CONSUMER BEHAVIOR

An Introduction

LEARNING CONCEPTS

Definition of CB
Consumer primacy
Environmental
analysis
Positioning/differentiat
ion
Segmentation

Theory and CB
Research
perspectives on
consumer behavior
Exchange
processes
Organizing model
of consumer
behavior

Consumer Behavior . . .
. . . is defined as the
study of the buying
units and the
exchange processes
involved in
acquiring,
consuming, and
disposing of goods,
services,
experiences, and
ideas.

What is the difference

between:

Consumer
Customer
Client

Consumers, Customers &

Clients

Consumers are for products while

customers are for brands
For example, we are all consumers of cell
phones, but customers of different
companies/brands like Nokia, Samsung,
Q-Mobile etc.
Client is a customer for whom the
company makes an effort to build longterm relationship (relationship marketing)
primarily used in service industries

Consumer Roles

Initiator
Influencer
Decision Maker
Buyer
User

Why Study Consumer

Behavior?

Foundation of Marketing
Management
Public Policy and Consumer
Behavior
Altruistic Marketing
Personal Value

Three Research
Perspectives on
Consumer Behavior

The Decision-Making Perspective

The Experiential Perspective

The Behavioral Influence

Perspective

The Decision-Making
Perspective . . .
. . . proposes that Generic Decision
buying results fromModel
Problem
consumers
Recognition
perceiving that
Search
they have a
problem and then Alternative
they move through Evaluation
a series of rational Choice
steps to solve the
Post-acquisition
problem
Evaluation

The Experiential
Perspective.
. . . proposes that in
some instances
buying results from
the consumers need
for fun, to create
fantasies, obtain
emotions, and
feelings.
Frequently uses
interpretative
research methods.

The Behavioral
Influence
Perspective . . .
. . . assumes that strong
environmental forces propel
consumers to make purchases
without necessarily first developing
strong feelings or beliefs about the
product.

Exchange Processes and

Consumer Behavior

Exchange is the
process that
involves the
transfer of
something tangible
or intangible, actual
or symbolic,
between two or
more social actors.

Prerequisites for
Exchange:

Two or more parties must be present

Each party has something of value to the
other
Each party is capable of communication and
delivery
Each party must be free to accept or reject
the other's offer
Each party must believe that it is
appropriate or desirable to deal with the
other

Elements of Exchange

Goods

Money

Information

Six Types of Resources Are

Exchanged:
Service
Status

Feelings

Dimensions of Exchange
Relations

Four types of consumer exchange

relations have been identified:

Restricted versus Complex Exchange

Internal versus External Exchange
Formal versus Informal Exchange
Relational versus Discrete Exchange

Current hot topic in marketing

Characteristics

Relational
exchange
long term

reciprocal obligations
non-economic rewards: market embedding social ties between buyer and seller increase
perceived value of exchange.
extensive formal and informal communication
high interdependence
planning

Relational exchange is also practiced

between members of marketing channel

Model of Consumer Behavior

External Influences
Culture, subculture,
Demographics,
Social Status,
Reference group
Family , Marketing
activities

Experiences and
Acquisition

Situations
Problem Recognition

Self Concept
Needs
and Life Style
Desires

Internal Influences
Perception,
Learning, Memory,
Motives,
Personality,
Attitudes

Information
Search
Alternative
Evaluation and
selection
Outlet selection
and purchase

Experiences and
Acquisitions

Post Purchase
processes

Outcomes

Individuals, Firms, Society

Consumer Decision Process

Problem recognition, Information Search, Alternative
evaluation, Purchase, Use, Evaluation

Marketing Strategy

Product, Price, Distribution,

Promotion
, Services
Market
Segmentation

Market Segmentation
Identify product related need sets, Group customers
with similar need sets, select attractive segment to target

Marketing Strategy
and Consumer

Market Analysis

Company, Competitors,
Conditions, Consumers

Creating Satisfied Customer

Our total
Products

Competitors
total
products

Consumer
Decision
Process

Superior
Value
Expected

Customer
Satisfaction

Sales

Perceived
Value delivered

Application Areas of
Consumer Behavior

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

Product Positioning . . .
. . . is influencing how consumers
perceive a brands 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 differentiates it from competitors

Specific Positioning

Competitive Positioning

positioning a brand by creating linkages

between brand and key attributes and benefits.
E.g., acceleration, reliability etc. for an
automobile
positioning a brand in relation to competitors
E.g. as currently being seen in the
telecommunication industry in Pakistan

Psychological Positioning

positioning a brand based upon dominant

personality characteristic of target market.
E.g. Do the Dew

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

The Natural
Environment . . .
. . . includes the types
of raw materials
available, pollution,
consumer fear of
contracting deadly
diseases, the expansion
of desert regions
around the globe, and
various weather
phenomena, such as
hurricanes or drought

The Economic
Environment
Set
of factors involving monetary, natural, and

human resources that influence

firms/consumers.
Behavioral economics: study of economic
decisions made by individual consumers and the
behavioral determinants of those decisions.
3 Major Contributions of Behavioral Economists:

Originated and documented the idea that the

consumer sector of the economy can strongly
influence the course of the aggregate economy
Investigated what factors influence the decision of
families to buy or save
Developed a methodology for making predictions of
economic activities based upon consumer surveys

The Technological
Environment
Goal is to anticipate
what changes in
the technological
environment will
occur and how
these will influence
the lifestyle and
consumption
patterns of
consumers

MARKETING 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

Pricing

Promotion

Distribution

Promotional Mix

Advertising
Personal Selling
Sales Promotion
Applications
Publicity
Public Relations
Word-of-mouth

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 will have on their buying behavior

Product Distribution . . .
. . . will be influenced
by understanding how
consumers make their
purchasing decisions.
For Example: For low
involvement decisions
(e.g., purchasing a soft
drink), the company
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
For
a segment
to bemarketing
useful it should
with
a different
mix be:
1. Measurability: assess needs and wants
through demographic, psychographic,
attitude and personality measures
2. Accessibility: Customers must be reachable
by marketing mix
3. Substantiality: size and income to generate
sufficient sales

Four Classifications of
Segmentation Variables:

Characteristics of the Person

Nature of the situation in which the
product or service may be
purchased
Geography
Culture and Subculture adopted by
the consumer

Characteristics of the
Consumer

Demographic Characteristics
Behavioral Segmentation: price
elasticity, benefits sought,
usage rate & pattern, brand
loyalty
Psychographic and Personality
Characteristics

Demographics is . . .
. . . the study of population changes and sub-cultural
values of various demographic groups based on such
factors as age, sex, income, education, ethnicity, and
geography
Examples of demographic variables:
age, sex, income, ethnicity, nationality, household size,
marital status, religion, education, occupation, etc.

Consumer Situations . . .
. . . consist of the temporary
environmental factors that form the
context within which a consumer
activity occurs at a particular time and
place
Types of situations: Social, physical,
temporal, task defined

Geographic Segmentation

Can include region,

size of cities and
counties, census
blocks, population
density, and
climate
Geo-demographics
is the combination
of geography and
demographics

Culture and Subculture

Culture is the way of life followed by

the people in a society

Subculture is a subdivision of a
national culture and is based on
some unifying characteristics, such
as nationality, religion, ethnicity etc.