Chapter 2: Consumer Behavior & the Marketing Manager

Consumer BehaviorJohn C. MowenMichael S. Minor

Ten Concepts to Learn PERMS Product

positioning Product

differentiation Elements of the

consumer environment

Behavioral economics

CB and marketing research

CB and the marketing mix

The bases of segmentation

Behavioral segmentaiton

Managerial applications analysis

Application Areas of Consumer Behavior: PERMS

Environmental Analysis Market Research Segmentation of the Marketplace Product Positioning and Product

Differentiation Marketing-Mix Development

Product Positioning . . .

. . . is influencing how consumers perceive a brand’s characteristics relative to those of competitive offerings

Goal is to influence demand by creating a product with specific characteristics (i.e. brand attributes) and a clear image that differentiate it from competitors

Specific Positioning positioning a brand based creating linkages

between brand and key attributes and benefits. E.g., acceleration of auto, reliability of auto

Competitive Positioning positioning a brand in relation to competitors. E.g., Suburban is larger than an Expedition

Psychological Positioning positioning a brand based upon dominant

personality characteristic of target market. E.g., We build excitement.

Product Differentiation . . .

. . . is the process of manipulating the marketing mix so as to position a product in a manner that allows consumers to perceive meaningful differences between a brand and its competitors

Environmental Analysis . . .

. . . is the assessment of the external forces that act upon the firm and its customers, and that create threats and opportunities

The Natural Environment . . .. . . includes the types of raw materials available, pollution, consumer fear of contracting deadly diseases, the expansion of desert regions around the globe, and various weather phenomena, such as hurricanes or drought

Components of the External Environment

Demographic

Economic

Natural

Technological

Political

Cultural

The Economic Environment Set of factors involving monetary, natural, and human resources that influence firms/consumers.

Behavioral economics: study of economic decisions made by individual consumers and the behavioral determinants of those decisions.

3 Major Contributions of Behavioral Economists: Originated and documented the idea that the

consumer sector of the economy can strongly influence the course of the aggregate economy

Investigated what factors influence the decision of families to buy or save

Developed a methodology for making predictions of economic activities based upon consumer surveys

The Technological Environment

Goal is to anticipate what changes in the technological environment will occur and how these will influence the lifestyle and consumption patterns of consumers

MARKET RESEARCH . . .

. . . is applied consumer research designed to provide management with information on factors that impact consumers’ acquisition, consumption, and disposition of goods, services, and ideas

Product

Promotion

Pricing

Distribution

Marketing-Mix Development .

. . . involves the development and coordination of activities involving the:

Advertising Personal Selling Sales Promotion

Applications Public Relations

Promotional Strategy

Price Changes

Predicting the likely impact of price changes on consumers is an important consumer behavior area. How will consumers react when

companies raise or lower the price of a product?

Principles of perception can be applied to analyze if consumers will notice a difference in price and if so, what effect it has

Product Distribution . . .

. . . will be impacted by understanding how consumers make their purchasing decisions. **Example: low involvement decision (e.g., purchase soft drink), must use extensive distribution.

Market Segmentation . . .

. . . involves subdividing the market place into distinct subsets of customers having similar needs and wants, each of which can be reached with a different marketing mix

Four Classifications of Segmentation Variables:

Characteristics of the Person Nature of the Situation in Which the

Product or Service May Be Purchased

Geography Culture and Subculture Adopted by

the Consumer

Characteristics of the Person

Demographic Characteristics Behavioral Segmentation:price

elasticity, benefits sought, usage rate, brand loyalty

Benefit Segmentation Psychographic and Personality

Characteristics

Demographics is . . .

. . . the study of population changes and subcultural values of various demographic groups based on such factors as age, sex, income, education, ethnicity, and geography.Examples of demographic variables:age, sex, income, ethnicity, nationality, household size, marital status, religion, education, occupation,

Consumer Situations . . .

. . . consist of the temporary environmental factors that form the context within which a consumer activity occurs at a particular time and placeTypes of situations: social, physical, task definition, time.

Geographic Segmentation

Can include region, size of cities and counties, census blocks, population density, and climate

Geodemographics is the combination of geography and demographics

Culture and Subculture

Culture is the way of life of the people of a society

Subculture is a subdivision of a national culture and is based on some unifying characteristic, such as social status or nationality

Segmenting Industrial Markets

Different segmenting variables are used to classify companies into segments including the North American Industry Classification System NAICS). Developed as part of NAFTA in 1997. 20--2-digit codes.

Solving Managerial Problems . .

. . . is a three-step process: Gather information and identify the

problem/opportunity Identify the relevant consumer

behavior concepts and how they apply to the problem

Develop a managerial strategy by identifying the managerial implications of each consumer concept.