Focus Consumer Behaviour and Consumer Research

Definition Consumer behaviour in relation to marketing Interdisciplinary nature of consumer behaviour Evolution of consumer behaviour A model of consumer behaviour
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What is consumer behaviour?

Activities people carry out in acquiring (searching and purchasing), consuming (using and evaluating) and disposing of products. Traditional focus of CB: why people buy

Present day focus of CB

Consumption analysis
A more encompassing field than CB

Why and how people buy products Why and how people use products Present day focus: use and satisfaction

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The meaning of consumption

Relationships a person might have with a product Consumption activities
Consuming as experience: pleasure Consuming as integration: solidarity Consuming as classification: association (fan) Consuming as play: identity merger

Development of the Marketing Concept

Production Concept Product Concept Selling Concept Marketing Concept
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The Production Concept

Assumes that consumers are interested primarily in product availability at low prices Marketing objectives:
Cheap, efficient production Intensive distribution Market expansion

The Product Concept

Assumes that consumers will buy the product that offers them the highest quality, the best performance, and the most features Marketing objectives:
Quality improvement Addition of features

Tendency towards Marketing Myopia

The Selling Concept

Assumes that consumers are unlikely to buy a product unless they are aggressively persuaded to do so Marketing objectives:
Sell, sell, sell

The Marketing Concept

Assumes that to be successful, a company must determine the needs and wants of specific target markets and deliver the desired satisfactions better than the competition Marketing objectives:
Make what you can sell Focus on buyers needs

Lack of concern for customer needs and satisfaction

Discussion Question
What two companies do you believe grasp and use the marketing concept? Why do you believe this?

The Marketing Concept

Implementing the Marketing Concept
Consumer Research Segmentation Targeting Positioning The process and tools used to study consumer behavior Two perspectives:
Positivist approach Interpretivist approach

The Marketing Concept

Implementing the Marketing Concept
Consumer Research Segmentation Targeting Positioning Process of dividing the market into subsets of consumers with common needs or characteristics

Discussion Question
What products that you regularly purchase are highly segmented? What are the different segments? Why is segmentation useful to the marketer for these products?

The Marketing Concept

Implementing the Marketing Concept
Consumer Research Segmentation Targeting Positioning The selection of one or more of the segments to pursue

The Marketing Concept

Implementing the Marketing Concept
Consumer Research Segmentation Targeting Positioning
Developing a distinct image for the product in the mind of the consumer Successful positioning includes: Communicating the benefits of the product Communicating a unique selling proposition

Evolution of CB
Who is the boss out here? Shifting from supply to demand Shifting from manufacturing to selling Shifting from selling to marketing

Evolution of Business Orientation and Consumer Studies

Manufacturing orientation

Selling orientation

Marketing orientation

Consumer orientation

How to make products

How to sell products

What to sell (product and selection)

What to make (creating consumer-driven products and organizations)

Behaviourism Marketing focus and marketing research Postmodernism Final power shift in the supply chain Internet for consumer buying and communication

Evolution of CB has seen a shift from manufacturing orientation (how to make products) to selling orientation to marketing to consumer orientation.
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Positivism Founding of Association of Consumer Research Motivation research

Consumer retention programmes

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Methods of studying consumers

Observation Interviews and surveys Experimentation Consumption research

The underlying principles of CB

The consumer is sovereign The consumer is global Consumers are different: Consumers are alike The consumer has rights

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Challenges for the future

Gathering and interpreting correctly the information that organizations need to meet the sophisticated needs of organizations Developing effective consumer research methods to keep abreast of the rapid changes in consumer trends and lifestyles Understanding CB from a broader perspective as an important part of life in its own right

Questions for Discussion

DQ1: If it is true that motivations and behaviour can be understood through research, is it also true that the marketer now has greater ability to influence the consumer than would have been the case in an earlier era? DQ2: Think of a product you recently bought and used. Using a consumption analysis approach, describe what product or packaging features could be improved based on an examination of how it is consumed.
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What does consumer orientation require?

Customer-centric organizations Marketing strategies for customer-centric organizations
Customer-centricity: a strategic commitment to focus every resource of the firm on serving and delighting profitable customers

Characteristics of customer-centric organizations

Shared vision and values Cross-functional integration System-wide simultaneous training Customer-based metrics

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Some concepts
Value
What consumers give up (time, money, or other resources) for a product and the benefits they receive

Market analysis
Consumer Company Environmental
PEST-NCR

Marketing strategy
Involves the allocation of resources to develop and sell products or services that consumers will perceive to provide more value than competitive products or services The process includes market analysis, market segmentation, brand strategy and implementation
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Market segmentation
Demographic Situational Psychographic Behavioural
4 Ps, 7Ps

Brand strategy
Marketing-mix strategies Brand marketing strategy
Brand equity
Functional and emotional elements

Brand promise, brand personality, brand protection

Seven Rs of the marketing mix

Research, rate, resources, retailing, reliability, reward, relationship
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Implementation
Customer retention and loyalty strategies Global marketing strategy Overcoming language problems Global branding

Questions for Discussion

DQ3: Why does market segmentation exist? Is the use of market segmentation strategies by organizations harmful or helpful to consumers and to society? DQ4: What are some of the most important changes in the consumer environment in India? How are these likely to impact marketing strategy? How would you expect them to differ in other nations?
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The Marketing Mix

Product Price Place Promotion

Successful Relationships

Customer Value Customer Satisfaction

Customer Retention

Successful Relationships
Value, Satisfaction, and Retention
Customer Value Customer Satisfaction Customer Retention
Defined as the ratio between the customers perceived benefits and the resources used to obtain those benefits Perceived value is relative and subjective Developing a value proposition is critical

Discussion Question
How does McDonalds create value for the consumer? How do they communicate this value?

Successful Relationships
Value, Satisfaction, and Retention
Customer Value Customer Satisfaction Customer Retention
The individual's perception of the performance of the product or service in relation to his or her expectations. Customers identified based on loyalty include loyalists, apostles, defectors, terrorists, hostages, and mercenaries

Successful Relationships
Value, Satisfaction, and Retention
Customer Value Customer Satisfaction Customer Retention
The objective of providing value is to retain highly satisfied customers. Loyal customers are key They buy more products They are less price sensitive They pay less attention to competitors advertising Servicing them is cheaper They spread positive word of mouth

Traditional Marketing Concept Vs. Value and Retention Focused Marketing Table 1-2
Traditional Marketing Concept
Make only what you can sell instead of trying to sell what you make

Consumer Behavior Is Interdisciplinary

Psychology Sociology Social psychology Anthropology Economics

Value and Retention Focused Marketing

Use technology that enables customers to customize what you make

Do not focus on the product; focus on Focus on the products the need that it satisfies perceived value, as well as the need that it satisfies Market products and services that match customers needs better than competitors offerings Utilize an understanding of customer needs to develop offerings that customers perceive as more valuable than competitors offerings

A Simplified Model of Consumer Decision Making Figure 1-1

Ethical issues
Conflict Business ethics: Rules of conduct Do marketers manipulate consumers?
Do marketers create artificial needs? Are advertising and marketing necessary? Do marketers promise miracles?

Public policy and consumerism

Consumer activism Culture jamming

Consumerism and consumer research

Green marketing Social marketing
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The dark side of consumer behaviour

Consumer terrorism Addictive consumption Compulsive consumption Consumed consumers Illegal activities
Consumer theft Anticonsumption
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