CONSUMER BEHAVIOR

MOHD ZAHIN MOHD YUSOF

Chapter 1 – Consumers Rule

What Is Consumer Behavior?

Definition
The field of consumer behavior covers a lot of ground: It
is the study of the processes involved when individuals
or groups select, purchase, use, or dispose of products,
services, ideas, or experiences to satisfy needs and
desires. Consumers take many forms, ranging from an
8-year-old child begging her mother for a Webkinz
stuffed animal to an executive in a large corporation
deciding on a multimillion-dollar computer system. The
items we consume can include anything from canned
peas to a massage, democracy, Reggaeton music, or a
celebrity like Lady Gaga.

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Consumer Behavior Is a Process
Exchange

In its early stages of development,

researchers referred to the field as buyer
behavior; this reflected an emphasis on the
interaction between consumers and
producers at the time of purchase. The
exchange, a transaction in which two or
more organizations or people give and
receive something of value, is an integral
part of marketing. Although exchange theory
remains an important part of consumer
behavior, the expanded view emphasizes
the entire consumption process, which
includes the issues that influence the
consumer before, during, and after a
purchase.
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Consumer Behavior Involves Many Different Actors
Consumer
We generally think of a consumer as a
person who identifies a need or desire,
makes a purchase, and then disposes of the
product during the three stages in the
consumption process. In many cases,
however, different people play a role in this
sequence of events. The purchaser and
user of a product might not be the same
person, as when a parent picks out clothes
for a teenager (and makes selections
that can result in fashion suicide in the view
of the teen). In other cases, another
person may act as an influencer, providing
recommendations for or against certain
products without actually buying or using
them.
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 Consumers Impact on Marketing Strategy

Understanding consumer Consumers Are Different! How We

Divide Them Up
Surfing cool Web sites is a lot of fun. But, on
the more serious side, why should
Building loyalty to a brand is a very smart
managers, advertisers, and other marketing
marketing strategy,
professionals bother to learn about
so sometimes companies define market
consumer behavior? Very simply,
segments when they identify their most
understanding consumer behavior is good
faithful customers or heavy users. As a rule
business. The basic marketing concept
of thumb, marketers use the 80/20 rule;
states that firms exist to satisfy needs.
20 percent of users account for 80 percent
Marketers can only satisfy these needs to
of sales.
the extent that they understand the people
or organizations who will use the products
and services they are trying to sell.

