Chapter 1 Understanding Consumer Behavior

Learning Objectives~ Ch. 1 1.Define consumer behavior (cb) and explain its elements. 2.Identify the 4 domains of consumer behavior. 3.Discuss the benefits of studying consumer behavior. 4.Explain how companies apply consumer behavior concepts when making marketing decisions.

Consumer Behavior The acquisition, consumption, and disposition of goods, services, time & ideas by (human) decision making units You do this multiple times a day Consciously & unconsciously Rationally & emotionally Influenced by advertising, social media, friends/family, celebrity, sport & marketing communications

Suzy Orman, personal finance expert, influences attitudes about milk. Since 1995 the National Milk Processors Board has run the “Got Milk?” campaign using celebrities from sports, media, and entertainment, as well as fictional characters from TV & film. PRNewsFoto/MilkPEP

Consumer Behavior Involves Attitudes Towards: Products Services Activities People Ideas

Consumer Behavior (CB) Reflects totality of consumer’s decisions with respect to the acquisition, consumption, & disposition of: goods services time ideas by (human) decision-making units Over time How does this relate to marketing strategies & tactics?

What Is Consumer Behavior? (Exhibit 1.1)

CB & Consumption Acquisition Usage Disposition Please think of each form of cb that you have done in the last 24 hours….

Consumer Behavior Dynamic process Can involve many people Involves many decisions big & small Involves consumer feelings & coping The abcs of consumer behavior intertwine: a.attitude/affect b.behavior c.cognition

Consumer Decisions Whether? What? Why? Why Not? How? Ways? When? Where? How much? How often? How long? Plus, a plethora of online decisions…to tweet or not to tweet…to check in or not to check in…

What Impacts Consumer Behavior? ① Psychological Core ② Decision-making process ③ Consumer Culture ④ Consumer Behavior Outcomes

① Psychological Core Motivation, Ability, & Opportunity Exposure, Attention, & Perception Categorizing & Comprehending Information Forming & Changing Attitudes Forming & Retrieving Memories

② Decision-making Process Problem Recognition & Search for Information Judgments & Decisions Post-Decision Evaluations

③ Consumer Culture External Processes/Influences: Consumer Diversity Social Class & Household Values, Personality, & Lifestyles Reference Groups & Other Social Influences

④ Consumer Behavior Outcomes Symbolize who we are—external signs used to express identity Diffuse through a market—influence others’ decision making Ethics & corporate social responsibility (CSR)

Beneficiaries of CB Research Marketing Managers Advertisers Ethicists/Advocacy Groups Public Policy Makers/Regulators Scholars Media/Popular press Consumers adage.com; signalsmith.com

Marketing Implications of Consumer Behavior-1 Developing/implementing customer-orientation –Segmenting the market? –Profitability of each segment? –Characteristics of each segment? –Customer satisfaction of each segment? Selecting the target market Marketing strategy

Marketing Implications of Consumer Behavior-2 Product positioning decisions –Positioning of competition? –How should our offerings be positioned? –Should we reposition offerings?

Marketing Implications of Consumer Behavior-3 Products/services development decisions –Consumers’ ideas for new products? –Additional or different attributes? –Brand naming? –Packaging and logo design?

Marketing Implications of Consumer Behavior-4 IMC decisions –Advertising objectives? –Words and visuals of ads? –Where should ads be placed? –When should ads be placed? –Have ads been effective?

Marketing Implications of Consumer Behavior-5 IMC decisions (cont.) –Sales promotion objectives? –When should sales promotions occur? –Have sales promotions been effective? –How large a sales force? –How can salespeople best serve customers?

Marketing Implications of Consumer Behavior-6 Pricing decisions –What should the price be? –How sensitive are consumers to price and price changes? –When should pricing tactics be used? Distribution decisions –Where does target market shop? –How should stores be designed?

Important Aspects CB involves more than just products (e.g., going to the dentist, what TV programs to watch, taking aerobics class, going skydiving, donating to a cause, etc.) CB involves more than just buying: a acquisition (leasing, trading, borrowing) b usage (gives insight on symbolic aspects, usage patterns, new product ideas or improvements, W-O- M) c disposing- recycling, product durability CB is a dynamic process (sequence of events over time)

Importance of CB to Marketing Managers IMPORTANCE OF BEING CUSTOMER- FOCUSED Market Segmentation- can group consumers by similar needs, wants, & attitudes -identify the most valued customers for marketing activities Customer Relationship Management (CRM)- providing value & service to customers over time to build loyalty Positioning-- niche in consumers’ minds- critical to success What company do you think does this best?

Questions?