Understanding Consumer Behavior

A Shift in Marketing

• Old approach = Market to consumers with a scattered approach to reach as many consumers as possible, even those not part of the target market
• New approach = Market with consumers using a more targeted approach to reach consumers interested in products
• A new approach considers consumers' ability to choose whether to start a conversation

Consumer Behavior (CB)

• CB involves the study of individuals, groups, or organizations
• CB explores the select, secure, use, and disposal processes of products, services, experiences, or ideas to satisfy needs and all impacts on the consumer and society
• CB involves direct and indirect influences

Four Key Aspects of Consumer Behavior

• Consumer behavior is a complex, multidimensional process
• Marketing decisions need an understanding of the underlying consumer behavior processes
• Target customer information is required in marketing decisions
• Important to consider ethical issues that affect the company, consumer, and society

Applications of Consumer Behavior

• Decisions based on customer behavior are more successful than those based on hunches, giving a competitive advantage
• Agencies protecting consumers and marketing regulation need extensive knowledge of consumer behavior
• Social marketing applies marketing strategies and tactics to create a positive effect on the target or society, such as campaigns to stop smoking/drugs, promote vaccines, environmental and charity initiatives.
• Since billions are spent to influence consumers, one must act ethically

Marketing Strategy and Consumer Behavior

• Marketing starts with a market analysis of the target to see who has similar needs
• Customer value represents the difference between all the benefits a product provides and all costs to acquire those benefits, aiming to offer more value than competitors
• Marketing mix encompasses product, price, place, promotion, and services

Marketing Strategy

• Products can be goods, services, ideas, people, and even experiences created by memorable events
• An experience is mostly internal to each customer

Market Analysis

• Learn about consumer needs through marketing research.
• What are the company's capabilities?
• What do competitors offer that is unique?
• Economic conditions, physical environment, regulations, and technology impact consumer needs and company abilities

Market Segmentation

• Focus efforts on a market segment, which is part of a larger market whose needs differ
• A market segment needs to be large enough to serve and make a profit

Segmentation Process

• Identify product-related need sets; most products satisfy more than one need
• Group consumers with similar needs
• Describe each group by demographics, lifestyles, and media usage
• Select attractive segments to serve, becoming target markets

Marketing Strategy

• Provide superior customer value to the target by:
• Maintaining consistent marketing of product/price, promotion/communication, place/distribution, and services provided

Product

• Product is anything a consumer acquires to meet a perceived need
• A product usually buys "need satisfaction," not physical attributes alone
• Products must meet consumer needs better than a competitor to be successful

Communications (Promotion)

• Communications promote information about the company and its products, using strategies such as Advertising, sales teams, PR, and packaging
• Must determine who to talk with, desired effect on the target, messaging, tools, and communication timing

Price

• Price is the purchase amount, whether time, money, or effort
• Price can also signal the product's quality
• Consumer cost is everything a consumer gives up to obtain the product

Distribution (Place)

• Distribution is the product's availability when and when the consumer wants to buy it
• Consider: Where do consumers shop, and what do retailers want to stock in inventory?

Service

• Service are extra activities enhancing the primary product
• Services cost money to provide, so only provide what offers value to the target
• Services play a role in market share and relative price

Consumer Decisions

• Success comes when consumers see a need, are aware, purchase, and are satisfied woth the product

Outcomes

• Firm outcomes include product position, sales and profits, and customer satisfaction
• Individual outcomes involve need satisfaction and avoiding injurious consumption
• Society outcomes consider economic and physical environment influences, as well as social welfare

Nature of Consumer Behavior

• Analyzing consumer behavior is complex, and often disorganized, involving many influences

CB Key Entities

• External Influences: culture, subculture, demographics, social status, reference groups, family, marketing activities
• Internal Influences: perception, learning, memory, motives, personality, emotions, attitudes
• Self-Concept & Lifestyle: Needs and Desires
• Decision Process: Situations, Problem Recognition, Information Search, Alternative Evaluation and Selection, Outlet Selection and Purchase, Postpurchase Processes

Self-Concept and Lifestyle

• Self-concept are individual's thoughts/feelings and the experiences they have, a result of their culture when it comes to themselves
• Lifestyle is how we live, reflecting what we buy, how we use them, and what we think and feel

CB Process

• The problem can be an actual problem or an opportunity
• Consumers might use only some of the steps in the purchase process and most purchases require only little thought
• Emotions can influence a purchase as much as facts and product features

Consumption

• Consumers can purchase products to satisfy needs and to show symbolic meaning for status, identity, or group acceptance
• Must consider the ethical implications when targeting and reaching consumers