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7/31/2019 Studies on Consumer Behavior
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UNIT 1
TRIMESTER 5
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Some Definitions ofConsumer Behavior
• Consumer behavior is the study of when, why, how,and where people do or do not buy products or services
• It blends elements from psychology, sociology,social anthropology and economics.
• It attempts to understand the buyer decision makingprocess, both individually and in groups.
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• It studies characteristics of individual consumerssuch as demographics and behavioral variables inan attempt to understand people's wants.
• It also tries to assess influences on theconsumer from groups such as family, friends,reference groups, and society in general.
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• The study of how people behave when obtaining,using, and disposing of products and services.
• The behavior of individuals when buying goods and
services for their own use or consumption.• The study of individuals, groups, or organizations
and the processes they use to select, secure, use,
and dispose of products, services, experiences, or ideas to satisfy needs and the impacts that theseprocesses have on the consumer and society.
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Some Definitions ofConsumer Behavior
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Why is it important tostudy consumer behavior?
• The study of consumers helps firms and organizationsimprove their marketing strategies by understanding issuessuch as:
• The psychology of how consumers think, feel, reason, andselect between different alternatives (e.g., brands, products,and retailers).
• The psychology of how the consumer is influenced by his or her environment (e.g., culture, family, signs, media).
• Through the application of sociology, psychology anddemographics, marketers can begin to understand whyconsumers form attitudes and make decisions to purchase.
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• The behavior of consumers while shopping or making other marketing decisions.
• Limitations in consumer knowledge or information processingabilities influence decisions and marketing outcome.
• How marketers can adapt and improve their marketingcampaigns and marketing strategies to more effectively reachthe consumer.
•
For marketing, these influences are studied in the context of demographics, which includes ethnicity, age, marital status,size of family, income, education and employment.
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• How consumer motivation and decision strategies differ between products that differ in their level of importanceor interest that they entail for the consumer.
• Consumer-behavior studies inform marketers,advertisers and public agencies how product andservice selection is influenced by personality,
perception, values and beliefs.
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• Behavior occurs either for the individual, or in thecontext of a group (e.g., friends influence whatkinds of clothes a person wears) or an organization
(people on the job make decisions as to whichproducts the firm should use).
• Consumer behavior involves the use and disposal
of products as well as the study of how they arepurchased.
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• Product use is often of great interest to themarketer, because this may influence how a productis best positioned or how we can encourage
increased consumption.
• Since many environmental problems result fromproduct disposal (e.g., motor oil being sent into
sewage systems to save the recycling fee, or lettinggarbage pileup ) this is also an area of interest.
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Why is it important tostudy consumer behavior?
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• Consumer behavior involves services and ideas aswell as tangible products.
• The impact of consumer behavior on society is alsoof relevance.
• For example, aggressive marketing of high fatfoods, or aggressive marketing of easy credit, mayhave serious repercussions for the national healthand economy.
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U.S. Consumers Had Short-Term Response to
First BSE (bovine spongiform encephalopathy also
known as mad cow disease) Announcements
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• Food purchase data reveal that the response of U.S.consumers to the 2003 discovery of BSE in two North
American cows was limited and dissipated within 2
weeks.• Purchase data are a more reliable source of information
on consumers‘ risk perceptions than consumer surveys.
• Future food safety announcements may not have the
same effect on consumers‘ food purchase decisionsbecause consumers‘ risk perceptions are likely tochange.
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• In May 2003, several U.S. Government agenciesreported that BSE had been found in Alberta,Canada.
• The following December, agencies reported that acow in Washington State had BSE.
• Both of these announcements had the potential toinfluence consumers‘ food choices and retail food
markets in the United States.
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• To measure consumer reaction to thoseannouncements, researchers compared household-level retail food purchases of three types of beef
products before and after each announcement tosee if consumers reduced their purchases of thoseproducts, and, if so, for how long.
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• Consumers‘ reactions to food safety news will be
influenced by how much it changes their riskperceptions.
• Consumers‘ beliefs about food safety may change
over time, and subsequent announcements couldbe made under very different conditions.
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• Many consumer surveys were conducted after the BSEannouncements.
• Each survey asked consumers whether they reduced
beef consumption following the announcements.• The main drawbacks to such surveys are that
consumers‘ memories of previous food purchases maybe error prone and consumers may sometimes feel
compelled to answer in the affirmative.• Using records of food purchases can be a more reliable
means of assessing consumer response.
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• Food purchases vary throughout the year and evolveover time.
• Americans habitually consume more of particular foodsseasonally and around holidays.
• Some foods, over time, have fallen out of favor whileother foods have taken their places.
• Change attributed to BSE announcements might beconfused with seasonal purchase patterns or long runtrends if underlying patterns created by habit andtradition, as well as evolving preferences, are not takeninto account.
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• Researchers examined three markets—fresh beef,frozen beef, and frankfurters.
• Frankfurters are more processed than frozen beef
(primarily steaks and hamburger patties).• More processed food satisfies demands different
from those for fresh or frozen beef, so a BSE
announcement might have different impacts onconsumers‘ frankfurter purchases than on other meats.
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Consumer Buying BehaviorWhat Influences Them To Buy
• The most challenging concept in marketing isunderstanding why buyers do what they do (or don‘tdo).
• Such knowledge is critical for marketers since having astrong understanding of buyer behavior will help shedlight on what is important to the customer and alsosuggest the important influences on customer decision-making.
• Using this information, marketers can create marketingprograms that they believe will be of interest tocustomers.
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• Factors affecting how customers make decisionsare extremely complex.
• Buyer behavior is deeply rooted in psychology andsociology.
• Since every person in the world is different, it isimpossible to have simple rules that explain howbuying decisions are made.
