MKTG 420 Professor Frank Pons Spring 2005 CONSUMER BEHAVIOR

What is CONSUMER BEHAVIOR ?

Definition Consumer behavior reflects the totality of consumers’ decisions and reactions with respect to the acquisition, consumption, and disposition of goods, services, time, and ideas made by decision making units over time. consumers’ decisions and reactions decision making units

Exhibit 1.2: What is Consumer Behavior? back Info 1

Consumer Behaviors?? Spring Break Trip to Cancun. Listening to your favorite band live in a concert hall? Downloaded on the internet through KAZAA? Playing Basket Ball with your University team? Adopting a Child from a different country? Selling counterfeit products on e-bay?

Consumer Behavior: Course Framework

Consumer Behavior as an Academic Discipline and an Applied Science Factors that contributed to the growing interest in consumer behavior: – accelerated rate of new product development – consumer movement – public policy concerns – environmental concerns – the opening of national markets throughout the world

Who Benefits from the Study of Consumer Behavior? Marketing Managers Public Policy Makers and Regulators Consumers

Understanding consumers’ issues or problems and developing methods to reach and educate consumers developing methods educate consumers Educating Consumers About Cancer

Tums educates consumers about the importance of calcium and increases awareness of its calcium content

Marketing’s Impact on Consumers Marketing and Culture: – Popular Culture: Music, movies, sports, books, celebrities, and other forms of entertainment consumed by the mass market.

Popular Culture Popular Culture Companies often create product icons to develop an identity for their products. Many made-up creatures and personalities, such as Mr. Clean, the Michelin tire man and the Pillsbury Doughboy, are widely recognized figures in popular culture.

Marketing Implications of Consumer Behavior Developing a Customer-Oriented Strategy – How Profitable Is Each Segment? – What Are the Characteristics of Consumers in Each Segment? – Are Customers Satisfied with Existing Offerings?

Marketing Implications of Consumer Behavior Selecting the Target Market Positioning – How Are Competitive Offerings Positioned? – How Should Our Offerings Be Positioned? – Should Our Offerings Be Repositioned?

Market Segmentation Finely-tuned marketing segmentation strategies allow marketers to reach only those consumers likely to be interested in buying their products.

Repositioning How are you perceived NOW? How do you WANT to be perceived? Convenient Inconvenient High $ Low $ * *

Marketing Implications of Consumer Behavior Developing Products or Services – What Ideas Do Consumers Have for New Products? – What Attributes Can Be Added to or Changed in an Existing Offering? – What Should Our Offering Be Called? – What Should Our Package and Logo Look Like? – What About Guarantees?

Marketing Implications of Consumer Behavior Making Promotion (Marketing Communications) Decisions – What Are Our Advertising Objectives? – What Should Our Advertising Look Like? – Where Should Advertising Be Placed? – When Should We Advertise? – Has Our Advertising Been Effective – What About Sales Promotion Objectives and Tactics? – When Should Sales Promotions Happen? – Have Our Sales Promotions Been Effective? – How Many Salespeople Are Needed to Serve Customers? – How Can Salespeople Best Serve Customers?

Marketing Implications of Consumer Behavior Making Pricing Decisions – What Price Should Be Charged? – How Sensitive Are Consumers to Price and Prices Changes? – When Should Certain Price Tactics Be Used?

Marketing Implications of Consumer Behavior Making Distribution Decisions – Where Are Target Consumers Likely to Shop? – How Should Stores Be Designed?

The Underlying Principles of Consumer Behavior The Consumer is Sovereign Consumers are Different; Consumers are Alike The Consumer has Rights Everyone Needs to Understand Consumers

Challenges for the Future Gathering and interpreting information that organizations need to meet changing needs of consumers Developing effective consumer research methods to capture changes in trends and lifestyles Understanding consumer behavior from a broader perspective as an important part of life

The Merchants of Cool (Video) How would you describe the teen market (importance, characteristics, homogeneous)? Why do you think some companies in the video (Sprite, MTV) have been so successful in marketing to teens? How are culture and marketing related? Which one influences the other in this video? Consumer Research represents a key feature in this video. What types of research are presented in this video? What kind of information do they provide? How have marketers use this information.

Consumer Research Methodology used to study consumer behavior.

Definition The variable is the entity that is studied or that varies in a research project. Importance of the RESEARCH QUESTION ?

Primary Versus Secondary Data Primary Data : Data originating from a researcher and collected to provide information relevant to a specific research project. Secondary Data: Data collected for some other purpose that is subsequently used in a research project.

Exhibit 2.5: Who Conducts Consumer Research? Nielsen Direct Marketing Association

Consumer Behavior Research Methods Surveys Focus Groups Interviews Storytelling Use of Photography and Pictures Diaries Experiments Field Experiments Observations Purchase Panels Database Marketing Key words: Valid and Reliable

Qualitative Versus Quantitative Research Quantitative studies: Quantitative studies:  Many data points (consumers): Quantity of information.  Statistical Analysis  Able to Quantify and forecast  All companies: money saver. Qualitative studies: Qualitative studies:  Few data points (consumers): Quality of information.  Interpretation: Subjectivity  Able to Qualify and understand  Fewer companies: more and more important.  Beware of underestimation: Importance and Difficulty. What about Multi-method and Bias?

Ethical Issues in Consumer Research The Negative Aspects of Consumer Research – Tracking Consumer Behavior in Different Countries – Potentially Higher Marketing Costs – Invasion of Consumer Privacy – Deceptive Research Practices