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 Consumers Impact on Marketing Strategy
Age
Consumers of different age groups obviously
have very different needs and
wants. Although people who belong to the
same age group differ in many other
ways, they do tend to share a set of values
and common cultural experiences that
they carry throughout life. In some cases,
marketers initially develop a product
to attract one age group and then try to
broaden its appeal later on. That s what
the high-octane energy drink Red Bull does.
The company aggressively introduced
it in bars, nightclubs, and gyms to the
products core audience of young
people.
Gender
We start to make gender distinctions at a very
early age even diapers come in pink
versions for girls and blue for boys. Many
products, from fragrances to footwear, target
either men or women. An all-female marketing
team at Procter & Gamble (P&G),
who jokingly call themselves chicks in charge,
introduced Crest Rejuvenating
Effects, the first mass-market toothpaste
positioned just for women.
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 Consumers Impact on Marketing Strategy
Family Structure
A persons family and marital status is yet
another important demographic variable
because this has such a big effect on
consumers spending priorities. Not
surprisingly, young bachelors and newlyweds
are the most likely to exercise; go to bars,
concerts, and movies; and consume alcohol
(enjoy it while you can!). Families with young
children are big purchasers of health foods
and fruit juices, whereas single-parent
households and those with older children buy
more junk food. Older couples and
bachelors are most likely to use home
maintenance services.
Social Class and Income
People who belong to the same social class
are approximately equal in terms of their
incomes and social standing in the community.
They work in roughly similar occupations,
and they tend to have similar tastes in music,
clothing, leisure activities,
and art. They also tend to socialize with one
another, and they share many ideas and
values regarding the way ones life should be
lived.
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 Consumers Impact on Marketing Strategy
Race and Ethnicity
African Americans, Hispanic Americans, and
Asian Americans are the three fastest growing
ethnic groups in the United States. As our society
becomes increasingly multicultural, new
opportunities develop to deliver specialized
products to racial and ethnic groups and to
introduce other groups to these offerings. For
example, Reebok introduced its RBK shoe line
and signed popular urban artists like 50 Cent
to promote it.
Geography
Many national marketers tailor their
offerings to appeal to consumers who
live in different parts of the country.
Some southerners are fond of a good ol
boy image that leaves others scratching
their heads. Although many northerners
regard the name Bubba as a negative
term, businesses in Dixie proudly flaunt
the name. Bubba Co. is a Charleston-
based firm that licenses products such
as Bubba-Q Sauce.
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 Consumers Impact on Marketing Strategy
Lifestyles: Beyond Demographics
Consumers also have very different lifestyles,
even if they share other demographic
characteristics such as gender or age. The way
we feel about ourselves, the things we value, the
things we like to do in our spare time all of these
factors help to determine which products will push
our buttons or even those that make us feel better.
Procter & Gamble developed its heartburn
medicine Prilosec OTC with an ideal customer in
mind based on a lifestyle analysis.
Relationship Marketing
Interact with customers on a regular
basis and give them reasons to
maintain a bond with the company over
time. A focus on relationships is even
more vital during the tough economic
conditions we ‘ve been experiencing
when times are tough, people tend to
rely on their good friends for support!.
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Consumers Impact on Marketing Strategy
Database marketing
Involves tracking specific consumers buying habits very
closely and crafting products and messages tailored
precisely to peoples wants and needs based on this
information. Wal-Mart stores massive amounts of
information on the 100 million people who visit its stores
each week, and the company uses these data to fine-tune
its offerings.

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 Marketing’s Impact on Consumers
Popular Culture
Marketing stimuli surround us as
advertisements, stores, and products
compete for our attention and our
dollars. Marketers filter much of what
we learn about the world, whether
through the affluence they depict in
glamorous magazines or the roles
actors play in commercials. Ads show
us how we should act with regard to
recycling, alcohol consumption, the
types of houses and cars we might
wish to own and even how to evaluate
others based on the products they buy
or don’t buy.
Cont.
Popular culture, consisting of the music, movies,
sports, books, celebrities, and other forms of
entertainment the mass market consumes, is both a
product of and an inspiration for marketers. It also
affects our lives in more far-reaching ways, ranging
from how we acknowledge cultural events such as
marriage, death, or holidays to how we view social
issues such as global warming, gambling, and
addictions.
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 Marketing’s Impact on Consumers

Consumer-Generated Content Web 2.0

Consumer-generated content, where This important trend helps to define the era
everyday people voice their opinions of Web 2.0 the rebirth of the Internet as a
about products, brands, and social, interactive medium from its original
companies on blogs, podcasts, and roots as a form of one way transmission from
social networking sites such as producers to consumers.
Facebook and MySpace, and even
film their own commercials that
thousands view on sites such as
YouTube, probably is the biggest
marketing phenomenon
of this decade.

