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CHAPTER 1
CONSUMER BEHAVIOR
AND MARKETING STRATEGY
LEARNING OBJECTIVES
LEARNING OBJECTIVES
LO1: Define consumer behavior
LO2: Summarize the applications of consumer behavior
LO3: Explain how consumer behavior can be used to develop marketing strategy
LO4: Explain the components that constitute a conceptual model of consumer behavior
LO5: Discuss issues involving consumption meanings and firm attempts to influence them
SUMMARY
LO1: Define consumer behavior
The field of 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.
LO2: Summarize the applications of consumer behavior
Consumer behavior can be applied in four areas, namely (a) marketing strategy, (b) regulatory policy, (c) social marketing, and (d) creating informed individuals. Developing marketing strategy involves setting levels of the marketing mix based on an understanding of the market and segments involved to create desirable outcomes. Developing regulatory guidelines involves developing policies, guidelines, and laws to protect and aid consumers. 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. Creating more informed individuals involves educating consumers about their own consumption behaviors as well as marketers’ efforts to influence it in such a way as to create a more sound citizenship, effective purchasing behavior, and reasoned business ethics.
LO3: Explain how consumer behavior can be used to develop marketing strategy
The interplay between consumer behavior and marketing strategy involves five stages. First is market analysis which involves gathering data and tracking trends related to the company, competitors, conditions, and consumers. Second is market segmentation. A market segment is a portion of a larger market whose needs differ somewhat from the larger market. Firms segment their markets and choose a segment or segments that best fit their capabilities and (Consumer Behavior Building Marketing Strategy 14e Mothersbaugh) (Solution Manual, For Complete File, Download link at the end of this File) 1 / 4
Copyright 2020 © McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.
market conditions. Third is marketing strategy which involves setting appropriate levels for the marketing mix as a function of the segments being targeted and the market conditions that exist. Fourth is the consumer decision process which is a series of steps starting with problem recognition and moving through information search, alternative evaluation, purchase, use, and post-purchase evaluation. Marketing efforts can be targeted to these different stages. Fifth is outcomes at the individual, firm, and societal level. And while profit maximization is often a goal at the firm level, possible adverse effects at the individual and societal level are of importance to firms, government organizations, and regulators. An understanding of consumer behavior theory and concepts is critical at each stage as marketers gather information, develop marketing strategies to influence consumer decisions, and evaluate the effects of their marketing efforts.
LO4: Explain the components that constitute a conceptual model of consumer behavior
The conceptual model of consumer behavior developed here can be broken into four interrelated parts. External and internal influences affect the consumer’s self-concept and lifestyle which, in turn, affects the decision process. External influences (Part 2 of the text) include culture, reference groups, demographics, and marketing activities. Internal influences (Part 3) include perception, emotions, attitudes, and personality. Self-concept is the totality of an individual’s thoughts and feelings about him- or herself. Lifestyle is, quite simply, how one lives, including the products one buys, how one uses them, what one thinks about them, and how one feels about them. External and internal factors operate to influence self-concept and lifestyle which, in turn, influences the decision process (Part 4). Overlaying these basic components is organizations (Part 5) and regulation (Part 6). Organizations or businesses can also be consumers as when Mercedes-Benz purchases dashboard sub-components from a supplier. This type of marketing is often termed business-to-business (B2B) marketing to differentiate it from business-to-consumer (B2C) marketing that is the focus of much of this text. The special nature of organizations and how they behave warrants special attention.Regulation is an aspect of consumer behavior that permeates marketer actions relating to all parts of our model and it warrants special attention as well.
LO5: Discuss issues involving consumption meanings and firm attempts to influence them
Consumption has meaning beyond the satisfaction of minimum or basic consumer needs.Thus, consumers might purchase Nike sneakers not only to satisfy the functional needs associated with safety and support, but also for symbolic needs associated with status, identity, and group acceptance. Some criticize marketers for their attempts to instill in, or amplify, consumer desires for products beyond minimum functional aspects. And while this criticism may hold true, it also seems likely that such desires and symbolic meanings are naturally assigned to objects even in the relative absence of marketing. Nonetheless, the ethical implications of marketers’ actions in this regard are important to consider.
