CHAPTER
1
CONSUMER
BEHAVIOR
AND
MARKETING
STRATEGY
Copyright © 2020 by McGraw-Hill Education. All rights reserved.
PART I: INTRODUCTION
Access the text alternative for these images
©2020 McGraw-Hill Education
1-2
Learning Objectives
LO 1 Define consumer behavior.
LO 2 Summarize the applications of consumer
behavior.
LO 3 Explain how consumer behavior can be used to
develop marketing strategy.
LO 4 Explain the components that constitute a
conceptual model of consumer behavior.
LO 5 Discuss issues involving consumption meanings
and firm attempts to influence them.
1-3
©2020 McGraw-Hill Education
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.
1-4
©2020 McGraw-Hill Education
(Top left image): Michael Jung/Getty Images; (Top right image):Intl St Clair/Blend Images LLC; (Bottom image):Shutterstock/yuttana Contributor Studio
Applications in Consumer Behavior
1
1. Marketing Strategy.
2. Regulatory Policy.
3. Social Marketing.
4. Informed Individuals.
1-5
©2020 McGraw-Hill Education
Shutterstock/lovelyday12
Marketing Strategy
The applications of consumer behavior involve the development,
regulation, and effects of marketing strategy. We now examine
marketing strategy in more depth.
Marketing strategy begins with an analysis of the market the
organization is considering. On the basis of the consumer
analysis undertaken in this step, the organization identifies
groups of individuals, households or firms with similar needs.
These market segments are described in terms of
demographics, media preferences, geographic location, and so
forth. Management then selects one or more of these segments
as target markets on the basis of the firm’s capabilities relative to
those of its competition (given current and forecasted economic
and technological conditions).
1-6
©2020 McGraw-Hill Education
Regulatory Policy
Various regulatory bodies exist to develop, interpret, and/or
implement policies designed to protect and aid consumers. For
example, SIRIM, JAKIM.
1-7
©2020 McGraw-Hill Education
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.
Social marketing has been used in attempts to reduce smoking,
to increase the percentage of children receiving their
vaccinations in a timely manner, to encourage environmentally
sound behaviors such as recycling, to reduce behaviors
potentially leading to AIDS, to enhance support of charities, to
reduce drug use, and to support many other important causes.
1-8
©2020 McGraw-Hill Education
Informed Individuals
Most economically developed societies are legitimately referred
to as consumption societies. Most individuals in these societies
spend more time engaged in consumption than in any other
activity.
In addition, marketers spend billions to influence consumer
decisions. These attempts occur in ads, in websites, on
packages, as product features, in sales pitches, and in store
environments. They also occur in the content of many TV shows,
in the brands that are used in movies, and in the materials
presented to children in schools.
1-9
©2020 McGraw-Hill Education
Marketing Strategy and Consumer
Behavior
Access the text alternative for these images
©2020 McGraw-Hill Education
1-10
Market Analysis Components
1. The Consumers.
2. The Company.
3. The Competitors.
4. The Conditions.
1-11
©2020 McGraw-Hill Education
Lightpoet © 123RF.com
The Consumer
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 often
can be accomplished by marketing research.
The Company
A firm must fully understand its own ability to meet customer needs.
This involves evaluating all aspects of the firm, including its financial
condition, general managerial skills, production capabilities, research
and development capabilities, technological sophistication, reputation,
and marketing skills.
Marketing skills would include new-product development capabilities,
channel strength, advertising abilities, service capabilities, marketing
research abilities, market and consumer knowledge, and so forth.
1-12
©2020 McGraw-Hill Education
The Competitors
It is not possible to consistently do a better job than the competition of meeting
customer needs without a thorough understanding of the competition’s
capabilities and strategies. This understanding requires the same level of
knowledge of a firm’s key competitors that is required of one’s own firm. In
addition, for any significant marketing action, the following questions must be
answered:
If we are successful, which firms will be hurt (lose sales or sales opportunities)?
Of those firms that are injured, which have the capability (financial resources,
marketing strengths) to respond?
How are they likely to respond (reduce prices, increase advertising, introduce a
new product)?
Is our strategy (planned action) robust enough to withstand the likely actions of
our competitors, or do we need additional contingency plans?
1-13
©2020 McGraw-Hill Education
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.
The deterioration of the physical environment has produced not
only consumer demand for environmentally sound products but
also government regulations affecting product design and
manufacturing.
1-14
©2020 McGraw-Hill Education
Market Segmentation
1
Market segmentation
is a portion of a larger
market whose needs
differ from the larger
market.
1-15
©2020 McGraw-Hill Education
Purestock/SuperStock
Market Segmentation
2
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.
1-16
©2020 McGraw-Hill Education
Market Segmentation
TABLE 1-1 Market Segment Attractiveness Worksheet
Criterion
Segment size
Segment growth rate
Competitor strength
Customer satisfaction with existing products
Fit with company image
Fit with company objectives
Fit with company resources
Distribution available
Investment required
Stability/predictability
Cost to serve
Sustainable advantage available
Communications channels available
Risk
Segment profitability
Other (________)
*Score on a 1–10 scale, with 10 being most favorable.
©2020 McGraw-Hill Education
3
Score
_______
_______
_______
_______
_______
_______
_______
_______
_______
_______
_______
_______
_______
_______
_______
_______
1-17
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. Communications.
3. Price.
4. Distribution, and
5. Service.
1-18
©2020 McGraw-Hill Education
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.
1-19
©2020 McGraw-Hill Education
Outcomes
1
1. Firm Outcomes – Product Position,
Sales and Profits, Customer
Satisfaction.
2. Individual Outcomes- Need
Satisfactions, Injurious Consumption ie
Overspending, Unhealthy Products.
3. Society Outcomes – Economic
Outcomes, Physical Environment
Outcomes, Social Welfare.
1-20
©2020 McGraw-Hill Education
Outcomes
2
Creating Satisfied Customers
Access the text alternative for these images
©2020 McGraw-Hill Education
1-21
The Nature of Consumer Behavior
1
Overall Conceptual Model of Consumer Behavior
1-22
©2020 McGraw-Hill Education
The Nature of Consumer Behavior
2
External Influences
• Culture.
• Demographics and social stratification.
• Ethnic, religious, and regional
subcultures.
• Families and households.
• Groups.
1-23
©2020 McGraw-Hill Education
(Top image): Lyn Topinka/U.S. Geological Survey; (Middle image):William Ryall 2010; (Bottom image):Rodrigo A Torres/Glow Images
The Nature of Consumer Behavior
3
Internal Influences
• Perception.
• Learning.
• Memory.
• Motives.
• Personality.
• Emotions.
• Attitudes.
1-24
©2020 McGraw-Hill Education
Bowie 15 123RF.com
The Nature of Consumer Behavior
4
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.
1-25
©2020 McGraw-Hill Education
bernardbardo/123RF
The Meaning of Consumption
Consumption has meaning beyond
satisfaction of minimum or basic consumer
needs.
Symbolic needs.
• Status.
• Identity.
• Group acceptance.
1-26
©2020 McGraw-Hill Education