Chapter 6 and chapter 9

Chapter 6: Consumer Behavior

• Consumer responses to products and services and the marketing of products and services:

• Components of consumer responses.

• How consumers make purchases.

• Factors influencing consumer purchases.

• Why should the firm care?

  • Better predict consumer responses

  • Better customer satisfaction

Model of Consumer Behavior

• Influence.

• Research.

• Predict and measure.

The Consumer Decision Process

• Need recognition.

• Information search.

• Alternative evaluation.

• Purchase.

• Post-purchase.

Need Recognition

• Ideal State: Where we want to be

• Actual State: Where we are now

• Definition: Consumer decision making starts with an unsatisfied need.

• Sources of Consumers’ Need Recognition

  • Out of Stock

  • Dissatisfaction

  • New Needs or Wants

  • Related Product Purchase

  • Market-Induced Recognition

  • New Products

Types of Needs

• Psychological needs.

• Functional needs.

Information Search

• Internal Search

  • Information from Memory

  • Kind of information recalled:

    • Brands

    • Attributes

    • Evaluations

    • Experiences

• External Search

  • Sources of External Information:

    • Retailer

    • Media

    • Interpersonal

    • Experiential

    • WOM

    • INTERNET (keyword, agents, portals, blogs…etc.)

Locus of Control

• Internal locus of control = more search activities

• External locus of control = fate, external factors

Types of Risk

• Actual or Perceived Risk

  • Performance risk

    • Poorly performing product or service.

  • Financial risk

    • Initial cost of the purchase

    • Costs of using the item

  • Social risk

    • What if others don’t like my purchase

  • Physiological risk

    • Harm due to poorly performing products

  • Psychological risks

    • Does the product convey the right image of me

Evaluation of Alternatives: Attribute Sets

• Universal: All possible choices for a product category.

• Retrieval: Readily brought from memory

• Evoked: Consider at the purchase decision

Sets Example

• Universal Set: All available brands.

• Retrieval Set of Brands.

• Alternative Evaluation Selection.

Purchase and Consumption

• Increase Conversion rate

  • Reduce real or virtual abandoned carts

  • Merchandise in stock

  • Reduce the actual wait time
    *Conversion rate measures how well purchase intentions turn into actual purchases.

Post-Purchase

• Postpurchase Outcomes:

  1. Customer Satisfaction

     • Build realistic expectations

     • Demonstrate correct product use

     • Provide money-back guarantee

     • Encourage feedback

     • Customer contact

  2. Cognitive Dissonance

     • Buyer’s remorse.

     • Psychologically uncomfortable state produced by an inconsistency between beliefs and behaviors

     • Belief: I shouldn’t buy stuff that I don’t need

     • Behavior: I purchased

     • What do firms do to reduce dissonance?

       • Reinforce the decision

       • Thank you letters, congratulations letters, quality ratings

  3. Customer loyalty

     • Marketers attempt to solidify a loyal relationship.

     • Satisfied customers purchase and buy from the same company again.

     • Repeated purchasing behavior

  4. Undesirable Consumer Behavior

     • Negative word of mouth (WOM)

     • Rumors

Chapter 9: STP: Segmentation, Targeting and Positioning

Segmentation, Targeting, Positioning Process

• Step 1: Strategy or Objectives

• Step 2: Segmentation Methods Segmentation

• Step 3: Evaluate Segment Attractiveness

• Step 4: Select Target Market Targeting

• Step 5: Identify and Develop Positioning Strategy Positioning

Segmentation

Approaching

• Product

• Place

• CUSTOMER

• Price

• Promotion
  MARKETING

• Targeting

• Positioning

Segmentation Methods

• Segmentation Method

  • Sample Segments

    • Geographic

      • Continent: North America, Asia, Europe, Africa

      • Within the United States: Pacific, mountain, central, south, mid-Atlantic, northeast

    • Demographic

      • Age, gender, income

    • Psychographic

      • Lifestyle, self-concept

    • Benefits

      • Convenience, economy, prestige

    • Behavioral

      • Occasion, loyalty

Targeting Strategies

• Targeting Strategies

  • Undifferentiated or mass marketing

    • Some commodity Products (flour)

  • Differentiated

    • Several market segments with different offerings

    • Coca-Cola

  • Concentrated

    • Single, primary target

    • Ferrari

  • Micromarketing or one-to-one or Local Marketing

    • Matching exact specifications

    • Financial Services Providers

    • Clinique

Market Targeting

• Selecting Target Market Segments

• Target market consists of a set of buyers who share common needs or characteristics that the company decides to serve.

• Market Targeting Strategies

  • A. Undifferentiated Marketing (Example: some food, clothing, general needs)

  • B. Differentiated Marketing (Example: An airline company offering business and economy class tickets)

  • C. Concentrated Marketing (Example: Ferrari)

Positioning

• Positioning maps show consumer perceptions of their brands versus competing products on important buying dimensions

Factors Influencing the Consumer Decision Process

• Marketing mix

  • Product

  • Price

  • Place

  • Promotion

• Psychological factors

  • Motives

  • Attitudes

  • Perceptions

  • Learning

  • Lifestyle

• Social factors

  • Family

  • Reference groups

  • Culture

• Situational factors

  • Purchase situation

  • Shopping situation

  • Temporal state

• Consumer Decision Process

Psychological Factors: Motives - Maslow’s Hierarchy of Needs

• Physiological

  • Food, drink, rest, & shelter

• Safety

  • Protection & physical well-being

• Love

  • Interaction with others

• Esteem

  • Inner desires

• Self-actualization

  • Personal growth & fulfillment

Psychological Factors - Lifestyle

• Lifestyle is a person’s pattern of living as expressed in his or her psychographics

• Lifestyle Marketing

Social Factors (Groups and Social Networks)

• Membership Groups

  • Groups with direct influence and to which a person belongs

• Aspirational Groups

  • Groups an individual wishes to belong to

• Reference Groups

  • Groups that form a comparison or reference in forming attitudes or behavior

Social Factors: Reference Groups

• Groups

  • Family

  • Friends

  • Coworkers

  • Famous people

• Provide:

  • information

  • rewards

  • self-image

Situational Factors

• Restaurants or store actions to make shopping more pleasant and conducive to purchasing.

• Starbucks, Abercrombie and Fitch Examples

Situational Characteristics and Consumption Behavior

• Components of physical surroundings:

  1. Colors

  2. Aromas

  3. Music

  4. Crowding

Situational Characteristics and Consumption Behavior - Music impact on Restaurant Visitors

Shopping Situation: Store Atmosphere