cb revision 1 skr

8/13/2019 CB Revision 1 SKR

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Consumer Behaviour

Revision Session 1

Dr.R.Satish Kumar


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What is Consumer Behavior?

The behavior that consumers display

in searching for, purchasing, using,evaluating, and disposing of products

and services that they expect will

satisfy their needs.


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Need to study ?

You cannot take the consumer for granted

any moreTherefore a sound understanding of

consumer behaviour is essential for the

long run success of any marketing program


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Why is this important?

Out of 11000 products launched by 77

companies, only 56% are present five years

laterKuczmaski & Associates

Only 8% of new product concepts offered by

112 leading companies reached the market.

Out of this 83% failed to reach marketing

objectivesGroup EFO Ltd., Marketing News, Feb 1, 1993, Pg 2


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MEET THE NEW CONSUMER

and smile when you do because sheis your boss. It may not be the

person you thought you knew.

Instead of choosing from what you

have to offer, she tells you what she

wants. You figure it out how to giveit to her.

-Fortune Editor


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A new product must satisfy

consumer needs, not the needs andexpectations of management.

Understanding and adapting toconsumer motivation and behaviour is

not an optionit becomes a necessityfor competitive survival


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Consumer sovereignty presents a

formidable challenge but skilfulmarketing can affect both motivation

and behaviour if the product or service

offered is designed to meet consumerneeds and expectations

A sales success occurs because demandeither exists already or is latent and

awaiting activation by the right marketingoffering


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Dominant forces shaping Consumer

Research

Factors that move an economy from

Production-driven to Market-driven

Level of sophistication with which human

behaviour is understood in psychology and

other behavioural sciences


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Environmental factors that affect the

marketing challenge

Extent to which the supply of valid products andservices exceed consumer demand

Ability to communicate with customers quickly andaccurately

Existence of multiple avenues of distribution quicklyand economically

Extent to which marketers can influence to inducedistributors to comply with overall marketing

strategy Economic growth, both nationally and globally


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Motivational Research

It seeks to learn what motivates people inmaking choices. The techniques are such as todelve into the conscious, subconscious and

the unconscious. women dont buy cosmetics, they buy hope.

women bake cakes out of the unconscious

desire to give birth


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The advice to footwear salesmenshould be Dont sell shoes sell

lovely feet

Marketers must contend with smallchanging segments of highly selective

buyers intent on receiving genuine value atthe lowest price


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All managers must become astute

analysts of Consumer motivation and

Behaviour

Three foundations for marketing decisions Experience

Intuition

Research


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Enhancing Consumer Value-added

Marketers have to constantly innovateafter understanding their consumers to

strip out costs permanently by focusing on

what adds value for the customer and

eliminating what doesnt.


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Individualised Marketing

A very personal form of marketing that

recognises, acknowledges, appreciates and

serves individuals who become or are known

to the marketer.

Databased marketing; DM

Customized marketing


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Variables involved in understanding

consumer behaviour

Stimulusads, products, hungerpangs

Responsephysical/mental reaction to thestimulus

Intervening variablesmood, knowledge,

attitude, values, situations, etc.


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The Consumer Decision-Making

Process

A consumer decision model is

a means of describing the

processes that consumers go

through before, during, and

after making a purchase.

A model shows the causes or

antecedentsof a particular

behavior and each of itsresults or consequences.


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Engel, Kollat, and Blackwell (EKB)

Model

The EKB model is a multimediation modelwhich shows both the components of decisionmaking and the multiples relationships and

interactions among the components. It identifies five distinct aspects of consumer

decision making: Input, information processing, a decision process,

decision process variables, and external influences


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Firms Marketing Efforts

1. Product

2. Promotion

3. Price

4. Channels of distribution

Sociocultural Environment1. Family

2. Informal sources3. Other noncommercial sources

4. Social class5. Subculture and culture

Output

Process

Input

ExternalInfluence

Postpurchase Evaluation

Purchase

1. Trial

2. Repeat purchase

Need

Recognition

Prepurchase

Search

Evaluation of

Alternatives

Psychological Field

1. Motivation

2. Perception

3. Learning

4. Personality

5. Attitudes

Experience

Figure 1-1:

A Model of Consumer

Decision Making


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Consumer Research

The process and tools used to study

consumer behavior.

Two perspectives: Positivist approach

Interpretivist approach


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Segmentation, Targeting, and Positioning

Segmentation: process of dividing the

market into subsets of consumers with

common needs or characteristics

Targeting: selecting one ore more of the

segments to pursue

Positioning: developing a distinct image forthe product in the mind of the consumer


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Successful Positioning

Communicating the

benefits of the

product, rather than

its features

Communicating a

Unique Selling

Proposition for the

product


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The Marketing Mix

Product

Price

Place

Promotion


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Successful Relationships

CustomerValue

CustomerSatisfaction

CustomerRetention


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Types of Customers

Loyalists:

Apostles

Defectors

Terrorists

Hostages

Mercenaries


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Types of Customers

Loyalists: Who keeppurchasing

Apostles: WhoseExperiences exceed their

expectations Defectors: Who feel neutral

or merely satisfied and arelikely to stop doing businesswith the company

Hostages: Unhappycustomers who stay withthe company due tomonopolistic environment

or low prices and difficult todeal with because offrequent complaints

Mercenaries: Very Satisfiedcustomers but who have no

real loyalty and may defectbecause of lower a priceelsewhere or on impulse.


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Customer Profitability-Focused

Marketing

Tier 1: Platinum

Tier 2: Gold

Tier 3: Iron

Tier 4: Lead


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Customer Profitability-Focused

Marketing

1. Platinum tier: Heavy users who are not price sensitive and who are willing

to try new offerings

2. Gold tier: Heavy users but not as profitable because they are price sensitive3. Iron tier: Whose spending volume and profitability do not merit special treatment

by the company

4. Lead tier: Cost the company money because they claim more attention than is

merited by their spending, tie up company resources and spread negative word of

mouth

Companies should develop distinct marketing responses for each group


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Societal Marketing Concept

A revision of the traditional marketingconcept that suggests that marketers

adhere to principles of social responsibilityin the marketing of their goods andservices; that is, they must endeavor tosatisfy the needs and wants of their target

markets in ways that preserve and enhancethe well-being of consumers and society asa whole.


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The Societal Marketing Concept

All companies prosper when society

prospers.

Companies, as well as individuals, would bebetter off if social responsibility was an

integral component of every marketing

decision.

Requires all marketers adhere to

principles of social responsibility.

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