Consumer Behaviour MKT60012 Semester 1, 2015

Introduction to Consumer Behaviour

Swinburne

SCIENCE | TECHNOLOGY | INNOVATION | BUSINESS | DESIGN

- What made you come here to do this unit?

- What do you want from this class?

- What are your concerns about attending this class?

- Where would you rather be?

Swinburne

SCIENCE | TECHNOLOGY | INNOVATION | BUSINESS | DESIGN

- Breakout

- Write down two true things about yourself and one lie.

Put your name on the paper and hand to your

neighbour.

Swinburne

SCIENCE | TECHNOLOGY | INNOVATION | BUSINESS | DESIGN

- It represents a foundation practice in our political

economy

- It helps to satisfy our desire for knowledge

- It helps us to:

- Predict and interpret customer response to stimuli

- Predict and interpret customer impact of stimuli

- This allows us to:

- Develop marketing strategy

- Develop public policy

- Become more informed as customers

Why seek to understand customer decision making?

Text line Learning objectives

To understand what consumer behaviour is and the different types of consumers.

To understand why marketers study consumer behaviour.

To understand the relationship between consumer behaviour and the societal marketing concept.

To understand the importance of consumer research for firms and their brands, as well as for consumers.

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To understand the steps in the consumer research process and the imperatives to conduct research.

To understand the types of consumer research.

To understand the relationship between consumer behaviour and customer value, satisfaction, trust and retention.

To understand the make-up and composition of a model of consumer behaviour.

Learning objectives (cont.)

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What is consumer behaviour?

Consumer behaviour is the behaviour that consumers

display in searching for, purchasing, using, evaluating and

disposing of the products and services that they expect

will satisfy their needs.

The study of consumer behaviour includes:

• how consumers think

• what they buy

• why they buy it

• how often they buy it

• how often they use it

• how they dispose of it.

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What is consumer behaviour (cont.)

When acting as consumers, individuals have one goal in mind:

To obtain goods and services that meet their needs and wants.

This requires solutions to problems, and the process is often complex.

Advertiser vs Consumer

http://www.youtube.com/watch?v=heSudg-tfIk&feature=related

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Personal consumers and organisational consumers

The personal consumer buys goods and services for:

– his or her own use

– use by the whole household, or a household member

– a gift for someone else. In all contexts, the products are bought for final use by individuals (end-users).

Examples of websites targeted at personal users:

Chanel Apple

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Personal consumers and organisational consumers

The organisational consumer includes:

> commercial for-profit businesses

> non-profit businesses

> public sector agencies (government departments)

> institutions (e.g., schools, churches, sports clubs)

Organisational consumers buy products to help run their organisations.

Websites targeting organisational users:

Ford Fleet Telstra Business

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Buyers, payers and users

The marketplace activities of individuals entail three functions:

1. the consumer (user) - who consumes or uses the product

2. the buyer - who undertakes activities to procure or obtain the product

3. the payer - who provides the money (or other value) to obtain the product.

Marketers must decide who to target: buyer, payer or user - e.g., some

game manufacturers advertise their products to both children (users) via

websites and to parents (buyers) via email registration:

Jumpstart

https://www.jumpstart.com/MyAccount/Register1.aspx

http://www.kidsafeseal.com/aboutourprogram.html

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Why marketers study consumer behaviour

To better understand:

• changing product life cycles

• changing environmental views and concerns

• changing consumer protection and public policy

• the growing role of services marketing

• the growing role of not-for-profit and social marketing

• the growing role of global marketing

• changing technology

• the impact of constant change.

Text line Changing product life cycles

Many product categories, and changes in them, are driven by product life cycle.

Shorter life cycles arise due to the pace of new product introductions and changes in technology.

Life cycles are increasingly shortened.

The next big thing SII

http://www.youtube.com/watch?v=GWnunavN4bQ

The next big thing SIII

http://www.youtube.com/watch?v=QR8A3T6sPzU

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Changing environmental views and concerns

Marketers and public policy makers are aware of the potentially negative impact of products and packaging.

Many consumers are socially aware and favour products that address environmental concerns.

Planet Ark – Cartridges

http://www.youtube.com/watch?v=KhcapnYmYPQ

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Changing consumer protection and public policy

As a result of consumer research and lobbying, marketers have become more aware of their responsibility to protect consumer interests.

