Chapter 1

The foundations of consumer behaviour

Schiffman, Bednall, OCass, Paladino, Ward & Kanuk:

Consumer Behaviour 4e 2007 Pearson Education Australia

Chapter Objectives
To define Consumer Behaviour (CB) To identify the two broad types of consumers To outline the Positivist and Interpretivist approaches to the study of Consumer Behaviour To understand the interdisciplinary nature of CB To review the simplified model of CB To outline why the study of CB is important To review the Marketing Concepts evolution To review traditional marketing concepts
Schiffman, Bednall, OCass, Paladino, Ward & Kanuk: Consumer Behaviour 4e 2007 Pearson Education Australia

What is Consumer Behaviour?

Consumer behaviour is defined as: The behaviour that consumers undertake in seeking, purchasing, using, evaluating, and disposing of products and services that they expect will satisfy their personal needs

Schiffman, Bednall, OCass, Paladino, Ward & Kanuk: Consumer Behaviour 4e 2007 Pearson Education Australia

More About Consumer Behaviour

The consumers goal is to obtain goods and services that meet their needs and wants People engage in purchase activities for many purposes other than consumption

Consumers face varying problems associated with acquiring products to satisfy these needs and wants

Consumers make specific types of decisions in order to obtain desired goods and services

Schiffman, Bednall, OCass, Paladino, Ward & Kanuk: Consumer Behaviour 4e 2007 Pearson Education Australia

For example, a research study may ask consumers...

Schiffman, Bednall, OCass, Paladino, Ward & Kanuk: Consumer Behaviour 4e 2007 Pearson Education Australia

Two Broad Types of Consumers

PERSONAL CONSUMERS
The personal consumer buys goods and services for: His or her own use Use by the whole household, or a household member, or A gift for someone else In all contexts, the products are bought for final use by individuals (end-users)

ORGANISATIONAL CONSUMERS
Organisational consumer includes: Profit businesses Not-for-profit businesses Public sector agencies and Institutions (e.g. schools, churches) In all cases, they buy products to help run their organisations

Schiffman, Bednall, OCass, Paladino, Ward & Kanuk: Consumer Behaviour 4e 2007 Pearson Education Australia

Consumers as Buyers and Users

The marketplace activities of individuals entail three functions:
The consumer (user)
Who consumes or uses the product

The buyer
Who undertakes activities to procure or obtain the product

The payer
Who provides the money (or other value) to obtain the product Marketers

must decide who to target their marketing at: the buyer, the payer, or the user?
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Schiffman, Bednall, OCass, Paladino, Ward & Kanuk: Consumer Behaviour 4e 2007 Pearson Education Australia

Consumer Research: Two Perspectives

POSITIVIST APPROACH
Tends to be objective and empirical Seeks causes for behaviour Conduct studies that can be generalised to larger populations

INTERPRETIVIST METHODOLOGY
More qualitative Based on smaller samples View each consumption situation as unique and non-predictive Look for common patterns across consumption situations

Schiffman, Bednall, OCass, Paladino, Ward & Kanuk: Consumer Behaviour 4e 2007 Pearson Education Australia

The Interdisciplinary Nature of Consumer Behaviour Research

Psychology
The study of the individual

Economics
An important component of economics is the study of consumers

Social Psychology
How individuals operate in groups

Inputs to the study of consumer behaviour

Cultural Anthropology
The study of humans in society
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Sociology
The study of groups

Schiffman, Bednall, OCass, Paladino, Ward & Kanuk: Consumer Behaviour 4e 2007 Pearson Education Australia

Consumer Behaviour as an Interdisciplinary Science

Psychology:

The study of the individual, including motivation, perception, attitudes, personality and learning styles The study of groups, group behaviour and the actions of individuals within groups The combination of sociology and psychology The study of human beings in a society, which traces the development of core beliefs, values and customs How consumers make decisions with the goal of maximising satisfaction
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Sociology: Social Psychology: Cultural Anthropology: Economics:

Schiffman, Bednall, OCass, Paladino, Ward & Kanuk: Consumer Behaviour 4e 2007 Pearson Education Australia

Figure 1.8

An ad focusing upon the key benefits sought by consumers

Schiffman, Bednall, OCass, Paladino, Ward & Kanuk: Consumer Behaviour 4e 2007 Pearson Education Australia

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Schiffman, Bednall, OCass, Paladino, Ward & Kanuk: Consumer Behaviour 4e 2007 Pearson Education Australia

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Key Model Components

Input Process Output
Input = Various firms marketing activities + EXTERNAL social/culture influences Decision steps + INTERNAL psychological factors (modified with experience) Trial and repeat purchases and post-purchase evaluation

Process =

Output =

Schiffman, Bednall, OCass, Paladino, Ward & Kanuk: Consumer Behaviour 4e 2007 Pearson Education Australia

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Figure 1.10: Subaru Liberty RX advertisement showing detailed information on features and price

Schiffman, Bednall, OCass, Paladino, Ward & Kanuk: Consumer Behaviour 4e 2007 Pearson Education Australia

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Why Study Consumer Behaviour?

