Consumer Behaviour Work Example
- 1. Consumer Behaviour European Master in Business Studies Select a sector/category of product and a firm. The firm is trying to improve their sales by analysing consumer behaviour when buying the product (from the start, with recognition of needs). A former EMBS student 24/05/2009
- 2. Table of contents Table of contents ..................................................................................................................................... 2 Introduction............................................................................................................................................. 3 How would you describe the attitude towards the brand on the market? ............................................ 4 Privacy issues: Big Brother aspect: ...................................................................................................... 4 Commercial aspect: ............................................................................................................................. 5 Conclusion: .......................................................................................................................................... 5 Are there differences between groups of consumers?........................................................................... 7 How could the firm improve attitudes towards the brand? ................................................................... 9 Which function of attitude will play a key role in the strategy ? .......................................................... 10 Describe the perception of the brand regarding competitors (positioning map) ................................ 11 Analyse how the perception of other stimulus can affect the brand image (perception of the outlet, price…) as well as other influencers (use of the product…) .................................................................. 13 Google home page and display of results: ........................................................................................ 13 Google new services: ......................................................................................................................... 13 Define the strategy and a draft of the implementation to consolidate/improve that perception ....... 15 A former EMBS student – European Master in Business Studies – 2007/2009 2
- 3. Introduction Google Inc is an American public corporation, specializing in Internet search and online advertising. It is a popular search engine, a tool for finding resources on the World Wide Web. Google is for the third year in a row, recognized as the most valuable brand in the world according to BrandZ1. Evaluated at $100 billion and as the number 2 in term of reputation2 behind Toyota. Google has not for primary scope to sell any products or services to its users. It however displays them some advertisements which will afterward provide him some revenues. In order to answer the problematic which is how to increase revenues I have to figure out how Google can display more advertisement to Internet users. To reach this objective I have to define Google consumer behavior when using its services. 1 http://www.brandz.com/output/ 2 http://seekingalpha.com/article/134363-google-ranks-as-most-valuable-brand-in-the-world-at-100-billion A former EMBS student – European Master in Business Studies – 2007/2009 3
- 4. How would you describe the attitude towards the brand on the market? Google got since the beginning a good image towards Internet consumers. Launched in 1998 Google was there during the Internet Gold Rush by providing the most useful and pertinent service(Internet orientation) and this for free. Google is in a certain way: our friend and/or a part of our life on Internet. This was a long time ago, before that it became so popular as it is now. Popularity has good and bad points and generate a lot of envy either from competition than public opinion. Privacy issues: Big Brother aspect: Medias have taken recently the privacy wave phenomenon to highlight how potentially Google is dangerous. The most recent news which is denouncing it are the pictures taken by Google in the street for his application Google Street Views. 3 The recent launch of Google Chrome4, an Internet web browser is enforcing the Big Brother reputation that some want to give to Google in plus of its commercial aspect. In 2007 a survey made in the United Kingdom on 1,101 persons shows that 60% of the respondents were unsure that Google will keep their information private5. However in comparison of all the leaders present on the market Google is the one that Internet users trust the most keep their information private. 3 http://www.reuters.com/article/internetNews/idUSTRE54C22R20090513 http://www.washingtonpost.com/wp-dyn/content/article/2009/05/20/AR2009052002776.html 4 http://tempsreel.nouvelobs.com/depeches/medias/multimedia/20080905.ZDN6592/google_chrome_ou_la_cr ainte_dun_navigateur_big_brother_.html 5 http://www.bigmouthmedia.com/live/articles/survey-results-uncertainty-over-googles-data-pri.asp A former EMBS student – European Master in Business Studies – 2007/2009 4
- 5. So on one hand people do not trust search engines in general regarding data privacy issues. However if they had one in which they should give their trust it would be Google. Those consumer fears can be easily understood by the following statements: "All of the major search engines collect data about our use of their services, and it adds up to a considerable amount of information. How much access do we have to view and control that information? Very little, really. How easy is it for us to find out what information is being collected about us and how it is used? What assurances do we have as to the usage of that information? How much control do we have over it? Would they be willing to let us remove that data? Should they create Ombudsman offices?"6 Commercial aspect: In 2007 a survey made in the United Kingdom asked to 1,000 British Internet users about the following question “Is Google becoming too commercial?”. To this question 23 % of women answered no and 35 % of men said yes7. "Google now dominates in so many areas that some people perceive it as all- powerful or arrogant. In some ways, that's true - but Google still adheres to its "do no evil" mantra in my opinion."8 Google is for sure more and more powerful, with more than 60% of market shares around the world. The advancement of technology made him customizing every advertisement on the Internet we faced which enforce this feeling. However as we can see Google is not considered yet as too commercial. Conclusion: As a conclusion for this part I would say that Google has the chance that Microsoft got one of the worst reputation in the software and ICT industry by providing costly solutions for lock-in configurations. 6 http://www.bigmouthmedia.com/live/articles/bigmouthmedia-investigates-big-brother-survey-rev.asp/3710/ 7 http://www.bizreport.com/2007/05/gender_split_in_attitude_toward_google.html 8 http://www.bizreport.com/2007/05/gender_split_in_attitude_toward_google.html A former EMBS student – European Master in Business Studies – 2007/2009 5
