Good Evening and Merry Christmas

Professor: Parthasarathi Thatoi

MBA; B.E. (Electrical Engg). Teaching in the MBA program since last few years. Telephone: +91 9987347000 Email: ps.thatoi@gmail.com

TodaySession 1

Introduction to Subject Matter Administrative details Case discussion: New Coke A Model of Consumer Behavior

What is this course about?

Understanding Consumers Behavior

Definition of Consumer Behavior

Those activities directly involved in obtaining, consuming, and disposing of products and services, with special emphasis on the mental

processes that precede and follow these actions

Mental processes important

E.g., not just what brand/ad we like or dislike, but why we

like or dislike it

Some illustrative examples which highlight the importance of understanding mental processes

Example 1

During periods when consumers are not shopping much (e.g., bad economy), store managers often play slow music within stores

During busy periods (e.g., holiday season), fast music is played Why?

Example 2.

In the US, the Marlboro cowboy is usually shown alone

Ad.

Example 3.

In Japan, the Marlboro cowboy is usually shown as part of a group

Ad.

WHY??

Solution.

Culture has an influence on consumer behavior US culture = importance of individual; not true in Asia Japanese consumers think a single cowboy looks lonely and poor

Just an ordinary worker on a farm

In general, important to understand consumer psychology to design successful marketing tactics

And that is what this course is all about

Course Description

Marketing applications stressed; but

Focus is on understanding the consumers psychology

Note: all marketing courses mouth the clich about customer is king, but very few courses actually follow that focus! This course corrects that bias Advertising the key tool used to explain many of the concepts

Advertising is the managerial tool that works off an understanding of consumer psychology Also, advertising model very similar to consumer behavior model

Marketing is centred on the customer

Marketing Mix = four areas a marketer can control. Marketing strategy: selection of target market and marketing mix in order to achieve our objectives.

Marketing is hard.

Right Target Market

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Marketing is hard.

Right Target Market

Right PRODUCT package

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Marketing is hard.

Right Target Market

Right PRODUCT package Right PLACE and time

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Marketing is hard.

Right Target Market

Right PRODUCT package Right PLACE and time Right PROMOTION & communications

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Marketing is hard.

Right Target Market

Right PRODUCT package Right PLACE and time Right PROMOTION & communications Right PRICE
procon02.ppt Feb 07 18

Profile of a typical customer

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THE SEVEN MAGIC QUESTIONS

I have seven little helpers That tell me what to do Their names are WHY and WHAT and WHEN and WHERE and HOW and WHO and HOW MUCH ARE THEY WILLING TO PAY?

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Buyer types

Personal Consumer: buys goods for own use.

Household Consumer: buys goods for the

household or family unit. Organisational : businesses, government and institutions. Buy to use for business purposes so MOTIVATION IS DIFFERENT

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Consumers: Buyers and Users

The consumer uses the product The purchaser buys it The payer provides the money

All have an influence on the buy/rebuy process

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The target market

WHO

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The target market

Their thoughts and actions

WHO

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The target market

Their thoughts and actions Our actions

WHO

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The target market

Their thoughts and actions Our actions

Why?

Product
What?

WHO

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The target market

Their thoughts and actions Our actions

Promotion
How? When?

Why?

Product
What?

WHO

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The target market

Their thoughts and actions Our actions

Promotion
How?

Why?

Product
What?

WHO

Place

When?

Where?

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The target market

Their thoughts and actions Our actions

Promotion
How?

Why?

Product
What?

WHO

Place

When?

How much?

Price

Where?

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Some of the influences on the individual

Family Ethnic background

Peer group

Individual values, needs, wants

Geographic

Religion
Mass media & advertising

Resources

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Admin StuffTeaching Style

Classes = lecture + case During Lecture:

Only One person can speak at a time Questions VERY welcome during the lecture. Again, just stop me and ask! If one of you asks a question, others should also feel free to add their comments.

For cases:

Break out rooms (in groups); discuss and provide a 1 page written answer 25-30 minutes Then general discussion

Admin StuffTextbook

Consumer Behavior (4th edition); Hoyer and MacInnis. Consumer Behaviour (9th Edition); Leon G. Schiffman & Leslie Lazar Kanuk. Consumer Behavior (2nd Edition); Satish K Batra & S H H Kazmi

Admin StuffGroup formation

Several aspects of the course involve group work

Project Case discussion In-class assignments

Form your own groups of 5-6 today!

Please email me list next week (names, ID-email, group contact person) Contact me if not part of group; will randomly assign

Admin StuffGrading Criteria

Internal External

40% 60%

Admin StuffClass Participation

Quality, not quantity!

Insightful comments will receive greater credit

Admin stuffClass Guidelines

Lecture handout (PPT) will be provided AFTER class.

Case: Introducing New Coke

The importance of understanding your consumers

FORM GROUPS OF 4-5 (DOESNT HAVE TO BE THE FINAL GROUPS!!)

Case: Introducing New Coke(FORM GROUPS)

1. 2. 3.

4.

5.

What factors led to Coca-Colas huge initial popularity? What was Pepsis strategy? Coca-Cola responded with New Coke: what happened as a result? (summarize facts from case) How did Coca-Cola end up making such a big mistake? What would you have done? Discuss in break-out rooms in groups; 1 page of bullet-points TOTAL (write your names also)

1 qn per group (and all groups think about qn 5)

Big Take-away

Marketing cannot be driven only by the product, or the competition, or the channel
Marketing is about understanding the consumers side:

why they like/dislike something

Coke was popular, but management did not understand why! Not the taste

More (recent) scientific evidence (not taste, but brand name)

In other words, important to understand Consumer Behavior!

End of case discussion

Session 1 Introduction to Consumer Behavior

Definition (what goes on in consumers mind) Importance: why is CB important?

Consumer Behavior (CB) dictates Marketing Tactics Lack of knowledge of CB = big mistakes!

New Coke Marlboro ad in Japan Pepsi

Knowledge of CB = Successful Marketing tactics