CHAPTER 1

An Introduction to Consumer Behavior

A frame work of consumer behavior
Internal influences External influences

Internal influences
Personality Self concept Life style Attitude Perception Values Beliefs

External influences
Family Friends Relatives Social groups Cultural groups Reference groups Avoidance groups Aspiration groups

Decision process
Types of decisions
† Simple † Complex

Models of behavior
† Extensive

problem solving † Limited problem solving † Routinized buying behavior

Consumer Behavior Is Interdisciplinary
Psychology Sociology History & Geography Anthropology Economics

Anthropology
The study of people within and across cultures Emphasis on crosscultural differences Questioning of assumptions within own culture

Economics
Basic economic issues
† † †

Supply and demand Rational decision making Perfect information

Emphasis on predicting behavior Complications in real life Behavioral economics³e.g., ´mental accountingµ

History and Geography
Origins of behavior, perspectives, and traditions Impact of geography on individuals
† † †

Isolation Language development Climate

Geographic determinism

Psychology
Study of human thinking and behavior Some issues
Personality † Personal development † Cognition (thinking), perception † Attention and its limitations † ´Learningµ³e.g., acquired tastes
†

Sociology
Cultural and interpersonal influences on consumption³e.g.,
Fads, fashions † Diffusion of innovation † Popular culture
†

Application Areas of Consumer Behavior: PERMS

Environmental Analysis Market Research Segmentation of the Marketplace Product Positioning and Product Differentiation Marketing-Mix Development

Product Positioning . . .
. . . is influencing how consumers perceive a brand·s characteristics relative to those of competitive offerings
† Goal

is to influence demand by creating a product with specific characteristics (i.e. brand attributes) and a clear image that differentiate it from competitors

Product Differentiation . . .

. . . is the process of manipulating the marketing mix so as to position a product in a manner that allows consumers to perceive meaningful differences between a brand and its competitors

Environmental Analysis . . .

. . . is the assessment of the external forces that act upon the firm and its customers, and that create threats and opportunities

Components of the External Environment

Demographic Economic Natural

Technological Political Cultural

MARKET RESEARCH . . .

. . . is applied consumer research designed to provide management with information on factors that impact consumers· acquisition, consumption, and disposition of goods, services, and ideas

Marketing-Mix Development
. . . involves the development and coordination of activities involving the:
Product Promotion Pricing Distribution

Promotional Strategy

Advertising Personal Selling Sales Promotion Applications Public Relations

Price Changes
Predicting the likely impact of price changes on consumers is an important consumer behavior area.
† How

will consumers react when companies raise or lower the price of a product? † Principles of perception can be applied to analyze if consumers will notice a difference in price and if so, what effect it has

Product Distribution . . .
. . . will be impacted by understanding how consumers make their purchasing decisions. **Example: low involvement decision (e.g., purchase soft drink), must use extensive distribution.

Market Segmentation . . .
. . . involves subdividing the market place into distinct subsets of customers having similar needs and wants, each of which can be reached with a different marketing mix

Consumerism &Consumer movement
What it is? When in started? What is the result?

Concerns of consumers ² government regulations
John F. Kennedy·s Message to Congress on March 15, 1962 Four basic rights
† Right

to safety † Right to be informed † Right to choose † Right to be heard

Consumer protection frame work
Consumer protection Act 1986 Three tier structure
Forum † State Forum † National Forum
† District

What is What? Role of non governmental organizations

Consumer responsibility
Consumers need to tread cautiously in the market place. While buying a product, ask yourself these questions : Do you really need this product? For how long would you like to use it? Will it last as long as you would like it to? What are the health fallout of that product? If it is a food product, does it give you any health benefits? Check the labeling of the product to see the nutritional chart of the product.

Others
Responsibility towards safe waste disposal Responsibility to endorse safer products Junk Food and Young Consumers

Changing face of the consumer behavior
Under the scenario of globalization
† Global

consumer † Changes in needs, preferences † Increase in standard of living † Changing values † Cross cultural impact

Continued «..
Technological changes
† High

end products † Aiming at more Convenience in shopping

New retailing environment
† Shoppertainment † Specialized

stores to hyper markets † Customer convenience is new mantra † E-tailing