consumer behavior ch 1-5

consumer behavior

study of HOW consumers select, purchase, use, and dispose of goods and services in the process of satisfying their personal needs and wants; also concerned with finding out WHY consumers acts as they do

customer lifecycle

the creation and delivery of lifetime value to the consumer during every interaction in a consumer's relationship with a firm

Goal of Customer Touchpoint Management

Enriching customers' experiences during every aspect of all transactions with the firm

TWO APPROACHES TO STUDY OF CONSUMER BEHAVIOR

*individual level
*social & cultural level

Disciplines that Contribute to the understanding of C.B.

*Psychology
*Sociology
*Anthropology
*Social Psychology
*Economics

marketing concept

an operating philosophy of business establishments in which the consumer is the focal point of the firm's activities; view that an industry is a consumer-satisfying process; not a good-producing process

agents of change

entities that actively strive to reshape consumer's beliefs and behaviors; claim that marketers have brought about the high standard of living to which we have grown accustomed

Development of the Marketing Concept

*PRODUCTION CONCEPT
*PRODUCT CONCEPT
*SELLING CONCEPT
*MARKETING CONCEPT

Production Concept

*Assumes that consumers are interested primarily in product availability at low prices
**Marketing Objectives:
-cheap, efficient production
-intensive distribution
-market expansion
\***Examples:
*Ford and the Model T
*Ti Basic Calculators for cheap before 1950s

Product Concept

*Assumes the consumer will buy the product that offers them the highest quality, the best performance, and the most features
**Marketing objectives:
-quality improvement
-Addition of features
\***Tendency toward Marketing Myopia(Kodak for example)

marketing myopia

if you focus too much on your product and forget about your consumer

Selling Concept

*Assumes that consumers are unlikely to buy a product unless they are aggressively persuaded to do so
**Marketing Objectives:
-Sell, sell, sell!!!
\***Lack of concern for customer needs and satisfaction
\***Examples: unsought products; cemetery plots,life insurance policies

*The Marketing Concept*

*Assumes that to be successful, a company must determine the needs and wants of specific target markets and deliver the desired satisfactions better than the competition
**Marketing Objectives
-make what you can sell
-focus on buyer's needs; mtg ppl's needs
~consumer research
~segmentation
~targeting
~positioning

consumer research

*the process and tools used to study consumer behavior
*Two perspectives:
~positivist approach
~interpretivist approach

segmentation

process of dividing the market into subsets of consumers with common needs or characteristics

targeting

the selection of one or more of the segments to pursure

positioning

*developing a distinct image for the product in the mind of the consumer
*successful positioning includes communicating the benefits of the product & a unique selling proposition(USP)

Marketing Mix

*Products
*Price
*Place
*Promotion

Customer Profitability-Focused Marketing

*Tracks costs and revenues of individual consumers
*categorizes them into tiers based on consumption behavior
*Groups customers into into four tiers
EX: credit card companies

Societal Marketing Concept

marketers act to enhance the well-being of consumers and society as a whole

Trends influencing Consumer Behavior in Contemporary Society

...

telecommuting

an arrangement whereby employees work at home using PC's, modems, faxes, and other communications equipment

global village

the increasingly interdependent global economic environment

green marketing

advocating the environmental soundness of products and packaging

mass-marketing strategy

philosophy that presumes consumers are uniform and that broad-appeal products and marketing programs suffice

Product-Market Matching Strategy

*Market Segmentation
*Market Targeting
*Positioning

market segmentation

the act of dissecting the marketplace into submarkets that require different marketing mixes

market targeting

the process of reviewing market segments and deciding which one(s) to pursue

marketing positioning

establishing a differentiating image for a product or service in relation to it competition

Variables used in marketing segmentation

*Geographic
*Demographic
*Geodemographic
*Psychographic
*Behavioral

Geographic segmentation

*Partitions the market based on climate, location, surroundings, and terrain
**Ex: clothing, food, and automobile manufacturers use to accommodate the specific needs and interests of geographically dispersed customers

Demographic segmentation

*partitions the market based on factors such as age, stage of family life cycle, gender, race and ethnicity, as well as occupation

Geodemographic segmentation

partitions the market by considering data on small units of geography, such as neighborhoods, zip codes, or census tracts

Psychographic segmentation

*Partitions the market based on lifestyle and personality characteristics

Behavioral segmentation**

partitions the market based on attitudes toward or reactions to a product and to its promotional appeals

market portrait

a portrait of the various market segments and competitors' positions in them relative to a specific product

types of market-targeting strategies

*undifferentiated
*multi-segment
*concentration
*customization

undifferentiated strategy

the market is viewed as a single large homogenous domain where a single marketing mix suffices (everyone)

multi-segment strategy

two or more segments requiring different marketing mixes

concentration strategy

focusing marketing effort on a single segment (niche)

customization strategy

personalizing marketing effort to suit individual customers' needs

mass customization

combining technology and customer information to tailor products and services to the specific needs of each customer

targeting considerations

*size
*measurability
*compatibility
*defendability
*potential
*accessibility
*stability

positioning

the manner in which a product is perceived by consumers as compared to their perception of competitors' offerings

perceptual map

a dimesional depiction that provides a visual profile profile of a number of brands for comparison purposes

repositioning

modifying a brand, redirecting it, or stressing different features to boost sales
*Targeting it to a new segment market
*Emphasizing new product uses and benefits
*Stressing different features with the intention of boosting sales

perception

the process of selecting, organizing, and interpreting sensations into a meaningful whole

exposure

the act of deliberately or accidentally coming into contact with environmental stimuli

attention

the allocation of an individual's mental capacity to a stimulus or task

sensation

the responses of a person's sensory receptors to environmental stimuli and transmission of this information to the brain via the nervous system

