Chapter 1

1. Chapter 1 Consumer Behavior & Marketing Management

2. Chapter Spotlights • Consumer benefits • Total product concept • Market segmentation and segmentation strategies • Positioning • Consumer decision-making • Engel, Kollat, and Blackwell (EKB) Model

3. Course Objectives • Better understand why people do what they do in the marketplace when they do it • Better understand yourself as a shopper, buyer, and consumer • Improve yourself as a shopper, buyer, and consumer • Improve your current/future job performance • Better understand marketer communications and behaviors in the marketplace

4. Consumer Benefits • People do not buy products or services, they buy benefits • Hence we make purchases not for the products themselves, but for the benefits of the problems they solve or the opportunities they offer • e.g., “always late” so a watch helps solve problem; has stopwatch feature so now can keep track of “work out” times

5. Consumer Benefits • Consumers seek bundles of types of benefits: • Tangible benefits: e.g., a watch keeps good time; has leather band • Intangible benefits: e.g., the “reliability” reputation of the watch manufacturer; the image of the watch wearer

6. The Total Product Concept • Total product: refers to the sum of benefits offered by a product, service, outlet, etc. • Basic core: bundle of utilitarian benefits (e.g., design, features, etc.) • Accessory ring: added-value benefits with no apparent extra cost (e.g., store reputation, manufacturer prestige, convenient location, etc.) • Psychological ring: benefits resulting from the consumer’s feelings associated with owning/using the product (e.g., belonging, youthful, powerful, sexy, etc.) • Time: products/service “give” or “take” time; this can be “good” or “bad” (e.g., fast food versus conventional restaurant)

7. Market Segmentation • Market segmentation is the study of the marketplace in order to discover already existing viable groups of consumers who are similar or homogeneous in their approaches to choosing and/or consuming goods and services.

8. Segment Bounding • Segment bounding is a means by which marketers differentiate among consumers and among market segments • Determine the “descriptors” of the consumers/units in the segment (e.g., demographics, psychographics, benefits sought, product usage rate, type of retail outlet, etc.) • Determine specific “geographic location” of segment • Bound segments in “time” to ensure that all data is relevant and up to date for the time of use.

9. Segment Viability • Four factors are used to assess segment viability. Viable segments are: • Of sufficient size • Measurable • Differentiated • Reachable

10. Segmentation Strategies • Mass marketing (undifferentiated marketing): offering the same product to the entire consumer population • Concentrated marketing (focused or niche marketing): selecting one market segment, even though the product may also appeal to others • Differentiated marketing: selecting two or more different segments

11. Segmentation in the Global Marketplace • There are two approaches to market segmentation • Localization: treating each country as a separate market and seeking consumer segments accordingly • Intermarket segmentation (also called “standardization”): selecting groups of consumers who exhibit similar consumption behavior across different countries • Marketers emphasize similarities rather than differences across country markets

12. Consumer Benefits and Product Positioning • Product positioning is the placement of a product, service, outlet, etc. in the mind of the consumer • There are five ways used to position products, services, outlets, etc. • On perceived benefits • On image • On attributes • Against competitors • Combination of two or more of the above • Repositioning: shifting position in the consumer’s mind through changes in important product, price, distribution, and promotional and/or personal selling benefits.

13. The Consumer Decision-Making Process • A consumer decision model is a means of describing the processes that consumers go through before, during, and after making a purchase (choice). • A model shows the causes or antecedents of a particular behavior and each of its results or consequences.

14. Engel, Kollat, and Blackwell (EKB) Model • The EKB model is comprehensive and shows the components of decision making and the relationships and interactions among them. • The five distinct parts of consumer decision making presented are: • Input, information processing, a decision process, decision process variables, and external influences

15. Input • Input includes all kinds of stimuli from our contact with the world around us: • Our experiences, contact with others • Marketer-controlled stimuli (e.g., advertising, store display, demonstrations) • Other stimuli (e.g., personal recollections, conversations with friends) • External search

16. Information Processing • Stimuli are processed into meaningful information • Five methods of information processing: • Exposure • Attention • Comprehension • Yielding • Retention

17. Decision Process • It is triggered at any time during information processing • It consists of five steps: • Problem recognition • Search • Alternative evaluation • Choice • Outcomes (post-purchase evaluation and behavior)

18. Decision Process Variables • Those individual qualities that make people/consumers unique. • Decision process variables include • Motives • Beliefs • Attitudes • Lifestyles • Intentions • Evaluative criteria • Normative compliance and informational influence • Other aspects of self

19. External Influences • Such influences are called “Circles of Social Influence.” They are: culture, sub-culture (co-culture), social class, reference groups, and family or household influences