Consumer Behavior andMarketing Strategy

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Definitions of consumer behaviour

The dynamic interaction of cognition, behaviour and environmental events by which human beings conduct the exchange aspects of their lives

(American Marketing Association)

A discipline dealing with how and why consumers purchase (or don’t purchase) products and services.(Neal et al.)

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Those behaviours performed by decision making

units in the purchase, usage and disposal of goods and services

(Kotler & Levy)

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Marketing decisions

It is important to have an understanding of consumer behavior before the development of marketing strategy.

Marketing decisions are based on:• Market segmentation• Product positioning• Marketing mix

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Consumer behaviour is product person-situation specific

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Consumer behaviour is product person-situation specific

• Product specific– Depends on the nature of the product• Person-individual– Different customers behave differently due

toneeds, personalities and values• Situation– Buying behaviour is dependent on the

givensituation

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The Nature of Consumer BehaviorSituations and Consumer DecisionsConsumer decisions result from perceived

problems and opportunities.

Consumer problems arise in specific situations and the nature of the situation influences the resulting consumer behavior.

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Consumer behaviour and marketing strategy• Positioning strategy• Market segmentation• New products• New market applications• Global marketing• Marketing mix• Consumerism• Non-profit marketing

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How consumer influences drive marketing decisions

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Consumer lifestyle and consumer decisions

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Consumers’ needs/attitudes influence consumption decisions

• These are reflected in consumer choices• In turn, consumers respond to:– Reduce, maintain or enhance their lifestyle• Consumer lifestyle - a basis for

understanding consumption

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Consumer decision process

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Applications of Consumer Behavior Marketing Strategy

Marketing strategies and tactics are based on explicit or implicit beliefs about consumer behavior.

Knowledge of consumer behavior can be an important advantage and can greatly reduce the odds of bad decisions and market failures!

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Marketing Strategy and ConsumerBehavior

Customer value is the difference between all the benefits derived from a total product and all the costs of acquiring those benefits.

Providing superior customer value requires the organization to do a better job of anticipating and reacting to customer needs than the competition does

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Step 1. Market AnalysisMarketing Strategy begins with an analysis of

the market the organization is considering, requiring a detailed analysis of the:

•organization’s capabilities•strengths and weaknesses of competitors•economic and technological forces•current and potential customers

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Market Analysis Components1. The Consumers2. The Company3. The Competitors4. The Conditions

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Step 2. Market Segmentation

On the basis of the consumer analysis, the organization identifies groups of individuals, households, or firms with similar needs. These market segments are described in terms such as demographics, media preferences, geographic location, etc.

Management then selects the segment(s) to target

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Step 3. Marketing StrategyMarketing Strategy seeks to provide the

customer with morevalue than the competition, while still

producing a profit for the firm.

Marketing strategy is formulated in terms of the marketing mix, which involves determining the product features, price, communications, distribution and services that will provide customers with superior value, resulting in the total product.

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Step 4. Consumer Decision Process

The total product is presented to the target market, which is consistently engaged in processing information and making decisions designed to maintain or enhance its lifestyle or performance.

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Step 5. OutcomesSociety – the cumulative effect of the

marketing process affects economic growth, pollution, social problems.

Firm – reaction of the target market to the total product produces an image of the product/brand/organization.

Individual – the process results in some level of need satisfaction, financial expenditure, attitude development/change, and/or behavioral changes.

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The consumer decision process intervenes between the marketing strategy, as implemented in the marketing mix, and the outcomes.

The firm can succeed only if consumers see a need that its product can solve, become aware of the product and its capabilities, decide that it is the best available solution, proceed to buy it, and become satisfied with the result of the purchase.

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