Introduction to CG onsumer Behavior and Marketing Strategy Online Shopping-2009 asketin to constmers via the svt bas masa for Actors. Hallows products and offer 24 bons day 7 days peuk, 365 ays a yea iallows products a services ton palin an ice rmanpor: itis cont feet in that it sao the sed fr stones, paperreatalag, and salespeor pe 1 provides means for developing one eatonsps with con sours nel establish databases for eoudct research, Online Busine torConsumer marketing re quires marketers to Aetiver the products and ser tional marketing dees ii 1.2000, marketers prowed their abity tosenv consisnens ein, and Internet sles toconsuners eontinge to grow faster tbs Form of retating, Ahongh the e-em rere shaken the easly 200 le many sualyts to declare tat the Internet ws overhypedl asa marketing tool tis now imly ‘established os ential clement of overall ste ting strategy One major caiteiin of online marketing is tat it reaches only asia sezment of the pop lation, Hooves research snes tha ntemct lppers reflected snilar gender ratios ed income eves the population the United States. ACNielsen reser fond sone than 143 wlion U.S. households to be active bonne Intemnet users. The L1 countries tracked by Nieken total over 315 milion Ionselolds, More than 40 millon bonselolds in Japan ere ative Inert git 32 iin fn Gera nd 23 lion in he ‘nite Kindo. Ths, Internet artes I anatket vol sen toe abl to each th if they use appropriate strategies t { second major exticism of online mar retina is that consumers shop on the Web & collect formation about produc t do not buy. Analyst tho consmnuees preferred to shop ia p stores and did not want tH sees to credit ear or persona information‘Chapter One sont online, However, recent research formed that tvo-thids of shoppers with Internet aces nctuily made a purchase online. Appar cently improved seeunty on the Wel has as snaged the foars ff many online shoppers So what do consumers buy online? Ae cord regent study, travel-related pur chases, including ailing tickets, topped the that books, CD/DVD, several studies have shown Jeo products, com: puter software, apparel and accessories, and specialty gift tems like lowers account for a significant portion of Web-based pur pases. Computer hardware, entertainment related services, and housewares also ar large categories Introduction to Consume Behavior and Marketing Strategy thers se the Web forthe vast selection ‘of products and servioes available, I'you are looking for unusal plants and landscaping. including miniature A ne plants fron Oregon o 40 varletios of eact grown from swodlings collected from the Grand Canyon, contact John Shelley’ Garon Center & Nursery in Winterstown, Pennsylvania, at 1 sewtigdnetsscom, Looking for high-on mountain bike components and acoessories the kind you ean find in Toca shops? Eo, contact Aardvark Cycles in Provo, Utah, at worntsaardvarkeyeles.com. Ifyou want t0 bid om collectibles, such as an early 60s Bar bio ora Lionel train set from the 1950s, eon tact oBay at webay:com, Sourees: Anick Jesdanun, “ternet Not Key In Buying Choees,” Wisconsin Stato Journal, May 19, 2008, .1A+; Enid Burns, "Active Home Web Use by Country, January 2008" clckz.com, March 13, 2006: Enid Bums, "Retail Sales Grew in 2008; clikz.com, January 5, 2006; Timothy J. Mullaney, Heather Grean, Michael Arn, Rober O. Hel, and Linda Hillstoin, "The E-Biz Suroriso' Business Vie0k, May 12, 2003, 9p, 60-68; Ken Cimino, “Reports Paint Proto ofan Internet Shopper” Ecom rmorceTimes.com, July 13, 2001; www.acnieleen.com, Screen capture reprinted by permission of John Sholley’s Garden & Nursery Center, Ine. Microsoft Internet Explorer® screen snot reprinted with permission from Micrasoft Corporation,Section One A Per pectiew on Consumer Behavior ow ean eonsuner behavior research help fntemvetsiarketes iaerease tele eevee ol success? Marketers have loug argued that the marketing foncept is the appropriate philosophy for conducting business simply stated. the marketing concept st sts an organization should satisfy com sumer needs and wats to make profits. To implement the marketing enneepl aoe must midetstand their enstomers ankl stay elove to ther to provide producks find services that eonstsners will purchase and ase appropriately Hee iota the marketing concept ws not fully understood or ipl mented properly by U.S. Gms. Often, even firms that accepted the merits concept in principle did not recognize that the marketing eaneept fg red the raanization to change its existing practices dramatically: Ip gener these firms oreted inplementing the marketing concept as a marketing tase rather than vanivation had to be involved. Although these fand cousumer research, this roscarch: was sel- ing not just the marketing strategy but also the Something in whieh the entire 0 Counpanies conducted market dom nsed as the basis for desi centire organizational strategy errr of te must success companies ithe world have become 3 