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Preliminary Buying Behavior

University of Maryland University College MBA 640 9041

Innovation Through Marketing and Technology (2222)

Dr. Mohammed Ezz

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Consumer Buying Behavior

It is important that Marketer are aware of their consumers buying behaviors and the influencers

involved. Consumer buying behavior is the study of the process involved when individuals or

groups select, purchase, use, or dispose of products, services, ideas, or experiences to satisfy

needs and desires (Solomon, 2017, p. 6). A study of consumer buying behavior is important in

helping companies plan and execute better business strategies (Khaniwale, 2015). Social

norms and situational factors often influence a buyer's final decision. (Khaniwale, 2015). Brands

play an important role in consumer buying behavior, conveying information about the product

and reassuring the consumer's buying decision (Marshall & Johnston, 2011). Consumer

behavior is also characterized by the actions that individuals take in buying and using

products or services, including the "mental and social processes that come before and after

these actions" (Kerin & Hartley, 2017, p. 123). Consumer behavior considers the many

reasons—personal, situational, psychological, and social—that people shop for products, buy

and use them, sometimes become loyal customers, and then dispose of them (UMGC, 2022).

Market Analysis

In order for ACME to decide if they should enter the Smart TV market, they need

understand the target markets and demand for smart TV. Smart TV is an Internet-enabled TV

set that includes free and paid streaming apps such as YouTube, Netflix, Amazon Prime and

Hulu and it also eliminates the need for additional devices such as Apple TV or Roku. Smart

TVs vary in quality, application preferences, and streaming networks, thereby adding additional

layers to consumer buying decision. ACME needs to tailor its strategies by discerning where,
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who, how, and for what reasons these devices are selling in the US, United Kingdom, and

Germany.

Demographics

For ACME to target the right consumers, the company must account for the demographic

and geographic locations of the potential consumers of smart TV customers. By figuring out

what zip codes their customers live in, a business might determine where to locate an

additional store. Gender, age, and stage of life are all demographic variables that influence

purchase decisions. Men and women need and buy different products (Ward & Thuhang,

2007). According to Stoll (2022), a key factor when considering television consumption in the

United States is how a consumer’s age affects their viewing habits and preferences. In a 2018

survey, 33 percent of adults between the ages of 55 and 64 years and 37 percent of those aged 65

or above cited viewing terrestrial TV as their favorite media activity (Stoll. J, 2022). Just seven

percent of consumers aged between 25 and 34 years old and one percent of respondents under

the age of 25 said the same, preferring to view movies or TV episodes online via streaming

platforms (Stoll. J, 2022).

Market Size

Smart TVs are quite popular in the United States and Europe. The number of households owning

such devices increased in the past decade and nowadays over half of the population in Europe

and the United States own a smart TV set (Laricchia, 2022a). In 2020, around 67 percent of the

United Kingdom households owned a Smart TV, (Laricchia, 2022a).

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According to Vailshery, L (2020), Americans are expected to spend $62 billion on smart home

related devices by the end of 2021 and this includes Smart TVs. As companies like Netflix and

Hulu dominate the binge-watching whatever-you-want-whenever-you-want with no commercials

tv movement, smart TV’s and TV plug ins are near a necessity (Vailshery, 2020). The number of

households owning a smart television device connected to the internet in Germany from 2014 to

2020. In 2020, roughly 17.2 million German households owned a connected smart TV, an

increase compared to the previous year at 15.12 million households (Koptyug, 2021). The size

and growth opportunity of each market will play a vital role in the decision-making process for

the three main markets: The US, United Kingdom, and Germany.

United States

Statistics shows the projected number of smart TV users in the United States from 2016

to 2022. The number of smart TV users is forecast to grow to 119 million by 2022, representing

about 58.3 percent of all connected TV users (Statista, 2022). In the US market, ACME appeals

to consumer needs, features required to satisfy those needs, and benefits. When the US

consumers purchase a smart TV, they search for qualities and features that add convenience,

accessibility to various media content and internet access based on a specific budget. According

to Hub Entertainment Research’s third annual Connected Home report, smart TVs are now in a

large majority of US TV homes, and account for over half of all TV sets (Advanced TV, 2021).

