CONSUMER BEHAVIOR

What is consumer behaviorAnd why do we need to understand it?

CONSUMER BEHAVIOR

CONSUMER BEHAVIOR

http://www.consumerpsychologist.com/

• One "official" definition of consumer behavior is "The study of individuals, groups, or organizations and the processes they use to select, secure, use, and dispose of products, services, experiences, or ideas to satisfy needs and the impacts that these processes have on the consumer and society."

CONSUMER BEHAVIOR

• Behavior occurs either for the individual, or in the context of a group (e.g., friends influence what kinds of clothes a person wears) or an organization (people on the job make decisions as to which products the firm should use).

• Consumer behavior involves the use and disposal of products as well as the study of how they are purchased. Product use is often of great interest to the marketer, because this may influence how a product is best positioned or how we can encourage increased consumption. Since many environmental problems result from product disposal (e.g., motor oil being sent into sewage systems to save the recycling fee, or garbage piling up at landfills) this is also an area of interest.

• Consumer behavior involves services and ideas as well as tangible products.

• The impact of consumer behavior on society is also of relevance. For example, aggressive marketing of high fat foods, or aggressive marketing of easy credit, may have serious repercussions for the national health and economy.

CONSUMER BEHAVIOR

• The study of consumers helps firms and organizations improve their marketing strategies by understanding issues such as how

• The psychology of how consumers think, feel, reason, and select between different alternatives (e.g., brands, products, and retailers);

• The psychology of how the consumer is influenced by his or her environment (e.g., culture, family, signs, media);

• The behavior of consumers while shopping or making other marketing decisions;

• Limitations in consumer knowledge or information processing abilities influence decisions and marketing outcome;

• How consumer motivation and decision strategies differ between products that differ in their level of importance or interest that they entail for the consumer; and

• How marketers can adapt and improve their marketing campaigns and marketing strategies to more effectively reach the consumer.

CONSUMER BEHAVIOR• The most obvious is for marketing strategy—i.e., for making better marketing campaigns.

For example, by understanding that consumers are more receptive to food advertising when they are hungry, we learn to schedule snack advertisements late in the afternoon. By understanding that new products are usually initially adopted by a few consumers and only spread later, and then only gradually, to the rest of the population, we learn that (1) companies that introduce new products must be well financed so that they can stay afloat until their products become a commercial success and (2) it is important to please initial customers, since they will in turn influence many subsequent customers’ brand choices.

• Social marketing involves getting ideas across to consumers rather than selling something. Marty Fishbein, a marketing professor, went on sabbatical to work for the Centers for Disease Control trying to reduce the incidence of transmission of diseases through illegal drug use. The best solution, obviously, would be if we could get illegal drug users to stop. This, however, was deemed to be infeasible. It was also determined that the practice of sharing needles was too ingrained in the drug culture to be stopped. As a result, using knowledge of consumer attitudes, Dr. Fishbein created a campaign that encouraged the cleaning of needles in bleach before sharing them, a goal that was believed to be more realistic.

• As a final benefit, studying consumer behavior should make us better consumers. Common sense suggests, for example, that if you buy a 64 liquid ounce bottle of laundry detergent, you should pay less per ounce than if you bought two 32 ounce bottles. In practice, however, you often pay a size premium by buying the larger quantity. In other words, in this case, knowing this fact will sensitize you to the need to check the unit cost labels to determine if you are really getting a bargain.

CONSUMER BEHAVIOR

CONSUMER BEHAVIOR

1. Problem Recognition

• You look at an old pair of running shoes and think you NEED new ones

• The NEED has to be addressed for you to go back to feeling NORMAL

CONSUMER BEHAVIOR

2 – Information Search

• Shift from traditional shopping to the online front.• Product information• Reviews are IMPORTANT

CONSUMER BEHAVIOR

3 – Evaluating Alternatives

• Is this the right product?

• Pros vs Cons• Do I really need this? • What is the best deal?

CONSUMER BEHAVIOR

4 - Purchase

• What to purchase and where to purchase

• Decision based on: – Logical assessment– Emotional connections– Marketing campaigns– Combination of above

CONSUMER BEHAVIOR

5 – Post Purchase Satisfaction/Dissatisfaction

• Did the product satisfy the need?

