Chapter 1: What is Consumer Behaviour
Consumer Behaviour Perspectives
Consumer behaviour can be defined from two different perspectives. This is because the
term refers to both:
1. Human thought and action
2. Field of study (Human Inquiry)
Consumer Behaviour: is the set of value seeking activities that take place as people go
about addressing their needs.
The Basic Consumption Process
• An exchange is the acting out of a decision to give something up in return for
something of greater value.
• Costs are the negative results of consumption.
• Benefits are positive results of consumption.
Consumption: represents the process by which goods, services, or ideas are used and
transformed into value.
Note: Discretionary consumption is where marketers spent a lot of time, money, and effort.
This is an important part of consumption, there would be no economy without discretionary
needs.
• Acquiring the customer in the first place is the most expensive part, however that
customer will provide great value after.
Behavioural Economics: study of what happens in markets with decision makers who
display human limitations and complications.
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,Relationships of Consumer Behaviour with other Disciplines
Consumer behaviour is mainly influenced by:
• Economics
• Anthropology
• Psychology
• Sociology
• Law & History
• Neuroscience
• Finance & Statistics
• Political sciences & Management
Questions to consider in order to understand how important serving customers well
should be to any given organization:
1. How competitive is the marketing environment?
2. How dependant is the marketer on repeat business?
Competition and Consumer Orientation
• Consumer Orientation: is a way of doing business in which the actions and
decisions making of the institution prioritize consumer value and satisfaction
above all other concerns.
• Market orientation: is an organizational culture that embodies the importance of
creating value for customers among all employees.
• Relationship Marketing: is based on the belief that firm performance is enhanced
through repeat business.
• Touchpoints: are direct contacts between the firm and a customer.
Notes: marketers are increasingly realizing the value of relationship marketing.
Consumer behaviour is important in at least three ways:
1. CB provides an input to business/marketing strategy
2. CB provides a force that shapes society
3. CB provides an input to making responsible decisions as a consumer
Characteristics of Successful Innovations
• Relative advantage: makes things better than before
• Simplicity: all things equal, a simpler innovation is better than a complex
innovation
• Observable: things that are observable tend to get adopt faster
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, • Triability: things that can be tried with little or n risk get adopted faster
• Consistency: consumers are more likely to adopt things that are congruent with
existing values and knowledge
Different Ways of Doing Business
Undifferentiated Marketing: the same basic product if offered to all customers.
Production Orientation: approach where innovation is generated primarily towards
making the production process as efficient and economic as possible.
Differentiated Marketers: firms that serve multiple market segments, each with a unique
product offering.
One to One Marketing: plan wherein a different product is offered for each individual
customer so that each customer is treated as a segment of one.
Niche Marketing: plan where a firm specializes in serving one market segment with
particularly unique demand characteristics.
3
Consumer Behaviour Perspectives
Consumer behaviour can be defined from two different perspectives. This is because the
term refers to both:
1. Human thought and action
2. Field of study (Human Inquiry)
Consumer Behaviour: is the set of value seeking activities that take place as people go
about addressing their needs.
The Basic Consumption Process
• An exchange is the acting out of a decision to give something up in return for
something of greater value.
• Costs are the negative results of consumption.
• Benefits are positive results of consumption.
Consumption: represents the process by which goods, services, or ideas are used and
transformed into value.
Note: Discretionary consumption is where marketers spent a lot of time, money, and effort.
This is an important part of consumption, there would be no economy without discretionary
needs.
• Acquiring the customer in the first place is the most expensive part, however that
customer will provide great value after.
Behavioural Economics: study of what happens in markets with decision makers who
display human limitations and complications.
1
,Relationships of Consumer Behaviour with other Disciplines
Consumer behaviour is mainly influenced by:
• Economics
• Anthropology
• Psychology
• Sociology
• Law & History
• Neuroscience
• Finance & Statistics
• Political sciences & Management
Questions to consider in order to understand how important serving customers well
should be to any given organization:
1. How competitive is the marketing environment?
2. How dependant is the marketer on repeat business?
Competition and Consumer Orientation
• Consumer Orientation: is a way of doing business in which the actions and
decisions making of the institution prioritize consumer value and satisfaction
above all other concerns.
• Market orientation: is an organizational culture that embodies the importance of
creating value for customers among all employees.
• Relationship Marketing: is based on the belief that firm performance is enhanced
through repeat business.
• Touchpoints: are direct contacts between the firm and a customer.
Notes: marketers are increasingly realizing the value of relationship marketing.
Consumer behaviour is important in at least three ways:
1. CB provides an input to business/marketing strategy
2. CB provides a force that shapes society
3. CB provides an input to making responsible decisions as a consumer
Characteristics of Successful Innovations
• Relative advantage: makes things better than before
• Simplicity: all things equal, a simpler innovation is better than a complex
innovation
• Observable: things that are observable tend to get adopt faster
2
, • Triability: things that can be tried with little or n risk get adopted faster
• Consistency: consumers are more likely to adopt things that are congruent with
existing values and knowledge
Different Ways of Doing Business
Undifferentiated Marketing: the same basic product if offered to all customers.
Production Orientation: approach where innovation is generated primarily towards
making the production process as efficient and economic as possible.
Differentiated Marketers: firms that serve multiple market segments, each with a unique
product offering.
One to One Marketing: plan wherein a different product is offered for each individual
customer so that each customer is treated as a segment of one.
Niche Marketing: plan where a firm specializes in serving one market segment with
particularly unique demand characteristics.
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