Consumer Behaviour

An Introduction

Example 1.
Real estate agents are able to command higher prices for house numbers which contain the number 9, and lower prices for number 8 During periods when consumers are not shopping much (e.g., bad economy), store managers often play slow music within stores. During busy periods (e.g., holiday season), fast music is played

Why?

Example 2
During periods when consumers are not shopping much (e.g., bad economy), store managers often play slow music within stores During busy periods (e.g., holiday season), fast music is played Why?

Example 3.
In the US, the Marlboro cowboy is usually shown alone In Japan, the Marlboro cowboy is usually shown as part of a group

Example 4.
Language Problem Pepsi come alive Come alive out of the grave - Germany Pepsi brings your ancestors back from the grave - China

Drivers of Inhibition
SECURITY AFFILIATION POWER EXCEL

expressions

PRECAUTIONS

RECOGNITION

WARM & CLOSE RELATIONSHIPS

CONTINOUSLY IMPROVEMENT

Focus of message

What is Consumer Behaviour?

Study of consumers and the processes they use to choose, use (consume), and dispose of products and services, including the decision processes that precede and follow these actions.
Also includes how that process impacts the world.

Consumer behavior incorporates ideas from several sciences including psychology, biology, chemistry and economics. "All marketing decisions are based on assumptions and knowledge of consumer behavior," (Hawkins and Mothersbaugh, 2007).

Study of Consumers: by understanding issues

The psychology of how consumers: think, feel, reason, and select between different alternatives (e.g., brands, products) is influenced by his or her environment (e.g., culture, family, signs, media) The behavior of consumers while shopping or making other marketing decisions Limitations in consumer knowledge or information processing abilities influence decisions and marketing outcome How consumer motivation and decision strategies differ between products that differ in their level of importance or interest that they entail for the consumer How marketers can adapt and improve their marketing campaigns and marketing strategies to more effectively reach the consumer

 Occurs either for the individual, or in the context of a group (e.g., friends influence what kinds of clothes a person wears) or an organization (people on the job make decisions as to which products the firm should use). Involves the use and disposal of products and how they are purchased. Influences how a product is best positioned or how we can encourage increased consumption. Since many environmental problems result from product disposal (e.g., motor oil being sent into sewage systems to save the recycling fee, or garbage piling up at landfills) this is also an area of interest. Involves services and ideas as well as tangible products. Impact on society of relevance. E.g. - aggressive marketing of high fat foods, or aggressive marketing of easy credit, may have serious repercussions for the national health and economy.

4 main applications 1
Marketing Strategy by understanding that consumers are more receptive to food advertising when they are hungry, we learn to schedule snack advertisements late in the afternoon. by understanding that new products are usually initially adopted by a few consumers and only spread later, and then only gradually, to the rest of the population, we learn that
1. companies that introduce new products must be well financed so that they can stay afloat until their products become a commercial success and 2. it is important to please initial customers, since they will in turn influence many subsequent customers brand choices.

4 main applications 2
Public Policy
In the 1980s, Accutane, a near miracle cure for acne, was introduced. Unfortunately, Accutane resulted in severe birth defects if taken by pregnant women. Although physicians were instructed to warn their female patients of this, a number still became pregnant while taking the drug. To get consumers attention, the Federal Drug Administration (FDA) took the step of requiring that very graphic pictures of deformed babies be shown on the medicine containers Other examples tobacco, alcohol, etc.

4 main applications 3
Social Marketing - involves getting ideas across to consumers rather than selling something.
Marty Fishbein, a marketing professor, went on sabbatical to work for the Centers for Disease Control trying to reduce the incidence of transmission of diseases through illegal drug use. The best solution, obviously, would be if we could get illegal drug users to stop. This, however, was deemed to be infeasible. It was also determined that the practice of sharing needles was too ingrained in the drug culture to be stopped. As a result, using knowledge of consumer attitudes, Dr. Fishbein created a campaign that encouraged the cleaning of needles in bleach before sharing them, a goal that was believed to be more realistic.

4 main applications 4
Better Consumers - As a final benefit, studying consumer behavior should make us. Common sense suggests, e.g. if you buy a 64 liquid ounce bottle of laundry detergent, you should pay less per ounce than if you bought two 32 ounce bottles. In practice, however, you often pay a size premium by buying the larger quantity. In other words, in this case, knowing this fact will sensitize you to the need to check the unit cost labels to determine if you are really getting a bargain.

