TBKLeo
1. An introduction to the study of consumer behaviour (pg. 2-17)
Consumer behaviour the behaviour that consumers display in searching for, purchasing, using,
evaluating and disposing of products, services and ideas
The term consumer behaviour describes two different kinds of consuming entities:
personal consumer
organisational consumer
Personal consumer the individual who buys goods and services for his or her own use, for
household use, for the use of a family member or a friend
Organisational consumer a business, government agency or other institution (commercial or
charitable) that buys the goods, services and/or equipment necessary for
the organisation to function
Marketing concept a consumer-oriented philosophy that suggest that satisfaction of
consumer needs provides the focus for product development and
marketing strategy to enable the firm to meet its own organisational goals
The production concept assumes that consumers are mostly interested in product availability at low prices.
The product concept assumes that consumers will buy the product that offers them the highest quality, the best
performance and the most features.
The selling concept assumes that consumers are unlikely to buy the product unless they are aggressively persuaded to
do so.
The key assumption underlying the marketing concept is that to be successful a company must determine the needs and
wants of specific target markets and deliver the desires satisfactions better than the competition.
Consumer research methodology used to study and interpret consumer behaviour
There are two theoretical perspectives that guide the development of consumer research methodology:
positivist approach
tends to be objective and empirical
interpretivist approach
tends to be qualitative and based on small samples
Market segmentation the process of dividing a potential market into distinct subsets of
consumers and selecting one or more segments as a target market to be
reached with a distinct marketing mix
Market targeting the selection of a distinct market segment at which to direct a marketing
strategy
Positioning establishing a specific image for a brand in relation to competing brands
Marketing mix the unique configuration of the four basic marketing variables (product,
promotion, price and channels of distribution) that a marketing
organisation controls
The marketing mix consists of four elements (4P’s):
product
price
promotion
place
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, TBKLeo
The three drivers of successful relationships between marketers and customers are:
customer value
customer satisfaction
customer retention
Customer value the ratio between the customer’s perceived benefits and the resources
used to obtain those benefits
Customer satisfaction an individual’s perception of the performance of the product or service in
relation to his or her expectations
Customer retention providing value to customers continuously so that they will stay with the
company rather than switch to a competitor
Small reductions in customer defections produce significant increases in profits because:
1. loyal customers buy more products
2. loyal customers are less price sensitive and pay less attention to competitors’ advertising
3. servicing existing customers is cheaper
4. loyal customers spread positive word-of-mouth and refer to other customers
Using a ‘customer pyramid’ where customers are grouped into four tiers:
1. platinum tier – heavy users who are not price sensitive and who are willing to try new offerings
2. gold tier – heavy users but not as profitable because they are more price sensitive and ask for more discounts
3. iron tier – customers whose spending volume and profitability do not merit special treatment from the company
4. lead tier – customers who actually cost the company money because they claim more attention than is merited by
their spending, tie up company resources and spread negative word-of-mouth
Digital technologies allow much greater customisation of products, services and promotional messages than older
marketing tools.
Online communication and emerging digital technologies have introduced several dramatic changes into the business
environment:
consumers have more power than ever before
consumers have access to more information than ever before
Digital communication enables a two-way interactive exchange compared to the one-way street that traditional advertising
offers.
Many marketers now employ narrowcasting – a method that enables them to develop and deliver more customised
messages to increasingly smaller markets on an ongoing basis.
The digital revolution in the marketplace, and its impact on consumer behaviour, presents many challenges for today’s
marketers.
Societal marketing concept a revision of the traditional marketing concept that suggests that
marketers adhere to principles of social responsibility in the marketing of
their goods and services; that is, they must endeavor to satisfy the needs
and wants of their target markets in ways that preserve and enhance the
well-being of consumers and society as a whole
Marketing ethics and social responsibility are important components of organisational effectiveness.