Input Variation

*sensation depends on this
*as sensory input decreases, our ability to detect change increases

perceptual overloading

the inability to perceive all stimuli competing for one's attention

perceptual vigilance

the ability to disregard much of the stimulation one recieves

selective exposure

a tendency of people to ignore media and ads that address topics that are unimportant to them

selective attention

a tendency of individuals to heed information that interests them and to avoid information that is irrelevant

perceptual defense

a tendency to block threatening or contradictory stimuli from extensive conscious processing

selective interpretation

the act of combining relevant knowledge structures with expectations and intentions to derive meaning from a stimulus

Companies use to create contrast

*Size
*Color
*Position
*Novelty

2 factors that combine to produce perception

*stimulus factors
*individual factors

stimulus factors

the physical characteristics of an object such as its size, color, and shape that produce a physiological impulse in an individual

individual factors

qualities of individuals such as their needs, interests, and experiences that influence their interpretation of the impulse

absolute threshold

lowest intensity level at which one can detect a stimulus

terminal threshold

a point beyond which intensity increases of a stimulus produce no greater sensation

differential threshold

(JND); the smallest increment in the intensity of a stimulus that one can detect

situational self-image

the physical and mental state a person is experiencing at a specific moment in time

situational variables

environmental circumstances that constitute the context within which purchases occur

Gestalt Psychology

a modern view that we perceive cohesive wholes and formulate total impressions rather than note solitary stimuli

Gestalt Principles

*Closure
*Grouping
*Proximity
*Context
*Figure and ground

closure

our tendency to perceive a complete object even though some parts are missing

grouping

our tendency to perceive large data chunks rather than small units

proximity

objects close together seem to relate

context

refers to the setting in which a stimulus is presented

figure and ground

objects or figures are perceived in relationship to background

perceptual categorization

consumers' tendency to group somewhat similar objects together in order to simplify perception

surrogate indicators

cues that we rely on to place products into categories

prototype matching

tendency to compare brands in a product category to the category's leading brand

perceptual inferences

beliefs based on prior experience that a person assigns to products or stores

Halo effect

generalized impressions we form about products, brands, or stores to simply shopping

schema

a structure for understanding and interpreting new information

script

the knowledge about procedures to follow in recurring situations

Subliminal Perception

stimuli that are too weak or too brief to be consciously seen or heard may be strong enough to be perceived by one or more receptor cells

image

a person's view of what a company, product, brand, or store is

imagery

the process by which we visualize sensory information in our working memory
*Plays a vital role in promotion
*Created largely through illustrations
*Enhances comprehension and increases recall
*Image protection, restoration, and enhancement are necessary strategies in today's marketplace

brand equity

the added value that a brand name brings to a product beyond the item's functional value

POSITIONING

*establishing a specific image for a brand in the consumer's mind
*product is positioned in relation to competing brands
*conveys the concept, or meaning, of the product in terms of how it fulfills a consumer need
*result of successful positioning is a distinctive, positive brand image

Positioning Techniques

*Umbrella Positioning
*Positioning against Competition
*Positioning Based on a Specific Benefit
*Finding an "Unowned" Position
*Filling Several Positions
*Repositioning

Perceptual Mapping

research technique that enables marketers to plot graphically consumers' perceptions concerning product attributes of specific brands

Services Positioning

*unique problems
*many services have developed strategies to provide customers with visual images & tangible reminders
*Physical environment

(Perceived Price) reference prices

used a a basis for comparison in judging another price
*internal
*external

Perceived Quality of Products

Intrinsic Vs Extrinsic Cues

Perceived Quality of Services

Difficult due to characteristics of services
*intangible
*Variable
*Perishable
*Simultaneously Produced and Consumed

SERVQUAL scale

used to measure gab between customers' expectation of service and perceptions of actual service

Price/Quality Relationship

the perception of price as an indicator of product quality
ex: the higher the price, the higher the perceived quality of the product

Perceived Risk

*the degree of uncertainty perceived by the consumer as to the consequences(outcome) of a specific purchase decision
*Types
-functional risk
-physical risk
*financial risk
*psychological risk
*time risk

How consumers handle risk

*seek info
*stay brand loyal
*select by brand image
*rely on store image
*buy the most expensive model
*seek reassurance

ethical consideration

see marketer's blurred lines between ads and programming content
You may not even perceive that you are being advertised to

learning

process by which changes occur in the content or organization of a person's long-term memory
*Not directly observable
*Behavioral changes are brought about by experience
*Effects are relatively long term
*Covers both over activities and cognitive processes

low-involvement learning

case where we are less motivated to attend to or process material to be learned

high-involvement learning

case where we are motivated to diligently process the information to be learned

classical conditioning

involves linking a conditioned stimulus and an unconditioned stimulus