Studying Consumer Behavior

Defining Consumer behavior

Definition

Consumer behavior is defined as

The decision process and physical activity individuals

engage in when evaluating, acquiring, using or disposing of goods and services. Difference Between Customers and Consumers Customers The term customer is typically used to refer to someone who regularly purchases from a particular store or company.

Defining Consumer behavior

Consumer Consumers are the potential purchasers of

products and services offered for sale. The individual Buyer The most commonly thought of consumer situation is that of an individual making a purchase with little or no influence from others. Consumer behavior Roles Initiator
The individual who determines that some need or want is not being

met and authorizes a purchase to rectify the situation.

Defining Consumer behavior

Influencer A person who by some intentional or un intentional

word or action influences the purchase decision, and/or the use of the product or service. Buyer The individual who actually makes the purchase transaction User The person most directly involved in the consumption or use of the purchase.

Defining Consumer behavior

For example A wife (initiator and influencer) may ask her

husband (buyer) to pick up a box of cereal on his shopping trip because their child (user) said she wanted it. The Decision Process The way in which our definition characterizes also deserves special attention. Consumer behavior is seen to involve a mental decision process as well as physical activity. A Subset Of Human Behavior Viewing consumer behavior in such a broad context suggests it is actually a subset of human behavior. The fact that consumer behavior is a subset of human behavior is to our advantage.

Defining Consumer behavior

Several disciplines collectively referred to as the

behavioral sciences have studied human behavior for sometime, and we can draw upon their contribution for understanding consumer behavior. The behavioral science disciplines that have most contributed to our understanding of consumer are Psychology Study of the behavior and mental processes of individuals. Sociology Study of the collective behavior of people in groups

Defining Consumer behavior

Social psychology

Study of how individuals influence and are influenced

by groups. Economics Study of peoples production, exchange and consumption of goods and services Anthropology Study of people in relation to their culture.

Why Study Consumer Behavior

Understanding the reasons for studying a discipline enables

one to better appreciate its contribution Significance for Daily Lives In a general sense, the most important reason for studying consumer behavior is the significant role it plays in our lives. Much of our time is spent directly in the marketplace, shopping or engaging in other activities. A large amount of additional time spent thinking about products and services talking to friends about them and seeing or hearing advertisements about them.

Why Study Consumer Behavior

In addition the goods we purchase and the manner

in which we use them significantly influence how we live our daily lives. These general concerns alone are enough to justify our study. Many seek to understand the behavior of consumers for what are thought to be more immediate and tangible reasons.

Why Study Consumer Behavior

Application To decision Making

Consumers are often studied because certain

decisions are significantly affected by their behavior or expected actions. Consumer behavior is said to be an applied discipline. Such applications can exist at two different levels of analysis.
Micro Perspective
Seek application of this knowledge to problems faced

by the individual firm or organization.

Why Study Consumer Behavior

Societal perspective Applied knowledge of consumers to aggregate-level problems

faced by large groups or by society as a whole.

Micro Perspective The micro perspectives involves understanding consumers for the

purpose of helping a firm or organization accomplish its objectives. Advertising managers, product designers and many others in profit-oriented businesses are interested in understanding consumers in order to be more effective at their tasks.

Why Study Consumer Behavior

Societal Perspective
On the macro or aggregate level consumers

collectively influence economic and social conditions within an entire society In the market system based on individual choice, consumers strongly influence
What will be produced. For whom it will be produced. What resources will be used to produce it.

Why Study Consumer Behavior

The collective behavior of consumers has a

significant influence on the quality and level of our standard of living. Understanding consumer behavior from a macro perspective can provide insight in to aggregate economic level and social trends and can perhaps even predict such trends. In addition understanding may suggest way to increase the efficiency of the market system and improve the well being of people in society.

Applying Consumer Behavior knowledge

Consumer Behavior And Marketing Management

Effective business managers realize the importance

of marketing to the success of their firm. Marketing may be defined as The process of planning and executing the conception, pricing, promotion and distribution of ideas, goods and services to create exchanges that satisfy individual and organizational objectives. The definition encompasses services and ideas as well as products.

Applying Consumer Behavior knowledge

The understanding of consumer behavior is essential to the

long run success of any marketing program. It is seen as a corner stone of the marketing concept. The essence of the marketing concept is captured in three interrelated orientation.
Consumers wants and needs When the focus is on identifying and satisfying the wants and

needs of consumers the intention of the firm is not seen as merely providing goods and services, instead want and need satisfaction is viewed as a purpose and providing products and services is t he means to achieve the end.

