ISL460U-CONSUMER BEHAVIOR
Chapter 8: Changing Consumer in New Era (Consumption and Beyond)
Introduction
The inclusion of the Internet in business processes has transformed not only the ways of production and distribution but also the ways of consumption. With commercial activities being performed on the Internet, the consumption habits of people who spend as much time online as in the offline world also change.
The Rise of The Internet, Social Media and Mobile Communication
The use of the Internet in commercial activities has caused businesses to meet a new world: the virtual world. Businesses aiming to gain a place and reach consumers in the virtual world have to undergo radical transformations both organizationally and functionally. The virtual world has caused businesses to redesign their activities ranging from business processes to promotional activities, and from reaching consumers to customer relations. This transformation in businesses has also found its way into consumers in return. With the digital transformation experienced by means of the Internet and smart devices, a number of changes have started to occur in the purchasing habits of consumers. Consumers can perform many transactions through online channels. With the innovations brought by communication technologies, individuals can perform their banking transactions without going to banks, and make their reservation without going to any travel agency. Now there is no need to watch weather forecasts on TV to find out if it is going to rain. Mobile applications show the weather daily and even hourly. Moreover, these transactions can be carried out much faster and easier via smart devices.
The Internet
The Internet, a technology developed for the American Defense Industry in the 60s, started to be used in daily life after the 90s. The stages the Internet has gone through from the past to the present can be chronologically listed as Web 1.0, Web 2.0, Web 3.0, and Web 4.0. Web 1.0 era had a one-sided communication system and internet users passively browsed websites in this phase. The most important features of Web 2.0 are defined as interaction and sharing. The Web 2.0 era forms the basis of the current interactive communication. During this period, users had the opportunity to produce content. Therefore, after this phase, the Internet ceased to produce information unilaterally and became more communication and community oriented. With Web 2.0, both web pages owned by individual users increased and the way to use the Internet in commercial activities opened. In the Web 3.0 phase, the prominent features on the Internet were collaboration, data collection and processing. The Internet becoming mobile and the increase in the use of mobile devices such as smartphones and tablets brought along the emergence of mobile applications. In this period, artificial intelligence and search engines started to come to the forefront. Furthermore, Web 4.0, is used to describe the
period when the Internet met cloud technology, the Internet of Things, big data and augmented reality. It is stated that although the boundaries have not been determined yet, Web 5.0 will also be the next phase of the Internet and internet services will become much more customizable. Each phase is the developed state of the previous phase.
Virtual Communities and Digital Social Networks
Communities consist of individuals who are in contact with each other, have common values, have similar lifestyles, show integrity in their attitudes, and have common goals and norms. Virtual communities are groups that are in mutual and interactive communication, have common interests, have online connections with each other, come together through technology and have a sense of belonging. In virtual communities, even though individuals live far from each other, they can come together thanks to the developments in internet and communication technologies. Virtual communities differ according to their various characteristics. Accordingly, virtual communities where community members consist of invited participants are defined as “closed virtual communities” (such as luxury brand communities or private shopping sites), while virtual communities where anyone can be a member without any invitation can be defined as “open virtual communities” (such as virtual game communities). Also, communities that are united around specific topics are characterized as thematic communities (i.e., brand pages or fan pages). Web- based virtual communities are postmodern communities that create a unity with common connection values. Businesses will only be able to reach community members who are in close contact with each other and influence each other’s behavior when they can reach out to them. Considering that these communities come together in online environments, it is clear that businesses should use online environments and digital channels. With the existence of the Internet, people have become a part of many different networks online. This situation is explained by the concept of network society. Having carried out one of the important studies on network society, Castells states that with the developments in information and communication technologies, the social and economic world has been reshaped through networks. According to Castells, the most distinctive features of the network society appear in the concepts of time and space. In the network society, there are two emergent social forms of time and space: timeless time and the space of flows. With these expressions, Castells refers to the expanded and negligible feature of the concept of time, and states that space is surpassed by technological means by clearing geographical boundaries and distances. This situation causes a new perception of time and space. There are a number of basic reasons why digital social networks are so popular and preferred. One of these reasons is interaction. The use of digital social networks has an interactive structure, enables content production and sharing, and the speed of information transmission has increased. Digital social networks are attractive, easily
subscribed and exited, often free of charge and the fact that community members can share their experiences with each other explain the reasons for their popularity. Shared knowledge and experiences ensure a bond between members in the community, even if there are members who do not know each other at all. People can meet new people through digital social networks. Users within the network can be described as friends, contacts or fans.