Ownership of a smart TV set is at 70 per cent of TV households in 2021, a notable milestone in

their adoption (Advanced TV, 2021). An overall 52 percent of all TV sets are now reported to be

smart TVs, an increase from 45 percent in 2020 (Advanced TV, 2021). This shows that US

consumers are rapidly the replacing of older, non-smart TVs with smart TVs.
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In the United States, families with kids or younger adults are more likely to own smart

TV sets and utilize the convenience features that enhance connectivity to social media and

internet access. According to Advance TV (2021), greater proportions of smart TV ownership

are found in homes with children under age 18 or in homes where the oldest person is under age

35 (61 percent). Streaming on TV has increased to 77 percent in US homes from 74 percent a

year ago and 56 percent homes say they stream using a smart TV at least once a month – up from

48 percent in 2020 (Advanced TV, 2021). David Tice, Hub Entertainment’s Senior Consultant

and co-author of the study stated the wider adoption of smart TVs and replacement of non-smart

TVs turns up the pressure on connected devices like streaming boxes, streaming sticks, and video

game consoles. (Advanced TV, 2021).

The pandemic has changed how people choose to purchase smart TVs. Prior to the

pandemic in 2019, 42 % of consumers planned to buy a new smart TV at the retail store, with

only 27 percent intended to purchase online (Advanced TV, 7 2021). In 2021, during the

pandemic 29% chose to purchase a smart TV at the retail store, with 43 % intended to buy

online (Advanced TV, 2021). Moreover, with the onset of the COVID-19 pandemic, smart TVs

grew in popularity, encouraging streaming services to enhance their interactive smart device

capability. Due to CDC’s restrictions on social distancing, purchases of most smart TV during

Black Friday and other public holidays declined. Consumers utilized the online sales and most

discounts on smart TV’s were offered by retailers and manufacturers online.

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United Kingdom

United Kingdom has also seen an increase in the smart TV market. In the United

Kingdom in 2014, only 11 percent of households owned a smart TV, whereas, in 2021, nearly 67

percent of households reported owning a smart TV (Laricchia, 2022b). In 2012, adoption was

relatively low with only 10 percent of the United Kingdom population owning a smart TV and

similarly low numbers can be found across many developed markets such as the US, Germany,

and the Nordics (Brilot, 2012). Despite initial smart TV's slow popularity, its capability to

eventually serve as the dominant all-in-one device was apparent. Smart TV's ability to stream a

variety of 8 web-based services "YouTube, MSN, Twitter, Skype, and Google, and the United

Kingdom launch of Netflix and YouView, and major sporting events, such as Euro 2012 and the

London Olympic Games" jump-started a need-based for smart TV (Brilot, 2012).

The total number of TV households subscribed to Sky decreased slightly over this period,

reaching 8.48 million households in the fourth quarter of 2019. In comparison, the number of

households who have YouView platforms increased to 1.86 million in 2019, up from 230

thousand households in 2010 (Stoll, 2021b). According to Bloomberg (2019), new consumer

research reveals increasing usage of multiple viewers in major European countries. Research

study conducted by Gracenote collected a snapshot of the United Kingdom, Germany, and

Sweden which shows how consumer behavior related to TV viewing has changed rapidly. The

study revealed that TV viewing has become a complicated undertaking for European audiences

who juggle multiple services to get all the video content they want and must access those

services across multiple devices (Bloomberg, 2019). Pay TV is currently the most popular

television source in the U.K. and Sweden with nearly two in three consumers in each market are
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using it. In Germany, however, the most popular source is free-to-air TV which accounts for the

vast majority of viewers at nearly eight in ten (Bloomberg, 2019).

Germany

In 2020, roughly 17.2 million German households owned a connected smart TV, an

increase compared to the previous year at 15.12 million households (Koptyug, 2021b).

According to Koptyug (2021b). Smart TVs are, in essence, a combination of a familiar television

with computer elements and this ensures viewers can watch video content on their smart TV

screens, as well as go online via the screen and download apps to easily access their streaming

service. Smart TVs still provide access to TV channels and they may also include additional

features such as web browsers and games, and allow viewing of content stored on another

device, such as a smartphone or a laptop, as long as the content and devices are compatible with

the smart TV(Koptyug, 2021b).

