BUS 471 / CONSUMER BEHAVIOR

Marketing concept: Have a better knowledge about needs and demands in the marketplace
and delivering them better than its rivals. The offerings must satisfy costumers and must be
create value fort hem so that costumers can be retained on the product. ( Making the offerings
indispensable )
Companies who achieved to be a leader in the marketplace, should produce for costumer
satisfaction not just aiming to sell and get profit by the product. Marketing concept should be
costumer-centered sende and respond philosophy. Applying this phisolophy will help you in
such way that you dont have to find costumers for your products, because costumers will find
your products if it is meet their needs.
Consumer behavior is set of actions about products/ services while searching,
purchasing,using and disposing of them.Consumer actions affets marketers about what they
should sell- to who- at which price, how they should communicate and deliver the offerings.

The marketing mix is consist of product, price , place( distribution ) and promotion. Market
segmentation, targeting and positioning are the foundation of turning consumers into
costumers. Market segmentation dividing your target markets into the approachable groups,
subset groups that based on needs, common interests, demographics, psychographic to
understand better the target market players.Targeting means companies selecting potential
costumers and aims to reach those with their offerings.Positioning is the company try to
differentiate products or services in the marketplace to identify differently on the consumer
minds.The societal marketing concept; while company meet needs and offer, preserve its
products and services, it also aims to boost the society's welfare.

VERTICAL STAGE : Samsung estimates that %94 of the smartphone users use their device
vertically. Samsung describes the vertical stage as the best way to experience performances ‘’
both on and off screen ‘’.
Samsung made stage that combines with their one of the best camera fits to satisfy costumers.

MARKETING MYOPIA: Companies focus on products rather than on the needs the
product to satisfy costumers. Companies ignore costumers satisafaction, marketing
competition, rivals products, just focus on products without any improvements.

ENGAGING COSTUMERS:
With the development of technology, the marketing mix concepts, segmentation,targeting all
of the elements and how they offer has also changed increasingly.
Shopping is much more easy nowadays. Consumers can view any storage they like to go and
can swipe the other in only 1 min intead of giong to mall, or present storage. Consumers has a
lot of options, and have way to filter these options in terms of qualification,price etc. They
can easily enable to acces online shops, can have information about a product by reading
reviews, or can add their opinions after purchases. These changes led to also changes in
buying behavior.

With these conveniences, brands are having difficulty to attract, satisfy, retain the costumers.
They must provide right benefits , satisfation factors to the right consumer segment. More
individualized experiences, optimal prices, shorter distribution channels
OREO 100ST BIRTHDAY:
OREO launced a campaign called Daily Twist and the aim of it was to make the cookie
younger.
The design and production team was relased different , uniquie cookies for events,cultural
differences ,trends on internet, holidays, celebrity birthdays.

The campaign reputation spread rapidly with the rainbow cookie design. Everyone on
twitter,facebook and even on TV Show was talking about it. The rainbow cookies made
OREA more ‘’ talkable ‘’ and brand went on viral on online platforms.
People were searching how the OREA was transformed that day, talking about design and
comments about it on facebook, twitter etc. For any new OREA transformation was creating
interaction, more and more people was noticing OREO name and it became more popular
inceasingly. Brand engagement is also increased.
And for the last 100th OREA was chosen by OREO fans.

Daily Twist was an incredible online marketing example. OREO brand name become more
popular and trendy owe to online advertising. The profits and quantity sold was increased.
They adopt costumer satisfaction centered marketing concept, they listen their costumer and
provide accordingly.

If a products delivers a value, porducts offerings align with the costumer expectations it is
more likely to costumer retention. Satisfied costumers are repeat buyers who get a decent
costumer experience after purchasing. They become loyal to the brand, spread positive wom,
leaves decent reviews on websites.
In other words, business who achieve high retention rates should offer better benefits while
delivering products or services to exceed expectations of the costumers. High retention rates
provide

