Consumer Behaviour Seminar 1 Introduction Chapter 1 and 2

1. Marketing Strategy 2008 Consumer Behaviour Seminar 1 Introduction Chapter 1 and 2

2. Studying consumer behaviour: • Analysing behaviour and everything that influences behaviour? • Making the complexities possible to grasp by taking one step at a time! • But still using a holistic view!

3. Looking at consumers from different perspectives: as a marketeer, as a distributor, from a shop perspective, from a customer perspective and from the regulator/government perspective! • The goal is to become better thinkers concerning consumers and customers!

4. Marketing and Your Life Plan! • Studies now, but what happens next? • Work on your ”Life Plan”!

5. Is Marketing difficult? • For one sucessful product you need around 80 ideas to test and you need to launch 2 products. • Yes, it is difficult and costly! • Why is it so difficult and can we do anything about it?

6. The Human Side of Marketing • Knowing what goes on in the consumers mind is very difficult to know and to forecast consumer behaviour is even harder! • Today we satisfy most of our primary needs. Our consumption is of higher needs, i e concerns more complex needs. • We can not study humans in the same manner that we study machines or animals. Surveys or experiments! • Maslow 1943

7. Meta needs – What is self-actualization? Truth, rather than dishonesty. Goodness, rather than evil. Beauty, not ugliness or vulgarity. Unity, wholeness, and transcendence of opposites, not arbitrariness or forced choices. Aliveness, not deadness or the mechanization of life. Uniqueness, not bland uniformity. Perfection and necessity, not sloppiness, inconsistency, or accident. Completion, rather than incompleteness. Justice and order, not injustice and lawlessness. Simplicity, not unnecessary complexity. Richness, not environmental impoverishment. Effortlessness, not strain. Playfulness, not grim, humorless, drudgery. Self-sufficiency, not dependency. Meaningfulness, rather than senselessness.

8. Interactions in Marketing • Many things influences behaviour. There are many marketing parameters, 4 Ps etc. • Y=f(x1,x2,x3…………………….xn) • Some you control and some you don’t. • Between these parameters there are complicated interactions. • To isolate net effects of one mix variable is extremely difficult!

9. Chapter 1 Introduction to Consumer Behaviour and Marketing Strategy

10. Background in the New Marketing Concept and Market Orientation • What are the foundations of NMC? • Satisfying needs rather than selling existing products • Integrated model where a number of m marketing mix-variables are optimimized

11. Reasons: • Changes in competition, from sellers to buyers market • We have gone from satisfying primary needs to satisfying more complex needs • Changes in the IT systems • Better quality in marketing research and developments in consumer behaviour and marketing research

12. The history of consumer behaviour as a science • Up to 1940: Sociological research and practical studies of selling processes • 1940-1964: Motivation research

13. Motivation research • Ernst Dichter, Motivation Research Inc. • The Cake Mix study 1950 • Depth interviews and antropological studies

14. Motivation research using quantitative research methods • Nescafé – product development – testing – test launching – problems – new tests – new launch – more problems • Mason Haire jr. (1950) • 100 women i two matching groups. Questions about shopping lists for groceries. • (……., Nescafé or Maxwell House,….)

15. Nescafé study 1950 and 1970 Nescafé 1950 1970 • Lazy wife 48% 18% • Thrifty 4% 36% • Spendthrift 12% 23% • Bad wife 16% 18% Maxwell House • Lazy wife 4% 10% • Thrifty 16% 55% • Spendthrift 0% 5% • Bad wife 0% 5% • Haire jr( 1950) Webster jr (1974)

16. The history of consumer behaviour as a science • Up to 1940: Sociological research and practical studies of selling processes • 1940-1964: Motivation research • 1960s: One-factor models

17. One-factor models • The study of individual phsychologicl and sociological factors and the relationship to buying or not buying a product • Example – The car industry • Who reads ads for cars? • Cognitive dissonance!

18. The history of consumer behaviour as a science • Up to 1940: Sociological research and practical studies of selling processes • 1940-1964: Motivation research • 1960s: One-factor models • 1960s and 70s: The rise and fall of the comprehensive theorethical models

19. Grand theories – Howard & Sheth

20. Test of Grand Theories • Results show low R2 values! • Why? • Difficulties in measurement, lack of validity and reliability • Difficulty in specifying the model relationships • Feedback loops vs causal relationships • Real consumer behaviour and quantitative characteristics?

