1. Assoc. Prof Sharmila Sethu
Chapter 1
Assoc. Prof Sharmila Sethu

2. Chapter 1 Consumers Rule
Consumer Behavior
Buying, Having, and Being

3. Introduction

4. What is Consumer Behavior?
The study of the processes involved when individuals or groups select, purchase, use, or dispose of products, services ideas, or experiences to satisfy needs and desires
Role Theory:
Identifies consumers as actors on the marketplace stage
Consumer Behavior is a Process:
Exchange: A transaction in which two or more organizations give and receive something of value

5. The Nature of Consumer Behavior
Situations and Consumer Decisions
Consumer decisions result from perceived problems and opportunities.
Consumer problems arise in specific situations and the nature of the situation influences the resulting consumer behavior.
Using Outdoor Media to Trigger Problem Recognition
1-5

6. Some Issues That Arise During Stages in the Consumption Process
Figure 1.1

7. Consumer Behavior Involves Many Different Actors
A person who identifies a need or desire, makes a purchase, and then disposes of the product
Many people may be involved in this sequence of events.
Purchaser / User / Influencer
Consumers may take the form of organizations or groups.

8. Consumers’ Impact on Marketing Strategy
Market Segmentation:
Identifies groups of consumers who are similar to one another in one or more ways and then devises marketing strategies that appeal to one or more groups
Demographics:
Statistics that measure observable aspects of a population
Ex.: Age, Gender, Family Structure, Social Class and Income, Race and Ethnicity, Lifestyle, and Geography

9. A Lesson Learned
Nike was forced to pull this advertisement for a running shoe after disabilities rights groups claimed the ads were offensive.
How could Nike have done a better job of getting its message across without offending a powerful demographic?

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

11. Consumers’ Impact on Marketing Strategy (cont.)
Relationship Marketing: Building Bonds with Consumers
Relationship marketing:
The strategic perspective that stresses the long-term, human side of buyer-seller interactions
Database marketing:
Tracking consumers’ buying habits very closely, and then crafting products and messages tailored precisely to people’s wants and needs based on this information

12. 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.
Marketers play a significant role in our view of the world and how we live in it.

13. 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.

14. Marketing’s Impact on Consumers: The Meaning of Consumption
People often buy products not for what they do, but for what they mean.
Types of relationships a person may have with a product:
Self-concept attachment
Nostalgic attachment
Interdependence
Love

15. Marketing’s Impact on Consumers: The Meaning of Consumption (cont.)
Consumption includes intangible experiences, ideas and services in addition to tangible objects.
Four types of Consumption Activities:
Consuming as experience
Consuming as integration
Consuming as classification
Consuming as play

16. Marketing’s Impact on Consumers: The Global Consumer
By 2006, the majority of people on earth will live in urban centers.
Sophisticated marketing strategies contribute to a global consumer culture.
Even smaller companies look to expand overseas.
Globalization has resulted in varied perceptions of the United States (both positive and negative).

17. The Global Consumer American products like Levi jeans are in
demand around the world.

18. Marketing’s Impact on Consumers: Virtual Consumption
The Digital Revolution is one of the most significant influences on consumer behavior.
Electronic marketing increases convenience by breaking down the barriers of time and location.
U-commerce:
The use of ubiquitous networks that will slowly but surely become part of us (i.e., wearable computers, customized advertisements beamed to cell phones, etc.)
Cyberspace has created a revolution in C2C (consumer-to-consumer) activity.

19. Blurred Boundaries Marketing and Reality
Marketers and consumers coexist in a complicated two-way relationship.
It’s increasingly difficult for consumers to discern the boundary between the fabricated world and reality.
Marketing influences both popular culture and consumer perceptions of reality.

20. Blurred Boundaries Marketing managers often borrow imagery
from other forms of
popular culture to
connect with an
audience. This line of
syrups adapts the “look”
of a pulp detective
novel.

21. Marketing Ethics and Public Policy
Business Ethics:
Rules of conduct that guide actions in the marketplace
The standards against which most people in the culture judge what is right and what is wrong, good or bad
Notions of right and wrong differ among people, organizations, and cultures.

22. Needs and Wants: Do Marketers Manipulate Consumers?
Consumerspace
Do marketers create artificial needs?
Need: A basic biological motive
Want: One way that society has taught us that need can be satisfied
Are advertising and marketing necessary?
Economics of information perspective: Advertising is an important source of consumer information.
Do marketers promise miracles?
Advertisers simply don’t know enough to manipulate people.

