Chapter 2: Consumer

Behavior & the Marketing

Manager

Consumer Behavior
John C. Mowen
Michael S. Minor
 Ten Concepts to Learn
 PERMS  CB and marketing
 Product positioning research
 Product  CB and the marketing
differentiation mix
 Elements of the  The bases of
consumer segmentation
environment  Behavioral
 Behavioral segmentaiton
economics  Managerial
applications analysis
Application Areas of
Consumer Behavior:
PERMS
 Environmental Analysis
 Market Research
 Segmentation of the Marketplace
 Product Positioning and Product
Differentiation
 Marketing-Mix Development
Product Positioning . . .
. . . is influencing how consumers
perceive a brand’s characteristics
relative to those of competitive
offerings

 Goal is to influence demand by creating

a product with specific characteristics
(i.e. brand attributes) and a clear image
that differentiate it from competitors
 Specific Positioning
 positioning a brand based creating linkages
between brand and key attributes and benefits.
E.g., acceleration of auto, reliability of auto
 Competitive Positioning
 positioning a brand in relation to competitors.
 E.g., Suburban is larger than an Expedition
 Psychological Positioning
 positioning a brand based upon dominant
personality characteristic of target market.
 E.g., We build excitement.
Product Differentiation . . .

. . . is the process of manipulating

the marketing mix so as to position
a product in a manner that allows
consumers to perceive meaningful
differences between a brand and
its competitors
Environmental
Analysis . . .

. . . is the
assessment of the
external forces that
act upon the firm
and its customers,
and that create
threats and
opportunities
The Natural
Environment . . .
. . . includes the types of
raw materials available,
pollution, consumer fear
of contracting deadly
diseases, the expansion
of desert regions around
the globe, and various
weather phenomena,
such as hurricanes or
drought
Components of the External
Environment

 Demographi  Technological
c
 Political
 Economic
 Cultural
 Natural
 The Economic
 Environment
Set of factors involving monetary, natural, and human
resources that influence firms/consumers.
 Behavioral economics: study of economic decisions
made by individual consumers and the behavioral
determinants of those decisions.
 3 Major Contributions of Behavioral Economists:
 Originated and documented the idea that the consumer sector of
the economy can strongly influence the course of the aggregate
economy
 Investigated what factors influence the decision of families to
buy or save
 Developed a methodology for making predictions of economic
activities based upon consumer surveys
The Technological
Environment
Goal is to anticipate
what changes in the
technological
environment will
occur and how these
will influence the
lifestyle and
consumption
patterns of
consumers
MARKET RESEARCH . . .

. . . is applied consumer research

designed to provide management
with information on factors that
impact consumers’ acquisition,
consumption, and disposition of
goods, services, and ideas
Marketing-Mix Development .
. . . involves the development and
coordination of activities involving the:

 Product  Pricing

 Promotion  Distribution
Promotional Strategy

 Advertising
 Personal Selling
 Sales Promotion
Applications
 Public Relations
Price Changes
 Predicting the likely impact of price
changes on consumers is an
important consumer behavior area.
 How will consumers react when
companies raise or lower the price of a
product?
 Principles of perception can be applied
to analyze if consumers will notice a
difference in price and if so, what effect
it has
Product Distribution . . .
. . . will be impacted
by understanding how
consumers make their
purchasing decisions.
**Example: low
involvement decision
(e.g., purchase soft
drink), must use
extensive distribution.
Market Segmentation . . .
. . . involves
subdividing the
market place into
distinct subsets of
customers having
similar needs and
wants, each of which
can be reached with
a different marketing
mix
Four Classifications of
Segmentation Variables:
 Characteristics of the Person
 Nature of the Situation in Which the
Product or Service May Be
Purchased
 Geography
 Culture and Subculture Adopted by
the Consumer
Characteristics of the
Person
 Demographic Characteristics
 Behavioral Segmentation:price
elasticity, benefits sought,
usage rate, brand loyalty
 Benefit Segmentation
 Psychographic and Personality
Characteristics
Demographics is . . .

. . . the study of population changes and subcultural values of

various demographic groups based on such factors as age, sex,
income, education, ethnicity, and geography.
Examples of demographic variables:
age, sex, income, ethnicity, nationality, household size, marital
status, religion, education, occupation,
Consumer Situations . . .

. . . consist of the temporary

environmental factors that form the
context within which a consumer
activity occurs at a particular time and
place
Types of situations: social, physical,
task definition, time.
Geographic Segmentation
 Can include region, size
of cities and counties,
census blocks,
population density, and
climate
 Geodemographics is the
combination of
geography and
demographics
Culture and Subculture

 Culture is the way of life of the

people of a society

 Subculture is a subdivision of a
national culture and is based on
some unifying characteristic, such
as social status or nationality
Segmenting Industrial
Markets
 Different segmenting
variables are used to
classify companies into
segments including the
North American
Industry Classification
System NAICS).
Developed as part of
NAFTA in 1997.
20--2-digit codes.
Solving Managerial
Problems . .
. . . is a three-step process:
 Gather information and identify the
problem/opportunity
 Identify the relevant consumer
behavior concepts and how they
apply to the problem
 Develop a managerial strategy by
identifying the managerial
implications of each consumer
concept.