Marketing Strategy 2008

Consumer Behaviour
Seminar 1
Introduction
Chapter 1 and 2

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Studying consumer behaviour:

• Analysing behaviour and everything

that influences behaviour?
•Making the complexities possible to
grasp by taking one step at a time!
• But still using a holistic view!

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• Looking at consumers from different
perspectives: as a marketeer, as a
distributor, from a shop perspective,
from a customer perspective and from
the regulator/government perspective!
• The goal is to become better thinkers
concerning consumers and customers!

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Marketing and Your Life Plan!

• Studies now, but what happens next?

• Work on your ”Life Plan”!

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 Is Marketing difficult?
• For one sucessful product you need
around 80 ideas to test and you need to
launch 2 products.
• Yes, it is difficult and costly!
• Why is it so difficult and can we do
anything about it?

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 The Human Side of Marketing
• Knowing what goes on in
the consumers mind is very
difficult to know and to
forecast consumer
behaviour is even harder!
• Today we satisfy most of our
primary needs. Our
consumption is of higher
needs, i e concerns more
complex needs.
• We can not study humans in
the same manner that we
study machines or animals.
Surveys or experiments! • Maslow 1943

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 Meta needs – What is self-actualization?
Truth, rather than dishonesty.
Goodness, rather than evil.
Beauty, not ugliness or vulgarity.
Unity, wholeness, and transcendence of opposites, not
arbitrariness or forced choices.
Aliveness, not deadness or the mechanization of life.
Uniqueness, not bland uniformity.
Perfection and necessity, not sloppiness, inconsistency, or
accident.
Completion, rather than incompleteness.
Justice and order, not injustice and lawlessness.
Simplicity, not unnecessary complexity.
Richness, not environmental impoverishment.
Effortlessness, not strain.
Playfulness, not grim, humorless, drudgery.
Self-sufficiency, not dependency.
Meaningfulness, rather than senselessness. 7
 Interactions in Marketing
• Many things influences behaviour. There
are many marketing parameters, 4 Ps etc.
• Y=f(x1,x2,x3…………………….xn)
• Some you control and some you don’t.
• Between these parameters there are
complicated interactions.
• To isolate net effects of one mix variable is
extremely difficult!
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 Chapter 1
Introduction to Consumer
Behaviour and Marketing
Strategy

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Background in the New Marketing
Concept and Market Orientation
What are the foundations of NMC?
• Satisfying needs rather than selling
existing products
• Integrated model where a number of
m marketing mix-variables are
optimimized

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Reasons:
• Changes in competition, from
sellers to buyers market
• We have gone from satisfying
primary needs to satisfying
more complex needs
• Changes in the IT systems
• Better quality in marketing
research and developments in
consumer behaviour and
marketing research
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The history of consumer
behaviour as a science
• Up to 1940: Sociological research and
practical studies of selling processes
•1940-1964: Motivation research

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 Motivation research

Ernst Dichter, Motivation Research Inc.

• The Cake Mix study 1950
• Depth interviews and antropological
studies

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 Motivation research using
quantitative research methods
• Nescafé – product development – testing
– test launching – problems – new tests –
new launch – more problems
• Mason Haire jr. (1950)
– 100 women i two matching groups. Questions
about shopping lists for groceries.
– (……., Nescafé or Maxwell House,….)

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 Nescafé study 1950 and 1970
Nescafé 1950 1970
– Lazy wife 48% 18%
– Thrifty 4% 36%
– Spendthrift 12% 23%
– Bad wife 16% 18%
Maxwell House
– Lazy wife 4% 10%
– Thrifty 16% 55%
– Spendthrift 0% 5%
– Bad wife 0% 5%
» Haire jr( 1950) Webster jr (1974)

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The history of consumer behaviour
as a science

• Up to 1940: Sociological research and practical

studies of selling processes
•1940-1964: Motivation research
•1960s: One-factor models

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 One-factor models
• The study of individual phsychologicl and
sociological factors and the relationship to
buying or not buying a product
• Example – The car industry
– Who reads ads for cars?
– Cognitive dissonance!