23. Discussion Question
This ad was created by the American Association of Advertising Agencies to counter charges that ads create artificial needs.
Do you agree with the premise of the ad? Why or why not?

24. Public Policy and Consumerism
Consumer efforts in the U.S. have contributed to the establishment of federal agencies to oversee consumer-related activities.
Department of Agriculture
Federal Trade Commission
Food and Drug Administration
Securities and Exchange Commission
Environmental Protection Agency
Culture Jamming:
A strategy to disrupt efforts by the corporate world to dominate our cultural landscape

25. Culture Jamming
Adbusters Quarterly is a Canadian magazine devoted to culture jamming. This mock ad skewers Benetton.

26. Consumerism and Consumer Research
Green Marketing:
When a firm chooses to protect or enhance the natural environment as it goes about its activities
Reducing wasteful packaging
Donations to charity
Social Marketing:
Using marketing techniques to encourage positive activities (e.g. literacy) and to discourage negative activities (e.g. drunk driving)

27. Consumer Related Issues
UNICEF sponsored this advertising campaign against child labor. The field of consumer behavior plays a role in addressing important consumer issues such as child exploitation.

28. The Dark Side of Consumer Behavior
Consumer Terrorism:
An example: Susceptibility of the nation’s food supply to bioterrorism
Addictive Consumption:
Consumer addiction:
A physiological and/or psychological dependency on products or services
Compulsive Consumption:
Repetitive shopping as an antidote to tension, anxiety, depression, or boredom

29. The Dark Side of Consumer Behavior (cont.)
Consumed Consumers:
People who are used or exploited, willingly or not, for commercial gain in the marketplace
Illegal Activities:
Consumer Theft:
Shrinkage: The industry term for inventory and cash losses from shoplifting and employee theft
Anticonsumption:
Events in which products and services are deliberately defaced or mutilated

30. Consumer Behavior As a Field of Study
Consumer behavior only recently a formal field of study
Interdisciplinary influences on the study of consumer behavior
Consumer behavior studied by researchers from diverse backgrounds
Consumer phenomena can be studied in different ways and on different levels

31. The Pyramid of Consumer Behavior
Figure 1.2

32. The Wheel of Consumer Behavior
Figure 1.3

33. What is Consumer Behavior?
The study of how consumers
Select
Purchase
Use
Dispose of
goods and services in the process of satisfying their personal and household needs and wants.
Contrary to popular belief, the attempt to understand consumer behavior doesn’t end with the purchase.
Understanding how consumers use and dispose of products is important as well.
Why?
Knowing who is actually using the product will affect the way the product is marketed in the future
For example: If a household appliance (e.g., a vacuum) is assumed to be used primarily by the wife, but in fact both spouses use it, then the marketer may want to market it in a different way (a different “target market”)

34. Why did consumer behavior become a separate discipline from marketing?
Marketers came to realize that consumers did not always act or react as marketing theory suggested they would
Consumers rejected mass-marketed products, preferring differentiated products that reflected their own special needs, personalities and lifestyles
Even in industrial markets, where needs are more homogeneous than consumer markets, buyers exhibited diversified preferences and less predictable purchase behavior
For example, consumers don’t always act logically; they don’t, for example, always “maximize utility” in their purchases

35. Other factors that contributed to the growing interest in consumer behavior
The accelerated rate of new product development
The consumer movement
Public policy considerations
Environmental concerns
The opening of national markets throughout the world

36. What Do Buying Decisions Involve?
Consider a decision to acquire a pet
Decision entails determining:
Where to learn about pets
Where to purchase the selected pet
How much to pay for it
Who will take care of it
What supplies or services are needed for it
Where to purchase such supplies or services
How much to pay for supplies and services
Use this as a lead-in for discussion of how students answered the practice discussion…

37. Discussion Questions
Why would someone shop on the Internet? Buy an iPod? Eat at TGI Friday’s frequently?
Why would someone else not make those purchases?
How would you choose one outlet, brand, or model over the others? Would others make the same choice in the same way?

38. Discussion Questions
Describe your lifestyle. How does it differ from your parents’ lifestyle?
Describe a recent purchase you made. To what extent did you follow the consumer decision-making process described in this chapter? How would you explain any differences?

