Introduction
Consumer behavior involves understanding the psychological, social, and economic factors that influence consumers’ choices and behaviors.
Consumer behavior is influenced by some internal and external factors. Internal factors include personal characteristics such as age, gender, personality, motivation, perception, and attitudes. External factors include cultural, social, economic, and situational influences.
Understanding consumer behavior is important for businesses as it helps companies develop effective marketing strategies and tailor their products and services to meet consumers’ needs and wants.
In recent years, the advent of digital technology and the rise of e-commerce have significantly impacted consumer behavior. Consumers now have access to different amounts of information, and can compare products and prices easily, as well as share their opinions and experiences with others through social media. This has led to changes in how consumers make decisions and interact with brands.
As a consumer, you will experience marketing transactions every day.
For example, you might want to have a piece of chicken at KFC and decide what kind of chicken and size you want to have. You might also consider buying a fuel at Goil using the loyalty card that you earned. Consumers behavior is everywhere and every day.
Supposing you need a new phone,how would you go about satisfying this need? Where would you turn to for information? How would you set your budget? Where would you buy the phone? etc, These are just some decisions that consumers face on a regular basis. Interestingly, each consumer will answer these questions differently based on their background and some psychological factors. For a company that makes phones, the answers to questions will help them know the types of phones to design, the price consumers are willing to pay and where they should sell their phones.
Consumer behavior includes not only buying tangible products such as books or cereal, but also includes the use of consumers services, activities, and experiences such as getting haircuts, going to a movie theater, taking a vacation, and donating products at Goodwill. Moreover, consumers make decisions to vote for a candidate, make choices to spend time either on Instagram or YouTube, or decide to work out at the gym. Consumer behaviour involves more than buying.
Brand
Using Netflix as a case study for Consumer Behavior Analysis.
Netflix is a video viewing service that offers a variety of award-winning TV shows, movies, anime, documentaries, and more on thousands of internet-connected devices.
The service is available globally in a number of languages and mainly distributes original and acquired motion pictures and television series of different genres. Reed Hastings and Mark Randolph launched Netflix in Scotts Valley, California, in August 29, 1997.
One day, while driving , Mr. Hastings and Mr. Randolph had the idea for Netflix. Randolph expressed his admiration for Amazon and his desire to identify a market of products that he could sell online. VHS was very expensive to keep at the time, so Hastings and Randolph decided against selling and renting it. When they learnt about DVDs, they decided to test the possibility of renting or selling DVDs via mail by sending the CDs to Mr. Hastings’ Santa Cruz residence.
More than 70 million people worldwide in about 40 countries currently use Netflix services.
Key and current issue in Netflix
The key and current issue facing Netflix is the product cost. The change in prices has affected its consumer behavior. For the first time in Netflix’s twenty-year history, Netflix revealed that it has lost one million users.
This loss in the number of subscriptions came shortly after the price increment. Some users took to social media platforms like Twitter to express their concerns about the price increment.
Netflix raised prices in 2022, and the move may have significantly impacted the number of consumers. Some experts claim that this is the outcome of growing inflation and rivalry in the video viewing industry. A further factor in Netflix’s declining user base is price increases. When it comes to Netflix’s pricing and plans, the “Standard” plan in the US costs $14 from January 2022 to June 2022 and permits two users per account to watch material simultaneously. The monthly prices have gone up by £1 as of January, coming in at £6.99 and £10.99, respectively.
Netflix lost more than 1 million subscribers during the first two quarters of 2022.
In its first quarter earnings report, Netflix said it lost 200,000 subscribers during the first three months of the year 2022. That marked the first time in a decade that the leading video view service, has lost users. Netflix’s subscribers dropped by 600,000 in the United States and Canada, Netflix projected a loss of another 2 million subscribers during second quarter, indicating the fourth quarter was not a blip.
Attest, a consumer research firm did a case study. It examined second quarter video viewing in the United States and found that Netflix was the only video view service to get a decline. Netflix was also the only one of the big services to introduce a price increase. Netflix announced the increment in January and began implementing it in March.
As at June, Inflation rose to 9.1/%, and the Inflationary pressures changed consumer attitudes about spending. People adjusted their spending habits and the first things to go are extras for entertainment, which are easier to drop than your grocery budget or utility bills.
So, for example, someone who sees the price increase for Netflix might look for a less expensive service, and notice that they can buy Disney+, Hulu and ESPN+ for less than the price of an HD Netflix product.