Cyberculture and Generations
The global society, in which technology and especially the Internet is determinant, has a unique cultural structure defined as “cyberculture”. This word is a combination of cybernetics, which means control science, and the word culture. According to Irvine, cyberculture means that national and international masses can reach local, ethnic, religious, and national cults through computer and communication networks. According to another definition, cyberculture derives not from the codes of any authentic culture but from a technological software, implies a transnational and transcultural understanding, breathes with the software world, and also brings a cognitive distinctness. Cyberculture is the cultural rules and behavior that have developed as a result of internet, common computer networks, and online interaction. Digital natives are a generation born in 1980 and after, who think that technology is a routine part of their daily lives rather than a necessity. The reason why this generation is called digital natives is because they speak the digital language as if it was their native language (native speaker-digital native). Digital immigrants are the generation that was born before 1980 and are not familiar with virtual reality like the digital natives born in the digital world, but try to adapt later. The Internet, online environments, digital devices, all kinds of technological innovations, and instant messaging applications are almost like a part of the lives of digital natives. They have a language of their own. They like to use abbreviations and emojis when texting. They use blogs and/or vlogs as a way to express themselves and follow their friends’ lives from their blogs/ social media accounts. production, distribution and communication forms. According to Manovich, the new media has two different layers: culture and computer. The way the computer models the world and represents data and the fact that it allows us to operate on them influence the formation and content of the cultural layer. The cultural layer also affects the computer and creates a new computer culture. This new culture is a mixture of people’s perception of the world and the digital representation of the computer.
Network Generation
Network generation consists of young people who love to share, who personalize products, who do research on every subject, who give importance to brands, who love fun things, who want everything to be resolved quickly and who want to have new technologies as soon as possible.
Alpha Generation
Another classification that has recently started to be discussed is the concept of “Alpha generation”. Alpha generation is the group representing individuals born after 2010. They are symbolized by the alpha letter, which symbolizes a new beginning, as the first generation to include individuals born in the 21st century. Alphas are individuals born in an environment dominated by technological developments, who see the world as a place without borders.
Social Media
Social media are internet-based applications that allow users to share and store the content created as a result of their experiences online and allow other users to access these content and share their own content. Social media can appear in different types depending on its intended use. Social media platforms can be listed as blogs, wikis, internet publications received with subscription, forums, virtual game communities, social worlds, professional networks, marking sites, video sharing sites, private social networking sites, e-commerce sites and photo sharing sites.
Mobile Communication
One of the most important innovations brought by communication technologies is the concept of mobility. Mobility refers to the wireless use of internet technologies. With the adaptation of mobile internet to devices used in communication, mobile devices have come into use. These devices are also referred to as smart devices. A number of features of mobile devices turn these devices into impressive marketing tools.
The Concept of New Generation Consumers
The innovations such as technological developments are factors that affect the change of marketing activities. These factors have affected all parties involved in marketing. It is obvious that the habits and purchasing decision processes of consumers have also changed. Changes in the habits of consumers, on the other hand, distinguished these consumers from traditional consumers and led them to be called as the new generation consumers.
Who are New Generation Consumers?
Kotler claims that the most important groups that can be defined as new generation consumers are teens, women and netizens. These three consumer communities constitute the most influential market segments in the digital age. They are the groups that use online environments most and that they are the groups that adapt to innovations first and easiest (i.e. early adopters). They are also trend setters. With their extensive use of the Internet and social media, especially young people with a high number of followers affect their followers when they share the products they purchase. These consumers are mobile consumers who have a strong connection and mostly consist of young, urban middle class individuals.
The Features of New Generation Consumers
The new generation consumers place more value on comments and suggestions about brands on the Internet than the advertising messages they are exposed to. The new generation consumers act in consultation with their peers with whom they are in peer to peer communication. Research shows that consumers believe in f-factor; namely, friends, families, fans, followers, more than businesses’ market communication efforts.
Concepts of Prosumer and Produsage
Creators of the products that they will consume. Producing to consume is explained with the concept of “prosumer”. The produsage concept has emerged as a new concept named after the prosumer concept. The term prosumer is derived from the words producer and consumer. Prosumers are more demanding, more conscious and more active consumers. They do not embrace being passive consumers who only buy the products offered to them. They would like to follow brands and communicate with them. Since they can easily access information about price, they want to negotiate with businesses and influence them. While the term prosumer is derived from the words producer and consumer, the term produsage is the combination of the words production and usage. It stands for the new generation of consumers to both use and produce the produced content.
