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1. STUDY SESSION
CONSUMER BEHAVIOUR

2. Agenda
• Introduction
• Application of Consumer behavior
• Marketing research
• Market Segmentation
• Purchasing Behavior
• Consumer Motivation
• Social Groups
• Summary

3. INTRODUCTION
CONSUMER BEHAVIOUR

4. Introduction
The study of consumers helps firms and organizations improve
their marketing strategies by understanding issues such as how
• The psychology of how consumers think, feel, reason, and
select between different alternatives (e.g., brands, products,
and retailers);
• The psychology of how the consumer is influenced by his or
her environment (e.g., culture, family, signs, media);
• The behavior of consumers while shopping or making other
marketing decisions;
• Limitations in consumer knowledge or information processing
abilities influence decisions and marketing outcome;
• How consumer motivation and decision strategies differ
between products that differ in their level of importance or
interest that they entail for the consumer; and
• How marketers can adapt and improve their marketing
campaigns and marketing strategies to more effectively reach
the consumer.

5. Introduction
• Limitations in consumer knowledge or information
processing abilities influence decisions and marketing
outcome;
• How consumer motivation and decision strategies differ
between products that differ in their level of importance or
interest that they entail for the consumer; and
• How marketers can adapt and improve their marketing
campaigns and marketing strategies to more effectively
reach the consumer.

6. Definition of Consumer Behavior
The study of consumers helps firms and organizations
improve their marketing strategies by understanding issues
such as how
• The psychology of how consumers think, feel, reason,
and select between different alternatives (e.g., brands,
products, and retailers);
• The psychology of how the consumer is influenced by his
or her environment (e.g., culture, family, signs, media);
• The behavior of consumers while shopping or making
other marketing decisions;

7. Contributing Disciplines
• Anthropology
• Sociology
• Psychology
• Economics
• History
• Political Science

8. Reasons for Studying
• To stay in business by attracting and retaining customers
• To benefit from understanding consumer problems
• To establish competitive advantage
• …because it is interesting!

9. The Circle of Consumption
• Production
• Acquisition
• Consumption
• Disposal

10. The Circle of Consumption, continued
• Typically, attention of marketers has focused on
acquisition as the critical phase
• Only recently has more attention been given to include
the full circle and the links between its elements
• Disposal to acquisition
• Disposal to production
• Disposal to consumption
• Production to consumption
• Acquisition to consumption
• Acquisition to disposal

11. APPLICATION
CONSUMER BEHAVIOR
CONSUMER BEHAVIOUR

12. Applications
• The most obvious is for marketing strategy - i.e., for
making better marketing campaigns. For example, by
understanding that consumers are more receptive to food
advertising when they are hungry, we learn to schedule
snack advertisements late in the afternoon.
• By understanding that new products are usually initially
adopted by a few consumers and only spread later, and
then only gradually, to the rest of the population, we learn
that (1) companies that introduce new products must be
well financed so that they can stay afloat until their
products become a commercial success and (2) it is
important to please initial customers, since they will in turn
influence many subsequent customers’ brand choices.

13. Applications
• A second application is public policy. In the 1980s,
Accutane, a near miracle cure for acne, was introduced.
Unfortunately, Accutane resulted in severe birth defects if
taken by pregnant women.
• Although physicians were instructed to warn their female
patients of this, a number still became pregnant while
taking the drug. To get consumers’ attention, the Federal
Drug Administration (FDA) took the step of requiring that
very graphic pictures of deformed babies be shown on the
medicine containers.

14. Applications
• Social marketing involves getting ideas across to
consumers rather than selling something. Marty Fishbein,
a marketing professor, went on sabbatical to work for the
Centers for Disease Control trying to reduce the incidence
of transmission of diseases through illegal drug use. The
best solution, obviously, would be if we could get illegal
drug users to stop.
• This, however, was deemed to be infeasible. It was also
determined that the practice of sharing needles was too
ingrained in the drug culture to be stopped. As a result,
using knowledge of consumer attitudes, Dr. Fishbein
created a campaign that encouraged the cleaning of
needles in bleach before sharing them, a goal that was
believed to be more realistic.

15. Applications
• As a final benefit, studying consumer behavior should
make us better consumers. Common sense suggests, for
example, that if you buy a 64 liquid ounce bottle of
laundry detergent, you should pay less per ounce than if
you bought two 32 ounce bottles.
• In practice, however, you often pay a size premium by
buying the larger quantity. In other words, in this case,
knowing this fact will sensitize you to the need to check
the unit cost labels to determine if you are really getting a
bargain.

