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CHAPTER 2
How Consumer Analysis
Affects Business Strategy
Roger D. Blackwell, Paul W. Miniard, and James F. Engel, Consumer Behavior, Ninth Edition
Copyright© 2001 by Harcourt, Inc.
Marketing Strategy
Involves the allocation of resources
to develop and sell products or
services that consumers will
perceive to provide more value
than competitive goods
Blackwell, Miniard, and Engel, Consumer Behavior, Ninth Edition, Copyright© 2001 by Harcourt, Inc.
Marketing Strategy
Involves the allocation of resources
to develop and sell products or
services that consumers will
perceive to provide more value
than competitive goods
Value: the difference between what
consumers give up (pay with
resources) for a product and the
benefits they receive in return
Blackwell, Miniard, and Engel, Consumer Behavior, Ninth Edition, Copyright© 2001 by Harcourt, Inc.
Foundations of Market-driven
Strategies
A thorough understanding of
consumer trends, global markets,
models to predict purchase and
consumption patterns, and
communication methods to reach
target markets most effectively
Blackwell, Miniard, and Engel, Consumer Behavior, Ninth Edition, Copyright© 2001 by Harcourt, Inc.
Foundations of Market-driven
Strategies
A thorough understanding of
consumer trends, global markets,
models to predict purchase and
consumption patterns, and
communication methods to reach
target markets most effectively
Consumer Behavior
Blackwell, Miniard, and Engel, Consumer Behavior, Ninth Edition, Copyright© 2001 by Harcourt, Inc.
Foundations of Market-driven
Strategies
A thorough understanding of
consumer trends, global markets,
models to predict purchase and
consumption patterns, and
communication methods to reach
target markets most effectively
Consumer Behavior
Consumer Insight
Blackwell, Miniard, and Engel, Consumer Behavior, Ninth Edition, Copyright© 2001 by Harcourt, Inc.
Creating Market-driven Strategies
Shared vision (among partners) about
the market and expected changes
Blackwell, Miniard, and Engel, Consumer Behavior, Ninth Edition, Copyright© 2001 by Harcourt, Inc.
Creating Market-driven Strategies
Shared vision (among partners) about
the market and expected changes
Selecting avenues for delivering superior
value to customers
Blackwell, Miniard, and Engel, Consumer Behavior, Ninth Edition, Copyright© 2001 by Harcourt, Inc.
Creating Market-driven Strategies
Shared vision (among partners) about
the market and expected changes
Selecting avenues for delivering superior
value to customers
Positioning the firm and brand based on
distinctive competencies
Blackwell, Miniard, and Engel, Consumer Behavior, Ninth Edition, Copyright© 2001 by Harcourt, Inc.
Creating Market-driven Strategies
Shared vision (among partners) about
the market and expected changes
Selecting avenues for delivering superior
value to customers
Positioning the firm and brand based on
distinctive competencies
Recognizing value of collaborative
relationships with channel members and
other entities
Blackwell, Miniard, and Engel, Consumer Behavior, Ninth Edition, Copyright© 2001 by Harcourt, Inc.
Creating Market-driven Strategies
Shared vision (among partners) about
the market and expected changes
Selecting avenues for delivering superior
value to customers
Positioning the firm and brand based on
distinctive competencies
Recognizing value of collaborative
relationships with channel members and
other entities
New organizational designs for
implementing and managing strategies
Blackwell, Miniard, and Engel, Consumer Behavior, Ninth Edition, Copyright© 2001 by Harcourt, Inc.
Market Analysis
Consumer
Company
Environmental
Political/Legal
Implementation
in Marketplace
Segmentation
Demographic
Situational
Psychographic
Marketing Mix
Product, Brand,
Price, Place
Promotion, and
7Rs
Blackwell, Miniard, and Engel, Consumer Behavior, Ninth Edition, Copyright© 2001 by Harcourt, Inc.
Market Analysis
The process of analyzing consumers
and trends; current and potential
competitors; company strengths
and resources; and the
technological, legal, and economic
environments
Blackwell, Miniard, and Engel, Consumer Behavior, Ninth Edition, Copyright© 2001 by Harcourt, Inc.
Market Analysis
The process of analyzing consumers
and trends; current and potential
competitors; company strengths
and resources; and the
technological, legal, and economic
environments
One goal is to minimize the number
of failed products introduced to the
market by better understanding the
wants and needs of the market
Blackwell, Miniard, and Engel, Consumer Behavior, Ninth Edition, Copyright© 2001 by Harcourt, Inc.
Market Analysis: Consumer
Insight and Product Development
Consumer Insight: an understanding of
consumers’ expressed and unspoken
needs and realities that affect how they
make life, brand, and product choices.
