Week 1 : Introduction to Consumer Behavior
What is Consumer Behavior?
- Study of the processes involved when individuals or groups select, purchase, use, or
dispose of products, services, ideas or experiences to satisfy needs and desires
- Consumers can be individuals, families, groups, trams, companies, etc
People in the Marketplace
- Consumption Communities; communities with like-minded individuals (i.e. if you want
a phone, you will go to an area where you can find an advertisement or more
information)
- Members share opinions and recommendations about any product
- Market Segmentation Strategies; an organization targets its product, service, or idea
only to specific groups of consumers rather than to everybody → even if it means that
other consumers who do not belong to this target market are not attracted to it
Segmentation
- Marketers must understand the wants and needs of different consumer segments
- Various dimensions are relevant for understanding consumer needs and wants
- Usage (whether heavy or light) can help focus marketers’ energies
Consumers are Different
- Heavy users are the most faithful customers
- 80/20 Rule; 80% of a business’ sales come from only 20% of the customers
- 80% of the work done by 20% of the people
- Pareto Principle; Alfredo Pareto realized that roughly in everything, 80% of the
effects come from 20% of the causes
- Most businesses have dedicated base of super fans who hold up the bottom line
of their business
- You can hold up 20% of your customers through loyalty programs and other
incentives that keep them loyal → give them something in return that makes
them excited about coming back to your business
Segmenting Consumers; Demographics (age, lifestyle, ethnicity, etc)
- Demographics are statistics that measure observable aspects of a population
- Even lifestyles can be useful to marketers in that consumers may share demographic
characteristics but have very different lifestyles
- Marketers try to understand their customers and develop lifelong relationships
- This approach is referred to as relationship marketing
- Database marketing can also be used to track consumers’ buying habits
Big Data
- Database Marketing; tracks specific consumers’ buying habits very closely and crafts
products and messages tailored towards peoples’ wants and needs based on this
information
, - I.e. you look something up on the internet, 2 days later you see an ad for it on
your instagram
- Relationship Marketing
Consumer-Brand Relationships
- Role Theory; takes the view that much of consumer behavior resembles actions in a
play
- We find that consumers may develop relationships with brands over time
- Self-Concept Attachment; the product helps to establish the user’s identity
- Nostalgic Attachment; product serves as a link to the consumers past
- Interdependence; product is a part of the user’s daily routine (i.e. Tim’s coffee, iPhone)
- Love; the product elicits emotional bonds of warmth, passion, or other strong emotion
(you would basically pay any price)
Motivation
- People often buy products not for what they do but for what they mean (i.e LV bag
compared to walmart bag that looks the same)
- Products play an extended role in our lives
- Refers to the processes that lead people to behave as they do
- Occurs when a need is aroused that the consumer wishes to satisfy
- Needs VS Wants
- Hedonic; occurs when a need is aroused that the consumer wishes to satisfy,
need creates a state of tension that drives the consumer to attempt to reduce or
eliminate it (i.e. experiential needs, involving emotional responses or fantasies)
- When you spoil yourself… it is not a need, it is a want
- Utilitarian; desire to achieve some functional or practical benefit (i.e. buy
umbrella when it is raining or vegetables for nutritional reasons)
- Hedonic can also have utility (i.e. you buy a LV handbag that you use everyday to
hold your keys, so it is practical, but it is not a NEED, a winners bag would do just
fine)
Technology and the Digital Native
- Technology and culture create a new “always” on consumer
- It changes :
- Who you interact with, the information you can find, the choices you see as
available, time and energy spent dealing with decisions, etc
- Internet of Things; the growing network of interconnected devices embedded in objects
that speak to one another (i.e. being able to close your garage door with your phone)
The Pyramid of Consumer Behavior
- As it moves closer to the top, it focuses on individual behavior
- Those towards the bottom are more interested in the aggregate activities that occur
among large groups of people
, - The bottom depicts macro consumer behavior (social focus) and the top depicts micro
consumer behavior (individual focus)
-
Positivism VS Interpretivist Approaches
- Two approaches that are important to sociological research and study
- Positivism : more scientific
- 1. Associated with ‘scientific method’
- Believe the social sciences can be as rigorously scientific as the natural
sciences
- More likely to use ‘quantitative’ analysis using statistical methods etc
- 2. Believe in value-free, objective research
- Scientific methodology allows us to gain objective, trustworthy and
generalizable data, more beneficial to sociological theory
- Interpretivism : more observational
- 1. Our knowledge of the world is ‘socially constructed’
- Knowledge is not ‘objective’ and ‘value-free,’ but it is transmitted to us
through ideas, discourses, and experiences
- There are no simple ‘facts,’ only interpretations of the world
- 2. It is not possible to make valid causal statements or predictions about the
social world
, -
What is Consumer Behavior?
