Intro to Consumer Behavior—An Alternative Narrative

HUMAN PURSUIT OF HAPPINESS ...
Hello, CB!

1

Welcome
to the Fascinating
World of Consumers
Where Offerings and Hopes Meet

Dear
e-Diary:
Here is my
Consumer
Behavior.
2:30/3:00

OBJECTIVES

LEARN

. APPLY

1 How Consumer
Behavior is
Defined and
What Its
Elements are

4 Five Resources
All Humans
Possess and
Exchange in the
Marketplace

.

EXPERIENCE

2 Five Visions of

the Consumer
Marketers Should
Recognize

5 Four

Consumption
Values Humans
Seek in the
Marketplace

3 Consumer

Needs and Wants
and How
Marketing Shapes
Them

... In the WORLD OF GOODS

I Love My Keds!
A Mere Ardent Consumer Till Yesterday, Now
Suddenly, I Am A Marketer Too!
See my new Keds!
These are no ordinary shoes. They
are uniquely mine. With some priceless
elements of my autobiography built into
them. They are my signal to the world as to
who I am. I wear them with spirit, glee, and
pride. I designed them, myself!
I had been dreaming of designing my
own pair of shoes for some time. So, on
the afternoon of November 22, 2011, I sat
down at my laptop and launched Keds.com.
The Keds design tab led me step-by-step
through the process of creating the shoe
I wanted. I had the option of choosing the
basic style and then applying my own design
and paint to the upper, lower, left and right
quarters, tongue, sole, lining, laces, and
even eyelets. I made these choices—giving
shape to my needs and my tastes.
Buying the shoes I designed was a
breeze. I made the online payment of $65
and then, ten days
later, on December 3, the pair of
shoes was delivered. And on the
Keds.com Web site, I did one more
thing: I put my design up for sale.
Keds will make a shoe with my
design for anyone who wants to
buy it. Voila, I am now a co-creator,
co-marketer!

Designing
my shoes;
crafting my
identity

—Arianna Osborn, Cincinnati, USA (March 5, 2012)

6 Four Reader

Types to Benefit
from This
Consumer
Behavior Book

Athletic shoes . Ice cream . Ketchup
Neckties . Skateboards . Soda
Speakers . T-shirts

Chocri . Coco Cola . eCreamery
Heinz .
M&M’s . NIKEiD
Threadless
.
Zazzle

Some of the other products you can custom-design and personalize,
and the companies that are making it possible.
Welcome to the age of customized consumption!

I

INTRODUCTION

CONSUMER BEHAVIOR

MY CB
BOOK

.COM

2

3

I

Introduction

WEB 2.0 AND THE EMPOWERED CONSUMER
Web 2.0 No, it is not our older brother’s Web anymore. It is Web 2.0—the World

Wide Web (www) with new capabilities that let us—the users—play a more active role
in the Web experience. In the early life of the Web (i.e., Web 1.0), users were limited to
viewing content passively. In contrast, Web 2.0 (building up progressively since about
2000) allows users to connect with other users (e.g., in discussion forums), create content
(e.g., customer reviews on Amazon.com), and annotate others’ content and messages (e.g.,
by posting comments on news and blogs). Interesting though this capability was, it was
at first used by consumers mostly for hobby-like content creation (e.g., on YouTube) and
for social networking (e.g., via Facebook). But lately, Web 2.0 has been deployed to give
consumers new power: To let consumers become co-creators, even co-marketers! Keds is
a prime example.

Keds: Shoes for Youthful Optimism You might have heard: Keds gave to the

world, in 1916, the first shoe with a soft sole so quiet you could walk into a room without being heard. The company boasts that its shoes were once the choice of such icons as
Marilyn Monroe and Jackie O. More recently, its Pro-Keds have been worn by
numerous NBA stars. In 2007, the company collaborated with fashion designer
Nanette Lapore and created Nanette Lepore by Keds—a fun, flirty summer style
that delighted the stiletto-tortured feet of fashionistas around the world. In
2008, the company launched Keds Studio, allowing customers to design their
own one-of-a-kind shoes. In 2010, it launched Keds Collective to collaborate
with cutting edge designers and music and cultural icons. The goal was to transform its original sneakers into museum-worthy pieces of art and function. Now
in 2012, the Keds site provides a much larger pallet of some 500-plus options
(e.g., 10 to 15 colors and 8 to 10 prints for each of the 13 components of the
shoe, such as upper, toe, insole, gore, stitching, etc.). You can also import your own images
and write your own text in one of the 20-plus font styles. And you can do one more thing:
You can post your creation for sale on the Keds Collective Web site itself.
Welcome to the age of Web 2.0! To the power of consumers-turned-marketers!
Welcome, in fact, to the fascinating world of consumers. In this book, we are going to
describe, dissect, and discourse about consumer behavior—human behavior in the world
of products. We will study how we think, feel, and act in the marketplace—how we come
to see the products the way we see them, how we make our choices from the mind-boggling array of goods available, how we buy them and then weave them into the tapestry of
our lives. How we consume them to sustain and energize our bodies, feed our minds, and
construct our egos and our identities. This is the study of consumer behavior.

We Are Consumers—24-7!
We are all consumers. This much must come as no surprise to you. But what you may
not have realized is how much of your waking day you spend being a consumer—and we
count not just when you are consuming or when you are buying something. Rather, as
we will explain later, you are a consumer any time you are even thinking about acquiring
and/or consuming anything. To be sure, we also live at least part of our lives not being
consumers—such as when we are conversing with a friend (without using a phone or any
other product), reflecting on our futures, or for that matter, on the future of mankind. But
most of the rest of the day is filled with plotting and enacting consumption. Write a daily
journal for a week, if you like, and see for yourself. A group of consumers did just that, at
our request. We reproduce one of these journals (see box: Dear e-Diary). This journal was
quite representative of all those we received in one respect; they all showed the same thing:
We are consumers 24-7!

CONSUMER BEHAVIOR

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The Fascinating World of Consumers
Consumer Karma—We Are Consumers 24/7!

Dear e-Diary—Here is My Consumer Behavior
by Ellen Tibbs

•
•
•

MONDAY
This morning on the way to work I bought a Sugar Free Red Bull and Special K
blueberry breakfast bar.
I was walking to my car earlier and saw a woman with a new Coach purse. I am
getting sick of the one I am carrying now. Once I save up some money I might
treat myself and buy one!
My friend just called and said she had an extra ticket to go to the Journey concert in two weeks. I really want to go so I told her I would meet up with her later
to pay for the ticket.
TUESDAY

• I got my hair colored at the salon, Madalyn San Tangelo this morning.
• My friend Lindsay and I wanted to eat sushi so I placed a carry out order at
•

AOI, a Japanese cuisine restaurant at Newport on the Levee. We both ordered
California Rolls, rice and we split an appetizer.
I was online today and bought and downloaded music from iTunes. I bought some
songs by James Blunt and Jack Johnson. .
WEDNESDAY

• I love my car, but I want a new one. I saw a new silver Scion today and want it
badly. I called my mom and talked to her about trading my car in for a new car.

• I looked online for a desk for my room. I have a computer and printer, but no
work station. I usually sit at my kitchen table or on the floor to do homework
and it’s getting really annoying. I looked at Pottery Barn, Bova and a couple of
random sites, but didn’t see anything I liked.
SATURDAY

• I bought an Icee Mango at Panera Bread…
• I went shopping today at Kenwood Mall for something to wear tonight. I went
to a couple of stores, but didn’t find anything. I went into Forever 21 and was
excited when I found a white skirt and black camisole. I was even more excited
when I found great accessories to match!
SUNDAY

• I had a headache this morning and was out of Advil so I went to Walgreen’s. I
•
•

bought water and a bottle of Advil gel caplets. In line I grabbed a new tube of
Ellen Tibbs is a college
Burt’s Beeswax and bought that too.
senior majoring in
I had to buy gas again today. I feel like I filled up! I hate buying gas. It is so
Business Administration
expensive and is a pain in the butt. The only thing worse than buying it is to
know you will have to buy it again in three days!
I work at J B Fin’s on the Levee, so I went shopping on my break. I went to Hollister and PacSun. I didn’t find
anything I liked. However, I did buy a new belly button ring from the outside vendor.

OM

MY CB BOOK

Consumers Are fascinating
As consumers, we are fascinating. Consider a conversation we recently had with a
consumer, Jackie, age 30 (see the box titled “A Consumer Interview: I Obey My Thirst”).
We will let that interview speak for itself, and let you decide whether you agree that consumers are indeed fascinating.
When we think of consumers such as Jackie, several images come to mind. Consumers are the browsers in the department store, shoppers in the mall, patrons enjoying a meal
in a restaurant, visitors standing in long lines at Disneyland, youngsters flocking to video
arcades, and old ladies rushing to grab door-buster sale items. These and many other visions of the consumer can be aptly grouped into the following five categories:
1. Consumer as Problem-Solver
2. Consumer as Economic Creature
3. Consumer as Computer
4. Consumer as Shopper
5. Consumer as Reveler
HUMAN PURSUIT OF HAPPINESS

I

Introduction

F IVE VISIONS OF THE CONSUMER
Consumer as Problem Solver In this vision, consumers are searching for solutions
to the needs of daily life, looking for a product or service that will meet those needs in the
best possible way. Once they find the “solution product,” they can relax and move on with
their lives. The following self-report from a consumer illustrates this :
After I purchased my new pants recently, I spent most of my free time thinking
about the shoes I already have. Finally, I decided that I didn’t have any shoes to
go with my new pants. On Tuesday, I started my search at Payless Shoe Source,
but didn’t have any luck. I continued my search at Dillard’s and JC Penny’s but
once again I just didn’t see what I was looking for. I became very discouraged. I
decided that later that evening, my final store to shop would be Shoe Carnival.
As soon as I walked in, I saw them, the perfect pair of shoes. They were a little
pricey at $38.99 but with a 10% sale, I bought them. I was very excited and relieved that I had found the shoes I was looking for. (Angie, 22)