Combines fact (from research) and
intuition to yield an insight that can lead
to a new product, existing product
innovation, brand extension, or revised
communication plan
Blackwell, Miniard, and Engel, Consumer Behavior, Ninth Edition, Copyright© 2001 by Harcourt, Inc.
V8, a brand of
vegetable and
fruit juices,
introduced a
new individual
size juice box
for consumers
who want to
drink “on the
go.”
Blackwell, Miniard, and Engel, Consumer Behavior, Ninth Edition, Copyright© 2001 by Harcourt, Inc.
Market Analysis: Consumer
Environment
Includes demographic trends, personal
and group influences, motivation,
attitudes, knowledge, changing needs,
consumption patterns, and consumer
lifestyles
Changes in the consumer environment
can lead to changes in packaging,
positioning, product design, and
advertising methods
-Mitsubishi
-Healthy Choice
Blackwell, Miniard, and Engel, Consumer Behavior, Ninth Edition, Copyright© 2001 by Harcourt, Inc.
Changing Consumer Health Trends
Blackwell, Miniard, and Engel, Consumer Behavior, Ninth Edition, Copyright© 2001 by Harcourt, Inc.
Market Analysis: Corporate
Strengths and Resources
Resources:
-Financial
-Personnel / managerial
-Production
-Development and design
-Research
-Marketing / advertising
Strengths:
-3M known for leadership,
quality, and innovation
-Advertising highlights
corporate strength
Blackwell, Miniard, and Engel, Consumer Behavior, Ninth Edition, Copyright© 2001 by Harcourt, Inc.
Market Analysis: Current and
Potential Competitors
-Who are current competitors and which firms
are likely to become competitors?
-What are advantages/disadvantages of
competitors and competitive products?
-How will competitors react to new products or
innovations (Manco tape; see Duck Company Case)
Blackwell, Miniard, and Engel, Consumer Behavior, Ninth Edition, Copyright© 2001 by Harcourt, Inc.
Market Analysis: Market
Environment
State of
Economy
Government
Stability and
Regulations
Market
Environment
Physical
Conditions
Technology
Blackwell, Miniard, and Engel, Consumer Behavior, Ninth Edition, Copyright© 2001 by Harcourt, Inc.
Market Analysis
Consumer
Company
Environmental
Political/Legal
Implementation
in Marketplace
Segmentation
Demographic
Situational
Psychographic
Marketing Mix
Product, Brand,
Price, Place
Promotion, and
7Rs
Blackwell, Miniard, and Engel, Consumer Behavior, Ninth Edition, Copyright© 2001 by Harcourt, Inc.
Market Segmentation
Process of identifying a group of people
similar in one or more ways, based on a
variety of characteristics and behaviors
Results in market segment: a group of
consumers with similar needs and
behaviors that differ from those of the
entire mass market
Goal: minimize variance within groups
and maximize variance between groups
Opposite of market aggregation
Blackwell, Miniard, and Engel, Consumer Behavior, Ninth Edition, Copyright© 2001 by Harcourt, Inc.
Market Segmentation
Identifying Segments
Consumer Characteristics
~Demographics
~Psychographics
~Purchase & Consumption
Behavior
~Personality
~Culture
~Values
Geographical Characteristics
~National boundaries
~State or regional boundaries
~Urban/rural
~Zip code
Situational Characteristics
~Work versus Leisure usage
~Where used
~Time
Using multiple variables to narrow target
Blackwell, Miniard, and Engel, Consumer Behavior, Ninth Edition, Copyright© 2001 by Harcourt, Inc.
Criteria for Choosing Segments
Measurability: ability to obtain information
about the size, nature and behavior of a
market segment
Accessibility: degree to which segments
can be reached, either through various
advertising or communication programs or
methods of retailing
Substantiality: size of the market--is it
large enough to be profitable?
Congruity: how similar segment members
are in characteristics or behaviors
Blackwell, Miniard, and Engel, Consumer Behavior, Ninth Edition, Copyright© 2001 by Harcourt, Inc.
Market Segmentation
Increasing diversity in consumer needs
and wants leads to mass customization:
customizing goods for individual
customers in high volumes and at
relatively low costs
Blackwell, Miniard, and Engel, Consumer Behavior, Ninth Edition, Copyright© 2001 by Harcourt, Inc.
Market Segmentation
Increasing diversity in consumer needs
and wants leads to mass customization:
customizing goods for individual
customers in high volumes and at
relatively low costs
Key is understanding which customized
features customers value the most
Blackwell, Miniard, and Engel, Consumer Behavior, Ninth Edition, Copyright© 2001 by Harcourt, Inc.