Applying Consumer Behavior knowledge

Company Objectives Consumers wants and needs are numerous A firm that concentrates on satisfying a small proportion of all

desires will most effectively utilize its resources. Company objectives and any of the firms special advantages are used as criteria to select the specific wants and needs to be addressed. Integrated Strategy An integrated effort is most effective in achieving firms objective through consumer satisfaction. For maximum impact this requires that marketing efforts be closely coordinated and compatible with each other and with other activities of the firm.

Applying Consumer Behavior knowledge

Several major activities can be undertaken by an

organization that is marketing oriented These include

Market opportunity analysis Target market selection

Marketing mix determination

They include decisions on the proper combination of

marketing variables to offer consumers

Applying Consumer Behavior knowledge

Market Opportunity Analysis
This activity involves examining trends and conditions

in the market place to identify consumer needs and wants that are not being fully satisfied. The analysis begins with a study of general market trends such as consumers lifestyles and income levels which may suggest unsatisfied wants and needs. More specific examination involves assessing any unique abilities the company might have in satisfying identified consumer desires.

Applying Consumer Behavior knowledge

Target Market Selection The process of reviewing market opportunities often results in

identifying distinct groupings of consumers who have unique wants and needs. This can result in a decision to approach each market segment with a unique marketing offering. Marketer may decide to concentrate company efforts on serving only one or a few identified target markets. An excellent example of this occurred in the bath soap market. By segmenting consumers according to their lifestyles patterns and personalities.

Applying Consumer Behavior knowledge

Marketing Mix Determination
The stage involves developing and implementing a strategy for

delivering an effective combination of want-satisfying features to consumers with in target markets. A series of decision are made on four major ingredients frequently referred to as the marketing mix variables Product Price Place Promotion

Applying Consumer Behavior knowledge

Product The nature of the physical product and service features are of

concern here Among decisions that are influenced by consumer behavior are: What size, shape and features should the product have? How should it be packaged? What aspects of service are most important to consumers? What types of warranties and service programs should be provided? What types of accessories and associated products should be offered?

Applying Consumer Behavior knowledge

Price Marketers must make decisions regarding the price for the

companys products or services and any modification those prices. These decisions will determine the amount of revenues the firm will generate. A few of the factors involving consumer behavior are How price-aware are consumers in the relevant product category? How sensitive are consumers to price differences among brands? How large a price reduction is needed to encourage purchases during new product introductions and sales promotions? What size discounts should be given to those who pay with cash?

Applying Consumer Behavior knowledge

Place The place variable involves consideration of where and how to

offer products and services for sale. It is also concerned with the mechanism for transferring goods and their ownership to consumers. Decisions influenced by consumer behavior include What type of retail outlet should sell the firms offering? Where should they be located and how many should there be? What arrangements are needed to distribute products to retailers To what extent is it necessary for the company to own or maintain tight control over activities of firms in the channel of distribution? What image and clientele should the retailer seek to cultivate?

Applying Consumer Behavior knowledge

Promotion Of concern here are the goals and methods of communicating

aspects of the firm and its offerings to target consumers. Consumer related decisions include: What methods of promotion are the best for each situation? What are the most effective means for gaining consumer attention? What methods best convey the intended message? How often should a given advertisement be repeated?

Studying Consumer Behavior

Modeling Behavior

The study of consumer behavior can also be quite

complex, because of the many variables involved and their tendency to interact with and influence each other. Models can help organize our thinking about consumer in to a coherent whole by identifying relevant variables, describing their basic characteristics and specifying how the variables relate to each other.

Studying Consumer Behavior

Consumer Behavior model is an organized picture of the

factors that have been identified as the most important general influences on consumer behavior. It is made up of three major sections External Environmental factors The external environment depicted in the outer circle is made up of six specific influences. The six specific influences are Culture Subculture Social class Social group Family Personal influences

Studying Consumer Behavior

Individual determinant These variables influence how the consumer proceed

through a decision process regarding products and services. Environmental stimuli do not directly influence consumers Stimuli are modified by internal influences such as Learning Personality Attitudes Information processing Motives

Studying Consumer Behavior

The Decision Process

Problem Recognition
Information Search and evaluation Purchase process

Post purchasing behavior