Chapter 1

Introduction: Consumer

Behavior, Its Origins and

Strategic Applications

Shamshul Anaz Kassim

Senior Lecturer

Faculty of Business management

UiTM Perlis

Learning Objectives

• At the end of this chapter, you should be able to:

– Define Consumer Behavior (CB)

– Explain the importance of CB as a field of study

– Understand how and why the field of CB developed

– Explain the interdisciplinary nature of CB as a body of

knowledge

– Describe how consumers make decision based on a

simple model of consumer decision making

The behavior that consumers display

in searching for, purchasing, using,

evaluating, and disposing of products

and services that they expect will

satisfy their needs.

What is Consumer Behavior?

Personal Consumer vs.

Organizational Consumers

Personal Consumer

The individual who buys goods and

services for his or her own use, for

household use, for the use of a family

member, or for a friend.

Organizational Consumer

A business, government agency, or

other institution (profit or nonprofit)

that buys the goods, services, and/or

equipment necessary for the

organization to function.

Why Study Consumer Behavior?

Consumer

• To understand our

purchasing behavior

• To become an efficient and

wise consumer

Marketers

• Important competitive

advantage

• Develop marketing

strategies and tactics

– Assumptions

– Theories

– researches

Why was CB developed?

• Consumer did not always act as suggested by

marketing theories

• Size of consumer market: vast, constantly expanding

• Consumer preferences: changing , highly diversified

• Market segmentation popularly adopted

• Positioning strategies to specific target segments

• Cross cultural research as basis for international

marketing

Development of the Marketing

Concept

Production

Concept

Selling Concept

Product Concept

Marketing

Concept

The Production Concept

• Assumes that consumers are interested

primarily in product availability at low

prices

• Marketing objectives:

– Cheap, efficient production

– Intensive distribution

– Market expansion

The Product Concept

• Assumes that consumers will buy the

product that offers them the highest quality,

the best performance, and the most features

• Marketing objectives:

– Quality improvement

– Addition of feature

The Selling Concept

• Assumes that consumers are unlikely to buy

a product unless they are aggressively

persuaded to do so

• Marketing objectives:

– Sell, sell, sell

• Lack of concern for customer needs and

satisfaction

The Marketing Concept

• Assumes that to be successful, a company

must determine the needs and wants of

specific target markets and deliver the

desired satisfactions better than the

competition

• Marketing objectives:

– Profits through customer satisfaction

The Marketing Concept

A consumer-oriented philosophy that

suggests that satisfaction of consumer

needs provides the focus for product

development and marketing strategy to

enable the firm to meet its own

organizational goals.

Implementing the Marketing

Concept

• Consumer Research

• Segmentation

• Targeting

• Positioning

Consumer Research

• The process and tools used to study

consumer behavior.

• Two perspectives:

– Primary

– Secondary

Segmentation, Targeting, and

Positioning

• Segmentation: process of dividing the

market into subsets of consumers with

common needs or characteristics

• Targeting: selecting one ore more of the

segments to pursue

• Positioning: developing a distinct image for

the product in the mind of the consumer

The Marketing Mix

• Product

• Price

• Place

• Promotion

Societal Marketing Concept

A revision of the traditional marketing

concept that suggests that marketers adhere

to principles of social responsibility in the

marketing of their goods and services; that

is, they must endeavor to satisfy the needs

and wants of their target markets in ways

that preserve and enhance the well-being of

consumers and society as a whole.

Consumer Behavior an

Interdisciplinary Science

• Psychology (the study of individual)

• Sociology (the study of groups)

• Social Psychology (the study of how individual operates in

relation to other people)

• Cultural Anthropology (the study of mankind in society)

• Economics (money, time & efforts)

Customer Value, Satisfaction, Trust

and Retention

Customer Value• Ratio between the customer’s perceived

benefits and the resources

• Perceived value is relative and subjective.

• E.g : Customer expectation toward

MCD’s food

Ensuring Customer Satisfaction• Consumer’s perception of the performance

of the products or services in relation to his

or her expectation.

• E.g : Cold fries serve in McD will

dissatisfied the customers.

Building Customer Trust• Trust = Customer’s long-term loyalty.

Securing Customer Retention• Attract customer’s interest to stay with a

company rather than switch to another

company.

• Loyal customer :

-Buy more

-Less price sensitive

-Spread positive information

-Service is cheaper

The Impact of New Technologies on

Marketing Strategies

• Customer can get more information through internet.Consumers have more power

• Only with few clicks, consumer can easily review the products or services and make comparison.

Consumers have more access to information

• The digitalization of information enables sellers to customize the product and services they are selling and still sell them at reasonable price.

Marketers can and must offer more services and product

• Through digital media communication, marketers can quickly get feedback from customers rather than to rely on sales information.

Increasing instantaneous exchanges between marketers and customers

• Marketers can track customer’s online behavior and also gather information by requiring website’s visitor to enter their details.

Marketers can gather more information about consumers more

quickly and easily

• The improvement in technologies make business transaction in the future more easier and convenience.

Impact reaches beyond the

pc-based

Firm’s Marketing Efforts

1. Product

2. Promotion

3. Price

4. Channels of distribution

Sociocultural Environment1. Family2. Informal sources3. Other noncommercial

sources4. Social class5. Subculture and culture

Output

Process

Input

Ex

tern

al

Infl

uen

ce

Postpurchase Evaluation

Purchase

1. Trial

2. Repeat purchase

Need

Recognition

Prepurchase

Search

Evaluation of

Alternatives

Psychological Field

1. Motivation

2. Perception

3. Learning

4. Personality

5. Attitudes

Experience

Figure 1-1:

A Model of

Consumer

Decision

Making