COPYRIGHT © 2006 Thomson Learning Australia

Roger D. Blackwell Clare D’Souza Mehdi Taghian Paul Miniard James Engel Consumer Behaviour Requests for permission to make copies of any part of the work should be addressed to: Thomson Level 7, 80 Dorcas Street South Melbourne Victoria Australia 3206 COPYRIGHT © 2006 Thomson Learning Australia

Consumer behaviour and consumer research CHAPTER 1

What is consumer behavior? Activities people undertake when obtaining, consuming, and disposing of products and services A field of study that focuses on consumer activities Scope goes beyond just why and how people buy to include consumption analysis

Obtaining ConsumingDisposing ConsumerinfluencesOrganisationalinfluences Consumer behavior

Consumerinfluences Organisational influences Culture Ethnicity Personality Family Life-stage Values Income Available resources Attitudes Opinions Feelings Motivations Past experiences Peer groups Knowledge Brand Product features Advertising Word of mouth Promotions Retail displays Price Quality Service Store ambiance Convenience Loyalty programs Packaging Product availability

ObtainingConsumingDisposing  How you decide you want to buy  Other products you consider buying  Where you buy  How you pay for product  How you transport product home  How you use the product  How you store the product in your home  Who uses the product  How much you consume  How product compares with expectations  How you get rid of remaining product  How much you throw away after use  If you resell items yourself or through a consignment store  How you recycle some products

Consumption analysis Why and how people use products in addition to why and how they buy

The marketing concept The process of planning and executing the conception, pricing, promotion, and distribution of ideas, goods and services to create exchanges that satisfy individual and organisational objectives Satisfaction with an exchange depends on satisfaction with consumption of product and the exchange of money

Why Study Consumer Behavior? Consumer Behavior Determines the Economic Health of a Nation

Why study consumer behaviour? Consumer behavior determines the success of marketing programs Marketing can be used to influence brand choice and purchase, while de-marketing can influence people to stop harmful consumption ‘The Customer is King’: Organisation influenced by consumer needs and wants

Why study consumer behaviour? Organisations that are customer-centric use a total marketing approach to focus their resources on satisfying customers Marketing is the process of transforming or changing an organisation to have what people will buy

Why study consumer behaviour? Consumer behavior determines everyone’s economic health: The individual’s decisions as a consumer determine their economic health by making more effective consumption decisions while avoiding deceptive practices harmful to them Public policy leaders and social commentators study consumer behavior to alleviate over-consumption and under- consumption by educating consumers about problems and providing assistance

Consumer behaviour helps to formulate public policy

Understanding consumers’ issues or problems and developing methods to reach and educate consumers Educating consumers about health

Understanding consumers’ needs to formulate public policy and predicting behavioral changes that follow Studying consumer behaviour helps formulate public policy Interest rates Warning labels Economics Social Welfare Family Planning Government Regulations Government Protection and Education Protection from Competitive Markets

Personal policy includes how you behave towards others and in buying situations, your values and beliefs, and how you live your life A person’s economic quality of life is determined by personal policy Consumer behaviour affects personal policy

Evolution of consumer behavior Supply chain: all the organisations involved in taking a product from inception to final consumption - Manufacturers - Wholesalers - Retailers - Facilitating organisations Consumers’ increased influence on business

Evolution of consumer behaviour Wholesaler Manufacturer Retailer Consumer Manufacturing Orientation Consumer Orientation Selling Orientation Marketing Orientation US WWII Europe WWII Consumers’ increasing influence

Manufacturing orientation Selling orientation Marketing orientation: - Motivation research - Positivism - Postmodernism Consumer orientation Evolution of consumer behaviour

Consumer orientation Beyond a marketing focus How all organisations in a demand chain adapt to changing consumer lifestyles and behaviors bringing product design, logistics, manufacturing, and retailing together Role of consumers in shaping many aspects of life – society, government, social programs, health cares, and other areas

Studying consumer behaviour: Consumer research methods Observation Observing consumer behaviors in different situations such as natural or artificial settings In-home observation: examining how and when consumers use and consume products in their households Shadowing: following and observing consumers in the shopping and consumption processes. Researchers may ask questions about reasons for behaviors Physiological methods: techniques borrowed from medicine, psychology and other sciences including cameras to measure eye movement, galvanic skin response, and MRI

Consumer research methods Interviews and surveys Surveys: efficient method for gathering information from a large sample of consumers by asking questions and recording responses (telephone and Internet surveys, mall intercepts, and mail questionnaires) Focus groups: a group discussion led by a moderator skilled in persuading consumers to thoroughly discuss a topic of interest Longitudinal studies: repeated measures of activities over time to determine changes in opinions, buying, and consumption behaviors

Consumer research methods Experimentation Measuring cause-and-effect relationships by manipulating independent variables to determine the effects of changes on dependent variables - Laboratory experiment - Field experiment Independent variables might include number of advertisements and package design Dependent variables might include purchase intent or behavior

Consumer research methods Consumption research builds on the three primary research methods to examine how people use products and services rather than how they buy them May use ethnographic tools to under-stand how values and culture influence usage of products and other behaviors May identify new uses for existing products or new product to satisfy unmet or changing consumer needs

Understanding how consumers use products

Underlying principles of consumer behaviour The consumer is sovereign The consumer is global Consumers are different Consumers are alike

Consumers appear different but respond in similar ways to brands

The Underlying Principles of Consumer Behavior The Consumer Is Sovereign The Consumer Is Global Consumers Are Different; Consumers Are Alike The Consumer Has Rights

Consumer Bill of Rights Refer to DOCEP (Department of Consumer and Employment Protection) in Western Australia for information on consumer rights. Remember that consumer rights may vary across countries in the South East Asian region.

Challenges for the future Gathering and interpreting information that organisations need to meet changing needs of consumers Developing effective consumer research methods to capture changes in trends and lifestyles Understanding consumer behaviour from a broader perspective as an important part of life