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Introduction to Consumer

Behavior
Session 1

What is Consumer
Behavior?

. is defined as the
study of the buying
units and the
exchange
processes involved
in acquiring,
consuming, and
disposing of goods,
services,
..

What is Consumer
Behavior?
Consumer behavior
is a
Most marketers recognize that
process.

consumer behavior is an ongoing


process, not merely what happens
at the moment a consumer hands
over money or a credit card and in
turn receives some good or
service (buyer behavior).
The exchangea transaction
where two or more organizations
or people give and receive
something of valueis an integral
part of marketing.
The expanded view emphasizes
the entire consumption process.

Stages in the Consumption Process

Actors in Consumer
Behavior
Consumer behavior

B.
involves many different
Aactors.
consumer is generally thought
of as a person who identifies a
need or desire, makes a
purchase, and then disposes of
the product during the three
stages in the consumption
process.
The purchaser and user of a
product might not be the same
person.
A separate person might be an
influencer. This person provides
recommendations for or against
certain products without actually
buying or using them.

Why Study Consumer


Behavior?

Consumer Analysis as a Foundation of


Marketing Management
Marketers attempt to satisfy needs and
wants of their target market
Marketing involves the study of
exchange process in which two parties
For marketers to create a successful
exchange they must understand the
factors that influence consumers needs
and wants
Consumer primacy is the principle on
which the entire field of marketing rest
The principle insists that that consumer
should be at the center of the
marketing effort

Why Study Consumer


Behavior?

Public Policy and Consumer Behavior


The development of laws and
regulations that impact consumer in
the market place
Elimination of advertisement on
cigarette industry
The study of consumer
misbehavior , sometimes called the
dark side of consumer behavior.
Consumers can act unethically ,
misuse products, engage in
behaviors that risk life and limb

The Consumer Dark Side


Consumer
terrorism

Addictive
consumption

Compulsive
consumption

Consumed
consumers
Illegal activities

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Copyright 2011 Pearson
Education, Inc. publishing as
Prentice Hall

The Consumer Dark Side


Consumer Terrorism

The terrorist attacks of 2001 had a tremendous impact on


consumerism throughout the world. Such effects give the
indication that both natural and man-made disruptions to
financial, electronic, and supply networks can be devastating.
Although bioterrorism has occurred in the past, the threat of
such attacks is more prevalent than ever.
Addictive Consumption
Consumer addiction is a physiological and/or psychological
dependency on products or services. New examples of this
might be video gaming or SMS addictions.

The Consumer Dark Side


Compulsive Consumption
Compulsive consumption refers to repetitive shopping, often
excessive, as an antidote to tension, anxiety, depression, or
boredom.
These people are often called shopaholics.
Note that compulsive consumption is different from impulse
buying
Negative or destructive consumer behavior. Three aspects
are:
The behavior is not done by choice.
The gratification derived from the behavior is short-lived.
The person experiences strong feelings of regret or guilt
afterward

The Consumer Dark Side


Gambling is an example of consumption
addiction that touches every segment of society
Consumed Consumers
People who are used or exploited, whether
willingly or not, for commercial gain in the
marketplace can be thought of as consumed
consumers. Examples include:
Prostitutes
Organ, blood, and hair donors
Babies for sale

The Consumer Dark Side


Illegal Activities
Shrinkage is an industry term for inventory
and cash losses due to shoplifting and
employee theft.
A growing form of fraud involves serial
wardrobers who abuse exchange and return
policies
Some types of destructive consumer behavior
can be thought of as anti-consumption
whereby products and services are
deliberately defaced or mutilated

Why Study Consumer


Behavior?
Consumer Behavior and Altruistic
Marketing
Altruistic Marketing is a field of study
that:
1. Researches the causes of negligent
consumer behavior
2. Applies the finding to develop
treatment and/or preventive methods
to reduce the maladaptive actions of
consumers
3. Suggest ways to influence people to
act more responsibly in their
consumption of dangerous goods and
services

The Meaning of
Consumption
A fundamental premise of
consumer behavior is that people
often buy products not for what
they do, but for what they mean.
People, in general, will choose the
brand that has an image (or even
a personality) that is consistent
with his or her underlying needs.
Role theory takes the view that
much of consumer behavior
resembles actions in a play.
Consumers have roles and they
may alter their consumption
decisions depending upon the role
being played at the time.

