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Chapter 1 – Consumers Rule

What Is Consumer Behavior?

The field of consumer behavior covers a lot of ground: It
is the study of the processes involved when individuals
or groups select, purchase, use, or dispose of products,
services, ideas, or experiences to satisfy needs and
desires. Consumers take many forms, ranging from an
8-year-old child begging her mother for a Webkinz
stuffed animal to an executive in a large corporation
deciding on a multimillion-dollar computer system. The
items we consume can include anything from canned
peas to a massage, democracy, Reggaeton music, or a
celebrity like Lady Gaga.

Consumer Behavior Is a Process

In its early stages of development,

researchers referred to the field as buyer
behavior; this reflected an emphasis on the
interaction between consumers and
producers at the time of purchase. The
exchange, a transaction in which two or
more organizations or people give and
receive something of value, is an integral
part of marketing. Although exchange theory
remains an important part of consumer
behavior, the expanded view emphasizes
the entire consumption process, which
includes the issues that influence the
consumer before, during, and after a
Consumer Behavior Involves Many Different Actors
We generally think of a consumer 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. In many cases,
however, different people play a role in this
sequence of events. The purchaser and
user of a product might not be the same
person, as when a parent picks out clothes
for a teenager (and makes selections
that can result in fashion suicide in the view
of the teen). In other cases, another
person may act as an influencer, providing
recommendations for or against certain
products without actually buying or using
Consumers Impact on Marketing Strategy

Understanding consumer Consumers Are Different! How We

Divide Them Up
Surfing cool Web sites is a lot of fun. But, on
the more serious side, why should
Building loyalty to a brand is a very smart
managers, advertisers, and other marketing
marketing strategy,
professionals bother to learn about
so sometimes companies define market
consumer behavior? Very simply,
segments when they identify their most
understanding consumer behavior is good
faithful customers or heavy users. As a rule
business. The basic marketing concept
of thumb, marketers use the 80/20 rule;
states that firms exist to satisfy needs.
20 percent of users account for 80 percent
Marketers can only satisfy these needs to
of sales.
the extent that they understand the people
or organizations who will use the products
and services they are trying to sell.

Consumers Impact on Marketing Strategy

Age Gender
Consumers of different age groups obviously We start to make gender distinctions at a very
have very different needs and early age even diapers come in pink
wants. Although people who belong to the versions for girls and blue for boys. Many
same age group differ in many other products, from fragrances to footwear, target
ways, they do tend to share a set of values either men or women. An all-female marketing
and common cultural experiences that team at Procter & Gamble (P&G),
they carry throughout life. In some cases, who jokingly call themselves chicks in charge,
marketers initially develop a product introduced Crest Rejuvenating
to attract one age group and then try to Effects, the first mass-market toothpaste
broaden its appeal later on. That s what positioned just for women.
the high-octane energy drink Red Bull does.
The company aggressively introduced
it in bars, nightclubs, and gyms to the
products core audience of young
Consumers Impact on Marketing Strategy

Family Structure Social Class and Income

A persons family and marital status is yet People who belong to the same social class
another important demographic variable are approximately equal in terms of their
because this has such a big effect on incomes and social standing in the community.
consumers spending priorities. Not They work in roughly similar occupations,
surprisingly, young bachelors and newlyweds and they tend to have similar tastes in music,
are the most likely to exercise; go to bars, clothing, leisure activities,
concerts, and movies; and consume alcohol and art. They also tend to socialize with one
(enjoy it while you can!). Families with young another, and they share many ideas and
children are big purchasers of health foods values regarding the way ones life should be
and fruit juices, whereas single-parent lived.
households and those with older children buy
more junk food. Older couples and
bachelors are most likely to use home
maintenance services.

Consumers Impact on Marketing Strategy
Race and Ethnicity Geography
African Americans, Hispanic Americans, and Many national marketers tailor their
Asian Americans are the three fastest growing offerings to appeal to consumers who
ethnic groups in the United States. As our society live in different parts of the country.
becomes increasingly multicultural, new Some southerners are fond of a good ol
opportunities develop to deliver specialized boy image that leaves others scratching
products to racial and ethnic groups and to their heads. Although many northerners
introduce other groups to these offerings. For regard the name Bubba as a negative
example, Reebok introduced its RBK shoe line term, businesses in Dixie proudly flaunt
and signed popular urban artists like 50 Cent the name. Bubba Co. is a Charleston-
to promote it. based firm that licenses products such
as Bubba-Q Sauce.

