Consumer Behavior

1. Resource Person:
Muhammad kamran

2. Contents
Unit–1: Consumer Behavior and Consumer Research
1.1. Development of Marketing Concepts
1.1.1 Marketing Concept
1.1.2 Implementing Marketing Concept
1.1.3 Segmentation, Targeting and Positioning
1.1.4 Marketing Mix
1.1.5 Customer Value, Satisfaction and Retention
1.1.6 Impact of Digital Technologies on Marketing Strategies
1.1.7 Consumer Behavior and Decision Making are
Interdisciplinary
1.2. Consumer Research
1.2.1 Quantitative Research
1.2.2 Qualitative Research
1.2.3 Combining Qualitative and Quantitative Research Findings
1.3. Consumer Research Process
1.4. Ethics in Consumer Research

3. Development of Marketing
concept
 The marketing concept and philosophy states that the
organization should strive to satisfy its customers' wants
and needs while meeting the organization's goals.

4. The customer is king

5. marketing era
 starts to dominate from 1950 - now

6.  The marketing concept recognizes that the
company's knowledge and skill in designing
products may not always be meeting the needs of
customers.

7.  It also recognizes that even a good sales
department cannot sell every product that does not
meet consumers' needs.

8.  With the customer's satisfaction the key to the
organization, the need to understand the customer
is critical.

9. care about consumers needs
A college student opened a small submarine sandwich shop
near his university's campus.
The sub shop immediate success. By using the marketing
concept, the young entrepreneur had recognized an unmet
need in the student population and opened a business that
met that need.

10.  The sub shop was so successful that it began to
outgrow its original location after about three
years. The shop moved to a larger location with
more parking spaces, also near the university. At
the new sub shop, waiters in tuxedos met the
students and seated them at tables with tablecloths.

11.  Besides the traditional subs, the shop now served full
meals and had a bar. Within a few months the sub shop
was out of business. The owner of the shop had become
so involved with his business vision that he forgot the
customers' needs and wants. They did not want an
upscale restaurant—there were other restaurants in the
area that met that need, they just wanted a quick sub
sandwich.

12.  By losing sight of the customers' wants and needs,
the owner of the sub shop lost his successful
business.

13. Criticism of marketing concept
 The marketing concept only advocates discovering
consumers' wants and needs and satisfying them.
 Consumers may not be aware of all of their wants
and needs.
 It seeks to encourage creativity to satisfy customer
needs.

14.  The marketing concept is a relative newcomer as
philosophy of doing business.
 Today, the marketing concept and philosophy
stands as a formula for doing business and many
believe it is a prescription for success.

15.  It aims to satisfy customers by guiding the
organization to meet the customers' needs and
wants while meeting the organization's goals.

16. Differences:
 Sales Concept
1.Focuses on the needs of
the seller.
2. is preoccupied with the
seller’s need to convert
his/her product into cash.
 Marketing Concept
1.Focuses on the needs of
the buyer
2. is preoccupied with the
idea of satisfying the
needs of the customer by
means of the product as a
solution to the customer’s
problem (needs).

17. Implementing the marketing
concept
 To identify unsatisfied consumer needs, companies
had to engage in extensive marketing research. In so
doing, they discovered that consumers were highly
complex individuals, subject to a variety of
psychological and social needs quite apart from their
survival needs.
 They discovered that the needs and priorities of
different consumer segments differed dramatically,
and in order to design new products and marketing
strategies that would fulfil consumer needs, they had
to study consumers and their consumption behaviour
in depth.

18. Implementing the marketing
concept
 Thus, the marketing concept underscored the
importance of consumer research and laid the
groundwork for the application of consumer behaviour
principles to marketing strategy. The strategic tools
that are used to implement the marketing concept
include segmentation, targeting, positioning and
the marketing mix.

19. Segmentation and Targeting
 Market segmentation is the 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.

20. Positioning
Positioning is developing a distinct image for the
product or service in the mind of the consumer, an
image that will differentiate the offering from competing
ones and squarely communicate to consumers that the
particular product or service will fulfil their needs better
than competing brands.

