Consumer Behaviour Summary

CHAPTER 1 – THE FOUNDATIONS OF CONSUMER BEHAVIOUR

What is Consumer Behaviour?

Consumer behaviour is the behaviour that consumers display in searching for, purchasing, using, evaluating
and disposing of the products/ services that they expect will satisfy their needs.
The study of consumer behaviour includes:

- How consumers think - How often they buy it

- What they buy - How often they use it
- Why they buy it - How they dispose of it
When acting as consumers, individuals have 1 goal in mind:

- To obtain goods/services that meet their needs and wants. This requires solutions to problems,
and the process is often complex.

Personal Consumers & Organizational Consumers

The personal consumer buys goods/services for:

- His/ her own use

- Use by the whole/member of the household
- A gift for someone else
- In all contexts, the products are bought for final use by individuals (end-users).
The organizational consumer includes:

- Commercial for-profit businesses

- Non-profit businesses
- Public sector agencies (government departments)
- Institutions (schools, churches, sports clubs)
- Organizational consumers buy products to help run their organizations

Buyers, Payers, Users

The marketplace activities of individual involve 3 functions:

- The consumer (user): who consumes or uses the product

- The buyer: who undertakes activities to procure or obtain the product
- The payer: who provides the money to obtain the product
Marketers must decide who to target - e.g. some game manufacturers advertise their products to both
children (users) via websites and to parents (buyers) via email registration.

Why Marketers Study Consumer Behaviour

Changing product life cycles

- Many product categories, and changes in them, are driven by product life cycle.
- Shorter life cycles arise due to the pace of new product introductions and changes in technology.
- Life cycles are increasingly shortened.
Changing environmental views and concerns

- Marketers & policy makers are aware of the potentially negative impact of products & packaging.
- Many consumers are socially aware and favour products that address environmental concerns.

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Changing consumer protection and public policy

- As a result of consumer research and lobbying, marketers have become more aware of their
responsibility to protect consumer interests.
- Practicing public policies in an effective manner enhances an organization’s capability to deal
with consumers and stakeholders alike.
The growing role of services marketing

- Service industry has become increasingly important in current economic situation.

- Marketing service offerings can be difficult as services are:
o Intangible o Inconsistent.
o Perishable o Inseparable
- A knowledge of consumer needs and interests is recognised as being essential to develop
effective marketing strategies.
- Example: Financial product services industry has undergone tremendous metamorphosis due to deregulation and
privatization. Anticipating consumer choices has become necessary.
The growing role of not-for-profit and social marketing

- Organisations in both the public and private non-profit sectors recognise the need for marketing
strategies that target groups.
- NGOs use consumer research to gain a better understanding of target market.
- This allows them to develop more effective marketing.
- Example of Non-Profit organizations: Charities, Foundations, Social Advocacy Organizations
The growing role of global marketing

- Organizations do recognise the need to move beyond domestic markets.

- By marketing globally, they can achieve economies of scale and increase sales.
- This assists in their bid for survival.
- Increasingly the governments of developing economies are encouraging small and medium
enterprises to augment their exporting capabilities.
- An essential aspect of successful expansion lies in precise attribution of the culture, custom and
the rituals of the foreign country.
- Proportionate savings in cost due to increased level of production
Changing technology

- Companies that are responsive to changing technology, and advances in the way that consumers
interact with companies through technology, can leverage greater relationships.
- This technology ranges from websites, to electronic or mobile ordering.
- Consumers have access to more information than ever before and can easily find, or provide,
reviews quickly.
- The change has challenged the current processes of new and established organizations.

1. Customize the products.

2. Effectively analyse marketing data through marketing analytics
3. More informed choices for the consumer.

Development of The Marketing Concept

- Production concept - Selling concept
- Product concept - Marketing concept
- Societal marketing concept

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 Consumer Behaviour Summary

o Seeks to fulfil the needs of the target audience in ways that improve society, while also
fulfilling the objectives of the organisation.
o Marketers should adhere to principles of social responsibility in the marketing of their
goods/services and satisfy needs and wants of their target markets in ways that preserve
and enhance the well-being of consumers and society.

