Week 1: Course Introduction & Introduction to Consumer

Behaviour

Presented by: Dr. Trevor Smith

January 24, 2014

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Career Track

Consultancy

Executive Employment Entrepreneurship

Researcher/ Lecturer

Course OverviewThis course explores the dynamics of consumer behaviour throughout the purchasing process and provides students with the necessary skills to analyze and shape marketing strategies for effectively meeting consumer needs. Consumer motivation, behavioural considerations affecting consumer purchasing decisions; and meeting consumer needs through selling, advertising and distribution are some of the key areas presented in this course.

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Student Learning Objectives Upon successful completion of this course, the

student should be able to: Determine the factors that motivate

consumers into buying certain products/services. Assess products as "bundles of satisfaction" and

develop strategies to maximize consumer acceptance of such products.

Demonstrate an understanding of how consumers process information into decisions and the strategic implications of this process.

Demonstrate insight into the continuum of factors that affect consumer decisions.

Develop an understanding of the environmental considerations affecting the behaviour of consumers.

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Readings Required Text

◦ Schiffman, L.G., Kanuk, L. L., Wisenblit, J. (2010), “Consumer Behavior”, 10th Edition, Prentice Hall, Upper Saddle River, NJ .

◦ Articles The material presented in the required text will be

supplemented with hand-outs. These hand-outs will be distributed by the course instructors.

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Guest Lecture A guest lecture will be delivered by an

industry practitioner aimed at enhancing classroom knowledge with industry experience. Date of guest lecture will be announced on confirmation.

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Deliverables◦ Midterm Test 15% - February 28, 2014◦ Group Project 25% - Mar 28, 2014◦ Final Exam 60%

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Office Hours◦ Wednesdays 10-12noon

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Week Topic DeliverablesWK1 Introduction to Course

Introduction to Consumer Behaviour Read course outline Read chapter 1

WK2 Consumer Research & Market Segmentation

Read chapter 2 & 3

WK3 Consumer Motivation Read chapter 4

WK4 Personality and Consumer Behaviour

Read chapter 5

WK5 Consumer Perception Read chapter 6

WK6 Exam Take Mid-Semester Exam (February 28)

WK7 Consumer Learning Read chapter 7WK8 Consumer Attitude formation and

Change & Communication and Consumer Behaviour

Read chapters 8 & 9

WK9 Social Class and Consumer Behaviour

Read chapter 11

WK10 Influence of Culture/Subculture / Cross Culture on Consumer Behaviour

Read chapters 12, 13 & 14

Submit Project (March 28)

WK11 Consumer Decision Making and Beyond

Read chapter 16

WK12 Revision

Exam Period) To be announced Take Final Exam

Overview of Consumer Behavior The Marketing Concept The Marketing Mix and Relationships Digital Technologies Societal Marketing Concept A Simplified Model of Consumer Decision

Making

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The behaviour that consumers display in searching for, purchasing, using, evaluating, and disposing of products and services that they expect will satisfy their needs.

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The individual who buys goods and services for his or her own use, for household use, for the use of a family member, or for a friend.

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A business, government agency, or other institution (profit or nonprofit) that buys the goods, services, and/or equipment necessary for the organization to function.

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Production Concept

Selling Concept

Product Concept

Marketing Concept

Assumes that consumers are interested primarily in product availability at low prices

Marketing objectives:◦ Cheap, efficient production◦ Intensive distribution◦ Market expansion

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Assumes that consumers will buy the product that offers them the highest quality, the best performance, and the most features

Marketing objectives:◦ Quality improvement◦ Addition of features

Tendency toward Marketing Myopia

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Assumes that consumers are unlikely to buy a product unless they are aggressively persuaded to do so

Marketing objectives:◦ Sell, sell, sell

Lack of concern for customer needs and satisfaction

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Assumes that to be successful, a company must determine the needs and wants of specific target markets and deliver the desired satisfactions better than the competition

Marketing objectives:◦ Make what you can sell◦ Focus on buyer’s needs

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What two Jamaican companies do you believe grasp and use the marketing concept?

