CONSUMER BEHAVIOUR AND MARKETING STRATEGY

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1 MARK2051: Consumer Behaviour Study Notes CONSUMER BEHAVIOUR AND MARKETING STRATEGY Marketing strategy: combination of product, price, distribution and promotion most suited to a particular group of consumers. à key to successful marketing strategy is an understanding of CONSUMER BEHAVIOUR (CB): discipline dealing w/ how and why consumers purchase (or don t) goods + services. o Dynamic interaction of cognitive, behaviour and environmental events by which human beings conduct the exchange aspects of their lives (American Marketing Association) Org must provide customer value: different between all benefits derived from a total product + all the costs of acquiring those benefits. Consumer behaviour a crucial aspect of: Marketing strategy New market applications Global marketing MARKET SEGMENTATION o = identifying consumer groups w/ unique needs/purchasing processes and developing specific marketing programs targeted at individual groups. o Basis of most marketing strategies. o e.g. benefit segmentation: focus on particular outcome consumers seek from using a product. POSITIONING STRATEGY o = the way a product/brand compares to its competitors, as perceived by customers. Examining CB can yield insights that can produce new marketing opportunities and markets. = form of international marketing that aims to target particular consumer segments, regardless of where they are located in the world. o à using STANDARDISED marketing mixes. o More cohesive, less costly. o But, may fail when there is no universal appeal. Must understand differences in CB between international markets. 1

2 Marketing mix = 4 Ps = Product, Price, Place (Distribution), Promotion. Products must solve a consumer problem. Consumer behaviour audit: systematic review of all important aspects of consumer behaviour. o List of key questions as guide to develop marketing strategy from CB perspective. o Organised around key decisions MMs must make re: Target market/segmentation. Product positioning. Marketing mix 4Ps. o Reveals gaps à points to need for future research. An overview of consumer behaviour The nature of consumption MMs view the consumer as a decision-making unit that takes in info, processes it and takes action to achieve satisfaction and enhance their lifestyle. Past decisions and time-related events lead to lifestyle CHANGES that pose additional consumption problems and result in new purchases/attitudes à further lifestyle changes. Model of consumer behaviour Internal influences External influences 2

3 Key to understanding consumers to develop marketing strategies à maximise sales.: profitability. LIMITATIONS: o Appears static à does reflect dynamic nature of CB. o Consumers are continually evolving and changing as they process new information related to their lifestyle and the outcome of past purchase decisions. o.: underlying model is the assumption that information processing is a never-ending activity. Consumer behaviour and society Consumerism: evolving activities of govts, businesses, orgs and consumers aimed at protecting/enhancing rights of consumers. o Movement in response to increasing roles of ethics in business. Issue of injurious consumption for MMs = CB that may be harmful/have negative consequences e.g. cigarettes, alcohol, gambling. PART A: Internal influences 1) PERCEPTION Perception: process through which people notice/attend to/interpret the stimuli (objects, messages, events) they encounter. Critical activity that links individual consumers to group/situation/marketer influences. The nature of perception Critical part of human brain s information processing system: series of interlinked activities by which stimuli are transformed into info and stored. PERCEPTION PROCESS: 1. Exposure 2. Attention 3. Interpretation 4 TH step in information processing system = MEMORY: how the meanings given to perceptual situations are recorded as info for s-t/l-t storage. Distinction between s-t and l-t memory referred to as duplex theory of memory. Perceptual selection only small % of info person is exposed to is passed onto the brain for interpretation. o EFFECT: consumers are active in process of perception à important for MMs. 3