16. MARKETING
RESEARCH
CONSUMER BEHAVIOUR

17. Marketing Research
• The systematic and objective process of gathering,
recording, and analyzing data for aid in understanding
and predicting consumer thoughts, feelings, and
behaviors.
• In a global environment, research has become truly
international.
Important factors:
• Speed
• The Internet
• Globalization
• Data Overload

18. Primary vs. secondary research methods
• There are two main approaches to marketing. Secondary
research involves using information that others have
already put together.
• For example, if you are thinking about starting a business
making clothes for tall people, you don’t need to question
people about how tall they are to find out how many tall
people exist—that information has already been published
by the U.S. Government.
•
• Primary research, in contrast, is research that you design
and conduct yourself. For example, you may need to find
out whether consumers would prefer that your soft drinks
be sweater or tarter.

19. The Marketing Research Process
• Defining the Problem and Project Scope
• The Research Approach
• The Research Design
• Data Collection
• Data Analysis and Interpretation
• Report

20. MARKETING
PHILOSOPHIES
CONSUMER BEHAVIOUR

21. Marketing Management Philosophies
• Production Concept
• Product Concept
• Selling Concept
• Marketing Concept
• Societal Marketing Concept
• Green Marketing
• Cause-Related Marketing
• De-Marketing

22. Production Concept
• Focus on Production
• View of consumers:
• They will buy as long as the product is available and
affordable.
• Model T: You can have any color as long as it’s black.
• Focus on production justified:
• Demand higher than supply
• Non-competitive product cost

23. Product Concept
• Focus on the product
• View of consumers:
• We have to have the best quality and the most features
and they will buy.
• Consumers might not care about quality
• Consumers might not be willing to pay for the
best quality
• Consumers might not be able to discern quality
difference
• Consumers might prefer simplicity

24. Selling Concept
• Focus on selling
• View of consumers:
• We have to sell to them or else they won’t buy.
• Focus on selling justified:
• Introductory stages of product life cycle
• Unsought goods

25. Marketing Concept
• Focus on marketing
• Creating mutually rewarding exchange relationships
• Consumer needs and wants have priority
• View of consumers:
• They will buy if you fulfill their needs better than the competition.

26. Societal Marketing Concept
• Same as Marketing Concept plus an added concern for
the well-being of society

27. MARKET
SEGMENTATION
CONSUMER BEHAVIOUR

28. Market Segmentation Bases
• Demographic
• Geographic
• Geo-Demographic
• Benefit
• Usage
• Lifestyle

29. Market Segmentation Advantages
• Specific Definition of the Market
• Satisfaction of Consumer Needs
• Meeting Changing Market Demands
• Assessment of Competitive Strengths and Weaknesses
• Efficient Allocation of Marketing Resources
• Precise Setting of Marketing Objectives

30. Applications of Benefit Segmentation
• Positioning
• Repositioning
• Competitive positioning
• New market opportunities/niches
• Positioning of multiple brands

31. Usage Segmentation
• Rate of Usage
• Brand Loyalty
• Usage Situation

32. Lifestyle Segmentation
• Activities
• Interests
• Opinions
• Demographics
• VALS I and II
• Maslow’s Hierarchy of Needs

33. Types of Decisions
• Extensive Problem Solving
• Limited Problem Solving
• Routinized Response Behavior

34. Problem Recognition
• Depletion of Stock
• Dissatisfaction
• Decrease in Finances
• Increase in Finances

35. Problem Recognition:
Causes in Desired State
• New Need Circumstances
• New Want Circumstances
• New Product Opportunities
• Purchase of Other Products

36. Information Search
and Evaluation
• Incidental Learning • Directed Search and
Evaluation
• Internal only
• loyalty
• impulse
• Internal and External

37. PURCHASING
BEHAVIOR
CONSUMER BEHAVIOUR

38. Definition
Definition of Buying Behavior:
• Buying Behavior is the decision processes and acts of
people involved in buying and using products.
Need to understand:
• why consumers make the purchases that they make?
• what factors influence consumer purchases?
• the changing factors in our society.

39. Purchasing behavior
Consumer Buying Behavior refers to the buying behavior of
the ultimate consumer. A firm needs to analyze buying
behavior for:
• Buyers reactions to a firms marketing strategy has a great
impact on the firms success.
• The marketing concept stresses that a firm should create
a Marketing Mix (MM) that satisfies (gives utility to)
customers, therefore need to analyze the what, where,
when and how consumers buy.
• Marketers can better predict how consumers will respond
to marketing strategies.

