Consumer Behavior and Marketing Strategy Chapter 1 Consumer behavior Definition Consumer behavior is 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. Key Aspects Regarding Consumer Behavior Need extensive information about consumer behavior (i.e., organizations are regularly applying theories and information about consumer behavior) Need to obtain information about specific consumers of interest (i.e., conduct research) Key Aspects Regarding Consumer Behavior (continued) 3. Consumer behavior is complex and multidimensional (note: research increases the odds for success but is not a guarantee that you will succeed) 4. Marketing approaches that focus on modifying consumer behavior can involve ethical concerns (e.g., marketing Coca Cola can provide consumers with an enjoyable drink but also a lot of sugar consumption can have unhealthy effects such as cavities in teeth) Applications of Consumer BehaviorMarketing StrategyRegulatory PolicySocial MarketingInformed Individuals Marketing StrategyMarketing strategies and tactics are based on explicit or implicit beliefs about consumer behavior.Decisions based on explicit assumptions and sound theory and research are more likely to be successful than are decisions based solely on implicit intuition.Knowledge of consumer behavior can be an important competitive advantage and can greatly reduce the odds of bad decisions and market failures! Regulatory PolicyVarious regulatory bodies exist to develop, interpret, and/or implement policies designed to protect and aid consumer [e.g., Food and Drug Administration, (FDA)].Effective regulation of many marketing practices requires an extensive knowledge of consumer behavior. Social MarketingSocial marketing is the application of marketing strategies and tactics to alter or create behaviors that have a positive effect on the targeted individuals or society as a whole.As is true for commercial marketing strategy, successful social marketing strategy requires a sound understanding of consumer behavior. Informed IndividualsMost economically developed societies are referred to as consumption societies. Most individuals in these societies spend more time engaged in consumption than any other activity, including work or sleep.Knowledge of consumer behavior can enhance our understanding of our environment and ourselves. Such an understanding is essential for sound citizenship, effective purchasing behavior, and reasoned business ethics. Marketing Strategy and Consumer BehaviorCustomer value is the difference between all the benefits derived from a total product and all the costs of acquiring those benefits.It is important that one considers the customer’s perspective.Providing superior customer value requires the organization to do a better job o.

1. Consumer Behavior and Marketing Strategy
Chapter 1
Consumer behavior Definition
Consumer behavior is 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.
Key Aspects Regarding Consumer Behavior
Need extensive information about consumer behavior (i.e.,
organizations are regularly applying theories and information
about consumer behavior)
Need to obtain information about specific consumers of interest
(i.e., conduct research)
Key Aspects Regarding Consumer Behavior (continued)
3. Consumer behavior is complex and multidimensional (note:
research increases the odds for success but is not a guarantee
that you will succeed)
4. Marketing approaches that focus on modifying consumer
behavior can involve ethical concerns (e.g., marketing Coca
Cola can provide consumers with an enjoyable drink but also a

2. lot of sugar consumption can have unhealthy effects such as
cavities in teeth)
Applications of Consumer BehaviorMarketing
StrategyRegulatory PolicySocial MarketingInformed Individuals
Marketing StrategyMarketing strategies and tactics are based on
explicit or implicit beliefs about consumer behavior.Decisions
based on explicit assumptions and sound theory and research are
more likely to be successful than are decisions based solely on
implicit intuition.Knowledge of consumer behavior can be an
important competitive advantage and can greatly reduce the
odds of bad decisions and market failures!
Regulatory PolicyVarious regulatory bodies exist to develop,
interpret, and/or implement policies designed to protect and aid
consumer [e.g., Food and Drug Administration,
(FDA)].Effective regulation of many marketing practices
requires an extensive knowledge of consumer behavior.
Social MarketingSocial marketing is the application of
marketing strategies and tactics to alter or create behaviors that
have a positive effect on the targeted individuals or society as a
whole.As is true for commercial marketing strategy, successful
social marketing strategy requires a sound understanding of
consumer behavior.

