CHAPTER ONE

Consumer Behavior and Marketing Strategy

Irwin/McGraw-Hill

Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved.

Consumer Behavior
Consumer behavior is the study of individuals, groups, or organizations and the processes they use to select, use, and dispose of products, services, experiences, or ideas to satisfy needs and the impacts that these processes have on the consumer and society.  Sheth, Mittal, and Newman (1999) define customer behavior as ³the mental and physical activities undertaken by household and business customers that result in decisions and actions to pay for, purchase, and use products and services. 

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CB Activities 

Mental activities include such things as:
assessing the suitability of a product or service brand  making inferences about a product or service¶s qualities from advertising information  evaluating actual experiences with the product  

Physical activities include such things as:
visiting stores  reading Consumer Reports  talking to salespeople  issuing a purchase order 

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Applications of CB
Marketing Strategy  Regulatory Policy  Social Marketing  Informed Individuals 

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Marketing Strategy and Consumer Behavior
1-1
Outcomes Individual Firm Society Consumer decision process Problem Recognition Information Search Alternative Evaluation Purchase Use Evaluation Marketing strategy Product, Price, Distribution, Promotion, Service Marketing segmentation Identify product-related need sets Group Customers with similar need sets Describe each group Select attractive segment(s) to target Marketing analysis Company Competitors Conditions Consumers Irwin/McGraw-Hill
Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved.

Marketing Strategy and CB
Customer value is the difference between all benefits derived from a total product and all the costs of acquiring those benefits.  A firm¶s marketing strategy involves selection of target market(s) and the marketing mix elements designed to satisfy those customers.  Total Product 

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Market Analysis Components

Customers  Company  Competition  Conditions 

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Market Segmentation
Identify product-related need sets  Group customers with similar need sets  Describe each customer set  Select attractive segment(s) to target 

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Marketing Mix Elements
Product - anything that is offered to a market to meet a need or want.  Service - auxiliary or peripheral activities that are performed to enhance the primary product.  Price - the value exchanged for the product.  Distribution (Place) - movement of a product from point of production to the customer.  Promotion - marketing communications. 

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Consumer Decision Process 

High Involvement Low Involvement No Decision Making
Brand-Loyal  Inertia   

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Decision Making Process
Problem Recognition  Information Search  Alternative Evaluation  Purchase  Use  Post-purchase Evaluation 

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Influence on Consumers 

Influence on consumers purchasing 

External Influences
Advertising  Friends  

Internal Influences
Personal experiences  Beliefs  

Situational Influences 

Store atmosphere

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Outcomes of CB 

Individual Outcomes
Need Satisfaction  Injurious Consumption  

Societal Outcomes
Economic Impact  Physical Environment  Social Welfare  

Firm Outcomes
Product Position  Sales  Customer Satisfaction 

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