Management of Consumer Behavior in Trading Enterprise

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Management of Consumer Behavior in Trading Enterprise

Omarov E. Sh. Management of Consumer Behavior in Trading Enterprise.
Qualifying scientific work as a manuscript.

Dissertation for a scientific degree of Doctor of Philosophy in specialty 073 Management (07 – Management and administration). Simon Kuznets Kharkiv National University of Economics, Kharkiv, 2021.

Dissertation for a scientific exam and title of Promotor of Sciences in accordance with the Affiliated honorary Research Fellow program – Fil. Dr. Jan-U. Sandal Institute, 2021.

The dissertation is devoted to the generalization and development of theoretical provisions, to the development of methodological approaches and practical recommendations for the management of consumer behavior in trading enterprise.

In the first chapter “Theoretical aspects of consumer behaviour management in trading enterprise”, the morphological analysis of the term “consumer behavior” by genus, subject, object of consumer behavior and by the actions conducted by subject towards the object is performed, allowing to provide the author’s definition of consumer behavior as a set of physical, psychological, emotional, cognitive and social processes including need recognition, information search, selection, purchase, use, service, evaluation, disposal of goods, services, ideas, time, events, experiences, or any other entities, and further information sharing, performed by individuals, groups, or organizations in order to meet their needs and wants in context of internal and external factors driving such processes and their impacts on consumer and environment.

The research has proved that one of the most controversial issues in consumer behavior management is a moral dilemma of the extent to which the company can impact consumers. Together with ecological, competitive, employees’ rights and other concerns, this dilemma led to appearance of societal marketing, as a reflection of corporate social responsibility concept, which today evolves to social entrepreneurship. In the dissertation, social entrepreneurship is considered basing on J.-U. Sandal’s definition as “a special form of management, which purpose is to run a production function in such a way as to ensure the increase of value for all the participating parties in that function”. Social entrepreneurship, as it is proved in the dissertation, is on the one hand distinguished from the traditional entrepreneurship, and on the other hand it is distinguished from activity of charity organizations.

Analysis of scientific works, conducted in the dissertation, has shown that scholars distinguish external (exogenous) and internal (endogenous) factors defining consumer behavior. Among external factors, the most mentioned are culture and subculture, reference groups, family, social class, and marketing impacts of a seller (price, promotion, product and place) and situational factors (time of purchase, task, environment, etc.). The most mentioned internal factors include psychological factors (motivation, perception, learning, attitude), social and demographical factors (age and stage of a lifecycle, income, occupation, gender, personality, lifestyle). Understanding of those factors is critical for effective consumer behavior management.

Analysis of existing definitions of consumer behavior management has shown that there is no definition that describes this category comprehensively. So the author’s definition of consumer behavior management is formulated in the dissertation: a subsystem of marketing management that embodies principles, methods, instruments and practices of interacting with customers in all the stages of their consumer behavior in order to both achieve a company’s strategic and tactical marketing goals and satisfy customer needs in a socially responsible way.

Basing on the integration of marketing principles and the principles of consumer behavior, the list of principles of consumer behavior management is formulated in the dissertation, namely: consumer orientation, flexibility and creativity, cross-disciplinary scientific approach, complexity, long-term orientation, social entrepreneurship. Those principles were integrated into the developed model of consumer behavior management in trading enterprise which aggregates stages and factors of consumer behavior, instruments of consumer behavior management and requires integration of social entrepreneurship elements to the marketing strategy.

In the second chapter of the dissertation “Analysis of factors influencing consumer behavior”, the empirical research of key factors impacting consumer behavior in trading enterprises was conducted. In order to limit the number of factors and define those causing the strongest impact on consumer behavior in trading enterprises, the experts were interviewed. As a result, among the external factors, the experts have chosen culture, social class, family, reference groups and the marketing mix factors (product, price, promotion and place), while among internal factors – motivation, learning, perception, age, gender, income, occupation, lifestyle, personality. In order to analyze the impact of these factors on consumer behavior, two different consumer research techniques were used: interviewing and experiment.

