Irwin/McGraw-Hill Welcome!Welcome! Consumer Behavior and Marketing Strategy Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved.

Irwin/McGraw-Hill Why Study Consumer Behavior? What is it? Why is it useful?

Irwin/McGraw-Hill What is Consumer Behavior? 80% of new products fail to meet financial expectations!!!! Study of individuals, groups, or organizations and the processes used to select, secure, use and dispose of products, services, experiences, or ideas to satisfy needs and the impacts that these processes have on consumers and society. Answers the question of WHY? Are managers telepathic? Do decisions regarding the 4 P’s just come to them? What are some commonly asked questions regarding consumer’s behavior?

Irwin/McGraw-Hill Commonly asked questions: Product related: What do they think of the product? What do they think of competitor’s product? How do you use the product? What is their A ad /A product ? Lifestyle related : What are your hopes/dreams? What is your place in the world? (role)

Irwin/McGraw-Hill Applications of Consumer Behavior Marketing strategy: MANAGERIAL RELEVANCE Use common sense/ Look at successes and failures. Regulatory Policy: Warning Labels/ Nutrition Labeling Social Marketing/ TRUTH ads Drug Use HIV prevention

Irwin/McGraw-Hill Marketing Strategy and Consumer Behavior (Goal is creating and Reinforcing Customer Value) Outcomes Individual Firm Society Consumer decision process Problem Recognition Information Search Alternative Evaluation Purchase Use Evaluation Marketing strategy Product, Price, Distribution, Promotion, Service Marketing segmentation Identify product-related need sets Group Customers with similar need sets Describe each group Select attractive segment(s) to target Marketing analysis Company Competitors Conditions Consumers 1-1 Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved.

Irwin/McGraw-Hill Describe the Need Set

Irwin/McGraw-Hill Market Segment Attractiveness Worksheet CriterionScore* Segment size_______ Segment growth rate_______ Competitor strength_______ Customer satisfaction with existing products_______ Fit with company image_______ Fit with company objectives_______ Fit with company resources_______ Distribution available_______ Investment required_______ Stability/predictability_______ Cost to serve_______ Sustainable advantage available_______ Communications channels available_______ Risk_______ Other (_______________)_______ *Score on a 1 to 10 scale, with 10 being most favorable. 1-2

Irwin/McGraw-Hill Creating Satisfied Customers Our total Product Physical Prod + Experience Competitors’ total product Consumer decision process Sales Customer satisfaction Superior value expected Perceived value delivered 1-3 Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved.

Irwin/McGraw-Hill Consumer Behavior is Product—Person—Situation Specific Marketing strategy Consumer behavior 1-4 Personal characteristics Product characteristics Consumption situation Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved.

Irwin/McGraw-Hill Overall Model of Consumer Behavior 1-5 SITUATIONS Problem Recognition Information Search Alternative Evaluation and Selection Outlet Selection and Purchases Postpurchase Processes SITUATIONS EXTERNAL INFLUENCES Culture Subculture Demographics Social Status Reference Groups Family Marketing Activities INTERNAL INFLUENCES Perception Learning Memory Motives Personality Emotions Attitudes SELF-CONCEPT and LIFESTYLE Needs Desires Experiences and Acquisitions Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved.