UNDERSTANDING CUSTOMER BEHAVIOR FOCUSED ON PSYCHOLOGICAL AND SOCIOLOGICAL DRIVERS A case of Coca-Cola Company Table of Contents I INTRODUCTION II BODY Social-cultural drivers 1.1 Culture 1.2 Role and status 1.3 Reference groups Psychological drivers 2.1 Motivation 2.2 Perception 2.3 Learning 2.4 Beliefs and attitudes III CONCLUSION I INTRODUCTION Consumer behavior is influenced by psychological factors and social factors (Lichev, 2017) Although these are uncontrollable factors, they should be carefully researched when planning marketing strategies Consumer behavior, according to Charles W Lamb, Joseph F Hair and Carl McDaniel, is a process that describes how consumers make choices and removes one type of product or service (Lamb, et al., 2009) Customer behavior research will give company suggestions for marketing mix elements Success will come to those businesses who grasp the rules of the market they serve It is necessary to segment the global market into smaller market and each market segment requires the company to have a separate marketing mix Consequently, the insights into consumer behavior are really the answers to fundamental issues of marketing solutionsc (Morris, et al., 2012) This report will examine the factors that influence consumer decisions, and take the case of Coca Cola as an example When it comes to understanding customers, Coca Cola is able to create a marketing mix that satisfies consumers' wants rather than competitors That obviously brings huge profits to the company II BODY Established in 1886 by John Pemberton in United States, Coca-Cola Company sold their products to more than 200 countries in the world with 1.5 billion consumers each day According to the report “Best Global Brand 2016 Ranking”, Coca-cola achieved the third of the most popular and valuable brand in the world with 73,102 million dollars Currently, this company is rather stable and continuously making profit (Anon., 2018) Consumer purchasing is influenced by two main groups of factors One is a group of internal factors that includes the psychological and personal factors Two groups of factors from the outside affect each individual consumer, which is the cultural and social factor (Lautiainen, 2015) This paper is dedicated to provide an analysis about how Coca-cola used psychological and sociological factors to persuade their customer to satisfy with their products Social-cultural drivers 1.1 Culture It can be defined that culture is a set of basic values, perceptions, wants and behaviors learned by a member of society from family and other important institutions (Armstrong & Kotler, 2015) Culture is the first cause, fundamental determinant of human needs and behaviors Different groups of consumers in the society or market segments have behaviors, habits and cultural values that they pursue The emergence of new cultures has altered the habits of consumers, changing the standard values that consumers pursue (Tunkkari, 2017) Each culture often has smaller cultural branches that create more distinctive features and levels of social integration for its members These cultural branches are ethnic groups, religions, racial groups, and geographic regions These cultural branches will form important market segments, and marketing people often design products that fit their needs (Hassan, 2015) For the western countries, people are familiar to Coca-Cola because of the traditional eating habit of fast food (Tsao, 2012) In the aspect of USA culture – where the brand was born, Coca-Cola become the icon of American spirit in the beginning era However, it not only represents the American culture, but takes different strategies to update and adapt to fit the taste become a world wide recognized brand Taking the advantage of the wide effect of the drinks, Coca-Cola corporate with large fast food brand such as McDonald’s, Subway, Burger King (CHENGXUZHANG, 2016) In contrast, the cola drinks are less popular among eastern countries including China, Japan, Korea, and etc According to a study named ‘Consumer decision making regarding a “green” everyday products (Jones, 2014), Eastern people have raised their concerns on healthy diet and carbonated drink is considered as high in fats and sugars Knowing the culture and the habits of eastern market in general, the company continuosly changes and innovates its products line to fit each different cultures and still keep the original core value and taste of Coca-Cola The company provides variety of coke, from the origin taste to the low and no calorie, sugar or with some special flavor such as lime, cherry, vanilla,… to offer more choices to customers Moreover, Chinese coke cans have a very different look, “Coca-Cola” is written in Chinese and included Chinese traditional culture and events on their can cover (CHENGXUZHANG, 2016) 1.2 Role and status The basic variables that determine social class and status are occupation, income, wealth, power, ideology, consciousness, occupational status, personal prestige, thought, communication, and socialization (Jisana T K., 2014) An individual purchases a product to satisfy the goal that demand requires or that it complements the social goal when they find consumption of those products help them achieve the value socially recognized Based on the social stratification criteria, company can classify and select market segments to make the most effective marketing decisions based on the criteria that same society class often uses same products (Lhotáková & Klosová, 2009) However, in Coca-Cola case, the beverage attracts people with different role and status Due to the stable price but continuously renovation, the drinks are welcomed by the young The number of middle age and old people are less attractive but also comprise a big number of consumers However, every advertising campaign all includes many groups with different roles and status in life 1.3 Reference groups A reference group is a group that market researchers view as a mirror to analyze whether an individual's purchasing and consuming choices can be accepted Reference groups are usually divided into secondary and primary groups (Kashyap, n.d.) Primary groups often have the most important impact The link among members of group is very strict, based on normative values, beliefs, behaviors These include: family, close friends, friendly neighbors, colleagues While, the secondary groups have less face-to-face communication They includes associations such as social networks, religious organizations, professional associations, unions, clubs, and idols (LAKE, 2018) Coca-Cola is using commercials and presenting types of people that the target group feels related to: from famous celebrities to happy families gathering for dinner, party with friends, etc The most beloved and successful campaign of Coca-Cola in recent years was ‘Share A Coke’ with friends and family in 2013 With more than 500,000 names recommend and available from all over the world, the campaign reached 150 million personalized bottles sold (Tarver, 2015) During the technology era, it is important for marketers to study on the social network of the customers Coca-Cola has introduced its smart digital