Consumers Impact on Marketing Strategy

Lifestyles: Beyond Demographics Relationship Marketing

Consumers also have very different lifestyles, Interact with customers on a regular
even if they share other demographic basis and give them reasons to
characteristics such as gender or age. The way maintain a bond with the company over
we feel about ourselves, the things we value, the time. A focus on relationships is even
things we like to do in our spare time all of these more vital during the tough economic
factors help to determine which products will push conditions we ‘ve been experiencing
our buttons or even those that make us feel better. when times are tough, people tend to
Procter & Gamble developed its heartburn rely on their good friends for support!.
medicine Prilosec OTC with an ideal customer in
mind based on a lifestyle analysis.

Consumers Impact on Marketing Strategy
Database marketing
Involves tracking specific consumers buying habits very
closely and crafting products and messages tailored
precisely to peoples wants and needs based on this
information. Wal-Mart stores massive amounts of
information on the 100 million people who visit its stores
each week, and the company uses these data to fine-tune
its offerings.

Marketing’s Impact on Consumers
Popular Culture Cont.
Marketing stimuli surround us as Popular culture, consisting of the music, movies,
advertisements, stores, and products sports, books, celebrities, and other forms of
compete for our attention and our entertainment the mass market consumes, is both a
dollars. Marketers filter much of what product of and an inspiration for marketers. It also
we learn about the world, whether affects our lives in more far-reaching ways, ranging
through the affluence they depict in from how we acknowledge cultural events such as
glamorous magazines or the roles marriage, death, or holidays to how we view social
actors play in commercials. Ads show issues such as global warming, gambling, and
us how we should act with regard to addictions.
recycling, alcohol consumption, the
types of houses and cars we might
wish to own and even how to evaluate
others based on the products they buy
or don’t buy.

Marketing’s Impact on Consumers

Consumer-Generated Content Web 2.0

Consumer-generated content, where This important trend helps to define the era
everyday people voice their opinions of Web 2.0 the rebirth of the Internet as a
about products, brands, and social, interactive medium from its original
companies on blogs, podcasts, and roots as a form of one way transmission from
social networking sites such as producers to consumers.
Facebook and MySpace, and even
film their own commercials that
thousands view on sites such as
YouTube, probably is the biggest
marketing phenomenon
of this decade.

Marketing’s Impact on Consumers

The Global Consumer U-commerce

One by-product of sophisticated The use of ubiquitous networks that will slowly but
marketing strategies is the movement surely become a part of us, whether in the form of
toward a global consumer culture, wearable computers or customized advertisements
one which unites people around the beamed to us on our cell phones ( Hey, you’re
world by their common devotion to walking by McDonald’s. Come on in for today’s
brand-name consumer goods, movie burger special. )
stars, celebrities, and leisure

Marketing’s Impact on Consumers

RFID Tag Virtual Consumption and the Power

of Crowds
Many products already carry a plastic
RFID tag that contains a computer There’s little doubt that the digital revolution
chip and a tiny antenna that lets the is one of the most significant influences on
chip communicate with a network. In consumer behavior, and the impact of the
the near future grocery items will tell Web will continue to expand as more and
the store what needs to be restocked more people around the world log in. Many of
and which items are past their us are avid Web surfers, and it s hard to
expiration dates, and your house will imagine a time when texting, Twittering, or
know when you’re pulling in the BlackBerrys and iPhones weren't an
driveway as it turns on the lights and accepted part of daily life.
starts your favorite tunes spinning
before you walk in the door.

Marketing’s Impact on Consumers

B2C e-commerce & C2C e-commerce Blurred Boundaries: Marketing and

And, it s not all about businesses selling to
consumers (B2C e-commerce). The There's no telling where advertising will turn
cyberspace explosion has created a up these days. Spirit Airlines flight attendants
revolution in consumer-to-consumer activity protested when the company proposed new
(C2C e-commerce): Welcome to the new aprons that featured logos for alcoholic
world of virtual brand communities. Just as beverages including Budweiser beer. A San
e-consumers are not limited to local retail Diego high school teacher sells ad space on
outlets in their shopping, they are not limited exams to local businesses to defray the cost
to their local communities when they look for of printing the tests due to school budget
friends or fellow fans of wine, hiphop, or cuts.

Marketing Ethics and Public Policy
Business ethics Cont.