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The history of consumer behaviour
as a science

• Up to 1940: Sociological research and practical

studies of selling processes
•1940-1964: Motivation research
•1960s: One-factor models
•1960s and 70s: The rise and fall of the
comprehensive theorethical models

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Grand theories – Howard & Sheth

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 Test of Grand Theories
• Results show low R2 values!
• Why?
– Difficulties in measurement, lack of validity
and reliability
– Difficulty in specifying the model
relationships
– Feedback loops vs causal relationships
– Real consumer behaviour and quantitative
characteristics?
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The history of consumer behaviour
as a science
• Up to 1940: Sociological research and practical
studies of selling processes
•1940-1964: Motivation research
•1960s: One-factor models
•1960s and 70s: The rise and fall of the
comprehensive theorethical models
•1980-: Different parallell research traditions
• Attitude research
• Qulitative research
• Use of multivariate statistical models on
quantitativ data
• Measurement of customer satisfaction
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 Multivariate techniques
• From bivariate to multivariate analysis
– Univariate analyses
– Bivariate analyses
– Multivariate analyses
• Using mixtures of scales in analyses
• Finding patterns through the use of
factor analysis

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 Bivariate method
• American Survey
Not-married Married

Eating candy regularly 75% 63%

Sample 999 2010

Hypoteses? Marital status Candy

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 Bivariate method

Under 25 Over 25

Eating candy regularly 80% 58%

Sample 1302 1707

Hypotheses?
Age Candy

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 Multivariate method
Not-m Married Not-m Married

-25 -25 25 + 25 +

Eating candy 79% 81% 60% 58%

regularly

Sample 799 503 200 1507

Hypotheses? Martial status Candy

Age
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 The Candy Study
• Candy Consumtion and Marital Status
– Singles eat more candy in their loneliness?!
– If you eat too much candy you will have difficulties in
getting a partner?!
– Or was it the age factor that explained to whole
thing?!
– Still the facts are that singles eat more candy!
– Cause-effect analyses are difficult!!!
– If you cannot or do not want to carry out experiments
– You have to make complex analyses of interactions
and reciprocal relationships!

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 Links to methodology in marketing
• Marketing research:
– 20% experiments (good for causal studies)
– 80% surveys (not good for causal studies)

• The usual and sometimes a bit boring type of

marketing research
– Survey
– Descriptive studie,How many? When? Where? etc
– Cross-section study
– Statistical study with a sample
– Standardised questionnarie with ”X in the box”
– Crosstabs and percentages
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Factor analysis and patterns
1. What do you think about when I say ”studying at a university”?
(1=do not think at all to 7=think very much)
• New friends
• Student life
• Your own flat
• Freedom
• Important for the future
• Higher wages
• A must to get a job
• Time consuming
• Difficult
• High level of stress
• Not much money
• Taking loans to pay back
• Self-actualisation
• To gain experiences
• To study what you are interested in

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 Factor loadings
1 2 3 4
Flat ,764
Student life ,740
Friends ,708
Freedom ,675
Future ,761
Wages ,714
A job ,615
High level of stress ,833
Difficult ,774
Time consuming ,752
Debts ,681
No money ,661
Study interesting things ,785
Self-actualisation ,777
Experience ,720 29
From 15 variables to 4 factors
• Factor 1: Studies are stressful, the demands
are high, you are poor and will have to pay
your debts later on!
• Factor 2: Studies will give you freedom, in
your own flat and with a student life together
with friends!
• Factor 3: You can build your experience and
fullfil your interests!
• Factor 4: Studies can be goal oriented
towards a job and a good salary!.

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Consumer Behaviour Definition
Peter, Olsen & Grunert model

• Consumer behaviour is dynamic

• Consumer behaviour is built on
interactions
• Consumer behaviour consists of
exchange relationships

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1. Consumer behaviour is dynamic

Individual consumers, consumer groups and

among these housholds and society at large
are changing at an increasing speed.
Generalisations about consumer behaviour is
to a very large extent limited in time and
space. Marketing strategies must always be
adjusted to new circumstances!

