1. © 2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
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© 2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin

2. PART I: INTRODUCTION
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3. CONSUMER BEHAVIOR AND MARKETING STRATEGY1
CHAPTER
CONSUMER BEHAVIOR AND MARKETING STRATEGY
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4. Consumer Behavior In The News…
Segmenting the Automobile Market
J.D. Powers Examined Car-Buyer Segments.
Can You Predict the Market for Each Brand?
Honda Civic
Honda Accord
Toyota Sienna Mini Van
Cadillac STS
Lexus LS 430
Source: D. Kiley, “Sexy or Sensible?” Business Week, January 16, 2006, p
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5. Consumer Behavior In The News…
Segmenting the Automobile Market
J.D. Powers Examined Car-Buyer Segments.
Can You Predict the Market for Each Brand?
Honda Civic – “teenage terror”
Honda Accord – “recent MBA grad”
Toyota Sienna Mini Van – “suburban mom”
Cadillac STS – “mid-career executive”
Lexus LS 430 – “titan of industry”
Source: D. Kiley, “Sexy or Sensible?” Business Week, January 16, 2006, p
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6. Consumer Behavior and Marketing Strategy
Consumer behavior is the study of individuals, groups, or organizations and the processes they use to select, secure, use, and dispose of products, services, experiences, or ideas to satisfy needs and the impacts that these processes have on the consumer and society.
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7. Applications of Consumer Behavior
Marketing Strategy
Regulatory Policy
Social Marketing
Informed Individuals
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8. Applications of Consumer Behavior
Marketing Strategy
Marketing strategies and tactics are based on explicit or implicit beliefs about consumer behavior.
Decisions based on explicit assumptions and sound theory and research are more likely to be successful than are decisions based solely on implicit intuition.
Knowledge of consumer behavior can be an important competitive advantage and can greatly reduce the odds of bad decisions and market failures!
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9. Applications of Consumer Behavior
Regulatory Policy
Various regulatory bodies exist to develop, interpret, and/or implement policies designed to protect and aid consumer.
Effective regulation of many marketing practices requires an extensive knowledge of consumer behavior.
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10. Applications of Consumer Behavior
Social Marketing
Social marketing is the application of marketing strategies and tactics to alter or create behaviors that have a positive effect on the targeted individuals or society as a whole.
As is true for commercial marketing strategy, successful social marketing strategy requires a sound understanding of consumer behavior.
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11. Applications of Consumer Behavior
United Way Campaign Provides an Example of Social Marketing
Courtesy of United Way of Central Alabama, Inc.
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12. Applications of Consumer Behavior
Informed Individuals
Most economically developed societies are referred to as consumption societies. Most individuals in these societies spend more time engaged in consumption than any other activity, including work or sleep.
Knowledge of consumer behavior can enhance our understanding of our environment and ourselves.
Such an understanding is essential for sound citizenship, effective purchasing behavior, and reasoned business ethics.
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13. Marketing Strategy and Consumer Behavior
Customer value is the difference between all the benefits derived from a total product and all the costs of acquiring those benefits.
Providing superior customer value requires the organization to do a better job of anticipating and reacting to customer needs than the competition does.
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14. Marketing Strategy and Consumer Behavior
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15. Marketing Strategy and Consumer Behavior
Step 1. Market Analysis
Marketing Strategy begins with an analysis of the market the organization is considering, requiring a detailed analysis of the:
organization’s capabilities
strengths and weaknesses of competitors
economic and technological forces
current and potential customers
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16. Marketing Strategy and Consumer Behavior
Step 2. Market Segmentation
On the basis of the consumer analysis, the organization identifies groups of individuals, households, or firms with similar needs. These market segments are described in terms such as demographics, media preferences, geographic location, etc.
Management then selects the segment(s) to target.
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17. Marketing Strategy and Consumer Behavior
Step 3. Marketing Strategy
Marketing Strategy seeks to provide the customer with more value than the competition, while still producing a profit for the firm.
Marketing strategy is formulated in terms of the marketing mix, which involves determining the product features, price, communications, distribution and services that will provide customers with superior value, resulting in the total product.
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18. Marketing Strategy and Consumer Behavior
Step 4. Consumer Decision Process
The total product is presented to the target market, which is consistently engaged in processing information and making decisions designed to maintain or enhance its lifestyle or performance.
Many firms are wrapping experiences around their traditional products and service in order to sell them better. For example, retailers have been moving to lifestyle centers in an effort create a more pleasing shopping experience.
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19. Marketing Strategy and Consumer Behavior
Step 5. Outcomes
Society – the cumulative effect of the marketing process affects economic growth, pollution, social problems.
Firm – reaction of the target market to the total product produces an image of the product/brand/organization.
Individual – the process results in some level of need satisfaction, financial expenditure, attitude development/change, and/or behavioral changes.
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20. Market Analysis Components
The Consumers
The Company
The Competitors
The Conditions
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21. Market Analysis Components
The Consumers
It is not possible to anticipate and react to customers’ needs and desires without a complete understanding of consumer behavior.
Discovering customers’ needs is a complex process, but it can often be accomplished by marketing research.
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22. Market Analysis Components
The Company
A firm must fully understand its own ability to meet customers needs. This involves evaluating all aspects of the firm including:
financial condition
general managerial skills
production capabilities
R&D capabilities
technological sophistication
reputation, and
marketing skills
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23. Market Analysis Components
The Competitors
It is not possible to consistently do a better job of meeting customer needs than the competition without a thorough understanding of the competition’s capabilities and strategies.
