When Students Finish This Chapter They Should Understand Why

Chapter 1: Consumers Rule

CHAPTER OBJECTIVES

When students finish this chapter they should understand why:

·  Consumer behavior is a process.

·  Consumers use products to help them define their identities in different settings.

·  Marketers need to understand the wants and needs of different consumer segments.

·  The Web is changing consumer behavior.

·  Consumer behavior is related to other issues in our lives.

·  Consumer activities can be harmful to individuals and to society.

·  A wide range of specialists study consumer behavior.

·  There are two major perspectives on understanding and studying consumer behavior.

CHAPTER SUMMARY

As students will soon see, the field of consumer behavior covers a lot of ground. Whether the consumer is on a shopping trip to the mall or surfing on the Internet, general principles and theories of consumer behavior apply. The formal definition of consumer behavior used in the text is “the study of the processes involved when individuals or groups select, purchase, use, or dispose of products, services, ideas, or experiences to satisfy needs and desires.”

Consumers can be seen as actors on the marketplace stage. As in a play, each consumer has lines, props, and costumes that are necessary to put on a good performance. The roles that consumers perform are among the most important elements to be studied in consumer behavior. Consumer behavior is also an economic process where exchanges take place. These exchanges often involve many players. In fact, consumers may even take the form of organizations or groups. Whatever the composition, the decisions made by the consumer and these other players are critical to an exchange being carried out successfully to the benefit of all concerned parties.

Understanding the consumer is paramount to developing good marketing strategy. An excellent approach to understanding consumer is market segmentation. . Consumers can be segmented along various demographic and psychographic dimensions. One of the important reasons for segmenting markets is to be able to build lasting relationships (relationship marketing) with the customers. Marketers are currently implementing many practices that seek to aid in forming a lasting bond with the often fickle consumer. One of the most promising of these practices is database marketing wherein consumers’ buying habits are tracked very closely. The result of this practice is that products and messages can be tailored to people’s wants and needs.

For better or for worse, we all live in a world that is significantly influenced by the actions of marketers. Marketers filter much of what we learn. Therefore, consumer behavior is affected by the actions of marketers. Domestic and global consumption practices are examined in this chapter with an eye toward the role of the marketer and the influence of such social variables as culture.

The field of consumer behavior and its application is not, however, without its critics. Ethical practices toward the consumer are often difficult to measure and achieve. “Do marketers manipulate consumers?” is a serious question. Perhaps the answer may be found by examining several secondary questions such as: “Do marketers create artificial needs?” “Are advertising and marketing necessary?” or “Do marketers promise miracles?” The responses to these questions are formulated in this chapter.

As with many aspects of business and life, consumer behavior may also have a dark side. Excesses, illegal activities, consumer terrorism, and even theft are not uncommon. Ethical practices do offer positive solutions, however, to most of these problems.

The chapter concludes by providing a glimpse of consumer behavior as a field of study and provides a plan for study of the field. Simple decisions (buying a carton of milk) versus complex decisions (selection of a complex networked computer system) can all be explained if consumer behavior is studied carefully and creatively. Strategic focus and sound consumer research seem to be among several tools that can provide the guiding light that is probably necessary in our complex and ever-changing world.

CHAPTER OUTLINE

1. Consumer Behavior: People in the Marketplace

a. The average consumer can be classified and characterized on the basis of:

1) Demographics—age, sex, income, or occupation.

2) Psychographics—refers to a person’s lifestyle and personality.

b. The average consumer’s purchase decisions are heavily influenced by the opinions

and behaviors of their family, peers, and acquaintances.

1) The growth of the Web has created thousands of online consumption

communities where members share views and product recommendations.

2) Groups exert pressure to conform.

c. As a member of a large society, U.S. consumers share certain cultural values or

strongly held beliefs about the way the world should be structured.

1) Some of the values are based on subcultures (such as Hispanics or teens).

d. The use of market segmentation strategies may be used to target a brand to only

specific groups of consumers rather than to everybody.

e. Brands often have clearly defined images or “personalities” created by product

advertising, packaging, branding, and other marketing strategies that focus on

positioning a product in a certain way.

f. When a product succeeds in satisfying a consumer’s specific needs or desires, it

may be rewarded with many years of brand loyalty.

1) This bond is often difficult for competitors to break.

2) A change in one’s life situation or self-concept, however, can weaken the

bond.

g. Consumers’ evaluations of products are affected by their appearance, taste, texture,

or smell.

1) A good Web site helps people to feel, taste, and smell with their eyes.

2) A consumer may be swayed by the shape and color of a package, symbolism

used in a brand name, or even in the choice of a cover model for a magazine.

h. In a modern sense, an international image has an appeal to many consumers.

Increasingly, consumers opinions and desires are shaped by input from around the

world.

What Is Consumer Behavior?

i. Consumer behavior is the study of the processes involved when individuals or

groups select, purchase, use, or dispose of products, services, ideas, or experiences

to satisfy needs and desires.

1) Consumers are actors on the marketplace stage.

a) The perspective of role theory takes the view that much of consumer

behavior resembles actions in a play.

Discussion Opportunity—Ask students to consider and even write down some of the roles they play in life. Have them also consider if they were to describe themselves as a famous actor or actress, who would they be? Ask students to share what they have written, followed by the question, “What does the actor or actress you have selected have to do with the roles you play in life?”

b) People act out many roles and sometimes consumption decisions are affected.

c) Evaluation criteria may change depending on which role in the “play”

a consumer is following.

2) Consumer behavior is a process.

a) Most marketers recognize that consumer behavior is an ongoing process,

not merely what happens at the moment a consumer hands over money or

a credit card and in turn receives some good or service (buyer behavior).

b) The exchange—a transaction where two or more organizations or people

give and receive something of value—is an integral part of marketing.

