MKTG 420

Professor Frank Pons

Spring 2005

CONSUMER BEHAVIORCONSUMER BEHAVIOR

What is What is

CONSUMER BEHAVIOR ?CONSUMER BEHAVIOR ?

DefinitionDefinition

Consumer behavior reflects the totality of consumers’ decisions and reactions with respect to the acquisition, consumption, and disposition

of goods, services, time, and ideas made by decision making units over time.

Exhibit 1.2: What is Consumer Behavior?

backInfo 1

Consumer Behaviors??Consumer Behaviors??

• Spring Break Trip to Cancun.

• Listening to your favorite band live in a concert hall? Downloaded on the internet through KAZAA?

• Playing Basket Ball with your University team?

• Adopting a Child from a different country?

• Selling counterfeit products on e-bay?

Consumer Consumer Behavior: Behavior:

Course Course FrameworkFramework

Consumer Behavior as an Consumer Behavior as an Academic Discipline and an Academic Discipline and an

Applied ScienceApplied Science

Factors that contributed to the growing interest in consumer behavior:– accelerated rate of new product development– consumer movement– public policy concerns– environmental concerns– the opening of national markets throughout

the world

Who Benefits from the Study Who Benefits from the Study of Consumer Behavior? of Consumer Behavior?

Marketing Managers Public Policy Makers and

Regulators Consumers

Understanding consumers’ issues or problems and developing methods to reach and educate consumers

Educating Consumers About Cancer

Tums educates consumers about the importance of calcium and increases awareness of its calcium content

Marketing’s Impact on ConsumersMarketing’s Impact on Consumers

Marketing and Culture:

– Popular Culture: Music, movies, sports, books, celebrities, and other

forms of entertainment consumed by the mass market.

Popular CulturePopular Culture

Companies often create product icons to develop anidentity for their products. Many made-up creatures andpersonalities, such as Mr. Clean, the Michelin tire man andthe Pillsbury Doughboy, are widely recognized figures inpopular culture.

Marketing Implications of Marketing Implications of Consumer BehaviorConsumer Behavior

Developing a Customer-Oriented Strategy

– How Profitable Is Each Segment?– What Are the Characteristics of Consumers in

Each Segment?– Are Customers Satisfied with Existing

Offerings?

Marketing Implications of Marketing Implications of Consumer BehaviorConsumer Behavior

Selecting the Target MarketPositioning

– How Are Competitive Offerings Positioned?– How Should Our Offerings Be Positioned?– Should Our Offerings Be Repositioned?

Market SegmentationMarket Segmentation

Finely-tuned marketing

segmentation strategies

allow marketers to

reach only those

consumers likely to be

interested in buying

their products.

RepositioningRepositioningHow are you perceived NOW? How do you WANT to be perceived?

Convenient Convenient

Inconvenient Inconvenient

High $ Low $ High $ Low $ *

*

Marketing Implications of Marketing Implications of Consumer BehaviorConsumer Behavior

Developing Products or Services– What Ideas Do Consumers Have for New

Products?– What Attributes Can Be Added to or Changed

in an Existing Offering?– What Should Our Offering Be Called?– What Should Our Package and Logo Look

Like?– What About Guarantees?

Marketing Implications of Marketing Implications of Consumer BehaviorConsumer Behavior

Making Promotion (Marketing Communications) Decisions– What Are Our Advertising Objectives?– What Should Our Advertising Look Like? – Where Should Advertising Be Placed?– When Should We Advertise?– Has Our Advertising Been Effective– What About Sales Promotion Objectives and Tactics?– When Should Sales Promotions Happen?– Have Our Sales Promotions Been Effective?– How Many Salespeople Are Needed to Serve Customers?– How Can Salespeople Best Serve Customers?

Marketing Implications of Marketing Implications of Consumer BehaviorConsumer Behavior

Making Pricing Decisions– What Price Should Be Charged?– How Sensitive Are Consumers to

Price and Prices Changes?– When Should Certain

Price Tactics Be Used?

Marketing Implications of Marketing Implications of Consumer BehaviorConsumer Behavior

Making Distribution Decisions

– Where Are Target Consumers Likely to Shop?

– How Should Stores Be Designed?

The Underlying Principles of Consumer Behavior

The Consumer is Sovereign

Consumers are Different; Consumers are Alike

The Consumer has Rights

Everyone Needs to Understand Consumers

Challenges for the Future

Gathering and interpreting information that organizations need to meet changing needs of consumers

Developing effective consumer research methods to capture changes in trends and lifestyles

Understanding consumer behavior from a broader perspective as an important part of life

The Merchants of Cool (Video)The Merchants of Cool (Video) How would you describe the teen market (importance,

characteristics, homogeneous)?

Why do you think some companies in the video (Sprite, MTV) have been so successful in marketing to teens?

How are culture and marketing related? Which one influences the other in this video?

Consumer Research represents a key feature in this video. What types of research are presented in this video? What kind of information do they provide? How have marketers use this information.

Consumer Consumer ResearchResearch

Methodology used to study Methodology used to study consumer behavior.consumer behavior.

DefinitionDefinition

The variable is the entity that is studied or that varies in a research project.

Importance of the RESEARCH QUESTION ?

Primary Versus Secondary DataPrimary Versus Secondary Data

Primary Data : Data originating from a researcher and collected to provide information relevant to a specific research project.

Secondary Data: Data collected for some other purpose that is subsequently used in a research project.

Exhibit 2.5: Who Conducts Consumer Research?Exhibit 2.5: Who Conducts Consumer Research?

Nielsen Direct Marketing Association

Consumer Behavior Research Consumer Behavior Research MethodsMethods

SurveysFocus GroupsInterviewsStorytellingUse of Photography

and Pictures

DiariesExperimentsField ExperimentsObservationsPurchase PanelsDatabase Marketing

Key words: Valid and ReliableKey words: Valid and Reliable

Qualitative Versus Quantitative ResearchQualitative Versus Quantitative Research Quantitative studies:Quantitative studies:

Many data points (consumers): Quantity of information. Statistical Analysis Able to Quantify and forecast All companies: money saver.

Qualitative studies:Qualitative studies: Few data points (consumers): Quality of information. Interpretation: Subjectivity Able to Qualify and understand Fewer companies: more and more important. Beware of underestimation: Importance and Difficulty.

What about Multi-method and Bias?What about Multi-method and Bias?

Ethical Issues in Ethical Issues in Consumer ResearchConsumer Research

The Negative Aspects of Consumer Research– Tracking Consumer Behavior in

Different Countries– Potentially Higher Marketing Costs– Invasion of Consumer Privacy– Deceptive Research Practices