What is Customer Value?

- Customer’s perceived benefits: economic, functional, and psychological.
- Customer’s resources used: money, time, effort, and psychological.
- Developing a value proposition: A innovation, service or feature intended to make the
product/service attractive to consumer.

Customer Satisfaction
Customer’s perception of performance <- Compared to -> Consumer’s expectation of performance

If exceeded: If equalled: If not met:

Very satisfied, delighted Satisfied Dissatisfied

- Positive side: Loyalist; Apostles

- Negative side: Defectors; terrorists
- Hostages: Mercenaries

Building Customer Trust

- Trust is the foundation for maintaining long-term relationships with customers.
- Challenge of establishing and maintaining consumer trust in a company and its products are
becoming a standardized norm.
- Word of mouth and recommendations from other consumers are highly rated measures of trust.

Customer Retention
- The strategy is to make it in the best interest of customers to stay rather than switch.
- Research shows small reductions in customer defections produce significant profit increases due
to the fact that:
o loyal customers buy more products
o loyal customers are less price-sensitive
o it is cheaper to service existing customers
o loyal customers spread positive word-of-mouth and refer other customers.

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CHAPTER 2 – CONSUMER NEEDS AND MOTIVATION

Needs
- Every individual has needs.
- Needs underlie all human actions.
- A need becomes a motive when it is aroused to a sufficient level of intensity. This creates tension
within the individual.
- The basic classification of need are:
Innate or Biogenic (Primary) Acquired or Psychogenic (Secondary)
Needs that sustain life, such as food, water, Needs we learn in response to our culture, such as
shelter, etc. prestige, affection, power, and learning

Goals
- Goals are the sought-after results of motivated behaviour that can be considered to be internal
representation of desired states.
- Goals can be inferred as the end state of the consumer in context of need fulfilment. (Generic goods)
- Needs & goals are interdependent; needs cannot exist without goals.
- Marketers are concerned with consumers’ product-specific goals: which may include the branded
products the they select to fulfil their needs.

What is Motivation?
- Motivation is defined as the driving force within individuals that impels them to action.
- Motivation can also be referred to as the processes that lead people to behave as they do. It occurs when a
need is aroused that the consumer wishes to satisfy.
- This driving force is produced by a state of tension that exists as the result of an unfulfilled need.
- Individuals strive both consciously and subconsciously to reduce the tension they feel by
addressing the need.

Model of the Motivation process

- Tension is the unsettlement of having the unfulfilled need.

- Drive is the urge to fulfil.
- Learning is the acquired moral, ethic, or conduct to be observed.
- Cognitive processes is the knowledge towards fulfilment
- Previous 2 will affect your behaviour

Motivation is a Dynamic Construct: needs and goals are ever changing

Needs are never fully satisfied New needs emerge as old needs
are satisfied
Success and failure influence Substitute goals may be persuaded
goals (if another goal is unattainable)
- Substitute goals is more when you fail your goal, so you need to find another.

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 Consumer Behaviour Summary

- Substitute goals, the goal will change, but the need stays the same.

Hierarchy of Needs Theory

- Abraham Maslow formulated a theory of human motivation based on a universal hierarchy
of needs in 1943. He identified five basic levels of needs.
- There is some overlap between levels, so that no need is ever completely satisfied.
- His theory tends to assume that individuals seek to satisfy lower needs first and as lower level
needs are satisfied, higher level needs emerge.

Maslow’s Hierarchy of Needs

- Safety: healthcare and availability of healthcare

- Social: warmth and satisfying human relationships
- Esteem: inward- self acceptance, success, self-esteem, satisfaction of any work, power; outward-
prestige, reputation, status, recognition
- Self- Actualization: What a man can be, he must be (everything he is capable of becoming).