Business ethics are rules of conduct These cultural differences certainly influence
that guide actions in the marketplace whether business practices such as bribery
the standards against which most are acceptable. In Japan, it s called kuroi kiri
people in a culture judge what is right (black mist); in Germany, it s schmiergeld
and what is wrong, good or bad. (grease money), whereas Mexicans refer to
These universal values include la mordida (the bite), the French say pot-de-
honesty, trustworthiness, fairness, vin (jug of wine), and Italians speak of the
respect, justice, integrity, concern for bustarella (little envelope). They re all talking
others, accountability, and loyalty. about baksheesh, the Middle Eastern term
Ethical business is good business. for a tip to grease the wheels of a
transaction. Giving gifts in exchange for
getting business from suppliers or customers
is common and acceptable in many
countries, even though this may be frowned
on elsewhere.
Marketing Ethics and Public Policy

Needs and Wants: Welcome to Consumerspace

Do Marketers Manipulate
Consumers? Consumerspace; an environment where
individuals dictate to companies the types of
One of the most common and products they want and how, when and
stinging criticisms of marketing is that where (or even if ) they want to learn about
companies convince consumers they them. In turn, companies need to develop
need many material things and that and leverage brand equity in bold new ways
they will be unhappy and inferior to attract the loyalty of these consumer
people if they do not have these “nomads”. People still “need” companies but
necessities. in new ways and on their own terms.

Marketing Ethics and Public Policy

Do Marketers Create Artificial Cont.

A Response. A need is a basic biological
The marketing system has come motive; a want represents one way that
under fire from both ends of the society has taught to satisfy the need. For
political spectrum. On the one hand, example, thirst is biologically based; we are
some members of the Religious Right taught to want Coca-Cola to satisfy that thirst
believe that marketers contribute rather than, say, goat s milk.
to the moral breakdown of society by
presenting images of hedonistic
pleasure and encouraging the pursuit
of secular humanism at the expense
of spirituality and the environment.

Marketing Ethics and Public Policy

Are Advertising and Marketing Cont.

A Response. Products are designed to meet
The social critic Vance Packard wrote existing needs, and advertising only helps
more than 50 years ago, Large-scale to communicate their availability. According
efforts are being made, often with to the economics of information perspective,
impressive success, to channel our advertising is an important source of
unthinking habits, our purchasing consumer information. This view emphasizes
decisions, and our thought processes the economic cost of the time spent
by the use of insights gleaned from searching for products.
psychiatry and the social sciences.

Marketing Ethics and Public Policy

Do Marketers Promise Cont.

A Response. Advertisers simply do not know
Through advertising, consumers are enough about people to manipulate them.
led to believe that products have Consider that the failure rate for new
magical properties; products will do products ranges from 40 to 80 percent.
special and mysterious things for Although people think that advertisers have
consumers in a way that will an endless source of magical tricks and
transform their lives. Consumers will scientific techniques to manipulate them, in
be beautiful, have power over others reality the industry is successful when
feelings, be successful, and be it tries to sell good products and
relieved of all ills. unsuccessful when it sells poor ones.

Marketing Ethics and Public Policy
Public Policy and Consumer Activism: America ?
Absolut Impotence. So reads a parody vodka
Concern for the welfare of consumers ad that Adbusters, a non profit organization
has been an issue since at least the that advocates for the new social activist
beginning of the twentieth century, movement of the information age, created.
and activists continue to voice The editor of the groups magazine argues
concerns about a range of issues that America is no longer a country, but
such as child labor, exploitative rather a multitrillion-dollar brand subverted by
advertising, and genetically corporate agendas. He claims that America
engineered food. is no different from McDonald s, Marlboro, or
General Motors (well, let’s at least hope our
country s balance sheet starts to look a bit
better than GMs).

Marketing Ethics and Public Policy
Culture Jamming Transformative
Consumer Research (TCR)
A strategy to disrupt efforts by the
corporate world to dominate our Consumer researchers are themselves
cultural landscape. The movement organizing to not only study but to rectify
believes culture jamming will change what they see as pressing social problems in
the way information flows; the way the marketplace. This perspective is called
institutions wield power; the way TV participatory action research (PAR) or
stations are run; and the way the Transformative Consumer Research (TCR).
food, fashion, automobile, sports, It promotes research projects that include the
music, and culture industries goal of helping people or bringing about
set their agendas. social change.

Marketing Ethics and Public Policy
Social Marketing Green Marketing

As the emerging TCR perspective In addition, green marketing is gaining in

shows, the field of consumer behavior popularity. Firms that adopt this philosophy
can play an important role in choose to protect or enhance the natural
improving our lives as consumers. environment as they go about their business
Social marketing strategies use activities. Some have focused their efforts on
techniques marketers normally reducing wasteful packaging, as when
employ to sell beer or detergent to Procter & Gamble introduced refillable
encourage positive behaviors such as containers for Downy fabric softener.
increased literacy and to discourage
negative activities such as drunk

The Dark Side of Consumer Behavior
Consumer Terrorism Cont.

