WHAT IS CONSUMERBEHAVIOR AND WHY DO WENEED TO KNOW?
22DEFINITION (H&M BOOK,PAGE 3) Consumer behavior reflects the totality ofconsumers’ decisions with respect to the acquisition,consumption, and disposition of goods, services,activities, experiences, peoples, and ideas by (human)decision making units [over time].
Goods Services ActivitiesExperiences People Ideas
55CONSUMER BEHAVIORINVOLVES MORE THAN JUSTBUYING Acquiring Using Disposing Is a dynamic process Can involve many people Involves many decisions
66MANY MANY CONSUMERDECISIONS To acquire, use, or disposeWhether?What?Why?Why Not?How?• When?• Where?• How much?• How often?• How long?
77WHATAFFECTSCONSUMERBEHAVIOR?Exhibit 1.6:A Model ofConsumerBehavior
88WHAT AFFECTSCONSUMER BEHAVIOR?Having.. Motivation Ability OpportunityConsumer’sCultureConsumer BehaviorOutcomesProcess of MakingDecisionsPsychologicalCore
99WHAT AFFECTSCONSUMER BEHAVIOR? Problem Recognition and Searchfor Information Making Judgments and Decisions Making Post-DecisionEvaluationsProcess of MakingDecisions
1010WHAT AFFECTSCONSUMER BEHAVIOR? Exposure, attention, andperception Categorizing andcomprehending information Forming and changing attitudes Forming and retrievingmemoriesPsychologicalCoreProcess of MakingDecisions
1111WHAT AFFECTSCONSUMER BEHAVIOR? Consumer behaviors cansymbolize who we are Consumer behaviors can diffusethroughout a market Dark side of MarketingConsumer BehaviorOutcomesProcess of MakingDecisionsPsychologicalCore External Processes:• Diversity: e.g. age, education• Social Class and HouseholdInfluences• Reference GroupsConsumer’sCulture
NOWWhy is it useful to know aboutconsumer behavior?
1313MARKETING IMPLICATIONS OFCONSUMER BEHAVIOR Developing a customer-oriented strategy What are the characteristics of consumers in eachsegment? Are customers satisfied with existing offerings? How profitable is each segment?SEGMENTATION
1414MARKETING IMPLICATIONS OFCONSUMER BEHAVIOR Selecting the Target Market Positioning How are competitive offerings positioned? How should our offerings be positioned? Example: Wild OatsTARGETING AND POSITIONING
1515MARKETING IMPLICATIONS OFCONSUMER 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 pizzaTARGETING AND POSITIONING
1616MARKETING IMPLICATIONS OFCONSUMER BEHAVIOR – 4PS Developing PRODUCTs or services What ideas do consumers have for new products? What attributes can be added to or changed in an existingoffering? What should our offering be called? What should our package and logo look like?
1717MARKETING IMPLICATIONS OFCONSUMER 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?
1818MARKETING IMPLICATIONS OFCONSUMER BEHAVIOR Making PRICING decisions What price should be charged? How sensitive are consumers to price andprices changes? When should certain pricing tactics beused?
1919MARKETING IMPLICATIONS OFCONSUMER BEHAVIOR Making PLACEMENT (Distribution) Decisions Where are target consumers likely to shop? How should stores be designed?
SOHow does one get to know aboutconsumer behavior?
2222EXHIBIT EN.3: WHO CONDUCTSCONSUMER RESEARCH?
2323AN APPLICATION OF CONSUMERRESEARCH Coke: Market maker and leader 1975: The Pepsi Challenge Early 1980s: Coke losing share Decided to take Pepsi on, change the tasteof Coke (Project Kansas) Conducted extensive research: 55% of participants favored the new Coke(N=40,000) Some dissent: “It was like trying to makethe flag prettier”
2424THE AFTERMATH New Coke launched in April 1985 Old coke withdrawn from market Initial sales response positive HUGE backlash from brand loyals WHY?
2525MORAL OF THE STORY Lack of understanding of consumers In contrast, Pepsi demonstrated an understanding ofconsumer 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”
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 youattend so that you are in the photo! Slides on LMES before class. Note: Webpage slides usuallywon’t have all the examples we discuss in class!