Copyright © Houghton Mifflin Company. All rights reserved.7 | 1Copyright © Cengage Learning. All rights reserved.1 | 1 Chapter One Understanding Consumer Behavior

Copyright © Houghton Mifflin Company. All rights reserved.7 | 2Copyright © Cengage Learning. All rights reserved.1 | 2 Learning Objectives Define consumer behavior and explain its elements Identify the four domains of consumer behavior Discuss the benefits of studying consumer behavior Learn how consumer behavior is used in organizations to make marketing decisions

Copyright © Houghton Mifflin Company. All rights reserved.7 | 3Copyright © Cengage Learning. All rights reserved.1 | 3 Marketing “…an organizational function and a set of processes for creating, communicating, and delivering value to customers and for managing customer relationships in ways that benefit the organization and its stakeholders.” Source: American Marketing Association,

Copyright © Houghton Mifflin Company. All rights reserved.7 | 4Copyright © Cengage Learning. All rights reserved.1 | 4 Consumer Behavior Reflects totality of consumer’s decisions with respect to the acquisition, consumption, and disposition of goods, services, time, and ideas by (human) decision making units (over time).

Copyright © Houghton Mifflin Company. All rights reserved.7 | 5Copyright © Cengage Learning. All rights reserved.1 | 5 Consumer Behavior Involves Attitude Towards Products Services Activities People Ideas

Copyright © Houghton Mifflin Company. All rights reserved.7 | 6Copyright © Cengage Learning. All rights reserved.1 | 6 What Is Consumer Behavior? (Exhibit 1.1)

Copyright © Houghton Mifflin Company. All rights reserved.7 | 7Copyright © Cengage Learning. All rights reserved.1 | 7 Consumer Behavior & Consumption Acquisition Usage Disposition

Copyright © Houghton Mifflin Company. All rights reserved.7 | 8Copyright © Cengage Learning. All rights reserved.1 | 8 Consumer Behavior Dynamic process Can involve many people Involves many decisions Involves consumers’ feeling and coping

Copyright © Houghton Mifflin Company. All rights reserved.7 | 9Copyright © Cengage Learning. All rights reserved.1 | 9 Consumer Decisions Whether? What? Why? Why Not? How? Ways? When? Where? How much? How often? How long?

Copyright © Houghton Mifflin Company. All rights reserved.7 | 10Copyright © Cengage Learning. All rights reserved.1 | 10 Model of Consumer Behavior

Copyright © Houghton Mifflin Company. All rights reserved.7 | 11Copyright © Cengage Learning. All rights reserved.1 | 11 What Affects Consumer Behavior? Psychological Core Process of Making Decisions Consumer’s Culture Consumer Behavior Outcomes

Copyright © Houghton Mifflin Company. All rights reserved.7 | 12Copyright © Cengage Learning. All rights reserved.1 | 12 Psychological Core Motivation, Ability, and Opportunity Exposure, Attention, and Perception Categorizing and Comprehending Information Forming and Changing Attitudes Forming and Retrieving Memories

Copyright © Houghton Mifflin Company. All rights reserved.7 | 13Copyright © Cengage Learning. All rights reserved.1 | 13 Decision Making Process Problem Recognition & Search for Information Judgments & Decisions Post-Decision Evaluations

Copyright © Houghton Mifflin Company. All rights reserved.7 | 14Copyright © Cengage Learning. All rights reserved.1 | 14 Consumer’s Culture: External Processes/Influences Consumer Diversity Social Class & Household Values, Personality, & Lifestyles Reference Groups and other social influences

Copyright © Houghton Mifflin Company. All rights reserved.7 | 15Copyright © Cengage Learning. All rights reserved.1 | 15 Hispanics Are X% More Likely Than General Consumers to: Source:

Copyright © Houghton Mifflin Company. All rights reserved.7 | 16Copyright © Cengage Learning. All rights reserved.1 | 16 Consumer Behavior Outcomes Symbolize who we are- external signs used to express our identity Diffuse through a market- influence others’ decision making Ethics and social responsibility

Copyright © Houghton Mifflin Company. All rights reserved.7 | 17Copyright © Cengage Learning. All rights reserved.1 | 17 Who Benefits from Study of Consumer Behavior? Marketing Managers Ethicists/Advocacy Groups Public Policy Makers/Regulators Academics Consumers

Copyright © Houghton Mifflin Company. All rights reserved.7 | 18Copyright © Cengage Learning. All rights reserved.1 | 18 Subfields of Consumer Psychology/Behavior Advertising- Radio/TV, magazines, etc. Consumer perception- Consumers “taste” with their eyes and ears Life stages- Consumers view product/service from level of maturity Motivation- Why do consumers purchase? Psychology of price- What is something really worth? Source:

Copyright © Houghton Mifflin Company. All rights reserved.7 | 19Copyright © Cengage Learning. All rights reserved.1 | 19 Consumer Behavior Career Attractions Challenge of working with others Human behavior- Gain knowledge through analysis of human choice patterns Creativity- How different studies are done Satisfaction- See hard work pay-off Source:

Copyright © Houghton Mifflin Company. All rights reserved.7 | 20Copyright © Cengage Learning. All rights reserved.1 | 20 Consumer Behavior Career Drawbacks High burnout risk- 6 day weeks and/or 50 hour week Slow start- Early efforts spent gathering data Lack of cooperation from research candidates Discouragement- Plan doesn’t work properly Decision overload- Too much data Source:

Copyright © Houghton Mifflin Company. All rights reserved.7 | 21Copyright © Cengage Learning. All rights reserved.1 | 21 Implications of Consumer Behavior Developing/implementing customer- orientation –Segmenting the market? –Profitability of each segment? –Characteristics of each segment? –Customer satisfaction of each segment? Selecting the target market

Copyright © Houghton Mifflin Company. All rights reserved.7 | 22Copyright © Cengage Learning. All rights reserved.1 | 22 Implications of Consumer Behavior –Product positioning decisions Positioning of competition? How should our offerings be positioned? Should we reposition offerings?

Copyright © Houghton Mifflin Company. All rights reserved.7 | 23Copyright © Cengage Learning. All rights reserved.1 | 23 Implications of Consumer Behavior –Products/services development decisions Consumers’ ideas for new products? Additional or different attributes? Brand naming? Packaging and logo design?

Copyright © Houghton Mifflin Company. All rights reserved.7 | 24Copyright © Cengage Learning. All rights reserved.1 | 24 Implications of Consumer Behavior IMC decisions –Advertising objectives? –Words and visuals of ads? –Where should ads be placed? –When should ads be placed? –Have ads been effective?

Copyright © Houghton Mifflin Company. All rights reserved.7 | 25Copyright © Cengage Learning. All rights reserved.1 | 25 Implications of Consumer Behavior IMC decisions (cont) –Sales promotion objectives? –When should sales promotions occur? –Have sales promotions been effective? –How large a sales force? –How can salespeople best serve customers?

Copyright © Houghton Mifflin Company. All rights reserved.7 | 26Copyright © Cengage Learning. All rights reserved.1 | 26 Implications of Consumer Behavior Pricing decisions –What should the price be? –How sensitive are consumers to price and price changes? –When should pricing tactics be used? Distribution decisions –Where does target market shop? –How should stores be designed?

Copyright © Houghton Mifflin Company. All rights reserved.7 | 27Copyright © Cengage Learning. All rights reserved.1 | 27 Additional Resources in Consumer Psychology/Behavior APA Monitor- Direct Market News- Advertising Age- PsychNet- Society For Consumer Psychology- Encyclopedia of Psychology- havior_Relationships/Consumer/ havior_Relationships/Consumer/ Media Post -