HE 3 MODULE 1

A. Who is a Consumer?

A consumer is a person (or group) who pays to consume the goods and/or services produced by a seller
(i.e., company, organization).

Consumer

The consumer is the one who pays to consume the goods and services produced.

six types of target markets:

1. Consumer Markets

2. Industrial Markets (made up of industrial companies)

3. Commercial Markets (consisting of service companies, non-manufacturing companies, and not-for

profit organizations)

4. Government Markets (made up of government agencies)

5. International and Global Markets (several markets distinguished by different needs and different
cultures)

6. Markets segmented for strategic targets (markets segmented by strategy and product characteristics,
and hence by characteristics of the buyer)

B. Characteristics of a Consumer

Around-the-clock-shopping “There’s an expectation among today’s consumers that the ability to

consume is a 24/7 thing,” says Eric Singleton, Chico’s Chief Information Officer.

Consumers are in control. “Customers in today’s era are much more in control of their shopping
experience, and they know they can dictate the shopping experience that they want,” Gayatri Patel,
eBay’s Director of Global Data infrastructure.

Omnichannel shopping. “The biggest trend we see right now is this blurring of lines across channels,”
says Sahal Laher, Brooks Brothers Executive Vice President and Chief Information Officer.

Content consumers. “Customers are branching out with this significantly broader ability to explore your
products in the moment,” says Singleton.

Global experience. “It’s a truly global economy,” says Laher. “We need to understand the customers’
needs wherever they are.

Collaborators. “There is a lot more collaboration and sharing of information that can influence
consumer decisions compared to the offline experience,” says Patel. “eBay can complement those
experiences with our retail partnerships.”

Social sharers. “The relevance of social media on retail is untapped but growing very rapidly,” says
Laher.
7 CHARACTERISTICS OF THE MODERN CUSTOMER

1. CUSTOMER REIGN SUPREME They control the experience they want: they research, explore and
share.

2. CUSTOMER ARE ALWAYS CONNECTED 24 hrs a day. 7 days a week on any internet-enabled device.

3. CUSTOMER EXPECT PERSONAL INTERACTIONS 87% of customers believe brands could deliver more
consistent experience.

4. CUSTOMERS COMPARE, COMPARE AND COMPARE they look at products they are interested in
across multiple channels and device

5. CUSTOMER TRUST WORD-OF-MOUTH OVER BRANDS 70% of consumers trust online suggestion

6. CUSTOMERS THINK IN TERMS OF “I WANT IT NOW” 64% of customer expect real-time service
regardless of the channel they use.

7. CUSTOMER ARE HIGHLY OPINIONATED customers are 3X more likely to recommend a brand after
they’ve had a positive interaction with them.

C. Consumer decision-making Consumer decision making process involves the consumers to identify
their needs, gather information, evaluate alternatives and then make their buying decision. The
consumer decision making behavior is a complex procedure and involves everything starting from
problem recognition to post-purchase activities.

5 Stages of Consumer Decision Making Process

1. Need Recognition Need recognition occurs when a consumer exactly determines their needs.

2. Information Search The information search stage in the buyer decision process tends to change
continually as consumers require obtaining more and more information about products which can
satisfy their needs.

▪ Commercial sources: advertisements, promotional campaigns, sales people or packaging of a

particular product.

▪ Personal sources: The needs are discussed with family and friends who provided product
recommendations.

▪ Public sources: Radio, newspaper and magazines.

▪ Experiential sources: The own experience of a customer of using a particular brand.

3. Evaluation of Alternatives This step involves evaluating different alternatives that are available in

the market along with the product lifecycle.

4. Purchase Decision When all the above stages have been passed, the customer has now finally
decided to make a purchasing decision.
5. Post-Purchase Behavior The purchase of the product is followed by post-purchase evaluation which
refers to analyzing as to whether the product was useful for the consumer or not.

D. Persuasive Advertising vs. Informative Advertising Persuasive Techniques in Advertising

1. The Carrot and The Stick Humans are hardwired to move towards pleasure, like a horse towards a
carrot, and away from pain, like a donkey avoids a stick.

