Chapter 2: Consumer Behavior & the Marketing Manager: Chapter 2: Consumer Behavior & the Marketing Manager Consumer Behavior John C. Mowen Michael S. Minor


Ten Concepts to Learn: Ten Concepts to Learn PERMS Product positioning Product differentiation Elements of the consumer environment Behavioral economics CB and marketing research CB and the marketing mix The bases of segmentation Behavioral segmentaiton Managerial applications analysis


Application Areas of Consumer Behavior: PERMS: Application Areas of Consumer Behavior: PERMS Environmental Analysis Market Research Segmentation of the Marketplace Product Positioning and Product Differentiation Marketing-Mix Development


Product Positioning . . . : 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


Slide5: 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 . . . : 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 . . . : 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 . . .: 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: Components of the External Environment Demographic Economic Natural Technological Political Cultural


The Economic Environment: 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: 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 . . .: 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


Slide13: Product Promotion Pricing Distribution Marketing-Mix Development . . . . involves the development and coordination of activities involving the:


Promotional Strategy: Advertising Personal Selling Sales Promotion Applications Public Relations Promotional Strategy


Price Changes: 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 . . .: 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 . . .: 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:: 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: Characteristics of the Person Demographic Characteristics Behavioral Segmentation:price elasticity, benefits sought, usage rate, brand loyalty Benefit Segmentation Psychographic and Personality Characteristics


Demographics is . . .: 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 . . .: 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: 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 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: 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 . .: 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.