The news of Netflix’s price hike also caused the stock market to react (Gerlich, 2023). The stock price closed at $102.23 on March 31, 2022. The stock price of the corporation dropped 16% to $85.84 per share in July following the presentation of its second-quarter results.
Consumer learning theories
Behavioral learning in Netflix
Behavioral learning theories is often described as stimulus-response theories, focused on the premise that, learning occurs in response to external cues or stimuli that the consumer is exposed to. Behavioral targeting allows for more precise targeting of people by delivering individualized messages and campaigns to consumers based on their activity on websites, applications, and campaigns.
One of the ways that Netflix influences consumer behavior is through its recommendation engine. The recommendation engine uses a variety of factors to suggest movies and TV shows to users, including their viewing history,etc. Furthermore, Netflix’s selection of films and television series transcends boundaries. They provide a vast array of foreign and well-known films from around the world. Every active user on Netflix receives daily personalized TV and movie material from Netflix thanks to its use of behavioral segmentation (Kaur and Ashfaq, 2023).
Behavioral learning technologies are used to achieve this automatically. The pricing and membership options of every Netflix user are profiled, along with their viewing habits and search history. Based on each subscriber’s using of the Netflix mobile app, this profiling is created. Based on the data gathered, various customer segments are established according to the watching and behavior patterns of the individual customers.
Netflix is always aware of the films and TV shows that its users have viewed within the previous day, week, month, etc. Basically, the most relevant sector is used to target current Netflix subscribers. The carefully chosen advertising packages offered by Netflix are made to specifically cater to the demands of every subscriber group. Netflix understands that members in each section may move to different target groups even when customers are divided into several categories. In order to accomplish this goal, Netflix gives all of its users enough information about the functions that are accessible to them as soon as they sign up. Netflix offers its users personalized TV and movie content and services. This is what makes the brand special. Every segment is targeted differently as well. Behavioral targeting and retargeting fall under the umbrella of personalized internet advertising, a type of advertising in which businesses craft strategic communications to appeal to certain traits, personalities, interests, or behaviors of their target audience(Kostovska et al., 2023).
It is categorized as Personalized strategic messaging based on individual consumer data will become more widespread and sophisticated as more and more consumer data is gathered online and made available to marketers. Behavioral learning has an exciting impact on a number of our company’s departments. Historically, recommendation algorithms powered by behavioral learning have been most prominently used in personalization.
Additionally, by identifying the traits of effective material, it employs behavioral learning to catalog motion pictures and television programs. They use this to maximize Netflix’s rapidly expanding studios’ output of original films and television series. Moreover, adaptive bitrate selection, internal product delivery networks, which handle more than one, third of all Internet traffic in North America and video and audio encoding can all be optimized through behavioral learning (Li et al., 2023). Additionally, it raises ad budget, creative, and channel mix in order to attract new Netflix users.
Netflix uses emotional analytics to craft a better customer experience by efficiently shortening movie trailers for consumers to evaluate movies more quickly, with a goal of retaining customers by putting movies in front of them that they enjoyed.
Cognitive learning in Netflix
Cognitive learning theory is based on the idea that knowledge acquisition occurs when learners actively engage in problem-solving activities. Cognitive Learning Theory asks us to think about thinking and how thinking can be influenced by internal factors such as, how focused we are, or how distracted we have become, and external factors such as, whether the things we are learning are valued by our community or whether we receive praise from others when we learn.
According to cognitive learning theory, learning happens in intricate ways that go far beyond picking up new routines and abilities. In addition, learners work hard to gain knowledge, insight, and intuition. Furthermore, people use a variety of psychological traits, including their openness to new experiences, to absorb information. This is learning in which the organization has no control over the process of learning. A fundamental tenet of this type of learning is that workers pick up valuable knowledge outside of structured learning environments. When there are unclear benefits from a learning situation, employees use informal learning environments. As an alternative, businesses like Netflix might set up their workplaces to encourage this kind of unofficial learning. To promote employee contact, the corporation can set up common facilities like food and beverage lounges and atriums. Whiteboards and markers might be provided in these communal work areas to encourage idea sharing. Goals in informal learning are frequently unclear. Getting training in person makes it more likely that the proper kind of learning will take place (MUHAMMAD, 2023).
One consumer learning theory that can effectively address the issue
Behavioral Learning is the theory that can help address this issue.
