Introduction to Consumer Behavior

Consumer Behavior

The study of individuals, groups, or organizations and the processes they use to select, secure, use, and dispose of products, services, experiences, or ideas to satisfy needs and the impacts that these processes have on the consumer and society.

Consumer Behavior• People

– Why do different consumers purchase different products?

– What ways do consumers go about buying products?

• Marketing– How are products designed for and sold to

consumers?

– How does advertising work to influence consumer preferences?

• What does advertising do?

Knowledge ofConsumer Behavior

Applications of Consumer Behavior

Social Marketing

Informed Individuals

Marketing Strategy

Regulatory Policy

Marketing Strategy• The Marketing Concept• What is Marketing Strategy?

– Providing superior customer value.• What is value?

– The marketing Strategy Process:• Opportunity Identification / Market Analysis• S-T-P• Marketing mix

Segmentation, Targeting, and Positioning

Product/Service PositioningProduct/Service Positioning

Market SegmentationMarket Segmentation

Market TargetingMarket Targeting

1. Identify segmentation variables and segment the market2. Develop profiles of resulting segments

3. Evaluate the attractiveness of each segment4. Select the target segment(s)

5. Identify possible positioning concepts for each target segment6. Select, develop, and communicate the chosen positioning concept

Segmentation

• Segmentation is a concept that recognizes the diversity in the marketplace. The process of segmenting the market produces clusters of people who enjoy similar product features.

Segmentation

• Goal: Identify segments that seek different benefits and, therefore, will be responsive to different positionings of the product/offerings.

• Means: Link benefits sought to characteristics that make customers readily identifiable and accessible. For example:– User status, Demographics, Media exposure patterns, …

• Caution: Avoid over-segmenting; make sure that each segment is substantial enough to justify a unique positioning effort.

Market Segmentation• Bases for Segmentation

– Usage• Non-users vs. Category users• Competitor users vs. Own brand users

– Geographic• Zip Code Analysis• Regional Analysis

– Demographic• Age • Gender• Income• Others

– Benefit Sought– Psychographic

Market Segmentation

Usage SegmentationUsage Segmentation

•Category Usage

Colas 22 39 10 39 90

Hair Spray

52

24

13

24

87

Cereal

4

48

13

48

87

Nonusers (%)

Light Half%pop %use

Heavy Half%pop %use

Heavy users: Efficiency /ProfitCaution: Majority Fallacy

•Brand Usage•$ to Sales - Target people/companies with profile of current user•$ to Opportunity - Target users of competitive brands or nonusers

Market SegmentationGeographic SegmentationGeographic Segmentation

•Zip Code Analysis•Regional Analysis

Demographic SegmentationDemographic Segmentation

•Age•Gender•Income•Others

Volkswagen Ads:5-second-rule.movSynchronicity II.movTurbonium.movSmarter Looking.mov

http://www.census.gov/cgi-bin/gazetteer

Market Segmentation

Benefit Sought SegmentationBenefit Sought Segmentation

Light

Miller

Pabst Hi Quality

Malty, Full-Bodied

Inexpensive

B

C

AD

Sprecher

New Glarus

Dane County Beer Market

Circles indicate consumer segments in order of size.A, B, C, D are local brands

Market Segmentation

Psychographic SegmentationPsychographic Segmentation

•Lifestyles

•Values

•Attitudes

•Interests

•Opinions

www.claritas.com

Market Segmentation

Survey Details

Mail Survey by Market Facts, Inc.

Sample - 2000 women (80% return)

Questionnaire:A) 214 Attitude Statements

- When it comes to a choice between nutrition and taste in my

family meal planning, I put nutrition first.

- I wouldn’t let animals come into the house because of the dirt.

- I get upset when things are out of place in my house.

- If there is a flu bug going around, I'm sure to catch it.

- Once you’ve got a cold, there is very little you can do about it.