Consumer as Economic Creature Consumers are also planners and managers of
personal finances; they want to use their money wisely. As such they seek to buy products
at the best prices available. This does not mean that they always go for the lowest price
(although often they do), but always that they want to maximize their utility. As one consumer stated:
My fiancée and I always cut coupons before we go grocery shopping. It always
saves us at least $20 per trip. We both agree that Kroger and Thriftway are too
expensive for our large bi-monthly shopping trips. We prefer to go to Meijer and
likely save another $40 just by going there. Once at Meijer, we aren’t too picky
about the brands we buy. We can often be seen calculating the per unit price
based on the Meijer brand versus the name brand with coupon. On almost everything, the lower per-unit cost always wins. Oddly enough ketchup is the one item
that I purchase based on the brand name. (Christopher, 23 )

Consumer as Computer We also see consumers reading package labels, checking-off
items on a shopping list, pondering information in their heads, looking at ads, making
sense of instructions on how to use a product—in other words, sorting out all the information about products and the marketplace. Indeed, our brains act like human computers.
This vision can be seen in the following self-report from a couple:
We were in the market for a house. We began by searching the MLS site on the
Internet. We searched listings by price, by location, by school district, and by
features. Then we found a realtor and let him do the searching. He showed us
several houses on the computer within our price range. One house seemed to
have all the features but was on a street with no sidewalks, and sidewalks were
important to us because we have children. Another house had
everything but the deck was small; a third house had a large
deck but the kitchen was small. We tried to figure how much
it would cost to make the deck bigger, and we thought that
expanding the kitchen would be very cumbersome. We kept
turning in our heads the three houses we liked and their various features, and finally, taking everything into account, we
settled on the one with the small deck. (Jenny, 23, and Paul,
24)

Doing
Yo g a
Is this person, at this moment, being a CONSUMER ?

CONSUMER BEHAVIOR

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Consumer as Shopper This is the familiar image of consumers, coming out of a store, loaded with shopping bags in
both hands. Inside the store, they are totally taken in by the vast
merchandise, enchanted by all that is on display, theirs to have
if they like, but to enjoy the sight anyway. Stores and marketplaces are the proverbial Alice’s Wonderland for the consumer
as a shopper. As one of our research respondents put it:
I shop all the time. Days, evenings, weekdays, weekends.
Whenever I can get out. I shop at department stores and just
as much at boutique shops. And I shop online—my favorite

Consumer Karma—I Obey My Thirst!

A Consumer Interview

“I Obey My Thirst!”
We intercepted Jackie Cooper, a 30-year old male, walking with a
shopping bag in hand, in the Downtown Mall, Cincinnati. Our interviewer was Pamela Ryckman, a junior marketing student, who conducted the interview as part of her class project.
Q. Excuse me sir, would you mind answering a few questions for
my class project?
A. Sure, you can ask me anything.
Q. Great, thank you. (Pointing at the shopping bag) What did you
buy today?
A. I just bought this new fly Fubu jersey. It is uh, blue and yellow,
double zero on the back. It’s phat.1
Q.
A.
Q.
A.
Q.
A.

How do you buy your clothing?
You know, whatever looks good. Stay away from stripes though.
Why?
Oh, it could make you look bulky, you know.
What kind of clothes do you buy?
Well, I have a lot of Nike. My favorite is Fubu, you know. I also
got Sean-John. That is the only kind of stuff I buy.

Q. Why do you like these brands? What do you look for when you
buy clothes?
A. Its gotta be comfortable. I have to be able to move in it, or play
ball in it, and still go to the clubs … comfortable but still nice.
Q.
A.
Q.
A.
Q.
A.

Do you go on spending sprees?
Nah, I try to keep my platinum bill on the D.L.2
Are you happy with the way you buy clothes?
Yeah, I got my own system. Hasn’t failed me yet.
Do you like shopping for clothes?
Clothes shopping? Yes, I like it. I love it. You know, I gotta
keep my threads on top of the game.
Q. Is choosing clothes a problem for you?
A. Nah, I usually just try whatever catches my eye and I just
buy it. I go in, do my business, and then I ‘m out. … I am
like flash … you know flashin’ in, flashin’ out. Bling blingin’!
Q. What role does clothing play in your life?
A. See, I look at clothing like it’s a part of me. It’s like people
be lookin’ at my clothes. It is like they’re seein’ into my soul.
You know what I mean? That’s why I dress the way I dress.

____________________________
1. Pretty hot and tempting; 2. Down-low

Jackie Cooper,
Makeup artist, Cincinnati, USA
Q. Do you pay attention to clothes
advertising?
A. Nah, I just buy what I like; I will not bow
to any sponsor. I buy what I want. I’m like
Sprite—I obey my thirst. That is the way it
is.
INTERVIEWER: Ok. Thank you for your time.

OM

MY CB BOOK
site is Alloy.com. I shop for sales and I shop for rare merchandise. If I am getting
bored I will go to the mall. In fact if I don’t go shopping for 2 or 3 days at a stretch,
I begin to feel depressed. I buy very carefully, after full deliberation, but I browse
a lot and I window-shop a lot. Mall is a place I couldn’t live without. You could say
I was born to shop. (Christy, 22)

Consumer as Reveler Finally, we all have visions of consumers just having a good
time—at a restaurant, a rock concert, a beach resort on spring break—enjoying life with
all the wonderful things the marketplace has to offer. Below are two excerpts from consumer interviews.
I am really big into smelling good. I spend hundreds of dollars on top name
cologne. I feel that appearance and smell at first are what make the man what
he is. I can be running to the grocery store and I put on cologne. (Chad, 22)
I love attending a live concert. Rap, country, rock, gospel, alternative—I love
them all. My favorite band is Dave Matthews—I have got all 14 of their CDs and
two live concert DVDs! (Joe , 23)


Introduction

Here we have a snapshot of a group of consumers (see facing page). When it comes
to consumers as revelers, a picture does speak a thousand words!
All of these visions are true. They exist not only in different consumers, but also
sometimes in the same consumer. Thus, we are economic creatures at times, watching every penny; at other times, we just want to experience, just want to be revelers, with money
as no object. Sometimes, we are assessing a product and soaking up all the information,
with our internal computer drives whirring. A consumer is indeed multi-faceted. And our
study will cover all these facets.
Now, we are ready to begin our formal study of consumer behavior.

WHAT IS CONSUMER BEHAVIOR?
We define consumer behavior as the set of mental and physical activities undertaken
by consumers to acquire and to consume products so as to fulfill their needs and wants.
Our definition of consumer behavior has several elements worth noting. Let us discuss these one by one.
Mental and Physical Activities First, consumer behavior includes both mental
and physical activities. Mental activities are acts of the mind, and they relate to what we
think, feel, and know about products. Physical activities are, in contrast, acts of the human body, and they relate to what we do physically to acquire and to consume products.
When you are contemplating buying a product, even dreaming about it, you are engaging
in a mental activity. You are also engaging in a mental activity when you are
Just wondering mulling over a product’s benefits and risks; making sense of an advertisement;
if a three-but- trying to remember the price of a product in the store you previously visited;
ton suit jacket trying to recall what Dr. Oz said the other day, on his TV show, about the
will be proper is benefits of eating chia seeds; or just wondering if a three-buttoned suit jacket
also Consumer will be good to wear to a forthcoming job interview, or if, instead, you should
Behavior. stick to the more conservative two-buttoned jacket.
Physical activities include visiting stores, clipping coupons, talking to
salespeople, test-driving a car, placing an item in the shopping cart, abandoning a shopping cart, and saving empty cartons for later recycling. Physical activities entailed in actual
consumption are also included—such as preparation to consume (e.g., setting the table,
blotting grease from pizzas and fries, etc.), consumption situations (e.g., choosing takeout
or dining in, using a cell phone while driving), consumption rituals (e.g., a makeup regimen), or routine trivial behaviors (e.g., TV channel flipping). Indeed, it is by observing
consumer inconveniences and improvisations during product use that marketers often
conceive new products and tailor their communications. Some activities are hybrids—
both physical and mental—such as reading Consumer Reports or product labels.
It should be noted that the mental and physical activities we study under consumer
behavior are not limited to specific acts of buying and using products. Rather, they include
activities that the consumer undertakes in preparation for and prior to the actual buying
act, and they also include activities that continue long after a product is actually consumed
or used. When a consumer hears a friend praising a product and makes a mental note to
try it some time in the future, this preparatory activity is part of consumer behavior. Likewise, if a few months after using a product, the consumer suddenly recalls the experience
of using that product and chuckles about it, enjoying the memory of past consumption,
then that post-use mental activity is also consumer behavior.
Product Second, we use the term product broadly, to refer to any physical or nonphysical product or service that offers some benefit to the consumer, including a place, a
person, or an idea offered for exchange. Thus, not only are physical products such as cars,
shirts, and golf clubs included, but so too are services such as a fitness club, a college education, a TV program, and a “breakup letter service”—more on that later. Also included are
places such as vacation destinations, outlet malls, or video arcades. And persons, such as
political candidates seeking your votes are included. And, finally, ideas are included, such

