ADVANCED CONSUMER BEHAVIOR

COURSE CODE: MKMT 601

Chapter 1
Introduction to Consumer Behavior
and Consumer Research
INTRODUCTION TO CONSUMER BEHAVIOR

 Consumer behavior can be defined as the

decision-making process and physical activity
involved in acquiring, evaluating, using and
disposing of goods and services.

 In other words, it is defined as the behavior that

consumers display in searching for, purchasing,
using, evaluating and disposing of products and
services that they expect will satisfy their needs.
 CONSUMER BEHAVIOR INVOLVES MANY DECISIONS
 Whether to acquire/use/dispose of an offering

 What offering to acquire/use/dispose of

 Why acquire/use/dispose of an offering

 How to acquire/use/dispose of an offering

 When to acquire/use/dispose of an offering

 Where to acquire/use/dispose of an offering

 How much, how often, and how long to acquire/use/

dispose of an offering
NATURE OF CONSUMER BEHAVIOR

 Individuals develop self-concepts and

subsequent lifestyles based on a variety of
internal (mainly psychological and physical) and
external (mainly sociological and demographic)
influences.

 These self-concepts and lifestyles produce needs

and desires, many of which require
consumption decisions to satisfy.
 THE CONSUMER’S RIGHTS
 Right to be protected against the marketing of goods
and services which are hazardous to life and property
of the people;
 Right to be informed about the quality, quantity,
potency, purity, standard and price of goods or services
so as to protect the consumer against unfair trade
practices;
 Right to be assured, wherever possible, access to a
variety of goods and services at competitive prices;
 Right to be heard and to be assured that consumers'
interests will receive due consideration at appropriate
forums;
 Right to seek redressal against unfair trade practices
dishonest, exploitation of consumers; and
 Right to consumer education.
WHY STUDY CONSUMER BEHAVIOR?
 Consumer behavior determines the economic
health of a nation
 Consumer behavior determines the success of
marketing programs
 Consumer behavior determines the economic
health of everyone.
 Consumer behavior helps formulate public policy

 Consumer behavior affects personal policy

CONT’D
Factors that contributed to the growing
interest in consumer behavior include:
 accelerated rate of new product
development
 consumer movement
 public policy concerns
 environmental concerns
 the opening of national markets
throughout the world
Overall model of consumer behavior
CHALLENGES OF THE FUTURE
 Gathering and interpreting information that
organizations need to meet changing needs of
consumers
 Developing effective consumer research methods to
capture changes in trends and lifestyles
 Understanding consumer behavior from a broader
perspective as an important part of life
DIFFERENCE BETWEEN CUSTOMER AND
CONSUMER

 Consumer is the more general term. A

consumer is anyone who engages himself in
physical activities of evaluating, acquiring, using
or disposing of goods and services.

 A customer is one who actually purchases a

product or service from a particular organization
or a shop. It usually implies a relationship over
time
TYPES OF CONSUMERS

 In the broadest sense, the term consumer

behavior describes two different kinds of
consuming entities: the personal consumer
and the organizational consumer.

 The personal consumer(end user or

ultimate user) buys goods and services for his or
her own use, for the use of the household, or as a
gift for a friend.
 CONT’D
 The organizational consumer includes profit and not-
for-profit businesses, government agencies(local,
provincial and national) and institutions, all of which
must buy products, equipment and services in order to
run their organizations.

 Consumers take many forms, ranging from a 6-year-old

child pleading with her mother for chewing gums to an
executive in a large corporation deciding on an extremely
expensive computer system.
REASONS FOR STUDYING CONSUMER
BEHAVIOR

 The most important reason for studying consumer

behavior is the role that it plays in our lives. We
spend a lot of time in shops and market places.

 Consumer decisions are affected by their behavior.

Therefore, consumer behavior is said to be an applied
discipline. This leads to the micro perspective and
societal perspective.
CONT’D

 Micro Perspective. It involves understanding

consumer for the purpose of helping a firm or
organization to achieve its objectives.

 Societal Perspective is on the macro level.

Consumers collectively influenced economic
and social conditions within a society.
CONSUMER RESEARCH
 Marketing Research vs. Market Research

 These terms often are used interchangeably, but

technically there is a difference.

 Market research deals specifically with the

gathering of information about a market’s size and
trends.

 Marketing research is a more general systematic

process that can be applied to a variety of marketing
problems.
THE EIGHT-STEP RESEARCH PROCESS

 We are depicting the consumer research process

in eight steps:
1. 1a. Problem/opportunity identification,
1b. Problem/opportunity formulation
2. Create the research design
3. Choosing a basic method of research
4. Selecting the sampling procedure
5. Data collection
6. Data analysis
7. Preparing and writing the report
8. Follow-up
 STEP ONE A: PROBLEM/OPPORTUNITY
IDENTIFICATION

The research process begins with the recognition

of a business problem or opportunity

Problem/opportunity emerges when environment

changes. E.g. Technological breakthrough, new
legal policy, social change, high unemployment rate

The presence of an environmental change is

known from continuous information
collection/search
STEP ONE B: PROBLEM/OPPORTUNITY
FORMULATION

Information is needed to clarify your research

question.