3. Informed IndividualsMost economically developed societies are
referred to as consumption societies. Most individuals in these
societies spend more time engaged in consumption than any
other activity, including work or sleep.Knowledge of consumer
behavior can enhance our understanding of our environment and
ourselves. Such an understanding is essential for sound
citizenship, effective purchasing behavior, and reasoned
business ethics.
Marketing Strategy and Consumer BehaviorCustomer value is
the difference between all the benefits derived from a total
product and all the costs of acquiring those benefits.It is
important that one considers the customer’s
perspective.Providing superior customer value requires the
organization to do a better job of anticipating and reacting to
customer needs than the competition does.
Marketing Strategy and Consumer Behavior
Market Analysis
Marketing strategy begins with an analysis of the market the
organization is considering, requiring a detailed analysis of
the:organization’s capabilitiesstrengths and weaknesses of
competitorseconomic and technological forcescurrent and
potential customers

4. Market SegmentationOn the basis of the consumer analysis, the
organization identifies groups of individuals, households, or
firms with similar needs. These market segments are described
in terms such as demographics, media preferences, geographic
location, etc. Management then selects the segment(s) to target.
Marketing StrategyMarketing Strategy seeks to provide the
customer with more value than the competition, while still
producing a profit for the firm. Marketing strategy is
formulated in terms of the marketing mix, which involves
determining the product features, price, communications,
distribution and services that will provide customers with
superior value, resulting in the total product.
Consumer Decision ProcessThe total product is presented to the
target market, which is consistently engaged in processing
information and making decisions designed to maintain or
enhance its lifestyle or performance.Many firms are wrapping
experiences around their traditional products and service in
order to sell them better. For example, retailers have been
moving to lifestyle centers in an effort create a more pleasing
shopping experience.
OutcomesSociety – the cumulative effect of the marketing
process affects economic growth, pollution, social problems
(e.g., illnesses caused by smoking and alcohol), social benefits
(e.g., improved nutrition, increased education).Firm – reaction

5. of the target market to the total product produces an image of
the product/brand/organization, sales (or lack of sales), and
some level of customer satisfaction among those who
purchased. Note: sophisticated marketers seek to produce
satisfied customers rather than mere sales because satisfied
customers are more profitable in the long run.Individual – the
process results in some level of need satisfaction, financial
expenditure, attitude development/change, and/or behavioral
changes.
Market Analysis ComponentsThe ConsumersThe CompanyThe
CompetitorsThe Conditions
The ConsumersIt is not possible to anticipate and react to
customers’ needs and desires without a complete understanding
of consumer behavior.Discovering customers’ needs is a
complex process, but it can often be accomplished by marketing
research.
The Company
A firm must fully understand its own ability to meet customers
needs. This involves evaluating all aspects of the firm
including: financial condition general managerial skills
production capabilities research and development (R&D)
capabilities technological sophistication reputation marketing
skills
Note: failure to properly understand a firm’s strengths can lead
to serious problems for the firm

6. The CompetitorsIt is not possible to consistently do a better job
of meeting customer needs than the competition without a
thorough understanding of the competition’s capabilities and
strategies.This requires the same level of knowledge of a firm’s
key competitors that is required of one’s own firm.
The Conditions
The state of the economy, the physical environment,
government regulations, and technological developments affect
consumer needs and expectations as well as company and
competitor capabilities.
Market Segmentation
Market segment: a portion of a larger market whose needs differ
somewhat from the larger market.
Internet example of behavioral targeting where a consumer’s
online activity is tracked and specific banner ads are delivered
based on that activity
Steps for Market Segmentation
Identifying product-related need sets
Grouping customers with similar need sets
Describing each group
Selecting an attractive segment(s) to serve
Product-Related Need SetsOrganizations approach market
segmentation with a set of current and potential capabilities.

7. The term need set is used to reflect the fact that most products
in developed economies satisfy more than one need.Customer
needs are not restricted to product features but also include
types and sources of product information, outlets where the
product is available, product price, the image of the product or
firm, and even where and how the product is produced.
Product-Related Need Sets (continued)
Identifying need setsConsumer researchLogicIntuition
Need sets are often associated with other variables including
age, gender, social class, race/ethnicity, and lifestyle.
Many start the segmentation process by focusing on one of the
groups defined by these variables.
Customers with Similar Need Sets
These consumers can be grouped into one segment as far as
product features and perhaps even product image are concerned
despite sharply different demographics.
Identifying similar need sets
Focus groups
Surveys
Product concept tests
(Possibly analysis of current consumption patterns)
Description of Each Group
Once consumers with similar need nets are identified, they
should be described in terms of demographics, lifestyles, and

