Lecture 1: Inroduction

Consumer Behavior and Consumer Research

Customer Centricity
Customer-centric organization:
Every resource in an organization (people, products, systems & logistics) is focused on serving & delighting profitable customers

Customer-centric organization:
Identify needs Formulate strategy Monitor trends consumer research & analysis so customers are always top priority

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Why Study Consumer Behavior?

Consumer Behavior Determines the Economic Health of a Nation

Consumer Behavior Determines the Success of Marketing Programs Consumer Behavior Determines the Economic Health of Everyone
Consumer Behavior Helps Formulate Public Policy
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Why Study Consumer Behavior?

Consumer Behavior Determines the Success of Marketing Programs
Organizations that are Customercentric use a total marketing approach to focus their resources on satisfying customers Marketing Process of transforming or changing an organization to have what people will buy
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Why Study Consumer Behavior?

Consumer Behavior Determines the Success of Marketing Programs
Marketing can be used to influence brand choice and purchase, while Demarketing can influence people to stop harmful consumption The Customer is King Organization influenced by consumer needs and wants
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Why Study Consumer Behavior?

Consumer Behavior Determines the Success of Marketing Programs
Market segmentation We group consumers not just based on common characteristics, BUT also similar behavior Understanding consumer behavior is crucial in marketing strategy

COPYRIGHT 2012 Cengage Learning Asia

Why Study Consumer Behavior?

Consumer Behavior Determines the Economic Health of Everyone
The individuals decisions as a consumer determine their economic health by making more effective consumption decisions while avoiding deceptive practices harmful to them

COPYRIGHT 2012 Cengage Learning Asia

Why Study Consumer Behavior?

Consumer Behavior Determines the Economic Health of Everyone
Public policy leaders and social commentators study consumer behavior to alleviate overconsumption and underconsumption by educating consumers about problems and providing assistance

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The Marketing Concept

The process of planning and executing the conception, pricing, promotion, and distribution of ideas, goods, and services to create exchanges that satisfy individual and organizational objectives Satisfaction with an exchange depends on satisfaction with consumption of product and the exchange of money

Educating Consumers About Crises

Educating Consumers About Health

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

Educating Consumers About Health

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

Helps Formulate Public Policy

Understanding consumers needs to formulate public policy and predicting behavioral changes that follow
Government Protection and Education

Protection from Competitive Markets

Why Study Consumer Behavior?

Consumer Behavior Affects Personal Policy
Personal policy includes how you behave towards others and in buying situations, your values and beliefs, and how you live your life A persons economic quality of life is determined by personal policy

What Is Consumer Behavior?

Activities people undertake when obtaining, consuming, and disposing of products and services

A field of study that focuses on consumer activities Scope goes beyond just why and how people buy to include consumption analysis
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Why Study Consumer Behavior?

Why and how people use products in addition to why and how they buy It will be easier to develop strategy to influence consumers if you know the reason why people buy & use specific product or brand

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Consumer Influences

Organizational Influences

Obtaining

Consuming

Disposing

Consumer Behavior
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Consumer Influences Culture Ethnicity Personality Family Life-stage Values Income Available Resources Attitudes Opinions Feelings Motivations Past Experiences Peer Groups Knowledge
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Organizational Influences Brand Product Features Advertising Word of Mouth Promotions Retail Displays Price Quality Service Store Ambiance Convenience Loyalty Programs Packaging Product Availability

Obtaining

Consuming

Disposing
How you get rid of remaining product

How you decide How you use the you want to buy product

Other products you consider buying

Where you buy

How you store the product in your home

Who uses the product

How much you throw away after use

If you resell items yourself or through a consignment store How you recycle some products

How you pay for product How much you consume How you transport How product product home compares with expectations
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CONSUMER INFLUENCES Culture Ethnicity Personality Family Life-stage Values Income Available Resources Attitudes Opinions Motivations Past Experiences Feelings Peer Groups Knowledge