39. Trends influencing consumer behavior in contemporary society
The Information Superhighway
Concern about Safety
Focus on Health and Beauty
Focus on Ethics
Shifting Roles of Sexes
Diversity
A Global Village
Telecommuting
The text identifies 12 major trends
Let’s take a closer look at some of these
Personalized Economy
Ecological Consciousness
Emphasis on Leisure
Changing Perception of Religion

41. 1. Growth of the information superhighway
Positive Implications
Marketers can be in touch with anyone, anywhere and at any time
Availability of information increases consumers’ knowledge and power in the marketplace.
Any doubts about this as a fact?
This trend has both positive and negative implications for marketers and consumers.
What are some positive ones?

42. Negative Implications
Increased information about consumers raises serious privacy issues
Creation of a digital divide that further stratifies society based on wealth, education and age
What are the down sides?
The privacy issue is a serious one and we’ll be looking at it in detail later
If information is power, those without access to information—already likely to be those with the least power—become even less able to keep up

43. 2. Focus on health, fitness, and beauty
Golden opportunities are created for marketers of many products ranging from fat-free foods to vitamins, as well as for services ranging from plastic surgery to hair implants.
Any question that this is a trend? (If so, just visit any health club)
What are the marketing implications?
Other examples?
Personal trainers
Magazines
vacations aimed at the health-conscious
liposuction/botox injections, etc.

44. 3. Shifting roles of men and women
More women in the workforce
More women in management positions
More women raising children alone
Gay and lesbian families changing the traditional model of the family
How have roles shifted?

45. A redefinition of buying decision centers within the family
A redefinition of sales and advertising strategies
What are the implications?
Examples?
As we’ll see later, women make more and more of the car-buying decisions
Today women are marketed to less as housewives than as professionals

46. 4. Telecommuting and the office of the future
Decline in demand for products and services such as cars, public transportation, automobile insurance, car repair, child care, and baby-sitting services
Increased need for efficient package-delivery services
Rise in demand for state-of-the-art communication devices
Do you agree this is a trend?
What are some of the implications for marketers of this trend?
What will we see diminished demand for?
What will we see increased demand for?

47. 5. Emphasis on leisure
People engage in leisure activities for different reasons
Knowing those reasons helps marketers select appropriate promotional appeals
Think about the concept of “leisure”
Does the fact that we have a name for something that means “doing nothing” tell us something?
What did your grandparents and their parents do with their “leisure” time?
A lot of them sat around and relaxed, read, etc.
Today, we know that…
Examples? (e.g., for good health, for excitement)
Why is it important to know those reasons?
Examples?
Recent ads for cruises focus on activities that take place off the boat

48. 6. Concern About Personal Safety
Enhanced demand for defense-related products
Post 9/11 issues relating to travel
Has there been an increase in concern about personal safety?
Yes, and note that your book was written even before 9/11
What are the implications for marketers?

49. 7. Diversity in the workplace and marketplace
“Traditional” minority groups in the US include:
Women
African-Americans
Asian-Americans
Latinos
Is this a trend?
Sure; in California, whites are now a minority!
What are the “traditional” minority groups in the US?
Is that all there is?

50. 8. Focus on ethics
For much of history, business ethics was considered an oxymoron
In the 1980’s, ethics became an issue with the discovery of numerous instances of corporate wrongdoing
Ford Pinto
Bhopal disaster
Asbestos
Tobacco
Like “jumbo shrimp” and “military intelligence”
You’ll read about the Pinto case for Friday
What happened in Bhopal?
Asbestos?
We all know about tobacco companies lying about the addictive nature of the product

51. 9. Ecological consciousness
Studies show that:
Consumers consider themselves “environmentalists”
They have changed their habits to protect the environment
They are willing to pay more for products that are considered environmentally safe
Are we more ecologically conscious today than in previous generations?
Despite the many excesses of the nineties…
…though not a lot more

52. An increasing flow of environmentally friendly products
Positive shift in public attitudes toward firms and products that protect the environment
As a result, the rise of green marketing
Greater potential for deception based on false claims of environmental safety of products
What are the implications?
What is “green marketing?”
We’ll be looking at the FTC regulations on green marketing in a couple of weeks

53. 10. The rise of the global village
An increasing acceptance of the free market system in many foreign countries (e.g., Eastern Europe)
Growth of major regional free-trade areas, such as NAFTA and the EU, resulting in increased trade
Expansion of American media—including advertising—to other nations exposes consumers to availability of American goods
Finally…
What does this mean?

54. Interdisciplinary Influences
Individual Focus
Interdisciplinary Influences
Experimental Psychology
Clinical Psychology
Developmental Psychology
Human Ecology
Microeconomics
Social Psychology
Sociology
Macroeconomics
Semiotics/Literary Criticism
Demography
History
Cultural Anthropology
Social Focus