Chapter 4 Consumer Behavior, Online Market Research, and Customer Relationship Management.

Chapter 4Chapter 4

Consumer Behavior, Consumer Behavior,

Online Market Research, and Online Market Research, and

Customer Relationship Customer Relationship ManagementManagement

© Prentice Hall 2004© Prentice Hall 2004 22

Learning ObjectivesLearning Objectives

1.1. Describe the factors that influence Describe the factors that influence consumer behavior online.consumer behavior online.

2.2. Understand the decision-making Understand the decision-making process of consumer purchasing online.process of consumer purchasing online.

3.3. Describe how companies are building Describe how companies are building one-to-one relationships with one-to-one relationships with customers.customers.

4.4. Explain how personalization is Explain how personalization is accomplished online.accomplished online.

5.5. Discuss the issues of e-loyalty and e-Discuss the issues of e-loyalty and e-trust in EC.trust in EC.


Learning Objectives Learning Objectives (cont.)(cont.)

6.6. Describe consumer market research in Describe consumer market research in EC.EC.

7.7. Describe CRM, its methods, and its Describe CRM, its methods, and its relationship with EC.relationship with EC.

8.8. Explain the implementation of customer Explain the implementation of customer service online and describe its tools.service online and describe its tools.

9.9. Describe Internet marketing in B2B, Describe Internet marketing in B2B, including organizational buyer behavior.including organizational buyer behavior.


Ritchey Design Learns Ritchey Design Learns about Customersabout Customers

The ProblemThe ProblemRitchey Design, Inc. is a relatively Ritchey Design, Inc. is a relatively small designer and manufacturer of small designer and manufacturer of mountain bike components mountain bike components Sells its products to distributors Sells its products to distributors and/or retailers, who then sell them and/or retailers, who then sell them to individual consumers to individual consumers Its 1995 Web site was more a status Its 1995 Web site was more a status symbol than a business tool symbol than a business tool


Ritchey Design Learns Ritchey Design Learns about Customers about Customers (cont.)(cont.)

Visitors could get information on Visitors could get information on Team Ritchey or find out where Team Ritchey or find out where Ritchey products were sold Ritchey products were sold

It did not give customers all the It did not give customers all the information they wantedinformation they wanted

It did not enable the company to It did not enable the company to gain insight into its customers’ gain insight into its customers’ wants and needswants and needs



The SolutionThe SolutionIn late 1995, Ritchey reworked the In late 1995, Ritchey reworked the Web site so that the company could Web site so that the company could hear from its customers directly hear from its customers directly

set up customer surveys on the site set up customer surveys on the site offered visitors who answer the surveys offered visitors who answer the surveys a chance to win free Ritchey productsa chance to win free Ritchey productsvsitors enter their names and addresses vsitors enter their names and addresses and then answer questions about the and then answer questions about the company’s products company’s products



Web Trader software automatically Web Trader software automatically organizes and saves the answers in organizes and saves the answers in a database and is used to help make a database and is used to help make marketing and advertising decisionsmarketing and advertising decisions

Questions are changed to learn Questions are changed to learn customers’ opinions about any new customers’ opinions about any new products Ritchey developsproducts Ritchey develops

Saves $100,000 on product Saves $100,000 on product development per yeardevelopment per year



An online catalog educates retailers An online catalog educates retailers and consumers about the and consumers about the technological advantages of technological advantages of Ritchey’s high-end components over Ritchey’s high-end components over competitors’ parts competitors’ parts

Visitors browse the product catalog Visitors browse the product catalog that includes detailed descriptions that includes detailed descriptions and graphics of Ritchey’s products and graphics of Ritchey’s products



The ResultsThe Resultsritcheylogic.comritcheylogic.com sells only team sells only team items such as t-shirts, bags, water items such as t-shirts, bags, water bottles, and other gear directly to bottles, and other gear directly to individuals onlineindividuals onlineThe company does not sell bike The company does not sell bike parts to individuals directly online parts to individuals directly online because it wants to maintain its because it wants to maintain its existing distribution system existing distribution system Dealers can place orders on the site Dealers can place orders on the site