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 Marketing’s Impact on Consumers
The Global Consumer
One by-product of sophisticated
marketing strategies is the movement
toward a global consumer culture,
one which unites people around the
world by their common devotion to
brand-name consumer goods, movie
stars, celebrities, and leisure
activities.
U-commerce
The use of ubiquitous networks that will slowly but
surely become a part of us, whether in the form of
wearable computers or customized advertisements
beamed to us on our cell phones ( Hey, you’re
walking by McDonald’s. Come on in for today’s
burger special. )
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 Marketing’s Impact on Consumers
RFID Tag
Many products already carry a plastic
RFID tag that contains a computer
chip and a tiny antenna that lets the
chip communicate with a network. In
the near future grocery items will tell
the store what needs to be restocked
and which items are past their
expiration dates, and your house will
know when you’re pulling in the
driveway as it turns on the lights and
starts your favorite tunes spinning
before you walk in the door.
Virtual Consumption and the Power
of Crowds
There’s little doubt that the digital revolution
is one of the most significant influences on
consumer behavior, and the impact of the
Web will continue to expand as more and
more people around the world log in. Many of
us are avid Web surfers, and it s hard to
imagine a time when texting, Twittering, or
BlackBerrys and iPhones weren't an
accepted part of daily life.
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 Marketing’s Impact on Consumers
B2C e-commerce & C2C e-commerce
And, it s not all about businesses selling to
consumers (B2C e-commerce). The
cyberspace explosion has created a
revolution in consumer-to-consumer activity
(C2C e-commerce): Welcome to the new
world of virtual brand communities. Just as
e-consumers are not limited to local retail
outlets in their shopping, they are not limited
to their local communities when they look for
friends or fellow fans of wine, hiphop, or
skateboarding.
Blurred Boundaries: Marketing and
Reality
There's no telling where advertising will turn
up these days. Spirit Airlines flight attendants
protested when the company proposed new
aprons that featured logos for alcoholic
beverages including Budweiser beer. A San
Diego high school teacher sells ad space on
exams to local businesses to defray the cost
of printing the tests due to school budget
cuts.
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 Marketing Ethics and Public Policy
Business ethics
Business ethics are rules of conduct
that guide actions in the marketplace
the standards against which most
people in a culture judge what is right
and what is wrong, good or bad.
These universal values include
honesty, trustworthiness, fairness,
respect, justice, integrity, concern for
others, accountability, and loyalty.
Ethical business is good business.
Cont.
These cultural differences certainly influence
whether business practices such as bribery
are acceptable. In Japan, it s called kuroi kiri
(black mist); in Germany, it s schmiergeld
(grease money), whereas Mexicans refer to
la mordida (the bite), the French say pot-de-
vin (jug of wine), and Italians speak of the
bustarella (little envelope). They re all talking
about baksheesh, the Middle Eastern term
for a tip to grease the wheels of a
transaction. Giving gifts in exchange for
getting business from suppliers or customers
is common and acceptable in many
countries, even though this may be frowned
on elsewhere.
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 Marketing Ethics and Public Policy
Needs and Wants:
Do Marketers Manipulate
Consumers?
One of the most common and
stinging criticisms of marketing is that
companies convince consumers they
need many material things and that
they will be unhappy and inferior
people if they do not have these
necessities.
Welcome to Consumerspace
Consumerspace; an environment where
individuals dictate to companies the types of
products they want and how, when and
where (or even if ) they want to learn about
them. In turn, companies need to develop
and leverage brand equity in bold new ways
to attract the loyalty of these consumer
“nomads”. People still “need” companies but
in new ways and on their own terms.
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 Marketing Ethics and Public Policy

Do Marketers Create Artificial Cont.

Needs?
A Response. A need is a basic biological
The marketing system has come motive; a want represents one way that
under fire from both ends of the society has taught to satisfy the need. For
political spectrum. On the one hand, example, thirst is biologically based; we are
some members of the Religious Right taught to want Coca-Cola to satisfy that thirst
believe that marketers contribute rather than, say, goat s milk.
to the moral breakdown of society by
presenting images of hedonistic
pleasure and encouraging the pursuit
of secular humanism at the expense
of spirituality and the environment.