The ACCC ensures that companies act responsibly and ethically in their dealings with consumers.

ACCC takes Apple to court

http://www.youtube.com/watch?v=fsjkWmDWIgs

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Growing role of services marketing

Australia’s service sector forms a large part of the economy.

Marketing service offerings can be difficult as services are:

• intangible

• perishable

• inconsistent.

A knowledge of consumer needs and interests is recognised as being essential to develop effective marketing strategies.

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Growing role of not-for-profit and social marketing

Organisations in both the public and private non-profit sectors recognise the need for marketing strategies that target groups.

Not-for-profit organisations use consumer research to gain a better understanding of their target market.

This allows them to develop more effective marketing.

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Growing role of global marketing

Australian companies recognise the need to move beyond domestic markets.

By marketing globally, they can achieve economies of scale and increase sales.

This assists in their bid for survival.

The federal government encourages small and medium sized businesses to export.

Cultural needs have to be recognised though.

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Changing technology

Companies that are responsive to changing technology, and advances in the way that consumers interact with companies through technology, are able to leverage greater relationships.

This technology ranges from websites, to electronic or mobile ordering.

Consumers have access to more information than ever before and can easily find, or provide, reviews quickly.

Fast food on a phone…

http://video.foxbusiness.com/v/2669650145001/fast-food-on-a-phone/

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Impact of constant change

Due to continual social, economic and technological changes, marketers need to know which markets to target.

Marketers seek to identify key similarities and differences and then segment their markets accordingly.

This is done by identifying common characteristics among groups of consumers.

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Development of the marketing concept

Production concept

Product concept

Selling concept

Marketing concept

Societal marketing concept

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An example of evolution of the mass marketing concept and change to STP

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Societal marketing concept

A restructured definition of the marketing concept:

Seeks to fulfil the needs of the target audience in ways that improve society as a whole, while also fulfilling the objectives of the organisation.

Marketers should adhere to principles of social responsibility in the marketing of their goods and services and satisfy the needs and wants of their target markets in ways that preserve and enhance the well-being of consumers and society.

Range Rover Evoque – Sustainability

http://www.youtube.com/watch?v=96iXZv4Q7ak

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Embracing the marketing concept

Consumer research is used to:

• gain a better understanding of consumption behaviour

• identify and locate appropriate target markets, and to understand their media habits

• identify both felt and unfelt (latent) needs

• determine how consumers perceive products, brands and stores

• identify attitudes before and after promotional campaigns

• identify how and why they make their consumption decisions.

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Consumer research

Primary research

Qualitative

Focus groups

In depth interviews

Quantitative

Observational research

Experimentation

Survey research

Combination

Uses both qualitative and quantitative

methods

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Customer value, satisfaction, trust and retention

• Providing customer value

• Customer satisfaction

• Building customer trust

• Customer retention

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What is customer value?

Customer’s

perceived benefits

(economic, functional

and psychological) Customer’s resources used

(money, time, effort and

psychological)

Developing a value proposition is central.

Go to http://content.dell.com/au/en/corp/about-

dell.aspx and read Dell’s value proposition.

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Customer satisfaction

Consumer’s

perception of

performance

Consumer’s

expectation of

performance compared to

If exceeded: If equalled:

Satisfied

If not met:

Dissatisfied Very satisfied,

delighted

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Building customer trust

Challenge of establishing and maintaining consumer trust in a company and its products.

Word of mouth and recommendations from other consumers are highly rated measures of trust.

Trust is the foundation for maintaining long-term relationships with customers.

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Customer retention

The strategy of retention is to make it in the best interest of customers to stay rather than switch.

Research shows small reductions in customer defections produce significant profit increases due to the fact that:

> loyal customers buy more products

> loyal customers are less price-sensitive

> it is cheaper to service existing customers

> loyal customers spread positive word-of-mouth and refer other customers.

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A simplified model of consumer decision making

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A simplified model of consumer behaviour - three interlocking stages

Input stage

Input stage

Firm’s marketing activities + external sociocultural

influences

Process stage

Decision steps + internal psychological factors

(modified by experience)

Output stage

Post-decision behaviour

(trial, repeat purchase and evaluation)

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Summary

• Defining consumer behaviour

• Why to study consumer behaviour

• The societal marketing concept

• The types and importance of consumer research

• Customer value, satisfaction, trust and retention

• A simplified consumer behaviour model