Market Segmentation
Increasing diversity in consumer needs
and wants leads to mass customization:
customizing goods for individual
customers in high volumes and at
relatively low costs
Key is understanding which customized
features customers value the most
Ability to reach “segment of one”
Blackwell, Miniard, and Engel, Consumer Behavior, Ninth Edition, Copyright© 2001 by Harcourt, Inc.
Market Segmentation
Increasing diversity in consumer needs
and wants leads to mass customization:
customizing goods for individual
customers in high volumes and at
relatively low costs
Key is understanding which customized
features customers value the most
Ability to reach “segment of one”
Segmentation can increase profitability
-decreases marketing expenses
-increases value (and therefore price) to
consumers
Blackwell, Miniard, and Engel, Consumer Behavior, Ninth Edition, Copyright© 2001 by Harcourt, Inc.
Segmentation at The Limited
Different stores for different folks
Each division evolved from
servicing a new segment of consumer
The Limited:
Young to Boomer
Career Women
Structure:
Young Men
Lane Bryant:
Larger-sizes for
“Real” Women
Blackwell, Miniard, and Engel, Consumer Behavior, Ninth Edition, Copyright© 2001 by Harcourt, Inc.
Market Analysis
Consumer
Company
Environmental
Political/Legal
Implementation
in Marketplace
Segmentation
Demographic
Situational
Psychographic
Marketing Mix
Product, Brand,
Price, Place
Promotion, and
7Rs
Blackwell, Miniard, and Engel, Consumer Behavior, Ninth Edition, Copyright© 2001 by Harcourt, Inc.
Market Mix Strategies: Product
Product: the total bundle of utilities (or
benefits) obtained by consumers in the
exchange process
Blackwell, Miniard, and Engel, Consumer Behavior, Ninth Edition, Copyright© 2001 by Harcourt, Inc.
Market Mix Strategies: Product
Product: the total bundle of utilities (or
benefits) obtained by consumers in the
exchange process
Internal considerations include:
-What are the costs of developing, producing,
distributing, and selling the product?
-How much profits will the product generate?
External considerations include:
-Will new product satisfy consumer demand
better than old product or competitive product?
-What packaging will most likely attract
consumers and fulfill storage needs best?
Blackwell, Miniard, and Engel, Consumer Behavior, Ninth Edition, Copyright© 2001 by Harcourt, Inc.
Market Mix Strategies: Price
Price: the total bundle of costs given up
by consumers in the exchange process
Blackwell, Miniard, and Engel, Consumer Behavior, Ninth Edition, Copyright© 2001 by Harcourt, Inc.
Market Mix Strategies: Price
Price: the total bundle of costs given up
by consumers in the exchange process
Pricing considerations include:
-What is the best pricing policy for the product
or for the store?
-How will consumers react to Everyday Low
Prices or promotional prices?
-Is it more important to have the “lowest price”
or prices in the range consumers expect to pay?
-What effect does price reduction or price
ending have on perceived quality of product?
-What does pricing policy need to be to maintain
a healthy profit margin?
Blackwell, Miniard, and Engel, Consumer Behavior, Ninth Edition, Copyright© 2001 by Harcourt, Inc.
Market Mix Strategies:
Promotion and Place
Promotion: activities involved in selling a
product, including advertising, personal
sales, publicity, and public relations
-What message should be sent to consumers?
-Which elements will best reach segments?
-How will attributes be communicated best?
Blackwell, Miniard, and Engel, Consumer Behavior, Ninth Edition, Copyright© 2001 by Harcourt, Inc.
Market Mix Strategies:
Promotion and Place
Promotion: activities involved in selling a
product, including advertising, personal
sales, publicity, and public relations
-What message should be sent to consumers?
-Which elements will best reach segments?
-How will attributes be communicated best?
Place: physical distribution and location
of sale (retail outlet)
-Where do consumers want or expect to buy this
product?
-What is the most efficient distribution channel
and method to get product to place of sale?
Blackwell, Miniard, and Engel, Consumer Behavior, Ninth Edition, Copyright© 2001 by Harcourt, Inc.
Market Mix Strategies: Brand
Brand: a trademark or distinctive name
identifying a product or manufacturer
A promise to consumers that attributes
they desire most will be obtained when
they buy the preferred brand
Often create an emotional attachment
Blackwell, Miniard, and Engel, Consumer Behavior, Ninth Edition, Copyright© 2001 by Harcourt, Inc.