By leaning the entire organization to serve consumers and stay close to ther These camupanies are conitted to developing quality prodets ad services and selling ct hone at a price that ives consumers hgh valve. Tn these companies, the 1 ing department, as well as design. em finance, and other departments, foens on doin value of produets to consumers. Some firms have fond they can ach product quality andl reduce eosts at the same ime, and they ences re omnployees aonanhont the company to seek ways to do so, Other firm fist determing what consumers want and how march they are will neering, production, human resources. Fhetr jobs in ways that enhance the to pay for a product and then Sean rpatnce and market the best-quaity prodet they ean for the price cone syumuers are willing to pa ‘Gonpanies are waking changes to sorve crnstmers better for thine mies 0 Fa eetissmatie snceess of Japanese companies, sch as Toyota and Soa, that foeus on providing consnsvers with value-Taden products bss spurred other comps to oe eat ly prenious years, many U.S. companies con scl almost anything Fea neihle to pradiiee. Consumers accepted the Level of quality of goad and services prodiced by U.S. companies as being as good as enukl be expect 1, Ho saa iperican coustiners discovered the stperior quality and Tower prises of shan Japanese products, they began to realize that many “anerican products offered aioe alte andl shifted to purchasing foreiga-made goods, Several C'S. compas hhad to redesign their pete not onfyin the United States but also in world snarkets Many have done so andl a dork Teadets in ther ndstres while othicrs have filed to da so aad are ne aniations to serve consumers in order to survive and. com Jonger strong conspetitors in their industries Hee eenad major reason for the shit to focusing on eonsuasers i the dramatic cane in the quality of consnmer anl marketing research, tn the past, companies ep dal not have detailed information om the 9 Ar eta they conduct! research to investigate new product concepts and £01) 0 aan leumeness often His researc was not continnons and di nt enti Ne wale Tomstomers, Today computer technology and secnmers and other dls sal purchasers and users of their products on acre companies to know personaly who their enstomees are alte aoe a those consumers of marketing strategy axl changes i stat: Both span dee ora etary can nos earcfly trek eonsumer reetions tones proves ndWhat ls Consumer Behavior? Chapter One Introduction to Consumer Behuwior and services and evaluate marketing strategies better than ever before, Thus, companies arc now better able to actually ianplement the snatketing concept, Consumer Tasight 1.1 offers several examples of newer methods for researching consumers A third reason for the increased emphasis on consumers s the development of the Internet as a marketing tool. [a the past, consumers received most of their informa tion about products and services from traditional print and media advertising and shopped prinasily in brick-and-mortar stores, While this i stil the case for many pur chases, marketers have recognized the potential for e-marketing to completely change the way consumers shop and purchase, This change eould be a threat to traditional manufacturers and retailers unless they adapt their markoting strategies to include electronic commerce. This change is an opportunity for small companies and entre prenemrs, since the startup costs of marketing products and services are greatly reduced compared with traditional marketing methods. In either case, knowledge of consumers’ shopping and purchast o-marketing strategy, thus inereast Savvy marketers know that the Internet ean be used to communicate vast amounts of {information about products and product lines to consumers, to actually sell products and services directly to consumers, and to market to global consumers who could not be reached cost-effectively by traditional marketing methods, Finally, savyy market cers have also recognized that the Internet can he nsed to conduct marketing research studies and collect other usoful infor develop effective marketing strategies, ratterns is needed to develop a successful ie importance of consumer behavior research, ation about consuaners that ean be used to Im sum, many successful companies have recognized the importance of consum crs and have sophisticated approaches and detailed data from which to develop organizational and marketing strategies. All of this should convinee you that the consumer behavior course yon are about to take is an important part of your bust ross education, In the emnainder of this chapter, we will discuss the nature of eon- sumer behavior and the parties involved in studying and analyzing it. We will also investigate some relationships hetwoen consumer behavior and marketing strategy and the vilue of this course for a successful career. Although this text focuses on consumer behavior and marketing stratogy, it should not be forgotten that employ es in every business function should be involved in serving consumers. Consumer Insight 1.2 disensses a method used by retailers to understand consumer shopping patterns The American Marketing Association defines consumer behavior as “the dynunic intoraction of affect and cognition, behavior, and the environment by which haan beings condact the exchange aspects of their lives.”