3. Intro: Consumer Behavior
The term refers to:
Human thought &
action
A field of study
“Consumer behavior as a human behavior is the set of value seeking
activities that take place as people go about addressing realized needs”
What is Consumer
behavior?
Decision process
Physical activity individuals
engage in when evaluating,
acquiring, using or
disposing of a good or
service
Dynamic interaction
5. what is Consumer Behavior
Blend of: Psychology, Sociology,
Social Anthology
Process on: Consumer & Society
• People, Groups,
Organizations
Service
Product
Experience
Satisfy Need, Utility,
Impact
Buying behavior (marketing is a influence)- helps predict/expect outcome of consumer
THE PRODUCT LIFE CYCLE
7. Understanding
Consumer Behavior
JMD (Just meaningful difference)
represents the smallest amount of
change in a stimulus that would
influence consumer consumption
and choice.
9. TRENDS influenced on product development
Millennial Influence
• Experiment w/
boundaries
• Social media voice
• YouTube- cook 411
• Fusion- birth of
experimentation
• Ethnically & racially
diverse (in history)
• Melting pot of worldly
people (taste bugs)
• Designed for them
(1 size fits all)
• Value Unique
• Choice’s
CUSTOMIZATION
COMBINING FLAVOR
Value- AUTHENTICITY
Age of customer CONTROL
(choc wine, sour sweet candy, ketchup bears)
11. TIME
TIME
Psychological principle of SCARCITY
1
2
limit on products
limited offers
Assign more value to things then they
become less available
▪ Difficult to obtain = more valuable
▪ Less available = threat
▪ Motivated @ thought of loosing
▪ Testing consumer response
▪ Responsive response
LAY’S ‘time’ strategy focus on
12. TIME
SEASON
COMMERCIAL nature of Christmas
1
2
Sales Tool
limited offers
(competitive prices)
Shoppers are more emotionally engaged
brand must create hallmark moments
▪ Every1 is a seasonal shopper
▪ Better chance at capturing more consumers
▪ $$$ = higher investment in marketing
▪ Royal wrapping paper -Packaging
▪ Bring to family gathering -Exposure
▪ desert & Snack- 2 food categories
LAY’S ‘time’ strategy focus on
13. TIME
TARGET
Picking the right target to CHANNEL
1
2
Holiday marketing
High Traffic
Holidays bring out all shoppers
Target is either cheap or over priced
▪ Store sells: food, clothes,
furniture.(allows for unnecessary
purchases)
▪ Global expansion- possibilities
▪ Large US Footprint of stores
▪ Already had contract (existing
inventory)
LAY’S ‘time’ strategy focus on
14. VALUE
▪ Both are responsible for creating customer
value.
▪ Customer value: the difference between what a
customer acquires (receives) from a product, and
all the costs associated with getting it.
▪ Marketers have to adapt and develop marketing
campaigns and marketing strategies in order to
efficiently react to the consumers’ needs and to
beat its competition.
▪ Flexibility beats stereotype
Marketing &
Marketing Strategies
16. Wide variety of different flavors of
chip, that are always supported by a
great style & design
Comparable to its competitors (goal-
high quality snack at good price)
* New product (diff strategy)
exclusive, unique and limited product
will not be cheap. 5 oz bag at $3.49
The New Product
*Unique
*Time Exclusive
Even though, companies products are
being sold in different locations & are
easy to find, the new product will be
sold in Target only.
LAY’S
PRODUCT
PLACE
PRICE
PROMOTION
Marketing Mix
18. How Theory of CB contributes to the development
and marketing of products
Why it is important for marketers to understand how end users learn about product & services?
“Learning is relatively permanent change in behavior that experience causes”
Behavioral Learning Theories
Learning takes place as the result of responses to external events.
“Black box” approach:
Stimulus Consumer Response
19. Classical
Conditioning
Repetition:
▪ To create awareness of the brand, product..
▪ Demonstrate relevance to the consumer
▪ Remind about benefit
▪ Disadvantage: advertising wear-out
Stimulus Generalization:
▪ Family branding
▪ Product line extension
▪ Licensing
▪ Look-alike packaging
Stimulus Discrimination
▪
conditioned &
unconditioned stimulusBehavioral Learning Theory
“Occurs when a stimulus
that elicits a response is
paired with another stimulus
that initially does not elicit a
response on its own.”
20. Instrumental
Conditioning
▪ Positive reinforcement
▪ Negative reinforcement
▪ Punishment
▪ Fixed-interval reinforcement -> seasonal sale
▪ Variable-interval reinforcement -> secret shopper
▪ Fixed-ratio reinforcement -> to collect stamps to get a prize
▪ Variable-ratio reinforcement -> slot machines
▪ Frequency marketing -> frequent flyer
Behavioral Learning Theory
“we learn to perform behaviors
that produce positive outcomes
and avoid ….negatives”
22. References
• Babin, B., Harris, E.,(2008)”CB”.
• Evon, D. (2013, November 2). Lays Chocolate-Covered
Potato Chips Get Mixed Reactions On Twitter. Retriever
on November 7, 2013 from
http://socialnewsdaily.com/18762/lays-chocolate-covered-
potato-chips-get-mixed-reactions-on-twitter/
• Solomon, M.R., (2007). Consumer Behavior (9th ed.).
