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 people’s 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 Behavior’s 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 Behavior’s 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 Behavior’s 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 Behavior’s 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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