Environmental Scanning to Anticipate Future Consumer Behavior Patterns

ENVIRONMENTAL SCANNING TO ANTICIPATE FUTURE CONSUMER BEHAVIOR PATTERNS

David A. Karns, Wright State University

Inder P. Khera, Wright State University

INTRODUCTION

Strategic planning in consumer service industries depends upon the identification of changes in consumer attitudes, values, and preferences, that is, changes in basic market forces. Companies which correctly anticipate and plan for new consumer tastes will be ready to take full advantage of new market potentials.

The anticipation of changes in consumer behavior directly rests upon economic psychological assumptions about future consumer needs and wants as well as technological innovations. The fundamental hypothesis of the present prototype scanning system is that consumer needs and wants are shaped by a social communication process in which new concepts emerge first in precursor consumer segments and then diffuse into other following consumer segments. Having defined a conceptual schema, it is possible to project consumer behavior in the near future by tracking opinions in different consumer segments. A marketing orientation requires planners to assume both a historical and cross cultural perspective, even when marketing within a single country.

REVIEW OF TREND ANALYSES

Anticipation of consumer behavior patterns depends upon the definition of, extrapolation of, and inferences about emerging consumer behavior patterns. It is an art rather than a science since predictions are conditional upon the continued persistence of the underlying causes and forces presently shaping consumer behavior. They also depend upon assumptions about significant industrial and technological changes in the future.

Tn the case of short-term predictions, a Status quo assumption is probably justified. Most technological and industrial innovations which will affect an industry over the next couple of years are in place or being installed. Also, consumer behavior possesses great inertia. While new concepts are continually emerging, many die out before affecting the majority of consumers. A company which correctly anticipates the future may also make sure that that future does not happen because adoption of a new technology may change consumer behavior in and of itself. For example, the adoption of automated teller machines (ATMs) by financial institution s combined with the decrease in branch hours and availability have significantly affected the way in which people transact routine banking business. In this case, the changes in consumer behavior were a result of industry changes rather than changes in consumer preferences. Thus, predictions of future consumer behavior are predicated on the assumptions which are built into the forecasting model.

Another important element in determining emerging patterns of consumer behavior is whether to extrapolate from existing behavior patterns or to draw inferences from data bases other than consumer behavior. many forecasting models collect data on present and past behavior and construct mathematical projections of behavior for the near future. Such extrapolations may be either linear or curvilinear under the assumption is that the rate of change will vary during some future time period.

Inferential analysis uses a much broader range of data about the future, including the intuitive feelings and understanding of the investigator. Often, futurists adopt a black box methodology with the investigator intuitively scanning data and projecting a trend on the basis of an implicit, unstated analytical model. Tn other cases, investigators set forth a model defining the parameters for projecting a trend.

The methodological design of the present prototype system is constructed on the axiom that new consumer behavioral patterns are best explained by determining the extent to which they the psychological needs of consumers. Social diffusion of an underlying concept. is central to understanding market behavior as a social activity filling social needs of consumers.

The chronological development of a pattern trend based on a new concept, normally describes an "S" curve. First, there is a period where the number of individuals adopting the new concept is relatively small and increases very slowly. Following that time, there is a second period during which there is a rapid spread as a more rapidly increasing portion of the population accepts the concept. This is followed, in turn, by a third period. The trend matures -.and the increase in new use slows again. After some point, of course, the trend may actually reverse, and the total number of individuals involved drops until the concept becomes insignificant.

Graham Molitor (1977) has been one of the leading exponents of the "S" curve approach to anticipating new events. "Innovators" enter early followed by a slow adoption by other individuals similar to innovators. These groups are the precursors of a new trend. ks time passes, more individuals join, until the ide~!i or concept has spread widely throughout the mass population. At this point, a mass market exists for products based upon the consumer concept.

,John Naisbitt (1982) refined Molitor's approach of examining the mass media for indications of precursor events. His view, expressed in Megatrends, is that the daily press has a limited amount of space to devote to news. As a new idea becomes more important in society it will receive an increasing amount of attention along with a requisite decrease in the attention given other ideas. Ry identifying precursor events while they are precursors, rather than indicators, of the mass market, Naisbitt attempts to anticipate trends which will affect businesses in the future. Both Molitor and Naisbitt look to the fringe press such as Rolling Stones for the first record of precursor events. The two authors, however, deviate in the priority of other media sources after the fringe media. Molitor suggests that professional journals, intellectual magazines, and general interest magazines precede mass media such as newspapers as a record of precursor events. Naisbitt, on the other hand, argues that the mass media provide the best basis for detecting precursors of future trends.

