Demographic-Related Purchase Behaviours of Consumers: The Evolving Tension between Exploration and Exploitation in Frequently Purchased Consumer Goods Markets

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Abstract

Consumers make trade-offs in their purchase decision making between extending market knowledge from exploring a product market and maximizing purchase value based on exploiting their current knowledge. The value of these strategies can be enhanced opportunistically by taking advantage of promotions. In this research, a new and unique datamining model was developed to process store scanner data for quantifying the brand selection behaviour of an individual consumer in reaction to promotions. Selected consumers in each of Pittsfield’s salty snack, yogurt, and toilet tissue markets were then segmented into four behavioural segments using clustering analysis based on their Prevalence of Promotion and their Value of Information from Purchases. The behavioural segmentation was valid, as the four generated behavioural segments in each product market could be differentiated by using demographic variables.In a product market, the demographic profiles of behavioural segments can be generated andused for improving the performance in targeting consumers. The generated demographic profiles of a behavioural segment explain how consumers in the segment react to promotions,which can be used for predicting how consumers will react in the future. Complementing demographic profiles, dynamic behavioural evolvements in consumer purchase lifecycles can also help to predict the purchase behaviours of consumers in the future from the purchases that the consumers have made. The evolvements enable people to understand how consumers with a given amount of market experiences make their purchase decisions via making trade-offs between market knowledge extension and immediate purchase value maximization.Product markets differ in their available number of brands for selection. The findings generated in a product market, however, cannot be generalized to a different product market. Consumers have different demographic-related purchase behaviours across frequently purchased consumer goods markets. Based on the findings in the research, the dissertation discusses and provides suggestions forretail businesses to improve their performances for achieving a competitive edge.

Keyword(s)

behavioural segmentation; consumer purchase life cycle; demographics; exploration and exploitation; marketing decision making; promotion

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