- Study of the processes involved when individuals or groups select, purchase, use, or
dispose of products, services, ideas or experiences to satisfy needs and desires
- Consumers can be individuals, families, groups, trams, companies, etc
People in the Marketplace
- Consumption Communities; communities with like-minded individuals (i.e. if you want
a phone, you will go to an area where you can find an advertisement or more
information)
- Members share opinions and recommendations about any product
- Market Segmentation Strategies; an organization targets its product, service, or idea
only to specific groups of consumers rather than to everybody → even if it means that
other consumers who do not belong to this target market are not attracted to it
Segmentation
- Marketers must understand the wants and needs of different consumer segments
- Various dimensions are relevant for understanding consumer needs and wants
- Usage (whether heavy or light) can help focus marketers’ energies
Consumers are Different
- Heavy users are the most faithful customers
- 80/20 Rule; 80% of a business’ sales come from only 20% of the customers
- 80% of the work done by 20% of the people
- Pareto Principle; Alfredo Pareto realized that roughly in everything, 80% of the
effects come from 20% of the causes
- Most businesses have dedicated base of super fans who hold up the bottom line
of their business
- You can hold up 20% of your customers through loyalty programs and other
incentives that keep them loyal → give them something in return that makes
them excited about coming back to your business
Segmenting Consumers; Demographics (age, lifestyle, ethnicity, etc)
- Demographics are statistics that measure observable aspects of a population
- Even lifestyles can be useful to marketers in that consumers may share demographic
characteristics but have very different lifestyles
- Marketers try to understand their customers and develop lifelong relationships
- This approach is referred to as relationship marketing
- Database marketing can also be used to track consumers’ buying habits
Big Data
- Database Marketing; tracks specific consumers’ buying habits very closely and crafts
products and messages tailored towards peoples’ wants and needs based on this
information
, - I.e. you look something up on the internet, 2 days later you see an ad for it on
your instagram
- Relationship Marketing
Consumer-Brand Relationships
- Role Theory; takes the view that much of consumer behavior resembles actions in a
play
- We find that consumers may develop relationships with brands over time
- Self-Concept Attachment; the product helps to establish the user’s identity
- Nostalgic Attachment; product serves as a link to the consumers past
- Interdependence; product is a part of the user’s daily routine (i.e. Tim’s coffee, iPhone)
- Love; the product elicits emotional bonds of warmth, passion, or other strong emotion
(you would basically pay any price)
Motivation
- People often buy products not for what they do but for what they mean (i.e LV bag
compared to walmart bag that looks the same)
- Products play an extended role in our lives
- Refers to the processes that lead people to behave as they do
- Occurs when a need is aroused that the consumer wishes to satisfy
- Needs VS Wants
- Hedonic; occurs when a need is aroused that the consumer wishes to satisfy,
need creates a state of tension that drives the consumer to attempt to reduce or
eliminate it (i.e. experiential needs, involving emotional responses or fantasies)
- When you spoil yourself… it is not a need, it is a want
- Utilitarian; desire to achieve some functional or practical benefit (i.e. buy
umbrella when it is raining or vegetables for nutritional reasons)
- Hedonic can also have utility (i.e. you buy a LV handbag that you use everyday to
hold your keys, so it is practical, but it is not a NEED, a winners bag would do just
fine)
Technology and the Digital Native
- Technology and culture create a new “always” on consumer
- It changes :
- Who you interact with, the information you can find, the choices you see as
available, time and energy spent dealing with decisions, etc
- Internet of Things; the growing network of interconnected devices embedded in objects
that speak to one another (i.e. being able to close your garage door with your phone)
The Pyramid of Consumer Behavior
- As it moves closer to the top, it focuses on individual behavior
- Those towards the bottom are more interested in the aggregate activities that occur
among large groups of people
, - The bottom depicts macro consumer behavior (social focus) and the top depicts micro
consumer behavior (individual focus)
-
Positivism VS Interpretivist Approaches
- Two approaches that are important to sociological research and study
- Positivism : more scientific
- 1. Associated with ‘scientific method’
- Believe the social sciences can be as rigorously scientific as the natural
sciences
- More likely to use ‘quantitative’ analysis using statistical methods etc
- 2. Believe in value-free, objective research
- Scientific methodology allows us to gain objective, trustworthy and
generalizable data, more beneficial to sociological theory
- Interpretivism : more observational
- 1. Our knowledge of the world is ‘socially constructed’
- Knowledge is not ‘objective’ and ‘value-free,’ but it is transmitted to us
through ideas, discourses, and experiences
- There are no simple ‘facts,’ only interpretations of the world
- 2. It is not possible to make valid causal statements or predictions about the
social world
, -