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CONSUMER BEHAVIOR

as vegetarianism or promoting Occupy Wall
Street. (The latter, a public protest, originally
initiated by Canadian activist group Adbusters,
was launched on September 17, 2011 in New
York City. Since then, under a more generalized moniker, The Occupy Movement, it has
spread worldwide: London, Ontario, Canada,
November 9, 2011; Copenhagen, October 15,
2011; Paris, November 4, 2011; London, UK,
October 15, 2011, repeated on February 27,
2012). The important point here is that casting your vote for a candidate is just as good an
example of consumer behavior as is buying a
Consumers as Revelers: Bo Ring Mud Festival South Korea
brand of toothpaste; so is visiting a museum,
choosing a college, reading Kim and Krickitt
Carpenter’s New York Times best seller, The Vow, displaying a “Save Our Environment”
bumper sticker on your new, British-built Toyota Avensis, or deciding not to donate to the
Octo-Mom (Nadya Suleman) fund.
Consumers Third, our definition includes the concept of consumer. In general, a
consumer is anyone engaged in the acquisition and use of products and services available
in the marketplace. Although a few humans on our planet might well be living lives sustained entirely by self-produced products and services (rather than those acquired in the
marketplace), most of us acquire the majority of the products and services we need and
want through marketplace exchange. Each of us, therefore, is a consumer.
The use of the term consumer in this text is broader than in practice, where different marketers call them, instead, by different names. For example, retail stores generally
refer to their patrons as customers (rather than as consumers); so do utility companies (e.g.,
electricity or phone service providers), financial companies (e.g., banks), and service providers (e.g., palm readers). Professional service providers (e.g., lawyers, real estate agents,
tax advisors) refer to them as clients, or by their more context-specific roles (e.g., doctors
call them patients, educators call them students, fund-raisers call them donors, etc.). Only
manufacturers (e.g., Procter Gamble, Unilever, Kraft, Cadbury, Molson,
Britvic. etc.), who do not routinely deal with the end-users of a product di- Customers, clients,
rectly, refer to these household end users as consumers. In this text, however, patients, tourists,
we refer to all of these kinds of acquirers and users of products and services donors, students—
all are consumers.
as consumers.
Our use of the term consumer also goes beyond its literal meaning—
persons who “consume.” Of course, some products do get consumed, such as food items,
but other products do not get “consumed” (i.e., depleted), such as household appliances or
other durables. For these products, we are users rather than consumers. Again, we will use
the term consumers to refer to the users of all products or services, whether these products
are consumables or durables.
Correspondingly, we define consumption as any and all usage of products whether
or not the products are actually “consumed” away; i.e., depleted. Thus, when we look at
our digital pictures and we show them or e-mail them to others, we are consuming these
pictures. And, of course, activities such as TV viewing, visiting art galleries, and tweeting
and retweeting messages on Twitter also count as consumption.
Needs and Wants Finally, two important words in our definition are needs and
wants. Needs and wants are perhaps the two words most freely used by consumers—“freely”
in the sense that consumers seldom ponder before uttering these words. They utter these
words merely, but unmistakably, to indicate their desire or intent to
possess and/or consume something. Philosophers of diverse ilk have Philosophers of diverse
ruminated for centuries as to what need and want mean, and under- ilk have ruminated for
standably there is no consensus. Consequently, consumer researchers centuries as to what
who study consumer needs and wants also vary in their definitions of need and want mean.
Photos courtesy of Arden E. John, South Korea

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I

Introduction


the terms. Indeed, it would be futile to search for a definition on which everyone would
agree. So, below are the definitions we will use in this book.

E xCHANGE, RESOURCES, AND VALUE

A Need Is Not A Product. A Product Is Not A Need.

Three Essentials of Consumer Behavior

A need can be defined as a discomforting human condition. It can be discomforting
in a physiological sense or in a psychological sense. Examples of physiologically discomforting conditions are sensations of hunger or cold; examples of discomforting psychological conditions are feeling bored, feeling insecure, or experiencing being looked down
upon. As consumers, we seek products or services in the marketplace exchange so as to
alleviate these conditions of discomfort. A want is a desire for a specific object or product.
The consumer who wants a product judges that it would restore his or her condition to a
satisfactory state. Thus, the felt discomfort of a hungry stomach is a need; desire for food
and for a specific kind of food is a want. Feeling insecure is a need; desire for the latest
model of Nike shoes, even when barely within one’s means, is a want. Thus, a product is
not a need; it is a solution to a need.2
The definitions we use here differ from common speech, where needs are equated
with necessities, and wants with luxuries. There are good reasons for this, which we will
explore in a later section. For now, just remember that need is your felt discomfort, period.
And remember also that the discomfort has to be perceived by the person himself or herself. Thus, a need is not someone else’s assessment of your condition. I cannot say that your
hair looks long, so you need a haircut; Or, that you don’t need an iPad, or the latest game
for your Wii. Or that you don’t need to have your Avatar reside in Second Life. It is for
you to decide if not having these things is discomforting for you, psychologically speaking.
Indeed, then, need is a very subjective word. It is a very personal feeling.

1

There are three essential elements in all consumer behavior. Without these, no “consumer behavior” can occur. And they work in unison—inseparably, as three grand enablers
of consumer behavior. These are exchange, resources, and value. Let us examine each.

Exchange
Exchange refers to an interchange between two parties where each receives from the
other something of more value and gives up something of less value. Within that specific
exchange, what is given up is of less value to the giver than it is to the receiver, so that both
parties gain more in value than they give up. Thus, when we buy a shirt, we part with our
money (say, 20 dollars or 40 rubles or 25 Euros or 120 pesos or 80 yen) because, at that
time, that particular shirt is more valuable to us than keeping that money in our pockets;
conversely, when we sell that shirt in a garage sale for one dollar, at that time, that shirt’s
value to us is less than even one dollar.
Although an exchange can also occur between any two consumers, it is customary
to call one of the parties the marketer and the other party the consumer. A marketer is an
individual or an organization with an organizational goal that offers products and services
in exchange for the consumer’s money or (occasionally) other resources. When a marketer
primarily seeks money and has the making of money as the principal organizational goal,
then that marketer is referred to as a commercial entity. When a marketer offers products
and services either free of cost or at a nominal charge insufficient to cover costs or make
any profit, the marketer is typically a non-profit or social organization. Typically, nonprofit or social organizations promote ideas (e.g., smoking cessation) or persons (e.g., a
presidential candidate). An important point here is that the study of consumer behavior is
just as useful for non-profit and social and community organizations.3

Money

Resources
Need is a
very
subjective
feeling—this
important
consumer
sentiment is
elegantly
captured in
this ad for
Nissan 370Z.

Copyright, Nissan
(2009). Nissan
and the Nissan
logo are registered trademarks
of Nissan. Photo:
Markus Wendler.
(Used with
permission.)

10

CONSUMER BEHAVIOR

A resource is something we own or possess that people value. Since people value
those resources, more or less universally, we can, as consumers, use them to acquire a
whole host of products and services. That is, as humans, we value resources ourselves, and,
because other humans value them too, we can exchange some of them to satisfy our needs
and wants.

Five Resources
There are five types of resources: money, time, skills and knowledge, body and physical energy, and social capital. Of these, money is the most often used resource for marketplace exchanges—when we acquire products and services, we typically pay for them
with money. We also use money to acquire the other four resources. We buy time-saving
devices to gain more time; we hire maids so we ourselves don’t have to expend time in
housekeeping chores. We buy books and take college courses to gain knowledge, we buy
home-improvement books to learn to do handiwork, and we pay for lessons to acquire the
skills needed to compete on Dancing With The Stars.
To build our bodies and enhance physical energy as a resource, we spend money and
join a gym. We spend time doing yoga. And we buy vitamins and nutrition-supplements
to get energy. Finally, we spend time and money to build social capital—the network of
friends and professional connections that can be of help in our hours of need. We buy
designer brand clothes that will help us gain acceptance among our peers. We spend time
writing “thank you” notes and sending gifts to keep the friends we have. And we pay fees
to join social clubs and associations to enlarge our social networks.4

Time

Knowledge

Energy

Social
capital


11

I

Introduction


Sometimes we use other resources so we can pay less in money. We pay, in part, with
our time when we choose to take a cheaper airline flight with a stopover instead of a direct
flight. Likewise when we buy a modular furniture system that we have to assemble ourselves, we exchange our time, physical energy, and skill set to save money. If we believe that
we have the requisite skills, then we choose a low-fee discount broker rather than a fullservice investment advisor, or we buy stocks online. We use our healthy bodies as resources
when we donate blood or pledge to donate some organ. And good looks are themselves
“exchanged” to attract a date, companion, or mate.

Value
The third essential element in all consumer behavior is value. Value is the sum total
of net benefits we receive from an activity or an exchange. Indeed, value is the core goal of
all exchanges that humans undertake.
Value, not money, is the basic currency of all human interaction. When we meet
someone, we try to quickly assess how long it would be worth our while to be talking
to that person. If an incoming phone call shows up on our caller ID, we promptly decide
if we would gain anything by taking that call at that time.… It is even more true of
marketplace exchanges. The only reason customers are even in the marketplace is that
they are looking for something of value. (ValueSpace, 2001, p. 3-4.)5

Utility

Social

Ego/
Identity

Recreation

12

CONSUMER BEHAVIOR

Value comes from all the benefits, all the desired outcomes that consumers obtain
and experience from their use of products. When a cream eradicates our acne, that is a
desired outcome to us and hence a value. When a musical play uplifts our moods, that is a
desired outcome and hence it is a value. When wearing a particular suit or dress brings us
compliments from others, we are receiving value. And when we feel good about ourselves
having donated to a charity, we are experiencing value. In everything we buy, in everything
we consume, in every advertisement to which we pay attention, from every salesperson
to whom we lend our ears, in every store we enter, on every Web site we visit, we seek
value.
Thus, value comes in multiple forms. Basically, value accrues when some need is satisfied. Because human needs are countless, so also are forms of value. However, they can
be categorized into four major types, captured in the acronym USER: (a) utilitarian, (b)
social, (c) ego/identity, and (d) recreational.6
Utilitarian value is the set of tangible outcomes of a product’s usage (or of an activity). It comprises physical consequences of a product and its effects in the physical world
around us and within us (i.e., in our bodies). Also called functional value, utilitarian value
comes from objects when they enable us to manage our lives as biological and physical
beings and to manage our external physical environments as well. Examples include filling
our bellies with food, energizing our bodies with nutrients, moisturizing our skin with
lotions, navigating physical distance by using a Segway™, etc. But don’t mistake utilitarian value as referring only to basic physical necessities. A computer that allows us to write
and save letters, a personal jet that enables us to reach places at will, and a digital camera
phone that lets us shoot pictures anytime anywhere, and then e-mail them instantly to our
friends—these products yield specific benefits that are also utilitarian.
Social value comes from our ability to manage our social worlds (as opposed to the
physical world). This includes maintaining warm and harmonious relations with others,
fitting in with peers, and generally projecting a good image to others. Thus, we get social
value when we wear brand name clothing with a certain brand image, and we get social
value when we buy someone a gift to affirm our relationship. We also receive social value
when we donate blood as part of an office drive, as well as when we boycott French imported products just because all our coworkers do.
Ego/identity value comes from our need to construct and nurture our identities
or self-concepts, our sense of ego, our ideas of who we are. Thus, we eat vegetarian food
because we value the identity of being an animal saver. We gain ego/identity value by recycling because we believe in preserving the environment. We wear Polo and Donna Karen

