Consumer BehaviorBy Prof. Rajeev KumarThe behavior that consumers display insearching for, purchasing, using, evaluating, anddisposing of products and services that theyexpect will satisfy their needs.
Personal ConsumerThe individual who buys goods and services forhis or her own use, for household use, for theuse of a family member, or for a friend.
Organizational ConsumerA business, government agency, or otherinstitution (profit or nonprofit) that buys thegoods, services, and/or equipment necessary forthe organization to function.
Needs and Motivation Needs are the essence of the marketing concept. Motivation is the driving force within individuals that impels them to action.Copyright 2007 by Prentice Hall
Consumer Motivation Represents the drive to satisfy both psychological and physiological needs through product purchase and consumption. gives insights into why people buy certain products. stems from consumer needs: industries have been built around basic human needs.
Types of Consumer Needs Physiological needs- Fundamental human needs, including food, water and shelter Safety and Health needs- Threats to our safety and health motive purchases for personal security and protection.
Safety and Health needs Protecting our personal information and computers represents new types of safety needs. Businesses provide a variety of products and services to appeal to safety and health conscious consumers.
PERCEPTIONS The process by which an individual selects, organizes and interprets stimuli into meaningful thoughts and pictures.(Customers perceive their environment through the sense of touch, smell, taste, hearing, etc.
BELIEFS AND ATTITUDE A belief is a descriptive image or thought that an individual holds about something. A person͛s attitude is a set of his feelings and the way in which he reacts to a given idea or thought.
LEARNING Consumer learning is a process which evolves and changes as a result of newly acquired knowledge or experience
CONSUMER INFLUENCES ORGANIZATIONAL INFLUENCES Culture Ethnicity Brand Product Features Personality Family Advertising Word of Mouth Life-stage Values Promotions Retail Displays Income Available Resources Price Quality Attitudes Opinions Service Store Ambiance Motivations Past Experiences Convenience Loyalty Programs Feelings Peer Groups Packaging Product Availability Knowledge OBTAINING CONSUMING DISPOSINGyHow you decide you yHow you use the product yHow you get rid ofwant yHow you store the remaining product to buy product yHow much you throwyOther products you in your home away after use consider buying yWho uses the product yIf you resell itemsyWhere you buy yHow much you consume yourselfyHow you pay for yHow product compares or through aproduct with consignmentyHow you transport expectations store product home yHow you recycle some products Consumer Behavior
Customers? Who are our existing / potential customers? What are their current / future needs? How can we satisfy these needs? Can we offer a product/ service that the customer would value? Can we communicate with our customers? Can we deliver a competitive product of service? Why should customers buy from us?
Becoming a Winner : A Three Dimensional Approach Efficiency Ladder Ability to Focus ( Specialization Ladder ) Ability ToAchieve Lower cost Ability to Delight Customers ( Market Orientation - Learning Ladder )
Successful RelationshipsCustomer Customer Value Retention Customer Satisfaction
Successful RelationshipsValue, Satisfaction, andRetention Defined as the ratio between the Customer Value customer͛s perceived benefits Customer and the resources used to obtain Satisfaction those benefits Customer Perceived value is relative and subjective Retention Developing a value proposition is critical
Successful RelationshipsValue, Satisfaction, andRetention Customer The individuals perception of the performance of the product or service Value in relation to his or her expectations. Customer Customers identified based on loyalty Satisfaction include loyalists, apostles, defectors, Customer terrorists, hostages, and mercenaries Retention
Successful RelationshipsValue, Satisfaction, andRetention The objective of providing value is to Customer Value retain highly satisfied customers. Customer Loyal customers are key Satisfaction ± They buy more products Customer ± They are less price sensitive Retention ± They pay less attention to competitors͛ advertising ± Servicing them is cheaper ± They spread positive word of mouth
Customer Profitability-Focused Marketing Tracks costs and revenues of individual consumers Categorizes them into tiers based on consumption behavior A customer pyramid groups customers into four tiers
Customer Profitability-Focused Marketing Tier 1: Platinum Tier 2: Gold Tier 3: Iron Tier 4: Lead
Traditional Marketing Concept Vs. Value and Retention Focused Marketing Table 1-2 Traditional Marketing Value and Retention Concept Focused MarketingMake only what you can sell instead Use technology that enablesof trying to sell what you make customers to customize what you makeDo not focus on the product; focus on Focus on the product¶sthe need that it satisfies perceived value, as well as the need that it satisfiesMarket products and services that Utilize an understanding ofmatch customers¶ needs better than customer needs to developcompetitors¶ offerings offerings that customers perceive as more valuable than competitors¶ offerings
Why Study Consumer Behavior?"All marketing decisions are based onassumptions and knowledge ofconsumer behaviour," (Hawkins andMothersbaugh, 2007). Researchingconsumer behaviour is a complexprocess, but understanding consumerbehaviour is critical to marketers-theycan use it to:
Provide value and customer satisfaction. Effectively target customers. Enhance the value of the company. Improve products and services. Create a competitive advantageUnderstand how customers view their products versus their competitors products.Expand the knowledge base in the field of marketing,Apply marketing strategies toward a positive effect on society (encourage people to support charities, promote healthy habits, reduce drug use etc.)