Differences Between Traditional and New Generation Consumers
Kotler describes the most important feature that distinguishes new generation consumers from traditional consumers as being mobile. The new generation of consumers are those who like to travel the world, live life faster, use time efficiently, and want something to be done immediately. When new generation consumers have a product that is stuck in their mind or want to buy something, they usually start the purchasing process with online channels and continue with online channels. When traditional consumers want or feel the need to purchase a product/brand, and do not have much information about it, they can access the necessary information to make a purchasing decision through different channels. The speed of reaching this information varies according to the source of the information. New generation consumers, on the other hand, can access any information about a product/brand within seconds. Created hashtags, retweets and mentions make it easier for the new generation of consumers to find each other.
New Generation Consumers’ Purchasing Decision Process
The developments in digital technologies do not remove the awareness, research, review, feedback and evaluation stages of the consumers in the purchasing process; they rather change the purchasing process itself. The traditional purchasing process is a linear process, whereas the online purchasing process has become much more complex and
turned into a purchasing cycle. The striking situation in this cycle is that the new generation consumers do not act in a certain order in the purchasing process, which is combined with the effect of online and offline factors. When the online purchasing process is evaluated in general, it is seen that there is a process in which consumers become aware of products/brands and become brand advocates when they are satisfied with the purchase. When the digital purchasing process is considered as a funnel, the process by which new generation consumers become a brand advocate from a consumer who visits the website of any product/brand with their decision mechanisms is summarized as follows.
The Factors that Affect New Generation Consumers’ Behavior
The most important factors that affect the transformation of consumers into a new generation of consumers with a new set of behavioral patterns were stated at the beginning of the chapter while the developments in internet, social media and mobile communication technologies were discussed. In addition to those factors, some other factors that have an impact on shaping the new generation consumer behavior are listed as follows.
Globalization
According to Kotler, globalization creates an equal area between businesses that had large competitive power in the past and smaller, more local and less competitive enterprises. The widespread use of social media has given great momentum to globalization. With the effect of globalization, the interaction between individuals and societies is carried to a very advanced level. For this reason, the lifestyles of individuals and societies who previously had different and distant cultures (lifestyles specific to that society) are becoming increasingly similar. While the differences in tastes, interests, eating, drinking, dressing, use of gestures and facial expressions are gradually disappearing, a similar style appears.
Postmodernism
The postmodern or post-industrial era is a period when there are great breakthroughs in technology and production has become limitless. In the postmodern period, the difference between production and consumption is ignored.
Digitalization of Marketing Activities (Marketing 4.0)
Kotler states that marketing activities were product- oriented when they first emerged (Marketing 1.0), transformed into customer-oriented marketing in the next stage (Marketing 2.0), later evolved into humanoriented marketing (Marketing 3.0) and finally, into Marketing 4.0. Marketing 4.0 adopts a digital-centric approach as the continuation of the widely accepted Marketing 3.0 concept that calls brands to touch the human spirit. Developments in communication technologies and smart devices, which are increasingly adopted by new generation consumers, constitute a basis for the development of Marketing 4.0. Marketing 4.0 can, therefore, be defined as digital marketing.
e-Commerce
According to the World Trade Organization, e-Commerce is regarded as “the production, advertisement, sales and distribution of goods and services over the telecommunication network” Businesses aim to establish a sustainable communication by creating social media accounts by pooling the communication with consumers in a certain center. Since new generation consumers are constantly online, actively using social media platforms, businesses want to be in sight of them by being present on social media platforms. In this way, they can determine the expectations, wishes, needs and demands of the new generation consumers much more quickly.
Collaborative Consumption Networks
After social networks spread and became a part of daily life, another innovation that emerged is the Collaborative Consumption Networks. Collaborative consumption networks come together on various websites that allow the sale of second-hand products, the sharing and use of various goods, and shopping with various units other than money. They are based on the common use or circulation of a good or service.
Omni Channel Marketing
Integrated channel retailing is a method used to satisfy consumers who constantly ask for more. Consumers need a perfect combination of digital and physical media. In the purchasing process, they want to take advantage of both digital environments and physical stores.
Future Trends
The development of applications such as augmented reality, QR codes, RFID technologies, near field communication systems, location-based applications, magic mirrors, virtual screens, selfservice kiosks, mobile coupons, deal sites, comparison sites, mobile wallets, 3D printers, autonomous devices, drones, geofencing, click & collect and crowd-shipping has also triggered the change in consumers’ habits.