Introduction to Consumer Behavior

Consumer Behavior
The study of individuals, groups, or organizations and the processes they use to select, secure, use, and dispose of products, services, experiences, or ideas to satisfy needs and the impacts that these processes have on the consumer and society.

Consumer Behavior
People
Why do different consumers purchase different products? What ways do consumers go about buying products?

Marketing
How are products designed for and sold to consumers? How does advertising work to influence consumer preferences?

What does advertising do?

Applications of Consumer Behavior

Social Marketing Marketing Strategy

Knowledge of Consumer Behavior

Informed Individuals

Regulatory Policy

Marketing Strategy
The Marketing Concept What is Marketing Strategy? Providing superior customer value.
What is value?

The marketing Strategy Process:

Opportunity Identification / Market Analysis S-T-P Marketing mix

Segmentation, Targeting, and Positioning

Market Segmentation

1. Identify segmentation variables and segment the market 2. Develop profiles of resulting segments Market Targeting 3. Evaluate the attractiveness of each segment 4. Select the target segment(s)
Product/Service Positioning 5. Identify possible positioning concepts for each target segment 6. Select, develop, and communicate the chosen positioning concept

Segmentation
Segmentation is a concept that recognizes the diversity in the marketplace. The process of segmenting the market produces clusters of people who enjoy similar product features.

Segmentation
Goal: Identify segments that seek different benefits and, therefore, will be responsive to different positionings of the product/offerings. Means: Link benefits sought to characteristics that make customers readily identifiable and accessible. For example:
User status, Demographics, Media exposure patterns,

Caution: Avoid over-segmenting; make sure that each segment is substantial enough to justify a unique positioning effort.

Market Segmentation
Bases for Segmentation
Usage
Non-users vs. Category users Competitor users vs. Own brand users

Geographic
Zip Code Analysis Regional Analysis

Demographic
Age Gender Income Others

Benefit Sought Psychographic

Market Segmentation
Usage Segmentation Category Usage Nonuser s (%) Light Half %pop %use Heavy Half %pop %use

Colas Hair Spray

22 52

39 10 24 13 48 13

39 24 48

90 87 87

Heavy users: Efficiency /Profit Caution: Majority Fallacy

Cereal 4

Brand Usage $ to Sales - Target people/companies with profile of current user $ to Opportunity - Target users of competitive brands or nonusers

Market Segmentation
Geographic Segmentation Zip Code Analysis Regional Analysis

Demographic Segmentation
Age Gender Income Others

http://www.census.gov/cgi-bin/gazetteer

Volkswagen Ads:
5-second-rule.mov Synchronicity II.mov Turbonium.mov Smarter Looking.mov

Market Segmentation
Benefit Sought Segmentation Dane County Beer Market Light
B Miller

Inexpensive

C
A

Pabst

Sprecher

Hi Quality

New Glarus

Malty, Full-Bodied Circles indicate consumer segments in order of size. A, B, C, D are local brands

Market Segmentation
Psychographic Segmentation
Lifestyles Values Attitudes Interests Opinions

www.claritas.com

Market Segmentation
Psychographic Segmentation
Survey Details Mail Survey by Market Facts, Inc. Sample - 2000 women (80% return)

Questionnaire:
A) 214 Attitude Statements - When it comes to a choice between nutrition and taste in my family meal planning, I put nutrition first. - I wouldnt let animals come into the house because of the dirt. - I get upset when things are out of place in my house. - If there is a flu bug going around, I'm sure to catch it. - Once youve got a cold, there is very little you can do about it. B) Product Usage for 69 Products C) Brand Usage for 38 Products D) Demographic Questions Analysis - Factor analysis to Select Segments

Market Segmentation
Psychographic Segmentation
Drug Segments
35% - Realists Not health fanatics not excessively concerned with protection from germs. They view remedies positively, want something that is convenient and works, and do not feel the need of a doctor-recommended medicine. Are doctor and prescription oriented, are neither fatalists nor stoics concerning health, but they prefer the stamp of authority on what they do take. Have a low health concern, are least likely to resort to medication, and are highly skeptical of cold remedies. Have a health concern, regard themselves as prone to any bug going around and tend to take medication at the first symptom. They do not look for strength in what they take, but need some mild authority reassurance.

31% - Authority Seekers

23% - Skeptics

11% - Hypochondriacs

Market Segmentation
Psychographic Segmentation
Product Usage Among Drug Segments

Realist

Auth. Skep. Hypo.

Upset Stomach Remedies Acid Indigestion Hangover Remedies Cold or Allergy Tablets Nasal Sprays Nasal Inhalers Liquid Cold Remedies Cough Drops Sore Throat Lozenges Cough Syrup Pain Reliever Tablets

49 46 27 74 33 26 17 71 53 59 90

43 45 21 57 27 23 16 71 56 54 88

32 35 17 41 21 17 11 58 37 31 77

59 50 31 72 38 31 21 76 62 65 95

Segmentation Examples
House of Blues
ComputerBug.com Yahoo! Snickers Ads: My Little Buddy.mov The Hands.mov Voting-booth.mov

Market Segmentation
Criteria For Segmentation
Identifiable Accessible Responsive Significant

Capturing Segments
Instruments Available
Price Product Distribution Promotion

Common Positioning Errors

Positioning in a crowded market space Positioning on an unimportant attribute

Positioning
Positioning requires designing a company and product image and developing a marketing mix to promote the image to the target segment(s).

Positioning Statement
The key concept of an idea to be communicated to a target market via elements of the marketing mix. Elements:
Target Concept (Frame of Reference) Point of Difference

Discussion
Develop positioning statements for:
Coca-Cola (Classic) UW-Whitewaters College of Business Amazon.com Pets.com

Discussion
Coke Ads: Teach-the-world-to-sing.mov Dancers.mov Parrot.mov Amazon Ads: worry-about-y2k.mov Is it big enough.mov Emahtskcblvdt.mov Pets.com: Crazy Dog Park.mov Bribes.mov Tabby.mov Christmas-time.mov

CB and Marketing Strategy

Market Analysis
Company, Competitors, Conditions, Consumers

Internal Analysis
Core competencies

Market Segmentation (S-T-P)

Target customer groups with similar need sets

Marketing Mix
Product, Place, Promotion, Price

Consumer Decision Process

From problem recognition to Use and Evaluation

Outcomes
Individual, Firm, Society

Overall Model of Consumer Behavior

External Influences
Culture Subculture Demographics Social Status Reference Groups Family Marketing Activities

Decision Process (Situations)

Problem Recognition Information Search Alternative Evaluation and Selection

Internal Influences
Perception Learning Memory Motives Personality Emotions Attitudes

Self-Concept and Lifestyle

Outlet Selection and Purchase

Postpurchase Processes

Discussion
Roberts American gourmet snack foods produces herbal-based snacks such as Spirulina Spirals and St. Johns Wort Tortilla Chips. According to the company president, Were selling like crazy. We dont do research. We react as sort of a karma thing. How would you explain the firms success? What are the advantages and disadvantages of this approach?

Discussion
What is the consumer behavior model for the following items?
Bicycles Luxury cars Inexpensive cars Skis Pets Personal computers

Small Group Discussion

Outline the decision processes that each of you went through the last time you purchased:
A restaurant meal A candy bar A car A home appliance or electronic component

What was the impact of the situation on your decision?