and drive a Jaguar because we think these brands are very urbane and sophisticated, and
we also view ourselves as urbane and sophisticated. Or alternatively, we wear, say, American Eagle and drive a Blazer because we want to nurture our self-identities as being very
rugged.
Finally, recreation value comes from objects and activities when they recreate our
moods and regenerate our mental ability—removing our fatigue and boredom, stimulating the senses, and rejuvenating our minds. Also called hedonic value, recreation value is
obtained from wide ranging forms of consumption: from mild mood-lifters like listening
to one’s favorite music to the extreme exhilaration of watching one’s favorite sports team
win the championship game; from a short coffee break to wallowing in pleasure at the
Venetian in Las Vegas.
Of course, many products and activities could simultaneously produce multiple values, and two consumers could use the same product to derive two different values. Thus,
a consumer could wear Polo or Donna Karen clothing purely to impress others, whereas
another person could wear them, not because what others might think of them, but because he or she sees himself or herself that way. To us the clearest distinction between the
two values (social and ego/identity) came from a consumer who said he buys name brand
shirts and pants to make an impression, even though he thinks it is foolish to pay so
much for them, and that when it comes
to underwear, he buys a store brand; in
contrast, another consumer bought only
designer-brand underwear because he
thought he “deserved it.”
Make no mistake about it: we sometimes choose a product to impress others, but sometimes we choose it purely
to play out our sense of identity. Tons of
expensive designer brand undergarments
and a dozen or more personal grooming
gadgets from Sharper Image get chosen,
not because of a desire to impress others
(these products have low public visibility), but because we believe we are the
kind of people who have the personalities suited for those brands.
Another point to note is that while
a few products are entirely symbolic
and have no physical utility (e.g., greeting cards), most products have utility
as a minimal core. Many products have
physical utility and not much more (e.g.,
Are These Two People Consuming at This Moment?
hardware products such as duct tape),
but most products have, surrounding
Yes, the clothes, for starters. Besides, whereas during yoga, we
are expected to shut off our minds from all extraneous thoughts, few
a physical, utilitarian core, some soare able to. For all we know, these two persons might be thinking,
cial, ego/identity, or recreational value.
individually, “I should, after all, buy a proper yoga mat.” Or, he might
Clothing, cars, colognes, and being seen
be contemplating which movie they should see later that evening,
in a Starbucks Café sipping a $4.50
Hugo or Midnight in Paris. And she, to buy TomTom GO 740 LIVE, as
Tazo® Vanilla Rooibos Tea Latte offer
the ultimate answer to his aversion (arguably a typical male trait) not
to ask for directions.
these multiple values, for example.
Remember, evaluating impending purchases or contemplating fuWe will dwell on these more in
ture consumption is also consumer behavior.
subsequent chapters of the book, but
Whether in actions currently unfolding or in thoughts laced
for now remember the acronym USER
with objects of desire, we are, at any given moment, more likeas your code word to think of the four
ly than not, being consumers. Indeed, then, we are consumers
principal values consumers seek in the
24/7!
marketplace and in consumption.

1

13

I

Introduction


Does Marketing Create consumer Needs?
Some people blame marketing for creating consumer needs. They charge that marketing creates a desire for products we don’t need. Does it? Let us examine this closely. Mainly,
this charge is based on two prevalent views of what a need is. First, the charge comes from
those who define true needs as only the basic things we require for survival. Consequently,
they argue that we only need a basic car, not a fancy car, but marketers create in us a desire
for a fancy car, and that we do not need $150 Nike shoes, but fancy advertising beguiles
us into believing that we do.
The second definitional problem is that in common parlance, a need is confused with
a product. This leads to the argument that no one needed an iPad until Apple introduced
iPads, and no one needed Botox treatments until Botox treatments became available. A
discourse on whether or not we needed something is impossible if we use the terms need
and product interchangeably.
In contrast, we have defined need as a condition (an unsatisfactory one), not as a
product that improves that condition. So the need to create, store, access, and watch digital content on-the-go always existed; iPads provided a solution—a better solution. And
the need to impress peers and express ourselves has always existed; Nike offers, and Botox
treatments offer, to some consumers, a way to do it. Consider digital camera cell phones.
Before they became available, we did not need digital camera cell phones. In fact, we did
not even need cell phones. But the need to be able to call our moms or friends from a
place with no pay phone nearby had always existed. And every once in a while we were in a
place looking at something, some product, some transient scene, and we wished we could
capture it in a photo and show it to a friend far away in real time to get his or her opinion.
We had always needed, too, the ability to see the caller’s face in our tiny cell phone’s screen.
Since these possibilities were not available, we dreamed about them every once in a while
and then pushed the thought away from our active attention. Until one day, science made
the cell phone available, and then the cell phone with digital camera and e-mail capabili-

Two consumers.
Two different self-identities.
Expressed through clothes.
Miguel Young, a “watch repair
artist” (L), Sean Foley, an ecodesign professor,
Fedora hat and tie-dye T-shirt—
to each his own, courtesy of the
marketplace.
(Incidentally, no amount of
clever marketing can make
Miguel trade his fedora hat
for the tie-dye T. And Sean will
absolutely, positively not do the
trade either. They might as well,
but not because of marketing.)

14

CONSUMER BEHAVIOR

1

ties, and we suddenly recognized these products as solutions to our long-dormant needs.
But it was science that gave us those products, not marketing. Marketing brought the news
and explained product functions and benefits. The same goes for every invention—from
Post-it® Digital Notes to hair transplants, science made them available, and, after that,
marketing brought us the information and offered the invention at a price (sometimes a
hefty sum, mind you). And those who saw these products as solutions to their needs—the
conditions that were bugging them—bought them immediately, without much persuasion, whereas others waited a while or never bought them at all (a high intensity marketing
effort notwithstanding!).
Speaking of the products science has brought us, smart consumers would have discovered their benefits even in the absence of marketers, and from them, in turn, all consumers
would have. Consumers who credit marketers with creating in them the need for all those
new inventions are merely shifting responsibility from themselves to marketers.
What about products that are not scientific inventions, but mere packaging of image,
you might ask. Like designer brands? Here, too, marketing receives more blame than it
deserves. Imagine a world in which only one brand and one type of shoe (in all sizes, of
course) was available, and only one brand and one style of clothes, and only one make and
style of car. Would you then have been happier? There resides in us a need to differentiate
ourselves, not to be stamped from a cookie cutter, to show something unique. What marketers do, to consumers’ benefit, is simply to make those varieties, those differentiations in
product offerings available. And in countries where these products are not freely available
(and where, therefore, there is no marketing), many consumers would kill to get them
from the gray market if they could!
Somehow, consumers have their ideas of what will make them happy, and they will
do anything to get those things, marketing or no marketing. (Without any promotion,
iPhone 4S, launched in Australia, Canada, France, Germany, Japan, the UK. and the US
on October 14, 2011, was sold out on a pre-order basis on the first day of availability! And
when Nike released its outer space-themed limited-edition shoe, Foamposite Galaxy, on
February 24, 2012, people lined up at the stores on the previous evening, and in several
cities armed police with riot gear had to be called in to manage the unruly crowd!!) The
important question, therefore, is this: Where do consumers get their
ideas? From diverse sources, actually. From the media for one. From
seeing what the sports celebrities are driving, and what the rap artists are
wearing. And they observe people around them. Who is wearing Seven7
™ or True Religion jeans, who is driving the Scion, and who is walking
with iPod ear buds as a fashion statement? Thus, it is the media, and it
is the society as a whole, the culture, the world around us, and what we
see on the streets we are roaming—these are the sources of our desires.
Marketing is a part of this environment, no more, and no less.
The tattoo is already inside you!
Let us look at it another way. Consider how many products are
introduced in a typical year, and how many of them become abysmal
failures. With all the marketing prowess behind them, marketers just
can’t convince enough number of consumers to part with their money
to buy those products. And then there is the battle of the brands. In
clothing, there is Kenneth Cole, and there is Tommy Hilfiger. Open
any issue of GQ or Esquire and you can find advertisements for both.
Why, then, do you buy one brand and not the other? There is a very
simple reason: Each brand makes a certain brand promise, each projects
a certain image, each fits a certain consumer’s inner self-image, and the
consumer buys that which speaks to him or her. To other marketers,
consumers vote “No”—with their wallets and purses. Yes, consumers
respond to advertising, to marketing, but only to the brand and only to

The Tattoo is already inside
you!
This consumer, Victor
Strunk, used to sixth-sense
extra-terrestrial characters
protecting him from dangers
both from outside and from
within, got them etched on
his skin.


15

I

Introduction

the marketer that in fact responds first to what is within the consumer already. As one tattoo artist, describing how he helps his clients choose a design, put it: “The tattoo is already
within the consumer; all I do is bring it out for the world to see!”7
Below, we summarize the arguments on the two sides of this debate.
REASONS FOR:

REASONS AGAINST:

1. What consumers really need (for survival) are
just the basics (e.g., food, clothing, shelter). As
to all other products, consumers come to believe
they need them because marketers tell them so.

1. To limit consumer needs to basic survival is to
limit consumers to mere biological beings. As
social and psychological beings, their social and
psychological needs are just as important.

2. Marketers create new products. Until then,
consumers manage with whatever is available.
By creating new products, marketers created consumer needs for those products.

2. Products are not needs, so creating products
cannot equal creating needs. Products are solutions to needs, which must already exist in consumers.