The terrorist attacks of 2001 were a Even prior to the anthrax scares of 2001,
wake-up call to the free-enterprise toxic substances placed in products
system. They revealed the threatened to hold the marketplace hostage.
vulnerability of nonmilitary targets and This tactic first drew public attention
reminded us that disruptions of our in the United States in 1982 when seven
financial, electronic, and supply people died after they took Tylenol pills
networks can potentially be more laced with cyanide. A decade later, Pepsi
damaging to our way of life than the weathered its own crisis when more than
fallout from a conventional battlefield. 50 reports of syringes found in Diet Pepsi
Assessments by the Rand cans surfaced in 23 states.
Corporation and other analysts point
to the susceptibility of the nations
food supply as a potential target of

The Dark Side of Consumer Behavior
Addictive Consumption Consumer Addiction

Although most people equate addiction Consumer addiction is a physiological or

with drugs, consumers can use virtually psychological dependency
any product or service to relieve (at least on products or services. These problems of
temporarily) some problem or satisfy course include alcoholism,
some need to the point that reliance on it drug addiction, and nicotine addiction and
becomes extreme. It seems we can many companies profit from addictive
become dependent on almost anything products or by selling solutions for them.
there is even a ChapStick Addicts support
group with 250 active members!

The Dark Side of Consumer Behavior

Compulsive Consumption Consumed Consumers

Some consumers take the expression born to Consumed consumers are people who are
shop quite literally. They shop because used or exploited, willingly or not, for
they are compelled to do so rather than commercial gain in the marketplace. The
because shopping is a pleasurable or situations in which consumers themselves
functional task. Compulsive consumption refers become commodities can range from traveling
to repetitive shopping, often excessive, road shows that feature dwarfs and midgets to
as an antidote to tension, anxiety, depression, the selling of body parts and babies.
or boredom. Shopaholics turn to shopping
much the way addicted people turn to drugs or
alcohol. One man diagnosed with compulsive
shopping disorder (CSD) bought more than
2,000 wrenches and never used any of them.

The Dark Side of Consumer Behavior
Cont. Cont.

Check out these consumed • Babies for sale Several thousand

consumers: surrogate mothers have been paid to be
• Prostitutes Expenditures on medically impregnated and carry babies
prostitution in the United States to term for infertile couples. A fertile
alone are estimated at $20 billion woman between the ages of 18 and 25
annually. These revenues are can donate one egg every 3 months and
equivalent to those in the rake in $7,000 each time. Over 8 years,
domestic shoe industry. that s 32 eggs for a total of $224,000.88
• Organ, blood, and hair donors By In one recent case in Germany, police
one estimate, you could make arrested a couple when they tried to
about $46 million if you donated auction their 8-month-old son on eBay..
every reusable part of your body
(do not try this at home).

The Dark Side of Consumer Behavior
Illegal Activities Consumer Theft and Fraud

Many consumer behaviors are not only self- Shrinkage is the industry term for inventory and
destructive or socially damaging but they are cash losses from shoplifting and employee
illegal as well. Analysts estimate the cost of theft (not the condition George experienced in
crimes consumers commit against business at a famous episode of Seinfeld). This is a
more than $40 billion per year. A survey the massive problem for businesses that gets
McCann-Erickson advertising agency passed on to consumers in the form of higher
conducted revealed the following tidbits: prices (about 40 percent of the losses can be
• Ninety-one percent of people say they lie attributed to employees rather than shoppers).
regularly. One in three fibs about his or her
weight, one in four about income, and 21
percent lie about their age. Nine percent
even lie about their natural hair color.
• Four out of ten Americans have tried to pad
an insurance bill to cover the deductible.
• Nineteen percent say they’ve snuck into a
theater to avoid paying admission
The Dark Side of Consumer Behavior

Anticonsumption Cont.

Some types of destructive consumer behavior Anticonsumption can range from relatively mild
are anticonsumption, events in which people acts like spray-painting graffiti on buildings and
deliberately deface or mutilate products and subways to serious incidences of product
services. Some of these actions are relatively tampering or even the release of computer
harmless, as when a person goes online at viruses that can bring large corporations to to send a bag of dog manure to a their knees. It can also take the form of political
lucky recipient. protest in which activists alter or destroy
billboards and other advertisements that
promote what they feel to be unhealthy or
unethical acts.

Consumer Behavior as a Field of Study

Anticonsumption Cont.

Some types of destructive consumer behavior Anticonsumption can range from relatively mild
are anticonsumption, events in which people acts like spray-painting graffiti on buildings and
deliberately deface or mutilate products and subways to serious incidences of product
services. Some of these actions are relatively tampering or even the release of computer
harmless, as when a person goes online at viruses that can bring large corporations to to send a bag of dog manure to a their knees. It can also take the form of political
lucky recipient. protest in which activists alter or destroy
billboards and other advertisements that
promote what they feel to be unhealthy or
unethical acts.