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Consumer Behaviour

Session 1Introduction to Consumer Behaviour &Importance to Marketing Management

Amir Hashmi

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Consumer Behaviour

The behavior that consumers display in

searching for, purchasing, using, evaluating,and disposing of products and services thatthey expect will satisfy their needs.(Schiffman & Kanuk, 2007)

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Personal Consumer

The individual who buys goods and

services for his or her own use, forhousehold use, for the use of a familymember, or for a friend.

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Consumer BehaviourPerspectives

CONSUMERSPERSPECTIVE

MARKETERSPERSPECTIVE

PREPURCHASEISSUES

What are myneeds/desires; what info

do I need?

How are consumerneeds/wants

formed/changed? How tocreate/influence them?

PURCHASEISSUES

Is product acquisitionlooking like a pleasant

experience?

How to orient the decisionprocess? How do

situational factors (e.g. instore) affect purchase

decisions?

POSTPURCHASEISSUES

Does product providepleasure, performfunctions? How is

product disposed of?

What determinescustomersatisfaction

and repurchase?

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Consumers as individuals

Psychological determinants of CB:o Perception how do consumers see/imagine

objects?o Learning how do consumers create and store info

and beliefs?o Motivation what are the drivers for buying and

consuming?o Personality and Self how do personality and self

traits influence CB?o Attitudes how like/dislike ideas and intensions are

formed

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Organisational Consumers

A business, government agency, or

other institution (profit or nonprofit) thatbuys the goods, services, and/orequipment necessary for the

organization to function

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Consumer Behaviour Model &Marketing Management

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Why is it important to understand

Consumer Behaviour? Marketings main task is to create endurable customer

satisfaction and loyalty, and a stable competitiveadvantage position

Consumer behaviour analysis is essential forsegmentation analysis

Consumer behaviour is essential to identify customerrelated opportunities and threats

Consumer behaviour analysis is essential for innovation

management Consumer behaviour analysis is essential for marketingmix management

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Development of the Marketing ConceptProductionConcept

Selling Concept

ProductConcept

MarketingConcept

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The Production Concept

Assumes that consumers areinterested primarily in productavailability at low prices

Marketing objectives:o Cheap, efficient productiono

Intensive distributiono Market expansion

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TheP

roduct Concept Assumes that consumers will buy the

product that offers them the highestquality, the best performance, andthe most features

Marketing objectives:o Quality improvemento

Addition of features

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The Selling Concept

Assumes that consumers are

unlikely to buy a product unless theyare aggressively persuaded to do so Marketing objectives:

o Sell, sell, sell

Lack of concern for customer needsand satisfaction

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The Marketing Concept Assumes that to be successful, a

company must determine the needs

and wants of specific target marketsand deliver the desired satisfactionsbetter than the competition

Marketing objectives:o Make what you can sello Focus on buyers needs

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Copyright 2007 byPrentice Hall

The Marketing Concept

ConsumerResearch Segmentation Targeting

P

ositioning

The process and toolsused to studyconsumer behavior

Implementing theMarketing Concept

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Consumer behaviour and market analysis

Consumer behaviour is mostly about

analysis Consumer behaviourMarketing Research:o Surveyso Focus groupso Observation

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ConsumerResearch Segmentation Targeting

P

ositioning

P

rocess of dividingthe market intosubsets of consumerswith common needs

or characteristics


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Copyright 2007 byP

rentice Hall

Market Segmentation

The process of dividing apotential market into distinctsubsets of consumers and

selecting one or moresegments as a target

market to be reached with adistinct marketing mix

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Bases for Segmentation

Geographic Demographic Psychological Psychographic

Sociocultural

Use-Related Usage-

Situation Benefit Sought

Hybrid

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Segmenting Consumers: Demographics

CB analyses importantdemographics, such as:

Age Gender Family structure Social class and income Race and ethnicity

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Segmenting Consumers: Lifestyles

Psychographics The way we feel

about ourselves

The things we value The things we like

and we do in ourworking and spare

time

1- 28

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Geographic Segmentation

The division of a total potentialmarket into smaller subgroups onthe basis of geographic variables

(e.g. region, state, or city)

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Demographic Segmentation

Age

Sex Marital Status Income, Education, and Occupation

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Web sites for Singles

Looking for a Match

Match.com targets allsingles

The Right Stufftargets only Ivy

League graduates

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Psychographic Segmentation

Also known as Lifestyle Analysis

Psychographic variables includeattitudes, interests, and opinions(AIOs)

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Socio-Cultural Values and

Beliefs Sociological = group Anthropological = cultural

Include segments based ono Cultural valueso Sub-cultural membershipo Cross-cultural affiliations

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Consumption- Specific Segmentation Behavioural Segmentation: CRM

1- Usage Rate

2- Usage Situation 3- Benefit Segmentation

4- Brand Loyalty

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Use-Related Segmentation

Rate of Usageo Heavy vs. Light

Brand Loyaltyo Brand Loyal vs. Brand Switchers

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Customer Profitability-FocusedMarketing

Tracks costs andrevenues ofindividualconsumers

Categorizes theminto tiers based onconsumptionbehavior

A customerpyramid groups

customers into four

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Consumption-Specific Segmentation

Usage-Behavior

Usage-situation segmentationo Segmenting on the basis of special occasions

or situationso Example : When Im away on business, I try to

stay at a suites hotel.

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Benefit Segmentation

Segmenting on the basis of the mostimportant and meaningful benefit

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Band-aidoffers flex as

abenefit to

consumers.

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Hybrid Segmentation Approaches

Psychographic-Demographic Profiles

Geodemographic Segmentation SRI Consultings VALS

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Copyright 2007 byPrentice Hall

VALS Framework

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Criteria for Effective Targeting of MarketSegments

Identification

Sufficiency Stability Accessibility

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ConsumerResearch Segmentation Targeting Positioning

The selection of one ormore of the segments topursue


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Implementing Segmentation Strategies

Concentrated Marketingo One segment

Differentiatedo Several segments with individual

marketing mixes

O G O OC S

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THE TRADITIONAL MARKETINGCONCEPT

VALUE- AND RETENTION-FOCUSEDMARKETING

Make only what you can sell instead of tryingto sell what you make.

Use technology that enables customers tocustomize what you make.

Do not focus on the product; focus on theneed that it satisfies.

Focus on the products perceived value, aswell as the need that it satisfies.

Market products and services that matchcustomers needs better than competitors

offerings.

Utilize an understanding of customer needsto develop offerings that customers perceive

as more valuable than competitors offerings.

Research consumer needs andcharacteristics.

Research the levels of profit associated withvarious consumer needs and characteristics.

Understand the purchase behavior processand the influences on consumer behavior. Understand consumer behavior in relation tothe companys product.

Realize that each customer transaction is adiscrete sale.

Make each customer transaction part of anongoing relationship with the customer.

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ConsumerResearch

Segmentation Targeting Positioning

Developing a distinct image for

the product in the mind of theconsumer Successful positioning

includes:o Communicating the benefits of the

producto Communicating a unique selling

proposition


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Product Positioning

Establishing a specific image for a brandin the consumers mind in relation to

competing brands Conveys the product in terms of how itfulfills a need

Successful positioning creates a

distinctive, positive brand image

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Market Positioning, Cont.

Segment Selection

Target Market

Set Product Position

Achieved by a suitable offer mix

Communicated by a promotional mix

To target Customers

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Positioning Prompts

Feature Driven

Problem Solutions

Target Driven

Competitive Driven

Emotional

Benefit Driven

Aspiration Value

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Positioning Approaches

Distinctive attributes

Unoccupied Positions

Repositioning

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