3. Marketers package products and create messages that lure consumers. By themselves, many
of the products would not have attracted consumers.

3. Many products fail despite heavy marketing.
Thus, not marketing but the product’s benefits
(including social and psychological benefits)
cause consumers to want them.

4. Marketers flood the media with commercials
and deals; exposed to a barrage of commercial
messages day-in and day-out, it is natural for consumers to succumb.

4. Consumers don’t really trust marketers anyway. Rather, their product choices are based on
advice from independent sources and influence
from peers.

So now, dear reader, you must decide which side you are on.

Seeing the Future First: Meeting Consumers’ Latent Needs
Consider the telephone. It is a miracle. It was invented in 1876. Suddenly, two persons continents apart could talk to each other. Since then, the technology experts in phone
companies have upgraded the device over the years, improving sound fidelity and adding
new features such as pulse tone, and, later, speed dial, memory, and muting. But their
gaze had for long remained focused on the telephone device itself. And while they kept
in mind the consumer need the device served, that need seems to have been understood
in its most obvious form: the need to talk to someone not within hearing range. They
did not look deeper; it was assumed, inadvertently, that whenever someone wanted to
talk to a distant person, that other person would be available at that location and at that
time, and that he or she would want to talk to the caller, without knowledge of who was
calling. Furthermore, it was assumed that the two would speak the same language! After
all, it was not until 1971 that the answering machine was invented.8 And it was not until
1987 that caller ID was first offered to consumers.9 And finally, technology experts are
only now building automatic, built-in translation software. It took more than a hundred
years to address these telephone-related consumer needs. For nearly a century, scientists
and marketers had failed to recognize these communication needs of consumers. No one
had bothered to look deeper.

Eva Denmark
Tools Design

Marketing Is All About Satisfying a Consumer Need

16

1


CONSUMER BEHAVIOR

Consider some other products to see if they create a new need, or, merely, albeit admirably, satisfy a latent need of consumers.10
Self-watering Flower Pot The pot has two chambers; the lower half is filled with
water; a wick from the top half, which contains soil, reaches out to the bottom chamber.
Would you want to buy it? If yes, that is because the moment you saw it, you recognized
it as the perfect solution to a latent need—the challenge of taking care of plants while on
vacation. If not, then no amount of marketing effort will make you buy it.

MyVu MyVu is a video eyewear system, equipped with a patented optical system
(called SolidOptex®). It connects to your iPod and to other video source devices, and gives
you a hands-free, full-screen, private viewing experience. Thus, you can watch your videos
on the train, plane, or bus, in the mall, at the coffee shop, or even while standing in line to
buy the tickets to the next Broadway show. And it looks high tech yet fashionably styled.
Hug Shirt It has wearable electronics. It enables a person to send you a hug from far
away. Here is how it works: It has two high-tech components, embedded in the fabric:
(1) sensors that can sense the strength of the touch, skin warmth, and the heart-beat of
the sender at a distance; and (2) actuators that can reproduce the same sensations for the
wearer. Yes, now you can hug your teacher everyday! (Check it out at the London-based
design company, cutecircuit.com.)

MyVu is a video eyewear

Word Lens An app for iPhone 4S. Imagine that you are in a foreign country looking at a road sign in a language you can’t read. Just activate this app and flash your phone
camera, and, voilà, instantly the sign text is translated into English or Spanish.
Silent Dating This concept in social networking was invented a few years ago. You
meet people in a group, but you are not allowed to talk at all. You are provided with a
generous supply of index cards and a pen. Scribble a message on one and slide it over to the
other person. Then wait for him/her to doodle back. Says one recent, happy, silent dater:
“I haven’t had this much fun since passing notes in school.” Silent Dating parties are held
in such cities as New York, San Francisco, Washington D.C., London, and even Beijing.
Check out the schedule for the next party at www.quietparty.com.

Will You Buy These Products?
Now, let us consider briefly what role marketing plays (or will play) for these products. Consider the Hug Shirt. Okay, “hugging your teacher” was the wrong pitch. How
about hugging your significant others, when you are away from home? If the wearable vest
doesn’t cost too much, some of us just might buy it. But, and this is an important “but,”
only if the sensations are realistic and only if we can bring ourselves to believe that the hug
we just experienced felt just as if the other person were in “touching proximity.” If not, no
amount of marketing prowess will get us to part with our money. The truth is, many of us
can’t wait to try it on. At least as a novelty experience, initially, and then, later, to use it as
a real emo-interface with a loved one far away.
What is your response to MyVu—the private-viewing experience eyewear that lets
you watch a video in the upper part of your visual field, while in the rest of your visual
field you scan your surroundings? Consumers who are already into watching videos on
their mobile screens, spend a lot of time away from home and office, and like the idea of
being able to watch their favorite videos even when in public places while glancing at the
surroundings (while keeping tack of the moving checkout line, for example) will embrace
it readily; others will wait until they have determined if this ability is important to them.
What about the iPhone app, Word Lens? Introduced in December 2010 for Android
phones and later for iPhone 4 and 4S, it has, at this writing (March 2012), become one of
the most sought-after apps for travelers.
Silent dating—It was a “hot” idea once, but now it is limited to a niche segment. For
this segment, that other dating scene, with loud music and the noise of a thousand conversations, has been utterly frustrating for any intelligent interaction. Silent Dating is also
a breath of fresh air for the tongue-tied among that segment. And it is a low-risk venture.
More than anything else, it is, for some, a new, alluring sport through which to play out
their spontaneity. Those of us who have this mindset of constant exploration will find it a
value; those who do not, will not, marketing or no marketing.
Will you buy any of these products? Yes or no, whatever your answer, it is your answer—the outcome of your determining if they will meet any of your needs. Would a
million-dollar ad campaign make you buy it? No, a million-dollar ad campaign will make
you, at most and if at all, reassess if it would satisfy your needs. That is all.

Hug Shirt
from CuteCircuit

That’s a loud shirt
for a quiet party.
Yes, I am bilingual—
English and Silence!
Notes from Silent Daters
(www.quietparty.com)


17

I

Introduction

L a cafeter í a
1 0 mide esta
manera

+

Word
Lens

=

C offee S hop
1 0 meters
this way

As these examples show, rather than creating needs in consumers, what marketing
does best is invent new solutions to meet consumers’ needs (overt or latent), and communicate the new and enhanced value these new products bring to relevant segments of
consumers.

Creating Consumer Value:
The Supreme Purpose of Business
What is the purpose of marketing? For that matter, what is the basic purpose of business itself? To make money? “Wrong,” says Harvard professor Theodore Leavitt, who explains this by an analogy: all humans have to breathe to survive, but breathing is not their
purpose. Likewise, making money cannot be called the purpose of business.11 The basic
purpose has to relate to why society allows businesses to exist. It is, says Peter F. Drucker,
one of the world’s leading management gurus, “to create a satisfied customer.”12
Marketing does not create a need. It creates a satisfied consumer. And in striving
to do so, its practitioners—marketers—serve a very important role for consumers, and
for society. They create products they hope will satisfy the latent needs of some segment
of consumers; or they commercialize the inventions of inventors, adapting them to suit
consumer needs and tastes. They bring, too, art, culture, aesthetics, design, and creativity
to morph and sculpt a socio-cultural identity for a given product—the so-called brand
image, the one they hope will resonate with the target consumer. However, creating that
brand image in the marketer’s own image will bring all that multi-million dollar effort and
all that marketing prowess to naught (see the story of OK Soda in Chapter 7); creating
it, instead, as they should, in the target consumer’s image will bring the admiration (and
economic votes; i.e., dollars or Euros or yen) of its target consumers.
To create a product in the consumer’s image, marketers must labor to understand
consumers’ needs and wants, desires and motives, self-concepts and identities; they must
then craft their products so that they solve consumers’ relevant problems and fulfill their
dreams. Marketers must labor, as well, to decide what price will make for a good value for
MyVu
the consumer and still bring the firm fair economic returns on its investment. Marketing
Video
brings the product to consumers’ doorsteps, or to the Web portals on their cell phone
Eyewear
screens. And it creates the physical, social, and cultural milieu that smooths the product
acquisition process for consumers and that invites, enables, and enhances consumers’ consumption experiences. The art of doing this right is the profession of marketing. This is, in
effect, the supreme mission of marketing.
How do you fulfill this mission? How do you create a satisfied customer? How else
but by studying consumers, by analyzing how a consumer thinks, feels, and acts in the
marketplace and how he or she connects products and specific brands to his or her needs
and aspirations. By seeing the “proverbial ‘tattoo’ that is already within the consumer,” so
to speak. That is why understanding consumer behavior is of paramount importance to
the success of all organizations, commercial or social.

t HE AGE OF THE EMPOWERED CONSUMER

1

Understanding consumer behavior has always been an essential prerequisite for business success. Throughout the 100-year-history of marketing in the 20th century, marketers
were in control. John Wanamaker’s Philadelphia store (now Macy’s), opened in 1876, was
the first store operated with what is now known as the marketing concept. The first marketing course was offered in 1905 by the University of Pennsylvania, and radio advertising
(the first truly “mass” medium) began in 1922.13 Consumers had the option of buying or
not buying the products they were offered, but little else. But since the beginning of the
21st century, the introduction of Web 2.0 has changed all that. Individual consumers can
now create brand messages on their own and broadcast them—see any number of “sucks.
com” Web sites (e.g., Dell Sucks, Netflix Sucks, etc.). And with social media, consumers
can now connect and band together by the millions. They now have access to media and
they now have the strength of numbers. The 21st century is the Age of the Empowered
Consumer. This (new) Age, in turn, has multiple facets; below is a list of four new developments in marketing and in the consumer mindset.
1. The age of co-creation and personalization
2. The age of the authentic and unique consumption experience
3. The age of collaborative consumption
4. The age of the consumer in the driver’s seat

