Consumer Behavior:

Its Origins and

Strategic Applications

Prof. Aparna Kanchan

 Session Objectives
• Overview of Consumer Behavior
• The Marketing Concept
• The Marketing Mix and Relationships
• Digital Technologies
• Societal Marketing Concept
• A Simplified Model of Consumer
Decision Making

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Why Study Consumer Behavior?
Environmental
Evolving consumer Growth of
Concerns
preferences Services
marketing

Shorter PLC
Reasons to better understand Global
consumer Marketing

Faster
Technology
Development Not-for- Profit
Need for
Changing Marketing
consumer
lifestyles
protection

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 Consumer Behavior
✓The behavior that consumers display in searching for, purchasing,
using, evaluating, and disposing of products and services that they
expect will satisfy their needs

✓Consumer Behavior focuses on how individuals make decisions to

spend their valuable resources ( time, money, effort) on consumption-
related items

✓ What they buy

✓ Why they buy
✓ When they buy
✓ Where they buy
✓ How often they buy
✓ How often they use it,
✓ How they evaluate it after purchase
✓ The impact of such evaluations on future purchases
✓ How they dispose it

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Customers Search for Products

weblink

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 Personal Consumer
The individual who buys goods and
services for
– his or her own use,
– for household use,
– for the use of a family member, or
– for a friend.

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 Organizational Consumer
✓A business (profit or nonprofit) ),
✓A government agency (local, state or
National)
✓Other institution (eg: Schools, hospitals
etc.
that buys the goods, services, and/or
equipment necessary for the
organization to function.

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The Marketing Concept

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Development of the Marketing
Concept
Production
Concept

Product Concept

Selling Concept

Marketing
Concept

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 The Production Concept
• Henry Ford introduced the
Production concept – early
1900’s
• Cars were assembled
individually – expensive & time
consuming
• Wanted to produce cars that
were affordable
• 1913- Introduced the Assembly
line

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 The Production Concept
• Assumes that consumers are
interested primarily in product
availability at low prices
• Marketing objectives:
– Cheap, efficient production
– Intensive distribution
– Market expansion

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 The Product Concept
• Assumes that consumers will buy the
product that offers them the highest
quality, the best performance, and the
most features
• Marketing objectives:
– Quality improvement
– Addition of features
• Tendency toward Marketing Myopia
– Ignores crucial changes in the marketplace
– eg : PDA
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 The Selling Concept
• Primary focus is selling the products that it
has unilaterally decided to produce
• Assumes that consumers are unlikely to buy
a product unless they are aggressively
persuaded to do so
• Marketing objectives:
– Sell, sell, sell
• Lack of concern for customer needs and
satisfaction
• Eg: Life Insurance

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 The Marketing Concept
• Assumes that to be successful, a
company must determine the needs
and wants of specific target markets
and deliver the desired satisfactions
better than the competition
• Marketing objectives:
– Make what you can sell
– Focus on buyer’s needs

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 The Marketing Concept
Implementing the
Marketing Concept
• Consumer • The process and
Research tools used to study
• Segmentation consumer behavior
• Targeting • Two perspectives:
• Positioning – Positivist approach
– Interpretivist
approach

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 The Marketing Concept
Implementing the
Marketing Concept
• Consumer • Process of dividing
Research the market into
• Segmentation subsets of
• Targeting consumers with
common needs or
• Positioning characteristics

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 The Marketing Concept
Implementing the
Marketing Concept
• Consumer The selection of one
Research or more of the
• Segmentation segments to pursue
• Targeting
• Positioning

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 The Marketing Concept
Implementing the
Marketing Concept
• Consumer • Developing a distinct image
Research for the product in the mind
of the consumer
• Segmentation
• Successful positioning
• Targeting includes:
• Positioning – Communicating the
benefits of the product
– Communicating a unique
selling proposition

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This product is
positioned as
an upgrade to
two wheeler
owners
 The Marketing Mix
• Product ( i.e features, design, brands, packaging,
post purchase benefits, return policies)
• Price (the list price, including discounts,
allowances, & payment methods)
• Place ( the distribution of the product or services
through specific store and non-store outlet)
• Promotion ( the advertising, sales promotion, PR
and sales efforts designed to build awareness and
demand for the products & services)

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Successful Relationships

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 Successful Relationships
Value, Satisfaction,
and Retention
• Defined as the ratio between
• Customer the customer’s perceived
Value benefits and the resources
used to obtain those
• Customer
benefits
Satisfaction
• Perceived value is relative
• Customer and subjective
Retention • Developing a value
proposition is critical

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 Successful Relationships
Value, Satisfaction,
and Retention
• Customer • The individual's perception of
the performance of the product
Value
or service in relation to his or
• Customer her expectations.
Satisfaction • Customers identified based on
loyalty include loyalists,
• Customer apostles, defectors, terrorists,
Retention hostages, and mercenaries

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 Successful Relationships
Value, Satisfaction,
and Retention
• The objective of providing value
• Customer is to retain highly satisfied
Value customers.
• Customer • Loyal customers are key
Satisfaction – They buy more products
• Customer – They are less price sensitive
Retention – They pay less attention to
competitors’ advertising
– Servicing them is cheaper
– They spread positive word of
mouth
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Customer Profitability-Focused
Marketing
• Tracks costs and revenues of
individual consumers
• Categorizes them into tiers based on
consumption behavior
• A customer pyramid groups customers
into four tiers

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Customer Profitability-Focused
Marketing

Tier 1: Platinum
Tier 2: Gold
Tier 3: Iron
Tier 4: Lead

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Traditional Marketing Concept Vs. Value
and Retention Focused Marketing

Traditional Marketing Value and Retention

Concept
Make only what you can sell instead
of trying to sell what you make
Do not focus on the product; focus on Focus on the product’s
the need that it satisfies
Market products and services that
match customers’ needs better than
competitors’ offerings
Focused Marketing
Use technology that enables
customers to customize what
you make
perceived value, as well as the
need that it satisfies
Utilize an understanding of
customer needs to develop
offerings that customers
perceive as more valuable than
competitors’ offerings

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Impact of Digital Technologies
• Consumers have more power and access to
information
• Marketers can gather more information about
consumers
• The exchange between marketer and
customers is interactive and instantaneous
and goes beyond the PC.
• Marketers must offer more products and
services

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Societal Marketing Concept
Marketers adhere to principles of social
responsibility in the marketing of their
goods and services; that is, they must
endeavor to satisfy the needs and
wants of their target markets in ways
that preserve and enhance the well-
being of consumers and society as a
whole.

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 Consumer Behavior Is
Interdisciplinary
• Psychology
• Sociology
• Social psychology
• Anthropology
• Economics

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A Simplified Model of Consumer Decision Making –
Figure 1-1

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THANK- YOU

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