It is more costly to win a new costumers than to retain existing ones.Retaining costumers
is more cost effective than acquiring new ones.
Technologies allow marketers to retain more costumers because they can follow up previous
purchases of the client and have knowledge about the costumers preferences and
evalutations.Consumers who are satisfied are tend to buy the same product from the same
brandsand spreads positive word of mouth(wom).
Consumer behavior stems from four disciplines:
1) psychologhy (human mind and the mental factors that affect behavior )
2) sociology development, ( structure, functioning, and problems of human society
3) anthropology ( human societies’ cultures and development )
4) communication (process of imparting or exchanging information. )

CONSUMER DECISION MAKING PROCESS:

MckKinsey consumer decision- journey

Consumer decision journey approach was developed against traditional

funnel approach. Traditional funnel approach failed to capture all the
touch points, changin buying behavior, habits and changing (digitilaziton )
marketing enviroment.
This model is a loop rather than a linear funnel model and it is composed
of several stages:

INITIAL CONSIDERATION SET: Consumers notice of a product or service

through touchpoints such as ads, social media and begin to the journey.
websites.
Marketers should discover new ways to their brand to be in inital cons. set
cuz brands which in int. Cons. Set are more likely to be purchased than
brands that arent in it.( Brand awareness matters )

EVALUATE: After consideration, consumers start to research for another

options. They often gather information and compare, feauters, quality,
price and reviews. Also they might utilize internal informations that is
based on previous exp and brand perceptions.

BUY: Consumers made the final decision and buy the product but this isnt
the end of the journey.

POST PURCHASE EXPERIENCE: Consumer experience the product and if

the exp. Was positive, started to recommend to others, reviews positively
on social media. Also they might develop loyatly bond and repeat
purchase and more even become retention costumer.

According to the McKinsey there three areas that changed on consumer

buying behavior and he advice new approaches for them:

1- BRAND CONSIDERATION: Marketers should discover new ways to their

brand to be in inital cons. Set cuz brands which in int. Cons. Set are more
likely to be purchased than brands that arent in it.( Brand awareness
matters ).

2-EMPOWERED CONSUMERS: Marketing was using as ‘’push ‘’ strategy on

costumers through traditional add, direct marketing etc.
Nowadays, the marketing strategy is ‘’pull ‘’ strategy. Costumers actively
pull the information that is helpful to them.
Marketers must move aggresively beyond push style marketing and learn
to affect consumer-driven touch points such as wom and internet infos.

3-TWO TYPES OF LOYALTY:

There are two types of loyal costumers. Active loyal costumers who are
repeatly purchase firm’s offerings and also actively recommend it to
others. Passive loyalists are just repeatly buy the firm’s product but they
are open to competitiors offers to switch to them.

Aligning marketing with the consumer decision journey

Firstly marketers must focus on decision making process of the costumers,

how they decide to buy or not to buy.
Marketers must know which strategies should apply to which type of
costumers and when to apply, so that they dont miss any effective
touchpoints of the costumers. Sometimes, the marketing efforts must
change, branda dv. To be in the initial con. phase do delevoping website
and maybe more explanation on the website to enable to understand
better by consumers.
FOUR KINDS OF ACTIVITIES CAN HELP MARKETERS ADDRESS THE NRE
REALITIES OF THE CONSUMER DECISION JOURNEY:

1- Prioritize objectives and spending

2- Tailor messaging
Hyundai allows to loyal costumers to return their car if they lose
their jobs.
3- Invest in consumer-driven marketing
4- Win the in-store battle
Packaging is becomes more importantly because consumers look at
a product and want to impressed by visually. Also in the store they
want to be feel special
What’s now required of CMOs is a broader role that realigns marketing
with the current realities of consumer decision making, intensifies efforts
to shape the public profiles of companies, and builds new marketing
capabilities

Consumer behavior study based on what actions taken by consumers and

what are the underlying reasons of these actions while purchase a produc
or service.

Extensive problem solving ( House, life insurance, car,furniture )

Contains high risk, Many criteria for purchase

Extensive information search Huge differences across alternatives
Multiple info soursces used. Role of the brand

Limited problem solving( groceries, cigarettes,pens)

Low risk Similarity on alternatives

Limited IS Habitual or impulse purchase
Prominent criteria for purchase Role of the brand

DECISION-MAKING MODEL

INPUT:
The marketing mix: Product, promotion,price,distribution
Sociocultural Inputs: non-commercial influences, comments,
family , influence of social class, culture, income, peers
Communications : delievers the marketing mix and socio culture
inputs to the costumers. WOM- advertising, social media, buzz
agents,

PROCESS:
Focus on how the consumer make decision. Psychological
factors(matiovation,perception,learning,abilities,attitudes,) and
experiences effects the decision making process stages like need
recognition, prepurchase search and evalation of alternatives.