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 Marketing Ethics and Public Policy
Are Advertising and Marketing
Necessary?
The social critic Vance Packard wrote
more than 50 years ago, Large-scale
efforts are being made, often with
impressive success, to channel our
unthinking habits, our purchasing
decisions, and our thought processes
by the use of insights gleaned from
psychiatry and the social sciences.
Cont.
A Response. Products are designed to meet
existing needs, and advertising only helps
to communicate their availability. According
to the economics of information perspective,
advertising is an important source of
consumer information. This view emphasizes
the economic cost of the time spent
searching for products.
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 Marketing Ethics and Public Policy
Do Marketers Promise
Miracles?
Through advertising, consumers are
led to believe that products have
magical properties; products will do
special and mysterious things for
consumers in a way that will
transform their lives. Consumers will
be beautiful, have power over others
feelings, be successful, and be
relieved of all ills.
Cont.
A Response. Advertisers simply do not know
enough about people to manipulate them.
Consider that the failure rate for new
products ranges from 40 to 80 percent.
Although people think that advertisers have
an endless source of magical tricks and
scientific techniques to manipulate them, in
reality the industry is successful when
it tries to sell good products and
unsuccessful when it sells poor ones.
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 Marketing Ethics and Public Policy
Public Policy and Consumer Activism: America ?
Consumerism
Absolut Impotence. So reads a parody vodka
Concern for the welfare of consumers ad that Adbusters, a non profit organization
has been an issue since at least the that advocates for the new social activist
beginning of the twentieth century, movement of the information age, created.
and activists continue to voice The editor of the groups magazine argues
concerns about a range of issues that America is no longer a country, but
such as child labor, exploitative rather a multitrillion-dollar brand subverted by
advertising, and genetically corporate agendas. He claims that America
engineered food. is no different from McDonald s, Marlboro, or
General Motors (well, let’s at least hope our
country s balance sheet starts to look a bit
better than GMs).

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 Marketing Ethics and Public Policy
Culture Jamming
A strategy to disrupt efforts by the
corporate world to dominate our
cultural landscape. The movement
believes culture jamming will change
the way information flows; the way
institutions wield power; the way TV
stations are run; and the way the
food, fashion, automobile, sports,
music, and culture industries
set their agendas.
Transformative
Consumer Research (TCR)
Consumer researchers are themselves
organizing to not only study but to rectify
what they see as pressing social problems in
the marketplace. This perspective is called
participatory action research (PAR) or
Transformative Consumer Research (TCR).
It promotes research projects that include the
goal of helping people or bringing about
social change.
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 Marketing Ethics and Public Policy
Social Marketing
As the emerging TCR perspective
shows, the field of consumer behavior
can play an important role in
improving our lives as consumers.
Social marketing strategies use
techniques marketers normally
employ to sell beer or detergent to
encourage positive behaviors such as
increased literacy and to discourage
negative activities such as drunk
driving.
Green Marketing
In addition, green marketing is gaining in
popularity. Firms that adopt this philosophy
choose to protect or enhance the natural
environment as they go about their business
activities. Some have focused their efforts on
reducing wasteful packaging, as when
Procter & Gamble introduced refillable
containers for Downy fabric softener.
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 The Dark Side of Consumer Behavior
Consumer Terrorism
The terrorist attacks of 2001 were a
wake-up call to the free-enterprise
system. They revealed the
vulnerability of nonmilitary targets and
reminded us that disruptions of our
financial, electronic, and supply
networks can potentially be more
damaging to our way of life than the
fallout from a conventional battlefield.
Assessments by the Rand
Corporation and other analysts point
to the susceptibility of the nations
food supply as a potential target of
bioterrorism.
Cont.
Even prior to the anthrax scares of 2001,
toxic substances placed in products
threatened to hold the marketplace hostage.
This tactic first drew public attention
in the United States in 1982 when seven
people died after they took Tylenol pills
laced with cyanide. A decade later, Pepsi
weathered its own crisis when more than
50 reports of syringes found in Diet Pepsi
cans surfaced in 23 states.
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 The Dark Side of Consumer Behavior
Addictive Consumption
Although most people equate addiction
with drugs, consumers can use virtually
any product or service to relieve (at least
temporarily) some problem or satisfy
some need to the point that reliance on it
becomes extreme. It seems we can
become dependent on almost anything
there is even a ChapStick Addicts support
group with 250 active members!
Consumer Addiction
Consumer addiction is a physiological or
psychological dependency
on products or services. These problems of
course include alcoholism,
drug addiction, and nicotine addiction and
many companies profit from addictive
products or by selling solutions for them.
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 The Dark Side of Consumer Behavior

