CH -1 Consumer Behavior

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Consumer Behavior:Meeting Changes and

Challenges

CHAPTER

ONE


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Learning Objectives

1. To Understand What Consumer Behavior Is and theDifferent Types of Consumers.

2. To Understand the Relationship Between ConsumerBehavior and the Marketing Concept, the SocietalMarketing Concept, as Well as Segmentation, Targeting,and Positioning.

3. To Understand the Relationship Between ConsumerBehavior and Customer Value, Satisfaction, Trust, and

Retention.4. To Understand How New Technologies Are Enabling

Marketers to Better Satisfy the Needs and Wants ofConsumers.

Copyright 2010 Pearson Education, Inc. publishing as Prentice Hall 2Chapter One Slide


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Learning Objectives (continued)

5. To Understand How Marketers Are IncreasinglyAble to Reach Consumers Wherever ConsumersWish to Be Reached.

6. To Understand How the Worlds EconomicCondition Is Leading to Consumption Instabilityand Change.

7. To Understand the Makeup and Composition ofa Model of Consumer Behavior.

8. To Understand the Structure of This Book



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To Which Segment of

Consumers Will This Ad Appeal?

Chapter One Slide 4Copyright 2010 Pearson Education, Inc. publishing as Prentice Hall


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A Segment of Consumers Who are

Environmentally Concerned

Copyright 2010 Pearson Education, Inc. publishing as Prentice Hall Chapter One Slide 5


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Consumer Behavior

The behavior that consumers display in

searching for, purchasing, using, evaluating,

and disposing of products and services thatthey expect will satisfy their needs.

http://www.google.com/prdhp?hl=en&tab=wf


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Two Consumer Entities

Copyright 2010 Pearson Education, Inc. publishing as Prentice Hall 7

Personal Consumer

The individual whobuys goods andservices for his or herown use, forhousehold use, forthe use of a familymember, or for afriend.

OrganizationalConsumer

A business,government agency,or other institution(profit or nonprofit)that buys the goods,services, and/orequipment necessaryfor the organization tofunction.

Chapter One Slide


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Development of the

Marketing Concept


ProductionOrientation

SalesOrientation

MarketingConcept

Chapter One Slide


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Production Orientation

From the 1850s to the late 1920s

Companies focus on production capabilities

Consumer demand exceeded supply Can we produce the product?

Can we produce enough of it?



SalesOrientation

MarketingConcept

Chapter One Slide


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Sales Orientation

From the 1930s to the mid 1950s

Focus on selling

Supply exceeded customer demand Can we sell the product?

Can we charge enough for it?



SalesOrientation

MarketingConcept

Chapter One Slide


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Marketing Concept

1950s to current - Focus on the customer!

Determine the needs and wants of specific

target markets Deliver satisfaction better than competition



SalesOrientation

MarketingConcept

Chapter One Slide


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Marketing Concept

What do customers want?

Can we develop it while they still want it?

How can we keep our customers satisfied? In response to these customers, firms began

to adopt the marketing concept, which

involves:



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Marketing Concept

Focusing on customer needs before

developing the product

Aligning all functions of the company to focuson those needs

Realizing a profit by successfully satisfying

customer needs over the long-term



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Discussion Questions

1. What two companies do

you believe grasp and use

the marketing concept?

2. Why do you believe this?

Copyright 2010 Pearson Education, Inc. publishing as Prentice Hall Chapter One Slide 14


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The Marketing Concept

Consumer Research

Segmentation

Market Targeting

Positioning

The process and tools

used to study consumer

behavior

Copyright 2010 Pearson Education, Inc. publishing as Prentice Hall

Embracing the Marketing

Concept

Chapter One Slide 16
http://www.acrwebsite.org/index.asp


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1. What products that you regularly purchase

are highly segmented?

2. What are the different segments?3. Why is segmentation useful to the marketer

for these products?