Understanding Consumer Behavior: critical to marketers

Provide value and customer satisfaction Effectively target customers Enhance the value of the company Improve products and services Create a competitive advantage Understand how customers view their products versus their competitors' products Expand the knowledge base in the field of marketing Apply marketing strategies toward a positive affect on society (encourage people to support charities, promote healthy habits, reduce drug use etc.)

Need to study ?
The consumer is not a moron. Shes your wife

You cannot take the consumer for granted any more Therefore a sound understanding of consumer behaviour is essential for the long run success of any marketing program

Why is this important?

Out of 11000 products launched by 77 companies, only 56% are present five years later Kuczmaski & Associates Only 8% of new product concepts offered by 112 leading companies reached the market. Out of this 83% failed to reach marketing objectives Group EFO Ltd., Marketing
News, Feb 1, 1993, Pg 2

Consumer thinks, feels, is involved & acts

Behaviour, action drive achieve

construes

Needs, desires, wants

Goals
satisfy

A simple need-satisfaction Motivation Model

Social & psychological construction after Abraham Maslow
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Abraham Maslow Hierarchy of Needs

a simple needs that motivate" theory - not personality Classes of needs Argument
our needs & satisfactions are gratified & balanced but . chronic need deficiencies (neurosis?) motivates action

simple descriptive, but very limited & partial cognitive & developmental implications especially the concept of self-actualisation
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Implementing in the Classroom

SelfActualization Esteem Social
Provide challenges Encourage autonomy Feedback Acknowledge success Introductions Interact with students Inclusive activities Maintain a safe and non-threatening atmosphere Create a comfortable environment Pacing/Breaks

Safety

Physiological Room temperature

MHN applied to business Southbeach Model

Maslows Hierarchy of Needs

Physiological Needs
Physiological needs are the very basic needs such as air, water, food, sleep, sex, etc. When these are not satisfied we may feel sickness, irritation, pain, discomfort, etc. These feelings motivate us to alleviate them as soon as possible to establish homeostasis. Once they are alleviated, we may think about other things.

Safety Needs
Safety needs have to do with establishing stability and consistency in a chaotic world. These needs are mostly psychological in nature. We need the security of a home and family. However, if a family is dysfunctional, family members cannot move to the next level because they have safety concerns. Love and belongingness have to wait until they are no longer in fear. Many in our society cry out for law and order because they do not feel safe enough to go for a walk in their neighborhood. Unfortunately many people, particularly those in the inner cities, are stuck at this level.

 Need to Belong
Love and sense of belonging are next on the ladder. Humans have a desire to belong to groups: clubs, work groups, religious groups, family, gangs, etc. We need to feel loved (non-sexual) by others, to be accepted by others. Performers appreciate applause. We need to be needed. We see numerous examples in advertising where our need for group belonging is tied to consumption of a particular product.

Esteem Needs
There are two types of esteem needs. First is self-esteem which results from competence or mastery of a task. Second, there's the attention and recognition that comes from others. This is similar to the sense of belonging level, however, wanting admiration has to do with the need for power. People who have all of their lower needs satisfied, often drive very expensive cars because doing so raises their level of esteem.

Self-Actualisation
The need for self-actualisations is "the desire to become more and more what one is, to become everything that one is capable of becoming." People who have everything can maximize their potential. They can seek knowledge, peace, aesthetic experiences, self-fulfilment, oneness with God etc. It is usually middle-class to upper-class students who take up environmental causes, go off to a monastery, etc.

Overall Model of Consumer Behaviour

External Influences Culture Subculture Demographics Social status Reference groups Family Marketing Activities Internal Influences Perception Learning Memory Motives Personality Emotions Attitudes Decision Processes Problem Recognition Information Search
Self-Concept & Learning

Alt Eval & Selection Outlet select & Purchase Postpurchase Processes

Dominant Family Purchase - Cozenza 1985

PRODUCT DOMINANT DECISION MAKER Wife Syncratic (both) Husband Husband Husband Wife TYPICAL DECISION Price, style Whether to go, where Type, price, style Company, coverage Company, coverage Style, brand, price

Womens casual clothing Vacations Mens casual clothing Life insurance Homeowners insurance Household appliances

