CONSUMER BEHAVIOR & CARECONSUMER BEHAVIOR & CAREAn IntroductionAn Introduction

Week 1

1CB & C

Consumer Behavior

Consumer Behavior is the study of individuals, groups, or organizations and the processes they use to select, secure, use, and dispose of products,

services, experiences, or ideas to satisfy needs and the impacts that

these processes have on the consumer and society.

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• Is the subject of human behavior that is concerned with the decisions and acts of individuals in purchasing and using products.

• It describes how consumers make purchase decisions and how they use and dispose of goods and services, and also analyzes the factors that influence purchase decisions.

• Involves individuals or groups acquiring, using and disposing of products, services, ideas, or experiences

• Includes search for information and actual purchase• Includes an understanding of consumer thoughts,

feelings, and actions3CB & C

Acquisition – Receiving– Finding– Inheriting– Producing– Purchasing

Consumption– Collecting– Nurturing– Cleaning– Preparing– Displaying– Storing– Wearing– Sharing

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Disposal-Giving - Throwing away-Recycling-Depleting

CONTRIBUTING DISCIPLINES TO CONTRIBUTING DISCIPLINES TO CBCB

Anthropology• The study of people within and across cultures• Emphasis on cross-cultural differences• Questioning of assumptions within own cultureSociology• Cultural and interpersonal influences on consumption

e.g.,– Diffusion of innovation– Popular culture

Psychology• Study of human thinking and behavior• Some issues

– Personality– Personal development– Cognition (thinking), perception– Attention and its limitations– “Learning”—e.g., acquired tastes

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Economics• Basic economic issues

– Supply and demand– Rational decision making– Perfect information

• Emphasis on predicting behavior• Complications in real life• Behavioral economics—e.g., “mental accounting”

History & Geography• Origins of behavior, perspectives, and traditions• Impact of geography on individuals

– Isolation– Language development– Climate

• Geographic determinism CB & C 7

Applications of Consumer Behavior

• Marketing Strategy• Regulatory (Public) Policy• Social Marketing• Personal Consumer Skills

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Types of Consumers

• Individuals/ Groups

• Organisations (Industrial consumers)

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Buying RolesConsumer Purchases• Initiator• Influencer• Decider• Buyer• User

Industrial Purchases• Initiator• Influencer• Decider• Buyer• User• Gatekeeper

Consumer buying rolesInitiator- Family member who initiates thinking about

buying products (gatekeeper)- Family member who initiates information

gatheringInfluencer- Family member whose opinion is sought about

purchases- Provides information about brands and evaluative

criteriaCB & C 11

Decider- Family member who has financial authority and/or

power to purchase the product

Buyer- Family member who acts as the purchasing agent- Performs the logistics (going to the store, writing

the check, etc.) of the purchase

User-Family member who actually uses or consumes the

productCB & C 12

Organisational buying roles• Initiator; people who identify the need for a

product or service• Influencer; people with expertise who may help

determine specifications• Decider; people with the authority to select or

approve a supplier• Buyer; buys it (processes the paperwork)• User; actually uses it• Gatekeeper; influences the flow of information

about the decision CB & C 13

Needs and WantsNeeds and Wants

Needs Unsatisfactory conditions of the consumer

that lead him or her to actions that will make the conditions better

Wants Desires to obtain more satisfaction than is

absolutely necessary to improve unsatisfactory conditions

Determination of Needs

Needs are determined by the following ;1.Individual person2.Environment

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The IndividualThe Individual3 Physical characteristics of the individual personGenetics; Heredity and chemical/biological characteristics of organisms Habits and needs vary with gene typesBiogenics; Biological characteristics that people possess at birth (gender, race, age, etc.)For example, older people have different needs

Psychogenics; Individual states and traits induced by a person’s brain functioningMoods, emotions, perceptions, experiences

EnvironmentEnvironment

3 Physical characteristics of the environmentClimate; Conditions that affect consumers’ need for food, clothing, shelterTemperature, altitude, rainfall etc.Topography; Physical condition of the location on earth, spatial profile, and presence of bodies of waterPeople in the mountains may need warm jackets, people near water may need boatsEcology; concerned with environmental influences of humansQuality of air, food chain, etc.

Types of needsPhysiological; The fundamentals of survival,

including hunger, thirst, and other bodily needs.

Safety; Concern over physical survival and safety.

Affiliation and Belongingness; A need to be accepted by others, to be an important person to them.

Achievement; A basic desire for success in meeting personal goalsCB & C 18

Power; A desire to gain control over one’s destiny as well as that of others

Self-expression; The need to develop freedom in self-expression and to be perceived by others as significant

Cognition; The desire to self-actualize through knowing, constructing a value system

Variety Seeking; Maintenance of a preferred level of physiological arousal and stimulation

Attribution; Estimation or attribution of the causality of events and actions

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Determination of Wants

Wants are determined based on the following ;1.Personal context2.Environment al context

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Personal contextPersonal contextPersonal worthFinancial resources available to consumersIncome assets, inheritance, borrowing power, etc.Social class classifications (capitalist, middle class, working poor, etc.)Institutional relationshipsGroups and organizations to which a person belongsInstitutional context includes workplace, religious and educational institutions, family and friends, and peer groupsCultural surroundingsCulture’s influence on consumersSome cultures value age, some value youth, some value possessions, some value the inner self, etc.