! In other words, consumer behavior involves the thoughts and feelings people experience and the actions they perform in consumption processes. It also includes all the things in the environment that influence these thoughts, feelings, and actions. These include comments from other consumers, advertisements, price information, packaging, product appearance, bl snmer behavior is dynamic, involves interactions, and involves exchanges, tnd many others, It is important to recognize from this definition that con: ‘Consumer Behavior Is Dynamic Consumer behavior is dymaraic because the thinking, feelings, and actions of indi- vidual consumers, targeted consumer groups, and society at large are constantly6 Secon One A Perspective on Consumnar Beh Consumer Insight 1.1 Digging Deeper into Consumers’ Minds and Lives arket researchers use a variely of techniques to learn about consumers. For example, f0cus Groups, surveys, experiments, and scanner data studies have Tong helped marketers develop more effective strategies, However, recent trend in market research is to dig deeper into consumers’ minds and lives using a variety Gf anthropological techniques to better understand the deeper meaning of products and brands. Catherine Dethorne, ad agency Leo Burnett’ director of planning, talls these techniques “getting in under the radar’ Below ‘ea sample of some of the types of research companies are doing. «+ gust as Kimberly-Clark Corporation was about 10 Taunch a line of Huggias baby lotions and bath prod- ticts, it saw sales slip for its Huggies baby wipes. ‘Since traditional focus group research could not come up with a reason for the decline in sales, the com pany tied a new approach, It decided to get consum. Phe to wear a pair of glasses with a camera mounted tn them so researchers could see product usage through the consumers’ eyes. It didn't take iong to ‘see the problem: Although consumers said that they changed babies on beds, the truth was that they Change them on beds, on floors, and on top of wash ing machines in awkward positions. The consumers were struggling with wipe containers and fotions that fequited two hands since one hand had to hold the tid. The company redesigned the wipe package ‘uth a push-button one-handed dispenser and Yesigned the lotion and shampoo bottles so they ‘could easily be used with one hand, changin ‘or example, the Internet has chan (ia [As Mary Flimin chops onions for risoto late one after- oon, a pair of video cameras and two market Tesearchers stationed in @ corner are recording her tvery move. Meg Armstrong and Joel Johnson, who represent a cookware company, want to see how @ {gourmet like Flimin cooks and what she likes. Hours Bier Armstrong and Johnson review their observa: tione: Even though Flimin said she often makes cakes fand bakes with fresh fruit, Armstrong notes that "her baking dishos are stashed in the boondocks, so she oosn't bake much? This insight could not be cap- tured by typical methods that rely on consumers to tell researchers what they do, Thomson Electronics hired E-lab to perform a study to find out how consumers mix listening to music with their daily lives. E-lab did a "beeper’ study in which participants were instructed to write down what they fiore doing when they were paged. Participants Yecorded where they were; what music, if any, was playing: who picked it; and their mood. Researchers ies tailed people around their homes, noting where they kept their stereos and how their music collec tions ware organized. The company was trying to find out how often people sit down to enjoy a CD as ‘opposed to using it for background music. This infor: ation would help Thomson Electronics in its new product decisions. Procter & Gamble developed a program to help its ‘Employees better understand consumer behavior. In one part of the program, employees lived with con. sumers for several days in thelr homes, ate meals ‘yh tho family, and went on shopping trips with ther. J tho way people search for ialorma- tion about products and services. The fat that consumers and their environments ‘constantly changing highlights the importance of ong analysis by marketers to keep abreast of important trends, The dynamic nature of eonstmor behavior makes develupinent of yet dilficnt task, Strat egies an excitin koting strat * that work at one: time o in one market ce eT maserable at other times or in other rnarkets, Boeanse product fife cycles are vhovter than ever before, snany companies have to innovate constantly to