DONUTS FOR YOUR TASTE BUDS; GRASS FOR YOUR FEET.
LOVE FROM YOUR FAVORITE MARKETER

If you were in London during the Summer of 2009, you would have
witnessed a strange product on the feet of many people walking in
London: Flip-flops with live grass growing on them!
just prior to Summer 2009, Krispy Kreme Company had surveyed over
1000 UK workers. Of the surveyed consumers, 72% said that they felt seriously stressed on
a daily basis. And 81% of them said, further, that a simple walk through a park made them
feel instantly relaxed. The problem was that, for these urban dwellers, a park was not
nearby.
So Krispy Kreme created the world’s first grass flip-flops. The el-fresco flip-flops take up
to three weeks to grow. When fully grown, each pair is covered with 10,000 blades of grass.
If watered regularly, the grass will last the whole SUMMER!
During the summer in 2009, the company stores distributed the grass
slippers to thousands of workers in London.
Krispy Kreme is not getting into the
shoe business, , mind you. It gives
away the grass flip-flops free. Nor is
the product connected in any way to
its usual fare—donuts. Except in
that both products bring consumers
comfort and joy. Explains Katie
McDermott of Krispy Kreme:
We cheer people up every day with our one-of-a-kind doughnuts,
but hopefully by providing them with their own part of park life too
we’ll be able to bring a sense of natural calm to stressed-out workers.
Welcome to the age of Romancing the Consumer—in this case, one sole at a time!
Powered

18

CONSUMER BEHAVIOR

M
O

by

MY CB BOOK


19

I

Introduction

1. THE AGE OF CO-CREATION and PERSONALIZATION
Arianna Osborne’s experience with Keds is being replicated by millions of consumers
around the world, all enabled by the new Internet technologies.14
NikeiD In a manner similar to that found on Keds, on NikeiD, you can design your
own Nike shoes, both on its Website, and now also in NikeiD Studios in select cities in
Europe, China, and USA, where design consultants are also available. Design them from
scratch, or you can customize classic models such as Nike Dunk, Nike SHOX, and Nike
Air Max.
Threadless Threadless invites anyone to design a T-shirt and submit it for competition. The consumer entries are posted on the company’s Web site for one week for the site
visitors to vote. The highest scoring ideas are accepted for production. The original designers get a share of profits . The company has nurtured a community of a million creators.
Chocri On the Website of Chocri, a German chocolate maker, you can create your
own chocolate bar. You choose one of the bases (dark, milk, or white) and select one of
over 100 toppings ranging from chili to candied rose petals. The company boasts over 27
billion combinations!
Jones Soda Jones Soda enables you to buy your Jones Soda with a customized
label that you create, with any photo and text you want. Choose one of the eight flavors (e.g., Blue Bubblegum, Fufu Berry, etc.), and upload your photo and a message; For
$29.99, a 12-pack of your personalized bottles of Jones Soda will be shipped to you.
Heinz In October 2011, Heinz in the U.K. invited its Facebook fans to send personalized soup cans (inscribed with a “Get Well Soon” phrase) to their ailing friends and
family members. Each consumer had the option of adding the recipient’s name and his/her
own name. The company would send the personalized soup cans for £1.99 per can, delivered in 3-4 days. (See Facebook/HeinzSoupUK.)
Zazzle On Zazzle.com, you can customize 49 products: clothing (T-shirts, hoodies,
hats, etc.), accessories (ties, necklaces, bags, etc.), cards and postage, office products, home
products, art posters, and cases for your iPhones, iPads, Blackberrys, and Samsung Galaxy
S. Prices are reasonable (hats: $14.95; men’s ties: $29.95; greeting cards: $2.95; iPad cases:
$49.95 and up, etc.), and the customized items are shipped within 24 hours!
Launched in 2005, Zazzle (based in Redwood City, California) has a fully localized
Web site available in 17 countries and has shipped products to customers in 224 countries.
This grand daddy of all “design your own products” e-merchants boasts 20 million unique
visitors and claims to be creating 500,000 unique products every day (cumulatively, 86
million products so far). Its mission: “To enable every custom, on-demand product in the
world on our platform… Providing you with fun and easy tools to make anything you
own.” Anything you own!

2. THE AGE OF The AUTHENTIC AND UNIQUE
CONSUMPTION EXPERIENCE
GrubWithUs Founded in Chicago in 2010, this Web company organizes meals in
select restaurants around groups of interest (e.g., photography, Veggie Grubbers, Yoga).
After you register and choose your city (currently available in eight U.S. cities—Boston,
Boulder, Chicago, Los Angeles, New York, San Francisco, Seattle, and Washington, D.C.),
you are sent weekly emails announcing the events in your city. Interested in the Arts? On
November 17, 2011, you could have dined with a group of artists at The Parthenon in
Chicago (price $22). Or if you are a techie, on November 16, 2011, you could have dined
with other techies on at Tremont 647, South End, Boston.
Lite Graffiti Elena C. of San Francisco offers what she calls a “light graffiti experience” at the UC Berkeley Campus. She explains “This involves capturing the light trails
created by your flashlights; the camera captures what the eye cannot see so the results are
amazing, even magical.” She posts the offer on Vayable.com, a Web site that connects pre-

20

CONSUMER BEHAVIOR

1


cisely this kind of unique-experience crafters with experience-seekers. For $25 a person for
up to 8 persons in the group, Elena will bring the flashlights and a digital camera. And she
will give you the digital pictures of the graffiti you create.
Java Trip On the same Vayable.com site, London resident Kardelen K. offers a coffee tasting tour of cafes in London. Her pitch: “I love coffee and I have been discovering
the coffee shops in London for two years.” You get to visit these cafes, and you get the
inside skinny on the coffee beans, their origins, and the brewing processes involved. This
three-hour experience will cost you $50 for a group of up to 6 people.

3. THE AGE OF COLLABORATIVE CONSUMPTION
Collaborative consumption refers to the practice of consumers coming together
to consume a product without necessitating each consumer to own the product in its
entirety. This practice is not new—roommates borrowing each other’s clothes (or sports
equipment, books, colognes, or leftover food!) have engaged in this practice for as long
as shared rooming has existed. Only, now the practice has a new twist, thanks to the new
means of consumer-to-consumer connectivity enabled by Web 2.0 and by social media.
Consumers are connecting, these days, with strangers (sometimes via intermediary firms)
to share the products they own—sometimes through barter or for a nominal price, but
often at a good-value price. This trend is also known as peer-to-peer commerce.

Piccadilly Circus, London

Air BnB (Airbnb.com) This San Francisco-based start-up connects travelers who
need a place to sleep with people who have a room to spare in their homes. The company
calls its Web site, the eBay for space. Space owners are able to put their spare rooms to
use, and travelers get access to distinctive spaces and the company of the hosts. The listed
properties span some 20,000 cities in 192 countries. As of December 2011, the company
boasts having booked 2 million nights!
Getaround This California-based company connects people who are willing to
rent their cars to other consumers needing to rent one. On a recent visit (November 19,
2011), one member consumer in South Beach, California was offering his Mini Cooper for $7.50 an hour, and in Sunnyvale, CA, for $50 an hour, you could have rented a
Tesla Roadster! Here is how the company describes its mission: “Car owners invest huge
amounts of time and money into an asset they barely use. Cars are driven only about 8%
of the time, while potential drivers walk past block after block of underutilized cars. We
connect the dots…to help people get around… We want to empower people to travel
more efficiently and cause a shift from personal to shared transport.”

4. THE AGE of THE CONSUMER In the DRIVER’S SEAT
Zaarly This U.S. company, launched in May 2011, is eBay in reverse. Consumers
post what they want, when, and how much they are willing to pay for it. Then other consumers (as well as conventional sellers) offer to fulfill the consumers’ needs. The notable
feature is the kinds and varieties of needs that you can post: baby-sitting services, a wedding singer, a chance to ride in a sports car, interior design advice, and the like. You can
post your order on the Web and also on your mobile with an app; no need to tell it where
you are—the “hyper-local” app already knows. Zaarly is a first, in that it is buyer-driven,
and delivers in the “here and now” (e.g., want coffee delivered in an hour). The company
boasts over 9.1 million posts in 200 U .S. cities (as of November 2011). And now its name
is also a verb: its Web site offers a step-by-step guide, “How to Zaarly”!

Request anything

Zaarly

David vs. Goliath On October 1, 2011, Molly Katchpole, a 22-year old Roger
Williams University student, posted a petition on Change.org against Bank of America’s
proposed $5-a-month debit card fee. By the month’s end, more than 300,000 people had
signed the petition. And more than 20,000 people had pledged to close their Bank of
America checking accounts. On November 1, the Big Bank aborted the plan!

21

Introduction

ENLIGHTENED MARKETERS: RESPONDING TO EMPOWERED CONSUMERS

Rather than feeling threatened by these trends, enlightened marketers are embracing
the empowered consumer. In fact some firms are enabling, advancing, and celebrating the
new consumer trends. Many of these trends have become possible due to the pioneering
efforts of businesses. Many companies that enable these services are new ventures, and
some were started by consumers who once faced the problem their businesses now solve.
Keds and NikeiD exemplify established companies that pioneered the co-creation processes. Zazzle is a new company conceived entirely to enable mass-customization—producing customized products for a “segment size of one” at close to the cost of mass production.
Other companies are finding innovative ways of engaging consumers’ hearts and minds in
their products and in their marketing endeavors:
Maxwell House In July 2011, Maxwell House Canada opened its second Optimism Café in Toronto (the first was in Montreal), giving away a free cup of coffee throughout the month of July. As part of its Brew Some Good campaign, it launched its Is Your
Cup Half Full or Half Empty Optimism campaign. It invited consumers to take an optimism break and post a video clip or a letter on its Web site. Among the posted videos
were these two:

•

It is a beautiful day.

But I can’t see it!

•

Dave Tally, a homeless person, found $3,300, but returned it to the owner. Inspired by his honesty, the
community offered help and now he is not homeless
anymore.
A blind person sat on a sidewalk with a cardboard
sign that read “I’m blind. Please help.” Passersby occasionally dropped a few small coins. Then a woman
came by and wrote something on the other side of
the cardboard. For the rest of the day, people came by
and emptied their pockets of change. The woman had
changed the sign to read: “It is a beautiful day. But I
can’t see it!”

