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Chapter 1 An Introduction to Consumer Behavior

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Defining Consumer Behavior

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Consumer Behavior is the Process Involved When Individuals or Groups Select, Use, or Dispose of Products, Services, Ideas or Experiences (Exchange) to Satisfy Needs and Desires.

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Contd
Consumer behavior is defined as the behavior that consumes display in searching for, purchasing, using, evaluating and disposing of product and services that they expect will satisfy their needs. Consumer behavior focus on how individuals make decisions to spend their available resources i.e. time, money, effort on consumption related items. This includes: What they buy Why they buy When they buy Where they buy How often they buy

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Contd
How often they use it How they evaluate it after purchase Impact of evaluation on future purchase How they dispose it

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Acquisition, Consumption and Disposal

Acquisition
Receiving Finding Inheriting Producing purchasing

Consumption
Collecting Nurturing Cleaning Preparing Displaying Storing Wearing Sharing

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Acquisition, Consumption and Disposal

Disposal
Giving Throwing away Recycling depleting

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Issues During Stages in the Consumption Process

Consumers Impact on Marketing Strategy

Understanding consumer behavior is good business.
Firms exist to satisfy consumers needs, so Firms must understand consumers needs to satisfy them.

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The Process of Marketing Segmentation:

Identifies Groups of Consumers Who are Similar to One Another in One or More Ways, and Devises Marketing Strategies that Appeal to One or More of These Groups.

Segmenting Consumers by Demographic Dimensions

Demographics are Statistics That Measure Observable Aspects of a Population Such As:
Geography Age

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Race and Ethnicity

Gender

Social Class and Income

Family Structure

Consumers Impact On Marketing Strategy: Building Bonds With Consumers

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Relationship Marketing occurs when a company makes an effort to interact with customers on a regular basis, and gives them reasons to maintain a bond with the company over time. Database Marketing involves tracking consumers buying habits very closely, and crafting products and messages tailored precisely to peoples wants and needs based on this information.

Marketings Impact on Consumers:

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Consumption Typology
Consumption Typology Explores the Different Ways That Products and Experiences Can Provide Meaning to People. There Are 4 Distinct Types of Consumption Activities:
Consuming as Experience An Emotional or Aesthetic Reaction to Consumption Objects Express Aspects of Self or Society Communicate Their Association With Objects, Both to Self/ Others Participate in a Mutual Experience and Merge Self With Group

Consuming as Integration Consuming as Classification

Consuming as Play

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Contributing Disciplines
Anthropology Sociology Psychology Economics History Political Science

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Why Study Consumer Behavior?

Marketing applications of consumer behavior:
Market segmentation Target market selection Positioning Product or service decisions Pricing decisions Distribution decisions Promotion decisions

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Scope Of Consumer Behavior

Customer Value, Satisfaction & Retention
Customer Value: the relation between the customer perceived benefits [economic, functional and psychological] and the resource [monetary, time, effort, psychological] used to obtain those benefits. Perceived values is relative and subjective.

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Scope Of Consumer Behavior

Customer Satisfaction: the individuals
perception of the product and services in relation to his / her expectations. A customer whose experience falls below expectations will be dissatisfied and vice-versa.

Customer Retention: The strategy of

customer retention makes the customers to stay with the company rather than switch to others. In almost all business situations it is more expensive to acquire a new customer than to keep existing one.

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Scope Of Consumer Behavior

Studies have shown that small reduction in customer defection produce significant increase in profits because: Loyal customers buy more product Loyal customer are less price sensitive and pay less attention to competitors advertising Servicing existing customers is cheaper Loyal customer spread positive word of mouth and refer other customers

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Marketing Management Philosophies

Production Concept Product Concept Selling Concept Marketing Concept Consumer Behaviour

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Production Concept
Focus on Production View of consumers:
They will buy as long as the product is available and affordable.

Focus on production justified:

Demand higher than supply Non-competitive product cost

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Product Concept
Focus on the product View of consumers:
We have to have the best quality and the most features and they will buy.

Consumers might not care about quality Consumers might not be willing to pay for the best quality Consumers might not be able to discern quality difference Consumers might prefer simplicity

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Selling Concept
Focus on selling View of consumers: We have to sell to them or else they wont buy. Focus on selling justified: Introductory stages of product life cycle Unsought goods

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Marketing Concept
Focus on marketing Creating mutually rewarding exchange relationships Consumer needs and wants have priority View of consumers: They will buy if you fulfill their needs better than the competition.

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Bases for Market Segmentation (Personal Consumer)

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Segmentation for Industrial Markets

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Segmentation for Industrial Markets

Geographic Segmentation useful for the automotive industry Product Segmentation i.e. Special parts and components Segmentation by End-Use Application ie. Paint mfg. Paint for waterproof applications, paint for rust prevention, paint which sticks to glass

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Market Segmentation: Advantages

Specific Definition of the Market Satisfaction of Consumer Needs Meeting Changing Market Demands Assessment of Competitive Strengths and Weaknesses Efficient Allocation of Marketing Resources Precise Setting of Marketing Objectives