4 1. Exposure = stimulus comes w/in a range of person s sensory receptors. Stimulus must be placed in consumer s immediate environment via different promotional/distribution channels. Stimulus must exceed absolute threshold: lowest level of stimulation necessary for detection by a person s sensory receptors. Selective exposure: process by which individuals deliberately seek out exposure to certain stimuli and avoid others; exposure can be: o o 2. Attention RANDOM. DELIBERATE à consumers seek info that will help them achieve certain GOALS (immediate + long-range). = stimulus activates sensor receptor nerves and resulting sensations go to brain for processing. Attention determined by 1. Stimulus factors Physical of stimulus 2. Individual factors Personal influencing perception Size and intensity (loudness/brightness) o Bigger. o Insertion frequency: no. of times the same ad appears in the same program. Colour and movement Position o Centre e.g. competition for eye-level space in grocery stores. Isolation (separation from other objects) Format o Simple. Contrast o Adaptation level theory: people adjust to the level/type of stimulus to which they are accustomed..: MMs must change campaigns regularly. o Differential threshold: consumer s ability to notice differences in levels of stimulation. Just-noticeable difference (jnd): min amount of change in a stimulus that needs to occur for consumers to notice difference. Compressed messages (sped up to increase attention) Information quantity o MMs must avoid info overload. Consumer INTERESTS/NEEDS/MOTIVATIONS are the primary individual that influence attention. o à reflection of lifestyle and goals. Tendency for customers to demonstrate a: o Heightened awareness of stimuli relevant to their needs/interests = perceptual vigilance. o Decreased awareness of stimuli not relevant to their needs/interests = perceptual defence. Increasing trend of adversarial shoppers and ad sceptics. 4

5 3. Situational factors Environmental elements other than the focal object Program involvement o Gain in attention occurs when program involvement moves from low to moderate levels. o But high levels of program involvement may detract from attention paid to some types of commercials. Non-focused attention = automatic monitoring = superficial/distracted allocation or processing ability to a stimulus. Explained by hemispheric lateralisation: two sides of brain control different types of activities. o Left: rational though, verbal info. o Right: pictorial, geometric, non-verbal info. Controversy over subliminal messaging: message not consciously attended to by audience exposed. o Prohibited under the Commercial Television Industry Code of Practice. 3. Interpretation = assignment of MEANING to sensations. Gestalt psychology: school of psychology that examines the process by which stimulus info is organised/categories by human brain into patterns. 2 components: a) COGNITIVE INTERPRETATION: stimuli are placed in existing categories of meaning. Adding meaning from existing knowledge. FACTUAL. Info more likely to be recalled w/out prompting. b) AFFECTIVE INTERPRETATION: emotional response triggered by stimulus. Adding meaning from feeling. EMOTIONAL. Info more likely to be recognised w/out prompting. Must distinguish between semantic meaning (conventional) and psychological meaning (based on experience/context). Interpretation determined by 1. Individual Learning o Provides framework w/in which people give meaning to new events/data. o Can vary across different cultures. Expectations o Play a role in how quality is perceived and how satisfaction is experienced. 5

6 2. Situational 3. Stimulus Moods. Motivations (e.g. hunger). Temperature. Proximity. o Perception of objects close together as related. o e.g. advertisements during feel-good programs. Internet. o e.g. pop ups are involuntary exposure formats. SEMIOTICS: science of how meaning is created, maintained and altered. o Focuses on signs anything that conveys meaning incl. words, pictures, colour, music, prices. Issues Misinterpretation of marketing messages o Beware of misleading claims. o Particular issue w/ radio broadcast messages and package info. o Currently no workable set of guidelines for eliminating this problem. Children s information processing o Evidence that younger children: Have a limited ability to process certain info. Pay more attention to visual versus auditory stimuli. Perception and marketing strategy a) Retail strategy MMs must consider: o Store layout. Sought-after items separated so consumer will travel through more of store = increased exposure. Cold and hot zones. Traffic and islands: high-margin items placed in high-traffic areas = increased exposure. o Shelf position and shelf space. Eye level. o Point-of-purchase displays. Attract attention to sales. o Reference prices. b) Brand name and logo development Important source of perception; but, long + expensive development process. To develop a single corporate identity. e.g. Commonwealth Bank spent > $20 million to develop logo. c) Media strategy Selective exposure.: MMs must assess which media target consumers are most often exposed to à place advertising accordingly. o Selective approach: reach where target market it. o Random approach: reach where target market may be. Depends on whether high or low involvement w/ product category. 6