8. media usage.
In order to design an effective marketing program, it is
necessary to have a complete understanding of the potential
customers.
In order to effectively communicate with customers, it is
essential to understand the context for how products are
purchased and consumed, how products are thought about by
customers, and the language used to describe the product.
Attractive Segment(s) to ServeTarget market - segment(s) of the
larger market on which we will focus our marketing effort.
This decision is based on our ability to provide the selected
segment(s) with superior customer value at a profit.Each market
segment requires its own marketing strategy.
Marketing Strategy
Marketing Strategy is the answer to the question: How will we
provide superior customer value to our target market?
This requires the formulation of a consistent marketing mix,
which includes theProductPriceCommunicationsDistribution,
andServices
that are provided to the target market
ProductA product is anything a consumer acquires or might
acquire to meet a perceived need.Consumers are generally
buying need satisfaction, not physical product attributes.Product
refers to physical products (e.g., automobile) and primary or
core services (e.g., transmission overhaul or ride in taxi).

9. Communications
Marketing communications include advertising, the sales force,
public relations, packaging, and any other signals that the firm
provides about itself and its products.
Key Communications Questions
With whom, exactly, do we want to communicate?
What effect do we want our communications to have on the
target audience?
What message will achieve the desired effect on our audience?
What means and media should we use to reach the target
audience?
When should we communicate with the target audience?
PricePrice is the amount of money one must pay to obtain the
right to use the product.Price sometimes serves as a signal of
qualityConsumer cost is everything the consumer must
surrender in order to receive the benefits of owning/using the
product.
DistributionDistribution means having the product available
where target customers can buy it. This is essential to the
product’s success.Good channel decisions require a sound
knowledge of where target customers shop for the product.
ServiceService refers to auxiliary or peripheral activities that
are performed to enhance the primary product or primary

10. service.Auxiliary services cost money to provide, so it is
essential that the firm furnish only those services that provide
value to the target customers. Providing services that are not
valued by customers can result in high costs and high prices
without a corresponding increase in customer value.
Consumer DecisionsThe consumer decision process intervenes
between the marketing strategy, as implemented in the
marketing mix, and the outcomes.The firm can succeed only if
consumers see a need that its product can solve, become aware
of the product and its capabilities, decide that it is the best
available solution, proceed to buy it, and become satisfied with
the result of the purchase.
OutcomesFirm OutcomesIndividual OutcomesSociety Outcomes
Firm OutcomesThe product position is the image of the product
or brand in the consumer’s mind relative to competing products
and brands.Sales are a critical outcome, as they produce the
revenue necessary for the firm to continue in business.Customer
satisfaction is a major concern for marketers. Retaining
customers requires that they be satisfied with their purchase and
use of the product.
Creating Satisfied Customers

11. Individual OutcomesNeed satisfaction: The most obvious
outcome of the consumption process for an individual, whether
or not a purchase is made, is some level of satisfaction of the
need that initiated the consumption process (whether none,
negative, or complete).Injurious consumption: The dark side of
consumer behavior, occurs when individuals or groups make
consumption decisions that have negative consequences for
their long-run well-being.
Society OutcomesEconomic Outcomes: The cumulative impact
of consumers’ purchase decisions, including the decision to
forgo consumption, is a major determinant of the state of a
given country’s economy.Physical Environment Outcomes:
Consumers make decisions that have a major impact on the
physical environments of both their own and other
societies.Social Welfare: Consumer decisions affect the general
social welfare of a society, including having a major impact on
the overall quality of life in a society.
External Influences
Major external influences: Culture Demographics and social
stratification Racial/ethnic, religious, and regional subcultures
Families and households Groups
Internal Influences
Major internal influences: Perception Learning Memory
Motives PersonalityEmotionsAttitudes

12. Self-Concept and LifestyleSelf-concept is the totality of an
individual’s thoughts and feelings about oneself.Lifestyle is
how one lives, including the products one buys, how one uses
them, what one thinks about them, and how one feels about
them.Our decision-making process often considers these self-
concept and lifestyle aspects.