination of what my family has bought, feedback (positive or negative), culture, my own personal perception of value, taste, media, social groups (i.e. soccer team, student), and perception of necessity. Here is a list of things and my rationale behind my consumer behaviours:

-Food: I buy lots of food- I buy lots of fruit, mostly local except bananas and pomegranates, but not so much organic unless there’s little price difference. I also buy lots of vegetables, interestingly inversely related to the vegetables I used to eat at my parent’s house, hence I choose broccoli instead of brussel sprouts. I also try to buy bulk to reduce packaging, and I won’t buy something if there’s too much plastic, or if its too expensive.

-Clothes: difficult to analyze, but I would say that my choice of clothes is affected by price, weather, comfort, durability, colour, feedback, and social groups.

-Objects: perception of necessity dictates the buying of school supplies, toiletries, kitchen utensils and pots and pans etc.

According to the Government of Canada’s website (http://www.international.gc.ca/trade-agreements-accords-commerciaux/ds/csr.aspx) Corporate Social Responsibility (CSR) is defined as the way companies integrate social, environmental, and economic concerns into their values and operations in a transparent and accountable manner.

However, what is the economic incentive for businesses to incorporate CSR into everyday business practices? Interestingly, the economic incentive is quite large, which has contributed to what is known as “Cause-Marketing” which pairs the credibility and business resources of a ‘for-profit’ business to help promote the mission of a non-profit business. (According to http://www.gtms-inc.com/tip_causemarketing.htm) a 2007 survey of American consumers indicated 95% of consumers would change brands of the same product if the other brand is associated with a good cause. HOWEVER, and this is a big ‘however’, simply picking a good cause and contributing is not necessarily good business. Why? Well, I believe that effective alignment depends on some variables:

• CONSUMER preferences for ‘worthy causes’
• cost difference between same product
• How the cause is marketed (petition, action, celebrity endorsement) and the channels of distribution
• Where the cause is promoted
• If there is a logical connection between the marketer and the cause

Examples-

In class 6, we were introduced to the idea that perception is key when it comes to marketing a product. We know that businesses pay dearly to ingrain their intended imagery into the minds of the consumers.

Case in point: Dog Food. What is the first dog food brand that pops into your head? Most likely, its Purina, Beneful, Pedigree, Iams, or Cesar, for the simple fact that those companies are currently running television ads. This is an interesting example, because dog food sales have nothing to do with taste, and everything to do with how the product is presented to you, and which brand you feel ‘suits your dog’s needs’. Does your dog want meat, vegetables, or how about healthy teeth?

However, with such a large market, it is difficult to find points of difference when advertising dog food. Thus, when a new trend in dog food marketing comes along (ex. environmentally-friendly dog food), many companies advertise a point of parity. Why? We learned that it was product differentiation that accounts for a successful marketing strategy.

In an interesting twist, one simply has to look at the structure of the market to understand the marketing strategy. The majority of dog food sales come from the top 5 producers, among them, corporate giant Nestle. Nestle just bought out Waggin Tails, Sept 10.(http://www.reuters.com/article/idUSLDE6891RA20100910), which earned 200 million last year. With high barriers to enter the pet food market, it may seem like there is lots of competition looking at the shelves in the supermarket, but the giants have simply bought out their competitors, making it much easier to dictate their position to consumers. The pet food industry’s marketing and positioning strategy is not as complex after all.

In class, we were asked to brainstorm ideas for incorporating management information systems into Mountain Equipment Co-op’s brand. What we realized very quickly is that there is great potential for the use of social media, and the creation of different distribution channels. I believe that MIS has applications in almost every aspect of business, and in marketing and R&D for MEC:

Marketing is most likely the aspect which stands to gain the most from incorporating technology.
Firstly, MEC already has an email list in place, and is currently offering incentives in the form of a contest as well as discounts and promotions to gain subscribers. However, the customers who would sign up for the list would be people who are already familiar with their company.
To gain more first-time buyers, MEC should turn to social media. For example, they could offer guided hikes or equipment demonstrations and advertise these events via Facebook, or in the local paper. As well, they may stand to profit from creating their own form of social media, by providing a way for adventurers to share their stories, their reviews of equipment, and their photos (perhaps through Flickr). Because their business philosophy deals with interaction with others and the environment, MEC could benefit greatly by fostering interaction with new customers, and maintaining the loyalty (and good word-of-mouth) of old customers. As well, Research and Development already works with frequent customers to develop better quality products. There is potential for MEC to develop a feedback system, which  may further their R&D, as well as generate more sales, as the products are better suited to their customers.