Market Analysis
Consumer
Company
Environmental
Political/Legal
Implementation
in Marketplace
Segmentation
Demographic
Situational
Psychographic
Marketing Mix
Product, Brand,
Price, Place
Promotion, and
7Rs
Blackwell, Miniard, and Engel, Consumer Behavior, Ninth Edition, Copyright© 2001 by Harcourt, Inc.
Strategy Implementation
Even the best strategies are worthless if
not implemented well in the marketplace
7Rs for formulation and implementation
Blackwell, Miniard, and Engel, Consumer Behavior, Ninth Edition, Copyright© 2001 by Harcourt, Inc.
Strategy Implementation
Organization
Consumer
Research
Design, conduct, analyze
Give information
Rate
Speed to market
Speed of shopping
Resources
Company resources
Forms of payment
Retailing
Methods, type, location
Where shop & buy
Reliability
Upon channel members
Of brand & retailer
Reward
Design and run programs
From programs
Relationship With partners & customers To store and brand
Customer Satisfaction
Blackwell, Miniard, and Engel, Consumer Behavior, Ninth Edition, Copyright© 2001 by Harcourt, Inc.
Customer Loyalty and
Retention Strategies
Blackwell, Miniard, and Engel, Consumer Behavior, Ninth Edition, Copyright© 2001 by Harcourt, Inc.
Customer Loyalty Programs
It is less costly and easier to keep a
customer than it is to create a new one
Blackwell, Miniard, and Engel, Consumer Behavior, Ninth Edition, Copyright© 2001 by Harcourt, Inc.
Customer Loyalty Programs
It is less costly and easier to keep a
customer than it is to create a new one
With increased choices, consumers are
becoming more fickle and less loyal
Blackwell, Miniard, and Engel, Consumer Behavior, Ninth Edition, Copyright© 2001 by Harcourt, Inc.
Customer Loyalty Programs
It is less costly and easier to keep a
customer than it is to create a new one
With increased choices, consumers are
becoming more fickle and less loyal
Loyalty programs are designed to reward
consumers for repeat patronage rather
than reward cherry-pickers
Blackwell, Miniard, and Engel, Consumer Behavior, Ninth Edition, Copyright© 2001 by Harcourt, Inc.
Customer Loyalty Programs
It is less costly and easier to keep a
customer than it is to create a new one
With increased choices, consumers are
becoming more fickle and less loyal
Loyalty programs are designed to reward
consumers for repeat patronage rather
than reward cherry-pickers
These programs can increase loyalty to a
brand, service, retailer, or organization
Blackwell, Miniard, and Engel, Consumer Behavior, Ninth Edition, Copyright© 2001 by Harcourt, Inc.
Customer Loyalty Programs
It is less costly and easier to keep a
customer than it is to create a new one
With increased choices, consumers are
becoming more fickle and less loyal
Loyalty programs are designed to reward
consumers for repeat patronage rather
than reward cherry-pickers
These programs can increase loyalty to a
brand, service, retailer, or organization
Common programs include purchase
(store/brand), stay (hotel), or flyer (airline)
Blackwell, Miniard, and Engel, Consumer Behavior, Ninth Edition, Copyright© 2001 by Harcourt, Inc.
Customer Loyalty Programs
Help identify customer segments that can
be targeted with special offers or perks
that are of more value to customers
Blackwell, Miniard, and Engel, Consumer Behavior, Ninth Edition, Copyright© 2001 by Harcourt, Inc.
Customer Loyalty Programs
Help identify customer segments that can
be targeted with special offers or perks
that are of more value to customers
Ultimate goal is to strengthen the
relationship with the customer
Blackwell, Miniard, and Engel, Consumer Behavior, Ninth Edition, Copyright© 2001 by Harcourt, Inc.
Strengthening Relationships
with Loyalty Programs
Blackwell, Miniard, and Engel, Consumer Behavior, Ninth Edition, Copyright© 2001 by Harcourt, Inc.
Strengthening Relationships
with Loyalty Programs
Make individualized marketing a reality
Institute a total quality control policy
Introduce an early warning system
Build realistic expectations
Provide guarantees
Provide information on product use
Solicit customer feedback
Acknowledge, address & rectify complaints
Reinforce customer loyalty
Blackwell, Miniard, and Engel, Consumer Behavior, Ninth Edition, Copyright© 2001 by Harcourt, Inc.
Global Marketing Strategy
Blackwell, Miniard, and Engel, Consumer Behavior, Ninth Edition, Copyright© 2001 by Harcourt, Inc.
Global Marketing Strategy
Thinking Globally: involves ability
to understand markets beyond
one’s own country of origin with
respect to:
Sources of demand
Sources of supply
Management & marketing
methods
Blackwell, Miniard, and Engel, Consumer Behavior, Ninth Edition, Copyright© 2001 by Harcourt, Inc.