CONSUMER BEHAVIOR

• Select a product you want to purchase

• List down the factors you may consider before purchasing the product

CONSUMER BEHAVIOR

http://60secondmarketer.com/blog/2011/03/13/5-consumer-behavior-secrets-you-can-use-to-grow-sales-and-revenue/

• Not long ago, Baylor University conducted a blind taste test between Coke and Pepsi. They took 100 people, gave them unlabeled samples of Coke and Pepsi and asked them to choose which one they preferred.

• Interestingly, the participants in the study were split 50/50. Half the room chose Coke and half the room chose Pepsi.

• A short while later, the researchers asked the same group to again choose which soft drink they liked better — only this time, the drinks had their labels on them. In other words, the participants knew when they were drinking Coke and when they were drinking Pepsi.

CONSUMER BEHAVIOR

80%chose coke.

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ACTION PARALYSIS

• Would you be willing to help by giving a donation?

• Would you be willing to help by giving a donation? Every penny will help.

1 2

CONSUMER BEHAVIOR

THE RESULTS

First Second

28%

50%

People are more likely to take action when minimal parameters are set.

CONSUMER BEHAVIOR

INTERNAL LABELS

• A study examined the voting patterns of 133 adults– Half the participants were selected and random

and told they were much more likely to vote since they had been deemed by the researchers to be more “politically active”

– The other half weren’t told anything.

CONSUMER BEHAVIOR

15% HIGHER TURNOUT

POLITICALLY ACTIVE

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WHY?

• We like being CONSISTENT. • We like being PART OF A GROUP, as long as we

approve of it.• E.g. “gold” or “platinum status works

effectively for customer loyalty programs• People who are labeled as “SUPERIOR”

customers tend to spend more.

CONSUMER BEHAVIOR

BUYING PAIN

CONSUMER BEHAVIOR

WHICH TYPE OF BUYER IS MOST DIFFICULT TO

CONVERT?

CONSUMER BEHAVIOR

STRATEGIES FOR TIGHTWADS

?

Reframing Value

Small Stuff

Reduce Pain Points

with Bundling

CONSUMER BEHAVIOR

REFRAMING VALUE

CONSUMER BEHAVIOR

REDUCE PAIN POINTS WITH BUNDLING

Bundle Cost: Rs. 75

Individual Cost: Rs. 60- Internet: Rs. 30- Daily Motion: Rs. 30

CONSUMER BEHAVIOR

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SMALL STUFF

• Study: Carnegie Mellon University• Impact of a single word on conversion rates

A $5 FEE A SMALL $5 FEE

VS.

20% increase in response rate

CONSUMER BEHAVIOR

HOW TO HANDLE SHORTCOMINGS

• Is it a good idea to admit to your faults?• Research from social psychologist Fiona Lee: – Two fictitious company reports – Both listed reasons why the company had

performed poorly last year

CONSUMER BEHAVIOR

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Admitting to shortcomings shows that

As opposed to

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USE URGENCY THE RIGHT WAY

• The effect of fear on attitude and behavior

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Urgency can be blocked by your

customer’s minds

if you don’t give them specific instructions on how to solve

the problem.

CONSUMER BEHAVIOR

Fortune 500The Fortune 500 is an annual list compiled and published by Fortune magazine that ranks 500 of the largest U.S. corporations by total revenue for their respective fiscal years. The list includes public companies, along with privately held companies for which revenues are publicly available.Fortune 500 - Wikipedia, the free encyclopediahttps://en.wikipedia.org/wiki/Fortune_500

CONSUMER BEHAVIOR

ASSIGNMENT

• Select a Fortune 500 company • Collect the following information:

1. Company Mission Statement and Basic Facts2. What Sets the Company Apart From its Competitors?3. What is Being Said About the Company in the News

and Through Social Networks?4. How the Company is Structured5. Who’s in Charge? 6. One print ad

CONSUMER BEHAVIOR

REFERENCES

• http://theconsumerfactor.com/en/5-stages-consumer-buying-decision-process/

• http://www.professionalacademy.com/blogs-and-advice/marketing-theories---explaining-the-consumer-decision-making-process

• http://www.consumerpsychologist.com/• http://

www.consumerpsychologist.com/intro_Consumer_Behavior.html