Compulsive Consumption Consumed Consumers

Some consumers take the expression born to Consumed consumers are people who are
shop quite literally. They shop because used or exploited, willingly or not, for
they are compelled to do so rather than commercial gain in the marketplace. The
because shopping is a pleasurable or situations in which consumers themselves
functional task. Compulsive consumption refers become commodities can range from traveling
to repetitive shopping, often excessive, road shows that feature dwarfs and midgets to
as an antidote to tension, anxiety, depression, the selling of body parts and babies.
or boredom. Shopaholics turn to shopping
much the way addicted people turn to drugs or
alcohol. One man diagnosed with compulsive
shopping disorder (CSD) bought more than
2,000 wrenches and never used any of them.

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 The Dark Side of Consumer Behavior
Cont.
Check out these consumed
consumers:
• Prostitutes Expenditures on
prostitution in the United States
alone are estimated at $20 billion
annually. These revenues are
equivalent to those in the
domestic shoe industry.
• Organ, blood, and hair donors By
one estimate, you could make
about $46 million if you donated
every reusable part of your body
(do not try this at home).
Cont.
• Babies for sale Several thousand
surrogate mothers have been paid to be
medically impregnated and carry babies
to term for infertile couples. A fertile
woman between the ages of 18 and 25
can donate one egg every 3 months and
rake in $7,000 each time. Over 8 years,
that s 32 eggs for a total of $224,000.88
In one recent case in Germany, police
arrested a couple when they tried to
auction their 8-month-old son on eBay..
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 The Dark Side of Consumer Behavior
Illegal Activities Consumer Theft and Fraud

Many consumer behaviors are not only self- Shrinkage is the industry term for inventory and
destructive or socially damaging but they are cash losses from shoplifting and employee
illegal as well. Analysts estimate the cost of theft (not the condition George experienced in
crimes consumers commit against business at a famous episode of Seinfeld). This is a
more than $40 billion per year. A survey the massive problem for businesses that gets
McCann-Erickson advertising agency passed on to consumers in the form of higher
conducted revealed the following tidbits: prices (about 40 percent of the losses can be
• Ninety-one percent of people say they lie attributed to employees rather than shoppers).
regularly. One in three fibs about his or her
weight, one in four about income, and 21
percent lie about their age. Nine percent
even lie about their natural hair color.
• Four out of ten Americans have tried to pad
an insurance bill to cover the deductible.
• Nineteen percent say they’ve snuck into a
theater to avoid paying admission
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 The Dark Side of Consumer Behavior
Anticonsumption
Some types of destructive consumer behavior
are anticonsumption, events in which people
deliberately deface or mutilate products and
services. Some of these actions are relatively
harmless, as when a person goes online at
dogdoo.com to send a bag of dog manure to a
lucky recipient.
Cont.
Anticonsumption can range from relatively mild
acts like spray-painting graffiti on buildings and
subways to serious incidences of product
tampering or even the release of computer
viruses that can bring large corporations to
their knees. It can also take the form of political
protest in which activists alter or destroy
billboards and other advertisements that
promote what they feel to be unhealthy or
unethical acts.
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 Consumer Behavior as a Field of Study
Anticonsumption
Some types of destructive consumer behavior
are anticonsumption, events in which people
deliberately deface or mutilate products and
services. Some of these actions are relatively
harmless, as when a person goes online at
dogdoo.com to send a bag of dog manure to a
lucky recipient.
Cont.
Anticonsumption can range from relatively mild
acts like spray-painting graffiti on buildings and
subways to serious incidences of product
tampering or even the release of computer
viruses that can bring large corporations to
their knees. It can also take the form of political
protest in which activists alter or destroy
billboards and other advertisements that
promote what they feel to be unhealthy or
unethical acts.
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