Consumer Behavior & Marketing Management Chapter 1 Consumer Behavior & Marketing Management

Chapter Spotlights Consumer benefits Total product concept Market segmentation and segmentation strategies Positioning Consumer decision-making Engel, Kollat, and Blackwell (EKB) Model

Course Objectives Better understand why people do what they do in the marketplace when they do it Better understand yourself as a shopper, buyer, and consumer Improve yourself as a shopper, buyer, and consumer Improve your current/future job performance Better understand marketer communications and behaviors in the marketplace

Consumer Benefits People do not buy products or services, they buy benefits Hence we make purchases not for the products themselves, but for the benefits of the problems they solve or the opportunities they offer e.g., “always late” so a watch helps solve problem; has stopwatch feature so now can keep track of “work out” times

Consumer Benefits Consumers seek bundles of types of benefits: Tangible benefits: e.g., a watch keeps good time; has leather band Intangible benefits: e.g., the “reliability” reputation of the watch manufacturer; the image of the watch wearer

The Total Product Concept Total product: refers to the sum of benefits offered by a product, service, outlet, etc. Basic core: bundle of utilitarian benefits (e.g., design, features, etc.) Accessory ring: added-value benefits with no apparent extra cost (e.g., store reputation, manufacturer prestige, convenient location, etc.) Psychological ring: benefits resulting from the consumer’s feelings associated with owning/using the product (e.g., belonging, youthful, powerful, sexy, etc.) Time: products/service “give” or “take” time; this can be “good” or “bad” (e.g., fast food versus conventional restaurant)

Market Segmentation Market segmentation is the study of the marketplace in order to discover already existing viable groups of consumers who are similar or homogeneous in their approaches to choosing and/or consuming goods and services.

Segment Bounding Segment bounding is a means by which marketers differentiate among consumers and among market segments Determine the “descriptors” of the consumers/units in the segment (e.g., demographics, psychographics, benefits sought, product usage rate, type of retail outlet, etc.) Determine specific “geographic location” of segment Bound segments in “time” to ensure that all data is relevant and up to date for the time of use.

Segment Viability Four factors are used to assess segment viability. Viable segments are: Of sufficient size Measurable Differentiated Reachable

Segmentation Strategies Mass marketing (undifferentiated marketing): offering the same product to the entire consumer population Concentrated marketing (focused or niche marketing): selecting one market segment, even though the product may also appeal to others Differentiated marketing: selecting two or more different segments

Segmentation in the Global Marketplace There are two approaches to market segmentation Localization: treating each country as a separate market and seeking consumer segments accordingly Intermarket segmentation (also called “standardization”): selecting groups of consumers who exhibit similar consumption behavior across different countries Marketers emphasize similarities rather than differences across country markets

Consumer Benefits and Product Positioning Product positioning is the placement of a product, service, outlet, etc. in the mind of the consumer There are five ways used to position products, services, outlets, etc. On perceived benefits On image On attributes Against competitors Combination of two or more of the above Repositioning: shifting position in the consumer’s mind through changes in important product, price, distribution, and promotional and/or personal selling benefits.

The Consumer Decision-Making Process A consumer decision model is a means of describing the processes that consumers go through before, during, and after making a purchase (choice). A model shows the causes or antecedents of a particular behavior and each of its results or consequences.

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 distinct parts of consumer decision making presented are: Input, information processing, a decision process, decision process variables, and external influences

Input Input includes all kinds of stimuli from our contact with the world around us: Our experiences, contact with others Marketer-controlled stimuli (e.g., advertising, store display, demonstrations) Other stimuli (e.g., personal recollections, conversations with friends) External search

Information Processing Stimuli are processed into meaningful information Five methods of information processing: Exposure Attention Comprehension Yielding Retention

Decision Process It is triggered at any time during information processing It consists of five steps: Problem recognition Search Alternative evaluation Choice Outcomes (post-purchase evaluation and behavior)

Decision Process Variables Those individual qualities that make people/consumers unique. Decision process variables include Motives Beliefs Attitudes Lifestyles Intentions Evaluative criteria Normative compliance and informational influence Other aspects of self

External Influences Such influences are called “Circles of Social Influence.” They are: culture, sub-culture (co-culture), social class, reference groups, and family or household influences