Global Marketing Strategy
Organizations must understand
consumers on a global basis
Globalization provides
opportunities for growth for large
and small firms
The Internet provides a way to
reach global markets inexpensively
Blackwell, Miniard, and Engel, Consumer Behavior, Ninth Edition, Copyright© 2001 by Harcourt, Inc.
Global Marketing Strategy
Can marketing be standardized?
Blackwell, Miniard, and Engel, Consumer Behavior, Ninth Edition, Copyright© 2001 by Harcourt, Inc.
Global Marketing Strategy
Can marketing be standardized?
-Can a firm use the same marketing
program in all target countries, or must it
create a different program for each?
-Which are greater-- the similarities
among or differences between
consumers in different countries?
-How do advantages of economies of
scale and unified brand image compare
to advantages of culture-specific
messages?
Blackwell, Miniard, and Engel, Consumer Behavior, Ninth Edition, Copyright© 2001 by Harcourt, Inc.
Global Marketing Strategy
Cultural analysis: the comparison of
similarities and differences in behavioral
and physical aspects of cultures
Blackwell, Miniard, and Engel, Consumer Behavior, Ninth Edition, Copyright© 2001 by Harcourt, Inc.
Global Marketing Strategy
Cultural analysis: the comparison of
similarities and differences in behavioral
and physical aspects of cultures
Cultural empathy: the ability to
understand the inner logic and
coherence of other ways of life and
refrain from judging other value systems
Blackwell, Miniard, and Engel, Consumer Behavior, Ninth Edition, Copyright© 2001 by Harcourt, Inc.
Global Marketing Strategy
Cultural analysis: the comparison of
similarities and differences in behavioral
and physical aspects of cultures
Cultural empathy: the ability to
understand the inner logic and
coherence of other ways of life and
refrain from judging other value systems
Intermarket segmentation: the
identification of groups of customers
who transcend traditional market or
geographic boundaries (similar
segments around the world)
Blackwell, Miniard, and Engel, Consumer Behavior, Ninth Edition, Copyright© 2001 by Harcourt, Inc.
Intermarket Segmentation
Building
marketing
strategy on
peoples’
universals rather
than differences.
Escada
customers are
similar in
affluence, taste,
and style,
regardless of
where they live.
Blackwell, Miniard, and Engel, Consumer Behavior, Ninth Edition, Copyright© 2001 by Harcourt, Inc.
Global Advertising Effectiveness
Global advertising sends the same
message to consumers around the world
Localized campaigns adapt messages to
the norms of the different cultures
Blackwell, Miniard, and Engel, Consumer Behavior, Ninth Edition, Copyright© 2001 by Harcourt, Inc.
Global Advertising Effectiveness
Global advertising sends the same
message to consumers around the world
Localized campaigns adapt messages to
the norms of the different cultures
When is global advertising most effective?
-Message is based on similar lifestyle
-Ad appeals to basic human needs and
emotions
-Product satisfies universal needs and
desires
Blackwell, Miniard, and Engel, Consumer Behavior, Ninth Edition, Copyright© 2001 by Harcourt, Inc.
Global Advertising Effectiveness
Global advertising sends the same
message to consumers around the world
Localized campaigns adapt messages to
the norms of the different cultures
When is global advertising most effective?
Language problems may occur, but backtranslation, visual language, and local
experts (advice) helps overcome them
Blackwell, Miniard, and Engel, Consumer Behavior, Ninth Edition, Copyright© 2001 by Harcourt, Inc.
Global Advertising Effectiveness
Before choosing a brand name, marketers
should consider the following:
Blackwell, Miniard, and Engel, Consumer Behavior, Ninth Edition, Copyright© 2001 by Harcourt, Inc.
Global Advertising Effectiveness
Before choosing a brand name, marketers
should consider the following:
-Does the name of the product have another
meaning in other countries in which it might be
marketed?
-Can the name be pronounced everywhere?
-Is the name close to that of a foreign brand, or
does it duplicate another product sold in other
markets?
-If the product is distinctly American, will national
pride and prejudice work against the acceptance
of the product in foreign markets?
Blackwell, Miniard, and Engel, Consumer Behavior, Ninth Edition, Copyright© 2001 by Harcourt, Inc.
Consumer Behavior
Roger D. Blackwell
Paul W. Miniard
James F. Engel
Requests for permission to make copies of any part of the work should be
mailed to the following address:
Permissions Department, Harcourt, Inc.
6277 Sea Harbor Drive
Orlando, Florida 32887-6777
Copyright© 2001 by Harcourt, Inc. All rights reserved.