Chapter 1 Introduction to Consumer Behavior and Marketing Strategy

McGraw-Hill/Irwin

Copyright 2010 by the McGraw-Hill Companies, Inc. All rights reserved.

Three Elements for Marketing Strategy

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Introduction
The marketing concept suggests an organization should satisfy consumer needs and wants in order to make a profit.
Need to understand customers. Must stay close to customers.

Early views on marketing concept

The concept was not implemented in the entire organization and viewed more as a marketing task.

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Introduction (cont.)
Reasons for revised focus on the marketing concept:
Dramatic success of Japanese companies
Focus on providing consumers value-laden products. Superior quality and lower prices of Japanese products. Increased consumer interest in world markets.

Dramatic increase in the quality of consumer and marketing research

Use of technology to identify and know customers personally. Ability to track consumer reactions.
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Introduction (cont.)
Reasons for revised focus on the marketing concept:
Development of the Internet as a marketing tool
E-marketing potential Increased importance of consumer behavior research Ability to conduct marketing research studies

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What is Consumer Behavior?

The American Marketing Association defines consumer behavior as:
The dynamic interaction of affect and cognition, behavior, and the environment by which human beings conduct the exchange aspects of their lives.

Involves thoughts and feelings people experience and actions they perform in the consumption processes.
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What is Consumer Behavior? (cont.)

Includes all things in the environment that influence thoughts, feelings, and actions.
Comments from other consumers Advertisements Price information Packaging Product appearance

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Consumer Behavior is Dynamic

Thinking, feelings, and actions of individual consumers, targeted consumer groups, and society at large are constantly changing. Requires ongoing consumer research and analysis of important trends. Makes development of marketing strategies difficult and exciting.
Shorter product life-cycle increases importance of constant innovation.
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Consumer Behavior Involves Interactions

Interactions among peoples thinking, feelings and actions, and the environment
Marketers need to understand:
What products and brands mean to consumers? What consumers must do to purchase and use them? What influences shopping, purchase, and consumption?

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Consumer Behavior Involves Exchanges

Exchange between people involves giving up of something of value and receiving something in return. Role of marketing in society is to help create exchanges by formulating and implementing marketing strategies.

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Exhibit 1.1 - Approaches to the Study of Consumer Behavior

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Major Approaches to Studying Consumer Behavior

Interpretive
Based on theories and methods from cultural anthropology. Objective is to understand consumption and its meanings. Methods of study involve:
Long interviews Focus groups

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Major Approaches to Studying Consumer Behavior (cont.)

Traditional
Based on theories and methods from cognitive, social, and behavioral psychology, and sociology. Objective is to develop theories and methods to explain consumer decision making and behavior. Methods of study involve:
Experiments Surveys

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Major Approaches to Studying Consumer Behavior (cont.)

Marketing science
Based on theories and methods from economics and statistics. Objective is to develop and test mathematical models to predict the impact of marketing strategies on consumer choice and behavior. This method of study has become popular in the consumer packaged goods industry since it can handle large scanner data sets.
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Exhibit 1.2 - Relationship Among ActionOriented Groups in Consumer Behavior

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Uses of Consumer Behavior Research

Three groups use knowledge about consumer behavior and consumer behavior research
Marketing organizations
Businesses attempting to sell products. Organizations that seek exchanges with consumers.

Government and political organizations

Major concern is monitoring and regulating exchanges between marketing organizations and consumers.

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Uses of Consumer Behavior Research (cont.)

Consumers
Includes consumers and organizational buyers who exchange resources for various goods and services. Interest in making exchanges that help them achieve their goals and the understanding of their own behavior.

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Consumer Behaviors Role in Marketing Strategy

Marketing strategy
Design, implementation, and control of a plan to influence exchanges to achieve organizational objectives. In consumer markets, these are designed to:
Increase chances of favorable thoughts and feelings of particular products, services and brands among consumers. Increase chances of trial and purchase.

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Consumer Behaviors Role in Marketing Strategy (cont.)

Marketing strategy
Developed by manufacturers, retail stores, catalog retailers, e-tailers and other direct marketers to:
Increase chances of favorable thoughts and feelings among consumers about purchasing from them. Increase chances of actual purchase.

Developed by companies that make funds available for purchase to:

Increase chances of usage of services offered by consumers.
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Consumer Behaviors Role in Marketing Strategy (cont.)

Marketing strategies involve developing and presenting marketing stimuli directed at selected target markets to influence:
What they think? How they feel? What they do?

Essence of marketing strategy is to understand markets, develop and implement superior strategies to attract and hold them profitably.
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Consumer Behaviors Role in Marketing Strategy (cont.)

Powerful force on consumers and society at large
The power of marketing and the ability of consumer research and analysis to yield insight into consumer behavior should not be discounted or misused.

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Exhibit 1.3 - Marketing Strategy Queries Consumer Behavior Research Can Help Answer

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Exhibit 1.3 - Marketing Strategy Queries Consumer Behavior Research Can Help Answer

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Summary
Defined the marketing concept and discussed early views. Presented aspects of consumer behavior. Examined three major approaches to consumer behavior research. Identified the groups that use knowledge about consumer behavior and research. Discussed the role of consumer behavior in marketing strategy.
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