2. The Scarcity Principle People value objects and experiences that are rare -- having something that
most people want, but can’t have, boosts our sense of self-worth and power.

3. One Message Per Advertisement To immediately hook people and persuade them to read or watch
the rest of your advertisement, try sticking to only one message.

4. Write in the Second Person Since your prospects primarily care about how you can help them, and
pronouns like “you” and “your" can engage them on a personal level and help them insert themselves in
the narrative you’re creating, writing advertisements in the second person can instantly grip their
attention and help them imagine a future

5. Give Your Audience a Sense of Control According to a research study conducted by three psychology
professors at Rutgers University, the need for control is a biological and psychological necessity. People
have to feel like they have control over their lives.

6. Use a Call-to-Value Instead of a Call-to-Action Call-to-actions are crucial for getting prospects to take
the next step, but a “Download Now” or “Call Now” CTA isn’t always going to convince the more
skeptical prospects to take your desired action.

Informative Advertising

Compared to persuasive advertising, informative advertising focuses more on the facts, and less on
emotions. It highlights how your product’s features and benefits solve your customers’ problems and
can even compare your product to your competitors' products.

1. Drink Responsibly 3. Siskyou Eye Center

2. Miller Lite

Persuasive advertising vs. informative advertising: which one is better?

Persuasive advertising and informative advertising definitely focus on different aspects of persuasion,
but they still aim to achieve the same goal: convincing your audience to take a desired action.

II. Economics and You

A. Consumers in the marketplace In the market economy consumer play an significant role. In a market
economy, there is a lot of competition because manufacturers want consumers to purchase their goods.

B. Needs vs. Wants

Want — have a desire to possess or do (something); wish for.

Need — require (something) because it is essential or very important rather than just desirable.
C. Supply and demand

Supply and demand form the most fundamental concepts of economics. Whether you are an academic,
farmer, pharmaceutical manufacturer, or simply a consumer, the basic premise of supply and demand
equilibrium is integrated into your daily action

Explaining Demand Although most explanations typically focus on explaining the concept of supply first,
understanding demand is more intuitive for many, and thus helps with subsequent descriptions.

D. Economic Systems

An economic system is a means by which societies or governments organize and distribute available
resources, services, and goods across a geographic region or country.

Types of Economic Systems

1. Traditional economic system The traditional economic system is based on goods, services, and work,
all of which follow certain established trends.

2. Command economic system In a command system, there is a dominant centralized authority

– usually the government – that controls a significant portion of the economic structure. Also known as
a planned system,

3. Market economic system Market economic systems are based on the concept of free markets. In
other words, there is very little government interference.

4. Mixed system Mixed systems combine the characteristics of the market and command economic
systems. For this reason, mixed systems are also known as dual systems.

Final Word Economic systems are grouped into traditional, command, market, and mixed systems.

E. Recession and depression

Recession is a downward trend in the business cycle

Depression major downswing in a business cycle

F. Inflation

Inflation refers to the rise in the prices of most goods and services of daily or common use, such as food,
clothing, housing, recreation, transport, consumer staples, etc. Inflation measures the average price
change in a basket of commodities and services over time.

What are the effects of Inflation?

The purchasing power of a currency unit decreases as the commodities and services get dearer. This also
impacts the cost of living in a country. When inflation is high, the cost of living gets higher as well, which
ultimately leads to a deceleration in economic growth.
G. Government and the economy

In every country, the government takes steps to help the economy achieve the goals of growth, full
employment, and price stability.

Monetary Policy

Monetary policy is exercised by the Federal Reserve System (“the Fed”), which is empowered to take
various actions that decrease or increase the money supply and raise or lower short-term interest rates,
making it harder or easier to borrow money.

Fiscal Policy

Fiscal policy relies on the government’s powers of spending and taxation. Both taxation and government
spending can be used to reduce or increase the total supply of money in the economy— the total
amount, in other words, that businesses and consumers have to spend