,Part I: Introduction
Chapter 1: Consumer Behavior and Marketing Strategy
LO1: Define consumer behavior
Consumer behavior: is 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 is a complex, multidimensional process.
o Consumer decisions involve numerous steps and are influenced by
a host of factors including demographics, lifestyle, and cultural
values.
o Consumer decisions are complicated when the needs and wants of
multiple individuals or groups are considered. (Where to go on
vacation with family?)
Successful marketing decisions by firms, nonprofit organizations, and
regulatory agencies require an understanding of the processes
underlying consumer behavior.
Successful marketing decisions require organizations to collect
information about the specific consumers involved in the marketing
decision at hand. Consumer decisions are heavily influenced by situation
and product category.
Marketing practices designed to influence consumer behavior involve
ethical issues that affect the firm, the individual, and society.
LO2: Summarize the applications of consumer behavior
Consumer behavior can be applied in four areas
1. Marketing strategy: Involves setting levels of the marketing mix based
on an understanding of the market and segments involved to create
desirable outcomes.
2. Regulatory policy: involves developing policies, guidelines, and laws to
protect and aid consumers. (Food and Drug Administration)
3. Social marketing: the application of marketing strategies and tactics to
alter or create behaviors that have a positive effect on the targeted
individuals or society as a whole. For example reduce smoking & recycling.
4. Informed individuals: Creating more informed individuals involves
educating consumers about their own consumption behaviors as well as
marketers’ efforts to influence it in such a way as to create a more sound
citizenship, effective purchasing behavior, and reasoned business ethics.
LO3: Explain how consumer behavior can be used to develop marketing strategy
The interplay between consumer behavior and marketing strategy involves five stages:
Company, comMpeatriktoertsa,
cnoanldyistisons, consumers
Market segmentation
Identify product-related need sets, group customers with similar
need sets, describe each group, select attractive segment to target
Marketing strategy
Product, price, distribuation, promotion, service
Consumer decision process
Problem recognition, information search, alternative evaluation,
purchase, use, evaluation
Outcomes
Individuals/firms/society
,Customer value: the difference between all the benefits derived from a total
product and all costs of acquiring those benefits. It is critical that a firm consider
value from the customer’s perspective.
Total product: the entire set of characteristics: product features, price,
communications, distribution and services (marketing mix).
Market analysis components
Requires a thorough understanding of the consumption process of potential
customers, the organization’s own capabilities, the capabilities of competitors,
and the economic, physical, and technological environment in which these
elements will interact.
1. The Consumers: It is not possible to anticipate and react to customer’s
needs and desires without a complete understanding of consumer
behavior. Discovering customers’ needs is a complex process, but it
can often be accomplished by marketing research
2. The Company: A firm must fully understand its own ability to meet
customer needs. This involves evaluating all aspect of the firm.
Marketing skills would include new- product development capabilities,
channel strength, advertising abilities, service capabilities, marketing
research abilities, market and consumer knowledge, etc.
3. The Competitors: understanding customer needs must be at the
same level of knowledge of a firm’s key competitors.
4. The Conditions: the state of economy, physical environment, government
regulations, and technological developments affects consumer needs and
expectations as well as company and competitor capabilities. A firm cannot
develop a sound marketing strategy without anticipating the conditions
under which that strategy will be implemented.
Market segmentation
Most important marketing decision a firm makes is the selection of one or ore
market segments on which to focus. Market segment: a portion of a larger market
whose needs differ somewhat from the larger market. Behavioral targeting:
consumers’ online activity is tracked and specific banner ads are delivered based
on that activity. Marketing segmentation involves four steps:
Identifying product-related need sets: organizations approach with a set
of current and potential capabilities such as reputation, an existing
product, a technology, or some other skill set. Need set is used to reflect
the fact that most products in developed economies satisfy more than
one need.
o A firm might start by identifying various ethnic groups and then
attempt to discover similarities and differences in consumption
related needs across these groups.
o Better-defined segments will generally be discovered by focusing
first on needs and then on consumer characteristics associated
with those needs, both approaches can be used for
segmentation.
Grouping customers with similar need sets: for example those who
are basic shoppers are all similar in that their most critical need set
is mall essentials.
Describing each group: then they should be described in terms of their
demographics, lifestyles, and media usage.
Selecting an attractive segment: Once you understand each segment
select the target market: the segment(s) of the larger market on which
we will focus our marking effort. Provide customer value at a profit;
segment size, growth rate, competitor strength, cost of providing the
superior value etc. Each segment has its own marketing strategy; each
element of the marketing mix should be examined to determine if
changes are required from one segment to another.
Marketing strategy
No selection of a target market without formulating marketing strategy.
Marketing strategy: how will we provide superior customer value to our target
market? Marketing mix: the product, price, communications, distribution, and
services provided to the target market. The combination of these elements that
meets customer needs and provides customer value.
