Introducing Consumer Behavior: Understanding Consumer Behavior/Developing and Using Information About Consumer Behavior Session 2: August 24, 2009 2 Session Objectives To define consumer behavior and explain its elements. To identify the four (4) domains of consumer behavior. To discuss the benefits of studying consumer behavior. To describe and discuss market segments, market segmentation, and product positioning based upon consumer value. To understand the importance of consumer research to marketing. To outline some of the research methods used to understand consumer behavior. 3 Consumer Behavior… “…reflects totality of consumer’s decisions with respect to the acquisition, consumption, and disposition of goods, services, activities, and ideas by (human) decision making units (over time).” Dynamic process (decisions about the consumption of many things) Can involve many people (families, groups) Involves many decisions (e.g. buying a home) 4 Consumer Behavior Involves Attitude Towards… Products Services Activities Ideas 5 Exhibit 1.1, pg. 4 What Is Consumer Behavior? 6 Consumer Behavior & Consumption Acquiring – buying is one type of acquisition behavior; others include trading, renting/leasing, bartering, gift giving, borrowing, theft, etc. Using – at the very core of consumer behavior; usage has symbolic implications for the consumer and thus is important for marketing strategy/tactics Disposing – how consumers get rid of an offering they previously acquired; can have extremely important implications for marketers (e.g., environmentally conscious consumers) 7 Exhibit 1.6 A Model Of Consumer Behavior – 4 Domains 8 Psychological Core Motivation, Ability, and Opportunity Exposure, Attention, and Perception Categorizing and Comprehending Information Forming and Changing Attitudes Forming and Retrieving Memories 9 Process of Making Decisions Problem Recognition and Information Search Judgments and Decisions Post-Decision Evaluations 10 Consumer’s Culture External Processes/Influences Diversity Social Class & Household Values, Personality, & Lifestyles Reference Groups 11 Consumer Behavior Outcomes Symbolize who we are – external signs used to express our identity Diffuse through a market – influence others’ decision making 12 Engel, Kollat, and Blackwell (EKB) Model The EKB model is comprehensive and shows the components of decision making and the relationships and interactions among them. The five (5) distinct parts of consumer decision making presented are: Input Information Processing Decision Process Decision Process Variables External Influences 13 14 Who Benefits from Study of Consumer Behavior? Marketing Managers Ethicists and Advocacy Groups Public Policy Makers and Regulators Academics Consumers 15 Marketing Implications of Consumer Behavior Developing a Customer-Oriented Strategy How Is the Market Segmented? (Consumers may have different needs and wants) How Profitable Is Each Segment? (Knowing this answer can help drive strategy) What Are the Characteristics of Consumers in Each Segment? Are Customers Satisfied with Existing Offerings? 16 Marketing Implications of Consumer Behavior Selecting the Target Market/Positioning Select the target market Positioning: How Are Competitive Offerings Positioned? How Should Our Offerings Be Positioned? Should Our Offerings Be Repositioned? (Subway) 17 Marketing Implications of Consumer Behavior Selecting the Target Market/Positioning Product positioning is the means through which marketers seek the right fit between a product and desired benefits (value dimensions sought) Ways of positioning products for targeted segments are: On perceived benefits or image By itself or against competitors Repositioning: re-educating the consumer about changes in important product, price, distribution, and promotional and/or personal selling benefits. 22 Marketing Implications of Consumer Behavior Developing Products/Services What Ideas Do Consumers Have for New Products? What Attributes Can Be Added to or Changed in Existing Offering? What Should Offering Be Called? What Should Package/Logo Look Like? 23 Marketing Implications of Consumer Behavior Making Promotion (Marketing Communications) Decisions What Are Advertising Objectives? What Should Advertising Look Like? Where Should Advertising Be Placed? When Should We Advertise? Has Advertising Been Effective? 24 Marketing Implications of Consumer Behavior Making Promotion (Marketing Communications) Decisions What About Sales Promotion Objectives and Tactics? When Should Sales Promotions Take Place? Have Sales Promotions Been Effective? How Many Salespeople Are Needed to Serve Customers? How Can Salespeople Best Serve Customers? 25 Marketing Implications of Consumer Behavior Making Pricing Decisions What Price Should Be Charged? How Sensitive Are Consumers to Price and Price Changes? (Elasticity, e.g. water vs. computers) When Should Certain Price Tactics be Used? 26 Marketing Implications of Consumer Behavior Making Distribution Decisions Where Are Target Customers Likely to Shop? How Should Stores Be Designed?