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Chapter 1: Consumer Behavior: Buying, Having, and

Being

Learning Objective:

1.1 Consumer behavior is a process.

1.2 Marketers have to understand the wants and needs of different consumer segments.

1.3 Our choices as consumers relate in powerful ways to the rest of our lives.

1.4 Our motivations to consume are complex and varied.

1.5 Technology and culture create a new “always on” consumer.

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What Is Consumer Behavior?

The study of the processes involved when individuals or groups select, purchase, use, or dispose off products, services, ideas, or experiences to satisfy needs and

desires.

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Identify Need Explore Options Form

Consideration Set Select

Purchase and Use Dispose

A consumer is a person who identifies a need or desire, makes a purchase and then disposes of the product (may not be the end-user)

Stages in Consumption Process

– How does a consumer decide that he/she needs a product?

– What are the best sources of information to learn more about alternatives?

– How are consumer attitude towards a product formed or changed?

– What cues do consumers use to identify superior alternatives?

– Is acquiring a product stressful or pleasant experience?

– What does the purchase say about the consumer?

– How do situational factors such as time, pressure, store displays affect consumer’s purchase decisions?

– Does the product provide pleasure or perform its intended function?

– How is the product eventually disposed and what are the environmental consequences?

– What determines whether a consumer is satisfied and will buy that product again?

– Does this consumer share his/her experience with others and influence their decision?

PREPURCHASE ISSUES

PURCHASE ISSUES

POST PURCHASE ISSUES

CONSUMER’S PERSPECTIVE MARKETER’S PERSPECTIVE

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Objective 2:

Marketers have to understand the wants and needs of different consumer segments.

Customize the product for different segments Keep the product the same but position it differently based on the target

Introduce different product lines for different segment

Customer Segmentation

• Usage Pattern • Demographics • Lifestyles/ Psychographics • Behavior

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Customer Segmentation: Usage Pattern

• 80/20 rule (Pareto Principle): 20 percent users account for 80% of sales (Heavy users)

1 % of pet owners buy 80% of Iams pet food.

1.2 % of beer drinkers account for 80% of Budweiser sales.

• Customer Tenure • Occasion or Timing • Engagement Level

Customer Segmentation: Demographics

Demographics: Observable aspects of the consumers

• Age • Gender • Family structure • Social class/income • Race/ethnicity • Geography

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Customer Segmentation: Psychographics/ Lifestyles

• Consumers may share demographic characteristics but have very different lifestyles

• The way we feel about ourselves, the things we value, the things we like to do in our spare time .

Customer Segmentation: Buying Behavior

• Relationship Marketing

• Nurtures long-term personal connections between your brand and your customers

• Increases customer engagement, satisfaction, and retention.

• 5% increase in customer retention efforts can result in a 25-95% increase in company revenues.

• Interact with the consumers on a regular basis

• Brands as partners

• Comes handy during tough times like bad economic conditions, bad press,

controversy, introduction of competitors, etc.

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Customer Segmentation: Buying Behavior

• Database Marketing

• tracks specific consumers’ buying habits very closely

• crafts products and messages tailored precisely to people’s wants and needs

• getting easier with Big Data and advanced computation power

• easier for companies to notice an anomaly in their customers’ buying pattern

• intervene with appropriate incentive

Objective 3:

Our choices as consumers relate in powerful ways to the rest of our lives.

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Role Theory:

Daughter/ Sister (Family)

Student/ Instructor (Work)

Friend (Social)

Runner (Hobby)

Play multiple identities in our lives

The criteria I use to evaluate products/ type of product/ relationship with product can be very different based on the role I am playing while making the decision

– safety can be my priority

– evaluate in terms of efficiency – how it helps with my work

– how it helps me connect/ have fun

Consumer-Product Relationships

• Products which help to establish the user identity

Self-concept attachment

• Products which serve a connection with the past self.

Nostalgic Attachment

• The product is a part of the user’s daily routine.Interdependence

• The product elicits emotional bonds of warmth, passion or other strong emotions.Love

Consumers can have different types of relationships with their products – consumers may develop relationships with brands over time.

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Popular culture marketing:

Popular culture marketing:

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Objective 4:

Our motivations to consume are complex and varied.

• Motivation is the processes that lead people to behave as they do. • It occurs when a need is aroused that the consumer wishes to satisfy.

Motivation – Need vs Want

Needs can also be hedonic (i.e., an experiential need, involving emotional responses or fantasies)

Needs can be utilitarian(i.e., a desire to achieve some functional or practical benefit, like consuming green

vegetables for nutritional reasons)

• Need – Something a person must have to live or achieve a goal • Want – A specific manifestation of a need that personal and cultural factors determine

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Technology and culture create a new “always on” consumer:

Social Media Virtual Brand Community Smart Devices

– Internet has provided more channels for the firms to reach their consumers – Has empowered consumers in ways people didn’t image only a couple decades ago.

– Unhappy with service – voice your discontent on twitter and tag the firm – Really happy with something – post a photo on Instagram

– More advanced AI based technology – change how we behave, how we consume.

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