Consumer Behaviour (subject code) Lecturer’s name Contact details Office hours … or by appointment Own notes Copyright  2004 McGraw-Hill Australia Pty Ltd PPTs t/a Consumer Behaviour 4e by Neal, Quester, Hawkins

Welcome to Consumer Behaviour Why study consumer behaviour? What is consumer behaviour? How does it affect marketing strategy? These are 3 fundamental questions we need to consider. We are all ‘consumers’ as consumption of products and services is a vital part of our society and economy. Besides this individual need, your career or current employment or business is continually coming in contact with and using Consumer Behaviour knowledge. Aspects of CB rely on psychology, sociology, economics and marketing theories and knowledge. The vital aspect is to know how to apply this knowledge to the formulation of the appropriate marketing strategies for competitive advantage. Copyright  2004 McGraw-Hill Australia Pty Ltd PPTs t/a Consumer Behaviour 4e by Neal, Quester, Hawkins

The Marketing Car Consumer behaviour ‘the engine of marketing’ Marketing manager Advertising Market research This example will stress why CB is vital. Market research: showing us the road ahead Marketing manager: in control Advertising: the very visible component of marketing Distribution: involves moving products from source to destination CB: the vital component in marketing Distribution Copyright  2004 McGraw-Hill Australia Pty Ltd PPTs t/a Consumer Behaviour 4e by Neal, Quester, Hawkins 1–3

Consumer behaviour knowledge is... the ‘engine’ of a marketing strategy We need to have consumer behaviour knowledge to be able to develop effective marketing strategies. Copyright  2004 McGraw-Hill Australia Pty Ltd PPTs t/a Consumer Behaviour 4e by Neal, Quester, Hawkins

Subject Objectives Knowledge and understanding Communication skills Theories Working Model of CB implications for strategic marketing decisions a focus on marketing decisions Communication skills Increase your skills in developing and presenting ideas orally and in writing Need to learn and understand the theory and be able to build this into our working knowledge of CB. Need to ask ‘what are the implications of this theory and how can we use it to predict how the consumers will react?’ We need to be capable of making informed marketing decisions. Generally, you need to continually hone your communication skills. To be capable of successful management you need to be able to communicate your ideas. Copyright  2004 McGraw-Hill Australia Pty Ltd PPTs t/a Consumer Behaviour 4e by Neal, Quester, Hawkins

Assessment (example) Final 2 hour exam 60% Includes an unseen case study (min 45% required to pass course) Mid semester test (date) 15% Tutorial participation 10% Tutorial material preparation 10% Tutorial case study 5% 100% Own discussion Copyright  2004 McGraw-Hill Australia Pty Ltd PPTs t/a Consumer Behaviour 4e by Neal, Quester, Hawkins

Tip !! When answering Case Studies and exam questions, think of the TEAS approach: T = Theory E = Explain the relevant theory A = Apply the theory S = Strategy Theories are used in consumer behaviour (and marketing) to predict how consumers will react to a given situation. When you are faced with a Case Study problem or an exam question, use the TEAS approach to guide your solution. Choose the relevant theory: for example, the Information Processing Model. Show that you understand the theory or how the components of the model combine. Apply this theoretical knowledge to the case or CB problem: what is predicted? Devise a strategy, taking into account your previous discussions: for example, you may discuss the 4 Ps of the marketing mix if all are appropriate. Copyright  2004 McGraw-Hill Australia Pty Ltd PPTs t/a Consumer Behaviour 4e by Neal, Quester, Hawkins

Reading Consumer Behaviour: Implications for Marketing Strategy Neal, Quester and Hawkins, 4th Aust. edition Communication skills handbook Resource Centre I can thoroughly recommend this text as it is very readable, clearly laid out, and discusses AUSTRALIAN examples. Copyright  2004 McGraw-Hill Australia Pty Ltd PPTs t/a Consumer Behaviour 4e by Neal, Quester, Hawkins

Course Structure Introduction Consumer decision process Internal influences External influences Organisational buying Consumers and society There are 6 main areas of study. The text is structured along the same lines. Copyright  2004 McGraw-Hill Australia Pty Ltd PPTs t/a Consumer Behaviour 4e by Neal, Quester, Hawkins

Chapter 1 Consumer Behaviour and Marketing Strategy Studying the consumer is important for marketers Implications of consumer behaviour for marketing strategy Components of a consumer behaviour audit Relevance of consumer behaviour for non-profit organisations, government agencies &/or consumer groups A working model of consumer behaviour As previously highlighted, marketers need to understand and predict how consumers will behave under certain conditions. They are then capable of developing strategies that take this information into account and are more likely to be successful. The consumer behaviour audit (see pages 11-15) sets out a series of questions that can provide the type of information required to conduct an evaluation of current marketing practices. It is important to note that CB is equally relevant to non-profit organisations, government agencies and consumer groups, such as those dealing with tobacco smoking, and advertising during children's TV viewing times. Finally, the chapter provides a detailed discussion of a ‘working model’ of consumer behaviour. This will provide you with the necessary knowledge to gain an overall appreciation of CB and an understanding of what this subject will cover in the next few weeks. Copyright  2004 McGraw-Hill Australia Pty Ltd PPTs t/a Consumer Behaviour 4e by Neal, Quester, Hawkins

Understanding Consumer Behaviour In order to understand how consumers behave, we need to appreciate the following: How do they purchase and use the products? Who are they? Where are they situated? and other vital demographic information. Psychological factors have an influence. For example, they affect how, when, what, and how much they buy. We need to understand and appreciate how these factors influence their behaviour. The influence of others is also important: friends, family, etc. How do they take in marketing information such as advertising, process it and use this to make buying decisions? Thus to understand consumers’ behaviour patterns we need to understand these factors and their dynamics. This allows marketers to be able to devise appropriate marketing strategies and allows the regulatory bodies—usually government bodies but they can be industry groups—to set rules and guidelines to protect consumers from unethical and unfair marketing practices.

