The Foundations of Consumer Behaviour

Schiffman, Bednall, O’Cass, Paladino, Ward & Kanuk:

Consumer Behaviour 4e © 2007 Pearson Education Australia

Chapter 1

The foundations of consumer behaviour

Schiffman, Bednall, O’Cass, Paladino, Ward & Kanuk: Consumer Behaviour 4e © 2007 Pearson Education Australia2

Chapter Objectives

To define Consumer Behaviour (CB)

To identify the two broad types of consumers

To outline the Positivist and Interpretivist approaches to the study of Consumer Behaviour

To understand the interdisciplinary nature of CB

To review the simplified model of CB

To outline why the study of CB is important

To review the Marketing Concept’s evolution

To review traditional marketing concepts


Consumer behaviour is defined as:

“The behaviour that consumers undertake in seeking, purchasing, using, evaluating, and disposing of

products and services that they expect will satisfy their personal needs”

What is Consumer Behaviour?


More AboutConsumer Behaviour

The consumer’s goal is to obtain goods and

services that meet their needs and wants

Consumers face varying problems associated with

acquiring products to satisfy these needs and wants

People engage in purchase activities for many purposes

other than consumption

Consumers make specific types of decisions in order

to obtain desired goods and services


For example, a research study may ask consumers...


Two Broad Types of Consumers

PERSONAL CONSUMERS

The personal consumer buys goods and services for:

• His or her own use

• Use by the whole household, or a household member, or

• A gift for someone else

In all contexts, the products are bought for final use by individuals (end-users)

ORGANISATIONAL CONSUMERS

Organisational consumer includes:

• Profit businesses

• Not-for-profit businesses

• Public sector agencies and

• Institutions (e.g. schools, churches)

In all cases, they buy products to help run their organisations


Consumers as Buyers 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 their marketing

at: the buyer, the payer, or the user?”


Consumer Research: Two Perspectives

POSITIVIST APPROACH

•Tends to be objective and empirical

•Seeks causes for behaviour

•Conduct studies that can be generalised to larger populations

INTERPRETIVIST METHODOLOGY

• More qualitative

• Based on smaller samples

• View each consumption situation as unique and non-predictive

• Look for common patterns across consumption situations


The Interdisciplinary Nature of Consumer Behaviour

Research

Psychology

The study of the individual

Sociology

The study of groups

Social Psychology

How individuals operate in

groups

Economics

An important component of

economics is the study of consumers

Inputs to the study of consumer behaviour

Cultural Anthropology

The study of humans in

society


Consumer Behaviour as anInterdisciplinary Science

Psychology: - The study of the individual, including motivation,

perception, attitudes, personality and learning styles

Sociology: - The study of groups, group behaviour and the actions

of individuals within groups Social Psychology:

- The combination of sociology and psychology Cultural Anthropology:

- The study of human beings in a society, which traces the development of core beliefs, values and customs

Economics: - How consumers make decisions with the goal of

maximising satisfaction


Figure 1.8

An ad focusing

upon the key benefits

sought by consumers


Key Model Components

Input Process Output

Input = Various firms’ marketing activities + EXTERNAL

social/culture influences

Process = Decision steps + INTERNAL psychological factors

(modified with experience) Output = Trial and repeat purchases

and post-purchase evaluation


Figure 1.10: Subaru Liberty RX advertisement showing detailed

information on features and price


Why Study Consumer Behaviour?

Reasons to better understand consumers


Development of the Marketing Concept


Overview of Philosophical Approaches

Production concept- Has the marketing objective of cheap, efficient

production and intensive distribution

Product concept- Based on the assumption that consumers will buy the

product that offers them the highest quality, the best performance, and the most features

Selling concept- Focus on aggressive promotion and selling to

persuade consumers to buy products


The Marketing Concept

Determine specific target

markets

Understand their needs and wants

Meet the identified needs

of the target markets, better

than competition

Note: Consumer behaviour helps to:• Segment the market• Identify unsatisfied needs• Understand needs• Effectively meet those needs


A reassessment of the traditional marketing concept where marketers also adhere to principles of social responsibility in the marketing of their goods and services.

The Societal Marketing Concept

The goals of the firm

Needs of the target market

Improvement of society

overall

Firms following this concept look for an effective balance


Market Segmentation

Market segmentation is the process of dividing a market into subsets of consumers with common needs or characteristics

A key component of the marketing concept is the identification of common market needs and the

creation of segments


Positioning

Positioning is developing a unique image for the product or service in the mind of the consumer – an image that will differentiate the offering from competing ones

Principle OneThe product’s benefits are

communicated, not its features

Principle TwoEffective

positioning must communicate a ‘unique selling

proposition’


The Marketing Mix

PRODUCT/SERVICE• Features• Designs• Brands• Packaging• Augmentation

PRICE• List price• Discounts• Payment

methods

PLACE• Distribution via

stores and non-store outletsPROMOTION

• Advertising• Sales promotion• Public relations• Sales efforts


Providing Customer Value

There is a trend in marketing to focus on improving “value” to consumers

Note the reference to “value” in the American Marketing Association’s definition of marketing:

“Marketing is an organisational function and a set of processes for creating, communicating and

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

organisation and its stakeholders”


What is customer value?

The customer’s perceived

benefits they receive

The customer’s resources (money, time, effort) used to

obtain those benefits

In other words:

‘what they get’ versus ‘what they give’


Customer Satisfaction

The consumer’s perception of

performance of the product/service

As compared to the consumers expectations

If exceeded: If equalled: If not met:

Very satisfied, delighted

Satisfied Dissatisfied


Benefits of Customer Retention

Loyal customers

Buy more products

Are less price sensitive

Pay less attention to competitor's advertising

Spread positive

word-of-mouth

Are cheaper to service


Traditional Marketing versus Value/Retention Marketing

Traditional Marketing Concept

Focus on needs, not the product itself

Research consumer needs

Target large market segments

Use one-way promotions Base budgets on the no.

of customers targeted

Value and Retention-focused Marketing

Focus on the product’s perceived value

Determine profits associated with needs

Develop one-to-one promotional messages

Use interactive promotion Base budgets on the

customers’ lifetime value


Summary

The definition of Consumer Behaviour (CB)

The two broad types of consumers

The positivistic and interpretive approaches

The interdisciplinary nature of CB

The simplified model of CB

Why the study of CB is important

A review of the Marketing Concept’s evolution

A review traditional marketing concepts

The Foundations of Consumer Behaviour

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