A lot more German households were adapting to smart TVs, with a growing share of

households recording ownership. According to Koptyup (2021b), 11 percent of homes in

Germany had an internet-enabled television set in 2013, in 2019 over 56 percent did. The

main reasons for purchasing a smart TV were due to image quality, screen size and value for

money (Koptyug, 2021b). In 2020, Smart TVs had a market share of roughly 89 percent, the

percentage of individuals who have access to a smart TV in their households in the US, United

Kingdom, Germany, Denmark, Sweden, Norway, and Finland is over 50 percent (Bloomberg,

2021).
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References
Advanced Television (2021). Smart TVs in Majority of US homes. Retrieved from:
https://advanced-television.com/2021/04/08/research-smart-tvs-in-majority-of-us-homes/

Bloomberg (2019). New Consumer Research Reveals Increasing Usage of Multiple TV Sources
by Major European Countries. Retrieved from:
https://www.bloomberg.com/press-releases/2019-05-15/new-consumer-research-reveals-
increasing-usage-of-multiple-tv-sources-by-viewers-in-major-european-countries

Koptyug, E. (2021a). Technology & Telecommunications: Consumer Electronics. Retrieved

from: https://www.statista.com/statistics/468660/connected-smart-tvs-number-of-
households-germany/

Koptyug, E. (2021b). Smart TVs in Germany - statistics & facts. Retrieved from:
https://www.statista.com/topics/6649/smart-tvs-in-germany/#dossierKeyfigures

Solomon, M. (2017). Learning Resources: Consumer behavior. Retrieved from:

https://leocontent.umgc.edu/content/umuc/tgs/mba/mba640/2212/learning-topic-list/consumer-
buying-behavior.html?ou=546517

Khaniwale, M. (2015). Learning Resources: Consumer behavior. Retrieved from:

https://leocontent.umgc.edu/content/umuc/tgs/mba/mba640/2212/learning-topic-list/
consumer-buying-behavior.html?ou=546517

Marshall, G. W., & Johnston, M. W. (2011). Learning Resources: Consumer behavior.

Retrieved from:
https://leocontent.umgc.edu/content/umuc/tgs/mba/mba640/2212/learning-topic-list/
consumer-buying-behavior.html?ou=546517

Kotler, P., & Keller, K. L. (2015). Learning Resources: Consumer behavior. Retrieved from:
https://leocontent.umgc.edu/content/umuc/tgs/mba/mba640/2212/learning-topic-list/
consumer-buying-behavior.html?ou=546517

UMGC (2022). Learning Resources: Consumer behavior: How People Make Buying Decisions.
Retrieved from:
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https://leocontent.umgc.edu/content/umuc/tgs/mba/mba640/2212/learning-resourcelist/
consumer-behaviorhowpeoplemakebuyingdecisions.html?ou=546517

Statista. (2021). Technology & Telecommunications. Retrieved April 11, 2022 from:
https://www.statista.com/statistics/687423/tv-connected-devices-time-spent/

Stoll, J. (2022a). Media: TV, Video, Film. Number of TV households in the US. Retrieved April
11, 2022 from:
https://www.statista.com/statistics/243789/number-of-tv-households-in-the-us/

Stoll, J. (2022b) Media: TV, Video, Film. Number of TV households in the UK by platform
https://www.statista.com/statistics/269949/number-of-tv-households-in-the-uk--by-
platform/

Laricchia, F. (2022a). Technology & Telecommunications: Smart & Connected TVs. Retrieved
from:https://www.statista.com/topics/4761/smart-and-connected-tvs/#dossierKeyfigures

Laricchia, F. (2022b). Smart TV Penetration in United Kingdom Household. Retrieved from:

https://www.statista.com/statistics/654074/smart-tv-penetration-in-uk-households/
#:~:text=Smart%20TVs%20%E2%80%93%20televisions%20that%20can,reported
%20owning%20a%20Smart%20TV

Vailshery, L. (2020). What Could IoT look like in Households 20 years from now? Retrieved
from: https://onequext.com/blog/what-could-iot-look-like-in-households-20-years-from-
now/