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Chapter 1
Assoc. Prof Sharmila Sethu
Chapter 1
Consumers Rule
Consumer Behavior
Buying, Having, and Being
Introduction
• https://www.sophia.org/tutorials/consumerbehavior
What is Consumer Behavior?
• Consumer Behavior:
– The 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
• Role Theory:
– Identifies consumers as actors on the marketplace stage
• Consumer Behavior is a Process:
– Exchange: A transaction in which two or more
organizations give and receive something of value
The Nature of Consumer Behavior
Situations and Consumer Decisions
Consumer decisions
result from perceived
problems and
opportunities.
Consumer problems
arise in specific
situations and the nature
of the situation
influences the resulting
consumer behavior.
Using Outdoor Media to Trigger Problem Recognition
1-5
Some Issues That Arise During Stages in the
Consumption Process
Figure 1.1
Consumer Behavior Involves
Many Different Actors
• Consumer:
– A person who identifies a need or desire, makes a
purchase, and then disposes of the product
• Many people may be involved in this sequence of
events.
– Purchaser / User / Influencer
• Consumers may take the form of organizations or
groups.
Consumers’ Impact on
Marketing Strategy
• Market Segmentation:
– Identifies groups of consumers who are similar to
one another in one or more ways and then
devises marketing strategies that appeal to one or
more groups
• Demographics:
– Statistics that measure observable aspects of a
population
• Ex.: Age, Gender, Family Structure, Social Class and
Income, Race and Ethnicity, Lifestyle, and Geography
A Lesson Learned
• Nike was forced to pull this
advertisement for a running
shoe after disabilities rights
groups claimed the ads
were offensive.
• How could Nike have done a
better job of getting its
message across without
offending a powerful
demographic?
Market Segmentation
Finely-tuned marketing
segmentation strategies
allow marketers to
reach only those
consumers likely to be
interested in buying
their products.
Consumers’ Impact on
Marketing Strategy (cont.)
• Relationship Marketing: Building Bonds with
Consumers
– Relationship marketing:
• The strategic perspective that stresses the long-term,
human side of buyer-seller interactions
– Database marketing:
• Tracking consumers’ buying habits very closely, and
then crafting products and messages tailored precisely
to people’s wants and needs based on this information
Marketing’s Impact on Consumers
• Marketing and Culture:
– Popular Culture:
• Music, movies, sports, books, celebrities, and other
forms of entertainment consumed by the mass market.
– Marketers play a significant role in our view of the
world and how we live in it.
Popular Culture
Companies often create product icons to develop an
identity for their products. Many made-up creatures and
personalities, such as Mr. Clean, the Michelin tire man and
the Pillsbury Doughboy, are widely recognized figures in
popular culture.
Marketing’s Impact on Consumers: The
Meaning of Consumption
• The Meaning of Consumption:
– People often buy products not for what they do,
but for what they mean.
– Types of relationships a person may have with a
product:
•
•
•
•
Self-concept attachment
Nostalgic attachment
Interdependence
Love
Marketing’s Impact on Consumers: The
Meaning of Consumption (cont.)
• Consumption includes intangible experiences,
ideas and services in addition to tangible
objects.
• Four types of Consumption Activities:
– Consuming as experience
– Consuming as integration
– Consuming as classification
– Consuming as play
Marketing’s Impact on Consumers: The Global
Consumer
• By 2006, the majority of people on earth will
live in urban centers.
• Sophisticated marketing strategies contribute
to a global consumer culture.
• Even smaller companies look to expand
overseas.
• Globalization has resulted in varied
perceptions of the United States (both
positive and negative).
The Global Consumer
American products like Levi jeans are in
demand around the world.
Marketing’s Impact on Consumers: Virtual
Consumption
• The Digital Revolution is one of the most significant
influences on consumer behavior.
• Electronic marketing increases convenience by
breaking down the barriers of time and location.
• U-commerce:
– The use of ubiquitous networks that will slowly but surely
become part of us (i.e., wearable computers, customized
advertisements beamed to cell phones, etc.)
• Cyberspace has created a revolution in C2C
(consumer-to-consumer) activity.
