Welcome to Week 1 of Consumer Behavior, Marketing 3050. This slideshare presentation will cover topics from Chapters 1 and 2 of the text, along with some additional information that expands on the text and addresses course objectives
Our objective this week examines the role and importance of consumer behavior in the marketing process. More specifically, we’ll answer the questions: What is Consumer Behavior? And importantly, why do we care?
Consumer behavior can be thought of in 2 contexts. The first we’ll cover is the field of study – as scientists and marketers develop approaches for measuring and understanding consumers. We’ll talk about the second context also – all the thoughts and actions that drive our behavior as consumers.
The study of consumer behavior began in the 1930s. This graph is pulled from Google news archives – it shows the frequency of citations about consumer behavior have increased from about 40 between 1930 and 1940 to more than 2000 in 2011. Consumer behavior is an applied science, meaning it pulls insights from several disciplines including psychology, economics, sociology and anthropology – all pure sciences with elements about behavior that marketers have borrowed as they try to understand consumer behavior.
The study of consumer behavior has evolved, keeping pace with changes in how goods and services are delivered to the marketplace. In the 18th century, consumers had very limited options. If you went to the general store, you may have had less than 10 options for cloth to use to make a new shirt. There may have been only be 1 style of blue jeans. Food products were limited, too, as the owner of the general store decided what they would carry.In the 19th and early 20th centuries, manufacturing processes improved with the industrial revolution. Economics began to factor into manufacturing decisions…. If demand was there, and manufacturing capability was there, then the product was available. As manufacturing capabilities increased, so did the number of options available for consumers. Now manufacturers turned to psychology to help with marketing… focusing on ‘drilling’ benefits into consumers so their product would ‘stand out’. Here’s a commercial that illustrates this idea… see if you can identify the benefits of the product….Hopefully you picked up on the brand – Maxwell House – and the key benefits…. Tastes as good as it smells. Now you say to yourself – ‘wow, that was really annoying’ I’m glad advertising is better now. Well for those of you who watch late night TV, you may agree that pushing benefits is still in play. Watch this commercial.
As we entered the 21st century, retailers began gaining more power… Kroger, Home Depot, Walmart – only carry the items that will sell – so manufacturing decisions can’t be based on the idea that ‘you’ll buy what I’ve got’. Marketers are also becoming more critical – to help manufacturers chase fewer customers. We’ve seen consumer research become more sophisticated – focusing on motivations, emotions, and predicting behavior. Here’s another commercial for Maxwell House coffee… see if you can identify the emotional connections the marketers are trying to establish.Did you pick up that Maxwell House is now something special?
Today, marketers are focused on shoppers – how they make decisions – and successful organizations, like Amazon, develop business plans and organize resources to make sure customers stay happy.The study of ‘shoppers’ is the latest development in the area of consumer behavior… we’re trying to understand needs, shopping occasions, in-store behavior, purchase drivers, and reaction to in-store efforts…. That’s an overview of the field of study of Consumer Behavior… let’s focus now on the human thought and action context.
The textbook definition describes consumer behavior as people looking for VALUE…. But they first must identify their need, then engage in activities that address those needs…. We’ll explore those ideas over the next few weeks.
This graph shows the basic consumption process…. Consumers must recognize a need… that then becomes a ‘want’ that they are willing to make an exchange for… an exchange that involves costs (like time and money) and benefits (need satisfaction). The consumer reaction to that exchange – either satisfaction or disappointment – leads the consumer to determine if the process delivered value (made them happy!). If value is low, then the process likely begins again.
The decision process supporting consumption is influenced by internal and external factors. We’ll examine these, too, over the next few weeks. Internal factors shown here define how you recognize needs and wants – and how you go about addressing those wants. But external factors – like your family, your culture – even the season and time you have to shop – also come into play as you try to find value that satisfies your needs.
So why is Consumer Behavior important? Well, it’s a key input into successful business and marketing strategies… answering questions like those shown here. Who buys, why they buy, how can I establish connections – all are important elements that drive manufacturing decisions AND the messages communicated to consumers.
The extent to which consumer behavior affects an organization depends on the company’s orientation…. There are some companies that have a production orientation – they just want to make products with minimal cost – and the products are undifferentiated – they are all the same. Some companies DO offer different products – there are those who are focused on markets – reaching multiple segments with multiple products. And there are those who make a single product and focus on a niche or single market.
This graphic illustrates the different marketing approaches. Let’s look at some examples.
So of these 3 examples, which is the market-driven company? Did you guess Converse? ….lots of shoes for different markets… And what about the apples? … the farmer is focused on production of a single product. The third example is a device you can place in your vehicle that sounds an alarm if your vehicle drifts…. This would likely be a niche product – maybe for those who work the night shift or drive long distances?....
Consumer behavior is also important because it affects society… what and how we buy determines how we live. Better marketing – focusing on delivering good products that meet needs – will boost the economic performance of companies… having successful companies means the country will have a stronger economy. Think about how the economies of underdeveloped countries perform – vs those where business / industry prosper.Government is also affected by consumer behavior – look for a discussion board about this idea in the Week 1 class folder.
Finally, understanding consumer behavior is important because we can help people make better decisions AND we can help OURSELVES make better decisions.
So how do we study consumer behavior? There are several approaches…. There’s interpretive – or qualitative research – the focuses on internal motivations. And there are large scale, or quantitative studies – focused on interviews with many people so we can look for ‘big picture’ ideas.
This chart shows the differences between qualitative and quantitative research. We won’t spend much time here – MKT 4230 – Marketing Research – examines these approaches in more detail.
Consumer behavior is very dynamic -- meaning it changes over time – and so we as marketers, need to keep track of changes so we can react. What causes behavior to change? Well, we have a global society now – so we need to understand cultures – technology has had a HUGE impact on how consumers get information – so we need to harness it. The demographics of our society continue to change – and we need to make sure our products meet changing needs – and finally, the economy has changed – pretty dramatically over the last few years – and we’ve seen consumer behavior change with it – less spending with credit cards, less shopping overall – more cautiousness about getting married / having children /buying homes.This concludes the video lecture … if you have questions about the content covered here, you can e-mail me or add a question to the “Virtual Office” blog. Now please head to the Discussion Board – and participate in the discussion about consumer behavior and government… and the discussion of the articles you found in the Wall Street Journal.
