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CHAPTER 1
CONSUMER BEHAVIOR AND
MARKETING STRATEGY

Thu Nguyen

Copyright © 2017 by The McGraw-Hill Companies, Inc. All rights reserved.

LEARNING OBJECTIVES

• L1: Define consumer behavior

• L2: Summarize the applications of consumer behavior
• L3: Explain how consumer behavior can be used to develop
marketing strategy
• L4: Explain the components that constitute a conceptual model of
consumer behavior
• L5: Discuss issues involving consumption meanings and firm
attempts to influence them

CONSUMER BEHAVIOR

• Consumer behavior is the study of individuals, groups, or

organizations and the processes they use to select, secure,
use, and dispose of products, services, experiences, or ideas to
satisfy needs and the impacts that these processes have on the
consumer and society.

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CONSUMER BEHAVIOR (CONT.)

• Consumer behavior is a complex, multidimensional process

• Successful marketing decisions by firms, nonprofit organizations,
and regulatory agencies require an understanding of the processes
underlying consumer behavior
• Successful marketing decisions require organizations to collect
information about the specific consumers involved in the marketing
decision at hand.
• Marketing practices designed to influence consumer behavior
involve ethical issues that affect the firm, the individual, and society

APPLICATIONS IN CONSUMER BEHAVIOR

1. Marketing Strategy

2. Regulatory Policy

3. Social Marketing: is the application of marketing strategies and tactics to

alter or create behaviors that have a positive effect on the targeted
individuals or society as a whole

4. Informed Individuals

MARKETING STRATEGY AND CONSUMER BEHAVIOR

• Customer value is the difference between all the benefits derived

from a total product and all the costs of acquiring those benefits
• Value from the customer’s perspective
• Total product- the target market, which is consistently engaged
in processing information and making decisions designed to
maintain or enhance its lifestyle (individuals and households) or
performance (businesses and other organizations).

These market segments are described in terms of demographics,

media preferences, geographic location …

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MARKET ANALYSIS COMPONENTS

1. The Consumers (needs and desires)

2. The Company (financial condition, general managerial skills,production

capabilities, research and development capabilities, technological
sophistication, reputation, and marketing skills)

3. The Competitors (capabilities and strategies)

4. The Conditions (the economy, the physical environment, government

regulations, and technological developments affect consumer needs and
expectations as well as company and competitor capabilities)

MARKET SEGMENTATION
• A market segment is a portion of a larger market whose needs differ somewhat
from the larger market.
• Market segmentation involves four steps:
1. Identifying product-related need sets:
• Need set is used to reflect the fact that most products in developed
economies satisfy more than one need
• Identify need sets by consumer research: focus group, in-depth interview
• Need sets associated with other variables (age, stage in the household life
cycle, gender, social class, ethnic group, or lifestyle…)
2. Grouping consumers with similar need sets: consumers can be grouped into
one segment as far as product features and perhaps even product image are
concerned despite sharply different demographics

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MARKET SEGMENTATION (CONT.)

3. Describing each group: based on their demographics,

lifestyles, and media usage.
4. Selecting an attractive segment(s) to serve: based on firm’s
ability to provide the selected segment(s) with superior
customer value at a profit

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MARKET SEGMENTATION (CONT.)

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MARKETING STRATEGY
➢ Marketing Strategy is the answer to the question: How will we provide superior
customer value to our target market?
➢ This requires the formulation of a consistent marketing mix, which includes the
1. Product: anything a consumer acquires or might acquire to meet a
perceived need.
2. Communications: advertising, the sales force, public relations, packaging,
and any other signal that the firm provides about itself and its products
3. Price: the amount of money one must pay to obtain the right to use the
product.
4. Distribution: having the product available where target customers can buy it
5. Service: auxiliary or peripheral activities that are performed to enhance the
primary product or primary service

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CONSUMER DECISION

• The outcomes of the firm’s marketing strategy are determined

by its interaction with the consumer decision process.

• The firm can succeed only if consumers see a need that its
product can solve, become aware of the product and its
capabilities, decide that it is the best available solution, proceed
to buy it, and become satisfied with the result of the purchase.

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OUTCOMES

1. Firm Outcomes:

1. Product position: an image of the product or brand in the consumer’s

mind relative to competing products and brands (this image consists
of a set of beliefs, pictorial representations, and feelings about the
product or brand)

2. Sales and profits

3. Customer satisfaction

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OUTCOMES (CONT.)

Creating Satisfied Customers: convincing consumers that your brand offers superior value
is necessary in order to make the initial sale.

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OUTCOMES (CONT.)

2. Individual Outcomes:

• Need satisfactions: the actual need fulfillment and the perceived need
fulfillment.

• Injurious consumption: occurs when individuals or groups make

consumption decisions that have negative consequences for their long-
run well-being

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OUTCOMES (CONT.)
3. Society Outcomes
• Economic outcomes: The cumulative impact of consumers’ purchase
decisions, including the decision to forgo consumption, is a major
determinant of the state of a given country’s economy.
• Physical Environment Outcomes: Consumers make decisions that have a
major impact on the physical environments of both their own and other
societies
• Social welfare: consumers’ decisions concerning how much to spend for
private goods (personal purchases) rather than public goods (support for
public education, parks, health care, and the like) are generally made
indirectly by consumers’ elected representatives

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The nature of consumer behaviour

Overall Conceptual Model of Consumer Behavior

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THE NATURE OF CONSUMER BEHAVIOUR

External influences:
• Culture
• Demographics and social stratification
• Ethnic, religious, and regional subcultures
• Families and households
• Groups

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THE NATURE OF CONSUMER BEHAVIOUR (CONT.)

Internal influences:
• Perception
• Learning
• Memory
• Motives
• Personality
• Emotions
• Attitudes

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THE NATURE OF CONSUMER BEHAVIOUR (CONT.)

Self-concept and lifestyle:

• Self-concept is the totality of an individual’s thoughts and feelings
about oneself.
• Lifestyle is how one lives, including the products one buys, how one
uses them, what one thinks about them, and how one feels about
them.

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THE NATURE OF CONSUMER BEHAVIOUR (CONT.)

Situations and Consumer Decisions:
• Consumer decisions result from perceived problems and
opportunities.
• Consumer problems arise in specific situations and the nature of the
situation influences the resulting consumer behavior.

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