Consumer Behaviour- An Introduction

What is Consumer Behavior?

The study of individuals, groups, or organizations and the processes they use to select, secure, use, and dispose of products, services, experiences, or ideas to satisfy needs and the impacts that these processes have on the consumer and society.

Consumer Behavior Defined

The behavior that consumers display in searching for, purchasing, using, evaluating, and disposing of products and services that they expect will satisfy their needs.

Consumer Behaviour reflects the totality of consumer decisions with respect to the acquisition, consumption and disposition of goods, services, time and ideas by decision-making units over time Hoyer & MacInnis

Why study consumer behavior?

Consumer behavior theory provides the manager with the proper questions to ask Marketing practice designed to influence consumer behavior influences the firm, the individual, and society All marketing decisions and regulations are based on assumptions about consumer behavior

Consumer Behavior Is Interdisciplinary

Psychology Sociology Social psychology Anthropology Economics

Marketing Strategy & Consumer Behavior

What is Customer Value? The difference between all the benefits derived from a total product and all the costs of acquiring those benefits.

What is required of a firm to provide superior customer value? It must do a better job of anticipating and reacting to customer needs than the competition does.

What role does consumer behavior play in creating superior customer value? An understanding of consumer behavior is the basis for marketing strategy formulation, and the consumers reaction to this marketing strategy ultimately determines the firms success or failure.

Marketing Strategy & Consumer Behavior

Market Analysis Components

The Consumers The Company The Competitors The Conditions

Market Segmentation

Market Segment: a portion of a larger market whose needs differ somewhat from the larger market. Four steps to segmentation:

Identify product-related need sets Group customers with similar need sets Describe each group Select an attractive segment(s) to serve

Market Segmentation

What is market segmentation? Market segmentation involves aggregating prospective buyers into groups that: 1. have common needs 2. will respond similarly to marketing actions Why segment the market? Market segmentation links market needs to an organizations marketing programs. When does an organization segment the market? When the potential increase in profits as a result of segmenting outweigh the costs of segmenting.

Market Segment Attractiveness

Marketing Strategy

How will we provide superior customer value to our target market? Marketing Mix

The Product Communications Price Distribution Service

Outcomes

Firm:

Product positioning Sales Customer Satisfaction Need Satisfaction Avoid Injurious Consumption Economic Physical Environment Social Welfare

Individual:

Society:

Creating Satisfied Customers

Consumer Behavior is Product Person Situation Specific

Personal Characteristics

Product Characteristics

Consumer Behavior

Marketing Strategy

Consumption Situation

Consumer Behaviour
Micro Perspective 2. Societal Perspective ______________________________ 1. Positivism 2. Interpretivism
1.

Positivism and Interpretivism

Positivism Purpose Prediction of consumer actions Quantitative research Rationality: Consumers make decisions after weighing alternatives; Causes & effects of behaviour can be identified & isolated; Marketers can influence behaviuor; A single reality exists; Findings can be generalized Interpretivism Understanding consumption practices Qualitative research There is no single objective truth; Reality is subjective; Each consumption experience is unique;Researcherrespondent interaction affects research findings; Often findings are not generalizable to larger population

Methods Assumptions

Knowing customers is never simple:

Customers may say one thing & do another

May not be in touch with their deeper motivation

Consumers are complex & constantly changing-what Worked yesterday may not work today.
NOT UNDERSTANDING CUSTOMERS NEEDS, MOTIVATIONS & PREFERENCES CAN HURT

A Simplified Model of Consumer Decision Making