Chapter 1: What is Consumer Behavior and Why Should I Care?
Consumer Behavior is a set of value seeking activities that take place as people go about
addressing their real needs. It involves thinking, feeling, and behaving.
The Basic Consumption Process:
A process by which consumer use and transform goods, services, or ideas into value.
1. Need - when we purchase a product we start with the need. Marketers will trigger
the need through advertising. The value of the need is not the same for everyone.
2. Want – the want is the interpretation of the need. If thirsty is the need then a drink
is the want. Marketer will influence the want, you can’t make someone thirsty but
you can influence the customer to choose coca cola over pepsi.
3. Exchange – giving something up (usually money) in return for something of greater
value (the product or service)
4. Costs and Benefits – when I assess a product I look at the cost which is not only the
money but also the time, effort, risk, etc. I will also look at the benefits like the
quality, convenience, emotions, etc. to decide if worth the cost.
5. Reaction – occurs when we start using the product or experiencing the service. Will
either start recommending it to friends or boycotting the product.
6. Value – it is the total assessment of the consumption (what you get – what you give).
If a customer sees value they will keep buying.
Relationship of Consumer Behavior With Other Disciplines
1. Economics – important aspect of economics is the study of how consumers spend
their funds and evaluate alternatives.
2. Psychology – studies how people think, react, and behave.
3. Sociology – study of groups of people within a society. Consumption can be affected
by group dynamics and influence.
4. Anthropology – relationship between people and things they own. What links
people with items to understand their personality.
Importance of Consumer Behavior
1. Provides an input to business/marketing strategy.
2. Provides a force that shapes society. For example, the government making fast food
restaurants with no drink refills to reduce child obesity after studying the children’s
habits and consumptions.
3. Provides an input to making responsible decisions as consumers.
Characteristics of Successful Innovations
1. Relative Advantage – is it better than what we already have in the market? If same
features as iPhone and with the same price why would I buy it?
2. Simplicity – must be simple to use and handle. Smartphones existed before iPhone
but were hard to use that’s why they weren’t successful back then.
3. Observability and Trialability – give consumers the product to look at, touch, and try
to be able to experience it before buying.
4. Consistency – don’t make extreme changes to the product.
,Different Ways of Doing Business
1. Undifferentiated Marketing – selling a product that doesn’t have anything unique
about it and targeting everyone. No one does this anymore, used to be water and
sugar.
2. Differentiated Marketing – more than one product and tries to target more than
one segment. For example, Toyota has Corolla (tight budget) and Camry (family,
middle class) and Lexus (luxury)
3. Niche Marketing - very unique product that is not for everyone. Targeting small but
specific segment. For example, GoPro targets people who are adventurous.
Chapter 2: Value and The Consumer Behavior Framework
The consumer value framework illustrates factors that shape consumption related behaviors
and ultimately determines the value associated with consumption. These factors are:
1. Internal Influences – things that go inside of consumer or are part of the consumer.
A. Psychology of the consumer
Cognition – the thinking or mental process that goes on as we
process and store things that can become knowledge.
Affect – the feelings experienced during consumption or associated
with specific objects. For example Disneyland=happiness.
B. Personality of the consumer – includes things like personality and lifestyle.
C. External Influences – Includes the social and cultural aspects of life as a consumer
A. Social Environment – people and groups who help shape consumer’s
everyday experience.
B. Situational Influence - unique to a time and place that can affect consumer’s
decision making.
C. Relationship Quality – reflects the connectedness between a consumer and a
retailer or service provider. For example, barista greets you with a smile or
remembers your name and making it personalized.
Value is the personal assessment of the net worth a customer obtains from an activity (what
you get- what you give). There are two types of value:
1. Utilitarian Value – derived from a product that helps the consumer solve problems
and satisfies the needs. Buying food= value from satisfying hunger.
2. Hedonic Value – derived entirely from the actual experience and emotions
associated with consumptions. For example, a 5* restaurant is high on hedonic
value.
Corporate Culture
1. Corporate Strategy – determines the vision and set general goals. For example,
increase market share by 20%.