21. The history of consumer behaviour as a science • Up to 1940: Sociological research and practical studies of selling processes • 1940-1964: Motivation research • 1960s: One-factor models • 1960s and 70s: The rise and fall of the comprehensive theorethical models • 1980-: Different parallell research traditions • Attitude research • Qulitative research • Use of multivariate statistical models on quantitativ data • Measurement of customer satisfaction

22. Multivariate techniques • From bivariate to multivariate analysis • Univariate analyses • Bivariate analyses • Multivariate analyses • Using mixtures of scales in analyses • Finding patterns through the use of factor analysis

23. Bivariate method • American Survey Not-married Married Eating candy regularly 75% 63% Sample 999 2010 Hypoteses? Marital status Candy

24. Bivariate method Under 25 Over 25 Eating candy regularly 80% 58% Sample 1302 1707 Hypotheses? Age Candy

25. Multivariate method Not-m Married Not-m Married -25 -25 25 + 25 + Eating candy 79% 81% 60% 58% regularly Sample 799 503 200 1507 Hypotheses? Martial status Candy Age

26. The Candy Study • Candy Consumtion and Marital Status • Singles eat more candy in their loneliness?! • If you eat too much candy you will have difficulties in getting a partner?! • Or was it the age factor that explained to whole thing?! • Still the facts are that singles eat more candy! • Cause-effect analyses are difficult!!! • If you cannot or do not want to carry out experiments • You have to make complex analyses of interactions and reciprocal relationships!

27. Links to methodology in marketing • Marketing research: • 20% experiments (good for causal studies) • 80% surveys (not good for causal studies) • The usual and sometimes a bit boring type of marketing research • Survey • Descriptive studie,How many? When? Where? etc • Cross-section study • Statistical study with a sample • Standardised questionnarie with ”X in the box” • Crosstabs and percentages

28. Factor analysis and patterns 1. What do you think about when I say ”studying at a university”? (1=do not think at all to 7=think very much) • New friends • Student life • Your own flat • Freedom • Important for the future • Higher wages • A must to get a job • Time consuming • Difficult • High level of stress • Not much money • Taking loans to pay back • Self-actualisation • To gain experiences • To study what you are interested in

30. From 15 variables to 4 factors • Factor 1: Studies are stressful, the demands are high, you are poor and will have to pay your debts later on! • Factor 2: Studies will give you freedom, in your own flat and with a student life together with friends! • Factor 3: You can build your experience and fullfil your interests! • Factor 4: Studies can be goal oriented towards a job and a good salary!.

31. Consumer Behaviour Definition • Peter, Olsen & Grunert model • Consumer behaviour is dynamic • Consumer behaviour is built on interactions • Consumer behaviour consists of exchange relationships

32. 1. Consumer behaviour is dynamic Individual consumers, consumer groups and among these housholds and society at large are changing at an increasing speed. Generalisations about consumer behaviour is to a very large extent limited in time and space. Marketing strategies must always be adjusted to new circumstances!

33. 2. Consumer behaviour is built on interactions To understand consumers and to develop efficient marketing strategies we must understand what consumers think (coginition), how they feel (affective processes), what they do (behaviour) and what happends in the environment and in the market that influence and is influences by what the consumer thinks, feels and does.

34. 3. Consumer behaviour consists of exchange relationships As the market concept has been developed more and more various types of exchanges have been studied. Exchange of money, goods, services, political thinking, religious thoughts, art etc etc…

35. Consumer Issues and Marketing Strategy Many links! Many aspects on consumer behaviour influences marketing strategy! Not everything can be studied. The choice of questions is extremely important for the marketer.

36. The Relationship between marketing strategy and Consumer Behaviour? • Consumer Behaviour • Demographic and socio economic variables • Personality • Expectations • Awareness • Knowledge • Attitudes • Motivation • Intentions • Behaviour • Marketing Strategy • Segmentation • Product • Promotion • Pricing • Distribution

37. Chapter 2 A Framework for Consumer Analysis

38. The basic model for analysing consumer behaviour Many theories, models and concepts are used to understand consumer behavour. An number of sciences are useds as e g micro economics, sociology, social psychology, psychology, economic geography, antropopogy etc etc.

39. The Wheel of Consumer Analysis consists of: • 1. Affect and cognition • a. Affect as e g: • Strong feelings like love, annoyance and hate • Less strong feelings lika satisfaction and frustration • General feelings like being relaxed or bored • Feelings about products and services, e g ”I like product X!”

40. The Wheel of Consumer Behavior

41. b. Cognition are mental processes and knowledge structures we use when we as individuals react on changes in our environment. Cognitive processes take the form of: • Knowledges we base on experience and that we store in our memory • Psychological processes: • When we become aware of and understand our environment • When we remember things • When we evaluate alternative courses of action • When we make decisions about where, when and how we buy products and services.

42. The Wheel of Consumer Behavior

43. 2. Behaviour Consumers’ overt actions that we can observe directly

44. The Wheel of Consumer Behavior

45. 3. Consumer environment • The environment is the complex envionment of physical and social stimuli around the consumer. • This consists of things, places and people. • The marketer can to varying degrees influence some of these stimuli, e g proucts, pacaging, services, advertising, personal selling, pricing, store layout etc. • Other stimuli can be studied and forecasted, e g competiors actions. • Finally some facors in the environment are totally unpredictable.

46. Marketing strategy Marketing strategy is part of the environment of the consumer. Our studies relate this strategy to the other basic factors in the fundamental model.

47. The Wheel of Consumer Behavior

48. Relationships between factors in the model One-way cause-effect relationships or two-way interactions of ”reciprocal determinism”?

49. One-way couse-effect relationship: Y = f ( X….)

50. ”Reciprocal determinism” Interactive systems Joint interaction decides what will happen!