The foundation of behavioral learning is customer demand. Domains like statistics, and computer science are the primary sources of behavioral learning. In addition, we attempt to analyze and provide recommendations based on the vast amount of existing data that we have gathered when obtaining “experience data” utilizing algorithms based on this. We can demonstrate behavioral learning by examining instances from the marketing domains, as these domains are widely utilized. Some businesses encourage and fund behavioral learning in an effort to draw in more clients, take initiative, and obtain insight into the tasks carried out. It’s important to note that Netflix uses behavioral learning in this aspect of its marketing. Netflix employs one of the most popular behavioral learning strategies in marketing research (Oktini,2023). As part of our dedication to fostering a culture of continuous development, Netflix continuously tests and monitors user and viewer behavior using technologies. Netflix generates movie suggestions for its users based on past viewer data. According to Netflix, the company has made significant investments in behavioral learning to promote its offerings, give customers a consistent experience, and perform analytics. They claim that the Netflix platform’s successful content alternatives, including movie genres, will be shaped by the use of behavioral learning. Customizing audio and video encoding to maximize content delivery networks is made possible by behavioral learning. This will significantly affect marketing initiatives and aid in bringing in new Netflix subscribers. Artificial intelligence facilitates customisation and understanding of consumer preferences by marketers. Recommendation search engines are used by businesses on internet platforms to increase their potential audience and provide better service to customers and customer groups(Ong et al.,2023). More personal information is required for this. Consumers and customers expect brands to be self-aware and to understand their preferences. Netflix can know their customers through behavioral learning theory. Knowing your customers and how they utilize your service is important in pricing.
Currently, Netflix distributes the service through suggestions and recommendations derived from its personalization research, acknowledging that user experience is a critical commercial value. Netflix productions are going to undergo a radical change because to the customisation features provided. Netflix allows you to fast-forward by following the material and detects where you continue to watch, and makes use of the viewer’s previous watching history to deliver content that is likely to be enjoyable. Netflix is able to give material and recommendations based on the interests of its viewers, members, customers, and users because of its personalization initiatives. Over time, this also aids in increasing user interest.
Its breadth expands and its ability to see content in various ways increases with the number of objects it identifies, as well as the amount of movies and videos it can show consumers. To guarantee that viewers do not waste their time looking, Netflix employs customization algorithms and offers and shows material that is specifically matched to each user. Recent growth in Netflix’s popularity makes it a valuable case study for understanding how to personalize content to users. This is a marketing ploy to enable technologies for personalization and customization to keep an eye on products that Netflix find.
Recommendation
•The goal of comprehending consumer behavior is to provide marketers with the knowledge and techniques necessary to forecast market consumption trends and purchase patterns for upcoming advertising and promotion campaigns. Each customer must play a part in order to perform well in the theory of consumer role-playing, which is comparable to theatrical acting, Because they adopt several personas when consuming and modify their choices based on the particular role they are playing at that moment, consumers are referred to as actors.
•Know Your Customers. Netflix misjudged their customers. Knowing your customers and how they utilize your service is important pricing. Netflix can retain a lot of these customers by providing a DVD/streaming combination option that offers a limited amount of video view per month and then up-selling them on the value of the upgrade.
•When and How You Communicate Matters. Netflix failed to communicate the value the price increase will bring to its customers. Netflix should make sure to always communicate the value of the service first before they make a change.
•Choosing wisely is just one of the numerous factors that buyers consider before making a purchase. According to the author, the desire to satiate certain pleasure requirements and the abundance of options available on the market are the primary drivers behind product purchases. As a result, how a certain good or service is positioned in the market to boost consumption can be greatly influenced by the role that customers play in their purchase decisions.
Conclusion
Netflix’s success in the video view media space is a testament to its excellent service, which offers customers extensive, high-quality videos. Being a video view service pioneer, Netflix has been effective in adjusting its business strategy to user behavior. There is a knowledge vacuum on how businesses might optimize their marketing tactics based on customer behavior because most study has concentrated on how business models affect consumer behavior. Despite the financial challenges brought on by the worldwide pandemic, the analysis demonstrates that Netflix is in a strong position. Numerous positive client reviews and a sharp rise in new contracts attest to the company’s creative business approach and higher level of customer satisfaction. The advancement and growth of the internet video view and film industries greatly depend on this research. Netflix’s customer-centric approach to business highlights how crucial it is to base marketing and business choices on customer demand. Furthermore, because of its flexibility and global reach, this study demonstrates the significance of shifting the film industry from movie theaters to online platforms. Nevertheless, because secondary data are used to generate its conclusions, this study has limitations.