LECTURE TIPS AND AIDS
1) It is important to get the student to believe that knowledge of consumer behavior can help managers understand why people behave as they do, and that this understanding can help 2 / 4
Copyright 2020 © McGraw-Hill Education. All rights reserved. No reproduction or distribution without the prior written consent of McGraw-Hill Education.
managers predict behavior. One rather simple “gimmick” to help get this point across goes as
follows:
Before the start of class, pin up a card with the number 3 printed on it making sure that none of the students can see the number. Then, during the lecture, when you are pointing out that some behaviors can be predicted, ask the students to pick a number between 1 and 4 inclusive and record how many pick each number. A substantial majority should pick 3. You can then turn the card over and indicate that your prediction resulted from (1) past experience, and/or (2) knowledge that in situations such as this, when a person has no other clues to go on, he or she tends to pick a “safe” middle number. (This is particularly true in multiple-choice tests!) The fact that not everyone in the class picked 3 allows you to explain that marketers will probably never be able to predict with 100 percent accuracy because human beings are unique. (Should the situation arise that more students choose a number other than 3, you could also use the example of imperfect prediction as well as the fact that sometimes even the best predictions are wrong!) 2) It should be pointed out that the model presented in the text is explanatory in nature, the purpose of which is to give the student an overall “picture” of how the parts of behavior that they will study fit together. The analogy might be made to a graphical model of an internal combustion engine. It should also be pointed out that there are a number of consumer behavior models that one can use. However, it might also be noted that they all vary little in terms of real substantive issues and that none are really predictive in the managerial decision-making sense.3) Have students select a product of interest and discuss how various components of the model could aid development of marketing strategies for various brands of the product.4) If you allow any free-ranging discussion, students will generally ask about particular ads that they find annoying or otherwise distasteful. Many will claim that they will never buy the product because of the ad. It is worth your while to cause this discussion to occur. Ask the class to discuss why such an ad is being run. Three points should emerge from the discussion. First, marketers sometimes make mistakes. Second, annoying ads can still induce learning (your students have learned about the product in the ad in question) which might influence subsequent behavior. Third, and most important, the students are probably not part of the target market for the ad. The target market may find the ad quite acceptable. You need to drive hard the fact that college graduates with business degrees are very unique. When they use their tastes to judge marketing programs targeted at other groups they are likely to make mistakes. This is one of the BIG takeaways from this class.5) Initiate a discussion on injurious consumption and the responsibilities of marketers, consumers, and the government. After the students discuss harmful products such as alcohol or tobacco, point out that improper diets and excess eating are the major causes of health problems in this country.Should the advertising of snack food be limited or required to carry warning labels? What role should the education system play in teaching people how to be effective consumers?Review Questions 1) How is the field of consumer behavior defined?It 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.2) What conclusions can be drawn from the examples at the beginning of this chapter? 3 / 4
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Successful marketing decisions require extensive information on consumer behavior theory.Consumer behavior theory provides the manager with the proper questions to ask. Managers, regulators, and others use consumer behavior and knowledge to make decisions.3) What are the four major uses or applications of an understanding of consumer behavior?(1) Developing marketing strategy, (2) Developing regulatory policy for marketing actions, (3) Social marketing, and (4) Understanding how societies function.4) What is social marketing?It is the applications of marketing strategies and tactics to alter or create behaviors that have a positive effect on the targeted individual and/or society as a whole.5) What is customer value and why is it important to marketers?It is the difference between all of the benefits derived from a total product and all the costs of acquiring those benefits. It is important because consumers choose those options that they believe will provide them the most value.6) What is required to provide superior customer value?The organization must do a better job of anticipating and reacting to customer needs than the competition. This requires knowledge of consumer behavior as well as technical and marketing skills.7) What is a total product?It is all aspects of the product including its price, package, distribution system, image, and so forth.8) What is involved in the consumer analysis phase of market analysis in Figure 1-1?The organization must be able to anticipate evolving consumer needs which requires a complete understanding of the product related behaviors of the market segments under consideration. This will often require extensive primary research.9) What is involved in the company analysis phase of market analysis in Figure 1-1?The firm must understand its ability to meet evolving customer needs better than the competition.This involves evaluating all aspects of the firm ranging from its financial condition to its general management skills to its reputation. This will generally involve both internal analyses as well outside assessments.10) What is involved in the competitor analysis phase of market analysis in Figure 1-1?A firm should know its key competitors as well as it knows itself (see #6 above). For particular initiatives, the firm needs to determine which competitors will be harmed and their capability and likely means of responding. The firm's strategy should be evaluated in light of these probable responses.11) What is involved in the conditions analysis phase of market analysis in Figure 1-1?This is an analysis of the state of the relevant economies, government regulations, the physical environment, and technological developments.12) Describe the process of market segmentation.Market Segmentation has four steps: (1) identify product-related need sets, (2) group consumers with similar need sets, (3) describe each group (in terms of demographics, media preferences, and lifestyles), and (4) select attractive segments to serve.
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