The site is basically used in B2C EC The site is basically used in B2C EC only for the basic activities in only for the basic activities in Internet marketing:Internet marketing:

communicating with customerscommunicating with customers

conducting market researchconducting market research

delivering advertisingdelivering advertising



What we can learn …What we can learn …Illustrates the benefits a company can derive from changing its Web site from a passive one to one with interactivityInteractive Web site allows the company to:

learn more about its customerseducate customersuse the site for customer service


Learning about Consumer Learning about Consumer Behavior OnlineBehavior Online

Model of consumer behavior Model of consumer behavior onlineonline

independent (or uncontrollable) variablesintervening or moderating variablesdecision-making processdependent variables


Learning about Consumer Learning about Consumer Behavior Online Behavior Online (cont.)(cont.)



Independent variablesIndependent variablesPersonal characteristicsEnvironmental variables

Social variablesCultural/community variablesOther environmental variables



Intervening (moderating) variablesvariables are those that can be controlled by vendors

Dependent variables: the buying decisions

customer makes several decisions“to buy or not to buy?” “what to buy?” “where, when, and how much to buy?”


Consumer Decision Consumer Decision Making ProcessMaking Process

Roles people play in the decision Roles people play in the decision making processmaking process

InitiatorInitiatorInfluencerDeciderBuyerUser


Consumer Decision Consumer Decision Making Process Making Process (cont.)(cont.)

5 phases of the generic 5 phases of the generic purchase decision model:purchase decision model:

1.1. need identification need identification

2.2. information search information search

3.3. evaluation of alternatives evaluation of alternatives

4.4. purchase and deliverypurchase and delivery

5.5. after-purchase evaluation after-purchase evaluation



Product brokering:Product brokering: Deciding what product Deciding what product to buyto buy

Merchant brokering:Merchant brokering: Deciding from whom Deciding from whom (from what merchant) to buy a product (from what merchant) to buy a product






One-to-One Marketing One-to-One Marketing and Personalization in ECand Personalization in EC

One-to-one marketing:One-to-one marketing: Marketing that Marketing that treats each customer in a unique waytreats each customer in a unique way

Personalization:Personalization: The matching of The matching of services, products, and advertising services, products, and advertising content to individual consumerscontent to individual consumers

User profile:User profile: The requirements, The requirements, preferences, behaviors, and preferences, behaviors, and demographic traits of a particular demographic traits of a particular customer customer


One-to-One Marketing One-to-One Marketing and Personalization in EC and Personalization in EC

(cont.)(cont.)



(cont.)(cont.)Major strategies used to compile user profiles

Solicit information directly from the userObserve what people are doing onlineBuild from previous purchase patternsPerform marketing research



(cont.)(cont.)Cookie:Cookie: A data file that is placed A data file that is placed on a user’s hard drive by a Web on a user’s hard drive by a Web server, frequently without server, frequently without disclosure or the user’s consent, disclosure or the user’s consent, that collects information about that collects information about the user’s activities at a sitethe user’s activities at a site



(cont.)(cont.)Collaborative filtering:Collaborative filtering: A A personalization method that uses personalization method that uses customer data to predict, based on customer data to predict, based on formulas derived from behavioral formulas derived from behavioral sciences, what other products or sciences, what other products or services a customer may enjoy; services a customer may enjoy; predictions can be extended to predictions can be extended to other customers with similar other customers with similar profilesprofiles



(cont.)(cont.)Variations of collaborative filtering:

Rule-based filteringContent-based filteringActivity-based filtering

Legal and ethical issues in collaborative filtering

Invasion-of-privacy issuesPermission-based personalization tools to request customer permission



