Consumer Behavior and Marketing Strategy

1. Consumer Behavior and Marketing Strategy Chapters 16 thru 19

2. Product and Marketing Strategy

3. Think about how you might implement a strategy for marketing a specific product to a group of consumers! What things are important? How might you organize your strategy? How do you use 4Ps to your advantage relative to CB?

4. The Wheel of Consumer Analysis Product Strategy Issues Of greatest importance for �Product� is that the consumer is satisfied!!!Of greatest importance for �Product� is that the consumer is satisfied!!!

5. Product Affect and Cognition

6. Product Behavior Two classes of product behavior: Product contact Marketing tactics designed to increase contact Donate products to Universities (e.g., computers) Free samples, gifting, vicarious use, borrow from friend� Brand loyalty/variety seeking Four categories of consumer purchasing patterns based on the degree of cognitive commitment and number of brands purchased in a particular period Product contact: Product contact:

7. Product Behavior � Purchasing Patterns

8. Product Behavior Variety seeking is a cognitive commitment to purchase different brands because of such things as Stimulation involved in trying different things Curiosity Novelty Overcoming boredom with the same old thing Who tends to seek variety?

9. Product Attributes Product attributes are important environmental stimuli that influence consumer affect, cognition, and behavior Consumers evaluate attributes based on their experiences, values and benefits Consumers make inferences from attributes (e.g., quality) Advertising has been highly influential in conveying the rewards of attributes�

10. Product Attributes Marketing associated with the product�s attributes has driven Apple�s success� What inferences do you make about Apple?

11. Packaging Packaging objectives; Protect the product as it moves through the channel to the consumer Be economical and not add undue cost to the product Allow convenient storage and use of the product by the consumer Be used effectively to promote the product to the consumer Package size can influence not only which brands are chosen, but also how much of a product is used on particular occasions

12. Characteristics of Consumers Vary in their willingness to try new products Different types of consumers may adopt a new product at different times Classic adoption curve and five categories of adopters Innovators Early adopters Early majority Late majority Laggards

13. The Adoption Curve

14. Important Questions in Analyzing the Relationships between Consumers and Products Use the iPhone as an exampleUse the iPhone as an example

15. Promotion and Marketing Strategy

16. Types of Promotion Strategy

17. Types of Promotion Marketers develop promotions to communicate information about their products and to persuade consumers to buy them Advertising Sales promotions Personal selling Publicity Successful products and brands require promotions to create and maintain a differential or competitive advantage over their competitors

18. A Communication Perspective So how does a product idea get promoted? In other words, how do we communicate a message about a product/service to consumers? First, the promotion must convey some meaning to target Then, consumer�s must be exposed to, attend to, and comprehend that meaning� Then, that meaning should move the targeted group to; Form favorable attitudes Purchase intentions Purchase behavior

19. A Communication Perspective cont.

20. Promotion Affect and Cognition Marketers need to promote beliefs about the positive consequences of buying and using the product Create brand awareness through perceptual process Stimulate category need through comprehension Maintain or increase attitude toward Ad and brand Maintain or increase the probability that consumers will buy the brand (purchase intention) How is this accomplished? Persuasion!

21. The Persuasion Process Changes in beliefs, attitudes, and behavioral intentions caused by a promotion communication The Elaboration Likelihood Model (ELM) Identifies two cognitive processes by which promotion can persuade consumers

22. Two Routes to Persuasion in the ELM

23. The Promotion Environment Includes all stimuli associated with the physical and social environment in which consumers experience promotion strategies Two environmental factors can influence advertising and sales promotion strategies Promotion clutter Level of competition

24. Level of Competition A key aspect of the promotion environment Comparative advertising, featuring direct comparisons with competitive brands, has become more common Promotion often becomes the key element in the marketers� competitive arsenal in fiercely competitive environments

25. Promotion Behaviors Different types of promotions can be used to influence the various behaviors in the purchase�consumption sequence Information contact Word-of-mouth communication with other consumers

26. Information contact Consumers must come into contact with promotion information for it to be successful Placing information in consumers� environments may be easy when target consumers can be identified accurately

27. Information contact cont. Helps consumers attend to the promotion messages Attention depends on how well promotion interacts with consumer characteristics such as intrinsic self-relevance and exiting knowledge

28. Word-of-Mouth Communication Helps spread awareness beyond those consumers who come into direct contact with the promotion Placing promotion information in consumers� environments, increases the probability that the information will be communicated to other consumers

29. Design and Implement a Promotion Strategy Promotions often are designed to first influence consumers� attitudes in anticipation of a later influence on their overt behaviors

