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Consumer Behaviour Part I: The Consumer in Context
Preparation for the Consumer Behaviour exam at Edinburgh Business SchoolContent extracted from the ‘Consumer Behaviour’ text book by David A. Statt
All pictures used for educational purposes only. No copyright infringement intended.
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Module 1: People as Consumers
Module 2: Market Segmentation
Module 3: New Products and Innovations
PART I The Consumer in Context
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...and we are all consumers.
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Studying people as consumers
Positivist approachFocuses on predicting what the consumer will do under certain specified conditions. Uses scientific research.
Reductionist approachAll human behavior can be reduced to consumerism.
Interpretivist approachPeople are not always rational.Reality is an individual’s subjective experience.Cause and effect can’t be isolated.
Module 1: People as Consumers
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Consumer
A person who purchases goods and services for personal use
CustomerU s u a l l y i m p l i e s a relationship over time between the buyer and a particular brand or retail outlet.
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...the emotional, mental and physical activities that people engage in when selecting, purchasing using, and disposing of products and services so as to satisfy needs and desires.
Consumer Behaviour is...
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Buying is not just a
necessary activity but an
attractive and highly
approved way of
behaving.
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At the heart of the trading nexus is the act of exchange between producer and consumer for their mutual benefit.
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“Consumption is the sole end and purpose of all production.”
Adam Smith
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“You can have any color you want, as long as it's black.”
Henry Ford
The Production Orientation
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shift from selling
what you can make to
making what you
can sell!
The Marketing Concept
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A business has only
two important
functions, marketing
and innovation.
Peter Drucker
‘to create a customer’
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Module 2: Market Segmentation
cheapest brand, aimed at young first-time buyers
top-of-the-range for the customer who has made it
intended as intermediate stages on life’s automotive journey
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3 marketing conditions to be met for segmentation to work
identity
access
size
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Most important forms of market segmentation:
geographic
demographic
psychological
usage
benefit
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geographic
MicromarketingSame location ≈ same needs, wants, preferences
Cultural effects differ ; Climatic conditions
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geographic
Campbell’s soupsMicromarketing: America devided in 22 markets
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geographic
Localization: Most consumer buying behaviour is localLocal newspaper, radio, TV, websites, in-store and POS-ads, etc.
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demographic
statistically categorizing a population by
agesex income
educationoccupation
social classfamily size
racereligion
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demographic
1. age
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demographic
2. sex
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demographic
3. socio-economic status (SES)
incomeeducation
occupation
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demographic
4. geodemographic
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demographic
5. psychological aka lifestyle
activitiesinterests
opinions
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demographic
American market divided into 10 segments with 5 female segments
Thelma Traditionalists 25%
Candice Chic suburbanite 20%
Mildred Militant mother 20%
Cathy Contented housewife 18%
Eleanor Elegant socialite 17%
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demographic
6. segmentation by usage
The market is usually divided into USER and NON-USER.
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demographic
7. segmentation by benefits
Find out what people want and provide it for them.
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Module 3: New Products and Innovations
New products have to be sold more and more, therefore, to existing customers.
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Module 3: New Products and Innovations
Competitive advantage derives from the encouragement of idea power.
- Rosabeth Moss Kanter
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Module 3: New Products and Innovations
Innovation is not a luxury but a universal necessity.
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Total Product Concept
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The Product Life-Cycle
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The Effects of Personal Influence
passionenergy idealism
pragmatism
cunningtowering impatience
unwillingness to allow set back
love-hate relationships w/ subordinates
Personal characteristics of
PRODUCT CHAMPIONS
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The Effects of Personal Influence
There are opinion leaders only if others
are willing to follow.
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Diffusion of New Products & Innovations
definition:
the process by which an innovation ... is communicated through certain channels over time among the members of a social system.
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Diffusion of New Products & Innovations
continuous innovation
2012
1964Modifications to existing
products, new models and flavors.
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Diffusion of New Products & Innovations
dynamically continuous innovation
Requires more change in consumer behavior
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Diffusion of New Products & Innovations
discontinuous innovation
Requires a new form of consumer behavior
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Diffusion of New Products & Innovations
Three main types of innovation:1. continuous 2. dynamically continuous 3. discontinuous
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Observability
compatibility
TrialabilityComplexity
Relative advantage
5 product characteristics that determine consumer response:
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improvement over existing products?
Relative Advantage
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Compatibility
deals with the issue of how well the innovation fits with the potential consumer’s existing values, attitudes, interests and behaviour
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Complexity
The easier it looks to use the more likely will people be to try it.
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Trialability
simple
difficult
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Observability
how easily the benefits of the innovation can be conveyed
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Adoption of New Products and Innovations
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The Individual Perspective
4) Perception 5) Personality 6) Learning, Memory & Thinking 7) Motivation
PART II
Next Modules: