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Schiffman, Bednall, O’Cass, Paladino, Ward & Kanuk:
Consumer Behaviour 4e © 2007 Pearson Education Australia
Chapter 1
The foundations of consumer behaviour
Schiffman, Bednall, O’Cass, Paladino, Ward & Kanuk: Consumer Behaviour 4e © 2007 Pearson Education Australia2
Chapter Objectives
To define Consumer Behaviour (CB)
To identify the two broad types of consumers
To outline the Positivist and Interpretivist approaches to the study of Consumer Behaviour
To understand the interdisciplinary nature of CB
To review the simplified model of CB
To outline why the study of CB is important
To review the Marketing Concept’s evolution
To review traditional marketing concepts
Schiffman, Bednall, O’Cass, Paladino, Ward & Kanuk: Consumer Behaviour 4e © 2007 Pearson Education Australia3
Consumer behaviour is defined as:
“The behaviour that consumers undertake in seeking, purchasing, using, evaluating, and disposing of
products and services that they expect will satisfy their personal needs”
What is Consumer Behaviour?
Schiffman, Bednall, O’Cass, Paladino, Ward & Kanuk: Consumer Behaviour 4e © 2007 Pearson Education Australia4
More AboutConsumer Behaviour
The consumer’s goal is to obtain goods and
services that meet their needs and wants
Consumers face varying problems associated with
acquiring products to satisfy these needs and wants
People engage in purchase activities for many purposes
other than consumption
Consumers make specific types of decisions in order
to obtain desired goods and services
Schiffman, Bednall, O’Cass, Paladino, Ward & Kanuk: Consumer Behaviour 4e © 2007 Pearson Education Australia5
For example, a research study may ask consumers...
Schiffman, Bednall, O’Cass, Paladino, Ward & Kanuk: Consumer Behaviour 4e © 2007 Pearson Education Australia6
Two Broad Types of Consumers
PERSONAL CONSUMERS
The personal consumer buys goods and services for:
• His or her own use
• Use by the whole household, or a household member, or
• A gift for someone else
In all contexts, the products are bought for final use by individuals (end-users)
ORGANISATIONAL CONSUMERS
Organisational consumer includes:
• Profit businesses
• Not-for-profit businesses
• Public sector agencies and
• Institutions (e.g. schools, churches)
In all cases, they buy products to help run their organisations
Schiffman, Bednall, O’Cass, Paladino, Ward & Kanuk: Consumer Behaviour 4e © 2007 Pearson Education Australia7
Consumers as Buyers and Users
The marketplace activities of individuals entail three functions:
1.The consumer (user) Who consumes or uses the product
2.The buyer Who undertakes activities to procure or obtain the product
3.The payer Who provides the money (or other value) to obtain the
product“Marketers must decide who to target their marketing
at: the buyer, the payer, or the user?”
Schiffman, Bednall, O’Cass, Paladino, Ward & Kanuk: Consumer Behaviour 4e © 2007 Pearson Education Australia8
Consumer Research: Two Perspectives
POSITIVIST APPROACH
•Tends to be objective and empirical
•Seeks causes for behaviour
•Conduct studies that can be generalised to larger populations
INTERPRETIVIST METHODOLOGY
• More qualitative
• Based on smaller samples
• View each consumption situation as unique and non-predictive
• Look for common patterns across consumption situations
Schiffman, Bednall, O’Cass, Paladino, Ward & Kanuk: Consumer Behaviour 4e © 2007 Pearson Education Australia9
The Interdisciplinary Nature of Consumer Behaviour
Research
Psychology
The study of the individual
Sociology
The study of groups
Social Psychology
How individuals operate in
groups
Economics
An important component of
economics is the study of consumers
Inputs to the study of consumer behaviour
Cultural Anthropology
The study of humans in
society
Schiffman, Bednall, O’Cass, Paladino, Ward & Kanuk: Consumer Behaviour 4e © 2007 Pearson Education Australia10
Consumer Behaviour as anInterdisciplinary Science
Psychology: - The study of the individual, including motivation,
perception, attitudes, personality and learning styles
Sociology: - The study of groups, group behaviour and the actions
of individuals within groups Social Psychology:
- The combination of sociology and psychology Cultural Anthropology:
- The study of human beings in a society, which traces the development of core beliefs, values and customs
Economics: - How consumers make decisions with the goal of
maximising satisfaction
Schiffman, Bednall, O’Cass, Paladino, Ward & Kanuk: Consumer Behaviour 4e © 2007 Pearson Education Australia11
Figure 1.8
An ad focusing
upon the key benefits
sought by consumers
Schiffman, Bednall, O’Cass, Paladino, Ward & Kanuk: Consumer Behaviour 4e © 2007 Pearson Education Australia1212
Schiffman, Bednall, O’Cass, Paladino, Ward & Kanuk: Consumer Behaviour 4e © 2007 Pearson Education Australia13
Key Model Components
Input Process Output
Input = Various firms’ marketing activities + EXTERNAL
social/culture influences
Process = Decision steps + INTERNAL psychological factors
(modified with experience) Output = Trial and repeat purchases
and post-purchase evaluation
Schiffman, Bednall, O’Cass, Paladino, Ward & Kanuk: Consumer Behaviour 4e © 2007 Pearson Education Australia14
Figure 1.10: Subaru Liberty RX advertisement showing detailed
information on features and price
Schiffman, Bednall, O’Cass, Paladino, Ward & Kanuk: Consumer Behaviour 4e © 2007 Pearson Education Australia15
Why Study Consumer Behaviour?