The act of making a consumer decision consists of three stages

which are:
Need recognition, pre-purchase search, evaluation of alternatives.

Need Recognition: There are two types of need recognition: actual

state types and desired state type.

Actual state type: consumer usually face with a problem.

Desired state type: may be due to failure or desire to buy product.

PRE-PURCHASE SEARCH:
This stage begins with on consumer's perception. Consumer perceives a
need that may be satisfied by the purchase or consumption of a product.
Firstly searches his memory, past experiences before. The greater his or
her relevant past experience, the less external information the consumer
is likely to need in order to reach a decision.
Factors that increase pre-purchase information search :

PRODUCT FACTORS:
> Long periods of time between successive purchases,
> Frequent changes in product styling, price changes,Many alternative
brands, much variation in features.
SITUATIONAL FACTORS:
>Experience: First time purchase;unsatisfactory past exp. With the
product category.
Social-Acceptability:
Value-Related Consideration:

CONSUMER FACTORS:
Demographics: Education,income,age,weatlh,marial status.
Personality Traits: willingness to accept risk,product involvement
and novelty seeking.

EVALUATION OF ALTERNATIVES:BRAND-SETS
> A list of brands, from which they plan to make their selection
(evoked set).
Costumer perceived value: Costumers evaluates their purchases to
determine whether they are satisfied or product meet their needs,
based on the price of the product. Is it worth it. ?
Three types of costumer value:

Economic(monetary) value: refers to tangible benefits. FX, a

costumer might perceive economic value when they purchase a
product that offers a significant discount, or good return on
investment.

Functional value: It refers to how well a products fulfills functional

needs of the costumer. It is about a products performance,usability.
Fx, a charge device functional value is rapid charge, longterm usage,
waterproof,batterry life,ease of use, height and weight.

Psychological value: Feelings, experiences, emotional satisfaction

that product provides to the costumer.FX, luxury brands often create
psy value, they create a perception between luxury products and
prestige,status.

 EVALUATION / DECISION RULES

Compensatory model,consumer consider all of the attribute of a
product in terms of its relative importance.
Noncompensatory decision rules,
Conjunctive model, must have at least this much of these, should
meet minimum cut-offs
Lexicogprahic model, Consumers identifies the most important
criteria and rank the highest on that criteria. The process would
continue until only one alternative remained. At least this much on
the most.
Affect Referral, I really like the look of this product/ I have
bought this brand before, and I have found that their
products are always good to use and represent good value.
Based on general evaluations not product attributions.

OUTPUT
Three types of output behavior:

1)TRIAL ( PURCHASE ) : first time of buying a product is called Trial. Consumers try to
evaluate the new brand and decide whether repeat the purchase or not.
2)REPEAT PURCHASE
3)POST-PURCHASE EVALUTION: When consumer’s expectation matches the product
performance then consumer feels neutral.
  Positive disconfirmation occurs when product
performance exceeds the consumer expectation and
consumer is satisfied.
 Negative disconfirmation occurs when consumer
expectation exceeds the product performance and consumer
is dissatisfied.
COGNITIVE DISSONANCE = POST-PURCHASE DISSONANCE
Costumer experiences dissatisfaction after purchase a product.Costumers feel that the product
quantity or quality doesnt meet their expectations/ find another product with better features or
pricing / find a competitor that provides better after-sales service.
Marketers must help consumers resolve conflicting cognitions by changing their attitudes to
conform to their behaviors.
• Ways to reduce post-purchase dissonance

1. Rationalize decision ( try to convince himself to that he have taken a wise decision).
2. Seek advertisements that support choices (avoid competitive ads).
3. “Sell” friends on the positive features of the purchase.
4. Seek reassurance from satisfied owners

Buyer Decision Process for New Products: Diffusion of Innovations

Maloney’s %16 Rule

The diffisuon of innovation has 5 stages innovators,early adopters,early majority,late
majority and late mass. When firm reached to %16 adoption of innovation, firm should
change messaging and media strategy from one based on scarcity to one based on social
proof.
For example, messages to innovators and early adopters are usually “Be one of the first to…”
But for the early majority, the message should be changed to something along the lines of
“Join the 50,000 customers who have already bought this product!”
Innovator like to be to hear the first time, so until you reach %16, mass marketing should not
be used.