create SAP jot value for customers and stay profitable. This involves creation of now products aoe om of existing products, new brands, and now strategies for them. For example, Mercedes-Benz. develope nore complete line of vehicles, inelading aChapter One Introd => In another part, the P&G employees worked behind the counter in Small shops to get insights into why shoppers buy or do not buy a product, how the shop- keeper stacks shelves, and what kind of business: propositions are appealing. This program helped ‘employees understand why consumers buy the prod: Source: A. G. Lafley and Ram Charan, "The Consumer Is Boss: Focus Group, BusinessWeek, Novernber 14, 2005, pp. 120—121 tion to Consumer Beh or and Market we Stratexy 7 ucts they do even ifthe consumers themselves could not articulate the reasons. + Before a Miramax movie opens in theaters, the pre- views are usually screened by groups of movie-goers, around the country observed by psychiatrist Russ Ferstandig. As people watch the previews and answer Ferstandig’s questions, he watches their body lan- guage. Based on, what he hears and sees, he may recommend that the Disney unit change previews to make them more compelling to audiences. He might suggest a short pause to let people catch up with a message or change the wording in a preview, such fas taking out the word comedy in describing the movie An Ideal Husband. + At Norman Thomas High School in Manhattan, inez intron, 14, chats exuberantly with her gitfriends between classes. The topics: singer Lauryn Hill and (Old Navy clothes. Tru Pettigrew, a 30-year-old re- searcher for a company called Triple Dot, leans close. The trend hunter dropped by the public high schoo! to glean intelligence for Eastpak. He listens to the girls mix Spanish phrases into their English chatter— something new to Pettigrew that may result in East pak ads with ‘Spanglish Pettigrew also is interested to hear that the teens, who preferred rival Jansport’s packs, buy as many as eight backpacks to mix with their wardrobes. “That's a key piece of information, he says later Not everyone is cheering these modern market research methods. "t's kind of pathetic that people are wiling to be subjects in order to help marketers get inside a cer- tain group's head and sell, soll, sell,” says Michael Jacobson of the Center for Science in the Public inter= fst. However, respondents are often paid—at least $100 by E-lab—for participating and are free to choose Whether or not they want to be in the study. Fortune, Match 17, 2008, pp. 120-126. David Kiley, “Shoot the ‘Melanie Wells, ‘New Ways to Get into Our Heads’ USA Today, March 2, 1989, pp. 81, 82. Copyright March 2, 1998, Reprinted with permission sport utility vehicle, the ME 350, to try to reach more consumers. Garmin offers a complete line of automotive GPS receivers to meet the needs of different consumer groups with different price-range preferences, Consumer Behavior Involves Interactions Consumer behavior involves interactions among people’ thinking, feelings, and actions, and the environment, Thus marketers need to understand what products and brands ‘mean to consumers, what consumers must do to purchase and use them, and what influences shopping purchase, ‘and consumption, The more marketers know about how these interactions influence individual consumers, target markets of similar consumers,Section One A Persp Consumer Insight 1.2 Snooping on Shoppers to Increase Sales Heese companies nationwide are turning to elec ronie and infared surveillance equipment fo snoop ‘on shoppers in ther stores. Some even conduct old-fash oo ay Hakeouts, complete with walkie-talkes, from cat wwalks in the stores, These companies are not trying 10 Spot shopiers, Rather, they are fearing about shoppers trafic patterns to change consumer buying habits. Take Bashas’s Markets, Inc., in Chandler, Arizona. A study showed that only 18 percent of the grocery acre’ customers ever went down the aisle with greeting sorte. which are high-profit items. So George Fiscus. {he store layout manager, moved the section, sandwich ing t between the floral department and an aisle wih peanct batter, fly, and health foods that regulary re Bp percont of the store's tratfc. Nested in thelr nev Foe. the greeting cards showed a second-quarter sales jump of 40 percent sacking consumers’ every move [s giving marketers oth revealing statistical detail and new insights, The Fosearch efforts have also turned up some Surprises: «+ By peering from the catwalks at 1,600 shoppers, Fo Pecners for Marsh Supermarkets unearthed @ {Foubling trend: People heavily shopped the periphery bf the store-—the produce, dairy, and meat sections — put irequently circumvented the core dry-goods S8¢- on that takes up the bulk of store space. The Indiana tore chain's inner aisles drew only 19 to 30 percent of tratfic, while the periphery accounted for as much ag 80 percent « VideOvart, Ine., a Chicago company that