Introduction to Consumer Behavior

CHAPTER 1

By: Marc Wachtfogel Ph.D.

Are You…

2By: Martin Lindstrom

Times Square – The Greatest Advertising Show on Earth

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Studios & Media Companies

4http://sploid.gizmodo.com

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TV Channels

http://sploid.gizmodo.com

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Consumer Goods

http://sploid.gizmodo.com

Supermarket Psychology - Purpose by Design

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Supermarket Psychology Entrances, Layout and Shelving

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https://www.youtube.com/watch?v=RjgkQ6bq7aE

Supermarket Psychology: Specials, pricing, labeling and packaging

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https://www.youtube.com/watch?v=yzRDEKyqIJs

Learning Objectives

1. To Understand What Consumer Behavior Is and the Different Types of Consumers.

2. To Understand the Relationship Between Consumer Behavior and the Marketing Concept, the Societal Marketing Concept, as well as Segmentation, Targeting, and Positioning.

3. To Understand the Relationship Between Consumer Behavior and Customer Value, Satisfaction, Trust, and Retention.

4. To Understand How Marketers are Increasingly Able to Reach Consumers via Social Media and Better Satisfy the Needs and Wants of Consumers.

5. To Understand the Makeup and Composition of a Model of Consumer Behavior.

10Copyright 2010 Pearson Education, Inc. publishing as Prentice Hall

Definition

• Consumer Behavior includes all the he behavior that consumers display in searching for, purchasing, using, evaluating, and disposing of products and services that they expect will satisfy their needs.

• The what, why, when, where, and how of consumer purchases are examined in consumer behavior.

• It is not just individuals, but households, families, and groups that influence the decisions we make.

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To Which Segment ofConsumers Will This Ad Appeal?

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A Segment of Consumers Who are Environmentally Concerned

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What are the personal (age, lifecycle), psychological (motivation, perception), social (group influences) and cultural messages (values,

perceptions, beliefs) of these products?

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Two Consumer Entities

15We will be focus on the personal consumer.

Development of the Marketing Concept

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The marketing concept was developed over time through two other important business orientations called the production and the sales orientation.

Production Orientation

• From the 1850s to the late 1920s• Companies wanted efficient production lines to mass produce products. • Consumer demand exceeded supply - Consumers were content to get a

product and were not focused on product variation.• Control was in the hands of the producers who said, “if we make it they

will buy it.”

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Sales Orientation

• From the 1930s to the mid 1950s• Excess product leads to focus on selling• Supply exceeded customer demand• Products were still similar and there was little variation

18Chapter One Slide

Marketing Concept- Customer is First -

• 1950s to current - Focus on the customer!• Rather than focus on what can be manufactured, the focus shifts with the

marketing concept to what consumers prefer. • Determine the needs and wants of specific target markets• Deliver satisfaction better than competition – Data Mining Everywhere

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10 Emotional Triggers

1. Fear: Fear is an emotion that can be used in a wide variety of marketing messages. Insurance companies often appeal to the emotion of fear with messages like "Don't get caught with too little insurance.”

2. Guilt: Consumers are easily affected by messages that trigger emotions of guilt. Nonprofit organizations use the guilt trigger effectively in copy such as "Don't let them suffer anymore.“

3. Trust: Trust is one of the hottest trends in marketing, and every company seems to be trying to jump on the trust bandwagon in their marketing messages. Financial companies are leading the way with messages like "no hidden fees.“

4. Value: Value is another hot trend in marketing, and many promotions appeal directly to the emotional trigger of getting a good deal. "If you find a better price for the same product, we'll match it“

5. Belonging: Few people truly want to be alone. Human nature dictates that most people want to feel like they belong to a group, and customers often purchase products in an attempt to feel part of a specific group. Many companies effectively appeal to consumers' desires to belong, using copy like "You're part of the family."

10 Emotional Triggers (cont.)

6. Competition: The old adage of keeping up with the Joneses is an adage for a reason Copy like "Make them drool" is a great example.

7. Instant Gratification: Messages that cater to a sense of urgency. Use words like now, today, in one hour or less, within 24 hours, and so on to appeal to the emotional trigger of instant gratification.

8. Leadership: A lot of consumers want to lead the way. Phrases such as "Be the first on your block" effectively appeal to the emotional trigger of leadership.

9. Trend-setting: Many consumers want to feel cool or trendy…"all the cool kids are doing it“ "Be like Mike" .

10. Time: In the 21st century, people are busier than ever. As such, they desire more free time to pursue personal interests, spend time with family and friends, and so on. "Cut the time it takes to vacuum your house in half."