Innovation Adoption Process

A stage that a costumer goes through when deciding to accept or reject a new
product.

Types of Innovations
1) Continous innovation 2) Discontinous (Disruptive) innovation

Product Features That Affect Adoption

Relative Advantage: considering the alternative solution more superior than

the old ones. The relative advantage might be in economic terms( the new tech
can be cheaper than the old or more efficient but expensive. Can be convenience
factor (having a phone is better than having.a camera )
Compatibility: An innovation fits with values,culture and experiences of
potential costumers.Adoption rate must be high because inv should compatitable
with the consumer’s mindset.

Complexity: an innovation is not easy to use in practice, difficult to understand

the product’s charachteristics, and that will influence the adoption rate.

Divisibility:( Trial- ability ) : innovation can be experimented with on a limited

basis. It can help to convince people,firms who are not sure to use the
innovation, to convince them to practice innovation.

Observability: Innovations which low observatbility will spread more slowly.

MARKET SEGMENTATION,TARGETING,POSITIONING

Market segmentation is dividing a market into subsets of consumers with

common needs. Afterwards, companies select segments that are reachable and
profitable and arrange its offerings accordingly.

MARKET SEGMENTATION:
Segments must be identifiable, accesible( marketers must have chance to
comminicate consumers effectively and economically and profitable.
Segments and their profile must be compatible with the company’s objectives
and resources. Targeted segments must be stable in terms of lifesyles and
consumption payyers, avoid fickle segments.

DEMOGRAPHIC SEGMENTATION

Divides markets in terms of age,gender,social class, geographically, marial

status, income,occupation.

Socio-demographic twins ( Prince Charles and Ozzy have almost same

charachterics in terms of demographic classification. Even tough two indiviual
have almost same demographic data, they have exteremly different lifestyle,
values,desires,personality,interest,habits etc. We cannot rely on demographic
data all alone. )

Riley on marketing: Riley was pointed out for gender segmentation for toys for
children. Girl’s toy section was full of princess and mostly in pink color. She
pointed out companies trick girls to buying pink feminine toys rather than male
targeted toys.

Geodemographics are based on the premise that people who have similarities in
terms of financials,tastes,lifestyle etc.

PSYCHOGRAPHIC SEGMENTATION:

VALS ( Values attitudes and lifestyle ) is a framework that helps to understand psy
segmentation.

Innovaters: They have high inome and high resources and independence is very important.
They have their own individual taste and are motivated to achieve finer things in life ( %10
percent of US

Thinkers: They have high resources anda are motivated by their knowledge/ Rational
decision making consumers and well- informed. Likely to accept any social changes.

Believers: They are more likely to affect by other consumers and more social.Lower
recources and less likely to accept innovation on their own.WOM costumers.

Achievers:motivated by desire for achievement.Commited to carrer and family.

Strivers: Low rescourse and motivated by achievements.Very similar values as achiever

Experiencers: motivated by self-experression, Young adults who want to experience being

different, spend mostly on food,clothing.

Makers: people who value self-sufficiency, interest on their family , work

Survivors: least resources and least adaption to any innovation.Pension earners. Oldest

BENEFIT SEGMENTATION

Categorization of the consumers who seek for similar benefits based on the perceived
value.Based on the fact that different costumers look for different products.
Nike- maternity collection for pregnant women. Different sports and lifestyles.

Mobile Phone Manufacturers Benefit segmentation can be used by mobile phone

manufacturers to divide their market into work-oriented customers, highly social customers,
and customers who consider mobile phones as a status symbol. Highly social customers
would expect mobile phones to be durable, technologically advanced, and easy to use. Work-
oriented customers would prefer buying phones that are inexpensive and durable. Mobile
phones are considered as a status symbol by many people. They expect their phone to be
technologically advanced, expensive, sleek, and stylish.
Segmentation can also be based on other criteria, like customer behavior or demographics..
For example, you may put those who are brand loyal in one category, and who are more price-
conscious in another.