uses ittared sensors in store ceilings 10 track shopping veirts nas spotied a ft of “dippers.” These shoppers car their carts at the ends of aisles and then walk aarp: filing their arms with items from the shelves a they go. Marketers figure such shoppers probably Buy Ieee pecause they are limited by what they can cavty. + Certam departments draw huge numbers of people tat that doesn't guarantee proportionate sales, ac. tording to a study by the Food Marketing Institute cand sooty at Hage, the better they ea satisfy commer reds andl wants and create ator than, For example, one major change in society i the shrinking mumber of vate income constrners axl the increase in ow and high-income SEE Haw this acer affectsconsarners thoughts, flings, ancl actions has portant innplications for snarketing strate its upscale Banana Repul markets while differont thoughts and feelings different reasons and different ay. Some companies are i marks and fhns put less emp He chain and its lower-end Old Navy stores eoping growth of niddle-1 that many consumers who bny clothes from Be ‘their olferings to appeal to the grow pine, expanded to tap these two et Gap stores snore Tanited.? tis Hkely Od Navy have about hr purchases ancl nay have presse them For asis om the ridle-ineo group. Ga ana Republic versus(Chapter One trade group. By retracing the steps of 2.400 shoppers. land checking what ended up in their grocery carts, the institute learned, for instance, that 77 percent of people walked through the bakery department, but ‘only a third actually bought anything there. + Astudy of Procter & Gamble products in Kmart stores found that sales rose sharply when items like coffee and toothpaste were placed outside their normal aisles on display racks. With no coupons or price cuts, sales of the newly located toothpaste rose as, much as 119 percent over a three-week test period, whereas coffee sales soared more than 500 percent. Although primarily a tool for retailers, traffic analysis is being used by consumer product companies as wel. (One tratfic study showed that shoppers often zip through the snack aisle, spending only 42.7 seconds there, whereas they spend more than twice that in the cottee aisle, At a Kroger store in Atlanta, PepsiCo Inc's Frito- LLay unit tried to raise its sales by advertising its chips in the coffee aisle. Over jars of Nestea and Maxwell House, Introduction to Consumer Behavior and Marketing Strat ‘a red sign flashes, “America, Your Chip Has Come In? ‘and suggests that shoppers pick up a bag of Doritos, ‘A study by New York City-based Envirosell Inc. deter- mined that the first 30 fect inside @ store entrance, the ‘decompression zone,” should not be used to sell prod: ucts. Mast consumers need this space to get their bear: ings. They are unintarested in elaborate displays unt they are past this zone. The company also determined that most shoppers, especially women, do not like to enter narrow aisles where they may be jostled from behind. Consequently, tems in hese aisles generally go unsold aca Underhill the founder of Envirosell Inc., advises storekeepers to keep stacks of shopping baskets at vari ‘ous locations within the store. It seems that only 34 percent of shoppers who don't have baskets actually purchase something, while 75 percent of shoppers with ‘baskets buy some items. Interestingly, a woman who shops with another woman spends twice as much time In the store than if she shops with a man, So Underhill suggests plenty of seating be available for men to relax and wait while their wives shop: Sources: Helen Coster, “Conaumer Spy.” Forbes, January 8, 2008, p. 91: ‘Kenneth Labich, “Atlention Shoppers: This Man Is. Watching You’ Fortune, July 19, 1999, pp. 131-124. Copyright 1999 Time, Ino. All rights reserved: The Wall Street Journal. Central Edition [Sta Produced Copy Oni] by Michael J. MeCartty, "James Bond Hits the Supermarket: Stores Snoop on Shoppers Hab- its to Boost Sales’ The Wail Sireet Journal, August 25, 1993, 9p. B1, B5. Copyright 1993 by Dow Jones & Co,, Inc. Reproduced with permission of Dow Jones & Co, In. in the format textbook via Copyright Clearance Center Consumer Behavior Involves Exchanges Consumer behavior involves exchanges between human beings. In other words, people give up something of value to others and receive something in return. Much of con snmer behavior involves people giving up money and other things to obtain proxtuets, and sorvioes, that i, exchanges between buyers (consumers) and sellers (marketers), In fact, the role of marketing in socioty is to help create exchanges by formulating and implementing marketin strategies. Approaches to Consumer behavior is a complex phenomenon and an eclectic field, The majority of plex p Consumer Behavior published research is done by marketing academics who vary greatly in their training, Research objectives, and methods. As shown in Exhibit 1.1, there are three major approaches to studying