Maslow Need Hierarchy: Exemplified

An Evaluation of Maslow’s Needs Hierarchy

Has been widely accepted in social science disciplines
Criticism

- The concepts are too general in nature

- It can’t be tested empirically (derived through experiment)
- Culture and time bound (American)
Benefits

- This theory can be a useful tool for understanding consumer motivations as consumer goods
often serve to satisfy a need level
- Offers a framework for developing advertising appeals on a need level and product positioning

Marketing Applications of the Needs Hierarchy

Segmentation applications:

- Used as a basis for segmentation strategies in advertising campaigns

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- E.g. Soft drink ads targeting the youth market and stressing social appeal by showing a group of
young people having and sharing good times.
Positioning applications:

- Determining how the product should be perceived by the target market

- The key is to find an unsatisfied need (niche) that is not being used by a competitor
- E.g. Volvo promoting the safety appeals of their vehicles.
- E.g. Physiological need: health food; medicine; low fat products, Safety: medical care; insurance,
Social: cosmetics, grooming products.

A Trio of Basic Needs – An Alternative Model Proposed by Psychologist: McClelland

- Can be subsumed within Maslow’s need hierarchy: (difference between this and Maslow is that
here they can co-exist)
- Power: person or objects: ego
- Affiliation: Social need
- Achievement: both egoistic and self-actualization need
- You can have all, but only one can be dominant

Mc Clelland Theory
- Individuals with high achievement needs are highly motivated by competing and challenging work.
- Individuals who are motivated by power have a strong urge to be influential and controlling. They
want that their views and ideas should dominate and thus, they want to lead.
- Individuals who are motivated by affiliation have an urge for a friendly & supportive environment.

Motives: Rational vs Emotional

Considered to be two types of motives:

- Rational: consumers select goals based upon objective criteria (height, weight, price, size).
- Emotional: consumers select based upon personal/subjective criteria (pride, fear, , liking).
- This one was under notes: ??idk
o Giving unique emotional experience in services
o Trigger word free.

Positive and Negative Motivation

Motivation can be positive or negative in direction
Positive goal Negative goal
Referred to as an approach object Referred to as an avoidance object
Hedonistic features: encourage “promotion- Utilitarian features: encourage “prevention-
approach” consumers avoidance” consumer
- One consumer may join a gym in order to get fit (an approach object).
- Whereas another consumer may join a gym to stop getting fat (an avoidance object).

Frustration: Cause and Effect

- Failure to achieve a goal often results in feelings of frustration.

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- People often mentally redefine the frustrating situation in order to protect their self-image.
- People adopt defence mechanisms to protect their egos from feelings of failure when they don’t
attain their goals.

Defence Mechanisms
- Aggression: to protect self esteem
- Rationalisation: Inventing plausible reason for not attaining goal
- Regression: Displaying childish behaviour
- Withdrawal: Withdrawing from situation
- Projection: Projecting blame for failure on others
- Daydreaming: Fantasizing to achieve imaginary gratification, fulfilment by thought
- Identification: Identifying with other people or situations, slice of life
- Repression: Suppress your desire for the goal and manifest in another way
- Escapism: Seek to live out a fantasy, avoidance of the reality

Development of Motivational Research

- Freud’s theory of personality provided the basis for motivational research development.
- In the 1950s, Dr Ernest Dichter adapted Freud’s techniques to study on consumers. He utilized
Psychoanalytical techniques.
- Qualitative research techniques were developed to delve into the consumer’s unconscious.
- Organizations like “QRCA” (Qualitative Research Consultant Association) were established to
conduct interdisciplinary research.

Qualitative Research Techniques

Technique Brief Description
Metaphor Allow consumers to express their brand conceptions and feeling in nonverbal/image form. Tools
Analysis such as “ZMET” are utilized
Depth Also referred to as “One to One Interview” follows a non-structured format and is between a single
Interviews respondent and a trained researcher.
Focus Group Constitute of 8-10 participants who meet up with a moderator- researcher analyst to explore a specific
Interviews product or brand.
Projective To explore the unconscious aspects of the consumer with reference to a brand such techniques are
Techniques used which consist of tools such as word association test, incomplete sentences, untitled pictures etc.

From Individual to Focus Group