(cont.)(cont.)Customer loyaltyCustomer loyalty

Customer loyalty: Customer loyalty: Degree to which a Degree to which a customer will stay with a specific customer will stay with a specific vendor or brandvendor or brandIncreased customer loyalty produces Increased customer loyalty produces cost savings through: cost savings through:

lower marketing costslower marketing costslower transaction costslower transaction costslower customer turnover expenseslower customer turnover expenseslower failure costslower failure costs

E-loyalty:E-loyalty: Customer loyalty to an e- Customer loyalty to an e-tailertailer



(cont.)(cont.)Trust in ECTrust in EC

Trust:Trust: The psychological status of The psychological status of involved parties who are willing to involved parties who are willing to pursue further interaction to pursue further interaction to achieve a planned goalachieve a planned goal

Trust is influenced by many Trust is influenced by many variablesvariables



(cont.)(cont.)



(cont.)(cont.)How to increase EC trustHow to increase EC trust

between buyers and sellers trust is between buyers and sellers trust is determined by:determined by:

degree of initial success that each party degree of initial success that each party experienced with EC and with each experienced with EC and with each otherotherwell-defined roles and procedures for all well-defined roles and procedures for all parties involvedparties involvedrealistic expectations as to outcomes realistic expectations as to outcomes from ECfrom EC



(cont.)(cont.)Issues in personalization

brand recognitionsecurity mechanisms help solidify trustdisclose and update latest business status and practices to potential customers and to build transaction integrity into the systemguarantee information and protection privacy through various communication channels


Market Research for ECMarket Research for EC

Goal of market research is to find information and knowledge that describes the relationships among:

consumersproductsmarketing methodsmarketers


Market Research for ECMarket Research for EC (cont.)(cont.)

Aim of marketing research is to:discover marketing opportunities and issuesestablish marketing plansbetter understand the purchasing processevaluate marketing performancedevelop advertising strategy



Market segmentation:Market segmentation: The The process of dividing a consumer process of dividing a consumer market into logical groups for market into logical groups for conducting marketing research, conducting marketing research, advertising, and salesadvertising, and salesMarket research toolsMarket research tools

data modeling data warehousing



Conducting market research onlineConducting market research onlinefaster and more efficient than off-line methodsaccesses a more geographically diverse audiencelarge studies done much more cheaplynot well developed at this time



What are we What are we looking for in EC looking for in EC online research?online research?

personal profile that helps marketers explain and predict online buying behavior



Procter & GambleProcter & GambleExample: Internet market Example: Internet market research expedites time-to-research expedites time-to-market for Procter & Gamblemarket for Procter & Gamble

In the past developing a major new In the past developing a major new product, from concept to market product, from concept to market launch, took over 5 years launch, took over 5 years In September 2000 introduced In September 2000 introduced Whitestrips on the Internet, offering Whitestrips on the Internet, offering the product for sale on P&G’s Web the product for sale on P&G’s Web sitesite



Procter & GambleProcter & Gamble (cont.)(cont.)Online research was facilitated by data Online research was facilitated by data mining conducted on P&G’s huge mining conducted on P&G’s huge historical data and the new Internet datahistorical data and the new Internet data

Internet created a product awareness of Internet created a product awareness of 35 percent before shipments were made 35 percent before shipments were made to stores to stores

Revolutionized process of studying the Revolutionized process of studying the product concept, segmenting the product concept, segmenting the market, and expediting product market, and expediting product development development



Online market research methodsOnline market research methodsWeb-based surveysOnline focus groupsHearing directly from customersCustomer scenariosTracking customer movements



Transaction logTransaction logA record of user activities at a A record of user activities at a company’s Web sitecompany’s Web site

Clickstream behaviorClickstream behaviorCustomer movements on the Internet; Customer movements on the Internet; and, what the customer is doing thereand, what the customer is doing there