21. Positioning
 Successful positioning centres around two key principles: first,
communicating the benefits that the product will provide rather
than the product’s features. As one marketing sage pointed out:
‘consumers do not buy drill bits – they buy ways to make holes’.
 Secondly, because there are many similar products in almost any
marketplace, an effective positioning strategy must develop and
communicate a ‘unique selling proposition’ – a distinct benefit or
point of difference – for the product or service. In fact, most of
the new products introduced by marketers (including new forms
of existing products such as new flavors, sizes, etc.) fail to
capture a significant market share and are discontinued because
they are perceived by consumers as ‘me too’ products lacking a
unique image or benefit.

22. Marketing Mix
The marketing mix consists of a company’s service and/or
product offerings to consumers and the methods and tools it
selects to accomplish the exchange.
The marketing mix consists of four elements:
1. The product or service (the features, designs, brands and
packaging offered, along with post purchase benefits
such as warranties and return policies);
2. The price (the list price, including discounts, allowances
and payment methods);
3. The place (the distribution of the product or service
through specific retail and non-retail outlets);
4. Promotion (the advertising, sales promotion, public
relations and sales efforts designed to build awareness of
and demand for the product or service).

23. Customer Value
Customer value is defined as the ratio between the
customer’s perceived benefits (economic, functional and
psychological) and the resources (monetary, time, effort,
psychological) used to obtain those benefits. Perceived
value is relative and subjective.

24. Customer Value (Cont.)
For example, diners at an exclusive, Michelin-star-
awarded restaurant in Copenhagen, Denmark, where a
meal with drinks may cost €250 per person, may expect
unique and delicious food, immaculate service and
beautiful decor.
Some diners may receive even more than they had
expected and will leave the restaurant feeling that the
experience was worth the money and other resources
expended (such as a month-long wait for a reservation).
Other diners may go with expectations so high that they
leave the restaurant disappointed.

25. Customer Value (Cont.)
On the other hand, millions of customers each year visit
thousands of McDonald’s restaurants in scores of
countries around the globe, where they purchase
standard, inexpensive meals from franchise owners and
employees systematically trained by the McDonald’s
Corporation to deliver the company’s four core
standards: quality, service, cleanliness and value.
Customers flock to McDonald’s outlets repeatedly
because the restaurants are uniform, customers know
what to expect and they feel that they are getting value
for the resources they expend.

26. Customer Satisfaction
Customer satisfaction is the individual’s perception of the
performance of the product or service in relation to his or her
expectations.
As noted earlier, customers will have drastically different
expectations of an expensive restaurant and a McDonald’s,
although both are part of the restaurant industry.
The concept of customer satisfaction is a function of
customer expectations. A customer whose experience falls
below expectations (e.g. used dishes not cleared quickly
enough at an expensive restaurant or cold fries served at a
McDonald’s) will be dissatisfied. Diners whose experiences
match expectations will be satisfied. And customers whose
expectations are exceeded (e.g. by small samples of delicious
food ‘from the Chef ’ served between courses at the expensive
restaurant, or a well-designed play area for children at a

27. Customer Retention
The overall objective of providing value to customers
continuously and more effectively than the competitors is to
have highly satisfied (even delighted) customers; this strategy
of customer retention makes it in the best interest of
customers to stay with the company rather than switch to
another firm. In almost all business situations, it is more
expensive to win new customers than to keep existing ones.
Studies have shown that small reductions in customer
defections produce significant increases in profits because:
1. loyal customers buy more products;
2. loyal customers are less price sensitive and pay less attention
to competitors’ advertising;
3. servicing existing customers, who are familiar with the firm’s
offerings and processes, is cheaper; and
4. loyal customers spread positive word-of-mouth and refer

28. THE IMPACT OF DIGITAL TECHNOLOGIES ON
MARKETING STRATEGIES
 Digital technologies allow much greater customization of
products, services and promotional messages than older
marketing tools.
 By using new technologies, marketers can collect and
analyse increasingly complex data on consumers’ buying
patterns and personal characteristics, and quickly analyse
and use this information for targeting smaller and
increasingly more focused groups of consumers.
 On the other hand, the same technologies enable
consumers to find more information about products and
services (including prices) more easily, efficiently and, for
the most part, from the comfort of their own homes

29. CONSUMER BEHAVIOUR AND DECISION-
MAKING ARE INTERDISCIPLINARY
 Consumer behaviour was a relatively new field of study in
the mid- to late 1960s.
 It had no history or body of research of its own, marketing
theorists borrowed heavily from concepts developed in
other scientific disciplines, such as psychology (the study
of the individual), sociology (the study of groups), social
psychology (the study of how an individual operates in a
group), anthropology (the influence of society on the
individual) and economics, to form the basis of this new
marketing discipline.