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2. Consumer behaviour is built on
interactions

To understand consumers and to develop

efficient marketing strategies we must
understand what consumers think (coginition),
how they feel (affective processes), what they
do (behaviour) and what happends in the
environment and in the market that influence
and is influences by what the consumer thinks,
feels and does.

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3. Consumer behaviour consists of
exchange relationships

As the market concept has been developed

more and more various types of exchanges
have been studied. Exchange of money, goods,
services, political thinking, religious thoughts,
art etc etc…

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Consumer Issues and Marketing
Strategy
Many links! Many aspects on
consumer behaviour influences
marketing strategy! Not everything can
be studied. The choice of questions is
extremely important for the marketer.

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 The Relationship between marketing
strategy and Consumer Behaviour?

Consumer Behaviour
•Demographic and socio
Marketing Strategy economic variables
•Segmentation •Personality
•Expectations
•Product
•Awareness
•Promotion •Knowledge
•Pricing •Attitudes
•Motivation
•Distribution
•Intentions
•Behaviour 36
 Chapter 2
A Framework for
Consumer Analysis

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 The basic model for analysing
consumer behaviour

Many theories, models and concepts are

used to understand consumer behavour.
An number of sciences are useds as e g
micro economics, sociology, social
psychology, psychology, economic
geography, antropopogy etc etc.
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The Wheel of Consumer Analysis consists of:

1. Affect and cognition

a. Affect as e g:
•Strong feelings like love, annoyance and
hate
•Less strong feelings lika satisfaction and
frustration
•General feelings like being relaxed or bored
•Feelings about products and services, e g ”I
like product X!”

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The Wheel of Consumer Behavior

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b. Cognition are mental processes and
knowledge structures we use when we as
individuals react on changes in our
environment. Cognitive processes take the
form of:
•Knowledges we base on experience and
that we store in our memory
•Psychological processes:
•When we become aware of and understand our
environment
•When we remember things
•When we evaluate alternative courses of action
•When we make decisions about where, when and how
we buy products and services.

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The Wheel of Consumer Behavior

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2. Behaviour

Consumers’ overt actions that we can

observe directly

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The Wheel of Consumer Behavior

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3. Consumer environment

•The environment is the complex envionment of

physical and social stimuli around the
consumer.
•This consists of things, places and people.
•The marketer can to varying degrees influence
some of these stimuli, e g proucts, pacaging,
services, advertising, personal selling, pricing,
store layout etc.
•Other stimuli can be studied and forecasted,
e g competiors actions.
•Finally some facors in the environment are
totally unpredictable. 45
Marketing strategy

Marketing strategy is part of the environment

of the consumer. Our studies relate this
strategy to the other basic factors in the
fundamental model.

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The Wheel of Consumer Behavior

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Relationships between factors in
the model
One-way cause-effect relationships or
two-way interactions of ”reciprocal
determinism”?

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One-way couse-effect
relationship:
Y = f ( X….)

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 ”Reciprocal determinism”
Interactive systems

Joint interaction decides what will happen!

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Basic conclusions:
•All analyses of consumer behaviour must
take into account all three basic factors in
the model
•Start with the factor that seem to be the
most obvious or the most important. From
that point of view work your way around the
other factor in the model.
•Analyses must be dynamic. Consumer
behaviour changes in time and space
eternally! 51
The Wheel of Consumer Behavior

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The dynamic duo of consumer analysis and
marketing strategy

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 Further conclusions
• Consumer analysis does not end with
the choice of market strategy.
• The analysis does not end when the
strategy is implemented.
• Consumer analysis, choice of strategy,
implementation and ongoing evaluation
etc is the key to efficient marketing!

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 Summing up
• The link between general marketing
thought and consumer behaviour
• The basic model of consumer behaviour
• Different perspectives and research
methods

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Consumer Research
and the Project

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An important problem in analysing
consumer behaviour
• Aggregating from individual consumer to
group or market
– Models of segmentation vs looking at the
market as one aggregation
– Help from multivariate analyses to group, e g
factor analysis
– Never disregard this problem!

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 Comparisons!

• Try to make comparisons

– Between customer segments
– Between products
– Between competitors

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Useful concepts and
models for the project

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