1. Consumer Behaviour
Resource Person: Prof. Shahbaz Shamsi
Own notes

2. Consumers Rule
Chapter 1

3. 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.

4. The Marketing Car Consumer behavior ‘the engine of marketing’
Marketing manager
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
Advertising
Market research
Distribution

5. 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.

6. 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.

7. Reading Consumer Behaviour: Buying, Having and Being
Michael R. Solomon, 6th Edition
Consumer Behaviour: Implications for Marketing Strategy
Neal, Quester and Hawkins, 4th Aust. edition
Course Pack
I can thoroughly recommend this text as it is very readable, clearly laid out, and discusses AUSTRALIAN examples.

8. What is Consumer Behavior?
The study of the processes involved when individuals or groups select, purchase, use, or dispose of products, services, ideas, or experiences to satisfy needs and desires

9. 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 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.)

10. 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.

11. Definitions of Consumer Behaviour (cont.)
Those actions directly involved in obtaining, consuming, and disposing of products and services, including the decision processes .
(Engel, Blackwell & Miniard)
This is similar in that it emphasizes the ‘actions’ of decision-making.

12. Consumer Behavior is a “Process”
CONSUMER’S PERSPECTIVE
MARKETER’S PERSPECTIVE
PREPURCHASE ISSUES
How does a consumer decide about needing a product?
How are consumer attitudes formed/changed?
PURCHASE ISSUES
Is product acquisition a stressful or pleasant experience?
How do situational factors affect purchase decision?
POSTPURCHASE ISSUES
Does product provide pleasure or perform function? How is product disposed of?
What determines customer satisfaction and repurchase?
Figure 1.1 (Abridged)

13. Actors in Consumer Behavior
Consumer: A person who identifies a need or desire, makes a purchase, and then disposes of the product
Purchaser vs. User vs. Influencer vs. Payer
Organization/group as consumer

14. Consumers’ Impact On Marketing Strategy
Understanding consumer behavior is good business
Understanding people/organizations to satisfy consumers’ needs
Knowledge and data about customers…
…Help to define the market
…Identify threats/opportunities to a brand

15. Consumers’ Impact On Marketing Strategy
Segmenting Consumers
Relationship Marketing: Building Bonds with Consumers

16. Segmenting Consumers Market Segmentation Similar consumers
Example: “Heavy Users” of fast-food industry

17. Segmenting Consumers: Demographics
Age
Gender
Family Structure & Marital Status
Social Class & Income
Race & Ethnicity
Geography

18. Discussion
Name some products or services that are widely used by your social group.
State whether you agree or disagree with the notion that these products help to form group bonds, supporting your argument with examples from your list of products used by the group.

19. Segmenting Consumers: Lifestyles
Psychographics
The way we feel about ourselves
The things we value
The things we do in our spare time

20. Relationship Marketing
Success = building lifetime relationships between brands and customers
Regular interaction with customers
Database Marketing

21. Marketing’s Impact on Consumers
Marketers significantly influence the world and the information we learn!
Advertisements, stores, and products communicate and persuade

22. Marketing’s Impact on Consumers The Meaning of Consumption
People often buy products not for what they do, but for what they mean
Brands…
…Convey image/personality
…Define our place in modern society
…Help us to form bonds with others who share similar preferences

23. The Meaning of Consumption
Types Of Brand Relationships:
Self-Concept Attachment
Nostalgic Attachment
Interdependence
Love

24. The Meaning of Consumption
Four distinct types of consumption activities
Consuming as Experience
Consuming as Integration
Consuming as Classification
Consuming as Play

25. Marketing’s Impact on Consumers The Global Consumer
Global Consumer Culture
People united by common devotion to:
Brand name consumer goods
Movie stars
Celebrities
Leisure activities
Pressure to understand similarities and differences of customers in various countries

26. Marketing’s Impact on Consumers Virtual Consumption
Impact of the Web on consumer behavior
24/7 shopping without leaving home
Instantaneous access to news
Handheld devices & wireless communications
C2C e-commerce
Virtual brand communities.
Consumer chat rooms

27. Virtual Consumption (Cont’d)
“Wired” Americans spend…
…Less time with friends/family
…Less time shopping in stores
…More time working at home after hours
But, many report that strengthens family ties

28. Marketing and Reality
“Blurred boundaries” between marketing efforts and “the real world”
Popular culture shaped by marketers

29. Marketing Ethics and Public Policy
Business Ethics: rules of conduct that guide actions in the marketplace
What is “Right vs. Wrong”
Differs among people, organizations, and cultures

30. Marketing Ethics and Public Policy (cont’d)
Consumers think better of products made by firms they feel behave ethically
Marketing “violators”
Mislabeling package contents
“Bait-and-switch” selling strategy
Alcohol/tobacco billboards in low-income neighborhoods

31. Manipulating Needs & Wants
Marketers tell people what they should want
Marketerspace vs. Consumerspace
Response: Marketers recommend ways to satisfy basic biological needs

32. Are Advertising & Marketing Necessary?
Marketers foster materialism
Response: Products are designed to meet existing needs
Economics of Information Perspective
Discussion: do marketers have the ability to control our desires or the power to create needs?
Is this situation changing as the Internet creates new ways to interact with companies? If so, how?

33. Do Marketers Promise Miracles?
Advertising promises “magical” products
Response: Advertisers simply do not know enough about people to manipulate them
Failure rate for new products = 40% to 80%

34. Figure 1.2 (Abridged) MICRO CONSUMER BEHAVIOR (INDIVIDUAL FOCUS)
Exp Psych
Clinic Psych
Develop Psych
Human Ecology
Microeconomics
Social Psych
Sociology
Macroeconomics
Semiotics/Literary Criticism
Demography
History
Cultural Anthropology
MACRO CONS BEHAV
(SOCIAL FOCUS)

35. Strategic Focus The field of consumer behavior…
…as an applied social science
…to understand consumption for its own sake

36. Wheel of Consumer Behavior
Figure 1.3

37. 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 )

38. 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.)

39. 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.)

40. 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.)

41. 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.

42. 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.