CHAPTER 1: WHAT IS CB AND WHY SHOULD I CARE?

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1 CHAPTER 1: WHAT IS CB AND WHY SHOULD I CARE? Consumer behaviour Human thought and action involved in consumption actions, reactions and consequences that take place as a consumer foes through a decision making process, reaches a decision and then puts that product to use. A field of study the body of knowledge researchers accumulate as they attempt to explain these actions, reactions and consequences. CONSUMER BEHAVIOUR AS HUMAN BEHAVIOUR Consumer behaviour: the set of value seeking activities that take place as people go about addressing and attempting to address realised needs. When a consumer is motivated by a need, a process kicks in as the consumer sets out to find desirable ways to fill this need. Involves thinking, feeling, behaving and culminating value Consumption Process 1. Need 2. Want specific desire that spells out a way a consumer can of about filling recognised need. 3. Exchange acting out of the decision to give something up in return for something of greater value 4. Costs and benefits negative or positive results of consumption 5. Reaction 6. Value perception of value based on consumption process Consumption: process by which goods, services or ideas are used and transformed into value. (Actions involved in acquiring and using) Value producing process marketer and consumer interact to produce value Consumption outcomes affect consumer well-being by affecting quality of life CONSUMER BEHAVIOUR AS A FIELD OF STUDY Consumer behaviour: the study of consumers as they go about the consumption process; the science of studying how consumers seek value in an effort to address real needs. CB interacts with many disciplines: marketing, economics, psychology, sociology, anthropology, neuroscience 1

2 COMPETITIVE MARKETING ENVIRONMENTS How competitive is the marketing environment: very = good service. Not very = bad service How dependant is the marketer on repeat business: very = good service since they orientate around value creation. Not very = bad service Firm orientations and consumers Consumer orientation: actions and decision making of a business prioritises consumer value and satisfaction. Key component in market orientated culture. Market orientation: organisational culture emphasising the importance of creating consumer value among employees. Must monitor and understand actions in the marketplace. Stakeholder marketing: about more than just buyer and seller. Recognises that all stakeholders are involved in and/or are affected by the firms marketing in some way Relationship marketing: a firm s marketing activities aim to increase repeat business Touch points: direct contacts between the firm and a customer. ROLE OF CB IN BUSINESS AND SOCIETY Different ways of doing business >> Undifferentiated: plan wherein the same basic product is offered to all customers. Generally product orientated (making production process efficient and economic) Differentiated: firms that serve multiple market segments with a unique product offering. Usually distributed with one-to-one marketing Niche: plan wherein a firm specialises in serving one market segment with a particularly unique demand characteristics CB and Society: CB creates the society in which we live and serves as an important source of input to public policy in a free society. CB and personal growth: studying CB helps us make better decisions by understanding consequences of poor budgeting, role of emotions, avenues for redress, social influences and environmental effects APPROACHES TO STUDYING CB Interpretive research: seeks to explain the inner meanings and motivations associated with specific consumption experiences. Interprets meaning rather than analyses. Qualitative research: case analysis, clinical interviews, and focus groups. Unstructured ways. Researcher dependant: interpretation is subjective. Data requires researcher to interpret meaning. 2

3 Two common orientations Phenomenology: qualitative approach to studying consumers that relies on interpretation of the lived experience associated with some aspect of consumption Ethnography: qualitative approach to studying consumers that relies on interpretation of artefacts to draw conclusions about consumption. (Useful in understanding how consumers turn sports experiences and memorabilia into value). Quantitative research: approach that addresses questions about consumer behaviour using numerical measurement and analysis tools. Usually structured. Not researcher dependant CB IS DYNAMIC Trends shaping value received by consumers today Internationalisation companies must deal with geographical and cultural distances Technological changes Changing communications often due to technology Changing demographics Changing economy MAKING DECISIONS Rationality making the right choice based on information. Consumers act with constraints and therefore cant make rational decisions. Consumers aren t always rational Low involvement (automatic decisions): don t have to be rational. Instincts help us make quick decisions High involvement: have to be very rational 3

4 CHAPTER 2: VALUE AND THE CONSUMER BEHAVIOUR VALUE FRAMEWORK CVF: Represents consumer behaviour theory illustrating factors that shape consumption related behaviours and ultimately determine the value associated with consumption ** for mid sem know internal influences and consumption process. Customer relationship management: customers form relationships with companies as opposed to companies conducting individual transactions with customers. Relationship quality reflects the connectedness between a consumer and a retailer, brand or service provider When consumer receives high value, relationship quality improves Internal influences: the psychology and personality of the consumer The consumption process is influenced by internal and external factors. Internal influences: go on inside the mind and heart of the consumer. Cognition: thinking or mental processes that go on as we process and store things that can become knowledge. Cognition is the rational part of decision making. Important for high involvement decisions Affect: feeling associated with objects or experienced during events. Intuition etc. Personality of the consumer: certain characteristics and traits define an individual these are known as individual differences. Consumers are heterogeneous. Differences include personality, lifestyle etc. External influences: social and cultural aspects of life as a consumer. It impacts the values of activities. Social environment: elements that specifically deal with the way other people influence consumer decision-making and value. People and groups shape everyday experiences e.g. what is an appropriate thing to eat for breakfast Situational influences: things unique to a time or place that can affect consumer decision making and the value received from consumption e.g. presence of music may shape behaviour and change buying patterns 4

5 VALUE Value: is a personal assessment of the net worth a consumer obtains from a marketing activity. Consumers aim to maximise value Marketing perspective relevant value is received from activities involving interactions between consumers and the firm or its products * do not use quality because people have a different perception of quality (income and wealth affect quality perception.) Types of Value: Can and should be both where possible e.g. Nike. Utilitarian value: derived from a product that helps the consumer solve problems and accomplish tasks that are part of being a consumer. Functional value. Hedonic value: the immediate gratification that comes from experiencing some activity. E.g. the emotions, experiences and pleasures attached to the product. It is subjective. Must provide at least one type of value >> MARKETING STRATEGY AND CONSUMER VALUE Marketing myopia: a common condition in which a company views itself in a product business rather than in a value or benefits producing business. In this way it is short sighted. E.g. train operator not in train business but transport business. Must build and evolve solutions around consumer needs and wants not the physical product Value co-creation: the realisation that a consumer is necessary and must play a part in order to produce value. Consumers are empowered and judge what they deem to be valuable. Product positioning: way a product is perceived in the mind of the consumer. 5