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MGMC02H3 Study Guide - United States Public Health Service, Consumer Behaviour, Subculture

Management (MGM)
Course Code
Kyeongheui Kim

of 9
Chapter 1 Consumer Behaviour
Consumer behaviour is the study of individuals, groups or organization and the
processes they use to select, secure, use and dispose of products, services, experiences
or ideas to satisfy needs and the impacts that these processes have on the consumer
and society
4 key aspects regarding consumer behaviour
1.Successful marketing decisions by commercial firms, nonprofits organizations
and regulatory agencies require extensive information about consumer
2.There is a need to collect information about the specific consumers involved
in the marketing decision at hand
3.Consumer behaviour is complex, multidimensional process
4.Marketing practices designed to influence consumer behaviour involve ethical
issues that affect the firm, the individual and society
Sufficient knowledge of consumer behaviour exists to provide a usable guide to
marketing practice for firms
All marketing decisions and regulations are based on assumptions and knowledge
about consumer behaviour
Applications of Consumer Behaviour
Marketing strategy
All marketing strategies and tactics are based on explicit or implicit beliefs about
consumer behaviour
Decisions based on explicit assumptions and on sound theory and research are more
likely to be successfully than decisions based on intuition or hunches
Regulating Policy
Various regulatory bodies exist to develop, interpret and implement policies designed
to protect and aid consumers (ex, Federal Drug Administration FDA)
Social Marketing
Social marketing is the application of marketing strategies and tactics to alter or
create behaviours that have a positive effect on the targeted individuals or society as a
Social marketing has been used to show the social consequences of smoking instead
of health consequences
Informed Individuals
Most economically developed societies are referred to as consumption societies
These people spend more time engaged in consumption rather than any other
Marketing Strategy & Consumer Behaviour
To survive in a competitive environment, an org must provide its target customers
more value than provided to them by its competitors
Customer value is the difference b/w all the benefits derived from a total product
and all the costs of acquiring those benefits
It is impt that a firm consider value from the customers perspective
Providing superior customer value requires the org to do a better job of anticipating
and reacting to customer needs than the competitor does -- this is the essence of good
marketing strategy
Consumer reactions to strategy determine success or failure of product
Marketing strategy begins with analysis of the market the organization is
considering. This requires detailed analysis of the org's capabilities, strengths and
weaknesses of competitors, economic and technological forces affecting marketing and
current and potential customers in market
On basis of consumer analysis, the org identifies groups of individuals, households
or firms with similar needs
These market segments are described in terms of demographics, media preferences,
geographic location etc
Management then selects one of these segments as target markets on the basis of
the firms capabilities relative to those of competitors
Next marketing strategy is formulating
Marketing strategy seeks to provide the customer with more value than the
competition while still producing a profit for the firm
Marketing strategy is formulated in terms of marketing mix: product features, price,
communication, distribution and services that provide customers with superior value
Entire set of characteristics is called total product
For the firm, the reaction of the target market to the total product produces an
image of the product or brand or organization; sales or lack thereof; and some level of
customer satisfaction among those who did purchase
Good marketers look to create satisfied customers bc they are more profitable in the
LR (i.e. Consumer loyalty)
For the individual, the process results in some level of need satisfaction, financial
expenditure, attitude development or change and/or behavioural changes
For society, the cumulative effect of the marketing process effects economic growth,
pollution, social problems and social benefits
An analysis of consumers is a key part of foundation of marketing strategy and
consumer reaction to the total product determines the success or failure of strategy
Market Analysis Components
The Consumers
Discovering consumers needs is a complex process but it can accomplished by market
Knowing the consumer requires understanding the behavioural principles that guide
consumption behaviours
The Company
A firm must understand its own ability to meet consumer needs
This involves evaluating all aspects of firm including financial condition, general
managerial skills, production etc
The Competitors
U must understand competitors capabilities and strategies
For any signif marketing action, the following questions must be answered:
1. If we are successful, which firms will be hurt?
2.Of those firms that are injured, which have the capability (financially,
marketing strengths) to respond?
3.How are they likely to respond (reduce prices, increase advertising, new
product etc)?
4. Is our strategy robust enough to withstand the likely actions of our
competitors or do we need contingency plans?
The Conditions
State of economy, physical environment, govt regulations and technological
developments affect consumer needs and expectations as well as company and
competitor capabilities
Intl agreements like NAFTA have reduced trade barriers and raised level of both
competition and consumer expectations
Technology changing the way ppl deal with things
Market Segmentation
Market segment is a portion of a larger market whose needs differ somewhat from
the larger market
A segment must be large enough to be served profitably
The smaller the segment, the closer the total product can be to that segments desires
but it also costs more to service this segment
Behavioural targeting in which consumers online activity is tracked and specific
banner ads are delivered based on that activity is an example of how technology is
making individualized communication cost effective:
Market segmentation involves 4 steps:
1. Identifying product related need sets
2.Grouping customers with similar need sets
3.Describing each group
4.Selecting an attractive segment to serve
Product Related Needs
Orgs approach market segmentation with a set of current & potential capabilities
The term need set is used to reflect the fact that most products in developed
economies satisfy more than one need (ex ppl buy watches to tell time, for status etc)