Blurred Boundaries
Marketing and Reality
• Marketers and consumers coexist in a
complicated two-way relationship.
• It’s increasingly difficult for consumers to
discern the boundary between the fabricated
world and reality.
• Marketing influences both popular culture and
consumer perceptions of reality.
Blurred Boundaries
Marketing managers
often borrow imagery
from other forms of
popular culture to
connect with an
audience. This line of
syrups adapts the “look”
of a pulp detective
novel.
Marketing Ethics and Public Policy
• Business Ethics:
– Rules of conduct that guide actions in the
marketplace
– The standards against which most people in the
culture judge what is right and what is wrong, good
or bad
• Notions of right and wrong differ among
people, organizations, and cultures.
Needs and Wants:
Do Marketers Manipulate Consumers?
• Consumerspace
• Do marketers create artificial needs?
– Need: A basic biological motive
– Want: One way that society has taught us that need can be
satisfied
• Are advertising and marketing necessary?
– Economics of information perspective: Advertising is an
important source of consumer information.
• Do marketers promise miracles?
– Advertisers simply don’t know enough to manipulate
people.
Discussion Question
• This ad was created by
the American
Association of
Advertising Agencies to
counter charges that
ads create artificial
needs.
• Do you agree with the
premise of the ad? Why
or why not?
Public Policy and Consumerism
• Consumer efforts in the U.S. have contributed to the
establishment of federal agencies to oversee
consumer-related activities.
–
–
–
–
–
Department of Agriculture
Federal Trade Commission
Food and Drug Administration
Securities and Exchange Commission
Environmental Protection Agency
• Culture Jamming:
– A strategy to disrupt efforts by the corporate world to
dominate our cultural landscape
Culture Jamming
• Adbusters Quarterly is a
Canadian magazine
devoted to culture
jamming. This mock ad
skewers Benetton.
Consumerism and
Consumer Research
• Green Marketing:
– When a firm chooses to protect or enhance the natural
environment as it goes about its activities
• Reducing wasteful packaging
• Donations to charity
• Social Marketing:
– Using marketing techniques to encourage positive
activities (e.g. literacy) and to discourage negative
activities (e.g. drunk driving)
Consumer Related Issues
• UNICEF sponsored this advertising campaign against child labor. The field
of consumer behavior plays a role in addressing important consumer
issues such as child exploitation.
The Dark Side of
Consumer Behavior
• Consumer Terrorism:
– An example: Susceptibility of the nation’s food
supply to bioterrorism
• Addictive Consumption:
– Consumer addiction:
• A physiological and/or psychological dependency on
products or services
• Compulsive Consumption:
– Repetitive shopping as an antidote to tension,
anxiety, depression, or boredom
The Dark Side of
Consumer Behavior (cont.)
• Consumed Consumers:
– People who are used or exploited, willingly or not, for
commercial gain in the marketplace
• Illegal Activities:
– Consumer Theft:
• Shrinkage: The industry term for inventory and cash
losses from shoplifting and employee theft
– Anticonsumption:
• Events in which products and services are deliberately
defaced or mutilated
Consumer Behavior
As a Field of Study
• Consumer behavior only recently a formal
field of study
• Interdisciplinary influences on the study of
consumer behavior
– Consumer behavior studied by researchers from
diverse backgrounds
– Consumer phenomena can be studied in different
ways and on different levels
The Pyramid of Consumer Behavior
Figure 1.2
The Wheel of Consumer Behavior
Figure 1.3
What is Consumer Behavior?
The study of how consumers
•
•
•
•
Select
Purchase
Use
Dispose of
goods and services in the process of satisfying their
personal and household needs and wants.
Why did consumer behavior become a
separate discipline from marketing?
• Marketers came to realize that consumers did not always
act or react as marketing theory suggested they would
• Consumers rejected mass-marketed products, preferring
differentiated products that reflected their own special
needs, personalities and lifestyles
• Even in industrial markets, where needs are more
homogeneous than consumer markets, buyers exhibited
diversified preferences and less predictable purchase
behavior
Other factors that contributed to the growing
interest in consumer behavior
• The accelerated rate of new product
development
• The consumer movement
• Public policy considerations
• Environmental concerns
• The opening of national markets throughout
the world
What Do Buying Decisions Involve?
