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Consumer Behavior

John C. Mowen
Michael S. Minor

Ten Concepts to Learn

PERMS
Product positioning
Product
differentiation
Elements of the
consumer
environment
Behavioral
economics

CB and marketing
research
CB and the marketing
mix
The bases of
segmentation
Behavioral
segmentaiton
Managerial
applications analysis

Application Areas of
Consumer Behavior:
Environmental Analysis
PERMS

Market Research
Segmentation of the Marketplace
Product Positioning and Product
Differentiation
Marketing-Mix Development

Product Positioning . . .
. . . is influencing how consumers
perceive a brands characteristics
relative to those of competitive
offerings

Goal is to influence demand by creating


a product with specific characteristics
(i.e. brand attributes) and a clear image
that differentiate it from competitors

Specific Positioning

Competitive Positioning

positioning a brand based creating linkages


between brand and key attributes and
benefits. E.g., acceleration of auto, reliability
of auto
positioning a brand in relation to competitors.
E.g., Suburban is larger than an Expedition

Psychological Positioning

positioning a brand based upon dominant


personality characteristic of target market.
E.g., We build excitement.

Product Differentiation . . .
. . . is the process of manipulating
the marketing mix so as to position
a product in a manner that allows
consumers to perceive meaningful
differences between a brand and
its competitors

Environmental
Analysis . . .
. . . is the
assessment of the
external forces
that act upon the
firm and its
customers, and
that create threats
and opportunities

The Natural
Environment . . .
. . . includes the types
of raw materials
available, pollution,
consumer fear of
contracting deadly
diseases, the expansion
of desert regions
around the globe, and
various weather
phenomena, such as
hurricanes or drought

Components of the External


Environment

Demographi
c

Technological

Political

Cultural

Economic
Natural

The Economic
Environment
Set
of factors involving monetary, natural, and

human resources that influence


firms/consumers.
Behavioral economics: study of economic
decisions made by individual consumers and the
behavioral determinants of those decisions.
3 Major Contributions of Behavioral Economists:

Originated and documented the idea that the


consumer sector of the economy can strongly
influence the course of the aggregate economy
Investigated what factors influence the decision of
families to buy or save
Developed a methodology for making predictions of
economic activities based upon consumer surveys

The Technological
Environment
Goal is to anticipate
what changes in
the technological
environment will
occur and how
these will influence
the lifestyle and
consumption
patterns of
consumers

MARKET RESEARCH . . .
. . . is applied consumer research
designed to provide management
with information on factors that
impact consumers acquisition,
consumption, and disposition of
goods, services, and ideas

Marketing-Mix Development .

. . . involves the development and


coordination of activities involving the:

Product

Pricing

Promotion

Distribution

Promotional Strategy

Advertising
Personal Selling
Sales Promotion
Applications
Public Relations

Price Changes

Predicting the likely impact of price


changes on consumers is an
important consumer behavior area.

How will consumers react when


companies raise or lower the price of a
product?
Principles of perception can be applied
to analyze if consumers will notice a
difference in price and if so, what effect
it has

Product Distribution . . .
. . . will be impacted
by understanding how
consumers make their
purchasing decisions.
**Example: low
involvement decision
(e.g., purchase soft
drink), must use
extensive distribution.

Market Segmentation . . .
. . . involves
subdividing the
market place into
distinct subsets of
customers having
similar needs and
wants, each of which
can be reached with
a different marketing
mix

Four Classifications of
Segmentation Variables:

Characteristics of the Person


Nature of the Situation in Which the
Product or Service May Be
Purchased
Geography
Culture and Subculture Adopted by
the Consumer

Characteristics of the
Person

Demographic Characteristics
Behavioral Segmentation:price
elasticity, benefits sought, usage
rate, brand loyalty
Benefit Segmentation
Psychographic and Personality
Characteristics

Demographics is . . .
. . . the study of population changes and
subcultural values of various demographic groups
based on such factors as age, sex, income,
education, ethnicity, and geography.
Examples of demographic variables:
age, sex, income, ethnicity, nationality, household
size, marital status, religion, education, occupation,

Consumer Situations . . .
. . . consist of the temporary
environmental factors that form the
context within which a consumer
activity occurs at a particular time and
place
Types of situations: social, physical,
task definition, time.

Geographic Segmentation

Can include region,


size of cities and
counties, census
blocks, population
density, and
climate
Geodemographics
is the combination
of geography and
demographics

Culture and Subculture

Culture is the way of life of the


people of a society

Subculture is a subdivision of a
national culture and is based on
some unifying characteristic, such
as social status or nationality

Segmenting Industrial
Markets

Different segmenting
variables are used to
classify companies into
segments including the
North American
Industry Classification
System NAICS).
Developed as part of
NAFTA in 1997.
20--2-digit codes.

Solving Managerial
Problems . .
. . . is a three-step process:

Gather information and identify the


problem/opportunity
Identify the relevant consumer
behavior concepts and how they
apply to the problem
Develop a managerial strategy by
identifying the managerial
implications of each consumer
concept.