This requires the same level of knowledge of a firm’s key competitors that is required on one’s own firm.
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24. Market Analysis Components
The Conditions
The state of the economy, the physical environment, government regulations, and technological developments affect consumer needs and expectations as well as company and competitor capabilities.
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25. Market Segmentation
Market segmentation is a portion of a larger market whose needs differ from the larger market.
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26. Market Segmentation Market Segmentation Involves Four Steps:
Identifying Product-Related Need Sets
Grouping Customers with Similar Need Sets
Describing Each Group
Selecting an Attractive Segment(s) to Serve
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27. Market Segmentation Product-Related Need Sets
Organizations approach market segmentation with a set of current and potential capabilities.
The term need set is used to reflect the fact that most products in developed economies satisfy more than one need.
Customer needs are not restricted to product features but also include types and sources of product information, outlets where the product is available, product price, the image of the product or firm, and even where and how the product is produced.
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28. Market Segmentation Customers with Similar Need Sets
The next step is to group consumers with similar need sets.
These consumers can be grouped into one segment as far as product features and perhaps even product image are concerned despite sharply different demographics.
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29. Description of Each Group
Market Segmentation
Description of Each Group
Once consumers with similar need nets are identified, they should be described in terms of demographics, lifestyles, and media usage.
In order to design an effective marketing program, it is necessary to have a complete understanding of the potential customers.
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30. Attractive Segment(s) to Serve
Market Segmentation
Attractive Segment(s) to Serve
Target market - segment(s) of the larger market on which we will focus our market effort.
This decision is based on our ability to provide the selected segment(s) with superior customer value at a profit.
Each market segment requires its own marketing strategy.
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31. Market Segment Attractiveness Worksheet
Market Segmentation
Market Segment Attractiveness Worksheet
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32. Marketing Strategy
Marketing Strategy is the answer to the question: How will we provide superior customer value to our target market?
This requires the formulation of a consistent marketing mix, which includes the
Product
Price
Communications
Distribution, and
Services
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33. Marketing Strategy The Product
A product is anything a consumer acquires or might acquire to meet a perceived need.
Consumers are generally buying need satisfaction, not physical product attributes.
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34. Marketing Strategy Communications
Marketing communications include advertising, the sales force, public relations, packaging, and any other signals that the firm provides about itself and its products.
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35. Marketing Strategy Price
Price is the amount of money one must pay to obtain the right to use the product.
Price sometimes serves as a signal of quality
Consumer cost is everything the consumer must surrender in order to receive the benefits of owning/using the product.
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36. Marketing Strategy Distribution
Distribution means having the product available where target customers can buy it. This is essential to the product’s success.
Good channel decisions require a sound knowledge of where target customers shop for the product.
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37. Marketing Strategy Service
Service refers to auxiliary or peripheral activities that are performed to enhance the primary product or primary service.
Auxiliary services cost money to provide, so it is essential that the firm furnish only those services that provide value to the target customers.
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38. Consumer Decisions
The consumer decision process intervenes between the marketing strategy, as implemented in the marketing mix, and the outcomes.
The firm can succeed only if consumers see a need that its product can solve, become aware of the product and its capabilities, decide that it is the best available solution, proceed to buy it, and become satisfied with the result of the purchase.
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39. Outcomes
Firm Outcomes
Individual Outcomes
Society Outcomes
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40. Outcomes Firm Outcomes
The product position is the image of the product or brand in the consumer’s mind relative to competing products and brands.
Sales are a critical outcome, as they produce the revenue necessary for the firm to continue in business.
Customer satisfaction remains a concern for marketers. Retaining customers requires that they be satisfied with their purchase and use of the product.
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41. Creating Satisfied Customers
Outcomes
Creating Satisfied Customers
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42. Outcomes Individual Outcomes Need satisfaction
The most obvious outcome of the consumption process for an individual, whether or not a purchase is made, is some level of satisfaction of the need that initiated the consumption process.
Injurious consumption, the dark side of consumer behavior, occurs when individuals or groups make consumption decisions that have negative consequences for their long-run well-being.
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43. Outcomes Society Outcomes Economic Outcomes
The cumulative impact of consumers’ purchase decisions, including the decision to forgo consumption, is a major determinant of the state of a given country’s economy.
Physical Environment Outcomes
Consumers make decisions that have a major impact on the physical environments of both their own and other societies.
Social Welfare
Consumer decisions affect the general social welfare of a society, including having a major impact on the overall quality of life in a society.
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44. The Nature of Consumer Behavior
Overall Conceptual Model of Consumer Behavior
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45. The Nature of Consumer Behavior
External Influences
The following are the major external influences:
Culture
Demographics and social stratification
Ethnic, religious, and regional subcultures
Families and households
Groups
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46. The Nature of Consumer Behavior
Internal Influences
Internal influences include:
Perception
Learning
Memory
Motives
Personality
Emotions
Attitudes
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47. The Nature of Consumer Behavior
Self-Concept and Lifestyle
Self-concept is the totality of an individual’s thoughts and feelings about oneself.
Lifestyle is how one lives, including the products one buys, how one uses them, what one thinks about them, and how one feels about them.
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48. The Nature of Consumer Behavior
Situations and Consumer Decisions
Consumer decisions result from perceived problems and opportunities.
Consumer problems arise in specific situations and the nature of the situation influences the resulting consumer behavior.
Using Outdoor Media to Trigger Problem Recognition
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49. The Meaning of Consumption
Consumption frequently has deep meaning for the consumer!
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