consumer behavior, The interpretive approach is relatively new in the field and has become quite influential, It is based on theories and methods from cultural anthropology. This approach seeks to develop a deep understanding of consumption and its mean- ings, Studies use long interviews and focus groups to understand sub thin what products and services mean to consumers and what consumers experience in purchasing and using them, Other studies might concern how advertising depicts women, how art and films reflect consumption meaning, ot how posses- sions influence self-images, Although these studies typically are not designed to help marketers develop successful strategies, implications for strategy develop: ment can be inferred from them.aaaaaagaggggaa...ananaxaxaae)l])!])]| — | 40 Section One A Parspctioe on Consumer Behavior | Exhibit 1-4 | | Approaches to the Study of Consumer Behavior ! \ core ny | a ae ee inerrote Cutt anivepology Undetardconsumpion_Longinlrvews ands meas foous ouns | Tone Prvcelogy Pisancoremer decison Eapenments | socal) reg andoehever SUNOS artng sence Econonics Fesriconsmer choco. Waverodeiog stasis trabahanor Smuton | “The traditional approach is based on theories and methods from cogs itive social sand behavioral psychology, aswell as sociology. Tt seeks to develop theories and Tio comuner decision making and behavior Studies involve taperiments and surveys to test theories and develop inaights if such things &s methods to exp career information processing, decision processes, and socal influences fn sannpebavion, This approach has had a profound impact on marketis thought aon nae archers teasing on theory testing anothers on investigating He impact of marketing strategies on consumers Ire marketing science approach is hased oo theories an methods from econey seo nd uatisties, Tr commonly involves developing and testing mathematical models re ae ee ie impact of marketing strategies ou consumer choie and behevion This P P \ approach has become a mainstay in the consumer packs ‘goods industry because it i ar tle large scanner data sets ivan oicieat manner to help voles marketing problems Ut thee approaches have vale and provide sights nto consumes Dehavion t geting atretgy in ciferent ways ad at diferent levels of analy, tnsights fom, ite ae teat in this text, thou the core ofthe books based onthe ta ditional approach oa rr be noted that marketing practitioners spend millions of dollars ct ant atudy consumers, These corapanies do their own research of hit wt ee eswarch firms, ad agencies, consulting firms, and academics to help Taam develop better marketing strategies to serve consumers. These compat Xt aa ny of the three approaches depending on the natare of the marketing pro lent or decision Uses of Consumer As shown in Exhibit 1.2, three Bohavior Research and politica organizations, and consumers Knowle Hehe ior and consumer behavior research. Bach group aoa ey tion ait inflyouces the conspipers interactions and exchanges wth sroups—-marketing organizations, government ge about consumer interested in con. the otber groups. nizations, which inchide not only businesses The first group is marketing 0 attempting to sell products but also hospitals, musenms, parks lave firms, uni seer Ar other organizations that seek exchanges with consumers, Aithoy i the primary emphasis in this texts on exchanges between busin ses and eonsimersChapter One Introd Exhibit 1.2 Relationships among Action-Oriented Gi Interested in Consui Marketing organizations er Behavio Marketing strategies jon to Consume — | Z tivities: ae Behavior and Marketing Strategy 14 Publ ee poliey organizations Consumers | Nonprofit and government organi hee consumers the ideas presented can also be used by other marketing organizations, such as the American Cancer Society, Yellowstone Park, or your college or university The second group in Exhibit 1.2 consists of var ‘ous government and political organizations. These inclide government agencies such as the Federal ‘Trade Commission and the Food and Drug Adminis- tration. The major concern of these organizations is monitoring and regulating exchanges between mar keting organizations and consumers, This is aceom- plished through the development of publie policies that affect marketing organizations and consumers Political organizations inclu stich as Students Against Drank Driving and various industry and trade organizations such as the Ameri can Marketing Association. These sure on marketing organizations and consumers to behave in certain ways e consumer activists roups exert pres The third group interested in consumer behavior ineludes both consumers and organizational buyers who exchange resources for various goods and sex- vices, Their interest is in making exchanges that help them achieve their yoals and in understanding their ‘own behavior, Consumer Insight 1.3 discusses how consumers and marketers change their behavior in difficult