CHAPTER

ONE
Consumer Behavior:
Meeting Changes and
Challenges

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 Two Consumer Entities
Organizational
Personal Consumer
Consumer
• The individual who • A business,
buys goods and government agency,
services for his or or other institution
her own use, for (profit or nonprofit)
household use, for that buys the goods,
the use of a family services, and/or
member, or for a equipment necessary
friend. for the organization
to function.

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 What is Consumer Behavior?
• Consumer Behavior:
– 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
– As consumers, we benefit from the insights into our own
consumption-related decisions: what we buy, why we buy, and how
we buy.
– The study of consumer behaviour makes us aware about the delicate
influences that persuade us to make the product or the service
choices we do.
– It is important for us to understand the internal and external
influences that urge forward the individuals to act in certain
consumption.
• Consumer Behavior is a Process:
– Exchange: A transaction in which two or more organizations give
and receive something of value
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External Influences Decision Process
Experience &
Culture Acquisition Problem Recognition
Sub-culture
Demographics Information Search
Social Status Reference
Groups Family Evaluation of Alternatives
Marketing Activities
Self Purchase Decision
Concept Needs

And Desire Post-Decisional Conflict

Life Styles
Outlet Selection and
Internal Influences Purchase Act
Perception
Learning Use Behavior
Memory
Experience &
Motives Acquisition Post-Use Feelings and
Personality
Emotions Reactions
Attitudes

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The Wheel of Consumer Behavior

Figure 1.3 1-7

Consumer Behavior is interdisciplinary

Psychology

Economics Sociology

Anthropology Social psychology

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Why Study Consumer
Behavior?

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 The Marketing Mix

Product Price

Marketing Mix

Place Promotion

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 Customer Value, Satisfaction,
Trust, and Retention

Successful Relationships

Strong
High level
Customer sense of Customer
of customer
value customer retention
satisfaction
trust

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 CUSTOMER SATISFACTION
• Customer satisfaction with customer behavior identified several types
of customer.
– Loyalists: who keep purchasing.
– Apostles: (messenger) whose experiences exceed their expectations
and who provide very positive word of mouth about the company to
others.
– Defectors: who feel neutral or merely satisfied and are likely to stop
doing business with the company.
– Terrorists: who have had negative experiences with the company and
who spread negative word of mouth.
– Hostages: who are unhappy customers who stay with the company
because of a monopolistic environment or low prices and who are
difficult and costly to deal with because of their frequent complaints.
– Mercenaries: who are very satisfied customers but who have no real
loyalty to the company and may defect because of a lower price
elsewhere or on impulse.
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 CUSTOMER RETENTION
• In almost all business situations, it is more
expensive to win new customers than to keep
existing ones.
– Loyal customers buy more products
– Loyal customers are less price sensitive and
pay less attention to competitor’s
advertising.
– Servicing, existing customers who are
familiar with the firm’s offerings and
processes is cheaper.
– Loyal customers spread positive word of
mouth and refer other customers.
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 Consumers’ Impact on Marketing
Strategy
• Market Segmentation:
– Identifies groups of consumers who are similar
to one another in one or more ways and then
devises marketing strategies that appeal to one
or more groups
• Demographics:
– Statistics that measure observable aspects of a
population
• Ex.: Age, Gender, Family Structure, Social Class
and Income, Race and Ethnicity, Lifestyle, and
Geography
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Market Segmentation
Finely-tuned marketing
segmentation
strategies allow
marketers to reach
only those consumers
likely to be interested
in buying their
products.

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 A Lesson Learned
• Nike was forced to pull this
advertisement for a running
shoe after disabilities rights
groups claimed the ads
were offensive.
• How could Nike have done
a better job of getting its
message across without
offending a powerful
demographic?

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 Marketing’s Impact on Consumers

• Marketing and Culture:

– Popular Culture:
• Music, movies, sports, books,
celebrities, and other forms of
entertainment consumed by the
mass market.
– Marketers play a significant role
in our view of the world and how
we live in it.
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 Popular Culture

Companies often create product icons to develop an identity

for their products. Many made-up creatures and
personalities, such as Mr. Clean, the Michelin tire man and
the Pillsbury Doughboy, are widely recognized figures in
popular culture.
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 Marketing’s Impact on Consumers:
Virtual Consumption
• The Digital Revolution is one of the most significant
influences on consumer behavior especially due to
COVID-19.
• Electronic marketing increases convenience by breaking
down the barriers of time and location.
• Digital Revolution in the Market place allows customization of
products, services, and promotional messages like never
before
• Enhances relationships with customers more effectively and
efficiently
• The consumer has more power because they have more
information on competing products, prices, and reviews
on product performance. This gives them more choices
and more bargaining power with the marketer.
• Cyberspace has created a revolution in C2C
(consumer-to-consumer) activity.
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DECISION PROCESSING

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