Cookies, Web Bugs, and SpywareWeb bugs: Tiny graphics files embedded on e-mail messages and in Web sites that transmit information about the user and their movements to a Web serverSpyware: Software that gathers user information, through an Internet connection, without the user’s knowledge

Analysis of B2C clickstream data



Limitations of online market researchLimitations of online market researchtoo much data may be available—need business intelligence to organize, edit, condense, and summarize itaccuracy of responsesloss of respondents because of equipment problemsethics and legality of Web tracking



Online shoppers tend to be wealthy, employed, and well educatedThe lack of clear understanding of the online communication process and how online respondents think and interact in cyberspace


CRM and Its CRM and Its Relationship with ECRelationship with EC

Customer relationship Customer relationship management (CRM):management (CRM): A customer A customer service approach that focuses on service approach that focuses on building long-term and building long-term and sustainable customer sustainable customer relationships that add value both relationships that add value both for the customer and the for the customer and the companycompany


CRM and Its CRM and Its Relationship with EC Relationship with EC

(cont.)(cont.)Classification of CRM programs

Loyalty programProspectingSave or win backCross-sell/up-sell

eCRM: Customer relationship management conducted electronically



(cont.)(cont.)Scope of CRMScope of CRM

1. Foundation of service2. Customer-centered services3. Value-added services



(cont.)(cont.)Extent of serviceExtent of service

1. Customer acquisition (prepurchase support)

2. Customer support during purchase3. Customer fulfillment (purchase

dispatch)4. Customer continuance support

(postpurchase)



(cont.)(cont.)Benefits of CRMBenefits of CRM

Provides:Provides:choices of products and servicesfast problem resolution and responseeasy and quick access to information

Limitations of CRMRequires integration with a company’s other information systems which is costlyDifficult to support mobile employees



(cont.)(cont.)CRM implementation issuesCRM implementation issues

Steps in building EC strategy Steps in building EC strategy focused on customer:focused on customer:

1. focus on the end customer2. systems and business processes that

are designed for ease of use and from the end customer’s point of view

3. efforts to foster customer loyalty



(cont.)(cont.)Five factors required to implement a CRM program effectively:

1. Customer-centric strategy2. Commitments from people3. Improved or redesigned processes4. Software technology5. Infrastructure



(cont.)(cont.)Justifying customer service and Justifying customer service and CRM programsCRM programs

Metrics:Metrics: Standards of Standards of performance; may be quantitative performance; may be quantitative or qualitativeor qualitative



(cont.)(cont.)Web-related metrics a company uses Web-related metrics a company uses to determine the appropriate level of to determine the appropriate level of customer support:customer support:

Response timeSite availabilityDownload timeTimelinessSecurity and privacyOn-time order fulfillmentReturn policyNavigability


CRM Applications and Tools:CRM Applications and Tools: Delivering Customer Service in Delivering Customer Service in

CyberspaceCyberspace

CRM applications improve upon CRM applications improve upon traditional customer service by means traditional customer service by means of easier communications and of easier communications and speedier resolution of customer speedier resolution of customer problems problems Customer service adds value to products and servicesIt is an integral part of a successful business


CRM Applications and Tools CRM Applications and Tools (cont.)(cont.)

Classifications of CRM applications

Customer-facing applicationsCustomer-touching applicationsCustomer-centric intelligence applicationsOnline networking and other applications



Customer-facing applicationsCustomer-facing applicationsCustomer interaction center (CIC):Customer interaction center (CIC): A A comprehensive service entity in comprehensive service entity in which EC vendors address customer which EC vendors address customer service issues communicated service issues communicated through various contact channelsthrough various contact channels

Intelligent agents in customer service and call centers







Autoresponders:Autoresponders: Automated e-mail Automated e-mail reply systems (text files returned via reply systems (text files returned via e-mail), which provide answers to e-mail), which provide answers to commonly asked questionscommonly asked questions