econornie environments.12 Section One Perspev on Consumer Behric mm Consumer Insight 1.3 Consumers’ and Marketers’ Reactions to Recessionary Times Tre cession staring 2008 changed the behavior ‘of consumers and marketers. According to a Gallup Pol, 58 percent of consumers said they cut household Spending as 8 result of lower prices inthe stock market nd fears about the economy. They said they cut back on travel for the holidays (63 percent), eating out at restau rants (B1 percent), entertainment such as going to the Inovies (72 percent), and household services such a housekeeping and lawn service (37 percent). Gonsumers also sold old jewelry and ransacked clos- ets to find “stuf” to put on eBay. According to eBay CEO ‘John Donahoe, Americans typically have about $3,200 worth of goods at home they could sell to raise cash. Coupon usage to trim grocery costs also went up for the tirt time in 15 years, Rather than use credit cards, many ‘consumers started saving money to buy something they wanted, and layaway plans in which consumers pay in ‘havanee for items weekly or monthly also made a come- pack eLayaway, a start-up that handles layaway pro grams for 1,000 retailers, had its customer base jump from 150 to 3,000 in the fall of the year. “The number of consumers who had both a fulltime: and a parttime job increased 11 percent over the previ- cus year, according to the Bureau of Labor Statistics, Many of these consumers were trying to increase their income so they could save more to help make up some tf the losses in theit retirement accounts. Also, sales of Blu-ray high definition disks more than tripled during the year as consumers found watching them at home a fot theaper than a night at the movies. Finally, 28 percent of Consumers said they were buying more store and generic brands to save money. ‘So what did marketers do to try to keep merchan dise moving and the economy from stalling? Most felallers put products on sale at deep discounts and many companies tried to promote the idea that their products provided value to consumers. For example. Procter & Gamble promoted its new Total Care versions of Tide detergent and Downy fabric softener as prod: ticts that preserved the look of new clothes. In other words, the products would keep clothes looking new fonge’ so consumers wouldn't Rave to buy clothes as foten and could save money. Since consumers were eating more meals at home, Campbell and Kraft banded together to promote a low-cost classic meal. tomato soup and a griled cheese sandwich. “Warm hearts without stretching budgets" read the copy in the ad that shows @ package of Kraft Singles cheese slices ‘and a can of Campbel’s tomato soup. Kratt’s DiGiorno pizza aired ads that stated that a home-delivered pizza ost twice as much as a DiGiorno Gillette ran a series of ads to justify the $20 to $25 price for eight Fusion Power razor blades arguing that Ih the world of high performance, what machine can you tun for as litle as a dollar a week?" Kellogg cereals Frayed up the idea that @ bow! of cereal with milk was a real that cost only 50 cents. It aiso snatched up paid ‘earch terms including “cereal” “breakfast” and “value fon portals such as Google.com to drive budget congcious consumers to its Web site. When they click on the ad, consumers are linked to a site that plays up the ‘pxcellent economic value" of Kellogg's cereal and offers: a dollar-off coupon to buy some. Velveeta cheese ads fell shoppers to “forget the cheddar, Velveeta is better. ‘and claim that a package of Velveeta is “twice the size of ‘cheddar, for the same price” in. sum, many consumers tried to find new ways to five within their means and stil live comfortably during a dificult economic time. Many marketers tried to convince consumers that their products provided good value for the money, but in a way that did not detract from their high-quality image, sources: Jame ODoanel and Sandra Block “Consumes Got Fuga So Retailers Get Crear USA Tes, Janes 2009, Soureee 3 Feverman, Americana Aro Digging Deep o Save Maney, USA Td Nove 17-2908, he; Laura Petrecca, Nlarketers Try to Promote Value Without Cheapening Image \ marke cence exchan: strateggios are typically Consumer Behavior's Role in Marketing Strate sto achiove e 1g strategy is the design, implementation USA Today, November 17, 2008, p.1Br. and control of a plan to inf rivational objectives. In consumer markets, marketing, osiamed to increase the chances that consumers will have ree houelts and Foaling about particnlar products, services, an! brands, andChapter One Introduction ‘onsumer Behavior and Marketing Strategy 18 will uy them and repeatedly purchase them. Also, marketing strategies are developed by retail stores, catalog retailers, e-tailers and other direct marketors to incroase the chances that consumers will have favorable thoughts and feelings about purchasing from them and will actually do so. In addition, credit card companies, ATM