Consider a decision to acquire a pet
• Decision entails determining:
–
–
–
–
–
–
–
Where to learn about pets
Where to purchase the selected pet
How much to pay for it
Who will take care of it
What supplies or services are needed for it
Where to purchase such supplies or services
How much to pay for supplies and services
Discussion Questions
Why would someone shop on the Internet? Buy an
iPod? Eat at TGI Friday’s frequently?
– Why would someone else not make those purchases?
– How would you choose one outlet, brand, or model over
the others? Would others make the same choice in the
same way?
Discussion Questions
• Describe your lifestyle. How does it differ from your
parents’ lifestyle?
• Describe a recent purchase you made. To what
extent did you follow the consumer decision-making
process described in this chapter? How would you
explain any differences?
Trends influencing consumer behavior in
contemporary society
The Information Superhighway
Focus on Health and Beauty
Shifting Roles of Sexes
Telecommuting
Personalized Economy
Emphasis on Leisure
Concern about Safety
Focus on Ethics
Diversity
A Global Village
Ecological Consciousness
Changing Perception of Religion
• https://www.youtube.com/watch?v=rDx27GXI
Cy4
1. Growth of the information superhighway
Positive Implications
• Marketers can be in touch with anyone, anywhere
and at any time
• Availability of information increases consumers’
knowledge and power in the marketplace.
Negative Implications
• Increased information about consumers raises
serious privacy issues
• Creation of a digital divide that further
stratifies society based on wealth, education
and age
• https://www.youtube.com/watch?v=oLXfTbE
HCvY
2. Focus on health, fitness, and beauty
• Golden opportunities are created for marketers of
many products ranging from fat-free foods to
vitamins, as well as for services ranging from plastic
surgery to hair implants.
3. Shifting roles of men and women
•
•
•
•
More women in the workforce
More women in management positions
More women raising children alone
Gay and lesbian families changing the traditional model
of the family
• A redefinition of buying decision centers
within the family
• A redefinition of sales and advertising
strategies
4. Telecommuting and the office of the future
• Decline in demand for products and services such
as cars, public transportation, automobile
insurance, car repair, child care, and baby-sitting
services
• Increased need for efficient package-delivery
services
• Rise in demand for state-of-the-art
communication devices
5. Emphasis on leisure
•
•
People engage in leisure activities for
different reasons
Knowing those reasons helps marketers
select appropriate promotional appeals
6. Concern About Personal Safety
• Enhanced demand for defense-related products
• Post 9/11 issues relating to travel
7. Diversity in the workplace and marketplace
“Traditional” minority groups in the US include:
• Women
• African-Americans
• Asian-Americans
• Latinos
8. Focus on ethics
• For much of history, business ethics was
considered an oxymoron
• In the 1980’s, ethics became an issue with the
discovery of numerous instances of corporate
wrongdoing
– Ford Pinto
– Bhopal disaster
– Asbestos
– Tobacco
9. Ecological consciousness
Studies show that:
• Consumers consider themselves
“environmentalists”
• They have changed their habits to protect the
environment
• They are willing to pay more for products that
are considered environmentally safe
• An increasing flow of environmentally friendly
products
• Positive shift in public attitudes toward firms
and products that protect the environment
• As a result, the rise of green marketing
• Greater potential for deception based on false
claims of environmental safety of products
10. The rise of the global village
• An increasing acceptance of the free market system
in many foreign countries (e.g., Eastern Europe)
• Growth of major regional free-trade areas, such as
NAFTA and the EU, resulting in increased trade
• Expansion of American media—including
advertising—to other nations exposes consumers to
availability of American goods
Interdisciplinary Influences
Individual Focus
Experimental Psychology
Clinical Psychology
Developmental Psychology
Human Ecology
Microeconomics
Social Psychology
Sociology
Macroeconomics
Semiotics/Literary Criticism
Demography
History
Cultural Anthropology
Social Focus