ORGANIZATIONAL INFLUENCES Brand Product Features Advertising Word of Mouth Promotions Retail Displays Price Quality Service Store Ambiance Convenience Loyalty Programs Packaging Product Availability

OBTAINING How you decide you want to buy Other products you consider buying Where you buy How you pay for product How you transport product home

CONSUMING How you use the product How you store the product in your home Who uses the product How much you consume How product compares with expectations

DISPOSING How you get rid of remaining product How much you throw away after use If you resell items yourself or through a consignment store How you recycle some products

Consumer Behavior
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Evolution of Consumer Behavior

Supply Chain:
all the organizations involved in taking a product from inception to final consumption - Manufacturers - Wholesalers - Retailers - Facilitating Organizations

Evolution of Consumer Behavior

Supply Chain:
all the organizations involved in taking a product from inception to final consumption - Manufacturers - Wholesalers - Retailers - Facilitating Organizations

Consumers Increased Influence on Business

Evolution of Consumer Behavior

Manufacturing Orientation
Selling Orientation Marketing Orientation Consumer Orientation

Evolution of Consumer Behavior

Consumers Increasing Influence

Wholesaler

Manufacturer

Retailer

Consumer

Manufacturing Orientation U.S. 1750-1850 1850-WWII 1760-WWII

Selling Marketing Consumer Orientation Orientation Orientation 1970-2000 1970-2000 2000+ 2000+

Europe 1750-1850

Evolution of Consumer Behavior

Manufacturing Orientation
Selling Orientation Marketing Orientation - Motivation research - Positivism - Postmodernism

Consumer Orientation
Beyond a marketing focus

How all organizations in a demand chain adapt to changing consumer lifestyles and behaviors bringing product design, logistics, manufacturing, and retailing together
Role of consumers in shaping many aspects of lifesociety, government, social programs, health cares, and other areas

Consumer Research: Methods of Studying Consumer Behavior

Consumer Research Methods

Observation
Observing consumer behaviors in different situations such as natural or artificial settings

Consumer Research Methods

Observation
In-home observation: examining how and
when consumers use and consume products in their households

Shadowing: following and observing

consumers in the shopping and consumption processes. Researchers may ask questions about reasons for behaviors

Physiological methods: Techniques

borrowed from medicine, psychology and other sciences including cameras to measure eye movement, galvanic skin response, and MRI

Consumer Research Methods

Interviews and Surveys
Surveys: efficient method for gathering
information from a large sample of consumers by asking questions and recording responses (telephone and Internet surveys, mall intercepts, and mail questionnaires)

Focus Groups: a group discussion led by a

moderator skilled in persuading consumers to thoroughly discuss a topic of interest

Longitudinal Studies: repeated measures of

activities over time to determine changes in opinions, buying, and consumption behaviors

Consumer Research Methods

Experimentation
Measuring cause-and-effect relationships by manipulating independent variables to determine the effects of changes on dependent variables
- Laboratory experiment

- Field experiment

Consumer Research Methods

Experimentation
Attempts to understand cause-and-effect relationships by carefully manipulating independent variables to determine how these changes affect dependent variables
- Laboratory experiment

- Field experiment Independent variables might include number

of advertisements and package design

Dependent variables might include purchase

intent or behavior

Understanding How Consumers Use Products

Consumer Research Methods

Consumption Research
Builds on the three primary research methods to examine how people use products and services rather than how they buy them

May use ethnographic tools to understand how values and culture influence usage of products and other behaviors May identify new uses for existing products or new product to satisfy unmet or changing consumer needs

The Underlying Principles of Consumer Behavior

The Consumer Is Sovereign

The Consumer Is Global

Consumers Are Different; Consumers Are Alike The Consumer Has Rights

Consumers appear different but respond in similar ways to brands

Consumers appear different but respond in similar ways to brands

Consumer Bill of Rights

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