In the dissertation, the subdivision of factors in 3 groups for the interviewing purposes was substantiated, and such groups of factors were defined: internal factors, external factors and behavioral responses of consumer. Basing on the list of factors, selected by experts, the questionnaire for evaluation of consumer behavior factors was developed. Taking into account the structure of consumer expenses and the structure of retail trade in Ukraine, it was concluded that the optimal format for points of sales in terms of our research is non-specialized retail stores. In order to choose the exact base for research, the set of requirements to the network of retail stores was grounded, in particular in terms of its size, breadth of product range, the availability of a system of registration of consumer purchases, the availability of the necessary conditions for the interviewing and further experiments, etc. One of the chain of retail shops meeting these requirements is Ukrainian trade enterprise Hazar LLC, thus it was selected as a base for interviewing consumers and for the further experiment.

According to the questionnaire proposed in the dissertation, 200 consumers of Hazar LLC were interviewed. In order to stimulate participation in interview and to track the consumer behavior of the respondents, the discounts cards with increased discount was provided to them.

In the third chapter of the dissertation “Methodical approach to consumer behavior management in trading enterprise”, the method of factor analysis is applied to the results of consumers’ interviewing, in order to define the relationships withing every group of factors of consumer behavior and to join them into integral factors. On the next step, the correlation matrix for the integral factors of consumer behavior was developed, allowing to define intergroup relationships and to develop conclusions and recommendations on consumer behavior management by trading enterprises, in particular: goods intended for families with children should be positioned as more affordable and more actively advertised on social networks, while consumers should be encouraged to share positive experiences of using such goods; merchandising of goods should be differentiated according to the theory of generations; goods of impulsive demand should be positioned with a focus on a predominantly female audience, just as musical accompaniment should be focused primarily on the musical tastes of a female audience; for expensive goods it is necessary to update and expand the range more often; it is also necessary to update and expand the range more often for youth products and conduct a more intensive information campaign; goods with reduced prices should have better information support, including the provision of additional information on special information media and online; the style of presenting product information should be simple, clear and fun.

The scientific and practical approach to choosing of instruments of consumer behavior management was developed. As an implementation of such approach, basing on the factors of consumer behavior which are the constituents of the marketing mix, the preliminary list of instruments of consumer behavior management was defined. The set of hypotheses on the positive effect of list of instruments on consumer behavior in trading enterprises was formulated, namely: music sound, preliminary advertisement of the known product, odd pricing technique, colouring the product’s price label, fair reference of personal positive experience regarding the product, personal experience of using the product, and of charity performed by the shop. To test these hypotheses, a series of experiments were conducted, which proved that music sound increases sales of a trading enterprise by 10.66%, the use of odd pricing technique – by 7,82%, colouring the product’s price label – by 9,81%, fair reference of personal positive experience regarding the product – by 45,59%, personal experience of using the product – by 40,32%, and charity performed by the shop – by 25.9%. In the same time, the preliminary advertisement of a known product does not significantly affect the volume of its sales by a trading enterprise.

Generalizing the results of researches being conducted, the methodical approach to consumer behavior management in trading enterprise was developed. Along with the key components of the developed consumer behavior management model, it contains the stages of choosing the instruments of consumer behavior management (hypotheses formulation, design of experiment and experimentation, assessment of the impact of instruments on consumer behavior, making and implementing decisions based on experiment results, sales monitoring) and the methodical provisions to evaluate the economic effect of implementation the instruments of consumer behavior management.

The practical value of the research results is confirmed by their implementation into the activities of trade enterprises and scientific and educational institutions. In particular, Hazar LLC has successfully implemented the approach to managing consumer behavior (reference № 86 from 27.08.2021); Kharkiv-Invest LLC has implemented the approach to determining the impact of certain factors on consumer behavior, as well as technique for assessing the effectiveness of certain instruments for managing consumer behavior as a constituent of scientific and practical approach to choosing of instruments of consumer behavior management (reference № 35/21 from 27.08.2021). Some theoretical and methodical results of the research are being used in the educational process of Simon Kuznets Kharkiv National University of Economics in the course of teaching of the discipline “Marketing and Sales Management” for masters in specialty 073 "Management" (reference № 28/86-21-99 from 27.08.2021). In particular, such theoretical and methodical results include categorical basis of consumer behavior management, including the definitions of the terms “consumer behavior” and “consumer behavior management”, the list of factors and their impact on consumer behavior, the instruments for managing consumer behavior by trading enterprises.

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