Coke Australia Starting in September 2011, in time for Christmas 2011, CocaCola Australia introduced Coke bottles inscribed with the first names of people. These were
not names of any specific persons, but rather merely common first names (e.g., Adrian,
Kate, Matt, etc.). The company used 150 common names and printed them on millions
of bottles. The expectation was that consumers would eagerly seek out not only their own
names but also the names of their friends, and would then enjoy consuming the Coke out
of these bottles together. The campaign was named Share a Coke.
It is only a matter of a few years (a single-digit number of years) before, to be successful, most marketers will have to remake themselves in the image of the newly empowered
consumer. Like Keds and Nike and Zazzle they will have to find ways of mass customizing their offerings; like Jones Soda and Heinz they will have to offer personalization;
like GrubWithUS and Vayable, they will have to engineer authentic, unique, experiential
consumption offerings. Like AirBnB and Getaround, they will have to enable productsharing among consumers and offer their consumers access to the products without having to own the product. And like Canada’s Maxwell House and Coke Australia, they will
have to develop innovative marketing programs that connect their products to consumers’ thoughts and feelings about their brand consumption experience. To prepare for that
future, a future already upon us, it is imperative that we study how humans behave as
consumers in their pursuit of happiness in the marketplace.

22

CONSUMER BEHAVIOR

CONSUMER BEHAVIOR AS A FIELD OF STUDY
When we seek to understand consumer behavior, we seek to understand, basically,
human behavior, albeit in connection with the world of goods. As an applied field of study,
it draws on all four fields of basic social sciences dedicated to the study of human behavior; namely, anthropology, sociology, economics, and psychology. You already know what
these fields are, but here is a quick refresher15:
Anthropology is the study of humankind in its habitat. It examines humankind’s historic development—how people came to live the way they do. It is a study of human in
nature—how she/he survives and adapts and how a culture develops to help her/him live
and adapt.
Sociology is the study of social systems—groups, organizations, and societies. It examines their structure and how individuals relate to one another in these social groups. It
includes the study of social institutions, such as family, church, school, etc., and the part
they play in society and in consumers’ lives.
Economics is the study of goods—how they are produced, distributed, and consumed.
As such it also deals with how societies and individuals allocate their resources on what to
produce and what to buy. Economics helps us understand how we spend money, why we
save it, and how to gain maximum utility from every transaction.
Psychology is the study of the human mind and the mental processes that influence a
person’s behavior. Here we study how we develop perceptions, how we learn, how we form
attitudes, and what motivations drive our behavior.
As we cover various consumer behavior topics, we will constantly draw on related
topics in these source disciplines, define the key concepts they use, and then go on to apply
them to the behavior of humans as consumers.
Consider our shopper in the mall, Jackie, for example (see the Interview). We may
find that Jackie has a world-view that is either perfectly normal or perfectly strange—depending on our own world-views. If our cultures and therefore our world-views are different from Jackie’s, then we may find it a little strange that he thinks that people can look at
his soul through his clothes. He also has a language (a dialect, actually) that is not standard
English—in his culture, “brotha” does not mean one born of the same parents. An appreciation of these traits of his requires us to draw on anthropology, the study of man and
his culture. Of course, his prime goal in buying clothes is to make himself attractive. Here
This is Vilkas, a kinetic dress. It has a mind of
its own. The kinetic hemline rises (over a 30
second interval) about 2 inches to reveal the
knee and upper thigh and then falls in a few
minutes. And it does so autonomously—on its
own. You cannot control it, except by manually
pulling it down. States the company’s
official description: “This initiates a physical
conversation between the wearer and the
garment, as they fight over control of the
body’s real estate.“
(Research Director: Joanna Berzowska)

If this has caught your fancy, then it brings
you value; otherwise, it does not. Go ahead, make
it a conversation starter. Play your playful self!

(Check it out at www.xslabs.net.)

If you think about it, life is about experiences.
Products that enable, shape, embellish, and
enrich those experiences become endearing to
consumers, marketing or no marketing. Life as a
human and as a consumer alike is an experiential
journey. So is, as we will tell you at the end of this
chapter, reading about consumer behavior, in this
book. Enjoy the journey. Model: Hanna Soder Photos: Shermine Sawalha

1

Anthropology

Sociology

Economics

Psychology

© XS Labs, Joanna Berzowska, 2005
(Used with permission.)

I


23

I

Introduction


we see the mysterious but very real influence of significant others on his choice of clothes.
Sociology helps us understand which other groups may have influenced his choices as a
consumer. Also he is worried about not “maxing out” his credit card; so no matter how
much he likes clothes (and other things), he is going to watch his money and make sure he
gets good value for it. These are considerations that economics helps us understand.
There are other mental processes going on in Jackie’s mind that we will need to understand: how did Jackie come to associate Fubu and Sean John with the kind of image he
wants for himself? How is it that he equates his clothes with his soul? And why is it that
he claims not to pay attention to advertising and not be influenced by it, even though he
declares this accomplishment by using advertising’s own slogan, I “obey my own thirst”?
Psychology helps us understand these processes of the consumer’s mind. Anthropology, sociology, economics, and psychology—all blended into one—that is the multidisciplinary
study of consumer behavior.

WHO SHOULD STUDY CONSUMER BEHAVIOR?

Marketers

Social
Organizations
Public
Policy
makers

Consumers

24

CONSUMER BEHAVIOR

Consumers Finally, a study of consumer behavior should be of interest (surprise!) to
consumers themselves. We spend many of our waking hours and so much of our money
contemplating and experiencing consumption that understanding what drives that behavior can be an interesting, even an eye-opening exercise. The good thing about this
book and this subject as a field of study is that we can actually relate every topic to our
own personal lives. By reading this book, you will understand your motives for buying or
not buying something. You will learn the bases of your perceptions and misperceptions
about products and brands. You will realize how our brains are imperfect computers, and
yet how they process all product information reasonably well. You will understand, too,
how you might be influenced by others and yet continue to believe that your marketplace
choices are your own. And, you will recognize how, through consumption, you construct
your own identity—connected with some groups but purposely distanced from others.

1

Now the fun begins. We give you, so to speak, a universal template with a collage of
mirrors of different shapes and sizes, and you can find for yourself which mirror reflects
you the best. Here is where it becomes a learning experience. Or experiential learning. It is
an expedition of discovery—about yourself and about the world of consumers. Welcome
to the expedition!

There are four group of people who should be interested in a study of consumer behavior and can benefit from understanding consumer behavior. They are (1) marketers, (2)
social organizations, (3) public policy makers, and (4) consumers themselves.
Marketers Marketers are the people who connect a business (or organization) to consumers. They present the product and its message to consumers, hoping consumers will
find it a source of satisfaction of their needs. And, equally important, marketers interpret
consumer needs and preferences for the benefit of their own organizations so other departments in their firms can design and make products that will satisfy those consumer needs.
To play this role effectively, all marketers need to understand consumer psychology and
consumer behavior.
Social Organizations The study of consumer behavior is just as useful to organizations whose goals are not to make money but rather to promote public well-being. Indeed,
everyone is a marketer. Political parties market candidates, and they should study voter
preferences and views. The Red Cross and other agencies seeking volunteers and money
are marketers offering “good feelings” in exchange, and they need to understand their
donors’ psychology. Arts organizations, educational institutions, social and human services agencies, and volunteer social campaign organizers such as Mothers Against Drunk
Driving (MADD), all need to understand their consumers—donors, patrons, art aficionados, irresponsible consumers. Even religion is not beyond marketing; an understanding
of consumer behavior can help religious organizations reach their goals and better serve
their followers.
Public Policy Makers The third group with an interest in consumer behavior consists
of public policy makers. They are concerned, as they should be, with protecting the consumer both from marketers’ potentially deceptive practices and from consumers’ own irrational consumption behaviors. While it always behooves marketers to act in the consumer’s
interest, sometimes marketers are tempted to engage in opportunistic practices that compromise consumers’ interests. To prevent this, lawmakers make laws, and various agencies
of the government enforce those laws, monitoring business practices. But in order for these
agencies to know when a practice is harmful to consumers, it has to know how consumers
interpret various marketing programs. For example, the Federal Trade Commission (FTC)
recently sued QVC (a cable shopping network) for running infomercials promoting its
dieting and slimming products for women. The FTC charged that the ads misled consumers.16 For this charge to have legs, it would have to be based on an understanding of the
psychology of perception and exactly what constitutes consumer deception.
Public policy makers are also concerned with protecting consumers from their own
unhealthy behaviors. Thus, the government mandates warnings in all tobacco advertising,
for example, but it must study whether anyone heeds such warnings, and whether increasing the size of lettering (as it recently required) would help. Thus, a study of consumer behavior is imperative also for public policy makers concerned with consumer protection.

An Experiential Journey

B log
Mongolian Cow Sour Yogurt Super Girl's Voice
The Age of the Empowered Consumer

I

n 2005, Li Yu Chun became the winner of the Chinese version of American Idolthe show named Mongolian Cow Sour Yogurt Super Girl's Voice. This “Super Girl” was
not, according to some judges of the show, the most outstanding talent on the show.
And had it been left to judges, or any other music connoisseur, she would have been
eliminated long before the final round. It was not her singing that saved her. Rather,
it was her attitude that earned her millions of fans across the country—the same
attitude that irked some of the establishment.

Throughout the show, Li wore jeans and a simple black top. Hair unkempt, no
lipstick, no makeup. In most of the Western countries, this would pass as a mere “tomboyish” persona. But in China, it was a major sociological and cultural experiment.
Chinese girls are supposed to look and act like, well, girls. And Li, then 21, was defying
an age-old gender role (for definition, see Chapter 14). While conservative elders
balked, Li‛s defiant attitude touched a chord among the country‛s youth. At the show‛s
climax, some 400 million Chinese stayed glued to their TV sets. And, exercising their
rarely granted democratic privilege, they texted-in their votes for Li, in millions,
crowning her the “Chinese Singing Idol.”
This story demonstrates, at once, the capabilities of technology (the Internet and
cell phones) to transfer power to consumers, and the power of market offerings that
capture and reflect, even if accidently, consumers‛ inner moorings. Li Yu Chun did not
try to persuade or to sway her audience. She wears the crown for singing, but she
owes her claim to fame to an iconoclastic persona hitherto merely dreamed of,
silently, by millions of Chinese youth. She gave voice to that silent dream, bringing out
the consumers‛ inner tattoo, so to speak. That is why consumers voted for her, in
millions. Just as they do in the marketplace, with their dollars.