You can use exploratory research, literature

review, personal interview, focus group and
other techniques to obtain information to
formulate your research question.
SETTING UP THE RESEARCH OBJECTIVES

A statement of research objectives should

be specific and unambiguous as possible.
For example: ―This research investigates
the relationship between demographic
background and musical preference
More specifically, this study studies how
age, sex, income level and educational level
determine consumer preference on film and
classical music.‖
STEP TWO: CREATING THE RESEARCH
DESIGN

Research design: is a plan that researchers follow

to answer the research objectives and/or test the
hypotheses.
The design will be Descriptive and/or Causal
(diagnostic and predictive)?
Descriptive design: Answer the questions who,
what, when, and how.
In quantitative research, we may calculate the
mean, median, mode or S.D. of the data collected.
For example: 35% of the respondents said they like
classical music.
CONT’D
Causal design: Examine whether one variable
causes or determine the value of another variable
(two variables at least).
Independent variable (The cause, example
demographic variables) and dependent variable
(the outcome, musical preference).
In quantitative research, you may use regression
analysis to analyze the association between two (or
more) variables. For example, the older the
respondent, the more he likes classical music.
STEP THREE: CHOOSING A BASIC METHOD
OF RESEARCH
1. Analysis of secondary data.
2. Survey. Obtain factual (e.g., age) and attitudinal
(e.g., musical preference) data.
3. Observation. Obtain behavioral data,
researchers and
subjects do not have direct interaction.
4. Experiment. The researchers deliberately change
the
independent variable(s) and record the effects of
that (those) variable(s) on other dependent
variable(s). Experiments are frequently used in
testing causality.
STEP FOUR: SELECTING THE SAMPLING
PROCEDURE
Sample is a subset of the whole population.
- Sampling is used because population may
be too big, population unknown, insufficient
resources to conduct a census.
- Sample should be ―representative‖ –
should help the researchers to make
inference about the population.
- Sampling method includes probability
and non-probability methods
STEP FIVE: DATA COLLECTION

 Under a natural or controlled environment

Especially important for experimental designs.
 Survey: Mall intercept, telephone, mail,
Internet…each method has different advantages
and disadvantages.
 Interview or focus group discussion
STEP SIX: DATA ANALYSIS

It is a process that interprets the observed data

into meaningful information.
 Conjoint Analysis- A research technique to
determine the relative importance and appeal of
different levels of an offering’s attributes.
 Anova

 Regression
STEP SEVEN: PREPARING AND WRITING THE
REPORT

Researcher should communicate their

findings to the managers, if possible, oral
presentation and written report should both
be made.

Practical recommendations should be

suggested to the managers.
 CONT’D
The format of the marketing research report varies
with the needs of the organization. You should
make sure that the report contains the following
sections:
• Table of Contents
• List of illustrations
• Executive summary
• Research objectives
• Methodology
• Results
• Limitations
• Conclusions and recommendations
STEP EIGHT: FOLLOW UP
-You should make sure the managers would
use your findings
-Well organized and presented, be practical,
avoid manager conflict, and remind the
managers to read your report.
-Sometimes, additional research should be
conducted to supplement your research
findings.
CONSUMER BEHAVIOR AND MARKETING
STRATEGY

Providing superior customer value requires the

organization to do a better job of anticipating and
reacting to customer needs than the competition
does.
An understanding of consumer behavior is the basis
for marketing strategy formulation. Consumers’
reactions to the marketing strategy determine the
organization’s success or failure.
CONT’D
 Marketing strategy begins with an analysis of the
market the organization is considering.

 This requires a detailed analysis of the organization’s

capabilities, the strengths and weaknesses of
competitors, the economic and technological forces
affecting the market, and the current and potential
customers in the market.
CONT’D

 Market segments are identified based on the

these information and are described in terms of
demographics, media preferences, geographic
location, and so forth.

 Management then selects one or more of these

segments as target markets
 CONT’D
 Next, marketing strategy is formulated. Marketing
strategy seeks to provide the customer with more
value than the competition while still producing a
profit for the firm.

 Marketing strategy is formulated in terms of the

marketing mix; that is, it involves determining the
product features, price, communications, distribution,
and services that will provide customers with
superior value.
 CONT’D
 This entire set of characteristics is often referred
to as the total product.

 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
(individuals and households) or performance
(businesses and other organizations).
MARKETING STRATEGY AND CONSUMER BEHAVIOR
(I) MARKETING ANALYSIS
Market analysis requires an understanding of the
4-Cs
 Consumer

 Company

 Competition

 Condition
(II)MARKETING SEGMENTATION-TO WHOM ARE WE
MARKETING

 A market segment is a portion of a larger

market whose needs differ somewhat from the larger
market.
Market segmentation involves four steps:
 Identify product related needs

 Group customers with similar need sets

 Describe each group

 Select target market

 CONT’D

The segmentation process is valid only when the

following criteria are met:

 Consumers within the segment are similar to one

another in terms of product needs

 Important differences among segments can be

identified

 The segment is large enough to be profitable

 Consumers in the segment can be reached by an

appropriate marketing mix.
(III) MARKETING STRATEGY

 Product
 Price
 Distribution
 Communication
 Service
(IV) CONSUMER DECISION PROCESS

 Problem recognition
 Information search—internal, external

 Alternative evaluation

 Purchase

 Use

 Evaluation
(V) OUTCOMES

a. Firm outcomes
 Product Position- an image of the product or
brand in the consumer’s mind relative to
competing products and brands.
 Sales and profits - virtually all firms evaluate
the success of their marketing programs in terms
of sales revenues and profits
 Customer Satisfaction-Retaining current
customers requires that they be satisfied with
their purchase and use of the product.
CONT’D
b. Individual Outcomes
 Need Satisfaction -This can range from no
satisfaction (or even a negative level if a
purchase increases the need rather than reduces
it) to complete satisfaction.
 Injurious consumption occurs when
individuals or groups make consumption
decisions that have negative consequences for
their long-run well-being.
 CONT’D
C. Society Outcomes
 Economic Outcomes - Consumers’ decisions on
whether to buy or to save affect economic growth, the
availability and cost of capital, employment levels, and so
forth.
 Physical Environment Outcomes - Consumers make
decisions that have a major impact on the physical
environments of both their own and other societies
 Social Welfare - Consumer decisions affect the general
social welfare of a society.
End of the Chapter!