30. Designing Promotion Strategies Various consumer segments to be considered Based on attitudes and past behavior

31. Design and Implement a Promotion Strategy

32. Designing Promotion Strategies Various consumer segments to be considered Based on attitudes and past behavior Appropriate promotions depend on the type of relationship consumers have with the product or brand FCB grid

33. FCB Grid

34. Designing Promotion Strategies Various consumer segments to be considered Based on attitudes and past behavior Appropriate promotions depend on the type of relationship consumers have with the product or brand FCB grid Specify how a brand will be connected to the important ends the consumer wants Means End Chain! Promotions will change over a product�s life cycle Be conscious of current stage in cycle Marketers must carefully analyze consumers and then use their creative imaginations!

35. Summary cont. Discussed the impact of marketing strategy on consumer behavior relative to; Products Promotions Pricing Placements Highlighted ways to implement each strategy

36. Price and Marketing Strategy

37. The Wheel of Consumer Analysis: Pricing Strategy Issues

38. Conceptual Issues in Pricing From a consumer�s point of view, price is usually defined as what the consumer must give up to purchase a product or service General model of the nature of marketing exchanges and the role of price in this process

39. The Pivotal Role of Price In Marketing Exchanges

40. Price Perceptions and Attitudes Price perceptions involve how price information is comprehended by consumers and made meaningful to them The stated price for a particular brand may be considered a product attribute Internal reference price

41. Conceptual Model of Cognitive Processing of Price Information

42. Price Behavior Funds access Cash Credit card � very common mode of payment Checks Transaction The exchange of funds for products and services is typically a relatively simple transaction

43. Price Environment The price variable typically offers very little for the consumer to experience at the sensory level, although it may generate considerable cognitive activity and behavior effort

44. A Strategic Approach to Pricing

45. Placement and Marketing Strategy

46. The Wheel of Consumer Analysis: Channel Strategy Issues

47. Store-Related Affect and Cognition Two major variables of managerial concern at the retail level Store image What consumers think about a particular store Includes perceptions and attitudes based on sensations of store-related stimuli received through the five senses Store Atmosphere Involves primarily affect in the form of in-store emotional states that consumers may not be fully conscious of when shopping Pleasure, Arousal, Dominance

48. Store Atmosphere cont. Pleasure and arousal were found to influence consumers� stated Enjoyment of shopping in the store Time spent browsing and exploring the store�s offerings Willingness to talk to sales personnel Tendency to spend more money than originally planned Likelihood of returning to the store Dominance was found to have little effect on consumer behaviors in the retail environment

49. Store-Related Behavior Marketing managers aim to encourage many behaviors in the retail store environment Store contact Involves the consumer locating, traveling to, and entering a store Store loyalty Repeat patronage intentions and behavior Strongly influenced by the arrangement of the environment

50. Store Environment Three major decision areas in designing effective store environments Store location Store layout In-store stimuli

51. Store Location General approaches to store location Checklist attempts to systematically evaluate the relative value of a site compared to other potential sites in the area Analog identifies an existing store or stores similar to the one to be located Regression models commonly used to investigate the factors that affect the profitability of retail outlets at particular sites Location allocation models involves the simultaneous selection of several locations and estimation of demand at those locations to optimize some specified criteria

52. Store Layout Can have important effects on consumers Grid layout The grid layout is more likely to be used in department and specialty stores to direct customer traffic down the main aisles

53. Example of a Grid Store Layout

54. Store Layout Can have important effects on consumers Grid layout The grid layout is more likely to be used in department and specialty stores to direct customer traffic down the main aisles Free-form layout This arrangement is particularly useful for encouraging relaxed shopping and impulse purchases

55. Example of Free-Form Store Layout

56. Advantages and Disadvantages of Grid and Free Form

57. In-Store Stimuli Signs and price information Benefit sign Price-only sign Color Warm colors Cool colors Shelf space and displays

58. In-Store Stimuli cont. Music Affects pace of in-store traffic flow of supermarket shoppers daily gross volume of customer purchases number of shoppers expressing awareness of background music after leaving the store Tempo of background music influences consumer behavior Scent Ambient scent

59. Placement Strategy These placement decisions are often overlooked but very influential on consumer behaviors As always, the starting point for designing effective channels is an analysis of consumer-product relationships

60. Congrats!!! You made it through the material� Upcoming: Next week: Exam review (Tues) and Exam 3 (Thurs) In two weeks: Thanksgiving break (Tues & Thurs) In three weeks: Consumer Behavior Jeopardy Last week of class: Presentations Finals week: Turn in Final Project