MKT3050 Consumer Behavior Seminar November 4-6, 2011 - Troy

MKT3050 Consumer BehaviorWeek 1 March 19, 2012

2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.Welcome to Week 1 of Consumer Behavior, Marketing 3050. This slideshare presentation will cover topics from Chapters 1 and 2 of the text, along with some additional information that expands on the text and addresses course objectives1

ObjectivesAt the end of this week, youll be able to identify and analyze the role and importance of consumer behavior in the marketing process.Well answer the questions:What is Consumer Behavior?Why do we care?

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2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.Our objective this week examines the role and importance of consumer behavior in the marketing process. More specifically, well answer the questions: What is Consumer Behavior? And importantly, why do we care?2

Consumer Behavior - What is it?Human Thought and ActionField of Study3

2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.Consumer behavior can be thought of in 2 contexts. The first well cover is the field of study as scientists and marketers develop approaches for measuring and understanding consumers. Well talk about the second context also all the thoughts and actions that drive our behavior as consumers.3

Consumer BehaviorThe formal study began in 1930s

An applied scienceFramework reflects:PsychologyEconomicsSociologyAnthropology4

2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.The study of consumer behavior began in the 1930s. This graph is pulled from Google news archives it shows the frequency of citations about consumer behavior have increased from about 40 between 1930 and 1940 to more than 2000 in 2011. Consumer behavior is an applied science, meaning it pulls insights from several disciplines including psychology, economics, sociology and anthropology all pure sciences with elements about behavior that marketers have borrowed as they try to understand consumer behavior.4

Study of Consumer BehaviorTimeline1750-1850 Consumers have limited optionsWholesalers and distributors decide what people will have available to buy1850-WWIIManufacturers build based on what they can makeEconomic concepts of supply / demand applied to consumer behaviorProduct options proliferateManufacturers begin using psychology to influence purchase by drilling benefits into consumershttp://www.youtube.com/watch?v=C_HN_3ulO9M&feature=relatedhttp://www.youtube.com/watch?v=Is3icfcbmbs

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2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.The study of consumer behavior has evolved, keeping pace with changes in how goods and services are delivered to the marketplace. In the 18th century, consumers had very limited options. If you went to the general store, you may have had less than 10 options for cloth to use to make a new shirt. There may have been only be 1 style of blue jeans. Food products were limited, too, as the owner of the general store decided what they would carry.

In the 19th and early 20th centuries, manufacturing processes improved with the industrial revolution. Economics began to factor into manufacturing decisions. If demand was there, and manufacturing capability was there, then the product was available. As manufacturing capabilities increased, so did the number of options available for consumers. Now manufacturers turned to psychology to help with marketing focusing on drilling benefits into consumers so their product would stand out. Heres a commercial that illustrates this idea see if you can identify the benefits of the product.

Hopefully you picked up on the brand Maxwell House and the key benefits. Tastes as good as it smells. Now you say to yourself wow, that was really annoying Im glad advertising is better now. Well for those of you who watch late night TV, you may agree that pushing benefits is still in play. Watch this commercial.5

Study of Consumer BehaviorTimelinePost WWII 2000Retailers gain power Only carry items that sell begin to affect manufacturing decisionsMarketers gain influence Advertising, media, incentives, promotions increase as choices expand, retail options explode and manufacturers / retailers chase fewer customersMore sophisticated research is used to assess motivations, predict behavior and understand emotional connections6http://www.youtube.com/watch?v=y3HLX0Ky3jU

2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.As we entered the 21st century, retailers began gaining more power Kroger, Home Depot, Walmart only carry the items that will sell so manufacturing decisions cant be based on the idea that youll buy what Ive got. Marketers are also becoming more critical to help manufacturers chase fewer customers. Weve seen consumer research become more sophisticated focusing on motivations, emotions, and predicting behavior. Heres another commercial for Maxwell House coffee see if you can identify the emotional connections the marketers are trying to establish.

Did you pick up that Maxwell House is now something special?6

Study of Consumer BehaviorTimelineTodayCustomer-centric demand chainShoppers determine success and available alternatives based on needs / wants / problemsMarketers work to understand how consumers make purchase decisionsAnd organizations focus resources on serving and delighting profitable customersEmergingShopper InsightsUnderstand the shopping experience including shopper need states, shopping occasions, shopper behavior in-store, drivers behind the purchase decision at the shelf and reaction patterns to particular in-store stimuli

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2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.Today, marketers are focused on shoppers how they make decisions and successful organizations, like Amazon, develop business plans and organize resources to make sure customers stay happy.

The study of shoppers is the latest development in the area of consumer behavior were trying to understand needs, shopping occasions, in-store behavior, purchase drivers, and reaction to in-store efforts.