Market offerings (products) are not the progenitors of consumer needs—unless
we use the term “need” and “product” as synonyms, as in, “I need coffee, therefore
coffee is my need.” They are, rather, the solutions to consumer needs, latent or overt.
Products succeed only when they come as response to consumer needs, desires, yearnings. Marketing‛s task is to cast its offerings in the consumers‛ image, not vice versa.
That truth requires that we understand Consumer Behavior.

MY CB BOOK .COM


25

I

Introduction


S U MMARY
We began this introductory chapter with a basic fact:
We spend most of our waking hours as consumers. We
are consumers 24/7! This is because we defined consumer
behavior as not just the act of buying and consuming but
also as all of the mental and physical activities we undertake when we contemplate and experience products—an
ongoing process that begins much before we actually
acquire and consume a product, and continues, in our
memories, long afterwards.
Taking the viewpoint of consumers 24/7, we portrayed marketplace products as solutions to consumer
needs and wants. We then defined need as a discomforting condition, whether physiological or psychological,
and want as a desire for specific solutions to that condition. We next identified three essentials that frame all
consumer behavior: exchange, resources, and value. Consumers’ marketplace activities are basically an exchange
with marketers, where consumers acquire products and
part with their money. Money is one of the five resources
consumers possess, the other four being time, knowledge
and skills, body and physical energy, and social capital. In
the exchange, what consumers seek first, foremost, and
always is value.
Anthropology
Consumer
Consumer Behavior
Ego/Identity value

We defined value as the set of net benefits consumers
receive from an exchange. And we identified four broad
categories of value: utilitarian, social, ego, and recreational (i.e., hedonic), captured in the acronym USER. We
then raised a question, “Does marketing create consumer
needs?” Marketing merely presents products and brings
their benefits to consumers’ attention, and consumers
pick and choose what meets their needs. Satisfying a consumer need is the very purpose of business. And in order
to do just that, marketers must, we argue, study consumer
behavior. The study of consumer behavior is built upon
the core disciplines of anthropology, sociology, psychology, and economics. And, besides marketers, social organizations and public policy agents too must study it. Lastly,
consumers themselves should study it so they can understand their own consumer behavior. This book is directed
at all “students” of consumer behavior—and who among
us is not a student in the school of life? Our gain from
reading the book is two-fold—first, we reflect on and understand our own behavior as consumers; and second, we
become knowledgeable about how, as marketers, we must
fashion our offerings so as to appeal to consumers.

DON’T WEAR YOUR STOCKINGS! SPRAY THEM

S

ay goodbye to all those runs in your stockings. And in hot summer, no more need to suffer
the confining fabric garment on your legs. Instead of wearing stockings made of fabric, now
all you do is hold a can and spray the stockings directly on your legs. The can sprays silk powder and
the powder coating makes it look like you are wearing a panty hose.
This innovative product is marketed
in Japan by C.C. Medico CO. Ltd of Japan. Japanese women have bought it in
droves. And they wear it with enthusiasm.
The sprayed-on stockings last a day.
Don’t worry, they won’t wash away in
rain—they are waterproof. Of course, you
can wash them off with soap and a loofah.
You can buy it at beauty.com (search
Air stocking). It comes in three colors:
Terra-cotta, natural, and bronze. Alas,
for the fish-net look, you will have to stay
with the real thing. But in Air Stockings,
you get to show your pedicured toes.

K ey T erms

Exchange
Hedonic value
Marketers
Mental activities

Need
Physical activities
Product
Psychology

Y our

Sociology
Utilitarian value
Value
Want

A Southwest flight attendant who tried it on a flight had this to say,

“ I haven’t sweated it off. It hasn’t rubbed off on my clothes or on the seat.”
“I would rather wear this than a hose; it makes my skin more smooth.”*

T urn

THINK+Apply
1. Give an example from your own life in which you
exchanged one resource for the other four.
2. Give an example of each exchange value you have
sought in recent marketplace exchanges.
3. Some accuse marketing of creating consumer needs,
making us buy things we did not need. Do you agree
or disagree? Defend your answer.
CONSUMER BEHAVIOR

Recreation value
Resource
Social capital
Social value

Said another:

REVIEW+Rewind
1. What is consumer behavior? Isn’t it basically people
buying products? Why or why not?
2. How are needs and wants defined here? Are these definitions different from how we use the words need and
wants in everyday language? Which approach to defining these is better and why?
3. What are the five resources all consumers have?
4. What is the USER model of consumer value?
5. Who should study Consumer Behavior and why?

26

CASE 1

1

A Must Do

1. Write a short memo to yourself, evangelizing how
this book is going to benefit you personally in your
role as (a) a consumer, and (b) a marketing professional (current or future).

PRACTICE+Experience
1. Write a journal of your own consumer behavior of
the past one week. Record one episode each for when
you were an economic creature, a problem solver, a
computer, a shopper, and (here comes your favorite
part) a reveler.
2. Find four advertisements that offer, individually, each
of the four values of the USER model, and explain
your selections.
3. Interview a consumer (similar to the interview of
Jackie in the chapter), and then identify the four
values of the USER model in his or her consumer
behavior. (Direct your topics so that the interview reveals all four values.)

Check it out at www.airstockings.com
DISCUSSION QUESTIONS
1. If women find this product appealing, 3. The product has yet to gain popularity in USA,
does it not show that marketing
Canada, UK, and other European and Asian
creates new needs in consumers?
countries. Why might its adoption by consumers
Explain.
be slower outside of Japan?
2. Why will women find this product 4. If this product were introduced in your own country,
appealing? Or, why not? Describe
would women adopt it? Why or why not?
the mindset of the prospective
(Perhaps you could interview some women to enrich
consumer.
your understanding.)

Note: We situated this case here as an end-of-chapter case, so as to alert the
reader that cases are included in the book. Actually, this and all other cases
raise multiple issues and apply to more than one chapter. Accordingly, rather than at the end of individual chapters, they are placed as a collective unit
at the end of all 18 chapters.

A Case Study
at the end of
every chapter?

No!


27

I

Introduction


RESEARCHING THE CONSUMER

1

MARKET SEGMENTATION
WHERE MARKETING STRATEGY MEETS CONSUMER RESEARCH

P

erhaps no other concept in marketing is more potent than the concept of segmentation. The core idea is that all consumers are not alike, and that to satisfy individual
consumers, we must bring them market offerings designed to meet their specific needs.
Market segmentation is the process of identifying key differences among the population
of consumers and clustering them into distinct groups corresponding with their different
needs and characteristics. These resulting groups are called market segments.

I

DEAR CONSUMER: MAY WE HANG OUT WITH YOU FOR A WHILE?

L

askerville—a code-named small town outside Chicago, with a population of
8,000, not counting the three or four visitors who slipped in and out of town. You could
see them in the market square, in local bars, at car dealerships, even at the funerals. It was
they who gave the town this code name, and the townspeople didn’t even know it.

n an absolute sense, seldom are any two consumers entirely identical. In this
sense, then, every consumer is a segment unto himself/herself. But many of the differences are minor, and for practical reasons, it is wise to not pay heed to every little difference. We end up grouping consumers, therefore, into broad groups, using grouping criteria that imply significant differences. For example, we could simply group
consumers by their sex, thus treating men and women as two distinct segments.
Or we could cluster all people into brown-eyed and blue-eyed consumers, but this
grouping is unlikely to be of any consequence (except perhaps for the marketers of
eye makeup). Thus, the core purpose of segmentation is to identify consumer groups
whose marketplace behaviors will be significantly different.

I

n this note, we describe various consumer characteristics—both demographic
and psychographic—that serve as bases of segmentation

They were researchers from the Chicago-based Foote, Cone Belding (FCB)

(To read full article, go to page 542 )

advertising agency, whose founder’s name was Albert Lasker. They would cast away
their business suits and don jeans and boots. To mingle with the villagers. Trying to
get a fix on what turns the wheels in small-town U.S.A. What better way to find out
about consumer attitudes, lifestyles, concerns, and mores, than to observe those consumers firsthand in their natural habitat.
QUALITATIVE AND QUANTITATIVE

W

hat the FCB researchers were doing is called participant observation, one of
the many methods of researching the consumer. There are qualitative methods (participant observation is an example), and then there are quantitative research methods.
Okay, answer the following question:

Q. Would you like to read up on consumer research methods now, or
would you rather first read a few substantive chapters on CB?
A. I want to read them now as I am eager to do some CB research projects soon.
B. I want to read the substantive CB concepts first so I may know which
CB concepts to research.
If you answered A, please go to Research Appendix (at the end of the “topic
chapters, p. 532)” ). If you answered B, turn the page to go to Chapter 2.
Incidentally, you have just participated in a quick quantitative survey research!

The readers of this book can be divided into two broad segments, in
terms of their preference for covering this topic:
SEGMENT A desires to read up on a significant application as prelude to
reading various CB concepts and theories.
SEGMENT B believes that it is better to get a good grasp of the CB Concepts
first to fully appreciate this application.

T

o meet the preferences of both these segments, we append this topic
at the end of all of the “topic chapters.” That way, readers may continue reading
about the fascinating concepts of CB in the next and subsequent chapters, right
away. They will also have the freedom to read this application after a few CB topic
chapters, and re-read it later at the end of all of the CB topic chapters.

(To read full article, go to page 532 )

28

CONSUMER BEHAVIOR


29

Intro to Consumer Behavior—An Alternative Narrative

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