Consumer Behavior

Why Study Consumer Behavior Consumer Behavior determines the economic health of a nation Consumer Behavior determines the success of marketing programs Consumer Behavior determines the economic health of everyone Consumer Behavior helps formulate public policy Consumer Behavior affects Personal Policy

Evolution of Consumer Behavior Who determines what consumers can buy? Supply Chain Manufacturer Wholesaler Retailer Other helping agencies Shifting from Supply to demand From Manufacturing to Selling From selling to Marketing

Marketing Orientation You don’t like the style? Buy it & I will give you free service for a year. Product Concept Selling Concept Marketing Concept Production Concept Consumer prefer products that are widely available and expensive. Consumers favor products that offer the most quality, performance, or innovative features. Consumer will buy products only if the company aggressively promotes / sells these products. Focuses on needs / wants of target markets & delivering value better than competitors.

Marketing Vs. Selling Concept

Marketing Concept Marketing Concept Market Customer Needs Integrated Marketing Profitability

Customer Needs Secret Needs Delight Needs Unstated Needs Real Need Status Symbol Delight Needs Gift from Dealer Unstated Needs Good Service from Dealer Real Need Operating Cost low, Not Initial Price Stated Needs Want Inexpensive Car

Customer Needs & Marketing Responsive Marketing Anticipative Marketing Creative Marketing Creative Marketer discover and produces solutions customers did not ask for but to which they enthusiastically respond. Responsive Marketer finds a stated need and fills it. Anticipative marketer looks ahead into what needs customer may have in near future.

Integrated Marketing Internal External Marketing Marketing 1st Level Integration: All marketing functions must work together (sales force, advertising, customer service, product management, marketing research) Internal Marketing External Marketing 2nd Level Integration: Marketing must be embraced by the other departments, they must also “think customer”. Marketing directed at people outside the company Task of hiring, training & motivating able Employees who want to serve customers well

Profitability Factors Affecting Profitability Sales Decline Slow Growth Factors Affecting Profitability Changing buying pattern Increasing Marketing Expenditures Increasing Competition

Evolving Views of Marketing’s Role in the Company Production Finance Production Finance Human Resource Marketing Human Resource Marketing Finance Production Production Human Resource Customer Marketing Finance Human Resource Marketing

Customer as the controlling function and Marketing as the Integrative Function

Traditional Organization Chart Top Management Middle Management Front Line People Customers

Modern Customer Oriented Organization Chart Customers Front Line People Middle Management Top Management

Societal Marketing

Methods of studying Consumer Behavior Observation Interviews and Surveys Experimentation

Observation In home observation: Placing marketers inside people’s homes to examine exactly how products are consumed. Shadowing: Method in which a researcher accompanies or shadows consumer through the shopping and consumption process, asking questions about each step of the process. Physiological observational methods: These include cameras to measure eye movement, galvanic skin response, MRI etc.

Interviews and Surveys Surveys are an efficient way of gathering information from a large sample of consumers by asking questions and recording responses. Mail Questionnaire Internet Surveys Telephonic Interviews Personal Interview Intercept Focus Group: 8-10 people involved in a discussion led by a moderator skilled in persuading consumers to discuss thoroughly a topic of interest to the researcher. Longitudinal Studies: Involve repeat measures of consumer activities over time to determine changes in their opinions, buying and consumption behavior.

Experimentation Attempts to understand cause and effect relationships by carefully manipulating independent variables to determine how these changes affect dependent variables. Laboratory Experiment: Conducted in physical environment that permits maximum control of variables being studied. Field Experiment: takes place in a natural setting such as a home or a store.

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