An Introduction to Applied Buyer Behavior

Partha Krishnamurthy Spring 2003

Agenda
Whats this course is about Contrast buyer and consumer behavior Define consumer behavior
What is marketing exchange

Who is interested in consumer behavior How do we study consumer behavior Exercise for Chapter 1

Whats this course about?

This course is about buyer behavior.
rather, consumer behavior. Whats the difference?

Buyer Behavior
Buyer behavior focuses primarily on buyers and buying.
But, often you buy for others (significant others, spouses, friends, children) To buy, you have to engage in activities other than buying e.g., searching, learning to search, using, knowing how to use, and disposing. so buyer behavior cannot be the whole story

Consumption and Consumer Behavior

Consumption
Activities, thoughts and feelings (of individuals and groups) directed toward achieving satisfaction (often using market offerings).

Consumers
Those who engage in consumption activities

Consumer Behavior (Brief definition)

How consumers go about achieving satisfaction.

Examples of Consumption
(and why it is just not buying)

Ulusaba South African Private Game Reserve

$10000 per night, up-close and personal with wild game

Nimmo Bay British Columbia

$26000 for 3-6 guests, 4 days/nights. Helicopter and Chef on demand, exclusive fishing, dining. Cant keep the fish though!

Personal Perfume
Created for you, and only you. Based on your style, taste, activities etc. Only $32,000

What Does it Mean to Study Consumer Behavior?

It is a study of the feelings, thoughts, and behaviors of consumers.
Specifically, from a managerial point of view, it is a study of how people respond to marketing entities such as products, advertisements, promotion, price etc.

This study is aimed at increasing the likelihood and frequency of the marketing exchange.

What is Marketing Exchange?

Marketing is an exchange process between the consumer and the producer benefits are exchanged for profits; more concretely, goods and services exchanged for money.
Goods & Services

Marketer
Money

Consumer

Marketing strategies are activities geared toward increasing the probability and frequency of the exchanges so that the exchange is profitable and satisfying.

Why should Consumer Behavior be Studied

Suppose, your product is not selling well. Should you decrease the price, increase advertising, offer consumer promotions? If you dont know how consumers respond to these marketing actions, how can you make the decision? Hence, for marketing strategies to be successful, understanding consumer behavior is absolutely important.

How to Study Consumer Behavior:

A Real World Application of
How Studying Consumer Behavior Facilitates Marketing Exchanges

Activebuyersguide.com is a website which assesses your goals, preferences, what you like and dont like about the features of products and then creates a list of products that fit your needs.
It provides the degree of fit between your preferences and the product features, descriptions of features etc. It encourages/facilitates marketing exchange

A Correction
In this course, our study of consumer behavior will also focus on:
consumer satisfaction. consumer well-being. sometimes these goals may have little to do with the probability/frequency of marketing exchange.

Returning to Consumer Behavior

What do we study?
Primarily, three aspects
Affect/Cognition:
Feelings (I love the restaurant) Thoughts ($14.99 for a bowl of soup? Why is it so expensive?)

Behavior:
Action (Going to the restaurant)

Environment:
Context (The lighting in the restaurant)

In other words, we will be examining consumers affective/cognitive and behavioral responses in the environmental context.

Relationships among groups interested in consumer behavior

Marketing organizations

Marketing strategies

Public Policy

Government and political organizations

Consumer activities Consumers

Approaches to the Study of Consumer Behavior

Approach Core Disciplines Interpretive

Cultural anthropology

Primary Objectives

Understand consumption and its meaning

Primary Methods

Long interviews & focus groups

Approaches to the Study of Consumer Behavior (contd)

Approach Core Disciplines Traditional

Psychology & Sociology

Primary Objectives

Explain consumer decision making and behavior

Primary Methods

Experiments & Surveys

Approaches to the Study of Consumer Behavior (contd)

Approach Core Disciplines Marketing Science

Economics & Statistics

Primary Objectives

Predict consumer choice and behavior

Primary Methods

Math-modeling & Simulation

Exercise # 1
Out of Class Exercise

Home Work: Vacation Fantasy Consumption Story

Surf the web, and based on information available in the web, and create an imaginary vacation, complete with details about the vacation ($5000 budget). Describe the vacation as if it were a story (2 pages, 10 points).

To be handed in class next Monday.

Type written, double-spaced, 1-inch margins on all sides, times-roman 12-point font only.