Discussion Questions

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

2. These companies may focus on the following:• They develop a wide variety of products to

meet very different needs.• They realize the importance of

communicating with their consumer and explaining their product benefits.

• They practice corporate social responsibility through tie-ins with charities and fundraising.

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Societal Marketing Concept

• The societal marketing concept was developed from the marketing concept.

• The image in this slide of a Siemens ad suggests the company is committed to developing products that are safe for customers and the environment.

• Marketers and consumers are increasingly taking stock of what is good for themselves, their family, their country, and the planet.

• Good corporate citizenship

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Embracing the Marketing Concept

1. Consumer Research2. Segmentation3. Market Targeting4. Positioning

1. The process and tools used to study consumer behavior

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

3. The selection of one or more of the segments identified to pursue – Target Market

4. 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

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All companies must continually conduct research to understand the needs and priorities of their market segments.

The Marketing MixThe 4 P’s

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Includes the name, design, and features

Includes the list price, discounts, and payment methods

How a company will distribute their product

How the company will let customers know about the product and its benefits

Customer Value, Satisfaction, Trust, and Retention

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Successful Relationships

1. Customer Value2. Customer Satisfaction3. Customer Trust4. Customer Retention

1. 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

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

3. Trust is the foundation for maintaining a long-standing relationship with customers.

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

• Loyal customers are key– They buy more products– They are less price sensitive– Servicing them is cheaper– They spread positive word of mouth

Value, Satisfaction, Trust, and Retention

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Starbucks Value Proposition

1. To create an “experience” around the consumption of coffee, an experience that people would weave into their lives.

2. To create an uplifting experience in customer intimacy3. To create an “ambiance” based on human spirit, a sense of

community and the need for people to come together.

Mission: to inspire and nurture the human spirit – one person, one cup and one neighborhood at a time.

Brand Image - Anywhere, everywhere, good coffee on the run.

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Customer PerspectiveFrom 4 P’s to 4 C’s of Marketing

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Discussion

• How does McDonald’s create value for the consumer?

• How do they communicate this value?

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1. They create bundled meals and dollar menus to create value for price-conscious consumers. In addition, they create value to the health-conscious consumer by offering salads, fruit, and healthy options for Happy Meals.

2. They communicate this value through television ads, in-store signage, and their website.

http://www.ted.com/talks/tony_robbins_asks_why_we_do_what_we_do

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Impact of Digital Technologies

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https://www.youtube.com/watch?v=iTUUWOV4Vns33

The Best Marketing Campaign…EVER!!!

The reason for the amazing success of this campaign was not what they were marketing, but how they used social media to

do it.

There are some lessons anyone trying to promote a product or service could use.1. Make it believable. Many marketing groups would never make a claim if they can't provide

substantial evidence. How might Tourism Queensland prove that their job is the best in the world? They can't. But it is believable because it is a beautiful place and fits what many people's definition of a dream job might be.

2. It's not about how much you spend. One of the major benefits of smart public relations and social media is that it scales in a way that advertising typically doesn't.

3. Focus on content, not traffic. The typical marketing campaign focuses on traffic to some kind of site. For Tourism Queensland, the biggest payoff of this campaign was having over 34,000 videos on YouTube from people around the world talking about how much they love Queensland.

4. Create an inherent reason for people to share. Another element of this campaign that worked extremely well was the fact that there was voting enabled on the videos.

5. Give your promotion a shelf life. The best thing about this campaign may just be the content yet to come. Ben, the winner, just started blogging and sharing videos and photos, but the content is already engaging, high quality and inspires you to dream of making it to Queensland yourself. Over the next six months, his itinerary will take him across the state of Queensland and unlock many other unique opportunities. Best of all, this content will live on far beyond the time span of the campaign. Source: fastcompany.com

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Consumer Behavior Is Interdisciplinary

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A Simple Model of Consumer Decision Making

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Post-purchase evaluation ties to the satisfaction topics discussed earlier and the importance of customer loyalty to marketing’s profitability.

The input stage includes sources of information to the consumer – how they learn and are influenced by the marketer and their environment.

The Process moves from the inputs to the psychological factors involved in recognizing a need, searching for information, and evaluating alternatives.

REALITY - EVOLVING

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NeoReader

• See a great pair of shoes in a magazine and want to find the nearest location to buy them?

• Want details of a product you may want to buy?

• See a movie ad or poster and want to view the trailer?

• Create your own code. Put a code on your business card that links to your website. How about a t-shirt or tattoo?

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Convergence & New Ways to PayIs it the end of credit cards?

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