Consumer Behaviour

Session 1
Introduction to Consumer Behaviour &
Importance to Marketing Management

Amir Hashmi
 Consumer Behaviour

The behavior that consumers display in

searching for, purchasing, using, evaluating,
and disposing of products and services that
they expect will satisfy their needs.
(Schiffman & Kanuk, 2007)
 Personal Consumer

The individual who buys goods and

services for his or her own use, for
household use, for the use of a family
member, or for a friend.
Consumer Behaviour Perspectives
CONSUMER’S MARKETER’S
PERSPECTIVE PERSPECTIVE

PREPURCHASE What are my How are consumer

ISSUES needs/desires; what info needs/wants
do I need? formed/changed? How to
create/influence them?

PURCHASE Is product acquisition How to orient the decision

ISSUES looking like a pleasant process? How do
experience? situational factors (e.g. in
store) affect purchase
decisions?

POSTPURCHASE Does product provide What determines

ISSUES pleasure, perform customer satisfaction
functions? How is and repurchase?
product disposed of?
 Consumers as individuals
• Psychological determinants of CB:
o Perception  how do consumers see/imagine
‘objects’?
o Learning  how do consumers create and ‘store’ info
and beliefs?
o Motivation  what are the drivers for buying and
consuming?
o Personality and Self  how do personality and self
traits influence CB?
o Attitudes  how like/dislike ideas and intensions are
formed
 Organisational Consumers

A business, government agency, or

other institution (profit or nonprofit) that
buys the goods, services, and/or
equipment necessary for the
organization to function
Consumer Behaviour Model &
Marketing Management
 Why is it important to understand
Consumer Behaviour?
• Marketing’s main task is to create endurable customer
satisfaction and loyalty, and a stable competitive
advantage position
• Consumer behaviour analysis is essential for
segmentation analysis
• Consumer behaviour is essential to identify customer
related opportunities and threats
• Consumer behaviour analysis is essential for innovation
management
• Consumer behaviour analysis is essential for marketing
mix management
Development of the Marketing Concept

Production
Concept
Product
Concept

Selling Concept

Marketing
Concept
 The Production Concept
• Assumes that consumers are
interested primarily in product
availability at low prices
• Marketing objectives:
o Cheap, efficient production
o Intensive distribution
o Market expansion
 The Product Concept
• Assumes that consumers will buy the
product that offers them the highest
quality, the best performance, and
the most features
• Marketing objectives:
o Quality improvement
o Addition of features
 The Selling Concept

• Assumes that consumers are

unlikely to buy a product unless they
are aggressively persuaded to do so
• Marketing objectives:
o Sell, sell, sell
• Lack of concern for customer needs
and satisfaction
 The Marketing Concept
• Assumes that to be successful, a
company must determine the needs
and wants of specific target markets
and deliver the desired satisfactions
better than the competition
• Marketing objectives:
o Make what you can sell
o Focus on buyer’s needs
 The Marketing Concept
Implementing the
Marketing Concept
• Consumer • The process and tools
Research used to study
• Segmentation consumer behavior
• Targeting
• Positioning

Copyright 2007 by
Prentice Hall
Consumer behaviour and market analysis

• Consumer behaviour is mostly about

analysis  Consumer behaviour
Marketing Research:
o Surveys
o Focus groups
o Observation
 The Marketing Concept
Implementing the
Marketing Concept
• Consumer • Process of dividing
Research the market into
• Segmentation subsets of consumers
• Targeting with common needs
• Positioning or characteristics
Market Segmentation

The process of dividing a

potential market into distinct
subsets of consumers and
selecting one or more
segments as a target market
to be reached with a distinct
marketing mix

Copyright 2007 by Prentice Hall

 Bases for Segmentation

• Geographic • Use-Related
• Demographic • Usage-
• Psychological Situation
• Psychographic • Benefit Sought
• Sociocultural • Hybrid
 Segmenting Consumers: Demographics

CB analyses important
demographics, such as:
• Age
• Gender
• Family structure
• Social class and income
• Race and ethnicity