Thats an overview of the field of study of Consumer Behavior lets focus now on the human thought and action context.7

Consumer Behavior as Human Behavior

Realized needsActivitiesAddressConsumer behavior is the set of value seeking activities that take place as people go about addressing realized needs.8

2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.The textbook definition describes consumer behavior as people looking for VALUE. But they first must identify their need, then engage in activities that address those needs. Well explore those ideas over the next few weeks.8

Exhibit 1.1The Basic Consumption Process

ANTOINE ANTONIOL/BLOOMBERG VIA GETTY IMAGES9

2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.This graph shows the basic consumption process. Consumers must recognize a need that then becomes a want that they are willing to make an exchange for an exchange that involves costs (like time and money) and benefits (need satisfaction). The consumer reaction to that exchange either satisfaction or disappointment leads the consumer to determine if the process delivered value (made them happy!). If value is low, then the process likely begins again.9

Making Decisions 10

Internal factorsHow you learnYour perceptionYour memoryHow you organize informationAttitudes

Your motivationPersonal valuesPersonalityLifestyleEmotional expressivenessExternal factorsYour culture and cultural valuesYour reference groupsPeer influenceSocial classFamily influence

Situation - atmosphere - timing - conditions

2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.The decision process supporting consumption is influenced by internal and external factors. Well examine these, too, over the next few weeks. Internal factors shown here define how you recognize needs and wants and how you go about addressing those wants. But external factors like your family, your culture even the season and time you have to shop also come into play as you try to find value that satisfies your needs.10

Consumer Behavior Why do we care?

Who buys?Why do they buy?What attributes (benefits) are they buying?Who is my competition?How can I establish connections with customers?Input to business/marketing strategy11

2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.So why is Consumer Behavior important? Well, its a key input into successful business and marketing strategies answering questions like those shown here. Who buys, why they buy, how can I establish connections all are important elements that drive manufacturing decisions AND the messages communicated to consumers.11

Consumer Behavior:Input to Business StrategyThe extent of use of consumer behavior by an organization depends on the orientation of the firm:Undifferentiated productProduction orientedFocus is on making the product efficiently with minimal costDifferentiated productMarket orientedCan make multiple products for multiple segmentsNiche marketConsumer orientation (or production) with single product12

2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.The extent to which consumer behavior affects an organization depends on the companys orientation. There are some companies that have a production orientation they just want to make products with minimal cost and the products are undifferentiated they are all the same. Some companies DO offer different products there are those who are focused on markets reaching multiple segments with multiple products. And there are those who make a single product and focus on a niche or single market.12

Exhibit 1.4Different Ways of Doing Business

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2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.This graphic illustrates the different marketing approaches. Lets look at some examples.13

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2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.So of these 3 examples, which is the market-driven company? Did you guess Converse? .lots of shoes for different markets And what about the apples? the farmer is focused on production of a single product. The third example is a device you can place in your vehicle that sounds an alarm if your vehicle drifts. This would likely be a niche product maybe for those who work the night shift or drive long distances?....14

Consumer Behavior Why do we care?

What and how we buy determines the society in which we live.Make better marketing campaignsBoost the economic health of companiesImprove the economic health of nationsWhen government creates laws to manage the way we buy and consume, consumer behavior is involved.Affect public policies

Force that shapes society15

2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.Consumer behavior is also important because it affects society what and how we buy determines how we live. Better marketing focusing on delivering good products that meet needs will boost the economic performance of companies having successful companies means the country will have a stronger economy. Think about how the economies of underdeveloped countries perform vs those where business / industry prosper.

Government is also affected by consumer behavior look for a discussion board about this idea in the Week 1 class folder.15

Consumer Behavior Why do we care?

Help consumers make better decisionsHelp ourselves make better decisionsManage budget / spendingUnderstand (and limit) emotional purchasingKnow where to get resolution when dissatisfiedUnderstand (and avoid) negative peer pressure / societal influencesConsider environmental impact of behaviorsInput to making responsible decisions as a consumer16

2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.Finally, understanding consumer behavior is important because we can help people make better decisions AND we can help OURSELVES make better decisions.16

Consumer Behavior How do we study it?There is no ONE right approachInner meaningsMotivations17Interpretive ResearchQuantitative ResearchLarge scale studies that are structured and deliver numerical / projectable results

2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.So how do we study consumer behavior? There are several approaches. Theres interpretive or qualitative research the focuses on internal motivations. And there are large scale, or quantitative studies focused on interviews with many people so we can look for big picture ideas.17

Exhibit 1.5 Comparing Quantitative and Qualitative Research

Source: Zikmund, W.G. and B.J. Babin (2007), Exploring Marketing Research, Thompson South-Western: Mason, Ohio.

2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.This chart shows the differences between qualitative and quantitative research. We wont spend much time here MKT 4230 Marketing Research examines these approaches in more detail.18

Consumer Behavior Why is it dynamic?

Move to a global society demands understanding of many culturesTechnological changes affect how consumers look for value and how marketers deliver itChanging methods of communication for consumers affects behaviorDemographics age, gender, family size, ethnicity, education continue to changeAs the economy changes, so does consumer behavior19

2012 Cengage Learning. All Rights Reserved. May not be scanned, copied or duplicated, or posted to a publicly accessible website, in whole or in part.Consumer behavior is very dynamic -- meaning it changes over time and so we as marketers, need to keep track of changes so we can react. What causes behavior to change? Well, we have a global society now so we need to understand cultures technology has had a HUGE impact on how consumers get information so we need to harness it. The demographics of our society continue to change and we need to make sure our products meet changing needs and finally, the economy has changed pretty dramatically over the last few years and weve seen consumer behavior change with it less spending with credit cards, less shopping overall more cautiousness about getting married / having children /buying homes.

This concludes the video lecture if you have questions about the content covered here, you can e-mail me or add a question to the Virtual Office blog. Now please head to the Discussion Board and participate in the discussion about consumer behavior and government and the discussion of the articles you found in the Wall Street Journal. 19