Chapter 2: Consumer Behavior

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Chapter 2 Consumer Behavior
the Marketing Manager

• Consumer BehaviorJohn C. MowenMichael S. Minor

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Ten Concepts to Learn

• PERMS
• Product positioning
• Product differentiation
• Elements of the consumer environment
• Behavioral economics

• CB and marketing research
• CB and the marketing mix
• The bases of segmentation
• Behavioral segmentaiton
• Managerial applications analysis

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Application Areas of Consumer Behavior PERMS

• Environmental Analysis
• Market Research
• Segmentation of the Marketplace
• Product Positioning and Product Differentiation
• Marketing-Mix Development

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Product Positioning . . .

• . . . is influencing how consumers perceive a
  brands characteristics relative to those of
  competitive offerings
• Goal is to influence demand by creating a product
  with specific characteristics (i.e. brand
  attributes) and a clear image that differentiate
  it from competitors

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• Specific Positioning
• positioning a brand based creating linkages
  between brand and key attributes and benefits.
  E.g., acceleration of auto, reliability of auto
• Competitive Positioning
• positioning a brand in relation to competitors.
• E.g., Suburban is larger than an Expedition
• Psychological Positioning
• positioning a brand based upon dominant
  personality characteristic of target market.
• E.g., We build excitement.

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Product Differentiation . . .

• . . . is the process of manipulating the
  marketing mix so as to position a product in a
  manner that allows consumers to perceive
  meaningful differences between a brand and its
  competitors

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Environmental Analysis . . .

• . . . is the assessment of the external forces
  that act upon the firm and its customers, and
  that create threats and opportunities

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The Natural Environment . . .

• . . . includes the types of raw materials
  available, pollution, consumer fear of
  contracting deadly diseases, the expansion of
  desert regions around the globe, and various
  weather phenomena, such as hurricanes or drought

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Components of the External Environment

• Demographic
• Economic
• Natural

• Technological
• Political
• Cultural

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The Economic Environment

• Set of factors involving monetary, natural, and
  human resources that influence firms/consumers.
• Behavioral economics study of economic
  decisions made by individual consumers and the
  behavioral determinants of those decisions.
• 3 Major Contributions of Behavioral Economists
• Originated and documented the idea that the
  consumer sector of the economy can strongly
  influence the course of the aggregate economy
• Investigated what factors influence the decision
  of families to buy or save
• Developed a methodology for making predictions of
  economic activities based upon consumer surveys

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The Technological Environment

• Goal is to anticipate what changes in the
  technological environment will occur and how
  these will influence the lifestyle and
  consumption patterns of consumers

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MARKET RESEARCH . . .

• . . . is applied consumer research designed to
  provide management with information on factors
  that impact consumers acquisition, consumption,
  and disposition of goods, services, and ideas

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Marketing-Mix Development . . . .
involves the development and coordination
of activities involving the

• Product
• Promotion

• Pricing
• Distribution

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Promotional Strategy

• Advertising
• Personal Selling
• Sales Promotion Applications
• Public Relations

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Price Changes

• Predicting the likely impact of price changes on
  consumers is an important consumer behavior area.
• How will consumers react when companies raise or
  lower the price of a product?
• Principles of perception can be applied to
  analyze if consumers will notice a difference in
  price and if so, what effect it has

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Product Distribution . . .

• . . . will be impacted by understanding how
  consumers make their purchasing decisions.
  Example low involvement decision (e.g.,
  purchase soft drink), must use extensive
  distribution.

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Market Segmentation . . .

• . . . involves subdividing the market place into
  distinct subsets of customers having similar
  needs and wants, each of which can be reached
  with a different marketing mix

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Four Classifications of Segmentation Variables

• Characteristics of the Person
• Nature of the Situation in Which the Product or
  Service May Be Purchased
• Geography
• Culture and Subculture Adopted by the Consumer

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Characteristics of the Person

• Demographic Characteristics
• Behavioral Segmentationprice elasticity,
  benefits sought, usage rate, brand loyalty
• Benefit Segmentation
• Psychographic and Personality Characteristics

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Demographics is . . .

• . . . the study of population changes and
  subcultural values of various demographic groups
  based on such factors as age, sex, income,
  education, ethnicity, and geography.
• Examples of demographic variables
• age, sex, income, ethnicity, nationality,
  household size, marital status, religion,
  education, occupation,

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Consumer Situations . . .

• . . . consist of the temporary environmental
  factors that form the context within which a
  consumer activity occurs at a particular time and
  place
• Types of situations social, physical, task
  definition, time.

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Geographic Segmentation

• Can include region, size of cities and counties,
  census blocks, population density, and climate
• Geodemographics is the combination of geography
  and demographics

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Culture and Subculture

• Culture is the way of life of the people of a
  society
• Subculture is a subdivision of a national culture
  and is based on some unifying characteristic,
  such as social status or nationality

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Segmenting Industrial Markets

• Different segmenting variables are used to
  classify companies into segments including the
  North American Industry Classification System
  NAICS). Developed as part of NAFTA in 1997.
  20--2-digit codes.

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Solving Managerial Problems . .

• . . . is a three-step process
• Gather information and identify the
  problem/opportunity
• Identify the relevant consumer behavior concepts
  and how they apply to the problem
• Develop a managerial strategy by identifying the
  managerial implications of each consumer concept.