The Meaning of
Consumption
Consumers can develop relationships
with brands:
Self-Concept Attachment
The product helps to
establish the users
identity

Interdependence

The product is a part of


the users daily routine

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Nostalgic Attachment
The product serves as a
link with a past self

Love
The product elicits
emotional bonds of
warmth, passion, or
other strong emotion

Discussion Question
Give some examples of products that
might be consumed strictly for
image.
How does the image of the product
enhance your sense of self when you
use or consume the product?
Give some examples of products that
may remind you of some pleasant
happening in the past

Exchange Processes and Consumer


Behavior
Exchange is the
process that
involves the
transfer of
something
tangible or
intangible, actual
or symbolic,
between two or
more social actors

Prerequisites for Exchange:


Two or more parties must be present
Each party has something of value to the
other
Each party is capable of communication
and delivery
Each party must be free to accept or reject
the other's offer
Each party must believe that it is
appropriate or desirable to deal with the
other

Elements of Exchange
Six Types of Resources Are
Exchanged:

Goods
Servic
e
Money

Informatio
n
Status
Feelings

Dimensions of Exchange
Relations
Four types of consumer exchange
relations have been identified:
Restricted versus Complex Exchanges
Internal versus External Exchanges
Formal versus Informal Exchanges
Relational versus Discrete

Relational exchange
Current hot topic in marketing
Characteristics
long term
reciprocal obligations
non-economic rewards: market embedded
ness--social ties between buyer and seller
increase perceived value of exchange.
extensive formal and informal communications
high interdependence
planning

Relational exchange practiced between


members of marketing channel

Market Embeddedness
The social ties between buyer and
seller increase the perceived value of
the exchange.
Examples, house parties of:
Tupperware
Mary Kay Cosmetics

Customer Value, Satisfaction, Trust,


and Retention
The goal of all marketers is to build and maintain successful
relationships with their consumers.
This occurs by offering a product which has benefits that the consumer
values.
In addition, they see the value of those benefits as exceeding the cost
of the product the cost in terms of money, time, and opportunity
costs.
If a product delivers value, the company is likely to have a high level of
customer satisfaction.
They will trust the marketer and continue to purchase the product. In
addition, they will tell others about the product and speak highly of it
when asked or when reviewing the product online.
A company with strong customer relationships will be able to achieve a
high level of customer retention their customers will not defect to
the competitor or stop using their product. They will retain these
customer over time and will be more profitable due to these valuable
loyal customers.

Customer Value,
Satisfaction, Trust, and
Retention
Successful Relationships

Chapter One Slide

Successful Relationships
Value,
Satisfaction,
Trust,
and
Customer
Retention
Value
Customer
Satisfaction
Customer
Trust
Customer
Retention

Defined as the ratio between


the customers perceived
benefits and the resources
used to obtain those benefits
Perceived value is relative and
subjective
Developing a value proposition
is critical
If the value propositions are
clear and applicable to the
consumer, they will
understand the strength of the
product benefits.
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Chapter One Slide

Discussion Questions
How does
McDonalds
create value for
the consumer?
How do they
communicate this
value?

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Chapter One Slide

Successful Relationships
Value,
Satisfaction,
Trust,
and
Customer
Retention
Value
Customer
Satisfaction
Customer
Trust
Customer
Retention

The individual's perception of the


performance of the product or service in
relation to his or her expectations.
If you fall below the consumer's expectations,
then the consumer is not satisfied, but if you
exceed expectations then you can create
customer delight.

When customers are highly satisfied, they


can become Loyalists who continue to
purchase
Apostles, who provide very positive
word-of-mouth.
When customers are disappointed, they
can become Defectors and move to the
competition
Terrorists, who spread negative wordof-mouth. Some dissatisfied customers
become hostages and stay with the
company but are very unhappy.
Mercenaries are satisfied but are not
really considered loyal and will move from
Chapter One Slide
company to company

Successful Relationships
Customer trust is
Value,
closely related to
customer satisfaction.
Satisfaction,
Trust in a company
Trust,
and
Customer
helps build loyalty.
Retention
Value
Consumer trust differs
Customer
based on the media and
Satisfaction
the source of the
message.
Customer
This is seen in
Trust
advertising where
Customer
customers trust word-ofRetention
mouth much more than
Copyright 2010 Pearson Education,
messages
Inc. publishing as Prentice marketing
Hall
33
Chapter One Slide

Successful Relationships
Value,
Satisfaction,
Trust,
and
Customer
Retention
Value
Customer
Satisfaction
Customer
Trust
Customer
Retention

The objective of providing


value is to retain highly
satisfied customers.
Loyal customers are key
They buy more products
They are less price
sensitive
Servicing them is
cheaper
They spread positive
word of mouth
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Chapter One Slide

Top 10 Ranked U.S. Companies in Terms of


Consumers Trust and Respect of Privacy

Top 10 Companies
American Express
eBay
IBM
Amazon
Johnson & Johnson
Hewlett-Packard
U.S. Postal Service
Procter and Gamble
Apple
Nationwide
Hall

