1. Irwin/McGraw-Hill CHAPTER ONE Consumer Behavior and Marketing Strategy Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved.

2. Irwin/McGraw-Hill Consumer Behavior Consumer behavior is the study of individuals, groups, or organizations and the processes they use to select, use, and dispose of products, services, experiences, or ideas to satisfy needs and the impacts that these processes have on the consumer and society. Sheth, Mittal, and Newman (1999) define customer behavior as “the mental and physical activities undertaken by household and business customers that result in decisions and actions to pay for, purchase, and use products and services.

3. Irwin/McGraw-Hill CB Activities Mental activities include such things as: assessing the suitability of a product or service brand making inferences about a product or service’s qualities from advertising information evaluating actual experiences with the product Physical activities include such things as: visiting stores reading Consumer Reports talking to salespeople issuing a purchase order

4. Irwin/McGraw-Hill Applications of CB Marketing Strategy Regulatory Policy Social Marketing Informed Individuals

5. Irwin/McGraw-Hill Marketing Strategy and Consumer Behavior Outcomes Individual Firm Society Consumer decision process Problem Recognition Information Search Alternative Evaluation Purchase Use Evaluation Marketing strategy Product, Price, Distribution, Promotion, Service Marketing segmentation Identify product-related need sets Group Customers with similar need sets Describe each group Select attractive segment(s) to target Marketing analysis Company Competitors Conditions Consumers 1-1 Copyright © 2001 by The McGraw-Hill Companies, Inc. All rights reserved.

6. Irwin/McGraw-Hill Marketing Strategy and CB Customer value is the difference between all benefits derived from a total product and all the costs of acquiring those benefits. A firm’s marketing strategy involves selection of target market(s) and the marketing mix elements designed to satisfy those customers. Total Product

7. Irwin/McGraw-Hill Market Analysis Components Customers Company Competition Conditions

8. Irwin/McGraw-Hill Market Segmentation Identify product-related need sets Group customers with similar need sets Describe each customer set Select attractive segment(s) to target

9. Irwin/McGraw-Hill Marketing Mix Elements Product - anything that is offered to a market to meet a need or want. Service - auxiliary or peripheral activities that are performed to enhance the primary product. Price - the value exchanged for the product. Distribution (Place) - movement of a product from point of production to the customer. Promotion - marketing communications.

10. Irwin/McGraw-Hill Consumer Decision Process High Involvement Low Involvement No Decision Making Brand-Loyal Inertia

11. Irwin/McGraw-Hill Decision Making Process Problem Recognition Information Search Alternative Evaluation Purchase Use Post-purchase Evaluation

12. Irwin/McGraw-Hill Influence on Consumers Influence on consumers purchasing External Influences  Advertising  Friends Internal Influences  Personal experiences  Beliefs Situational Influences  Store atmosphere

13. Irwin/McGraw-Hill Outcomes of CB Individual Outcomes Need Satisfaction Injurious Consumption Firm Outcomes Product Position Sales Customer Satisfaction Societal Outcomes Economic Impact Physical Environment Social Welfare