2. Marketing Strategy – how company creates value for customers. For example,
opening a new store, include a vegetarian item, reducing sugar.
3. Marketing Tactics – involves the 4p’s. Product, place, price, and promotion.
, Total Value Concept is practiced when companies operate with the understanding that
products provide value in multiple ways.
Augmented product is the original product + the extra things needed to increase the value
from consumption. For example, warranty, maintenance, after-sales services.
Perceptual map is used to depict geographically the positioning of competing products.
Blue Ocean Strategy seeks to position a firm so far away from competitors that the firm
creates an industry of its own and for some time isolates itself from competitors.
Customer life time value calculates how much each customer is worth to the business.
Marketing myopia is a condition in which a company views itself competing in a product
business rather than in a value business. They stop innovating and providing value. Nokia
didn’t go digital but Sony did and they became the leader.
Value co-creation is the process where brands and customers work together to create
better ideas, products, and services.
Chapter 3: Consumer Learning Starts Here: Perception
Perception is a consumer’s awareness and interpretation of reality. In order to learn (change
behavior) have to go through the elements and process of perception. Consumers act on
their perception, not reality.
Phases of The Consumer Perception Process
1. Sensing – consumer senses stimuli to which he is exposed. Stimuli is perceived
through our 5 senses, however, not all stimuli we get exposed to gets noticed.
2. Organizing – process by which the brain assembles the sensory evidence into
something recognizable. They interpret what the stimuli is. There are three different
types:
A. Assimilation – the stimuli has characteristics that are easily recognizable. For
example: sweet, round, and hole in the middle= a doughnut.
B. Accommodation – the stimuli shares some but not all characteristics that
allow a perfect assimilation. For example: sweet, round and no hole =
doughnut with no center hole.
C. Contrast – stimuli doesn’t share enough common info with existing known
categories so we will contrast it with what we know. For example, unknown
white liquid = contrast with milk.
3. Reaction – the consumer reacts to a certain stimuli and a response or behavior
occurs like buying or recommending to others.
Consumer Behavior is a set of value seeking activities that take place as people go about
addressing their real needs. It involves thinking, feeling, and behaving.
The Basic Consumption Process:
A process by which consumer use and transform goods, services, or ideas into value.
1. Need - when we purchase a product we start with the need. Marketers will trigger
the need through advertising. The value of the need is not the same for everyone.
2. Want – the want is the interpretation of the need. If thirsty is the need then a drink
is the want. Marketer will influence the want, you can’t make someone thirsty but
you can influence the customer to choose coca cola over pepsi.
3. Exchange – giving something up (usually money) in return for something of greater
value (the product or service)
4. Costs and Benefits – when I assess a product I look at the cost which is not only the
money but also the time, effort, risk, etc. I will also look at the benefits like the
quality, convenience, emotions, etc. to decide if worth the cost.
5. Reaction – occurs when we start using the product or experiencing the service. Will
either start recommending it to friends or boycotting the product.
6. Value – it is the total assessment of the consumption (what you get – what you give).
If a customer sees value they will keep buying.
Relationship of Consumer Behavior With Other Disciplines
1. Economics – important aspect of economics is the study of how consumers spend
their funds and evaluate alternatives.
2. Psychology – studies how people think, react, and behave.
3. Sociology – study of groups of people within a society. Consumption can be affected
by group dynamics and influence.
4. Anthropology – relationship between people and things they own. What links
people with items to understand their personality.
Importance of Consumer Behavior
1. Provides an input to business/marketing strategy.
2. Provides a force that shapes society. For example, the government making fast food
restaurants with no drink refills to reduce child obesity after studying the children’s
habits and consumptions.
3. Provides an input to making responsible decisions as consumers.
Characteristics of Successful Innovations
1. Relative Advantage – is it better than what we already have in the market? If same
features as iPhone and with the same price why would I buy it?
2. Simplicity – must be simple to use and handle. Smartphones existed before iPhone
but were hard to use that’s why they weren’t successful back then.