- 6. It gives then to Google the example to not follow and allow him to adopt a clearly different strategy: providing to everyone who has an access to Internet a highly demand technology for free. Google took since the beginning the “Don’t be evil9“10 slogan which means: “don’t think about short-term strategies which consist in exploiting consumers”. So let’s say a “don’t kill the golden goose”11 strategy. However the “Don’t be evil” slogan is hard to keep in mind when Google is making 37 times more revenues than in 2002 and that the primary objective of a firm is providing increasing returns to shareholders. The recent launch of some of its products: Google Maps, Google Chrome, raised a lot of issues and questions regarding privacy issues. Google was also attacked recently this year by medias on environmental issues.12 We can say that the success of brands like Google, BlackBerry, Apple and Amazon is amazing. Each of these brands is delivering an experience that is not only easy, friendly and fun to use, but one that is customized to each user. Google has today the reputation of being a part of our Internet experience life, we grew up with him and really recognize it as a trustful brand. However by getting more and more bigger people are seeing it as new Microsoft with the fear one day to be controlled by him. 9 http://www.smh.com.au/news/biztech/dont-be-evil/2008/04/15/1208025168177.html 10 http://searchengineland.com/14-is-google-evil-tipping-points-since-2001-10174 11 http://en.wikipedia.org/wiki/The_Goose_that_Laid_the_Golden_Eggs 12 http://www.pcworld.com/article/156899/study_searching_google_damages_the_environment.html A former EMBS student – European Master in Business Studies – 2007/2009 6
- 7. Are there differences between groups of consumers? According to a study untitled “Search Engine attitudes” from 2004 made on 1649 American users, 98,8% of Internet users are using search engines and among those 98,8% the following configuration can be observed: Here we have definitely three groups of consumers: - Loyal consumers; - Loyal consumers but loyal to other search engines as well; - Not loyal; Among the most famous brand in this sector: Google is the search engine to which Internet users are the most loyal to. This study is even highlighting the fact that 91% of Internet users would modify and re –launch their query if they are unsatisfied by the first three pages of results. So there is A former EMBS student – European Master in Business Studies – 2007/2009 7
- 8. once more a certain trust in using a specific search engine. This is moreover a trend which is increasing because in 2002 this rate was fixed at 71%. “Users tend to have more confidence in their search engine of choice than in their own ability to formulate a query that will return their desired results”. Moreover as in all market we have also the two extremes, on one side the Google aficionados using every services of Google in order to get the best part of it and on the other hand the ones considering Google as evil and going for huge boycott of Google. However those two groups may be marginal in terms of volume. Among the mass user population we may have as well a strong division between Internet users which are aware of privacy issues, the one who are and the ones who are but do not care. For example most of adults aware of privacy issues and their risks may be reluctant of giving some personal information on Internet whereas young people seem to care far less about it such as the Facebook phenomenon is illustrating it. A former EMBS student – European Master in Business Studies – 2007/2009 8
- 9. How could the firm improve attitudes towards the brand? As we saw Google is facing criticisms on three sides: commercial aspect, privacy issues and environmental problems. However in the field of search engines Google is still considered as the most trustful brand. So in order to improve attitudes towards the brand Google can play on those three aspects. The main aspect concerned seems to be the one of the privacy. Google could changed it by giving the possibility to its users to choose if they accept or not to give their personal information. In this case Google would restrict his data collection letting people feeling freer. However the firm in this case may have more to lose by providing such freedom to its users. This is the same situation for advertisement, the personalization of each advertisement is enforcing the big brother aspect, Google should pay attention to it maybe by providing random advertisement. Regarding environmental issues Google recently invested for 30 millions in green projects in creating start-up firms researching on solar-thermal and high-altitude wind power.13 13 http://planetsave.com/blog/2008/02/07/google-to-outspend-us-government-on-environment/ A former EMBS student – European Master in Business Studies – 2007/2009 9
- 10. Which function of attitude will play a key role in the strategy ? The Knowledge function will have a key role in this configuration. The reason is because mainly the only way for Google to make people change their attitude is to make them read a user agreement. Most of the people on Internet do not read user agreement and contracts which are incredibly long. Here everything is about information. A former EMBS student – European Master in Business Studies – 2007/2009 10
- 11. Describe the perception of the brand regarding competitors (positioning map) The main satisfaction reasons about the search engine market are coming from the quality of their services(mainly search services but also the convenience of associated services such as mail services, blogs, news…). The main unsatisfaction criteria could come from privacy, lock-in strategy, commercial aspects such as advertisement so in one word the commercial aspect. Explanations of the positioning map: Google was formerly a company providing a competitive technology to Yahoo with an advantage in the pertinence of results. Google at that time was not as popular as it used to be now and then the privacy issues was not a day to day conversation topic. Right now Google is accumulating an incredible amount of data due to the number of services they are A former EMBS student – European Master in Business Studies – 2007/2009 11