30. CONSUMER BEHAVIOUR AND DECISION-
MAKING ARE INTERDISCIPLINARY (Cont.)
 Many early theories concerning consumer behaviour were
based on economic theory, on the notion that individuals
act rationally to maximise their benefits (satisfactions) in
the purchase of goods and services.
 Later research discovered that consumers are just as likely
to purchase impulsively and to be influenced not only by
family and friends, by advertisers and role models, but also
by mood, situation and emotion. All of these factors
combine to form a comprehensive model of consumer
behaviour that reflects both the cognitive and emotional
aspects of consumer decision-making .

32. Comparisons between
Customer Research and Marketing Research
Customer Research Marketing Research
Study Purpose Data collection and
strengthening
relationship with
customers. Respondents
are told the identity of
the sponsor
Data collection only.
Respondents are not
told the research
sponsor’s identity.
Respondents level of
involvement and
expectations
Increase respondents
involvement by
indicating that data
collected will be used to
improve company’s
offerings.
The respondents level of
involvement is generally
low.
Sample Size As many as possible A sufficient number of
respondents are
contacted to achieve
statistical validity

33. Data Collection and
Analysis
Data collected can be
linked to specific
respondents and
analysed at the
respondents level
Data are collected and
aggregated. Typically,
comparisons among
sample averages are
used in the analysis
End Result Appropriate data are
identified to fix product
and service problems and
to correct individual
participant’s problems
Product and Service
problems are identified
Follow-up surveys Follow-up is encouraged Is not encouraged and
considered unethical.

34. Quantitative Research
 Descriptive in nature.
 Enables marketers to “predict” consumer behavior.
 Research methods include experiments, survey
techniques, and observation.
 Findings are descriptive, empirical, and can be
generalized to larger populations.

35. Qualitative Research
 Consists of depth interviews, focus groups, metaphor
analysis, collage research, and projective techniques.
 Administered by highly trained interviewer-analysts.
 Findings tend to be subjective.
 Small sample sizes so the findings cannot be
generalised to larger populations.
 Primarily used to obtain new ideas for promotional
campaigns

36. Qualitative Research
Quantitative
Research
Study
Purpose
• Provide insights
about ideas
• Exploratory research
before quantitative
study
• Describe target
market
• Results for
strategic
marketing
decisions
Types of
Questions
• Open-ended
• Unstructured
• Close-ended
• Attitude scales
Data
Collection
Methods
• Projective techniques
• Depth interviews
• Focus groups
• Observation
• Experimentation
• Questionnaires
Comparison between Qualitative and
Quantitative Research

37. Qualitative Research
Quantitative
Research
Sampling
Methods
• Small
• Nonprobability
samples
• Large
• Probability
samples
Data
Analysis
• Analyzed by
researchers who
collected data
• Look for “key words”
• Subjective
• Coded, tabulated,
and entered into
database
• Use of statistical
methods
Continued

38. Combining Qualitative and Quantitative
Research Findings
 Marketers often use a combination of quantitative and
qualitative research to help make strategic marketing
decisions.
 For example, they use qualitative research findings to
discover new ideas and to develop promotional
strategy, and quantitative research findings to predict
consumer reactions to various promotional inputs.
 Frequently, ideas stemming from qualitative research
are tested empirically and become the basis for the
design of quantitative studies.

39. Combining Qualitative and Quantitative
Research Findings (Cont.)
 Marketers have discovered that these two research
paradigms are really complementary in nature. The
prediction made possible by quantitative (positivist)
research and the understanding provided by
qualitative (interpretivist) research together produce a
richer and more robust profile of consumer behaviour
than either research approach used alone.
 The combined findings enable marketers to design
more meaningful and effective marketing strategies.

40. The Consumer Research Process

41. Developing Research Objectives
 Defining purposes and objectives helps ensure an
appropriate research design.
 A statement of objectives helps to define the type and
level of information needed.

