1. CHAPTER ONE
Consumer Behavior
and Marketing Strategy

2. Learning Objectives
1. Marketing managers and Regulatory bodies do use
consumer behavior concepts.
2. Understand the nature of customer value, the
importance of providing superior customer value,
and the role that a knowledge of consumer behavior
plays in strategies to create customer value.
3. Relationship between marketing strategy and
consumer behavior.
4. Understand that consumers can be viewed as
problem solvers and decision-makers seeking to
maintain or enhance their lifestyles.
5. Understand that a knowledge of consumer behavior
provides managers with a set of appropriate
questions and a guideline to action, not a blueprint
or prescription for success.

3. What is Consumer Behavior?
The study of individuals, groups, or
organizations and the processes they
use to select, secure, use, and
dispose of products, services,
experiences, or ideas to satisfy needs
and the impacts that these processes
have on the consumer and society.

4. Why study consumer behavior?
 Consumer behavior theory provides
the manager with the proper
questions to ask
 Marketing practice designed to
influence consumer behavior
influences the firm, the individual,
and society
 All marketing decisions and
regulations are based on assumptions
about consumer behavior

5.  The study of consumers helps firms and organizations
improve their marketing strategies by understanding issues
such as how
 The psychology of how consumers think, feel, reason, and select
between different alternatives (e.g., brands, products);
 The the psychology of how the consumer is influenced by his or her
environment (e.g., culture, family, signs, media);
 The behavior of consumers while shopping or making other marketing
decisions;
 Limitations in consumer knowledge or information processing abilities
influence decisions and marketing outcome;
 How consumer motivation and decision strategies differ between
products that differ in their level of importance or interest that they
entail for the consumer; and
 How marketers can adapt and improve their marketing campaigns and
marketing strategies to more effectively reach the consumer.

6. Applications of Consumer
Behavior
 Marketing Strategy
 To satisfy target consumer needs
 Regulatory Policy
 To protect consumers
 Social Marketing
 To help consumers
 Informed Individuals
 To better understand how societies
function

7. Applications of Consumer Behavior
1. Marketing Strategy
2. Regulatory Policy
3. Social Marketing
4. Informed Individuals

8. Applications of Consumer Behavior
1. Marketing Strategy: Kwality Walls focus on teenagers .Image ,life
style and fun. Developed new persona.
2. Regulatory Policy:
• Useful to legislators, regulators and governmental agencies in
developing policy to protect and secure consumer from unfair ,
unsafe marketing practices
• Consumer Reports on contamination in Coke and worms in
chocolates resulted in legislation on packaging and contents
• Tobacco and alcohol ban to those below 18 (assumptions of
consumer behavior are being made if right will do consumer great
good if wrong may cause damage )

9. Applications of Consumer Behavior
(cont.)
3.Social Marketing:
What is Social Marketing ?
EX: American Legacy Foundation (Tobacco)Ammonia is
found in dog poop cigarette manufactures add this.
Money used to levy tobacco taxes used to campaign
against use of smoking among teens, Found to bring
down usage among teenagers. Focus of
communications was not harm but social
disapproval like turned down by date

10. What is social marketing
 Social marketing is the application of marketing
strategies and tactics to alter or create
behaviors that have positive effect on the
targeted individuals or society as a whole
 Social Marketing requires understanding of
consumer behavior
 EX: Stop
smoking/vaccinations/environmentally sound
behavior/reduce drug use/reduce aids thru
potentially harmful behavior/Support charity/

11. Applications of Consumer Behavior
(cont.)
4.Informed Individuals
As we become consumption driven knowledge
of consumer behavior can Enhance
understanding of our environment and self.
Help to be better citizen, effective purchase
decision and reasoned business ethics
EX; Tomato soups do not contain tomato but
contain hi salts

12. Marketing Strategy & Consumer
Behavior
 What is Customer Value?
The difference between all the benefits derived from a total
product and all the costs of acquiring those benefits.
 What is required of a firm to provide superior customer value?
It must do a better job of anticipating and reacting to customer
needs than the competition does.
 What role does consumer behavior play in creating superior
customer value?
An understanding of consumer behavior is the basis for marketing
strategy formulation, and the consumer’s reaction to this
marketing strategy ultimately determines the firms success or
failure.

13. Prerequisite to sound marketing strategy
is understanding of consumer behave as
well as other factors:
B-C >0 produces value to customer

14. Marketing Strategy and Consumer Behavior

15. Market Analysis Components
 The Consumers
 The Company
 The Competitors
 The Conditions

16. Market Segmentation
Market segmentation
is a portion of a larger
market whose needs
differ from the larger
market.

17. Market Segmentation
 Market Segment: a portion of a larger
market whose needs differ somewhat
from the larger market.
 Four steps to segmentation:
 Identify product-related need sets
 Group customers with similar need sets
 Describe each group
 Select an attractive segment(s) to serve

18. Market Segmentation
 What is market segmentation?
Market segmentation involves aggregating
prospective buyers into groups that:
1. have common needs
2. will respond similarly to marketing actions
 Why segment the market?
Market segmentation links market needs to an
organization’s marketing programs.
 When does an organization segment the market?
When the potential increase in profits as a result of
segmenting outweigh the costs of segmenting.

19. Market Segmentation
Market Segmentation Involves Four Steps:
1. Identifying Product-Related Need Sets
Any product cans serve multiple needs.
EX: Car transport and need for status or transport and fun needs
EX: Nirma vs Surf /Surf vs Tide
Identifying present or potential need sets require an understanding
of consumer behavior( use of focus groups/depth interviews/l logic/
intuition. Segments are developed using variables like age, lifestyle
etc. Start with needs and then identify segment characteristics

20. Market Segmentation Involves Four
Steps: (cont.)
2. Grouping customers by needs
Group consumer with similar need sets.
Ex moderately priced ,fun and sporty cars are preferred among the young
single, young couples with no children or middle aged with no children in
household. All these can be grouped into one segments based on car
features although they cross demographics

21. Market Segmentation Involves Four
Steps: (cont.)
3.Describing Each Group
Describe them in terms of relevant
characteristics like lifestyle, demographic
needs, media usage
4.Selecting an Attractive Segment(s) to Serve

22. Market Segmentation
Market Segment Attractiveness Worksheet

23. Marketing Strategy
 How will we provide superior
customer value to our target market?
 Marketing Mix
 The Product
 Communications
 Price
 Distribution
 Service

24. Outcomes
 Firm:
 Product positioning
 Sales
 Customer Satisfaction
 Individual:
 Need Satisfaction
 Injurious Consumption
 Society:
 Economic
 Physical Environment
 Social Welfare

25. Creating Satisfied Customers

26. Consumer Behavior is Product – Person
– Situation Specific
Personal
Characteristics
Consumer Marketing
Product
Behavior Strategy
Characteristics
Consumption
Situation

27. Consumer Lifestyles and Consumer
Decisions
Needs/Attitudes
That Influence
Consumption Decisions
Consumer
Consumer
Choices
Lifestyle
Behavior/Experiences
That Influence
Consumption Decisions

28. The Nature of Consumer Behavior
Overall Conceptual Model of Consumer Behavior