Consumer Behaviour and Marketing Strategy Positioning strategy Market segmentation New products New market applications Global marketing Marketing mix Consumerism Non-profit marketing Positioning: ‘battle for the mind of the consumer’ (Ref: Tout + Ries). How consumers perceive the product. Segmentation: the segments are now smaller, greater importance is placed on understanding the consumer segments, a need to meet specific requirements. Many new products fail because CB aspects are overlooked, e.g. tea bags and instant coffee faced failure because consumers saw them as inferior, not innovations. Marketers can find new markets with existing products. Despite the fact that many products are marketed globally, marketers must appreciate the subtle differences between cultures. The marketing mix must take into account consumers’ reactions. Consumerism is now more important than ever: for example, the way that companies react to product recalls can make or break them. Non-profit organisations such as churches and universities need to have sound marketing strategies in place to survive in the competitive market place. Copyright  2004 McGraw-Hill Australia Pty Ltd PPTs t/a Consumer Behaviour 4e by Neal, Quester, Hawkins

How Consumer Influences Drive Marketing Decisions The model also shows the major sources of consumer influence that marketing managers should understand when they are developing marketing strategy to solve consumer problems. Direct students to study Exhibit 1.5: The consumer behaviour audit. (See pages 13-15.)

Definitions of Consumer Behaviour The dynamic interaction of cognition, behaviour and environmental events by which human beings conduct the exchange aspects of their lives (American Marketing Association) A discipline dealing with how and why consumers consumers purchase (or don’t purchase) products and services. (Neal et al.) The AMA definition emphasises thinking, behaviour and influences on consumers. Although the Neal definition is simple, it emphasises the how and why of consumer behaviour. (See page 5.) Copyright  2004 McGraw-Hill Australia Pty Ltd PPTs t/a Consumer Behaviour 4e by Neal, Quester, Hawkins

Definitions of Consumer Behaviour (cont.) Those behaviours performed by decision-making units in the purchase, usage and disposal of goods and services (Kotler & Levy) The decision process and physical activity individuals engage in when evaluating, acquiring, using or disposing of goods and services (London & Della Bitta) Kotler’s definition adds the concept that we are dealing with decision-making units, i.e. consumers don’t always act alone, particularly in households and industrial buying situations. The London definition emphasises the actual decision-making process of buying and consuming. Copyright  2004 McGraw-Hill Australia Pty Ltd PPTs t/a Consumer Behaviour 4e by Neal, Quester, Hawkins

Definitions of Consumer Behaviour (cont.) Those actions directly involved in obtaining, consuming, and disposing of products and services, including the decision processes that precede and follow these actions (Engel, Blackwell & Miniard) This is similar in that it emphasises the ‘actions’ of decision-making. Copyright  2004 McGraw-Hill Australia Pty Ltd PPTs t/a Consumer Behaviour 4e by Neal, Quester, Hawkins

Consumer Lifestyle and Consumer Decisions This conceptual and organisational model provides an overview of consumer behaviour. The purpose of the consumer behaviour model presented in this chapter is to outline the major conceptual areas of consumer behaviour and illustrate their relationships with one another. The model also shows the major sources of influence that marketing managers should understand when they are developing marketing strategy to solve consumer problems. A major influence in the consumer behaviour model presented in this chapter is the element of consumer lifestyle. (See p. 18.)

Consumer Decision Process In a particular situation, the consumer decision process begins once the consumer realises that there is a difference between the actual and the desired state, i.e. problem recognition. The consumer searches for information—this can be either internal (think about it) or an external search (e.g. ask someone). They then evaluate this information, make a selection and choose a location for the purchase. This experience and the product are evaluated and information is either stored in memory or acted upon, e.g. ‘Don’t buy that product again because it tastes salty!’ (See page 19.)

Factors that Determine and Influence Consumer Lifestyles Which of these are internal and which are external to the individual? The combination of these external and internal influences is manifested in consumer lifestyles, and the products and services individuals consume to maintain and/or change that lifestyle. (See pages 20–24.)

Overall Model of Consumer Behaviour Individuals engage in purchasing to improve their lifestyle. This is a major influence on their consumption of products and services. Based on experiences (below) and their individual attitudes and needs (above) they choose certain products. Retailers and marketers need to recognise the complexity involved and that some influences are more important than others to individual consumers. Model on page 25, information and details pages 17–24.

Next Lecture… Chapter 2: Situational Influences Copyright  2004 McGraw-Hill Australia Pty Ltd PPTs t/a Consumer Behaviour 4e by Neal, Quester, Hawkins