Prentice Hall
• Millennial Behaviors:
http://www.bizjournals.com/seattle/print-
edition/2013/09/27/millennials-power-brand-
influence.html?page=3
Editor's Notes
Lays launched a new product on the US market, and we choose this product as an example to illustrate consumer behavior
Introduction:
First, I will define what Consumer behavior is, and identify how the lifestyles of people are important when understanding consumer behavior,
Next we will talk about how Consumer behavior contributes and influences product development and how it influences buying behavior. Paulina will discuss the unique and specific marketing tactic Lays is using for promoting limited time, holiday special and targeting millennium groups while Eva will discuss it further into theory and talk about the incorporation of the marketing mix. Nadya will finish off with the Theory of Consumer Behavior and how it can help to develop and market a product. We will conclude with our stand and possible recommendation for the future and growth of the product.
CB can be defined from two different perspectives. The term CONSUMER BEHAIVOR refers to both:
Human thought and action
A field of study
Consumer behavior as a human behavior is the set of value seeking activities that take place as people go about addressing realized needs.
Physical activity individuals engage in when evaluating, acquiring, using or disposing of a good or service
Even something so simple as liking a facebook page is engaging and therefore is a part of consumer behaivor.
We all live different lives, and enjoy a particular lifestyle. For marketers, knowing how lifestyles influences consumer behavior allows for predicting what type of product would be admirable to specific target group that falls within the similar lifestyle. Here you can see the lifestyle dimensions of consumer behavior. The AIOD table. In the case of the lays chips, we can assume that the people who are buying them enjoy holidays and can easily get influenced by the golden and red color packaging, while their interests would probably be community and home, their opinions would most likely be about themselves and knowing they tried something new and different and the demographic would be the millennial women, with average or above average income due to the fact that the price of the chips aren’t so cheap as compared with others. - Eva will talk more about the pricing.
The chocolate covered lays chips are currently in the pre-launch introduction phase. They have been introduced in the beginning of this month November and Lays will be monitoring the responses in the beginning stage. If it is positive, there are speculations that the product will grow and stay on the market, if not, it will be discontinued after New Year.
Here, we can see all the possible influences on consumer Behavior. While this represents the lifestyle table, here we can look at all the aspects. Lets take organizational influences for example: Branding, Advertising, Promotion, price, service, packaging, product features, retail display and so on, we can argue that Lays, an already established global brand has created something completely new and unique for the market for limited time only.
The gold packaging is attractive and symbolizes Christmas, the wavy font letter is luring and everything is different yet consumers still are able to recognize it is LAYS chips– but viewed as exclusive and only available for 3 months = which may make people think “ wow I have to try it” Otherwise I will never get a chance….Will this approach of launching this product change customers behavioral patterns? Will this be the just meaningful difference that will trigger a stimulus and consumption? It is safe to say that consumers probably never would have thought of buying chips as a Christmas snack
It is also relevant to mention how buying these chips influences the consumer in terms of values, family, peer groups and feelings about it. The feelings here we believe are quite important, because snacks are often consumed when one isn't hungry but wants to satisfy the joy of eating. When women are stressed it is believed that chocolate lowers the stress level. Combining both sweet and salty flavors with elegant packaging could show how it influences buyers.
5 ounce bag isn’t big, which shows that it’s a snack you want to open, eat, enjoy and dispose, unlike the family super size Lays chips for Parties and social gatherings, these chips
Now, lets now talk about consumer behavior and its influence on marketing mix and marketing strategies.
These days, flexibility beats stereotype. Branding and marketing for younger generation (for Millenians) needs to be unique and different in order to catch attention and this new product, its packaging, marketing and overall concept is just that)
Consumer behavior is affected by various aspects: such as pier influence, demographics (household structure), needs and wants and purchase behavior. On the other hand, regulatory policies need to be in place to protect the end customer and marketing strategies need to be undertaken to satisfy the target market, in our case young women.
Product: as you all could see the new golden design is very sophisticated and can be easily associated with Christmas holidays
As it was said before, the new product has been getting a lot of attention on Twitter and Facebook and the reactions from potential customers of the new product are very mixed.
Psychologists are focused on several theories, but main are theory which is focused on simple stimulus response – behavioral theory and more complex, which reviews abstract rules, concepts when end users observe other consumers reaction – cognitive theory.
A good and memorable example of classical conditioning is known Pavlov experiment with the dog and the bell, where the bell in the beginning was unconditioned stimulus, but with the dog experience & knowledge, it start to be conditioned stimulus and dog reaction was conditioned response.
Most effective usage is when marketers present first conditioned stimulus before unconditioned
Repetition: repeated slogan to create association with the brand. Method of 3 exposures.
Stimulus Generalization: halo effect and masked branding
Stimulus Discrimination: well-established brands urge do not buy cheap imitations
Instrumental learning occurs when consumer get reward/punishment after desired/non-desired action only.
Cognitive Learning Theory – stress importance of the mental process
Attention – the consumer focus and observe model’s behavior
Retention – the consumer retains behavior in memory
Production processes – the consumer is able to perform retained behavior
Motivation – “a situation arises wherein the behavior is useful to the consumer
Observational learning – “the consumer acquires and performs the behavior earlier demonstrated by a model”
