01 Consumer Behavior 2.0-The Critical Introduction to Consumer Behavior

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Consumer BehaviorThe Applied Psychology of Business Management

The Critical Introduction to Consumer Behavior


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About the Lecture Presenter

Daniel M. Zhou Consumer Behavior 2

BA in ESP (Hubei, P.R.China)

MSc in Management (Bath, UK)

Name: Daniel M. Zhou

Gender: male

Zodiac: Gemini

Professional Career:

project coordinator and translator in local government (1997-2001); managing loans and financial aids from international

funding communities to improve local economy

academic staff in Hubei University (2003 present); my

teaching and research interests lie in applying psychology to

business management, consumer behavior, organizationalbehavior and the psychology of investing

Hobbies: reading history , watching movies ,

travelling , and photographing .


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Class Policies


You can interrupt me at any time when you think appropriate and at any

place where you think appropriate

Listening is as important as reading

Make sure that you arrive punctually

Switch off you mobile phone in class

If you cannot meet the minimal requirement, I will fail you


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Teaching Methods and Students Outcomes


You are expected to understand business theories and be able to apply

them to the real-world business Scenario

Mutual communications, in-class discussions and on-stage

presentations are highly encouraged

Extensive reading is needed to take good command of CB

Independent thought and original ideas are deeply appreciated

The course is delivered bilingually - The core terms and concepts are

given in English, but explained and expounded in Chinese. And only

English Presentations Slides are available


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Consumer Behavior


CHAPTER

1

The Critical

Introduction to

Consumer Behavior


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Contents

The Underlying Logic of Consumer Behavior1

Consumer and Consumer Behavior2

Essential Concepts of Consumer Behavior Study3

The Relationship between Consumer Behavior and

Marketing Strategy4

The Structure of Consumer Behavior5


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The Underlying Logic of Consumer Behavior Study


Customers are scarce:

Todays major economic problem is overcapacity in most of the

worlds industries. Customers are scarce, not products. Demand,

not supply, is the problem. Overcapacity leads to

hypercompetition, with too many goods chasing too few

customers. It is customer satisfaction that determines businesssurvival and profits.

Customers are various:

Customers are highly varied from one to another due to theirmood, personalities, lifestyles, age, gender, educations,

professional careers, social classes, cultural backgrounds, etc..

Without understanding consumers behaviors, success to attract

and retain them stands little chance.


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Consumer and Consumer Behavior

A consumer is generally thought of as a person whoidentifies a need ordesire, makes a purchase, and

then disposes ofthe product during three stages

(pre-purchase, purchase, and post-purchase) in the

consumption process.

The term consumer behavior describes two different

kinds of consuming entities: the personal

consumer , and the organizational consumer



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The field ofconsumer behavioris the study ofindividuals, groups,ororganizations 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

consumerand society.

The field ofconsumer behaviorcovers many grounds. It is thestudy of the processes involved when individuals or groups select,

purchase, use, or dispose of products, services, ideas, or

experiences to satisfy needs and desires.

The study ofconsumer behaviorfocuses on how individuals

make decisions to spend their available resources (time, money,effort) on consumption-related items. That includes what they buy,

why they buy it, when they buy it, where they buy it, how often they

buy and use it, how do they dispose of it after they buy?


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Consumer behavioris the very foundation of the formulation and

implementation of any marketing and business programs.

Consumer behavioris both an academic discipline and an

applied science.

Consumer behaviorhas interdisciplinary roots.


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ConsumerBehavior

Psychology

Management

SociologyAnthropology

Economics


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Essential Concepts - Marketing


Peter Drucker:

The aim of marketing is to make selling superfluous.

American Marketing Association:

Marketing is an organizational function and a set of processes for creating,

communicating and delivering value to customers and for managing

customer relationships in ways that benefit the organization and its

stakeholders.

Barbara Kahn:

Modern marketing is defined by a focus on customer value. The best way

to convince customers to buy from you is to provide more value. The key toprofitability is customer loyalty and customer satisfaction.

Philip Kotler:

Marketing is a social and managerial process by which individuals and

groups obtain what they need and want through creating and exchanging

products and value with others.


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Essential Concepts - Marketing


General term:Marketing is the process of Identifying, meeting and

satisfying customer and social needs profitably.Daniel M. Zhou

Strategic perspective:A process of building and maintaining a strategic network

with all the stakeholders in a jointly profitable way.Daniel M. Zhou


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Essential Concepts Needs, Wants and Demands


Need:

A human need is a state of felt deprivation of some basic

satisfaction. People require food, air, water, clothing and

shelter; people also have strong needs for recreation,

education, and entertainment.

