Chapter 1 Consumer Behavior: Its Origin and Strategic Application

The study of consumer behavior enables marketers to understand and predict consumer behavior in the market place; it is concerned not only with the consumer buy but also with why, when, where, how often they buy it. Consumer research is the methodology used to the study of consumer behavior and take place at every phase of the consumption process: before, during and after the purchase. Definition: The term consumer behavior is defined as the behavior that consumer display in searching for, purchasing, using, evaluating and disposing of the product and services that they expect will satisfy their needs. Consumer behavior focuses on how individual makes decision to spent there available resource (time, money, efforts) on consumption related items. That includes what they buy when they buy it how often they buy it , how often they use it how they evaluated it after the purchase. There are two kind of consumer 1) Personal consumer: The personal consumer buys the goods and services for his or own use of the house hold or as a gift. 2) Organizational Consumer: Organizational Consumer includes profit and nonprofit business, government agencies (local state national) and institution all of which must buy product, equipments and services in order to run their organization.

The marketing concept

The field of consumer behavior is rooted in the marketing concept, a business orientation that evolved in the 1950s through several alternatives approaches, referred to respectively, as the production concept, the product concept and the selling concept. The three major strategic tools of marketing are market segmentation, targeting and positioning. For example in the 1930 Colonel Sanders opened a road side restaurant where hi develops the recipes and the cooking method that were to key success to KFC. As the restaurant grew and popularized sanders enlarge the business and also open the road side motel but the reputation of the motel is bad. The sanders decide to try and overcome by putting a sample room of clean and comfortable in the middle of successful restaurant and even put the entrance to the restaurant ladies room in that room Sanders understood the importance of the image and reposition. Later sanders come with the idea of franchising his cooking method and chicken recipe while keeping the ingredients of the recipe secret And founded KFC and a business model that has been adopted by all the fast food chain.

The marketing Mix

The marketing mix consists of a company services and product offering to the consumer and the pricing promotion and distribution method needed to accomplish the exchange. There are three drivers of successful relationship between marketers customer and customer value, high level of customer satisfaction and building a structure that ensure customers retention. Customer value: Is define the ratio between the customers perceived benefits (Economic, functional, and psychological) and the resources (monetary, time effort, psychological) used to obtain to those benefits, Perceived value is relative and subjective. For example Dinner at exclusive French restaurant in Washington, DC, Where the meal and beverages may cost up to 300$ per person. Customer Satisfaction: is the individual perception of the performance of the product or services in relation to his or her expectation as noted earlier, customer will have drastically different expectation of an expensive French restaurant and a McDonalds although both are the part of restaurant industry. The concept of customer satisfaction is the function of customer expectation. A customer whose experience is far below(e.g. limited wine at an expensive restaurant or cold fries served at the McDonalds )

Customer retention: The overall objective of providing value to the customers continuously
and more effectively than the competition is to have and to retain highly satisfied customers ; this strategy of customer retention make it in the best interest of customer to say with the company rather than switch to another firm. In the all business situation it is more expensive to win a new customer. Study shows that: 1) A loyal customer buy a more product .; 2) A loyal customer is less price sensitive and pay less attention to the competitors to the advertising. 3) Servicing customers who are familiar with the firm. 4) A loyal customer spread positive word of mouth.

The impact of the digital technologies on marketing strategies Digital technology allows much greater customization of product, service and promotional message than older marketing tool. They enable marketers to adopt the elements of marketing mix to consumer needs more quickly and efficiently , and to build and maintain relationship with the customers on much greater scale. 1) 2) 3) 4) Customer have more power than ever before Customer have access more information than ever before Marketers can and must offer more service product than ever The exchange between marketer sand customers is increasingly interactive and instantaneous.

5) Marketers can gather more information about consumer more quickly and easily. 6) Impact reaches beyond the PC based connection.

Consumer behavior is integral part of strategic market planning. The belief that ethics and social responsibility should also integral component of every marketing decision. The social marketing concept that call on marketers to fulfill the need of their target market in the way that improve society as whole.

A simplified model of consumer decision making

The process of decision making can be viewed as three distinct but interlocking stages: the input stage and the process stage and the output stage. The input stage influence the consumer recognition of a product need and consist of two major source of information the firms marketing efforts (the product itself , its price, its promotion and where its sold ) and the external sociological influences on the consumer(family friends neighbor other informal and non-commercial source, social class and cultural and subcultural membership) The cumulative impact of each firms marketing efforts the influence of family, friends and neighbor and the society existing code of behavior are al input that are likely to affect what consumer purchase and how they use what they buy. The process stage of the model focuses on consumer makes decision. The psychological factor inherent in each individual (motivation perception learning personality and attitudes) affect the how external inputs from the input stage influence the consumer recognition of a need, prepurchase search for information and evaluation of alternatives in turn affect the consumers existing psychological attributes, The output stage of consumer of decision making model consist of two closely related post decision activates purchase behavior and post purchase evaluation purchase behavior for low cost nondurable product (e.g. new shampoo) may be influenced by the manufacturers coupon and may actually be a trial purchase if the consumer is satisfied he or she may repeat the purchase . The consumer decision making model is examined in depth.

External Influence Input Sociocultural Environment 1. Family 2. Informal Source 3. Other noncommercial sources 4. Social class 5. Cultural and subcultural

Firms marketing Efforts 1. 2. 3. 4. Product Promotion Price Channel of Distribution

Consumer Decision Making Process

Need Recognition Prepurchase Search Evaluation of alternatives 1. 2. 3. 4. 5.

Psychological Field
Motivation Perception Learning Personality Attitudes

Experience

Post decision Behavior

Purchase 1. Trial 2. Repeat Purchase Purchases Evaluation