1. WHAT IS CONSUMER
BEHAVIOR AND WHY DO WE
NEED TO KNOW?

2. 22
DEFINITION (H&M BOOK,
PAGE 3)
 Consumer behavior reflects the totality of
consumers’ decisions with respect to the acquisition,
consumption, and disposition of goods, services,
activities, experiences, peoples, and ideas by (human)
decision making units [over time].

3. Goods Services Activities
Experiences People Ideas

4. 44
EXHIBIT 1.1

5. 55
CONSUMER BEHAVIOR
INVOLVES MORE THAN JUST
BUYING
 Acquiring
 Using
 Disposing
 Is a dynamic process
 Can involve many people
 Involves many decisions

6. 66
MANY MANY CONSUMER
DECISIONS
 To acquire, use, or dispose
Whether?
What?
Why?
Why Not?
How?
• When?
• Where?
• How much?
• How often?
• How long?

7. 77
WHAT
AFFECTS
CONSUMER
BEHAVIOR?
Exhibit 1.6:
A Model of
Consumer
Behavior

8. 88
WHAT AFFECTS
CONSUMER BEHAVIOR?
Having..
 Motivation
 Ability
 Opportunity
Consumer’s
Culture
Consumer Behavior
Outcomes
Process of Making
Decisions
Psychological
Core

9. 99
WHAT AFFECTS
CONSUMER BEHAVIOR?
 Problem Recognition and Search
for Information
 Making Judgments and Decisions
 Making Post-Decision
Evaluations
Process of Making
Decisions

10. 1010
WHAT AFFECTS
CONSUMER BEHAVIOR?
 Exposure, attention, and
perception
 Categorizing and
comprehending information
 Forming and changing attitudes
 Forming and retrieving
memories
Psychological
Core
Process of Making
Decisions

11. 1111
WHAT AFFECTS
CONSUMER BEHAVIOR?
 Consumer behaviors can
symbolize who we are
 Consumer behaviors can diffuse
throughout a market
 Dark side of Marketing
Consumer Behavior
Outcomes
Process of Making
Decisions
Psychological
Core
 External Processes:
• Diversity: e.g. age, education
• Social Class and Household
Influences
• Reference Groups
Consumer’s
Culture

12. NOW
Why is it useful to know about
consumer behavior?

13. 1313
MARKETING IMPLICATIONS OF
CONSUMER BEHAVIOR
 Developing a customer-oriented strategy
 What are the characteristics of consumers in each
segment?
 Are customers satisfied with existing offerings?
 How profitable is each segment?
SEGMENTATION

14. 1414
MARKETING IMPLICATIONS OF
CONSUMER BEHAVIOR
 Selecting the Target Market
 Positioning
 How are competitive offerings positioned?
 How should our offerings be positioned?
 Example: Wild Oats
TARGETING AND POSITIONING

15. 1515
MARKETING IMPLICATIONS OF
CONSUMER BEHAVIOR
 Selecting the Target Market
 Positioning
 How are competitive offerings positioned?
 How should our offerings be positioned?
 Should our offerings be repositioned?
 Example: Domino’s pizza
TARGETING AND POSITIONING

16. 1616
MARKETING IMPLICATIONS OF
CONSUMER BEHAVIOR – 4PS
 Developing PRODUCTs or services
 What ideas do consumers have for new products?
 What attributes can be added to or changed in an existing
offering?
 What should our offering be called?
 What should our package and logo look like?

17. 1717
MARKETING IMPLICATIONS OF
CONSUMER BEHAVIOR
 Making PROMOTION (Marketing Communications)
Decisions
 Advertising
 What are our advertising objectives?
 What should our advertising look like?
 Where should advertising be placed?
 When should we advertise?
 Has our advertising been effective?
 Sales promotion
 What about sales promotion objectives and tactics?
 When should sales promotions happen?
 Have our sales promotions been effective?
 How many salespeople are needed to serve customers?
 How can salespeople best serve customers?

18. 1818
MARKETING IMPLICATIONS OF
CONSUMER BEHAVIOR
 Making PRICING decisions
 What price should be charged?
 How sensitive are consumers to price and
prices changes?
 When should certain pricing tactics be
used?

19. 1919
MARKETING IMPLICATIONS OF
CONSUMER BEHAVIOR
 Making PLACEMENT (Distribution) Decisions
 Where are target consumers likely to shop?
 How should stores be designed?

20. SO
How does one get to know about
consumer behavior?

21. 2121
CONSUMER BEHAVIOR
RESEARCH METHODS
 Surveys
 Focus Groups
 Interviews
 Storytelling
 Photography, Pictures
 Diaries
 Experiments
 Field Experiments
 Conjoint Analysis
 Observations
 Purchase Panels
 Database Marketing

22. 2222
EXHIBIT EN.3: WHO CONDUCTS
CONSUMER RESEARCH?

23. 2323
AN APPLICATION OF CONSUMER
RESEARCH
 Coke: Market maker and leader
 1975: The Pepsi Challenge
 Early 1980s: Coke losing share
 Decided to take Pepsi on, change the taste
of Coke (Project Kansas)
 Conducted extensive research:
 55% of participants favored the new Coke
(N=40,000)
 Some dissent: “It was like trying to make
the flag prettier”

24. 2424
THE AFTERMATH
 New Coke launched in April 1985
 Old coke withdrawn from market
 Initial sales response positive
 HUGE backlash from brand loyals
 WHY?

25. 2525
MORAL OF THE STORY
 Lack of understanding of consumers
 In contrast, Pepsi demonstrated an understanding of
consumer needs
 Market Research issues
 Corporate arrogance assumed that consumers will step in line
 Ignored the vocal minority
 Statements like – “after a while they will fall in love”

26. 2626
 Read Chapter 2 (except “Types of Needs”, pages 50-52)
 Email me your group membership by Feb. 19.
 Group photos will be taken on Feb. 20 in class. Make sure you
attend so that you are in the photo!
 Slides on LMES before class. Note: Webpage slides usually
won’t have all the examples we discuss in class!