vending machine that customers will be able to buy their drinks from this vending machine via smartphones even before reaching the machine (GOBRY, 2011) In order to encourage recycling in Israel, Coca-Cola created Facebook Places for 10,000 recycle bins around the country (HARBISON, 2011) The idea was that social influence would play a part and people would be encouraged to recycle after seeing their friends it Psychological drivers 2.1 Motivation A motive is “a need that is sufficiently pressing to direct the person to seek satisfaction of need” (Armstrong & Kotler, 2015) As the need becomes urgent, it urges people to act to meet their needs Thus, the basis of motivation formation is the high demand There are two popular doctrines: the Sigmund Freud doctrine and the Abraham Maslow theory According to Freud's theory, he argues that human purchase decisions are affected by unconscious motives that they themselves not understand (Bevir, 2007); in contrast, according to Maslow's doctrine, he says that people are trying to satisfy their basic needs When that demand is satisfied, people will move on to higher demands According to him, he points out there are five needs that people need to meet as below picture (David J Shock, 2015) Coca-cola team understands and follows it to improve their marketing strategies Firstly, the physiological needs bring their customers to the needs of thirst Then, the slogan in 2009 was “Open Happiness” touched to social and esteem needs of human People don’t really need to buy Coca-cola to satisfy the thirst because of various drinks However, adverstising brings people to buy this product For example, the famous adversting named “Coca-cola brrr” created the feeling of refreshment and fun experiences to customer when drinking Coca-cola Therefore, they will choose Coca-cola when they are thirsty (Herrera, 2012) 2.2 Perception Perception is a process through which people select, organize, and interpret the information received to create a picture of the world around them The perception is divided into processes: selective attention, selective distortion, and selective retention (DIYARBAKIRLIOGLU, 2011) Humans can perceive differently about the same situation through selective perception, distortion, and memorization of information Therfore, maybe two people have the same motivation but different actions in the same situation The above characteristics of perception require the marketer to make great efforts to bring the advertising information to the receiving customer It is important for a company to differentiate itself with others Coca-cola was successful in positioning the brand to their customer through their logo (The Coca-Cola Company, 2018) During more than 125 years, the standard logo written in the Spencerian script helps company differentitate with their competitors It created a special impression to their customer to realize its company (James, 2013) To attract more attentions of customers, Coca-cola team decide to change their marketing strategies in March, 2016 This company created new campaign “Taste the Feeling” which means “drinking a Coca-cola is simple pleasure that make everyday moments more special” According to Chief Marketing Officer Marcos de Quinto, this strategy encourage to the brand identity as the best beverage brand in the world This strategy gathered different types of Coca-cola product becoming “One Brand” In which, customers were provided different kind of Coca-cola which is “suitable for their taste, lifestyle and diet – with or without calories, with or without caffeine” (Moye, 2016) 2.3 Learning Learning are certain changes that occur in human behavior under the influence of experience accumulated by themselves Humans gain experience and knowledge due to experience and ability to learn Adults are more experienced, more proficient An expert in any field is experienced in buying activities of that field Applying to Coca-cola, the physiological needs drive people to buy a drink People might choose to buy Coca-cola because of the good places in the supermarket or their advertising If the experience is worth, the consumer will appreciate it Then, when they are in diet or want to drink healthier, they also want to find products of Coca-cola Therefore, diversified products of Cocacola can be satisfied and maintain their customer (Shaw, 2018) 2.4 Beliefs and attitudes Through practicing and understanding people have acquired beliefs and attitudes, which in turn affects their buying behavior Belief is a descriptive way of thinking that people know about something Belief is based on knowledge, opinion, and truth with or without emotion Attitude shows a person's relative judgment, feelings, and tendencies toward a particular subject or opinion The attitude of putting people in the framework of thinking about the things they like or not like, getting close to or away from them It’s difficult to change the attitude of customers According to Interbrand’s report, Coca-cola still remains their third place of the most valuable products ranking in 2016 This company continues to maintain their loyal customers by creating new packaging and offerings which are more suitable to the modern life Nowadays, packaging are more important The brand decided to change the product into smaller size Thus, people who concerns about calories and sugar still can buy this product (Shaw, 2018) Decision making process There are five steps used to study how the consumers make their decisions These steps are in various orders depending on the consumer preferences or the period of time Consumers will go through these steps in making a purchase decision (Yarnold, n.d.): NEED ↓ INFORMATION GATHERING/SEARCH ↓ EVALUATION OF ALTERNATIVES ↓ PURCHASE OF PRODUCT/SERVICE ↓ POST PURCHASE EVALUATION Coca-Cola satisfies in the first place a useful need of taking away the thirst However, Coca-Cola promotes its beverages everywhere at all the time to create an image that will fit in different occasions The company wants its product to be recognized is a ‘want’ rather than a ‘need’ As the drink meet the very basis need, consumer may have low involvement when they buy CocaCola Usually, consumers will not take into account the different Coca-Cola brands, but just purchase the brand they always take if it satisfies their needs, or in this case wants (Feloni, 2015) III CONCLUSION Buyer behavior is influenced by four main factors: culture, social, personal, and psychological All of these factors provide the basis for a better understanding of how to approach and serve the buyer Consumption behavior studies, along with the factors that influence consumer behavior, help marketers identify and predict consumer trends for specific types of consumers From there, they can make timely and effective marketing plans Marketers must study the desires, perceptions, preferences, and behavioral choices and purchases of target customers 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Armstrong, G & K P., 2013 Marketing An Introduction 11th ed s.l.:Pearson Education Armstrong, G & Kotler, P., 2015 Marketing An Introduction 12th ed s.l.:Pearson Education Bevir, M., 2007 The unconscious