Consumer Behavior:

Its Origins and

Strategic Applications
CUSTOMERS V/S CONSUMERS
Why this course is named as consumer behavior not
customer behavior

Consumer Behavior is classified in three

components/aspects:
1. Acquisition (source of information)
2. Consumption (final use)
3. Disposition (throw, for future use eg Ghee in Horlicks
bottle, sell/rent the car)
Consumer behavior
TYPES OF CONSUMERS
Personal consumers

Organization consumers
PERSONAL CONSUMERS
The individual who buys goods and services for his or
her own use(cigrettes and haircut), for household
use(sugar,salt,furniture) for the use of a family
member(a pair of shoes for the son), or for a friend(a
pen set).
Organizational consumer
A business, government agency, or other institution
(profit or nonprofit) that buys the goods, services,
and/or equipment necessary for the organization to
function.

Eg: when any manufacturing firm buys raw material to

produce and sell its products
Development of the Marketing Concept
Production
Concept

Product Concept

Selling Concept
Marketing
Concept
Societal Mkt Concept
Holistic Mkt Concept (relationship, quality, interne
Copyright 2007 by Prentice Hall
The Production Concept
Assumes that consumers are interested primarily in
product availability at low prices
Marketing objectives:
Cheap, efficient production
Intensive distribution
Market expansion

Copyright 2007 by Prentice Hall

The Product Concept
Assumes that consumers will buy the product that
offers them the highest quality, the best performance,
and the most features
Marketing objectives:
Quality improvement
Addition of features

Copyright 2007 by Prentice Hall

The Selling Concept
Assumes that consumers are unlikely to buy a product
unless they are aggressively persuaded to do so
Marketing objectives:
Sell, sell, sell
Lack of concern for customer needs and satisfaction

Copyright 2007 by Prentice Hall

The Marketing Concept
Assumes that to be successful, a company must
determine the needs and wants of specific target
markets and deliver the desired satisfactions better
than the competition
Marketing objectives:
Make what you can sell
Focus on buyer’s needs

Copyright 2007 by Prentice Hall

Consumer Behavior
The behavior that consumers display in searching for,
purchasing, using, evaluating, and disposing of products
and services that they expect will satisfy their needs.

Copyright 2007 by Prentice Hall

Buyer v/s User
A father is buying a cycle for his school going son

A man is purchasing a tooth paste for his family

The Marketing
Implementing the
Concept
Marketing Concept
Consumer Research The process and tools
Segmentation used to study consumer
Targeting behaviour
Positioning

Copyright 2007 by Prentice Hall

The Marketing
Implementing the
Concept
Marketing Concept
Consumer Research Process of dividing the
Segmentation market into subsets of
Targeting consumers with
Positioning
common needs or
characteristics

Copyright 2007 by Prentice Hall

The Marketing
Implementing the
Concept
Marketing Concept
Consumer Research The selection of one or
Segmentation more of the segments to
Targeting pursue
Positioning

Copyright 2007 by Prentice Hall

The Marketing
Implementing the
Concept
Marketing Concept
Consumer Research Developing a distinct image for
Segmentation the product in the mind of the
consumer
Targeting
Successful positioning includes:
Positioning
Communicating the benefits
of the product
Communicating a unique
selling proposition

Copyright 2007 by Prentice Hall

This product is
positioned as a
solution to
facial redness.
The Marketing Mix
Product
Price
Place
Promotion

Copyright 2007 by Prentice Hall

Successful Relationships

Customer Customer
Value Retention

Customer
Satisfaction

Copyright 2007 by Prentice Hall

Successful Relationships
Value, Satisfaction,
and Retention
Defined as the ratio between the
Customer Value
customer’s perceived benefits
Customer and the resources used to obtain
Satisfaction those benefits
Customer Perceived value is relative and
Retention subjective

Copyright 2007 by Prentice Hall

Discussion Question
How does McDonald’s create value for the consumer?
How do they communicate this value?

Copyright 2007 by Prentice Hall

Successful Relationships
Value, Satisfaction,
and Retention
Customer The individual's perception of the
Value performance of the product or
service in relation to his or her
Customer
expectations.
Satisfaction
Customer
Retention

Copyright 2007 by Prentice Hall

Successful Relationships
Value, Satisfaction,
and Retention
The objective of providing value is to
Customer Value
retain highly satisfied customers.
Customer Loyal customers are key
Satisfaction They buy more products
Customer They are less price sensitive
Retention They pay less attention to
competitors’ advertising
Servicing them is cheaper
They spread positive word of
mouth
Copyright 2007 by Prentice Hall
Customer Profitability-Focused Marketing
Tracks costs and revenues of individual consumers
Categorizes them into tiers based on consumption
behavior
A customer pyramid groups customers into four tiers

Copyright 2007 by Prentice Hall

Customer Profitability-Focused Marketing

Tier 1: Platinum
Tier 2: Gold
Tier 3: Iron
Tier 4: Lead

Copyright 2007 by Prentice Hall

Traditional Marketing Concept Vs. Value and Retention Focused
Marketing
Table 1-2

Traditional Marketing Value and Retention

Concept
Make only what you can sell instead
of trying to sell what you make
Do not focus on the product; focus on Focus on the product’s
the need that it satisfies
Market products and services that
match customers’ needs better than
competitors’ offerings
Focused Marketing
Use technology that enables
customers to customize what
you make
perceived value, as well as the
need that it satisfies
Utilize an understanding of
customer needs to develop
offerings that customers
perceive as more valuable than
competitors’ offerings

Copyright 2007 by Prentice Hall

Impact of Digital Technologies
Consumers have more power and access to
information
Marketers can gather more information about
consumers
The exchange between marketer and customers is
interactive and instantaneous and goes beyond the
PC.
Marketers must offer more products and services

Copyright 2007 by Prentice Hall

Societal Marketing Concept
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.

Copyright 2007 by Prentice Hall

Application of Consumer Behavior
Marketing Strategy (4 Ps)
Regulatory policy
Social marketing
Informed individuals
Nature of consumer behavior
External influence
• Culture
• Subculture
• Demographics Decision
• Social status process
• Reference groups Problem
• Family recognition
• Marketing Self concept and information
lifestyle search
activities
Alternative
Internal influence evaluation
• Perception Purchase
• Learning Prost -
• Memory purchase
• Motives behavior
• Personality
• Emotions
• Attitudes