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Ch1 cb

  1. 1. CHAPTER ONE Consumer Behavior and Marketing Strategy McGraw-Hill/Irwin Copyright © 2004 by The McGraw-Hill Companies, Inc. All rights reserved.
  2. 2. What is Consumer Behavior? <ul><li>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. </li></ul>
  3. 3. Why study consumer behavior? <ul><li>Consumer behavior theory provides the manager with the proper questions to ask </li></ul><ul><li>Marketing practice designed to influence consumer behavior influences the firm, the individual, and society </li></ul><ul><li>All marketing decisions and regulations are based on assumptions about consumer behavior </li></ul>
  4. 4. Applications of Consumer Behavior <ul><li>Marketing Strategy </li></ul><ul><ul><li>To satisfy target consumer needs </li></ul></ul><ul><li>Regulatory Policy </li></ul><ul><ul><li>To protect consumers </li></ul></ul><ul><li>Social Marketing </li></ul><ul><ul><li>To help consumers </li></ul></ul><ul><li>Informed Individuals </li></ul><ul><ul><li>To better understand how societies function </li></ul></ul>
  5. 5. Marketing Strategy & Consumer Behavior <ul><li>What is Customer Value? </li></ul><ul><li>The difference between all the benefits derived from a total product and all the costs of acquiring those benefits. </li></ul><ul><li>What is required of a firm to provide superior customer value? </li></ul><ul><li>It must do a better job of anticipating and reacting to customer needs than the competition does. </li></ul><ul><li>What role does consumer behavior play in creating superior customer value? </li></ul><ul><li>An understanding of consumer behavior is the basis for marketing strategy formulation, and the consumer’s reaction to this marketing strategy ultimately determines the firms success or failure. </li></ul>
  6. 6. Marketing Strategy & Consumer Behavior
  7. 7. Market Analysis Components <ul><li>The Consumers </li></ul><ul><li>The Company </li></ul><ul><li>The Competitors </li></ul><ul><li>The Conditions </li></ul>
  8. 8. Market Segmentation <ul><li>What is market segmentation ? </li></ul><ul><li>Market segmentation involves aggregating prospective buyers into groups that: </li></ul><ul><li>1. have common needs </li></ul><ul><li>2. will respond similarly to marketing actions </li></ul><ul><li>Why segment the market ? </li></ul><ul><li>Market segmentation links market needs to an organization’s marketing programs. </li></ul><ul><li>When does an organization segment the market ? </li></ul><ul><li>When the potential increase in profits as a result of segmenting outweigh the costs of segmenting. </li></ul>
  9. 9. Market Segmentation <ul><li>Market Segment: a portion of a larger market whose needs differ somewhat from the larger market. </li></ul><ul><li>Four steps to segmentation : </li></ul><ul><ul><li>Identify product-related need sets </li></ul></ul><ul><ul><li>Group customers with similar need sets </li></ul></ul><ul><ul><li>Describe each group </li></ul></ul><ul><ul><li>Select an attractive segment(s) to serve </li></ul></ul>
  10. 10. Market Segment Attractiveness
  11. 11. Marketing Strategy <ul><li>How will we provide superior customer value to our target market? </li></ul><ul><li>Marketing Mix </li></ul><ul><ul><li>The Product </li></ul></ul><ul><ul><li>Communications </li></ul></ul><ul><ul><li>Price </li></ul></ul><ul><ul><li>Distribution </li></ul></ul><ul><ul><li>Service </li></ul></ul>
  12. 12. Outcomes <ul><li>Firm: </li></ul><ul><ul><li>Product positioning </li></ul></ul><ul><ul><li>Sales </li></ul></ul><ul><ul><li>Customer Satisfaction </li></ul></ul><ul><li>Individual: </li></ul><ul><ul><li>Need Satisfaction </li></ul></ul><ul><ul><li>Injurious Consumption </li></ul></ul><ul><li>Society: </li></ul><ul><ul><li>Economic </li></ul></ul><ul><ul><li>Physical Environment </li></ul></ul><ul><ul><li>Social Welfare </li></ul></ul>
  13. 13. Creating Satisfied Customers
  14. 14. Consumer Behavior is Product – Person – Situation Specific Personal Characteristics Product Characteristics Consumption Situation Consumer Behavior Marketing Strategy
  15. 15. Consumer Lifestyles and Consumer Decisions Consumer Lifestyle Needs/Attitudes That Influence Consumption Decisions Behavior/Experiences That Influence Consumption Decisions Consumer Choices
  16. 16. Overall Model Of Consumer Behavior