1. An Introduction to Applied Buyer Behavior Partha Krishnamurthy Spring 2003

2. Agenda What’s this course is about Contrast buyer and consumer behavior Define consumer behavior –What is marketing exchange Who is interested in consumer behavior How do we study consumer behavior Exercise for Chapter 1

3. What’s this course about? This course is about buyer behavior. …rather, consumer behavior. What’s the difference?

4. Buyer Behavior Buyer behavior focuses primarily on buyers and buying. –But, often you buy for others (significant others, spouses, friends, children) –To buy, you have to engage in activities other than buying e.g., searching, learning to search, using, knowing how to use, and disposing. … so buyer behavior cannot be the whole story

5. Consumption and Consumer Behavior Consumption –Activities, thoughts and feelings (of individuals and groups) directed toward achieving satisfaction (often using market offerings). Consumers –Those who engage in consumption activities Consumer Behavior (Brief definition) –How consumers go about achieving satisfaction.

6. Examples of Consumption (and why it is just not “buying”) Ulusaba – South African Private Game ReserveUlusaba »$10000 per night, up-close and personal with wild game Nimmo Bay – British ColumbiaNimmo Bay »$26000 for 3-6 guests, 4 days/nights. »Helicopter and Chef on demand, exclusive fishing, dining. »Can’t keep the fish though! Personal Perfume »Created for you, and only you. »Based on your style, taste, activities etc. »Only $32,000

7. What Does it Mean to Study Consumer Behavior? It is a study of the feelings, thoughts, and behaviors of consumers. Specifically, from a managerial point of view, it is a study of how people respond to marketing entities such as products, advertisements, promotion, price etc. This study is aimed at increasing the likelihood and frequency of the marketing exchange.

8. What is Marketing Exchange? Marketing is an exchange process between the consumer and the producer – benefits are exchanged for profits; more concretely, goods and services exchanged for money. Marketing strategies are activities geared toward increasing the probability and frequency of the exchanges so that the exchange is profitable and satisfying. Marketer Consumer Goods & Services Money

9. Why should Consumer Behavior be Studied –Suppose, your product is not selling well. Should you decrease the price, increase advertising, offer consumer promotions? –If you don’t know how consumers respond to these marketing actions, how can you make the decision? –Hence, for marketing strategies to be successful, understanding consumer behavior is absolutely important.

10. How to Study Consumer Behavior: A Real World Application of How Studying Consumer Behavior Facilitates Marketing Exchanges Activebuyersguide.com Activebuyersguide.com is a website which assesses your goals, preferences, what you like and don’t like about the features of products and then creates a list of products that fit your needs. It provides the degree of fit between your preferences and the product features, descriptions of features etc. It encourages/facilitates marketing exchange

11. A Correction In this course, our study of consumer behavior will also focus on: –consumer satisfaction. –consumer well-being. … sometimes these goals may have little to do with the probability/frequency of marketing exchange.

12. Returning to Consumer Behavior What do we study? –Primarily, three aspects Affect/Cognition: »Feelings (“I love the restaurant”) »Thoughts (“$14.99 for a bowl of soup? Why is it so expensive?”) Behavior: »Action (Going to the restaurant) Environment: »Context (The lighting in the restaurant) In other words, we will be examining consumers’ affective/cognitive and behavioral responses in the environmental context.

13. Relationships among groups interested in consumer behavior Consumers Consumer activities Marketing strategies Public Policy Government and political organizations Marketing organizations

14. Approaches to the Study of Consumer Behavior Approach Primary Objectives Core Disciplines Primary Methods Interpretive Cultural anthropology Understand consumption and its meaning Long interviews & focus groups

15. Approaches to the Study of Consumer Behavior (cont’d) Approach Primary Objectives Core Disciplines Primary Methods Traditional Psychology & Sociology Explain consumer decision making and behavior Experiments & Surveys

16. Approaches to the Study of Consumer Behavior (cont’d) Approach Primary Objectives Core Disciplines Primary Methods Marketing Science Economics & Statistics Predict consumer choice and behavior Math-modeling & Simulation

17. Exercise # 1 “Out of Class” Exercise Home Work: Vacation Fantasy Consumption Story –Surf the web, and based on information available in the web, and create an imaginary vacation, complete with details about the vacation ($5000 budget). Describe the vacation as if it were a story (2 pages, 10 points). To be handed in class next Monday. –Type written, double-spaced, 1-inch margins on all sides, times-roman 12-point font only.