Transcript Marketing Strategy and Consumer Behavior

© 2007 McGraw-Hill Companies, Inc., McGraw-Hill/Irwin
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PART I: INTRODUCTION
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CHAPTER
1
CONSUMER
BEHAVIOR AND
MARKETING
STRATEGY
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Consumer Behavior and Marketing
Strategy
Consumer behavior is 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.
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Applications of Consumer Behavior
1. Marketing Strategy
2. Regulatory Policy
3. Social Marketing
4. Informed Individuals
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Applications of Consumer Behavior
Marketing Strategy
Marketing strategies and tactics are based on explicit or
implicit beliefs about consumer behavior.
Decisions based on explicit assumptions and sound theory
and research are more likely to be successful than are
decisions based solely on implicit intuition.
Knowledge of consumer behavior can be an important
competitive advantage and can greatly reduce the odds of
bad decisions and market failures!
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Applications of Consumer Behavior
Regulatory Policy
Various regulatory bodies exist to develop, interpret, and/or
implement policies designed to protect and aid consumer.
Effective regulation of many marketing practices requires an
extensive knowledge of consumer behavior.
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Applications of Consumer Behavior
Social Marketing
Social marketing is the application of marketing strategies
and tactics to alter or create behaviors that have a positive
effect on the targeted individuals or society as a whole.
As is true for commercial marketing strategy, successful
social marketing strategy requires a sound understanding of
consumer behavior.
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Applications of Consumer Behavior
Informed Individuals
Most economically developed societies are referred to as
consumption societies. Most individuals in these societies
spend more time engaged in consumption than any other
activity, including work or sleep.
Knowledge of consumer behavior can enhance our
understanding of our environment and ourselves.
Such an understanding is essential for sound citizenship,
effective purchasing behavior, and reasoned business ethics.
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Marketing Strategy and Consumer
Behavior
Customer value is the
difference between all the
benefits derived from a total
product and all the costs of
acquiring those benefits.
Providing superior
customer value requires the
organization to do a better
job of anticipating and
reacting to customer needs
than the competition does.
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Marketing Strategy and Consumer Behavior
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Marketing Strategy and Consumer
Behavior
Step 1. Market Analysis
Marketing Strategy begins with an
analysis of the market the
organization is considering, requiring
a detailed analysis of the:
•organization’s capabilities
•strengths and weaknesses of competitors
•economic and technological forces
•current and potential customers
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Marketing Strategy and Consumer
Behavior
Step 2. Market Segmentation
On the basis of the consumer
analysis, the organization
identifies groups of individuals,
households, or firms with similar
needs. These market segments
are described in terms such as
demographics, media
preferences, geographic
location, etc.
Management then selects the
segment(s) to target.
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Marketing Strategy and Consumer
Behavior
Step 3. Marketing Strategy
Marketing Strategy seeks to
provide the customer with more
value than the competition, while
still producing a profit for the firm.
Marketing strategy is formulated in
terms of the marketing mix, which
involves determining the product
features, price, communications,
distribution and services that will
provide customers with superior
value, resulting in the total
product.
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Marketing Strategy and Consumer
Behavior
Step 4. Consumer Decision Process
The total product is presented to the
target market, which is consistently
engaged in processing information
and making decisions designed to
maintain or enhance its lifestyle or
performance.
Many firms are wrapping
experiences around their traditional
products and service in order to sell
them better. For example, retailers
have been moving to lifestyle
centers in an effort create a more
pleasing shopping experience.
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Marketing Strategy and Consumer
Behavior
Step 5. Outcomes
Society – the cumulative effect of the
marketing process affects economic
growth, pollution, social problems.
Firm – reaction of the target market
to the total product produces an
image of the
product/brand/organization.
Individual – the process results in
some level of need satisfaction,
financial expenditure, attitude
development/change, and/or
behavioral changes.
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Market Analysis Components
1. The Consumers
2. The Company
3. The Competitors
4. The Conditions
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Market Analysis Components
The Consumers
It is not possible to anticipate
and react to customers’ needs
and desires without a complete
understanding of consumer
behavior.
Discovering customers’ needs
is a complex process, but it can
often be accomplished by
marketing research.
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Market Analysis Components
The Company
A firm must fully understand its own ability to meet customers
needs. This involves evaluating all aspects of the firm including:
• financial condition
• general managerial skills
• production capabilities
• R&D capabilities
• technological sophistication
• reputation, and
• marketing skills
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Market Analysis Components
The Competitors
It is not possible to consistently
do a better job of meeting
customer needs than the
competition without a thorough
understanding of the
competition’s capabilities and
strategies.
This requires the same level of
knowledge of a firm’s key
competitors that is required on
one’s own firm.
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Market Analysis Components
The Conditions
The state of the economy, the
physical environment,
government regulations, and
technological developments
affect consumer needs and
expectations as well as
company and competitor
capabilities.
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Market Segmentation
Market segmentation
is a portion of a larger
market whose needs
differ from the larger
market.
