CHAPTER 1

An Introduction toConsumer Behavior

A frame work of consumer behavior Internal influences External influences

Internal influences Personality Self concept Life style Attitude Perception Values Beliefs

External influences Family Friends Relatives Social groups Cultural groups Reference groups Avoidance groups Aspiration groups

Decision process Types of decisions

Simple Complex

Models of behavior Extensive problem solving Limited problem solving Routinized buying behavior

Consumer Behavior Is Interdisciplinary

Psychology Sociology History & Geography Anthropology Economics

Anthropology The study of

people within and across cultures

Emphasis on cross-cultural differences

Questioning of assumptions within own culture

Economics Basic economic issues

Supply and demand Rational decision making Perfect information

Emphasis on predicting behavior

Complications in real life Behavioral economics—

e.g., “mental accounting”

History and Geography Origins of behavior,

perspectives, and traditions

Impact of geography on individuals Isolation Language development Climate

Geographic determinism

Psychology Study of human

thinking and behavior Some issues

Personality Personal development Cognition (thinking),

perception Attention and its

limitations “Learning”—e.g.,

acquired tastes

Sociology Cultural and

interpersonal influences on consumption—e.g., Fads, fashions Diffusion of

innovation Popular culture

Application Areas of Consumer Behavior: PERMS

Environmental Analysis Market Research Segmentation of the Marketplace Product Positioning and Product

Differentiation Marketing-Mix Development

Product Positioning . . . . . . is influencing how consumers perceive a brand’s characteristics relative to those of competitive offerings

Goal is to influence demand by creating a product with specific characteristics (i.e. brand attributes) and a clear image that differentiate it from competitors

Product Differentiation . . .

. . . is the process of manipulating the marketing mix so as to position a product in a manner that allows consumers to perceive meaningful differences between a brand and its competitors

Environmental Analysis . . .

. . . is the assessment of the external forces that act upon the firm and its customers, and that create threats and opportunities

Components of the External Environment

Demographic

Economic

Natural

Technological

Political

Cultural

MARKET RESEARCH . . .

. . . is applied consumer research designed to provide management with information on factors that impact consumers’ acquisition, consumption, and disposition of goods, services, and ideas

Product

Promotion

Pricing

Distribution

Marketing-Mix Development

. . . involves the development and coordination of activities involving the:

Promotional Strategy

Advertising Personal Selling Sales Promotion

Applications Public Relations

Price Changes Predicting the likely impact of price

changes on consumers is an important consumer behavior area. How will consumers react when companies

raise or lower the price of a product? Principles of perception can be applied to

analyze if consumers will notice a difference in price and if so, what effect it has

Product Distribution . . .

. . . will be impacted by understanding how consumers make their purchasing decisions. **Example: low involvement decision (e.g., purchase soft drink), must use extensive distribution.

Market Segmentation . . .

. . . involves subdividing the market place into distinct subsets of customers having similar needs and wants, each of which can be reached with a different marketing mix

Consumerism &Consumer movement

What it is? When in started? What is the result?

Concerns of consumers – government regulations

John F. Kennedy’s Message to Congress on March 15, 1962

Four basic rights Right to safety Right to be informed Right to choose Right to be heard

Consumer protection frame work Consumer protection Act 1986 Three tier structure

District Forum State Forum National Forum

What is What? Role of non governmental organizations

Consumer responsibility Consumers need to tread cautiously in the

market place. While buying a product, ask yourself these questions :

Do you really need this product? For how long would you like to use it? Will it

last as long as you would like it to? What are the health fallout of that product? If

it is a food product, does it give you any health benefits? Check the labeling of the product to see the nutritional chart of the product.

Others Responsibility towards safe waste

disposal Responsibility to endorse safer products Junk Food and Young Consumers

Changing face of the consumer behavior

Under the scenario of globalization Global consumer Changes in needs, preferences Increase in standard of living Changing values Cross cultural impact

Continued ….. Technological changes

High end products Aiming at more Convenience in shopping

New retailing environment Shoppertainment Specialized stores to hyper markets Customer convenience is new mantra E-tailing