1. The expanded view emphasizes the entire consumption process.

2. This view would include issues that influence the consumer before,

during, and after a purchase.

***** Use Figure 1.1 Here; Use Consumer Behavior Challenges #5 and #7 Here *****

3) Consumer behavior involves many different actors.

a) A consumer is generally thought of as a person who identifies a need or

desire, makes a purchase, and then disposes of the product during the

three stages in the consumption process.

b) The purchaser and user of a product might not be the same person.

c) A separate person might be an influencer. This person provides

recommendations for or against certain products without actually buying

or using them.

d) Consumers may be organizations or groups (in which one person may

make the decision for the group).

***** Use Consumer Behavior Challenge #1 Here *****

2. Consumers’ Impact on Marketing Strategy

a. Understanding consumer behavior is good business. A basic marketing concept

states that firms exist to satisfy consumers’ needs.

1) Consumer response is the ultimate test of whether a marketing strategy will succeed.

2) Data about consumers helps organizations to define the market and to identify

threats and opportunities to a brand.

Segmenting Consumers

b. The process of market segmentation identifies groups of consumers who are

similar to one another in one or more ways and then devises strategies that

appeal to one or more groups. There are many ways to segment a market.

1) Companies can define market segments by identifying their most loyal, core

customers or heavy users.

2) Demographics are statistics that measure observable aspects of a population,

such as birth rate, age distribution, and income.

a) The U.S. Census Bureau is a major source of demographic data on families.

3) Important demographic dimensions include:

a) Age.

b) Gender.

c) Family structure.

d) Social class and income.

e) Race and ethnicity.

f) Geography.

4). Lifestyles: Beyond Demographics. Segmentation variables that involve values, activities,

and the ways that people see themselves are known as lifestyle or psychographic variables.

Discussion Opportunity—Have students describe themselves demographically. Ask: Does this have any bearing on your purchase patterns? How could a marketer find out about you in a demographic sense? Describe one purchase occasion where a demographic dimension had an impact on your purchase decision.

Relationship Marketing: Building Bonds with Consumers

c. Relationship marketing occurs when a company makes an effort to interact with

customers on a regular basis, giving them reasons to maintain a bond with the

company over time.

Discussion Opportunity—Provide the class with an example of relationship marketing. Ask: What types of organizations can make best use of relationship marketing? Have students offer additional examples of relationship marketing.

d. Database marketing involves tracking consumers’ buying habits very closely and

crafting products and messages tailored precisely to people’s wants and needs

based on this information. Wal-Mart is a good example of a company that effectively
utilizes database marketing.

***** Use Consumer Behavior Challenge #6 Here *****

Discussion Opportunity—Ask: How can database marketing help an organization improve its relationship marketing? What databases are you in? How did you get there?

3. Marketing’s Impact on Consumers

a. For better or worse, we all live in a world that is significantly influenced by the

actions of marketers.

Marketing and Culture

b. Popular culture consists of the music, movies, sports, books, celebrities, and

other forms of entertainment consumed by the mass market; it is both a product of

and an inspiration for marketers. Product icons often become central figures in popular

culture.

1) The meaning of consumption—A fundamental premise of consumer behavior is

that people often buy products not for what they do, but for what they mean.

2) People, in general, will choose the brand that has an image (or even a

personality) that is consistent with his or her underlying needs.

Discussion Opportunity—Give some examples of products that might be consumed strictly for image. Have students offer examples of products that they purchase for this reason. Ask: How does the image of the product enhance your sense of self when you use or consume the product?

3) People may have various relationships with a product:

a) Self-concept attachment—the product helps to establish the user’s identity.

b) Nostalgic attachment—the product serves as a link with a past self.

c) Interdependence—the product is a part of the user’s daily routine.

d) Love—the product elicits emotional bonds of warmth, passion, or other

strong emotion.

Discussion Opportunity—Ask students to give an illustration of a product that they have a strong attachment for and explain the relationship. How did this relationship develop?

4) The global consumer. One highly visible—and controversial—byproduct of

sophisticated marketing strategies is the movement toward a global consumer

culture, where people around the world are united by their common devotion

to brand name consumer goods, movie stars, and musical celebrities.

5) Virtual consumption. The Digital Revolution is one of the most significant

influences on consumer behavior right now.

a) Online shopping.

b) Electronic marketing has increased convenience by breaking down many of

the barriers caused by time and location.

c) New venues include B2C e-commerce and C2C e-commerce.

d) Virtual brand communities.

1

e) Will the Web bring us closer together or drive us into our on little

private world? Are we, for example, spending less time with friends and

family in the traditional way?

Discussion Opportunity—Ask: What are the pros and cons of the virtual world? How has the virtual world altered your lifestyle? What will the future bring with respect to this topic?

Blurred Boundaries: Marketing and Reality

c. Marketers and consumers co-exist in a complicated, two-way relationship. There

is often a “blurring” between the two. Where does marketing end and reality begin?

Discussion Opportunity—Ask: What other “blurring” do you see occurring in the marketing field? Give examples to illustrate your thoughts. If no suggestions are offered, consider pointing out that there is a blurring of boundaries between promotional and entertainment material, in addition to the blurring between the marketing world and consumers’ real worlds.

4. Marketing Ethics and Public Policy

Business Ethics

a. Business ethics are rules of conduct that guide actions in the marketplace—the

standards against which most people in a culture judge what is right and what is

wrong, good, or bad. There are various universal values and many culture-specific ones

***** Use Consumer Behavior Challenge #2 Here *****

Discussion Opportunity—Ask: What other values do you think might affect consumption?

Needs and Wants: Do Marketers Manipulate Consumers?

b. One of the most stinging criticisms of marketing is that marketing (especially