Marketing ethics designing, packaging, pricing, advertising and distributing products in
such a way that negative consequences to consumers, employees and
society in general are avoided
Consumer decision-making the process of making purchase decisions based on cognitive and
emotional influences such as impulse, family, friends, advertisers, role
models, moods and situations that influence a purchase
The process of consumer decision-making can be viewed as three distinct but interlocking stages (simple model
consumer decision-making):
Page 2 of 31
1. An introduction to the study of consumer behaviour (pg. 2-17)
Consumer behaviour the behaviour that consumers display in searching for, purchasing, using,
evaluating and disposing of products, services and ideas
The term consumer behaviour describes two different kinds of consuming entities:
personal consumer
organisational consumer
Personal consumer the individual who buys goods and services for his or her own use, for
household use, for the use of a family member or a friend
Organisational consumer a business, government agency or other institution (commercial or
charitable) that buys the goods, services and/or equipment necessary for
the organisation to function
Marketing concept a consumer-oriented philosophy that suggest that satisfaction of
consumer needs provides the focus for product development and
marketing strategy to enable the firm to meet its own organisational goals
The production concept assumes that consumers are mostly interested in product availability at low prices.
The product concept assumes that consumers will buy the product that offers them the highest quality, the best
performance and the most features.
The selling concept assumes that consumers are unlikely to buy the product unless they are aggressively persuaded to
do so.
The key assumption underlying the marketing concept is that to be successful a company must determine the needs and
wants of specific target markets and deliver the desires satisfactions better than the competition.
Consumer research methodology used to study and interpret consumer behaviour
There are two theoretical perspectives that guide the development of consumer research methodology:
positivist approach
tends to be objective and empirical
interpretivist approach
tends to be qualitative and based on small samples
Market segmentation the process of dividing a potential market into distinct subsets of
consumers and selecting one or more segments as a target market to be
reached with a distinct marketing mix
Market targeting the selection of a distinct market segment at which to direct a marketing
strategy
Positioning establishing a specific image for a brand in relation to competing brands
Marketing mix the unique configuration of the four basic marketing variables (product,
promotion, price and channels of distribution) that a marketing
organisation controls
The marketing mix consists of four elements (4P’s):
product
price
promotion
place
Page 1 of 31
, TBKLeo
The three drivers of successful relationships between marketers and customers are:
customer value
customer satisfaction
customer retention
Customer value the ratio between the customer’s perceived benefits and the resources
used to obtain those benefits
Customer satisfaction an individual’s perception of the performance of the product or service in
relation to his or her expectations
Customer retention providing value to customers continuously so that they will stay with the
company rather than switch to a competitor
Small reductions in customer defections produce significant increases in profits because:
1. loyal customers buy more products
2. loyal customers are less price sensitive and pay less attention to competitors’ advertising
3. servicing existing customers is cheaper
4. loyal customers spread positive word-of-mouth and refer to other customers
Using a ‘customer pyramid’ where customers are grouped into four tiers:
1. platinum tier – heavy users who are not price sensitive and who are willing to try new offerings
2. gold tier – heavy users but not as profitable because they are more price sensitive and ask for more discounts
3. iron tier – customers whose spending volume and profitability do not merit special treatment from the company
4. lead tier – customers who actually cost the company money because they claim more attention than is merited by
their spending, tie up company resources and spread negative word-of-mouth
Digital technologies allow much greater customisation of products, services and promotional messages than older
marketing tools.
Online communication and emerging digital technologies have introduced several dramatic changes into the business
environment:
consumers have more power than ever before
consumers have access to more information than ever before
Digital communication enables a two-way interactive exchange compared to the one-way street that traditional advertising
offers.
Many marketers now employ narrowcasting – a method that enables them to develop and deliver more customised
messages to increasingly smaller markets on an ongoing basis.
The digital revolution in the marketplace, and its impact on consumer behaviour, presents many challenges for today’s
marketers.
Societal marketing concept a revision of the traditional marketing concept that suggests that
marketers adhere to principles of social responsibility in the marketing of
their goods and services; that is, they must endeavor to satisfy the needs
and wants of their target markets in ways that preserve and enhance the
well-being of consumers and society as a whole
Marketing ethics and social responsibility are important components of organisational effectiveness.
Marketing ethics designing, packaging, pricing, advertising and distributing products in
such a way that negative consequences to consumers, employees and
society in general are avoided
Consumer decision-making the process of making purchase decisions based on cognitive and
emotional influences such as impulse, family, friends, advertisers, role
models, moods and situations that influence a purchase
The process of consumer decision-making can be viewed as three distinct but interlocking stages (simple model
consumer decision-making):
Page 2 of 31