Reasons to better understand consumers
Schiffman, Bednall, O’Cass, Paladino, Ward & Kanuk: Consumer Behaviour 4e © 2007 Pearson Education Australia16
Development of the Marketing Concept
Schiffman, Bednall, O’Cass, Paladino, Ward & Kanuk: Consumer Behaviour 4e © 2007 Pearson Education Australia17
Overview of Philosophical Approaches
Production concept- Has the marketing objective of cheap, efficient
production and intensive distribution
Product concept- Based on the assumption that consumers will buy the
product that offers them the highest quality, the best performance, and the most features
Selling concept- Focus on aggressive promotion and selling to
persuade consumers to buy products
Schiffman, Bednall, O’Cass, Paladino, Ward & Kanuk: Consumer Behaviour 4e © 2007 Pearson Education Australia18
The Marketing Concept
Determine specific target
markets
Understand their needs and wants
Meet the identified needs
of the target markets, better
than competition
Note: Consumer behaviour helps to:• Segment the market• Identify unsatisfied needs• Understand needs• Effectively meet those needs
Schiffman, Bednall, O’Cass, Paladino, Ward & Kanuk: Consumer Behaviour 4e © 2007 Pearson Education Australia19
A reassessment of the traditional marketing concept where marketers also adhere to principles of social responsibility in the marketing of their goods and services.
The Societal Marketing Concept
The goals of the firm
Needs of the target market
Improvement of society
overall
Firms following this concept look for an effective balance
Schiffman, Bednall, O’Cass, Paladino, Ward & Kanuk: Consumer Behaviour 4e © 2007 Pearson Education Australia20
Market Segmentation
Market segmentation is the process of dividing a market into subsets of consumers with common needs or characteristics
A key component of the marketing concept is the identification of common market needs and the
creation of segments
Schiffman, Bednall, O’Cass, Paladino, Ward & Kanuk: Consumer Behaviour 4e © 2007 Pearson Education Australia21
Positioning
Positioning is developing a unique image for the product or service in the mind of the consumer – an image that will differentiate the offering from competing ones
Principle OneThe product’s benefits are
communicated, not its features
Principle TwoEffective
positioning must communicate a ‘unique selling
proposition’
Schiffman, Bednall, O’Cass, Paladino, Ward & Kanuk: Consumer Behaviour 4e © 2007 Pearson Education Australia22
The Marketing Mix
PRODUCT/SERVICE• Features• Designs• Brands• Packaging• Augmentation
PRICE• List price• Discounts• Payment
methods
PLACE• Distribution via
stores and non-store outletsPROMOTION
• Advertising• Sales promotion• Public relations• Sales efforts
Schiffman, Bednall, O’Cass, Paladino, Ward & Kanuk: Consumer Behaviour 4e © 2007 Pearson Education Australia23
Providing Customer Value
There is a trend in marketing to focus on improving “value” to consumers
Note the reference to “value” in the American Marketing Association’s definition of marketing:
“Marketing is an organisational function and a set of processes for creating, communicating and
delivering value to customers and for managing customer relationships in ways that benefit the
organisation and its stakeholders”
Schiffman, Bednall, O’Cass, Paladino, Ward & Kanuk: Consumer Behaviour 4e © 2007 Pearson Education Australia24
What is customer value?
The customer’s perceived
benefits they receive
The customer’s resources (money, time, effort) used to
obtain those benefits
In other words:
‘what they get’ versus ‘what they give’
Schiffman, Bednall, O’Cass, Paladino, Ward & Kanuk: Consumer Behaviour 4e © 2007 Pearson Education Australia25
Customer Satisfaction
The consumer’s perception of
performance of the product/service
As compared to the consumers expectations
If exceeded: If equalled: If not met:
Very satisfied, delighted
Satisfied Dissatisfied
Schiffman, Bednall, O’Cass, Paladino, Ward & Kanuk: Consumer Behaviour 4e © 2007 Pearson Education Australia26
Benefits of Customer Retention
Loyal customers
Buy more products
Are less price sensitive
Pay less attention to competitor's advertising
Spread positive
word-of-mouth
Are cheaper to service
Schiffman, Bednall, O’Cass, Paladino, Ward & Kanuk: Consumer Behaviour 4e © 2007 Pearson Education Australia27
Traditional Marketing versus Value/Retention Marketing
Traditional Marketing Concept
Focus on needs, not the product itself
Research consumer needs
Target large market segments
Use one-way promotions Base budgets on the no.
of customers targeted
Value and Retention-focused Marketing
Focus on the product’s perceived value
Determine profits associated with needs
Develop one-to-one promotional messages
Use interactive promotion Base budgets on the
customers’ lifetime value
Schiffman, Bednall, O’Cass, Paladino, Ward & Kanuk: Consumer Behaviour 4e © 2007 Pearson Education Australia28
Summary
The definition of Consumer Behaviour (CB)
The two broad types of consumers
The positivistic and interpretive approaches
The interdisciplinary nature of CB
The simplified model of CB
Why the study of CB is important
A review of the Marketing Concept’s evolution
A review traditional marketing concepts