42. Secondary Data
 Data that has been collected for reasons other than the
specific research project at hand
 Includes internal and external data

43. Types of Secondary Data
Internal Data
 Data generated in-house
 May include analysis of
customer files
 Useful for calculating
customer lifetime value
External Data
 Data collected by an
outside organization
 Includes government,
periodicals, newspapers,
books, search engines
 Commercial data is also
available from market
research firms

44. Designing Primary Research
 Quantitative Research Designs
 Include research design, data collection methods,
instruments to be used, and the sample design
 Qualitative Research Designs
 Include depth interviews, focus groups, projective
techniques, and metaphor analysis

45. Data Collection Methods
Observational Research
 Helps marketers gain an in-depth understanding of
the relationship between people and products by
watching them buying and using products
 Helps researchers gain a better understanding of what
the product symbolizes

46. Data Collection Methods Mechanical
Observational Research
 Uses mechanical or electronic device to record
consumer behavior or response
 Consumers’ increased use of highly convenient
technologies will create more records for marketers
 Product audits which monitor sales are heavily used by
companies

47. Data Collection Methods Experimentation
 Can be used to test the relative sales appeal of many
types of variables
 An experiment is usually controlled with only some
variables manipulated at a time while the others are
constant
 Can be conducted in laboratories or in the field

48. Surveys
Data Collection Methods
Personal Interview
Mail
Telephone
Online

49. Validity and Reliability
 If a study has validity it collects the appropriate data
for the study.
 A study has reliability if the same questions, asked of a
similar sample, produce the same findings.

50. Attitude Scales
 Likert scales: easy for researchers to prepare and
interpret, and simple for consumers to answer
 Semantic differential scales: relatively easy to
construct and administer
 Behavior intention scales: also easy to construct
and administer
 Rank-order scales: subjects rank items in order of
preference in terms of some criteria

51. Qualitative Collection Method
Depth Interview
 Usually 30 minutes to 1 hour
 Nonstructured
 Interpreted by trained researcher
 Listen to words as well as “body language”

52. Qualitative Collection Method Focus Group
 8-10 participants
 Lasts about 2 hours
 Always taped or videotaped to assist analysis
 Often held in front of two-way mirrors

53. Focus Group Discussion Guide
1. Why did you decide to use your current cellular company?
2. How long have you used your current cellular company?
3. Have you ever switched services? When? What caused the
change?
4. What do you think of the overall quality of your current
service?
5. What are the important criteria in selecting a cellular service?
Examples of Probe questions:
a. Tell me more about that . . .
b. Share your thinking on this . . .
c. Does anyone see it differently . . .

54. Qualitative Collection Method Projective
Techniques
 Research procedures designed to identify consumers’
subconscious feelings and motivations
 Consist of a variety of disguised “tests”

55. Qualitative Collection Method Metaphor
Analysis
 Based on belief that metaphors are the most basic
method of thought and communication
 Zaltman Metaphor Elicitation Technique (ZMET)
combines collage research and metaphor analysis to
bring to the surface the mental models and the major
themes or constructs that drive consumer thinking
and behavior.

56. Customer Satisfaction
Measurement
 Customer Satisfaction Surveys
 Gap Analysis of Expectations versus Experience
 Mystery Shoppers
 Customer Complaint Analysis
 Analysis of Customer Defections

57. Sampling and Data Collection
 Samples are a subset of the population used to
estimate characteristics of the entire population.
 A sampling plan addresses:
 Whom to survey
 How many to survey
 How to select them
 Researcher must choose probability or nonprobabililty
sample.

58. Probability Sampling Designs
Simple random
sample
Every member of the population has a known and
equal chance of being selected.
Systematic random
sample
A member of the population is selected at random
and then every “nth” person is selected.
Cluster (area)
sample
The population is divided into mutually exclusive
groups (such as blocks), and the researcher draws a
sample of the groups to interview.
Stratified random
sample
The population is divided into mutually exclusive
groups (such as age groups), and random samples
are drawn from each group.

59. Data Analysis and Reporting Findings
 Open-ended questions are coded and quantified.
 All responses are tabulated and analyzed.
 Final report includes executive summary, body, tables,
and graphs.

60. Ethics in Consumer Research
 Market research ethics are moral principles that guide the
responsibility to conduct and analyze research without
deception to ensure authenticity.
 At every step of a market research effort, a market research
company takes measures to ensure both participants and
clients are treated fairly and with respect.
 It is essential to understand participants’ rights when
conducting market research, such as focus groups, in-
depth interviews, and surveys.
 Researchers should allow all participants to remain
anonymous, and their right to confidentiality should
always be respected.