The product: anything a consumer acquires or might acquire to meet a
perceived need. Consumers are generally buying need satisfaction, not
, physical attributes. The
Chapter 1: Consumer Behavior and Marketing Strategy
LO1: Define consumer behavior
Consumer behavior: is 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 is a complex, multidimensional process.
o Consumer decisions involve numerous steps and are influenced by
a host of factors including demographics, lifestyle, and cultural
values.
o Consumer decisions are complicated when the needs and wants of
multiple individuals or groups are considered. (Where to go on
vacation with family?)
Successful marketing decisions by firms, nonprofit organizations, and
regulatory agencies require an understanding of the processes
underlying consumer behavior.
Successful marketing decisions require organizations to collect
information about the specific consumers involved in the marketing
decision at hand. Consumer decisions are heavily influenced by situation
and product category.
Marketing practices designed to influence consumer behavior involve
ethical issues that affect the firm, the individual, and society.
LO2: Summarize the applications of consumer behavior
Consumer behavior can be applied in four areas
1. Marketing strategy: Involves setting levels of the marketing mix based
on an understanding of the market and segments involved to create
desirable outcomes.
2. Regulatory policy: involves developing policies, guidelines, and laws to
protect and aid consumers. (Food and Drug Administration)
3. Social marketing: the application of marketing strategies and tactics to
alter or create behaviors that have a positive effect on the targeted
individuals or society as a whole. For example reduce smoking & recycling.
4. Informed individuals: Creating more informed individuals involves
educating consumers about their own consumption behaviors as well as
marketers’ efforts to influence it in such a way as to create a more sound
citizenship, effective purchasing behavior, and reasoned business ethics.
LO3: Explain how consumer behavior can be used to develop marketing strategy
The interplay between consumer behavior and marketing strategy involves five stages:
Company, comMpeatriktoertsa,
cnoanldyistisons, consumers
Market segmentation
Identify product-related need sets, group customers with similar
need sets, describe each group, select attractive segment to target
Marketing strategy
Product, price, distribuation, promotion, service
Consumer decision process
Problem recognition, information search, alternative evaluation,
purchase, use, evaluation
Outcomes
Individuals/firms/society
,Customer value: the difference between all the benefits derived from a total
product and all costs of acquiring those benefits. It is critical that a firm consider
value from the customer’s perspective.
Total product: the entire set of characteristics: product features, price,
communications, distribution and services (marketing mix).
Market analysis components
Requires a thorough understanding of the consumption process of potential
customers, the organization’s own capabilities, the capabilities of competitors,
and the economic, physical, and technological environment in which these
elements will interact.
1. The Consumers: It is not possible to anticipate and react to customer’s
needs and desires without a complete understanding of consumer
behavior. Discovering customers’ needs is a complex process, but it
can often be accomplished by marketing research
2. The Company: A firm must fully understand its own ability to meet
customer needs. This involves evaluating all aspect of the firm.
Marketing skills would include new- product development capabilities,
channel strength, advertising abilities, service capabilities, marketing
research abilities, market and consumer knowledge, etc.
3. The Competitors: understanding customer needs must be at the
same level of knowledge of a firm’s key competitors.
4. The Conditions: the state of economy, physical environment, government
regulations, and technological developments affects consumer needs and
expectations as well as company and competitor capabilities. A firm cannot
develop a sound marketing strategy without anticipating the conditions
under which that strategy will be implemented.
Market segmentation
Most important marketing decision a firm makes is the selection of one or ore
market segments on which to focus. Market segment: a portion of a larger market
whose needs differ somewhat from the larger market. Behavioral targeting:
consumers’ online activity is tracked and specific banner ads are delivered based
on that activity. Marketing segmentation involves four steps:
Identifying product-related need sets: organizations approach with a set
of current and potential capabilities such as reputation, an existing
product, a technology, or some other skill set. Need set is used to reflect
the fact that most products in developed economies satisfy more than
one need.
o A firm might start by identifying various ethnic groups and then
attempt to discover similarities and differences in consumption
related needs across these groups.
o Better-defined segments will generally be discovered by focusing
first on needs and then on consumer characteristics associated
with those needs, both approaches can be used for
segmentation.
Grouping customers with similar need sets: for example those who
are basic shoppers are all similar in that their most critical need set
is mall essentials.
Describing each group: then they should be described in terms of their
demographics, lifestyles, and media usage.
Selecting an attractive segment: Once you understand each segment
select the target market: the segment(s) of the larger market on which
we will focus our marking effort. Provide customer value at a profit;
segment size, growth rate, competitor strength, cost of providing the
superior value etc. Each segment has its own marketing strategy; each
element of the marketing mix should be examined to determine if
changes are required from one segment to another.
Marketing strategy
No selection of a target market without formulating marketing strategy.
Marketing strategy: how will we provide superior customer value to our target
market? Marketing mix: the product, price, communications, distribution, and
services provided to the target market. The combination of these elements that
meets customer needs and provides customer value.
The product: anything a consumer acquires or might acquire to meet a
perceived need. Consumers are generally buying need satisfaction, not
, physical attributes. The