1- 27
 Segmenting Consumers: Lifestyles
Psychographics
• The way we feel
about ourselves
• The things we value
• The things we like
and we do in our
working and spare
time

1- 28
 Geographic Segmentation

• The division of a total potential

market into smaller subgroups on
the basis of geographic variables
(e.g. region, state, or city)
 Demographic Segmentation

• Age
• Sex
• Marital Status
• Income, Education, and Occupation
 Web sites for Singles
Looking for a Match

Match.com targets all The Right Stuff

singles targets only Ivy
League graduates
 Psychographic Segmentation

• Also known as Lifestyle Analysis

• Psychographic variables include
attitudes, interests, and opinions
(AIOs)
 Socio-Cultural Values and
Beliefs
• Sociological = group
• Anthropological = cultural
• Include segments based on
o Cultural values
o Sub-cultural membership
o Cross-cultural affiliations
Consumption- Specific Segmentation
• Behavioural Segmentation: CRM
• 1- Usage Rate
• 2- Usage Situation
• 3- Benefit Segmentation
• 4- Brand Loyalty
 Use-Related Segmentation

• Rate of Usage
o Heavy vs. Light
• Brand Loyalty
o Brand Loyal vs. Brand Switchers
 Customer Profitability-Focused
Marketing
• Tracks costs and
revenues of
individual
consumers
• Categorizes them
into tiers based on
consumption
behavior
• A customer
pyramid groups
customers into four
Consumption-Specific Segmentation
Usage-Behavior

• Usage-situation segmentation
o Segmenting on the basis of special occasions
or situations
o Example : When I’m away on business, I try to
stay at a suites hotel.
 Benefit Segmentation

Segmenting on the basis of the most

important and meaningful benefit
 Band-aid
offers “flex” as
a
benefit to
consumers.
 Hybrid Segmentation Approaches

• Psychographic-Demographic Profiles
• Geodemographic Segmentation
• SRI Consulting’s VALS
 VALS Framework

Copyright 2007 by
Prentice Hall
Criteria for Effective Targeting of Market
Segments

• Identification
• Sufficiency
• Stability
• Accessibility
 The Marketing Concept
Implementing the
Marketing Concept
• Consumer The selection of one or
Research more of the segments to
• Segmentation pursue
• Targeting
• Positioning
Implementing Segmentation Strategies

• Concentrated Marketing
o One segment
• Differentiated
o Several segments with individual
marketing mixes
 THE TRADITIONAL MARKETING VALUE- AND RETENTION-FOCUSED
CONCEPT MARKETING
Make only what you can sell instead of trying Use technology that enables customers to
to sell what you make. customize what you make.

Do not focus on the product; focus on the Focus on the product’s perceived value, as
need that it satisfies. well as the need that it satisfies.

Market products and services that match Utilize an understanding of customer needs
customers’ needs better than competitors’ to develop offerings that customers perceive
offerings. as more valuable than competitors’ offerings.

Research consumer needs and Research the levels of profit associated with
characteristics. various consumer needs and characteristics.

Understand the purchase behavior process Understand consumer behavior in relation to

and the influences on consumer behavior. the company’s product.

Realize that each customer transaction is a Make each customer transaction part of an
discrete sale. ongoing relationship with the customer.
 The Marketing Concept
Implementing the
Marketing Concept
• Developing a distinct image for
• Consumer
the product in the mind of the
Research consumer
• Segmentation • Successful positioning
• Targeting includes:
• Positioning o Communicating the benefits of the
product
o Communicating a unique selling
proposition
 Product Positioning

• Establishing a specific image for a brand

in the consumer’s mind in relation to
competing brands
• Conveys the product in terms of how it
fulfills a need
• Successful positioning creates a
distinctive, positive brand image
 Market Positioning, Cont….

• Segment Selection
• Target Market
• Set Product Position
• Achieved by a suitable offer mix
• Communicated by a promotional mix
• To target Customers
 Positioning Prompts
• Feature Driven
• Problem Solutions
• Target Driven
• Competitive Driven
• Emotional
• Benefit Driven
• Aspiration
• Value
 Positioning Approaches

• Distinctive attributes
• Unoccupied Positions
• Repositioning