Chapter 1

The foundations of
consumer behaviour

PowerPoint to accompany:
Learning objectives

To understand what consumer behaviour is and the different types of

consumers.
To understand why marketers study consumer behaviour.
To understand the relationship between consumer behaviour and the
societal marketing concept.
To understand the importance of consumer research for firms and
their brands, as well as for consumers.

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Learning objectives (cont.)

To understand the steps in the consumer research process and the

imperatives to conduct research.
To understand the types of consumer research.
To understand the relationship between consumer behaviour and
customer value, satisfaction, trust and retention.
To understand the make-up and composition of a model of consumer
behaviour.

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What is consumer behaviour?

Consumer behaviour is the behaviour that consumers display in

searching for, purchasing, using, evaluating and disposing of the
products and services that they expect will satisfy their needs.
The study of consumer behaviour includes:
• how consumers think
• what they buy
• why they buy it
• how often they buy it
• how often they use it
• how they dispose of it.

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 What is consumer behaviour (cont.)
When acting as consumers,
individuals have one goal in
mind:
To obtain goods and services
that meet their needs and
wants.
This requires solutions to
problems, and the process is
often complex.

Advertiser versus consumer

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Personal consumers and organisational consumers
The personal consumer buys goods and services for:
• his or her own use
• use by the whole household, or a household member
• a gift for someone else.
In all contexts, the products are bought for final use by individuals
(end-users).

Examples of websites targeted at personal users:

Chanel Smiggle Apple

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Personal consumers and organisational consumers
The organisational consumer includes:
• commercial for-profit businesses
• non-profit businesses
• public sector agencies (government departments)
• institutions (e.g. schools, churches, sports clubs)
Organisational consumers buy products to help run their
organisations.

Websites targeting organisational users:

Ford Fleet Telstra Business

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Buyers, payers and users
The marketplace activities of individuals entail three functions:
1. the consumer (user) - who consumes or uses the product
2. the buyer - who undertakes activities to procure or obtain the
product
3. the payer - who provides the money (or other value) to obtain
the product.

Marketers must decide who to target: buyer, payer or user - e.g.

some game manufacturers advertise their products to both children
(users) via websites and to parents (buyers) via email registration:
Jumpstart

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Why marketers study consumer behaviour

To better understand:
• changing product life cycles
• changing environmental views and
concerns
• changing consumer protection and
public policy
• the growing role of services marketing
• the growing role of not-for-profit and
social marketing
• the growing role of global marketing
• changing technology
• the impact of constant change.
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 Changing product life cycles

Many product categories, and The next big thing SII

changes in them, are driven by The next big thing SIII
product life cycle.
The next big thing SIV
Shorter life cycles arise due to
the pace of new product
introductions and changes in
technology.
Life cycles are increasingly
shortened.

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 Changing environmental views and concerns
Marketers and public policy
makers are aware of the
potentially negative impact of
products and packaging.
Many consumers are socially
aware and favour products that
address environmental
concerns.

Planet Ark - Cartridges

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 Changing consumer protection and public policy
As a result of consumer research and lobbying, marketers have
become more aware of their responsibility to protect consumer
interests.
The ACCC ensures that companies act responsibly and ethically in
their dealings with consumers.

ACCC takes Apple to court

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 Growing role of services marketing
Australia’s service sector forms a large part of the economy.
Marketing service offerings can be difficult as services are:
• intangible
• perishable
• inconsistent.

A knowledge of consumer needs and interests is recognised as

being essential to develop effective marketing strategies.

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 Growing role of not-for-profit and social marketing
Organisations in both the public and
private non-profit sectors recognise
the need for marketing strategies that
target groups.
Not-for-profit organisations use
consumer research to gain a better
understanding of their target market.
This allows them to develop more
effective marketing.

Movember

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 Growing role of global marketing
Australian companies recognise The federal government
the need to move beyond encourages small and
domestic markets. medium sized businesses
By marketing globally, they can to export.
achieve economies of scale Cultural needs have to be
and increase sales. recognised though.
This assists in their bid for
survival.

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 Changing technology
Companies that are responsive to changing technology, and advances
in the way that consumers interact with companies through
technology, are able to leverage greater relationships.
This technology ranges from websites, to electronic or mobile
ordering.
Consumers have access to more information than ever before and can
easily find, or provide, reviews quickly.

Fast food on a phone…

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 Impact of constant change
Due to continual social, economic and technological changes,
marketers need to know which markets to target.

Marketers seek to identify key similarities and differences and then

segment their markets accordingly.

This is done by identifying common characteristics among groups of

consumers.

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Development of the marketing concept

Societal
Marketing marketing
concept concept
Selling
concept
Product
concept

Production
concept

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 An example of evolution of the mass marketing
concept and change to STP

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Societal marketing concept
A restructured definition of the marketing concept:
Seeks to fulfil the needs of the target audience in ways that
improve society as a whole, while also fulfilling the objectives of the
organisation.
Marketers should adhere to principles of social responsibility in the
marketing of their goods and services and satisfy the needs and
wants of their target markets in ways that preserve and enhance
the well-being of consumers and society.

Range Rover Evoque - Sustainability

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Embracing the marketing concept
Consumer research is used to:
• gain a better understanding of consumption behaviour
• identify and locate appropriate target markets, and to understand
their media habits
• identify both felt and unfelt (latent) needs
• determine how consumers perceive products, brands and stores
• identify attitudes before and after promotional campaigns
• identify how and why they make their consumption decisions.

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Consumer research

Primary research

Combination
Quantitative
Qualitative

Observational
Focus groups Uses both qualitative
research
In depth interviews and quantitative
Experimentation
methods
Survey research

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Customer value, satisfaction, trust and retention
• Providing customer value
• Customer satisfaction
• Building customer trust
• Customer retention

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What is customer value?

Customer’s
perceived benefits
(economic, Customer’s resources used
functional and (money, time, effort and
psychological) psychological)

Developing a value proposition is central.

Go to http://content.dell.com/au/en/corp/about-
dell.aspx and read Dell’s value proposition.

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Customer satisfaction

Consumer’s
Consumer’s expectation
perception of
compared to performance
of
performance

If exceeded: If equalled: If not

met:

Very satisfied, Satisfied Dissatisfied

delighted

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Building customer trust
Challenge of establishing and maintaining consumer trust in a
company and its products.
Word of mouth and recommendations from other consumers are
highly rated measures of trust.
Trust is the foundation for maintaining long-term relationships with
customers.

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Customer retention
The strategy of retention is to make it in the best interest of
customers to stay rather than switch.
Research shows small reductions in customer defections produce
significant profit increases due to the fact that:
• loyal customers buy more products
• loyal customers are less price-sensitive
• it is cheaper to service existing customers
• loyal customers spread positive word-of-mouth and refer other
customers.

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A simplified model of consumer decision making

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A simplified model of consumer behaviour - three
interlocking stages

InputInput
stagestage
Firm’s marketing activities + external sociocultural
influences

Process stage
Decision steps + internal psychological factors
(modified by experience)

Output stage
Post-decision behaviour
(trial, repeat purchase and evaluation)

Copyright ©2014 Pearson Australia (a division of Pearson Australia Group Pty Ltd) –9781442561533/Schiffman/Consumer behaviour/6e
Summary
• Defining consumer behaviour
• Why to study consumer behaviour
• The societal marketing concept
• The types and importance of consumer research
• Customer value, satisfaction, trust and retention
• A simplified consumer behaviour model

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31 Copyright ©2014 Pearson Australia (a division of Pearson Australia Group Pty Ltd) –9781442561533/Schiffman/Consumer behaviour/6e