Want:

Wants are desires for specific satisfiers of these deeper

needs.

Demand:

Demands are wants for specific products backed by an

ability and willingness to buy them.


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Essential Concepts Value and Satisfaction


Satisfactionis a persons feelings of pleasure or disappointment

resulting from comparing a products perceived performance (or

outcome) in relation to his or her expectations.

Perceived value=benefits-costs

=(functional benefits + emotional benefits) (monetary cost + time

cost + energy cost +Psychic cost)

Perceived value = expectation: satisfiedPerceived value expectation: dissatisfied

Perceived value expectation: delighted


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Essential Concepts Value and Satisfaction


Achieve

customer

delight

Satisfycustomer

unstated needs

Meet basic

customer

requirements

Prevent customercomplaints

Develop customer

confidence

Build customerloyalty


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Essential Concepts Marketing Mix



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Essential Concepts Marketing Philosophy Evolution



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Essential Concepts Marketing Philosophy Evolution


Startingpoint

Focus Means Ends

FactoryExistingproducts

Selling and

promotion

Profits through

sales volume

Selling concept

MarketCustomer

needsIntegrated

Marketing

Profits through

Customer satisfaction

Marketing concept

Individual

customers

Customerneeds and

values

One-to-one

Marketing;

integration of

the value chain

Profitable growth through

capturing customer share,

loyalty and life-time value

Customer concept


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Consumer Behavior and Marketing Strategy



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Marketing Strategy begins with an

analysis of the market the organization

is considering, requiring a detailed

analysis of the:

organizations capabilities

strengths and weaknesses of competitors

Political, economic, socio-cultural and

technological forces

current and potential customers

Step 1. Market Analysis


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On the basis of the consumer analysis,

the organization decide on formulating

programs to attract and retain

customers

Market segmentation is a process of dividing

a market into subsets of consumers with

common needs or characteristics

Market targeting is selecting one or more of

the segments identified for the company to

pursue

Market positioning is developing a distinct

image for the product or service in the mind

of the consumer.

Step 2. Market Segmentation


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Marketing Strategy seeks to provide

the customer with more value than the

competition, while still producing a profit

for the firm.Marketing strategy is formulated in

terms of the marketing mix, which

involves determining the product

features, price, communications,

distribution and services that will

provide customers with superior value,resulting in the total product.

Step 3. Marketing Strategy


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The total product is presented to the

target market, which is consistently

engaged in processing information and

making decisions designed to maintainor enhance its lifestyle or performance.

Many firms are wrapping experiences

around their traditional products and

service in order to sell them better. For

example, retailers have been moving tolifestyle centers in an effort create a

more pleasing shopping experience.

Step 4. Consumer Decision Process


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Society the cumulative effect of the

marketing process affects economic

growth, regulatory policies, and social

problems.Firm reaction of the target market to the

total product produces an image of the

product/brand/organization.

Individual the process results in some

level of need satisfaction, financial

expenditure, attitude development/change,and/or behavioral changes.

Step 5. Outcomes


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Discussion: Do Marketers Manipulate Consumers?



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The Structure of Consumer Behavior



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The Structure of Consumer Behavior


Consumersas

individuals

Sense and perception

Need and motivation Learning and memory

Attitudes formation andchange

Personality, self and lifestyle

Consumersin social,

cultural andmarketsettings

Reference group, opinionleadership and familyinfluence

Social class

Culture, subculture and crossculture impacts

Consumer behavior andmarketing communications

Consumersas decision

makers

Consumer decision makingprocess

Purchase situation, outletselections, and online buyingbehavior


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The Highly Recommended Reference Books


Consumer Behavior(9th edition)

Authors: Leon G. Schiffman; Leslie Lazar Kanuk

Publishing House: Pearson Education

Consumer Behavior Buliding Marketing Strategy (10th edition)

Authors: Del I. Hawkins; David L. Mothersbaugh; Roger J.Best

Publishing House: McGraw Hill

Consumer Behavior- Buying, Having and Being (7th edition)

Authors: Michael R. Soloman



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The Highly Recommended Reference Books


Psychology and Life (18th edition)

Authors: Richard J. Gerrig; Philip G. Zimbardo


Social Psychology (11th edition)

Authors: Shelley E. Taylor; Letitia Anne Peplau; David O. Sears



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Consumer Behavior

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01 Consumer Behavior 2.0-The Critical Introduction to Consumer Behavior

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