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Market Segmentation
Market Segmentation Involves Four Steps:
1. Identifying Product-Related Need Sets
2. Grouping Customers with Similar Need Sets
3. Describing Each Group
4. Selecting an Attractive Segment(s) to Serve
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Market Segmentation
Product-Related Need Sets
Organizations approach market segmentation with a set
of current and potential capabilities.
The term need set is used to reflect the fact that most
products in developed economies satisfy more than one
need.
Customer needs are not restricted to product features but
also include types and sources of product information,
outlets where the product is available, product price, the
image of the product or firm, and even where and how the
product is produced.
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Market Segmentation
Customers with Similar Need Sets
The next step is to group consumers with similar need sets.
These consumers can be
grouped into one segment
as far as product features
and perhaps even product
image are concerned
despite sharply different
demographics.
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Market Segmentation
Description of Each Group
Once consumers with similar
need nets are identified, they
should be described in terms of
demographics, lifestyles, and
media usage.
In order to design an effective
marketing program, it is
necessary to have a complete
understanding of the potential
customers.
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Market Segmentation
Attractive Segment(s) to Serve
Target market - segment(s) of the
larger market on which we will focus
our market effort.
This decision is based on our ability to
provide the selected segment(s) with
superior customer value at a profit.
Each market segment requires its own
marketing strategy.
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Marketing Strategy
 Marketing Strategy is the answer to the question:
How will we provide superior customer value to our
target market?
 This requires the formulation of a consistent
marketing mix, which includes the
1. Product
2. Price
3. Communications
4. Distribution, and
5. Services
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Marketing Strategy
The Product
A product is anything a
consumer acquires or might
acquire to meet a perceived
need.
Consumers are generally
buying need satisfaction,
not physical product
attributes.
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Marketing Strategy
Communications
Marketing communications include advertising, the
sales force, public relations, packaging, and any other
signals that the firm provides about itself and its
products.
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Marketing Strategy
Price
Price is the amount of money
one must pay to obtain the
right to use the product.
Price sometimes serves as a
signal of quality
Consumer cost is everything
the consumer must surrender
in order to receive the
benefits of owning/using the
product.
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Marketing Strategy
Distribution
Distribution means having the
product available where target
customers can buy it. This is
essential to the product’s
success.
Good channel decisions require
a sound knowledge of where
target customers shop for the
product.
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Marketing Strategy
Service
Service refers to auxiliary or
peripheral activities that are
performed to enhance the
primary product or primary
service.
Auxiliary services cost money
to provide, so it is essential
that the firm furnish only those
services that provide value to
the target customers.
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Consumer Decisions
The consumer decision process intervenes between
the marketing strategy, as implemented in the
marketing mix, and the outcomes.
The firm can succeed only if consumers see a need
that its product can solve, become aware of the
product and its capabilities, decide that it is the best
available solution, proceed to buy it, and become
satisfied with the result of the purchase.
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Outcomes
1. Firm Outcomes
2. Individual Outcomes
3. Society Outcomes
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Outcomes
Firm Outcomes
The product position is the image of the product or
brand in the consumer’s mind relative to competing
products and brands.
Sales are a critical outcome, as they produce the revenue
necessary for the firm to continue in business.
Customer satisfaction remains a concern for marketers.
Retaining customers requires that they be satisfied with
their purchase and use of the product.
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Outcomes
Creating Satisfied Customers
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Outcomes
Individual Outcomes
Need satisfaction
The most obvious outcome of the consumption process
for an individual, whether or not a purchase is made, is
some level of satisfaction of the need that initiated the
consumption process.
Injurious consumption, the dark side of consumer
behavior, occurs when individuals or groups make
consumption decisions that have negative consequences
for their long-run well-being.
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Outcomes
Society Outcomes
Economic Outcomes
The cumulative impact of consumers’ purchase decisions, including the
decision to forgo consumption, is a major determinant of the state of a
given country’s economy.
Physical Environment Outcomes
Consumers make decisions that have a major impact on the physical
environments of both their own and other societies.
Social Welfare
Consumer decisions affect the general social welfare of a society,
including having a major impact on the overall quality of life in a society.
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The Nature of Consumer Behavior
Overall Conceptual Model of Consumer Behavior
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The Nature of Consumer Behavior
External Influences
The following are the major external
influences:
• Culture
• Demographics and social stratification
• Ethnic, religious, and regional subcultures
• Families and households
• Groups
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The Nature of Consumer Behavior
Internal Influences
Internal influences include:
• Perception
• Learning
• Memory
• Motives
• Personality
•Emotions
•Attitudes
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The Nature of Consumer Behavior
Self-Concept and Lifestyle
Self-concept is the totality of
an individual’s thoughts and
feelings about oneself.
Lifestyle is how one lives,
including the products one
buys, how one uses them,
what one thinks about them,
and how one feels about them.
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The Nature of Consumer Behavior
Situations and Consumer Decisions
Consumer decisions
result from perceived
problems and
opportunities.
Consumer problems
arise in specific
situations and the nature
of the situation
influences the resulting
consumer behavior.
Using Outdoor Media to Trigger Problem Recognition
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