40. Stages of the Consumer Buying Process
• Six Stages to the Consumer Buying Decision Process
(For complex decisions). Actual purchasing is only one
stage of the process.
• Not all decision processes lead to a purchase. All
consumer decisions do not always include all 6 stages,
determined by the degree of complexity

41. Stages of the Consumer Buying Process
1. Problem Recognition
• (awareness of need)--difference between the desired
state and the actual condition. Deficit in assortment of
products. Hunger--Food. Hunger stimulates your need to
eat
• Can be stimulated by the marketer through product
information--did not know you were deficient? I.E., see a
commercial for a new pair of shoes, stimulates your
recognition that you need a new pair of shoes.

42. Stages of the Consumer Buying Process
2. Information search
• Internal search, memory.
• External search if you need more information. Friends and
relatives (word of mouth). Marketer dominated sources;
comparison shopping; public sources etc.
A successful information search leaves a buyer with
possible alternatives, the evoked set.
• Hungry, want to go out and eat, evoked set is
• chinese food
• indian food
• burger king etc

43. Stages of the Consumer Buying Process
3. Evaluation of Alternatives
• Need to establish criteria for evaluation, features the
buyer wants or does not want. Rank/weight alternatives or
resume search. May decide that you want to eat
something spicy, indian gets highest rank etc.
• If not satisfied with your choice then return to the search
phase. Can you think of another restaurant? Look in the
yellow pages etc. Information from different sources may
be treated differently. Marketers try to influence by
"framing" alternatives.

44. Stages of the Consumer Buying Process
4. Purchase decision
Choose buying alternative, includes product, package,
store, method of purchase etc.
5. Purchase
May differ from decision, time lapse between 4 & 5, product
availability.
6. Post-Purchase Evaluation--outcome: Satisfaction or
Dissatisfaction. Cognitive Dissonance, have you made the
right decision. This can be reduced by warranties, after
sales communication etc.
After eating an indian meal, may think that really you
wanted a chinese meal instead.

45. CONSUMER
MOTIVATION
CONSUMER BEHAVIOUR

46. Motivation
• When we understand why people buy we can enhance
our chances of making a sale. So why do people buy?
Because they have a need or a want? Yeah ok , but what
is behind the need or want? What is their primary reason
they want to buy from you?
• Fundamentally people buy for two reasons:
• 1, To avoid PAIN
• 2, To GAIN something
• Research indicates that buyers are 3 times more
motivated to avoid PAIN than to gain something and
people buy emotionally and defend it logically.

47. Motivation
• Effective sales people are always looking for their
prospects immediate or future pain, in order to sell
solutions. They are able to ask great questions so the
prospect discovers their own pain and then magnify it by
focusing questions around the impact of the problem.
• When prospects discover their pain and moreover the
impact it has on them personally or the company, they can
get emotionally involved and therefore increasing their
buying motivation. Excellent sales people will ask good
questions to stir up emotion and gain commitment from
the prospect to fix the problem before presenting
solutions.

48. Motivation Theories
• Freud
• Lewin
• Maslow

49. Freudian Theory
• According to Freud psychoanalytic theory, all psychic
energy is generated by the libido. Freud suggested that
our mental states were influenced by two competing
forces: cathexis and anticathexis. Cathexis was described
as an investment of mental energy in a person, an idea or
an object.
• If you are hungry, for example, you might create a mental
image of a delicious meal that you have been craving. In
other cases, the ego might harness some of the id's
energy to seek out activities that are related to the activity
in order to disperse some of the excess energy from the
id. If you can't actually seek out food to appease your
hunger, you might instead browse through a cookbook or
browse through your favorite recipe blog.

50. Lewin’s Field Theory
• Lewin is most renown for his development of the field theory.
The field theory is the "proposition that human behavior is the
function of both the person and the environment: expressed in
symbolic terms, B = f (P, E)." (Deaux 9) This means that one’s
behavior is related both to one’s personal characteristics and to
the social situation in which one finds oneself.
• The field theory may seem obvious to us now, but most early
psychologist did not believe in behaviorism. Many
psychologists at the time believed in the psychoanalytic theory
that held human motives to be blind pushes from within. Lewin
thought of motives as goal- directed forces. He believed "that
our behavior is purposeful; we live in a psychological reality or
life space that includes not only those parts of our physical and
social environment that are important to us but also imagined
states that do not currently exist"

51. Maslow Theory

52. SOCIAL GROUPS
CONSUMER BEHAVIOUR

53. Social Groups
• A social group is a collection of people who interact with
each other and share similar characteristics and a sense
of unity. A social category is a collection of people who do
not interact but who share similar characteristics. For
example, women, men, the elderly, and high school
students all constitute social categories.
• A social category can become a social group when the
members in the category interact with each other and
identify themselves as members of the group. In contrast,
a social aggregate is a collection of people who are in the
same place, but who do not interact or share
characteristics.