Reasons to better understand consumers

Schiffman, Bednall, OCass, Paladino, Ward & Kanuk: Consumer Behaviour 4e 2007 Pearson Education Australia

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Development of the Marketing Concept

Schiffman, Bednall, OCass, Paladino, Ward & Kanuk: Consumer Behaviour 4e 2007 Pearson Education Australia

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Overview of Philosophical Approaches

Production concept

Has the marketing objective of cheap, efficient production and intensive distribution

Product concept

Based on the assumption that consumers will buy the product that offers them the highest quality, the best performance, and the most features

Selling concept

Focus on aggressive promotion and selling to persuade consumers to buy products

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Schiffman, Bednall, OCass, Paladino, Ward & Kanuk: Consumer Behaviour 4e 2007 Pearson Education Australia

The Marketing Concept

Meet the identified needs of the target markets, better than competition

Determine specific target markets

Understand their needs and wants

Note: Consumer behaviour helps to: Segment the market Identify unsatisfied needs Understand needs Effectively meet those needs
Schiffman, Bednall, OCass, Paladino, Ward & Kanuk: Consumer Behaviour 4e 2007 Pearson Education Australia

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The Societal Marketing Concept

A reassessment of the traditional marketing concept where marketers also adhere to principles of social responsibility in the marketing of their goods and services.
Needs of the target market Improvement of society overall The goals of the firm

Firms following this concept look for an effective balance

Schiffman, Bednall, OCass, Paladino, Ward & Kanuk: Consumer Behaviour 4e 2007 Pearson Education Australia

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Market Segmentation
Market segmentation is the process of dividing a market into subsets of consumers with common needs or characteristics

A key component of the marketing concept is the identification of common market needs and the creation of segments

Schiffman, Bednall, OCass, Paladino, Ward & Kanuk: Consumer Behaviour 4e 2007 Pearson Education Australia

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Positioning
Positioning is developing a unique image for the product or service in the mind of the consumer an image that will differentiate the offering from competing ones Principle Two
Effective positioning must communicate a unique selling proposition

Principle One
The products benefits are communicated, not its features

Schiffman, Bednall, OCass, Paladino, Ward & Kanuk: Consumer Behaviour 4e 2007 Pearson Education Australia

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The Marketing Mix

PRODUCT/SERVICE Features Designs Brands Packaging Augmentation PROMOTION Advertising Sales promotion Public relations Sales efforts

PRICE List price Discounts Payment methods

PLACE Distribution via stores and nonstore outlets

Schiffman, Bednall, OCass, Paladino, Ward & Kanuk: Consumer Behaviour 4e 2007 Pearson Education Australia

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Providing Customer Value

There is a trend in marketing to focus on improving value to consumers Note the reference to value in the American Marketing Associations definition of marketing:
Marketing is an organisational function and a set of processes for creating, communicating and delivering value to customers and for managing customer relationships in ways that benefit the organisation and its stakeholders
Schiffman, Bednall, OCass, Paladino, Ward & Kanuk: Consumer Behaviour 4e 2007 Pearson Education Australia

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What is customer value?

The customers perceived benefits they receive The customers resources (money, time, effort) used to obtain those benefits

In other words: what they get versus what they give

Schiffman, Bednall, OCass, Paladino, Ward & Kanuk: Consumer Behaviour 4e 2007 Pearson Education Australia

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Customer Satisfaction
The consumers perception of performance of the product/service As compared to the consumers expectations

If exceeded:

If equalled:

If not met:

Very satisfied, delighted

Satisfied

Dissatisfied
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Schiffman, Bednall, OCass, Paladino, Ward & Kanuk: Consumer Behaviour 4e 2007 Pearson Education Australia

Benefits of Customer Retention

Buy more products Are cheaper to service

Are less price sensitive

Loyal customers
Spread positive word-of-mouth Pay less attention to competitor's advertising

Schiffman, Bednall, OCass, Paladino, Ward & Kanuk: Consumer Behaviour 4e 2007 Pearson Education Australia

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Traditional Marketing versus Value/Retention Marketing

Traditional Marketing Concept
Focus on needs, not the product itself Research consumer needs Target large market segments Use one-way promotions Base budgets on the no. of customers targeted

Value and Retentionfocused Marketing

Focus on the products perceived value Determine profits associated with needs Develop one-to-one promotional messages Use interactive promotion Base budgets on the customers lifetime value
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Schiffman, Bednall, OCass, Paladino, Ward & Kanuk: Consumer Behaviour 4e 2007 Pearson Education Australia

Summary
The definition of Consumer Behaviour (CB) The two broad types of consumers The positivistic and interpretive approaches The interdisciplinary nature of CB The simplified model of CB Why the study of CB is important A review of the Marketing Concepts evolution A review traditional marketing concepts

Schiffman, Bednall, OCass, Paladino, Ward & Kanuk: Consumer Behaviour 4e 2007 Pearson Education Australia

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