Trends
The general direction in which something tends to move. A general tendency or inclination. Current style; vogue: the latest trend in fashion. Beginning to deviate from normal

fads

trends

fashion

movement

James Lavers Laws of the Timetable of Style

indecent 10 years before its time shameless 5 years daring 1 year smart ******* dowdy 1 year after its time hideous 10 years ridiculous 20 years amusing 30 years quaint 50 years charming 70 years romantic 100 years beautiful 150 years

TRENDS 2010 - JWT (1) consumers will keep exercising restraint till they are confident

search for stability so, brands will have to give more reasons for consumers to open up their wallets

reading the fine print

will look for best value and also read the fine print

maximum disclosure

nutritional facts, environmental facts, ethical business policies

4 the devil wears packaging

economic spotlight on environmental cost

it's BIG and BIGGER than ever

economical and political power shift to BRIC

TRENDS 2010 - JWT (2)

trickle-up innovation

developing countries will lead the way up to developed nations

retooling for an aging world

fast aging world - over 65 one of the biggest segments

life in real time

instant gratification. Now also for informattion real time web

location based everything

mobile & mapping technology. The new microtargeting real time messaging and LBS

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visual fluency

proliferation of innovative visuals that simplify and synthesize it

Psychology of Consumer Behaviour

Oog wanders down the Pliocene beach, searching for food, water, shelter, and a female. Ugh comes the other way, looking for food, water, shelter, and a male. Spotting Ugh, Oog runs up and starts sweet-grunting her, strutting and expanding his puny chest, showing what a prime specimen of primate-hood he is. Ugh looks him over, checks the beach to see if there are any better males around to choose from. Seeing none, she shrugs her narrow shoulders, and accepts Oog's overtures. A minute later they're cracking shellfish with rocks. Millions of years ago, Oog and Ugh, our thousands-great grandparents, were slowly turning into human beings. As they did so, they also laid the basis for human thought, both conscious and subconscious.

Psychology of Consumer Behaviour

Conscious mind:
the one we're aware of (that's what makes it conscious). We perceive with it, think with it, act with it. It's the one that allows us to decide how to react to the world around us or what do to.

Subconscious mind:
the one which influences how we consciously perceive and decide.

In particular, the subconscious mind influences our behavior, what we actually do in response to a stimulus. The subconscious mind is composed of 2 basic elements:
Instincts learned responses.

Behaviour: Instincts
Are hardwired into the brain, the genetic legacy of millions of years of evolution. Arise as ancestral animals react to sensory stimuli in such a way that they survive Makes a creature react automatically to stimuli. The brain carries out instinctive reactions without conscious control. Causes a physical reaction to various stimuli. It is an automatic reaction carried out by the brain. None of those reactions are voluntary or a conscious decision

Behaviour: Learned Response

Learned response is one that mitigates or modifies an instinctive reaction. It is instilled in a person through a series of steps:
emotions belief attitude, feelings behavior

Behaviour:
To buy or not to buy, that is the question
Consumers are influenced in their buying behavior by many psychological factors. Among these:
Peer pressure: Human beings are social animals: we all want to keep up with the Joneses. The right kind of car, the right kind of house, the right kind of neighborhood (where others, presumably, are making the right kinds of consumer choices): these become indispensable components of tribal identity. Branding: It cant be an mp3 player; it has to be an iPod. Its not a hamburger; its a Big Mac. Coke is the Real Thing (unless youre a bit of an iconoclast, in which case Pepsi Refreshes the World.) A brand is a symbolic construct, an image of a product projected into the marketplace, created to foster recognition and allegiance. Brands are associated in the minds of target audiences with the psychological qualities that imbue cachet.

Behaviour:
To buy or not to buy, that is the question
Product placement: When Carrie Bradshaw used Absolut Vodka to make her cosmopolitans, did that make you want to use Absolut Vodka too? Well, it might have if you were a thirty-something single woman and that was the market segment Absolut was targeting. Product placement is embedded marketing in a context in which we dont expect to find advertising. Our defenses are down. If its good enough for Sarah Jessica Parker, a little voice in our brain whispers, its good enough for us. Consumer shopping behavior: The shopping environment itself provides purchase cues. Sugary cereals placed on a shelf thats eye level with the kid in the cart. Tabloids at the supermarket checkout stand. The discount racks at the front of the clothing emporium. The physical layout of a store can make all the difference to whether a consumer views a shopping expedition as recreation or a utilitarian chore.

Variables involved in understanding consumer behaviour

Stimulus ads, products, hungerpangs Response physical/mental reaction to the stimulus Intervening variables mood, knowledge, attitude, values, situations, etc.