[MUSIC] So, let's provide some context before we jump into the theories of consumer behavior. 150, 150. Why is this figure important? Consultants have found that American families buy the same 150 items, which make up as much as 85% of their household needs. This makes it very hard to break into a customer's potential field of purchase. Their consideration set of items that they would buy and use in their household, that's their field of purchase. So the buyer is really high, so this leads to failure. About 75% to 85% of consumer packaged goods and retail goods fail during their first year. And of the remaining products, many of them fail within the second year on the market. Even some products that initially seem destined for success in the first year ended up on the dump heap of failed ideas by year two. Listen to this. Here are some products that actually launched successfully from 2002 to 2008 and they disappeared within two years. You might have heard of some of them and might not have. First Pepsi Edge, M&Ms Mega Chocolate candies, Oral B Brush-ups, Colgate Simply White, Coca Cola C2 and Pepsi Blue. Have you heard of them? If you have, you wouldn't see them in the marketplace right now, because they're no longer manufactured. And these aren't the only products whose manufacturers failed to understand their markets and their potential consumer. Now in 2006, cellphone use was on the rise. Many people are starting to use the cellphones to talk while at restaurants and other public places. You've heard them. We all know about obnoxious person who would be loudly describing their food or the experience they're having would have a restaurant. If you have never heard or seen something like that, then you might be that person. Anyway, getting back to the subject in hand. Anthony Ferrante saw a need for a real life silent chamber. Both to give callers privacy and to prevent their conversations from annoying those around them. So, he developed the cell zone. He launched it at the 2006 restaurant show where it met with rave reviews from restaurant owners. However, at $3,500, very few restaurants ordered this unit. It looked kind of like this cellphone booth. It's an empty phone booth with a glass door. One problem with it, though was it took up space and restaurants weren't willing to give up that square footage. Square footage is valuable in the restaurant business. Other businesses, such as clubs and bars weren’t interested, partly because their clientele was shifting from boys schools to texting the younger clientele who might've visits these places. So for Ferrante tried selling ads on the booths, but that effort failed to take hold his product. His product failed. What Ferrante did not take into account was how consumer behavior might change. In this case, more and more consumers started shifting from voice conversations to text conversations and this brought an end to the noisy neighbor in the restaurant and an end to Ferrante's dream product. However, that moved to texting now gave rise to the rude date opposite you who is always on the phone texting. No longer making calls, but texting while out with you. Anyway, consumer behavior also impacted the sales of the Segway. Consumers were unwilling to adopt the product. Have you've seen those? I've discussed those in the earlier lectures. They didn't want to adopt it, especially since it was designed to replace of all things walking. Go figure. Why do products really fail so often though? As we discussed earlier at least part of the problem is that they have not spent, marketers have not spent the time necessary to understand consumer behavior in the buying process. If a company does not spend the time to understand consumer behavior, then the products they make will fail. Why new products do often fail? Marketers can take steps to reduce the incidence of this failure. The way consumers behave and how they make purchase decisions is certainly complex, but it is predictable. Companies can use marketing models to help understand consumers behavior. We will be discussing some of these theories and models today. And if we understand how consumers behave, then we are better able to predict changes in the behavior and target these groups with marketing efforts to match their behavior. So, what influences consumer behavior? Many factors impact how consumers behave. Let's examine some of them. Some of the major variables that impact are cultural factors, social factors and personal factors. In our next lesson, we will discuss cultural factors. [SOUND]