In a recent article in the Globe and Mail, (http://www.theglobeandmail.com/news/arts/david-suzuki-looks-back-with-a-hint-of-regret/article1623210/), David Suzuki looks back on his legacy as a scientist and environmental activist. Though his is proud of his organizations efforts, he knows all too well that more has to be done, especially in the business world, in order to protect our planet.

When speaking of his approach, he mentions that he started his career as a scientist. He then began working in television, in an effort to use broadcast media to inform the public about the status of the environment. What I found very interesting is when he spoke of his regrets, especially when he mentions that he wishes his initial perspective had been broadened, meaning, instead of focusing solely on the science, looking at the environment from a business perspective; perhaps if he approached environmentalism with a greater understanding of business, his message would have been more successful. When it all comes down to it, business is at the core of interaction.

“I have been told over and over again by business people and politicians, ‘You environmentalists should understand that we can’t afford to do the things you want us to do if we don’t have a strong, growing economy, because the economy is the bottom line.’ ”

If sustainability could be tied to the economy and to business, we would be successful in our efforts to protect our shared planet. Because the economy is tied to the limited availability of resources, it is inevitable that our approach must change before our lack of resources deprive us of a liveable environment. The question that remains in my mind, however, is what will it take for the economy to change? The incorporation of social media into environmentalism? Having monetary incentives to opt for sustainable business? A realization that we have minimal potable water, and a lack of clean air?

Technology is constantly evolving- in fact, tech advances can be tracked along a logarithmic curve, meaning that the pace of evolution of the tech industry is exponential. Though from a business viewpoint, the scientific innovations are not useful unless the consumers believe that the neew technology is actually better, or worth upgrading for.

As the race to find the next big marketable tech idea continues, Pranav Mistry of MIT has a goal of bridging the gap between the physical and digital world. Here is a clip of what he has been working on. If nothing else, watch from 10:17-10:50, where he demonstrates the applicability of to everyday tasks:

http://www.ted.com/talks/pranav_mistry_the_thrilling_potential_of_sixthsense_technology.html

In this case, he and his team have managed to identify everyday problems, and work from a consumer standpoint to find technological solutions. In contrast, most app developers are using apps for marketing purpose, but their actual applicability to everyday tasks are quite frankly, trivial. It will be very interesting to see when, and how, this technology will be able to translate into a business.

We all know that competition sparks innovation, but does innovation necessarily result in profit? Businesses need to keep the novelty they seek in check with consumer demands.

A week ago, I watched a very interesting documentary “The Garden”, which is essentially the story of a group of farmers in South Central Los Angeles, comprising of 374 families- mostly  Latin-American immigrants, who were given permission by the city to use 14 acres of land destroyed by the ’92 riots to grow a community garden. However, 12 years later, in an illegal and under-handed deal, the city sold the property back to the original owner for an unreasonably low 5 million dollars, who had plans to bulldoze the garden and build warehouses. Here is the trailer (definitely worth a look!):

https://www.youtube.com/watch?v=Yhhfr_hIL7A

Aside from the illegal sale, the main ethical issue that this case revolves around is a failure on the city’s part to work on behalf of the interests of the community at large.

Though we learned in Math 184 that in all problems it is assumed that each company is trying to maximize profits, we instinctively know that people should come before profits. The city of Los Angeles operates as a business, with an unspoken understanding (as with all governments) that their purpose is to serve the needs of the people in their community. This is a situation in which ignoring long-term consequences results in unethical business practices.

The original owner also stated that he would be willing to sell the property for $16.3 million dollars, though he only initially paid $5 million. Though the farmers managed to raise that amount, in 60 days nonetheless, the owner refused to sell it to them citing his dislike of their intended use of the property. In this case, the owner’s rights clash with the betterment of the community as well, which raises the question: Must property owners comply with the community, the needs of the community etc.? In our individualistic society and free market which has the capability to function with only limited community interaction- do we need to consider the needs of others? Do businesses and governments have a certain responsibility to their community?

I believe that considering the needs of the community is not only good business sense, but also ethical business practices. The city of Los Angeles opted to leave 374 families, who are already of low socio-economic status, without food that they had relied on and worked hard for. Instead they considered the needs of their own organization- a quick $5 mill. over health, community betterment, empowerment, food, and job creation. Not only was their deal illegal, but they also violated the people’s trust, withheld documents from the public, openly lied, and ultimately permitted the original owner to bulldoze the garden.