Consumer Behavior

Introduction

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Why ?
The psychology of how consumers think, feel, reason, and select between different
alternatives (e.g., brands, products, and retailers)
The psychology of how the consumer is influenced by his or her environment (e.g.,
culture, family, signs, media)
The behavior of consumers while shopping or making other marketing decisions
Limitations in consumer knowledge or information processing abilities influence
decisions and marketing outcome
How consumer motivation and decision strategies differ between products that differ in
their level of importance or interest that they entail for the consumer
How marketers can adapt and improve their marketing campaigns and marketing
strategies to more effectively reach the consumer.
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What do we Study in Consumer behavior

Importance and applications

STP Strategies
Buying process theories and Models
Culture and Consumer behavior
Influence of family and Social Class
Group Influences

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What do we Study in Consumer behavior

Group Influences
Needs and Motivation
Personality
Perception
Learning
Attitude Formation and change
Diffusion of innovations

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Unit -1
An introduction to Consumer Behavior

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Chapter Outline

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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Marketing
Marketing is the activity, set of institutions and
processes for creating, communicating, delivering and
exchanging offerings that have value for consumers,
clients, partners and Society.
The core of marketing is identifying unfulfilled needs
and delivering products and services that satisfy their
needs.
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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 explains how individuals make
decisions to spend their available resources (Time,
Money, Effort) on goods and services that marketers offer
for sale.
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Customers Search for Products

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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, government agency, or other institution
(profit or nonprofit) that buys the goods, services, and/or
equipment necessary for the organization to function.

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Government Buying

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Development of the Marketing Concept

Production
Concept
Product Concept
Selling Concept
Marketing
Concept
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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

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The Selling Concept

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

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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 buyers needs

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The Marketing Concept

Implementing the
Marketing Concept
Consumer
Research
Segmentation
Targeting
Positioning

The process and

tools used to study
consumer behavior
Two perspectives:
Positivist approach
Interpretivist
approach
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weblink

Copyright 2007 by Prentice Hall

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The Marketing Concept

Implementing the
Marketing Concept
Consumer
Research
Segmentation
Targeting
Positioning

Process of dividing
the market into
subsets of
consumers with
common needs or
characteristics
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Segmentation Used
by India Today Illustrated

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The Marketing Concept

Implementing the
Marketing Concept
Consumer
Research
Segmentation
Targeting
Positioning

The selection of one

or more of the
segments to pursue

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The Marketing Concept

Implementing the
Marketing Concept
Consumer
Research
Segmentation
Targeting
Positioning

Developing a distinct image for

the product in the mind of the
consumer
Successful positioning
includes:

Communicating the
benefits of the product
Communicating a
unique selling
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The Marketing Mix

Product
Price
Place
Promotion

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Successful Relationships

Customer
Value

Customer
Retention

Customer
Satisfaction
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Successful Relationships
Value, Satisfaction,
and Retention
Customer
Value
Customer
Satisfaction
Customer
Retention

Defined as the ratio between

the customers perceived
benefits and the resources
used to obtain those benefits
Perceived value is relative and
subjective
Developing a value proposition
is critical
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Successful Relationships
Value, Satisfaction,
and Retention
Customer
Value
Customer
Satisfaction
Customer
Retention

The individual's perception of the

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

The objective of providing value is

to retain highly satisfied customers.
Loyal customers are key

They buy more products

They are less price
sensitive
They pay less attention to
competitors advertising
Servicing them is cheaper
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They spread positive word

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 Vs. Value and Retention Focused Marketing

Traditional Marketing
Concept
Make only what you can sell instead
of trying to sell what you make

Value and Retention

Focused Marketing
Use technology that enables
customers to customize what
you make

Do not focus on the product; focus on Focus on the products

the need that it satisfies
perceived value, as well as the
need that it satisfies
Market products and services that
match customers needs better than
competitors offerings

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

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Thank you

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