B) Product Usage for 69 Products

C) Brand Usage for 38 Products

D) Demographic Questions

Analysis - Factor analysis to Select Segments

Psychographic SegmentationPsychographic Segmentation

Market Segmentation

35% - Realists Not health fanatics not excessively concernedwith protection from germs. They view remedies positively, want something that isconvenient and works, and do not feel theneed of a doctor-recommended medicine.

31% - Authority Seekers Are doctor and prescription oriented, are neither fatalists nor stoics concerning health, but they prefer the stamp of authority on what they do take.

23% - Skeptics Have a low health concern, are least likely toresort to medication, and are highly skepticalof cold remedies.

11% - Hypochondriacs Have a health concern, regard themselves as prone to any bug going around and tend to take medication at the first symptom. They donot look for strength in what they take, but

need some mild authority reassurance.

Drug Segments

Psychographic Segmentation

Market SegmentationPsychographic SegmentationPsychographic Segmentation

Product Usage Among Drug Segments

Realist Auth. Skep. Hypo.

Upset Stomach Remedies 49 43 3259

Acid Indigestion 46 45 3550

Hangover Remedies 27 21 17 31Cold or Allergy Tablets 74 57 41 72Nasal Sprays 33 27 21 38Nasal Inhalers 26 23 17 31Liquid Cold Remedies 17 16 11

21Cough Drops 71 71 58 76Sore Throat Lozenges 53 56 37

62Cough Syrup 59 54 31 65Pain Reliever Tablets 90 88 77

95

Segmentation Examples

House of Blues

ComputerBug.com

Yahoo!

Snickers Ads:My Little Buddy.movThe Hands.movVoting-booth.mov

Market Segmentation• Criteria For Segmentation

– Identifiable

– Accessible

– Responsive

– Significant

• Capturing Segments– Instruments Available

• Price

• Product

• Distribution

• Promotion

– Common Positioning Errors• Positioning in a crowded market space

• Positioning on an unimportant attribute

Positioning

• Positioning requires designing a company and product image and developing a marketing mix to promote the image to the target segment(s).

Positioning Statement

• The key concept of an idea to be communicated to a target market via elements of the marketing mix.

• Elements:– Target– Concept (Frame of Reference)– Point of Difference

Discussion

• Develop positioning statements for:– Coca-Cola (Classic)– UW-Whitewater’s College of Business– Amazon.com– Pets.com

DiscussionCoke Ads:

Teach-the-world-to-sing.movDancers.movParrot.mov

Amazon Ads:worry-about-y2k.movIs it big enough.movEmahtskcblvdt.mov

Pets.com:Crazy Dog Park.movBribes.movTabby.movChristmas-time.mov

CB and Marketing StrategyMarket Analysis

Company, Competitors, Conditions, Consumers

Market Segmentation (S-T-P)Target customer groups with similar need sets

Marketing MixProduct, Place, Promotion, Price

Consumer Decision ProcessFrom problem recognition to Use and Evaluation

OutcomesIndividual, Firm, Society

Internal AnalysisCore competencies

Overall Model of Consumer BehaviorExternal Influences

CultureSubculture

DemographicsSocial Status

Reference GroupsFamily

Marketing Activities

Internal InfluencesPerceptionLearningMemoryMotives

PersonalityEmotionsAttitudes

Self-Conceptand

Lifestyle

Decision Process(Situations)

Problem Recognition

Information Search

Alternative Evaluationand Selection

Outlet Selection and Purchase

Postpurchase Processes

Discussion• Robert’s American gourmet snack foods produces

herbal-based snacks such as Spirulina Spirals and St. John’s Wort Tortilla Chips. According to the company president, “We’re selling like crazy. We don’t do research. We react as sort of a karma thing.”

How would you explain the firm’s success? What are the advantages and disadvantages of this approach?

Discussion

• What is the consumer behavior model for the following items?– Bicycles– Luxury cars– Inexpensive cars– Skis– Pets– Personal computers

Small Group Discussion• Outline the decision processes that each of

you went through the last time you purchased:– A restaurant meal– A candy bar– A car– A home appliance or electronic component

• What was the impact of the “situation” on your decision?