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Consumer Research

Segmentation

Market Targeting

Positioning

The selection of one or

more of the segments

identified to pursue


Implementing the

Marketing Concept



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Consumer Research

Segmentation

Market Targeting

Positioning

Developing a distinct image for

the product in the mind of theconsumer

Successful positioning includes:

Communicating the benefits

of the product

Communicating a unique

selling proposition


Implementing the

Marketing Concept



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The Marketing Mix

Product Price

Place Promotion

MarketingMix



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Customer Value, Satisfaction, Trust,

and Retention


Successful Relationships

Customer

value

High levelof

customersatisfaction

Strongsense of

customertrust

Customer

retention

Chapter One Slide


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Customer Value

Customer

Satisfaction

Customer Trust

CustomerRetention

Defined as the ratio between

the customers perceived

benefits and the resources

used to obtain those

benefits

Perceived value is relative

and subjective Developing a value

proposition is critical


Value, Satisfaction,

Trust, and Retention



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How does McDonalds

create value for the

consumer?

How do they

communicate this

value?



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Customer

Value

Customer

Satisfaction

Customer Trust Customer

Retention

The individual's perception

of the performance of the

product or service in

relation to his or her

expectations.

Customer groups based onloyalty include loyalists,

apostles, defectors,

terrorists, hostages, and

mercenariesCopyright 2010 Pearson Education, Inc. publishing as Prentice Hall





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Loyalists: Satisfied customers, who keep purchasing

Apostles: Experiences exceed their expectations,+

ve. Word of mouth.

Defectors: On - ve side. Feel neutral or just likely tostop business.

Consumer Terrists, who spread negative word-of-

mouth. Some dissatisfied customers become



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hostages and stay with the company but are very

unhappy. Stay due to monopoly.

Mercenaries are satisfied but are not really

considered loyal and will move from company tocompany.



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Customer Value

CustomerSatisfaction

Customer Trust

CustomerRetention


Establishing and

maintaining trust is

essential.

Trust is the

foundation for

maintaining a long-standing relationship

with customers.





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Customer Value

CustomerSatisfaction

Customer Trust

CustomerRetention

The objective of providingvalue is to retain highlysatisfied customers.

Loyal customers are key They buy more products

They are less pricesensitive

Servicing them ischeaper

They spread positiveword of mouth






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Top 10 Ranked U.S. Companies in Terms of Consumers

Trust and Respect of Privacy

Table 1.2

Top 10 Companies

American Express

eBay

IBM Amazon

Johnson & Johnson

Hewlett-Packard

U.S. Postal Service

Procter and Gamble

Apple

NationwideCopyright 2010 Pearson Education, Inc. publishing as Prentice Hall Chapter One Slide 26


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Customer Profitability-Focused

Marketing

Tracks costs andrevenues ofindividual consumers

Categorizes theminto tiers based onconsumptionbehavior

A customer pyramidgroups customersinto four tiers


Platinum

Gold

Iron

Lead

Chapter One Slide

THE TRADITIONAL MARKETING CONCEPT VALUE- AND RETENTION-FOCUSED


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Copyright 2010 Pearson Education, Inc. publishing as Prentice HallChapter One Slide 32

THE TRADITIONAL MARKETING CONCEPT VALUE AND RETENTION FOCUSED

MARKETING

Make only what you can sell instead of trying

to sell what you make.

Use technology that enables customers to

customize what you make.

Do not focus on the product; focus on the

need that it satisfies.

Focus on the products perceived value, as well

as the need that it satisfies.

Market products and services that match

customers needs better than competitors

offerings.

Utilize an understanding of customer needs to

develop offerings that customers perceive as

more valuable than competitors offerings.

Research consumer needs and characteristics. Research the levels of profit associated with

various consumer needs and characteristics.

Understand the purchase behavior process andthe influences on consumer behavior. Understand consumer behavior in relation tothe companys product.

Realize that each customer transaction is a

discrete sale.

Make each customer transaction part of an

ongoing relationship with the customer.


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Impact of Digital Technologies


Marketers

More products and

services throughcustomization

Instantaneous exchanges

Collect and analyze data

Consumers

Power

Information

Computers, phones, PDA,GPS, smart TV

Chapter One Slide


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The Mobile Consumer

Wireless MediaMessages willexpand as: Flat-rate data

traffic increases

Screen imagequality is enhanced

Consumer-user

experiences withweb applicationsimprove


Penetration of Internet Usage Among Mobile

Subscribers in 16 Countries - FIGURE 1.3
http://www.marketingcharts.com/


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Consumer Behavior Is

Interdisciplinary

Psychology

Sociology

Socialpsychology

Anthropology

Economics



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A Simple Model of Consumer Decision Making - Figure 1.4

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CH -1 Consumer Behavior

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