Understanding Consumer Behavior Raj Echambadi

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Understanding Consumer Behavior Raj Echambadi
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Recap from last class

• Marketing is about decisions involved in creating
  and keeping customers.
• Marketing is about manipulation of economic,
  social, and moral incentives to provide value to
  the consumers and to achieve optimal goals for
  the firm.
• Consumer-satisfying process. Satisfaction is
  measured as (Performance Expectations).
  Perceived value. Moral of the story?

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Recap from last class (2)

• Define your business as a needs-satisfier. Do not
  be marketing myopic.
• The role of strategy is to deliver sustainable
  competitive advantage (SCA). A good strategy
  ensures that all firm activities fit with each
  other.
• Strategy is NOT operational effectiveness.
• Focus. Be either a cost leader or a
  differentiator. Dont straddle. You cant be all
  things to all people. Execution is important as
  well.

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Recap from last class (3)

• Marketing Strategy has two major components
• Segmenting markets, selecting a target market and
  positioning a product (STP)
• Marketing mix variables 4Ps
• Segmenting is dividing up the market into
  homogeneous groups. Micro segments.
  Responsiveness.
• Targeting is choosing one or more segments to
  cater to with your marketing mix (because
  resources are finite). Niche strategy.
• Positioning is what a firm stands for in the
  minds of the consumers.

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Product Positioning

• Positioning starts with a product. Positioning is
  not what you do to a product. Positioning is
  what you do to the mind of the prospect. That
  is, you position the product in the mind of the
  prospect.
• Al Ries and Jack Trout (1981)
• The way the product is defined by consumers on
  important attributes!

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Product Positioning using perceptual maps
Socially Beneficial
Larry King
Oprah Winfrey
Regis and Kathy Lee
Not Intellectual
Intellectual
Not Socially Beneficial
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Product Positioning using perceptual maps
Socially Beneficial
Larry King
Oprah Winfrey
Regis and Kathy Lee
Not Intellectual
Intellectual
Not Socially Beneficial
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Product Positioning using perceptual maps
Socially Beneficial
Larry King
Oprah Winfrey
Regis and Kathy Lee
Rosie ODonnell
Not Intellectual
Intellectual
Not Socially Beneficial
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Product Positioning using perceptual maps
High moisturizing
Zest
7
Tone
4
Lever 2000
2
Dove
5
Market Segment
Safeguard
Coast
8
Lux
Nondeodorant
Deodorant
3
1
Dial
Lifebuoy
Lava
Individual Brand
6
Low moisturizing
10
Product Positioning using perceptual maps
High moisturizing
Zest
7
Tone
4
Lever 2000
2
Dove
5
Safeguard
Coast
8
Lux
Nondeodorant
Deodorant
3
1
Dial
Lifebuoy
Lava
6
Low moisturizing
11
Product Positioning using perceptual maps
High moisturizing
Zest
7
Tone
4
Lever 2000
2
Dove
5
Safeguard
Coast
8
Lux
Nondeodorant
Deodorant
3
1
Dial
Lifebuoy
Lava
6
Low moisturizing
12
Product Positioning using perceptual maps
High moisturizing
Zest
7
Tone
4
Lever 2000
2
Dove
5
Safeguard
Coast
8
Lux
Nondeodorant
Deodorant
3
1
Dial
Lifebuoy
Lava
6
Low moisturizing
13
Product Positioning using perceptual maps
High moisturizing
Zest
7
Tone
4
Lever 2000
2
Dove
5
Safeguard
Coast
8
Lux
Nondeodorant
Deodorant
3
1
Dial
6
Lifebuoy
Lava
Low moisturizing
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Positioning is determined by the firms resources
and capabilities in conjunction with the needs of
the market!
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Place

• Channels design and management
• Direct and indirect methods of distribution
• Value chain and efficiencies

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Promotions

• Integrated marketing communications
• Advertising, public relations, publicity, and
  sales promotions
• Trade, sales, and retail promotions
• Push vs. pull

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Price

• Perceived value
• Price paid
• COGS costs that go into creating the products
  that a company sells therefore, the only costs
  included in the measure are those that are
  directly tied to the production of the products

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Product
3. Augmented Product Additional services
benefits (unexpected)
Product is a complex bundle of benefits
Installation
Packaging
Style
Brand name
Delivery credit
After- sale service
Core good or service
Design
1. Core product What the consumer is really
buying
Warranty
2. Actual Product
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Effective marketing strategies rest on three
foundations
Markets
How will we create value?
Technologies
Do we have the organizational capabilities neces
sary to sustain it?
How can we capture this value in the face of
competition?
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Schematic of the Marketing Process
Based on Robert Dolans Note on Strategy, HBR
Press
Product
Place
Promotion
Price
PROFITS
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The Consumption Chain
Problem Opportunity Recognition
Search
Alternative Evaluation
Purchase Decision
Purchase Act
Post-purchase Evaluation
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Types of Consumer Decisions
High involvement Infrequently purchased Expensive
High risk Much information desired
Low involvement Frequently purchased Inexpensive L
ittle risk Little information needed
Extensive Problem Solving
Limited Problem Solving
Routinized Response Behavior
Low Involvement
High Involvement
Involvement Continuum
Simplifying strategy
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Possible Influences on Consumer Buying Decisions
Consumer Buying Decision Process
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Perception

• Perception is reality

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BLUE