Sales force automation (SFA):Sales force automation (SFA): Software Software that automates the tasks performed by that automates the tasks performed by sales people in the field, such as data sales people in the field, such as data collection and its transmissioncollection and its transmission



Customer-touching applicationsCustomer-touching applicationsPersonalized Web PagesE-Commerce ApplicationsCampaign Management



Web Self-ServiceActivities conducted by users on the Activities conducted by users on the Web to provide answers to their Web to provide answers to their questions (e.g., tracking) or for product questions (e.g., tracking) or for product configurationconfigurationSelf-trackingSelf-configuration and customization



Customer-centric applicationsCustomer-centric applicationsData reports

Data warehouseData warehouseA single, server-based data repository A single, server-based data repository that allows centralized analysis, that allows centralized analysis, security, and control over the datasecurity, and control over the data



Data analysis and miningData analysis and miningAnalytic applications automate the processing and analysis of CRM data

can be used to analyze the performance, efficiency, and effectiveness of an operation’s CRM applications

Data mining involves sifting through an immense amount of data to discover previously unknown patterns



Online networking and other Online networking and other applicationsapplications

ForumsChat roomsUsenet groupsE-mail newslettersDiscussion lists



Mobile CRMMobile CRMthe delivery of CRM applications to any user, whenever and wherever needed

Voice communicationpeople are more comfortable talking with a person, even a virtual one, than they are interacting with machines. The smile and the clear pronunciation of the agent’s voice increases shoppers’ confidence and trust





Role of knowledge management and intelligent agents in CRM

Automating inquiry routing and answering queries requires knowledgeGenerated from historical data and from human expertise and stored in knowledge bases for use whenever neededIntelligent agents support the mechanics of inquiry routing, autoresponders, and so on


Internet Marketing in B2BInternet Marketing in B2B

Organizational buyer behaviorOrganizational buyer behaviornumber of organizational buyers is much smaller than the number of individual buyerstransaction volumes are far largerterms of negotiations and purchasing are more complex


Internet Marketing in B2BInternet Marketing in B2B (cont.)(cont.)



Methods for B2B online marketingMethods for B2B online marketingTargeting customersTargeting customers

contact all of its targeted customers individually when they are part of a well-defined groupaffiliation serviceadvertising

Electronic wholesalersElectronic wholesalersintermediary sells directly to businesses, but does so exclusively online



Other B2B marketing servicesOther B2B marketing servicesDigital Cement

provides corporate marketing portals that help companies market their products to business customers

National Systemstracks what is going on in an industry

BusinessTownprovides information and services to small businesses, including start-ups

Vantagenetoffers free tools that help increase traffic to a company’s Web site



Affiliate programsAffiliate programsPlacing banners on another vendor’s Placing banners on another vendor’s Web siteWeb siteContent alliance program in which content is exchanged so that all can obtain some free content

InfomediariesOnline data mining services


Managerial IssuesManagerial Issues

1. Do we understand our customers?

2. What do customers want from technology?

3. How is our response time?4. How do we measure and improve

customer service?5. Is CRM for real?


Managerial Issues (cont.)Managerial Issues (cont.)

6. Do we have to use electronically supported CRM?

7. Should we use intelligent agents?8. Who will conduct the market

research?9. Are customers satisfied with our Web

site?10. Can we use B2C marketing methods

and research in B2B?


SummarySummary

1. Essentials of consumer behavior.2. The online consumer decision-

making process.3. Building one-to-one relationships

with customers.4. Online personalization.5. Increasing loyalty and trust.


Summary Summary (cont.)(cont.)

6. EC customer market research.7. CRM, its technologies, and EC

connection.8. Implementing customer service

online.9. B2B Internet marketing and

organizational buyers.

Date post:	27-Dec-2015
Category:	Documents
Upload:	barry-allen
View:	229 times
Download:	2 times

Chapter 4 Consumer Behavior, Online Market Research, and Customer Relationship Management.

Documents