UNDERSTANDING CONSUMER BEHAVIOR

Consumer Behavior
Sem 1, 2023-2024

Adapted from Hoyer W. D., MacInnis D. J. and Pieters R. (2018), Consumer Behavior, 7th ed., Cengage Learning.
Discussion question

What have you recently purchased that cost over $100?

1. Why did you buy that item?

2. How and where did you search for information?
3. Why did you choose that particular brand/ retailer?
4. How do you feel about your purchase now?
Learning objectives
1. Define consumer behavior and explain the components that make up the
definition

2. Identify the four domains of consumer behavior that affect acquisition, usage, and
disposition decisions

3. Explain how companies apply consumer behavior concepts when making

marketing decisions

4. Discuss the benefits of studying consumer behavior

Recall: What is marketing?
 Marketing is a process by which companies create value for customers and
build strong customer relationships in order to capture value from
customers in return.

The twofold goal of marketing is to:

 attract new customers by promising superior value
 grow current customers by delivering satisfaction
Recall: The marketing process

Kotler P. T. & Amstrong G. 2018, Principles of Marketing (17th Global Edition), Pearson.
Recall: Market segmentation – Targeting – Positioning

S T P
Segmentation Targeting Positioning

Developing a distinct
Selecting the segments
Dividing a market into image for the product or
identified as prospective
subsets of consumers service in the mind of
customers and pursuing
with common needs or the consumer - stressing
them with distinct
characteristics the product’s unique
offerings
benefits
Recall: Buyer-readiness stages

Kotler P. T. & Amstrong G. 2018, Principles of Marketing (17th Global Edition), Pearson.
What is consumer behavior?
 Consumer behavior reflects the totality of consumers’ decisions with respect
to the acquisition, consumption, and disposition of goods, services, activities,
experiences, people, and ideas by human decision-making units [over time].

Consumer behavior is a complex, multidimensional process.

The ‘Why’ of consumer behavior

Stimulus Black box Consumer decision

A knowledge of consumer behaviour can help managers understand why people

behave as they do and that this understanding can help managers predict behavior.
What is consumer behavior?
What is consumer behavior?
 CB involves goods, services, activities, experiences, people, and ideas.
• Offering: A product, service, activity, experience, or idea offered by a marketing
organization to consumers.
What is consumer behavior?
 CB involves more than buying.

Acquisition Usage Disposition

What is consumer behavior?
 CB is a dynamic process.
• The sequence of acquisition, consumption, and
disposition can occur over time in a dynamic
order.

 CB can involve many people.

• Consumer behavior does not necessarily reflect
the action of a single individual.
What is consumer behavior?
 CB involves many decisions.

Whether What Why/ Why not How

to offering to acquire/ use/ dispose to
acquire/ use/ dispose acquire/ use/ dispose of an offering acquire/ use/ dispose
of an offering of of an offering

When Where How much/ How

to to often/ How long
acquire/ use/ dispose acquire/ use/ dispose to
of an offering of an offering acquire/ use/ dispose
of an offering
What is consumer behavior?
 CB involves consumer emotions and coping.
What is consumer behavior?
 CB is just as much about stopping consumption as much it is about
encouraging it.

 https://www.youtube.com/watch?v=56b09ZyLaWk

 https://www.youtube.com/watch?v=6biz85fUv04
Social Factors
Cultural Factors
Reference groups
Culture and values
Opinion leaders
Subculture
Family
Social class

Individual Factors Psychological Factors

Gender Perception
Age & family life cycle Motivation
stage
Learning
Personality, self-
Beliefs and attitudes
concept & lifestyle Consumer decision-making process
What affects consumer behavior?

 The psychological core

 The process of making decisions

 The consumer's culture

 Problem Information Alternatives Purchase Post-purchase
recognition search evaluation decision evaluation
 Problem Information Alternatives Purchase Post-purchase
recognition search evaluation decision evaluation
 Problem Information Alternatives Purchase Post-purchase
recognition search evaluation decision evaluation
 Problem Information Alternatives Purchase Post-purchase
recognition search evaluation decision evaluation
Palmer JB & Cropnick RH (1986), ‘New dimension added to conjoint analysis’, Marketing News, 3 January, p. 62.
Marketing implications of consumer behavior

 Consumer behavior is the basis for strategy formulation

 Consumer reaction to the marketing strategy determines the success or
failure
 Marketing implications of consumer behavior

Quester P., Pettigrew S., Rao Hill S., Kopanidis F., Hawkins D. I. 2014, Consumer Behaviour - Implications for Marketing Strategy,
McGraw-Hill Education.
Marketing implications of consumer behavior

 Developing or implementing
customer-oriented strategy
• Segmentation of the market
• Profitability of each segment
• Characteristics of consumers in
each segment
• Customer satisfaction with existing
offerings
 Selecting target market
Marketing implications of consumer behavior

 Developing products
• Consumer ideas for new
products

• Attributes that can be added or

changed in existing products

• Branding of offering

• Appearance of package and

logo
Marketing implications of consumer behavior

 Positioning decisions
• Positioning of competitive offerings

• Positioning of one’s own offerings

• Need for repositioning offerings

Marketing implications of consumer behavior

 Promotion and marketing communication decisions

• Communication objectives

• Appearance of marketing communications

• Location, time, and effectiveness of advertisement

• Sales promotion objectives and tactics

• Effectiveness of sales promotion

• Number of sales personnel required to best serve customers

Marketing implications of consumer behavior

 Pricing decisions
• Price range of a product or service

• Consumer sensitivity to price and price changes

• Pricing tactics
Marketing implications of consumer behavior

 Distribution decisions

• Time and convenience of consumers

• Assortment of merchandise

• Store design
Beneficiaries of consumer behavior studies

 Marketing managers

 Ethicists and advocacy groups

 Public policy makers and regulators

 Academics

 Consumers