Chapter One Slide 26

Customer Profitability-Focused
Marketing
You are probably familiar with segmentation
based on demographics, such as age and
gender.
Another common segmentation scheme used
by marketers is to segment customers by their
profitability to the firm.
With this method, marketers can offer higherlevel services to their platinum customers who
are more valuable to the marketer, more likely
to try new offerings, and are often not price
sensitive

Customer ProfitabilityFocused Marketing


Platinum

Tracks costs and


revenues of
individual consumers
Categorizes them
into tiers based on
consumption
behavior
A customer pyramid
groups customers
into four tiers

Copyright 2010 Pearson Education,


Inc. publishing as Prentice Hall

37

Chapter One Slide

THE TRADITIONAL MARKETING


CONCEPT

VALUE- AND RETENTIONFOCUSED MARKETING

Make only what you can sell instead


of trying to sell what you make.

Use technology that enables


customers to customize what you
make.

Do not focus on the product; focus on


the need that it satisfies.

Focus on the products perceived


value, as well as the need that it
satisfies.

Market products and services that


match customers needs better than
competitors offerings.

Utilize an understanding of customer


needs to develop offerings that
customers perceive as more valuable
than competitors offerings.

Research consumer needs and


characteristics.

Research the levels of profit


associated with various consumer
needs and characteristics.

Understand the purchase behavior


process and the influences on
consumer behavior.

Understand consumer behavior in


relation to the companys product.

Realize that each customer


transaction is a discrete sale.

Make each customer transaction part


of an ongoing relationship with the
customer.

Copyright 2010 Pearson Education, Inc. publishing as Prentice Hall

38

Chapter One Slide

Three Research Perspectives on


Consumer Behavior

The DecisionMaking
Perspective

The Experiential
Perspective

The Behavioral
Influence
Perspective

The Decision-Making
Perspective
. . . proposes that
buying results from
consumers
perceiving that
they have a
problem and then
they move through
a series of rational
steps to solve the
problem

Generic Decision
Model

Problem
Recognition
Search
Alternative
Evaluation
Choice
Post-acquisition
Evaluation

The Experiential Perspective


. . . proposes
that in some
instances buying
results from the
consumers need
for fun, to create
fantasies, obtain
emotions, and
feelings.

The Behavioral Influence


Perspective

assumes that strong


environmental forces propel
consumers to make
purchases without necessarily
first developing strong
feelings or beliefs about the
product.

..

Do Marketers Create Artificial


Needs?

Objective of marketing: create


awareness that
needs exist, not to create needs
Need: a basic biological motive

versus
Want: one way that society has
taught us that the need can be
satisfied

Are Advertising & Marketing


Necessary?
Yes, we can say that advertising and
marketing are necessary because
consumers may not know that solutions to
problems exist without the information
provided by advertising and marketing.
This is the view of the economics of
information perspective.
It points out that there is an economic cost
to searching for information. Advertising
helps consumers by reducing search time

Do Marketers Promise
Miracles?
The failure rate for
new

products ranges from 4080%.


Although people may think
that advertisers use magic
to sell products, marketers
are only successful when
they promote good
products
Advertisers simply do not
know enough about people
to manipulate them

Discussion
Advertisers are often blamed for
promoting a materialistic society by
making their products as desirable as
possible.
Do you agree with this?
If yes, is materialism a bad thing?
If no, what are your reasons?

Interdisciplinary Research Issues in


Consumer Behavior
Disciplinary Focus

Product Role

Experimental
Psychology

Perception, learning, and memory processes

Clinical Psychology

Psychological adjustment

Microeconomics/Human
Ecology

Allocation of individual or family resources

Social Psychology

Behavior of individuals as members of social groups

Sociology

Social institutions and group relationships

Macroeconomics

Consumers relations with the marketplace

Semiotics/Literary
Criticism

Verbal and visual communication of meaning

Demography

Measurable characteristics of a population

History

Societal changes over time

Cultural Anthropology

Societys beliefs and practices

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Copyright 2011 Pearson
Education, Inc. publishing as
Prentice Hall

Disciplines in
Consumer Research

MICRO CONSUMER BEHAVIOR


(INDIVIDUAL FOCUS)

Consumer behavior
involves many different
disciplines

MACRO CONSUMER
BEHAVIOR
(SOCIAL FOCUS)
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Experimental Psych
Clinical Psychology
Developmental Psych
Human Ecology
Microeconomics
Social Psychology
Sociology
Macroeconomics
Semiotics/Literary Criticism
Demography
History
Cultural Anthropology

2/13/15
Copyright 2011 Pearson
Education, Inc. publishing as
Prentice Hall

Wheel of Consumer Behavior

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2/13/15
Copyright 2011 Pearson
Education, Inc. publishing as
Prentice Hall