3. Observability and Trialability – give consumers the product to look at, touch, and try
to be able to experience it before buying.
4. Consistency – don’t make extreme changes to the product.
,Different Ways of Doing Business
1. Undifferentiated Marketing – selling a product that doesn’t have anything unique
about it and targeting everyone. No one does this anymore, used to be water and
sugar.
2. Differentiated Marketing – more than one product and tries to target more than
one segment. For example, Toyota has Corolla (tight budget) and Camry (family,
middle class) and Lexus (luxury)
3. Niche Marketing - very unique product that is not for everyone. Targeting small but
specific segment. For example, GoPro targets people who are adventurous.
Chapter 2: Value and The Consumer Behavior Framework
The consumer value framework illustrates factors that shape consumption related behaviors
and ultimately determines the value associated with consumption. These factors are:
1. Internal Influences – things that go inside of consumer or are part of the consumer.
A. Psychology of the consumer
Cognition – the thinking or mental process that goes on as we
process and store things that can become knowledge.
Affect – the feelings experienced during consumption or associated
with specific objects. For example Disneyland=happiness.
B. Personality of the consumer – includes things like personality and lifestyle.
C. External Influences – Includes the social and cultural aspects of life as a consumer
A. Social Environment – people and groups who help shape consumer’s
everyday experience.
B. Situational Influence - unique to a time and place that can affect consumer’s
decision making.
C. Relationship Quality – reflects the connectedness between a consumer and a
retailer or service provider. For example, barista greets you with a smile or
remembers your name and making it personalized.
Value is the personal assessment of the net worth a customer obtains from an activity (what
you get- what you give). There are two types of value:
1. Utilitarian Value – derived from a product that helps the consumer solve problems
and satisfies the needs. Buying food= value from satisfying hunger.
2. Hedonic Value – derived entirely from the actual experience and emotions
associated with consumptions. For example, a 5* restaurant is high on hedonic
value.
Corporate Culture
1. Corporate Strategy – determines the vision and set general goals. For example,
increase market share by 20%.
2. Marketing Strategy – how company creates value for customers. For example,
opening a new store, include a vegetarian item, reducing sugar.
3. Marketing Tactics – involves the 4p’s. Product, place, price, and promotion.
, Total Value Concept is practiced when companies operate with the understanding that
products provide value in multiple ways.
Augmented product is the original product + the extra things needed to increase the value
from consumption. For example, warranty, maintenance, after-sales services.
Perceptual map is used to depict geographically the positioning of competing products.
Blue Ocean Strategy seeks to position a firm so far away from competitors that the firm
creates an industry of its own and for some time isolates itself from competitors.
Customer life time value calculates how much each customer is worth to the business.
Marketing myopia is a condition in which a company views itself competing in a product
business rather than in a value business. They stop innovating and providing value. Nokia
didn’t go digital but Sony did and they became the leader.
Value co-creation is the process where brands and customers work together to create
better ideas, products, and services.
Chapter 3: Consumer Learning Starts Here: Perception
Perception is a consumer’s awareness and interpretation of reality. In order to learn (change
behavior) have to go through the elements and process of perception. Consumers act on
their perception, not reality.
Phases of The Consumer Perception Process
1. Sensing – consumer senses stimuli to which he is exposed. Stimuli is perceived
through our 5 senses, however, not all stimuli we get exposed to gets noticed.
2. Organizing – process by which the brain assembles the sensory evidence into
something recognizable. They interpret what the stimuli is. There are three different
types:
A. Assimilation – the stimuli has characteristics that are easily recognizable. For
example: sweet, round, and hole in the middle= a doughnut.
B. Accommodation – the stimuli shares some but not all characteristics that
allow a perfect assimilation. For example: sweet, round and no hole =
doughnut with no center hole.
C. Contrast – stimuli doesn’t share enough common info with existing known
categories so we will contrast it with what we know. For example, unknown
white liquid = contrast with milk.
3. Reaction – the consumer reacts to a certain stimuli and a response or behavior
occurs like buying or recommending to others.