Why do you believe this?

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Consumer Research

Segmentation Targeting Positioning

The process and tools used to study consumer behavior

Two perspectives:◦ Positivist approach◦ Interpretivist approach

Implementing the Marketing Concept

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Consumer Research

Segmentation Targeting Positioning

Process of dividing the market into subsets of consumers with common needs or characteristics

Implementing the Marketing Concept

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What products that you regularly purchase that are highly segmented?

What are the different segments? Why is segmentation useful to the marketer

for these products?

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Consumer Research

Segmentation Targeting Positioning

The selection of one or more of the segments to pursue

Implementing the Marketing Concept

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Consumer Research

Segmentation Targeting Positioning

Developing a distinct image for the product in the mind of the consumer

Successful positioning includes:◦ Communicating the

benefits of the product◦ Communicating a unique

selling proposition

Implementing the Marketing Concept

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This product is positioned as a solution to

facial redness.

Product Price Place Promotion

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Customer Value

Customer Satisfaction

Customer Retention

Customer Trust

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Customer Value

Customer Satisfaction

Customer Retention

Customer Trust

Defined as the ratio between the customer’s perceived benefits and the resources used to obtain those benefits

Perceived value is relative and subjective

Developing a value proposition is critical

Value, Satisfaction, ,Retention & Trust

How does Burger King create value for the consumer?

How do they communicate this value?

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Customer Value

Customer Satisfaction

Customer Retention

Customer Trust

The individual's perception of the performance of the product or service in relation to his or her expectations.

Customers identified based on loyalty include loyalists, apostles, defectors, terrorists, hostages, and mercenaries

Value, Satisfaction, Retention, Trust

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Customer Value

Customer Satisfaction

Customer Retention

The objective of providing value is to retain highly satisfied customers.

Loyal customers are key◦ They buy more products◦ They are less price sensitive◦ They pay less attention to

competitors’ advertising◦ Servicing them is cheaper◦ They spread positive word of

mouth

Value, Satisfaction, Retention & Trust

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Customer Value

Customer Satisfaction

Customer Retention

Customer Trust

The objective is for the customer to trust the company and its products

Foundation for maintaining long standing relationship with customer; helps to increase loyalty

Trust is key◦ Online and off-line product◦ Neilsen’ Customize Research Services:

Word-of mouth communications/ recommendations from other consumers (78% trusting such source)

Newspaper, consumer opinion posted on-line, brand website (high in trust)

“Online banner ads”, text ads to mobile phones (low in trust)

Value, Satisfaction, Retention & Trust

Tracks costs and revenues of individual consumers

Categorizes them into tiers based on consumption behavior

A customer pyramid groups customers into four tiers

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Tier 1: Platinum

Tier 2: Gold

Tier 3: Iron

Tier 4: Lead

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Traditional Marketing Concept

Value and Retention Focused Marketing

Make only what you can sell instead of trying to sell what you make

Use technology that enablescustomers to customize whatyou make

Do not focus on the product; focus on the need that it satisfies

Focus on the product’s perceived value, as well as theneed that it satisfies

Market products and services that match customers’ needs better thancompetitors’ offerings

Utilize an understanding of customer needs to develop offerings that customers perceive as more valuable than competitors’ offerings

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Consumers have more power and access to information

Marketers can gather more information about consumers

The exchange between marketer and customers is interactive and instantaneous and goes beyond the PC.

Marketers must offer more products and services

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Marketers adhere to principles of social responsibility in the marketing of their goods and services; that is, they must

endeavor to satisfy the needs and wants of their target markets in ways that

preserve and enhance the well-being of consumers and society as a whole.

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Psychology Sociology Social psychology Anthropology Economics

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Consumer Research & Market Segmentation ◦ Chapters 2&3

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