- 12. offering for free which are moreover high demanded services. So I would say that from time to time Google moved from a mid quality of service Internet tools provider to a high quality one. However in order to reach such level of quality you need an incredible amount of data, just the fact of gathering those data can be seen as a change in Google commercial approach. Moreover when the user is seeing that advertisement which are displayed to him are really focus on his personality he can then be aware that a use of those data have been made. So this is why I would say that during the couple of years Google success made him moved in the positioning map. Yahoo on the other hand did not really much move its commercial perception because it is as successful as before… or even less. But it is sure of two things, first Yahoo as Google increase its portfolio of services(emergence of Mail services, Video Search etc…) increasing the quality of service to offer. Second thing before the gap between Yahoo and Google was not as big as nowadays. Microsoft is as we know the extreme in terms of making business: lock in effect, bundling. The quality of its service regarding search engine is under the ones of Yahoo and Google however it is still offering an interesting portfolio of services linked to this product. Baidu the Chinese search engine has the reputation of getting a lot of its revenues by companies ready to pay a lot of money to change the results of display. So one could say that it is a very commercial approach in comparison to Google and Yahoo. In terms of quality Baidu is still not providing key services such as emails and foreign languages interfaces. Kosmix is a young Indian search engine really revolutionary in his way of displaying request results however nowadays in the field of search engine you need far more than providing a search experience to your users. The same observation can be made to Xquick which has the reputation of being an anonymous search engine, which means no customized ads and even no ads at all. A former EMBS student – European Master in Business Studies – 2007/2009 12
- 13. Analyse how the perception of other stimulus can affect the brand image (perception of the outlet, price…) as well as other influencers (use of the product…) According to me two aspects can influence the Google brand: the home page and the way results are displayed and the new services(innovations) that Google is providing. Google home page and display of results: The day that Google will change its home page it will have a tremendous effect on his brand image. Until now Google is the only company which almost did not reconsider his home page design for almost ten years. Always considering that Google has before all to be sober, cool and most of all easy to use. According to them Internet user need simple products. And until now all we can say is that they were right in their strategy. From more than 11 years this trend seems to be the same: Figure 2: Google home page in 1998 Figure 1:Google page results in 2001 And it is the same when displaying its results. However as technology are moving up Google will have one day to change one of those two aspects or even both and from this change we will see how it affects Google. Google new services: The new functions that Google is adding everyday can be seen from two different perspectives. A former EMBS student – European Master in Business Studies – 2007/2009 13
- 14. If it is a useful and original service people are tend to see Google as cooler as ever this is the case of the integration of iGoogle or Google Mail. On the other hand when Google is copying products and services from other companies just for competition we really have the vision of a shark ready to take the control over all the technologies. The examples of Knol (encyclopedia to compete with Wikipedia) or even Lively (to compete with second life) are good examples of this ambition: Figure 3: An article about Insomnia on Wikipedia Figure 4: An article about Insomnia on Knol Figure 5: A print screen of a scene in Second Figure 6: A print screen of a scene in Google Life Lively A former EMBS student – European Master in Business Studies – 2007/2009 14
- 15. Define the strategy and a draft of the implementation to consolidate/improve that perception For me here there are two different things: - Don’t copy but create; - Don’t be evil; The first is in fact joining in a certain way the second. I really think that Google should stick to his motto. Most of Internet users have been educated with Google and made their first step with it on the Internet. Google is a part of our life and we saw it growing years after years. I would say that Google is our friend and that we have a certain trust in it. We are however seeing him more and more as a Microsoft with the will of having an overall control of everything. Having a control over everything is not really a problem but it is when the technology provided are inferior to some others and this is what it is all about. The second point is about the Big Brother and commercial aspect. Google’s strength is mainly based on the information they get from their users, reducing the number of collected information is for Google like reducing their strengths. However sometimes you need to make some sacrifices. I guess that Google is accumulating enough information on their users and that reducing the amount of collected data to six months as requested is not such a big deal. I really think as well that Google comes to be more and more influenced by marketing people rather than pure engineers. We are living in an economical system where almost every business is driven by marketing orientation and this is more or less the model that Google is adopting. However it does not have to be that always that way. So far Google succeeds with an economical model which was far different from all the other ones. Microsoft motto has often been associated to the following “Build a better mousetrap, and the world will beat a path to your door." Whereas actually Google used the one of make the customer happy and then get your profit out of it and not the other way around. A former EMBS student – European Master in Business Studies – 2007/2009 15