CHAPTER ONEConsumer Behavior and Marketing StrategyMcGraw-Hill/IrwinCopyright 2004 by The McGraw-Hill Companies, Inc. All rights reserved.

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What is Consumer Behavior? 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.

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Why study consumer behavior?Consumer behavior theory provides the manager with the proper questions to askMarketing practice designed to influence consumer behavior influences the firm, the individual, and societyAll marketing decisions and regulations are based on assumptions about consumer behavior

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Applications of Consumer BehaviorMarketing StrategyRegulatory PolicySocial MarketingInformed Individuals

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Marketing Strategy & Consumer BehaviorCreating Customer Value:The difference between all the benefits derived from a total product and all the costs of acquiring those benefits.

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Marketing Strategy & Consumer Behavior

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Consumer Insight 1-1What services could become experience-provoking events? How would they do this?How can retailers, including Internet outlets, provide their customers experiences?What would a store like Niketown (or a local shopping mall in your area) have to do to charge admission for customers to enter?

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Market Analysis ComponentsThe ConsumersThe CompanyThe CompetitorsThe Conditions

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Market SegmentationMarket Segment: a portion of a larger market whose needs differ somewhat from the larger market.Four steps to segmentation:Identify product-related need setsGroup customers with similar need setsDescribe each groupSelect an attractive segment(s) to serve

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Market Segment Attractiveness

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Marketing StrategyHow will we provide superior customer value to our target market?Marketing MixThe ProductCommunicationsPriceDistributionService

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OutcomesFirm:Product positioningSalesCustomer SatisfactionIndividual:Need SatisfactionInjurious ConsumptionSociety:EconomicPhysical EnvironmentSocial Welfare

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Creating Satisfied Customers

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Overall Model Of Consumer Behavior

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Consumer Insight 1-2What does the consumption of a product like Nikes mean to Andre?What does this story say about our society and the impact and role of marketing?