54. Types of Groups
• Primary and secondary
• Formal and informal
• Membership and symbolic
• In and out

55. Primary and secondary Groups
• Groups play a basic role in the development of the social nature and
ideals of people. Primary groups are those in which individuals
intimately interact and cooperate over a long period of time. Examples
of primary groups are families, friends, peers, neighbors, classmates,
sororities, fraternities, and church members. These groups are
marked by primary relationships in which communication is informal.
Members of primary groups have strong emotional ties. They also
relate to one another as whole and unique individuals.
• In contrast, secondary groups are those in which individuals do not
interact much. Members of secondary groups are less personal or
emotional than those of primary groups. These groups are marked by
secondary relationships in which communication is formal. Members
of secondary groups may not know each other or have much face-to-
face interaction. They tend to relate to others only in particular roles
and for practical reasons. An example of a secondary relationship is
that of a stockbroker and her clients. The stockbroker likely relates to
her clients in terms of business only. She probably will not socialize
with her clients or hug them.

56. Group Size
• A group's size can also determine how its members behave and relate. A small
group is small enough to allow all of its members to directly interact. Examples of
small groups include families, friends, discussion groups, seminar classes, dinner
parties, and athletic teams. People are more likely to experience primary
relationships in small group settings than in large settings.
• The smallest of small groups is a dyad consisting of two people. A dyad is
perhaps the most cohesive of all groups because of its potential for very close
and intense interactions. It also runs the risk, though, of splitting up. A triad is a
group consisting of three persons. A triad does not tend to be as cohesive and
personal as a dyad.
• The more people who join a group, the less personal and intimate that group
becomes. In other words, as a group increases in size, its members participate
and cooperate less, and are more likely to be dissatisfied. A larger group's
members may even be inhibited, for example, from publicly helping out victims in
an emergency. In this case, people may feel that because so many others are
available to help, responsibility to help is shifted to others. Similarly, as a group
increases in size, its members are more likely to engage in social loafing, in which
people work less because they expect others to take over their tasks.

57. In, out, and reference groups
• In an experiment, the youngsters also erected artificial
boundaries between themselves. They formed in-groups
(to which loyalty is expressed) and out-groups (to which
antagonism is expressed).
• To some extent every social group creates boundaries
between itself and other groups, but a cohesive in-group
typically has three characteristics:
• Members use titles, external symbols, and dress to
distinguish themselves from the out-group.
• Members tend to clash or compete with members of the
out-group. This competition with the other group can also
strengthen the unity within each group.
• Members apply positive stereotypes to their in-group and
negative stereotypes to the out-group.

58. SUMMARY
CONSUMER BEHAVIOUR

59. Summary
The study of consumers helps firms and organizations
improve their marketing strategies by understanding issues
such as how:
• The psychology of how consumers think, feel, reason,
and select between different alternatives (e.g., brands,
products, and retailers)
• The psychology of how the consumer is influenced by his
or her environment (e.g., culture, family, signs, media)
• The behavior of consumers while shopping or making
other marketing decisions

60. Summary
• Limitations in consumer knowledge or information
processing abilities influence decisions and marketing
outcome
• How consumer motivation and decision strategies differ
between products that differ in their level of importance or
interest that they entail for the consumer; and
• How marketers can adapt and improve their marketing
campaigns and marketing strategies to more effectively
reach the consumer.

61. Summary
• There are several units in the market that can be analyzed. Our
main thrust in this course is the consumer. However, we will
also need to analyze our own firm’s strengths and weaknesses
and those of competing firms. Suppose, for example, that we
make a product aimed at older consumers, a growing segment.
A competing firm that targets babies, a shrinking market, is
likely to consider repositioning toward our market.
• To assess a competing firm’s potential threat, we need to
examine its assets (e.g., technology, patents, market
knowledge, awareness of its brands) against pressures it faces
from the market. Finally, we need to assess conditions (the
marketing environment). For example, although we may have
developed a product that offers great appeal for consumers, a
recession may cut demand dramatically.