EXHIBIT 2

ADOPTION PATTERN FOR A CONSUMER BEHAVIOR CONCEPT

The historical pattern followed by a consumer concept can be divided into the four phases presented in Exhibit 1. Phase T is the Innovation or introduction phase during which the emergent concept first appears. Phase II is the Diffusion phase when adoption of the emergent concept spreads and withdrawal remains low. During phase III, the Maturation phase, further adoption is slower. At the same time more consumers are rejecting the concept. Phase TV is the Termination or declining phase when further acceptance of the concept ceases and rejection increases until the concept disappears.

This representation of consumer behavior as a pattern rather than a simple trend facilitates further analysis by allowing the definition of a beginning and ending for a concept as well as providing meaning for the diffusion and spread of the concept. In addition, identification of consumer patterns permits inferences with regard to the potential size of the market.

The analysis of emerging patterns in consumer behavior can be used to answer four questions: 1) Will the potential market for a consumer service concept expand or contract in the near future?; 2) What is the current phase of the consumer behavior pattern?; 3) What is the probable duration of the pattern?; and 4) What are the likely short term behavioral implications of the pattern for a consumer service company?

DURABILITY OF EMERGENT CONSUMER BEHAVIOR PATTERNS: SOCIAL-PSYCHOLOGICAL BASES

The key to understanding the future history of an emergent consumer behavior pattern is found in the role which the underlying concept plays in meeting the psychological needs of consumers and the relative degree to which individuals in different social positions share in its acceptance. As Galtung (1976) has argued, attitude patterns which are over represented in the societal center, that is, among elites and other trend setters, are more likely to increase in importance while attitudes which are over represented among the peripheral parts of the population, that is, non-elites and followers, are more likely to decrease. Likewise, Loye (1978) indicated that convergence of attitudes across a number of different polar groupings within the social structure accelerates or hastens acceptance of an emergent consumer behavior pattern while divergence across different polarities slows the spread or speeds the decline of a consumer pattern.

The diffusion process whereby consumer concepts originate in one consumer segment and then spread throughout other segments is fundamental to prognostications about the durability and potential of emerging consumer behavioral patterns.

Consumer concepts can also be described in terms of the amount of attention devoted to a concept by the communications media, that is, the relative attention of opinion leaders. In Exhibit 2, concepts receiving little or no media attention are located at the periphery of social attention. Conversely, concepts at the core of social attention receive considerable media attention. Exhibit 2 shows that concepts fall into one of four sectors: (1) consumer behavior, (2) lifestyle, (3) economic behavior, and (4) industrial technology.

Media attention reflects the agenda setting role of the mass media, but it also reflects the intuitive anticipation of the psychological needs and interests of readers. Thus, systematic monitoring of the media serving selected consumer segments, e.g., trend setters, intellectuals, and followers, as well as industrial media, provides a nonobtrusive monitoring of changing consumer attitudes.

The greater the "centrality" of a concept, that is, the more important, to a lifestyle preferred by consumers, the more likely that it is to be accepted. In addition, the more important or central that it is to the population, the more likely it is to persist and be durable in the short term. The centrality of a concept has been demonstrated to be important determining the causal strength of that concept on behavior.

EXHIBIT 3

RELATIVE MEDIA ATTENTION TO CONCEPTS

A second significant psychological basis for understanding the spread of a behavior pattern and its durability is the psychological "congruence" of the pattern. The early work of Festinger (1957) and others demonstrated that cognitive dissonance is a potent force producing both attitude and behavioral change on the part of experimental subjects., Conversely, the lack of dissonance was a very important factor in supporting non-change of attitudes and behavior. Extending this finding to emergent consumer behavior patterns, patterns consistent with other consumer patterns are predicted to spread more rapidly. Consumer patterns will be more durable if either industrial technology or other attitudes are consistent with and support the emergent trend.

