Chapter 2: Consumer Behavior & the Marketing Manager

Managerial Application Areas of Consumer Behavior:

PERMS

Product Positioning and Product Differentiation

Environmental Analysis Market Research Marketing-Mix Development

Segmentation of the Marketplace

Product Positioning
Influencing how consumers perceive a brands characteristics relative to those of competitive offerings

Goal: influence demand by creating a product with specific characteristics and a clear image

Product Differentiation
Consumers perceive meaningful differences between a brand and its competitors

Specific Positioning Market Leaders No mention of competitors Competitive Positioning Non-market leaders Positioned in relation to market leader

Perceptual Map
Simple Preparation Tuna Chicken Healthy Turkey Fresh Fish Beef Pork Involved Preparation Unhealthy Hot Dogs Bacon

Environmental Analysis
The assessment of the external forces that act upon the firm and its customers, and that create threats and opportunities

Components of the External Environment

Demographic Economic Natural

Technological Political Cultural

Demographics
The study of population changes and subcultural values of various demographic groups based on such factors as age, sex, income, education, ethnicity, and geography

Economic Environment

Three Major Contributions of Behavioral Economists: Consumer sector of the economy can strongly influence the course of the aggregate economy Factors that influence the decision of families to buy or save Methodology for making predictions of aggregate economic activities based upon consumer surveys

Natural Environment
Raw materials available Pollution Disease Expansion of desert regions around the globe Weather phenomena

Technological Environment
Anticipate changes and how these will influence the lifestyle and consumption patterns of consumers

Political Environment

Laws, regulations impact consumers. Politically important national or international developments.

Cultural Environment

Customs Values

MARKET RESEARCH

Applied consumer research Designed to provide management with information about consumer behavior

Marketing-Mix Development
The development and coordination of activities involving the:

Product Promotion

Pricing Distribution

New Product Development

Idea generation Concept testing Product development Market testing

Promotional Strategy

Advertising and Personal Selling Implications Sales Promotion Applications Public Relations

Price Changes
How will consumers react when companies raise or lower the price of a product? Principles of perception can be applied to analyze if consumers will notice a difference in price and if so, what effect it has

Product Distribution
Impacted by understanding how consumers make their purchasing decisions

Market Segmentation

Subdividing the market into distinct subsets of customers Similar needs and wants Reached with a different marketing mix

Four Classifications of Segmentation Variables:

Characteristics of the Person Situation Geography Culture and Subculture

Characteristics of the Person

Demographic Characteristics Behavioral Segmentation Benefit Segmentation Usage Behavior Psychographic and Personality Characteristics

Consumer Situations

Temporary environmental factors Form the context within which a consumer activity occurs

Geographic Segmentation

Region Census blocks Size of cities and counties Population density Climate Geodemographics: the combination of geography and demographics

Culture and Subculture

Culture is the way of life of the people of a society Subculture is a subdivision of a national culture and is based on some unifying characteristic, such as social status or nationality

Segmenting Industrial Markets

Solving Managerial Problems

3. 4.

Gather information and identify the problem/opportunity Identify the relevant consumer behavior concepts and how they apply to the problem Develop a managerial strategy Summarize the managerial recommendations