companies, banks, and other organi- rations that make funds available for purchases develop strategies to inevease the chances that con- sumers will use their services. Marketing strat involve developing and presenting marketing stimuli directed at selected target markets to influence what they think, haw they feel, andl what they do, Of course, organizations develop strategies at many levels, from planning the future of large, mul- tinational, multihusiness corporations like General re a tt nn Bleetric and Philip Morris down to planning a ee eee ett change in the strategy for a single brand/model or a Understanding consumer be ‘and market a number of su single store, Although consumer behavior research is useful for all levels of strategic analysis, itis most commonly studied and applied at the brand and store levels, Also, published consumer behavior re- search most frequently focuses on North American markets. Although this hook attempts to reflect the state of the art in terms of knowledge about con sumer behavior, it will also go beyond these bound- aries when possible Exhibit 1.3 lists some marketing strategy questions that knowledge of consumer behavior and con- sumer behavior research can help answer. They can be addressed in formal consumer research, informal discussions with consumers, and intuition and thinking based on sound understanding of consumer behavior principles It should be clear from Exhibit 1.3 that understanding consumers isa eritical © to ana. lyze and understand not only eonsumers of their produets and brands but also consumers of competitive offerings and the reasons they purchase competitive products. Understanding markets and developing and implementing superior clement in developing successful marketing strategies. Marketers hav strategies to attract and hold them profitably is the essence of marketing strat- egy. Consumer Insight 14 discusses the use of consumer research to turn around a failing company Finally, it should be clear that marketing strategies, particularly as developed and implemented by suecessful companies, have a pe and society at large. We believe that marketing strate sumer needs and wants but also change what consumers think and feel about themselves, about various marketing offerings, and about reasons and situations ies not only adapt to con for purchase and use. This does not mean that marketing is unethical or an inap- propriate activity. However, the power of marketing and the ability of consumer research and analysis to yield insight into consumer behavior should not be dis conted oF inisused.rr — ————————— | 14 Section One A Parspeetiow on ( 1 Behav! i Exhibit 1.3 Some Marketing Strategy Questions Consumer Behavior Research Can Help Answer +. Which consumers ae likely to buy this product and our brand, what are they tke, Row are they diferent rom consumers who don't buy, and how do we reach them? \ ‘2. What rtera ae consumers likely fo use to decide which products and brands fo purchase? nat wil the consumer decision process ental, and what wilinfence #2 5, ls brand image, convenience, price, paricular produc attributes, r other criteria most important to consumers ofthis product? ‘4 What strategies should be used to encourage consumers to purchase ou brand and not purchase those of competitors? 5, How do consumers process information about produets, and how can tis process be inivenced toincrease th chances that consumers wll ave a favorable impression of ur brand? 6, What do consumers think and fel about our brand versus Competive brands? What can be done to improve ther opinion of our brand? +7 How can we increase the chances that consumers wl process information about our brand ‘and come up with a favorable impression? 6, What behaviors do consumers have to periorm to purchase and use tis product and our brand? How can we ineease the frequency with which consumers perform these behaviors? ‘Are thete opportunites to change the way consumers purchase and use this product thet could give usa compete advantage? ‘9, in what stuatons are consumers likely to purchase and use tis produc and out brand” How ‘can the number ofthese situations be increased? What environmental factors influence puichase and use? 10. What price are consumers wing to pay for our produc and st believe they are geting good ‘lve? Should sales promotions be used and I's, which ones and how shoulé they be timed? 11. What can we do to satsty and even delight consumers wit our brand 80 that hey become loyal customers? +, How can we delight consumers of cur brand and also meet the needs of owners, employees, ) suppliers, channel member, society, and other stakeholders? } Online Shopping- AN ccusvamer research, Success brick A first question an Intomet marketer OJ asnomtar ons ike WalMart 08 research is whother poop who wan JCPenney aswel an pntandck or nea a pdt ar abo Internet wer, Ea havo inp hepa by suring aceos to computer and a wallinguoss au