Congruence or consistency of emergent patterns as the underlying concepts move from the periphery to the core or vice versa can be found both within and between sectors. In other words, an emergent consumer behavior pattern which is highly consistent with changes in lifestyle and/or changes in economic behavior is more likely to spread and be durable than one which is not consistent or correlated with trends in those areas. Likewise, a pattern which is consistent with another consumer behavior pattern is more durable than one which is inconsistent with other patterns.

Perhaps the most elaborate design for understanding the psychological basis of pattern durability is the "Ideological Matrix Prediction" (IMP) proposed by Loye. In this approach Loye defines polarities such as (a) young - old; (b) active - inactive; (c) tender - tough minded; (d) left - right; and (e) extreme - moderate. Using historical data he attempted to define whether the polar groupings in-each pair were consistent or inconsistent with regard to specific ideas. Loye argued that an idea is more readily accepted as public policy where there was a greater amount of consistency across polarities. In addition, he extended the IMP approach to include an "Ideological Force Matrix" defining whether the high force or the low force end of the polarity advocated the position which finally prevailed. While Loye's definitions of ideological force matrix entries appear to vary from application to application and with intuitive readings, the basic argument that ideas proposed by societal groups with a greater amount of strength or force are more likely to be accepted seems valid.

SEARCHING FOR AND EVALUATING EMERGING CONSUMER BEHAVIOR PATTERNS

Attitudes are beliefs or orientations by individuals toward specific objects within defined contexts. The principal focus of research on emergent patterns of consumer behavior is the identification and evaluation of new consumer "concepts." A concept for the present purposes involves the relationship between a number of different objects, attitudes, and behaviors. 4 concept in the health care industry, for example, might involve the use of Doc-in-the-box franchise clinics to provide primary health care. Tn personal lifestyles, eating fish and  vegetables rather than red meat would be considered a food consumption concept. Tn each case, the concept involves both consumer behavior and a product or service provided to the consumers.

Patterns involve the relative acceptance of concepts by a population of consumers. That is, a concept which has only been accepted by the avant-garde is in one phase of a pattern while another concept which is still being used by middle Americans but has been rejected by the avant-garde lies in another phase of its pattern. Thus, patterns are defined by the acceptance of a specific consumer behavior concept in different population segments providing the subjective norms combined with beliefs about and the importance of the concept.

Searching for Emerging concepts: The search for emerging patterns begins with identification of new concepts as they move from the periphery of consumer attention to the core of consumer attention as reflected in various media. The two areas covered in this prototype environmental scanning program are: 1) consumer behavior and 2) the food service industry.

Within each of these areas media sources are scanned for the appearance of more specific concepts. Sample concepts searched for in each area are listed in Exhibit 3.

The search for articles reflecting consumer concepts is targeted on: (1) fringe media, such as Rolling Stones, (2) specialized trade journals, (3) lifestyle related magazines such as Cuisine, (4) intellectual journals, such as the Atlantic and Harpers, (5) economic trend magazines such as Business Week and Rarron's, (6) general interest publications, such as Time and Newsweek, and (7) general circulation newspapers from around the country. More specifically newspapers are drawn from five geographical regions around the United States: (1) the northeast and middle Atlantic states (2) the south (3) the north central industrialized states (4) the midwestern and mountain states and (5) the trend setting states along the western and southern periphery of the country which have been trend setting in the spread of liberal lifestyle trends over the past two decades (Washington, Oregon, California, Arizona, New Mexico, Texas, Florida, and Connecticut). The monitoring order of these data bases reflects Molitor's conceptualization of the relative order of appearance of new consumer concepts rather than that used by Naisbitt.

Evaluating Emerging Patterns: Once media items have been located and entered into the data base management system, the data base file is broken into three month periods for analysis. kt this time descriptor codes for each concept are scrutinized with a content analysis subroutine which produces tabulations of the relative frequencies of key descriptors and title content. Both analyses are decomposed by media base, that is, fringe media and mass media are separated.

In addition to the textual analysis, the data analysis describes the relative movement of concepts between the periphery and the core. A second analytical procedure carried out within the data base management system is a statement of the correlation between given concepts and other concepts within each of the data files and across data files to determine the relative congruence of concepts. Patterns with - greater congruence are more likely to be durable than patt-erns less consistent with other concepts within the consumer mind.

The identification and description of concepts involving new patterns of consumer behavior is only one step in the process of fully understanding such emergent patterns. The second, and more important step is that of evaluating the durability of and probable market for emergent patterns.