Environmental contextEnvironmental contextEconomyEconomic development and business cycles in a nation’s economyEconomic level of a nation, inflation, unemployment rate, income growth, etc.TechnologyMan-made inventions and devices used to sustain, facilitate or enhance human life and activitiesEnergy, telecommunications, education, etc.Public policyGovernmental laws and regulations that control human behaviorBusiness practices like product safety, pricing, etc. are regulated

Why Study Consumer Behavior?

1. To stay in business by attracting and retaining customers

2. To benefit from understanding consumer problems

3. To establish competitive advantage

The Dark Side of Consumer Behavior

Compulsive Consumption

>Behavior is Not Done by Choice>Gratification is Short-Lived>Strong Feelings of Regret or Guilt Afterwards

Illegal Activities

> Consumer Theft (Shrinkage)>Anti-consumption

– Culture Jamming– Cultural Resistance

Consumed Consumers

> People Who Are Exploited for Commercial Gain in the Marketplace.

Addictive Consumption

> Gambling

CB & MARKETING STRATEGYCB & MARKETING STRATEGY

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Marketing strategy

• A set of stimuli placed in consumers’ environments designed to influence their affect, cognition, and behavior.

• Marketing strategies should be designed not only to influence consumers but also to be influenced by them.

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Consumers’ Impact on MarketingStrategy

• Understanding consumer behavior is good business.– Firms exist to satisfy consumers’ needs, so– Firms must understand consumers needs to satisfy

them.

• The process of marketing segmentation:– Identifies groups of consumers who are similar to one

another in one or more ways, and– Devises marketing strategies that appeal to one or

more of these groups.

Market Segmentation Bases

• Demographic• Geographic• Geo-Demographic• Benefit• Usage• Lifestyle

Advantages Market Segmentation

1. Specific definition of the market2. Satisfaction of consumer needs3. Meeting changing market demands4. Assessment of competitive strengths and

weaknesses5. Efficient allocation of marketing resources6. Precise setting of marketing objectives

Applications of Benefit Segmentation

• Positioning • Repositioning• Competitive positioning• New market opportunities/niches• Positioning of multiple brands

Usage Segmentation

• Rate of Usage• Brand Loyalty• Usage Situation

Lifestyle SegmentationPsychographics

• Activities• Interests• Opinions• Demographics• Values & Lifestyles (VALS I and II)

– Maslow’s Hierarchy of Needs

CB & MARKETING MANAGEMENT PHILOSOPHIES

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Philosophies/ Concepts

1. Production Concept2. Product Concept3. Selling Concept4. Marketing Concept5. Societal Marketing Concept

– Green Marketing– Cause-Related Marketing– De-Marketing

Production Concept• Focuses on production• Assumes that consumers are interested primarily in

availability of the product at low pricesView of consumers:

– They will buy as long as the product is available and affordable.

Focus on production justified:– Demand higher than supply– Non-competitive product cost– Intensive distribution– Market expansion

Product Concept• Focuses on the product• Assumes that consumers will buy the product that offers them the

highest quality, the best performance and most features.View of consumers

– We have to have the best quality and the most features and they will buy.

Justification- Quality improvement- Addition features However;

• Consumers might not care about quality• Consumers might not be willing to pay for the best quality• Consumers might not be able to discern quality difference• Consumers might prefer simplicity

Selling Concept• Focuses on selling• Assumes that consumers are unlikely to buy a product

unless they are aggressively persuaded to do so.View of consumers

– We have to sell to them or else they won’t buy.Focus on selling justified

– Introductory stages of product life cycle– Unsought goodsHowever; - Lack of concern for customer needs and satisfaction

Marketing Concept• Focuses on marketing

– Creating mutually rewarding exchange relationships– Consumer needs and wants have priority

• Assumes that to be successful, a company must determine the needs and wants of specific target markets and deliver the desired satisfactions better than competition.

View of consumers– They will buy if you fulfill their needs better than the

competition.Justification - Profits through customer satisfaction.

Societal Marketing Concept

• Same as Marketing Concept plus an added concern for the well-being of society

- Green marketing- Cause marketing

PURCHASE DECISION MODELPURCHASE DECISION MODEL

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Purchase decision model

• Refer to word doc.

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As consumers use a product or service, particularly during trial purchase they evaluate its performance in relation to their own expectations.

There are 3 possible outcomes where;1. Actual performance matches expectations leading

to a NEUTRAL feeling2. Performance of the product exceeds expectations

causing what is known as positive confirmation of expectations i.e. SATISFACTION

3. Performance is below expectations causing a negative confirmation of expectations leading to DISSATISFACTION.

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SATISFACTION

A state of satisfaction will lead to; Brand loyalty Profitability of the company Increased sales for the marketer Increased customers- word of mouth Repeat purchases

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DISSATISFACTION

A state of dissatisfaction will lead to; Brand switch Loss of sales for the marketer Loss of customers Customer complaints

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Consumer Research Consumer Research

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• Self study

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