MARKET TARGETING

Market -targeting strategies:

UNDIFFERENTIATED ( MASS ) MARKETING :

Mass marketing,
Targets the whole market only with one offer. Focus on common needs rather than what’s
different.

DIFFERENTIATED MARKETING

Offers different products for each different market segment to satisfy costumer and to increase
profits. Stronger position

CONCENTRATED MARKETING

Targets a large share of a smaller market. / limitied company resources, bettter knowledge of
the market. Luxury brands,

MICROMARKETING

It is typically used to advertise a product or service with a narrow customer base. he customer
base is chosen by the marketer based on certain characteristics, such as age, gender, job title,
location, etc.

For example, Uber uses a location-based micromarketing strategy in each city it is expanding
into. When Uber entered the Vancouver market recently, it used the rainy weather of the city
to incentivize people to use the ride-hailing app instead of walking on the busy streets with
umbrellas.

Known as mass costumaztion / one to one marketing, Targeting a niche, narrow group
Red Bull = The popular energy drink may have started life as a beverage, but after targeting
the young, extreme sports crowd who are always in need of extra energy, it’s now become a
huge name in sports, too.

BEHAVIORAL TARGETING

Behavioral targeting uses consumer actitives on the digital platforms to provide the most
effective messages and advertisements to attract specific consumer demographics. To
determine which add and msg will effect them most.
It utilize behavioral data- like what people are ora re not doing in your app,website or with
your campaigns- to trigger personalized marketing.
Tracking Online/Mobile Navigation or hidden trail of digital breadcrumbs
- Consumer supplied data – their blogs, tweets, and Facebook profiles,instagram posts.
- ‘Click’ data - Websites visited; Engagement on sites (i.e. which pages they look at, the
length of their visits, and how often they return); Lifestyles and personalities (derived from
the contents of pages consumers visit); Purchases, almost purchases (i.e., abandoned shopping
carts), returns, exchanges.
-Sensor data, Social graph data
-Algorithmic data.( predictive analysis )

> Behavioral targeting offers several powerful advantages, including tailored advertising
and retargeting.

Amazon and netflix uses behavioral targeting.

The Behavioral Targeting Process

1) Data collection and analysis : Individual’s demographics,login information,website
wisited, sessionn duration, last purchased items aew gather from websites,mobile apps,crm
systems.
2)Segmentation :Visitors are divided into groups, different segments basis their behavior.
3)Data application: Unique campaigns are now designed and impelemented at this stage.
Targeted email campaigns based on the behavior of a user: Amazon masters this domain.
If a user pays a visit to the eCommerce giant’s platform, browses through some of its
smartphone categories, but leaves without making any purchase, Amazon instantly sends
a personalized email (check the image below) to the user sharing a list of similar items that
might be of interest to them.
BENEFITS OF BEHAVIORAL TARGETING
> Increase On-site Engagement
> Creates an long-term communication channel between clients and brands

PREDICTIVE ANALYTICS
Predictive analytics in marketing means using data mining, predictive modeling, and machine
learning to predict marketing trends, customer behavior, and campaign outcomes.

In business, one of the earliest applications of predictive analytics is credit scoring. By using
historical information about a person’s loan applications, past payments, and credit history,
banks and other financial institutions use predictive analytics to calculate a score that reflects
the likelihood of that person making their payments on time in the future.

MARKETING POSITIONING

Positioning is after deciding which segment will be targeted, companies decide how they will
offer their products and services and how they will attract the consumers,
differentiation,cost,or focus strategies can be applied.

UMBRELLA POSITIONING: A statement or a slogan that describes the universal benefit of

the company’s offering. ‘’ Nobody makes your day like McDonald’s can ‘’ – ‘’ Just Do it ‘’

PREMIER POSITIONING
focuses on the brand’s exclusivity. Loreal ‘’ because Im worth it ‘’ use feminism.