This document discusses consumer behavior and why it is important to understand. It defines consumer behavior as involving decisions about acquiring, consuming and disposing of goods, services and ideas over time. Understanding consumer behavior allows marketers to develop customer-oriented strategies, select target markets, position offerings, and make product, promotion, pricing and distribution decisions. Consumer behavior research methods can be used to learn about consumers, such as surveys, focus groups and observations. One example discussed is Coca-Cola's market research and subsequent New Coke launch in 1985, which showed a lack of understanding of loyal consumers.

1. WHAT IS CONSUMER
BEHAVIOR AND WHY DO WE
NEED TO KNOW?

2. 22
DEFINITION (H&M BOOK,
PAGE 3)
 Consumer behavior reflects the totality of
consumers’ decisions with respect to the acquisition,
consumption, and disposition of goods, services,
activities, experiences, peoples, and ideas by (human)
decision making units [over time].

3. Goods Services Activities
Experiences People Ideas

4. 44
EXHIBIT 1.1

5. 55
CONSUMER BEHAVIOR
INVOLVES MORE THAN JUST
BUYING
 Acquiring
 Using
 Disposing
 Is a dynamic process
 Can involve many people
 Involves many decisions

6. 66
MANY MANY CONSUMER
DECISIONS
 To acquire, use, or dispose
Whether?
What?
Why?
Why Not?
How?
• When?
• Where?
• How much?
• How often?
• How long?

7. 77
WHAT
AFFECTS
CONSUMER
BEHAVIOR?
Exhibit 1.6:
A Model of
Consumer
Behavior

8. 88
WHAT AFFECTS
CONSUMER BEHAVIOR?
Having..
 Motivation
 Ability
 Opportunity
Consumer’s
Culture
Consumer Behavior
Outcomes
Process of Making
Decisions
Psychological
Core

9. 99
WHAT AFFECTS
CONSUMER BEHAVIOR?
 Problem Recognition and Search
for Information
 Making Judgments and Decisions
 Making Post-Decision
Evaluations
Process of Making
Decisions

10. 1010
WHAT AFFECTS
CONSUMER BEHAVIOR?
 Exposure, attention, and
perception
 Categorizing and
comprehending information
 Forming and changing attitudes
 Forming and retrieving
memories
Psychological
Core
Process of Making
Decisions

11. 1111
WHAT AFFECTS
CONSUMER BEHAVIOR?
 Consumer behaviors can
symbolize who we are
 Consumer behaviors can diffuse
throughout a market
 Dark side of Marketing
Consumer Behavior
Outcomes
Process of Making
Decisions
Psychological
Core
 External Processes:
• Diversity: e.g. age, education
• Social Class and Household
Influences
• Reference Groups
Consumer’s
Culture

12. NOW
Why is it useful to know about
consumer behavior?

13. 1313
MARKETING IMPLICATIONS OF
CONSUMER BEHAVIOR
 Developing a customer-oriented strategy
 What are the characteristics of consumers in each
segment?
 Are customers satisfied with existing offerings?
 How profitable is each segment?
SEGMENTATION

14. 1414
MARKETING IMPLICATIONS OF
CONSUMER BEHAVIOR
 Selecting the Target Market
 Positioning
 How are competitive offerings positioned?
 How should our offerings be positioned?
 Example: Wild Oats
TARGETING AND POSITIONING

15. 1515
MARKETING IMPLICATIONS OF
CONSUMER BEHAVIOR
 Selecting the Target Market
 Positioning
 How are competitive offerings positioned?
 How should our offerings be positioned?
 Should our offerings be repositioned?
 Example: Domino’s pizza
TARGETING AND POSITIONING

16. 1616
MARKETING IMPLICATIONS OF
CONSUMER BEHAVIOR – 4PS
 Developing PRODUCTs or services
 What ideas do consumers have for new products?
 What attributes can be added to or changed in an existing
offering?
 What should our offering be called?
 What should our package and logo look like?

17. 1717
MARKETING IMPLICATIONS OF
CONSUMER BEHAVIOR
 Making PROMOTION (Marketing Communications)
Decisions
 Advertising
 What are our advertising objectives?
 What should our advertising look like?
 Where should advertising be placed?
 When should we advertise?
 Has our advertising been effective?
 Sales promotion
 What about sales promotion objectives and tactics?
 When should sales promotions happen?
 Have our sales promotions been effective?
 How many salespeople are needed to serve customers?
 How can salespeople best serve customers?

18. 1818
MARKETING IMPLICATIONS OF
CONSUMER BEHAVIOR
 Making PRICING decisions
 What price should be charged?
 How sensitive are consumers to price and
prices changes?
 When should certain pricing tactics be
used?

19. 1919
MARKETING IMPLICATIONS OF
CONSUMER BEHAVIOR
 Making PLACEMENT (Distribution) Decisions
 Where are target consumers likely to shop?
 How should stores be designed?

20. SO
How does one get to know about
consumer behavior?

21. 2121
CONSUMER BEHAVIOR
RESEARCH METHODS
 Surveys
 Focus Groups
 Interviews
 Storytelling
 Photography, Pictures
 Diaries
 Experiments
 Field Experiments
 Conjoint Analysis
 Observations
 Purchase Panels
 Database Marketing

22. 2222
EXHIBIT EN.3: WHO CONDUCTS
CONSUMER RESEARCH?

23. 2323
AN APPLICATION OF CONSUMER
RESEARCH
 Coke: Market maker and leader
 1975: The Pepsi Challenge
 Early 1980s: Coke losing share
 Decided to take Pepsi on, change the taste
of Coke (Project Kansas)
 Conducted extensive research:
 55% of participants favored the new Coke
(N=40,000)
 Some dissent: “It was like trying to make
the flag prettier”

24. 2424
THE AFTERMATH
 New Coke launched in April 1985
 Old coke withdrawn from market
 Initial sales response positive
 HUGE backlash from brand loyals
 WHY?

25. 2525
MORAL OF THE STORY
 Lack of understanding of consumers
 In contrast, Pepsi demonstrated an understanding of
consumer needs
 Market Research issues
 Corporate arrogance assumed that consumers will step in line
 Ignored the vocal minority
 Statements like – “after a while they will fall in love”

26. 2626
 Read Chapter 2 (except “Types of Needs”, pages 50-52)
 Email me your group membership by Feb. 19.
 Group photos will be taken on Feb. 20 in class. Make sure you
attend so that you are in the photo!
 Slides on LMES before class. Note: Webpage slides usually
won’t have all the examples we discuss in class!