The major basis for evaluating the durability of consumer behavior pattern lies in its significance to individual consumers and the extent to which it is supported by, that is, consistent with, other consumer behavior patterns. Evaluation of such consistency can be initially obtained from the correlations with related concepts in the consumer literature, as well as, simple determination of whether the literary mentions suggest consistency among trends. Since the amount of space available in the media is limited, relative frequency of mention by the media only suggests the emergence of new patterns. Existing patterns may be substantially more important to consumers than emergent trends and, yet, not be a major topic of consideration in the mass media.

The only way to evaluate the centrality as well as the congruence of consumer behavioral patterns is to collect additional data beyond that appearing in the mass media. The principal source of such a confirmatory and explanatory data base is the collection of data on consumer reaction to both emerging and present consumer patterns in focus groups and surveys reflecting significant polar groupings within the population.

The results of the information collected during the focus group process can be presented in a concept analysis matrix, such as that shown in Exhibit 4. Each of the polar groups is listed down the left hand side of the matrix.

The first field of the matrix shows whether each of the polarities converge or diverge on their opinions regarding a concept. Tn other words, the young and middle aged populations seem to hold the same opinion with regard to a trend while the elite and the hoi polloi differ on this particular trend in Exhibit 4. The second matrix field lists which of the two polar groups is acting as the initiator or prime supporter of the concept. The third field on the matrix shows the focus group analysis of centrality or importance of the concept to the two groups. The fourth field contains the measure of the latitude of acceptance showing the extent to which opinion within the focus groups is very peaked in the sense that there is a narrow definition of the meaning and significance of the concept, in contrast to a broader significance for the concept. Finally, the fifth field shows the level of correlations between the consumer behavior concepts and concepts in the lifestyle sector and economic behavior sector in the model in Exhibit 2.

EXHIBIT 3

MEDIA SCREENING CONCEPTS

EXHIBIT 4

CONCEPT ANALYSIS MATRIX: SYNTHETIC BACON

Comparative analysis of the matrices allows inferences about the extent of penetration of different concepts in the consumer population.

Finally, the analyst provides an inference about which consumer behavior pattern phase each concept-is in.

PROTOTYPE IMPLEMENTATION

Implementation of the prototype environmental scanning system has encountered the following significant problems: (1) the training and attention span of concept coders, (2) intercoder reliability, (3) a preponderance of media items focusing on current consumer concepts rather than emerging concepts, (4) a preponderance of industrial media items focusing on financial and management topics rather than consumer behavior concepts, (5) a massive data base and resultant management problems, (6) development of analytical and presentation procedures to identify substantial trace blips in consumer patterns to replace the overly conservative methods of traditional statistics, and (7) validation of analytical results since industrial representatives often selectively perceive important developments as dominating the media while data counts show different patterns.

SUMMARY

An environmental scanning system, has as its objectives: (1 ) anticipation of significant trends in consumer reaction to concepts, (2) anticipation of significant trends in consumer behavior which will affect service industries, and (3) determination of significant trends in the food service industries. The prototype system undertakes two activities to accomplish these three objectives. First, it defines emerging market concepts and approaches. Second, it defines emerging causal agents which affect the consumer relationship to foods and predict the durability of new consumer patterns with respect to consumer needs and wants and societal changes, as well as, industrial technological trends.

A. basic assumption of an industrial opportunity forecasting system is that when a concept begins to emerge and form the basis of a new consumer behavior trend there is a shift from occasional consumer references and contact to a focus of consumer attention. As a result of increasing centrality and consumer focus on a new concept, the mass media pay increasing attention, and devote an increasing amount of space to the concept.

The spread of the concept and the development of a full pattern involves subsequent diffusion from leader consumer segments to the general consumer market. As attention expands, the frequency of mention spreads from the precursor media to the general mass market media, such as newspapers and general circulation magazines.

The ultimate durability of an emergent consumer behavior trend, rests upon the degree of congruence or consistency of the emergent trend with other trends and concepts both within the consumer behavior sector and other sectors such as lifestyle, economic behavior, and industrial technology. Emergent trends which are supported by other trends will be durable; patterns which are not supported by other concepts will not last. Ultimately, inferences about the durability of emerging consumer behavior trends will rest upon the information which is gathered from the focus group analysis.

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