Chapter 1

Consumer Behavior & Marketing Management

Chapter Spotlights

Consumer benefits Total product concept Market segmentation and segmentation strategies Positioning Consumer decision-making Engel, Kollat, and Blackwell (EKB) Model

Course Objectives

Better understand why people do what they do in the marketplace when they do it Better understand yourself as a shopper, buyer, and consumer Improve yourself as a shopper, buyer, and consumer Improve your current/future job performance Better understand marketer communications and behaviors in the marketplace

Consumer Benefits

People do not buy products or services, they buy benefits Hence we make purchases not for the products themselves, but for the benefits of the problems they solve or the opportunities they offer

e.g., always late so a watch helps solve problem; has stopwatch feature so now can keep track of work out times

Consumer Benefits

Consumers seek bundles of types of benefits:

Tangible benefits: e.g., a watch keeps good time; has leather band Intangible benefits: e.g., the reliability reputation of the watch manufacturer; the image of the watch wearer

The Total Product Concept

Total product: refers to the sum of benefits offered by a product, service, outlet, etc.

Basic core: bundle of utilitarian benefits (e.g., design, features, etc.) Accessory ring: added-value benefits with no apparent extra cost (e.g., store reputation, manufacturer prestige, convenient location, etc.) Psychological ring: benefits resulting from the consumers feelings associated with owning/using the product (e.g., belonging, youthful, powerful, sexy, etc.) Time: products/service give or take time; this can be good or bad (e.g., fast food versus conventional restaurant)

Market Segmentation

Market segmentation is the study of the marketplace in order to discover already existing viable groups of consumers who are similar or homogeneous in their approaches to choosing and/or consuming goods and services.

Segment Bounding

Segment bounding is a means by which marketers differentiate among consumers and among market segments

Determine the descriptors of the consumers/units in the segment (e.g., demographics, psychographics, benefits sought, product usage rate, type of retail outlet, etc.) Determine specific geographic location of segment Bound segments in time to ensure that all data is relevant and up to date for the time of use.

Segment Viability

Four factors are used to assess segment viability. Viable segments are:

Of sufficient size Measurable Differentiated Reachable

Segmentation Strategies

Mass marketing (undifferentiated marketing): offering the same product to the entire consumer population Concentrated marketing (focused or niche marketing): selecting one market segment, even though the product may also appeal to others Differentiated marketing: selecting two or more different segments

Segmentation in the Global Marketplace

There are two approaches to market segmentation

Localization: treating each country as a separate market and seeking consumer segments accordingly Intermarket segmentation (also called standardization): selecting groups of consumers who exhibit similar consumption behavior across different countries

Marketers emphasize similarities rather than differences across country markets

Consumer Benefits and Product Positioning

Product positioning is the placement of a product, service, outlet, etc. in the mind of the consumer There are five ways used to position products, services, outlets, etc.

On perceived benefits On image On attributes Against competitors Combination of two or more of the above

Repositioning: shifting position in the consumers mind through changes in important product, price, distribution, and promotional and/or personal selling benefits.

The Consumer DecisionMaking Process

A consumer decision model is a means of describing the processes that consumers go through before, during, and after making a purchase (choice). A model shows the causes or antecedents of a particular behavior and each of its results or

consequences.

Engel, Kollat, and Blackwell (EKB) Model

The EKB model is comprehensive and shows the components of decision making and the relationships and interactions among them. The five distinct parts of consumer decision making presented are:

Input, information processing, a decision process, decision process variables, and external influences

Input

Input includes all kinds of stimuli from our contact with the world around us:

Our experiences, contact with others Marketer-controlled stimuli (e.g., advertising, store display, demonstrations) Other stimuli (e.g., personal recollections, conversations with friends) External search

Information Processing

Stimuli are processed into meaningful information Five methods of information processing:

Exposure Attention Comprehension Yielding Retention

Decision Process

It is triggered at any time during information processing It consists of five steps:

Problem recognition Search Alternative evaluation Choice Outcomes (post-purchase evaluation and behavior)

Decision Process Variables

Those individual qualities that make people/consumers unique. Decision process variables include

Motives Beliefs Attitudes Lifestyles Intentions Evaluative criteria Normative compliance and informational influence Other aspects of self

External Influences

Such influences are called Circles of Social Influence. They are: culture, sub-culture (coculture), social class, reference groups, and family or household influences