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Chapter One

Understanding

Consumer Behavior


Learning Objectives

• Define consumer behavior and explain its elements

• Identify the four domains of consumer behavior

• Discuss the benefits of studying consumer behavior

• Learn how consumer behavior is used in organizations to make marketing decisions


Marketing

“…an organizational function and a set of processes for creating, communicating, and

delivering value to customers and for managing customer relationships in ways that benefit the

organization and its stakeholders.”

Source: American Marketing Association, http://www.marketingpower.com/content4620.php


Consumer Behavior

Reflects totality of consumer’s decisions with respect to the acquisition, consumption, and disposition of goods, services, time, and ideas by (human) decision making units (over time).


Consumer Behavior Involves Attitude Towards

• Products

• Services

• Activities

• People

• Ideas


What Is Consumer Behavior? (Exhibit 1.1)


Consumer Behavior & Consumption

• Acquisition

• Usage

• Disposition


Consumer Behavior

• Dynamic process

• Can involve many people

• Involves many decisions

• Involves consumers’ feeling and coping


Consumer Decisions

• Whether?• What?• Why?• Why Not?• How?• Ways?

• When?• Where?• How much?• How often?• How long?


Model of Consumer Behavior


What Affects Consumer Behavior?

• Psychological Core

• Process of Making Decisions

• Consumer’s Culture

• Consumer Behavior Outcomes


Psychological Core

• Motivation, Ability, and Opportunity

• Exposure, Attention, and Perception

• Categorizing and Comprehending Information

• Forming and Changing Attitudes

• Forming and Retrieving Memories


Decision Making Process

• Problem Recognition & Search for Information

• Judgments & Decisions

• Post-Decision Evaluations


Consumer’s Culture:External Processes/Influences

• Consumer Diversity• Social Class &

Household• Values, Personality, &

Lifestyles• Reference Groups and

other social influences


Hispanics Are X% More Likely Than General Consumers to:

Source: http://www.HispanicBusiness.com

0%

10%

20%

30%

40%

50%

60%

70%

80%

Consume 7-Up

Consume Sprite

Own A Kia Family Size= 5+


Consumer Behavior Outcomes

• Symbolize who we are- external signs used to express our identity

• Diffuse through a market- influence others’ decision making

• Ethics and social responsibility


Who Benefits from Study of Consumer Behavior?

• Marketing Managers

• Ethicists/Advocacy Groups

• Public Policy Makers/Regulators

• Academics

• Consumers


Subfields of Consumer Psychology/Behavior

• Advertising- Radio/TV, magazines, etc.• Consumer perception- Consumers “taste”

with their eyes and ears• Life stages- Consumers view product/service

from level of maturity• Motivation- Why do consumers purchase?• Psychology of price- What is something really

worth?

Source: http://www.wcupa.edu/_ACADEMICS/sch_cas.psy/Career_Paths/Consumer/Career05.htm


Consumer Behavior Career Attractions

• Challenge of working with others

• Human behavior- Gain knowledge through analysis of human choice patterns

• Creativity- How different studies are done

• Satisfaction- See hard work pay-off



Consumer Behavior Career Drawbacks

• High burnout risk- 6 day weeks and/or 50 hour week

• Slow start- Early efforts spent gathering data• Lack of cooperation from research candidates• Discouragement- Plan doesn’t work properly• Decision overload- Too much data



Implications of Consumer Behavior

• Developing/implementing customer-orientation– Segmenting the market?– Profitability of each segment?– Characteristics of each segment?– Customer satisfaction of each segment?

• Selecting the target market



– Product positioning decisions• Positioning of competition?• How should our offerings be positioned?• Should we reposition offerings?



– Products/services development decisions• Consumers’ ideas for new products?• Additional or different attributes?• Brand naming?• Packaging and logo design?



• IMC decisions– Advertising objectives?– Words and visuals of ads?– Where should ads be placed?– When should ads be placed?– Have ads been effective?



• IMC decisions (cont)– Sales promotion objectives?– When should sales promotions occur?– Have sales promotions been effective?– How large a sales force?– How can salespeople best serve

customers?



• Pricing decisions– What should the price be?– How sensitive are consumers to price and

price changes?– When should pricing tactics be used?

• Distribution decisions– Where does target market shop?– How should stores be designed?


Additional Resources in Consumer Psychology/Behavior

• APA Monitor- http://www.apa.org • Direct Market News- http://www.dmnews.com• Advertising Age- http://www.adage.com • PsychNet- http://www.psychnet-uk.com • Society For Consumer Psychology-

http://fisher.osu.edu/marketing/scp • Encyclopedia of Psychology-

http://www.psychology.org/links/Environment_Behavior_Relationships/Consumer/

• Media Post - http://www.mediapost.com

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