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Consumer Buying BehaviorWhat Influences Them To Buy
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• Customers make purchases in order to satisfyneeds.
• Some of these needs are basic and must be filledby everyone on the planet (e.g., food, shelter) whileothers are not required for basic survival and varydepending on the person.
• Needs that are not a necessity are wants or desires
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Consumer Buying BehaviorWhat Influences Them To Buy
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• The consumer could be the actual buyer, the personspending the money.
• But it is also possible that the one who does the buying
is not necessarily the user of what is bought and thatothers may be involved in the buying decision inaddition to the actual buyer.
• The purchasing process in the consumer market is not
as complex as the business market.• But having multiple people involved in a purchase
decision is not unusual.
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Consumer Buying BehaviorWhat Influences Them To Buy
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• For example, when planning a family vacation themother may make the hotel reservations but others inthe family may have input on the hotel choice.
•
Similarly, a father may purchase snacks at the grocerystore but his young child may be the one who selectedit from the store shelf.
• So understanding consumer purchase behavior
involves not only understanding how decisions aremade but also understanding the dynamics thatinfluence purchases.
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Consumer Buying BehaviorWhat Influences Them To Buy
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What Influences Purchasing?
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Internal Influences(Perceptual Filter)
• Perceptual Filter:
• Perception is how we see ourselves and the worldwe live in.
• A consumers mental makeup results frominformation that has been consciously or subconsciously filtered as he experiences it, a
process referred to as a perceptual filter.
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• Perception has several steps.
• Exposure – sensing a stimuli (e.g. seeing an ad)
•
Attention – an effort to recognize the nature of astimuli (e.g. recognizing it is an ad)
• Awareness – assigning meaning to a stimuli (e.g.,humorous ad for particular product)
• Retention – adding the meaning to one‘s internal
makeup (i.e., product has fun ads)
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Internal Influences(Perceptual Filter)
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• How these steps are eventually carried out depends ona person‘s approach to learning.
• By learning means how someone changes what they
know, which in turn may affect how they act.• E.g., A person may be able to focus very strongly on a
certain advertisement and be able to retain theinformation after being exposed to it only once.
• While another person may need to be exposed to thesame advertisement many times before he evenrecognizes what it is.
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Internal Influences(Perceptual Filter)
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• Consumers are also more likely to retaininformation if a person has a strong interest in thestimuli.
• If a person is in need of a new car he is likely topay attention to a new advertisement for a car whilesomeone who does not need a car may need to see
the advertisement many times before theyrecognize the brand of automobile.
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Internal Influences(Perceptual Filter)
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• Marketers spend large sums of money in an attempt toget customers to have a positive impression of their products.
•
Exposing consumers to a product can be verychallenging considering the number of competingproduct messages (ads) that are also trying toaccomplish the same objective.
• So marketers must be creative and use various meansto deliver their message to capture the attention of theconsumer.
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Internal Influences(Perceptual Filter)
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• Marketers must continually monitor and respond if their message becomes distorted in ways that willnegatively shape its meaning.
• This can happen due to competitive activity (e.g.,comparison advertisements).
• Finally, getting the consumer to give positive
meaning to the message they have retainedrequires the marketer to make sure that consumersaccurately interpret the facts about the product.
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Internal Influences(Perceptual Filter)
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Internal Influences(Knowledge)
• Knowledge is the sum of all information known by a person.
• What exists as knowledge to an individual depends on howan individual‘s perceptual filter makes sense of theinformation he is exposed to.
• Marketers may conduct research that will gauge consumers‘level of knowledge regarding their product.
• It is likely that other factors influencing consumer behavior are largely shaped by what is known about a product.
• Thus, developing methods (e.g., incentives) to encourageconsumers to accept more information (or correctinformation) may affect other influencing factors.
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Internal Influences(Attitude)
• Attitude refers to what a person feels or believesabout something.
• Attitude may be reflected in how an individual acts
based on his or her beliefs.• Once formed, attitudes can be very difficult to
change.
•
Thus, if a consumer has a negative attitude towarda particular issue it will take considerable effort tochange what they believe to be true.
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• Marketers facing consumers who have a negative attitudetoward their product must work to identify the key issuesshaping a consumer‘s attitude then adjust marketingdecisions (e.g., advertising) in an effort to change the attitude.
• For companies competing against strong rivals to whom loyalconsumers exhibit a positive attitude, marketers must find outwhy consumers feel positive toward the competitor and thentry to meet or beat the competitor on these issues.
• Alternatively, a company can try to locate customers who feelnegatively toward the competitor and then increaseawareness among this group.
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Internal Influences(Attitude)
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Internal Influences(Personality)
• The behavior one projects in a situation is similar to thebehavior the person exhibits in another situation, this ispersonality.
•
Personality is the sum of sensory experiences othersget from experiencing a person (i.e., how one talks,reacts).
• While one‘s personality is often interpreted by those we
interact with, the person has his own vision of hispersonality, called Self Concept, which may or may notbe the same has how others view us.
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• Using research techniques to identify howcustomers view themselves may give marketersinsight into products and promotion options that are
not readily apparent.• For example, a marketer may initially build a
marketing strategy around more obvious clues to
consumer behavior, such as consumer‘sdemographic indicators (e.g., age, occupation,income).
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Internal Influences(Personality)
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• But in-depth research may indicate that consumersare purchasing products to fulfill self-conceptobjectives that have little to do with the
demographic category they fall into (e.g., senior citizen may be making purchases that make themfeel younger).
• Appealing to the consumer‘s self concept needs
could expand the market to which the product istargeted.
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Internal Influences(Personality)
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Internal Influences(Lifestyle)
• Lifestyle relates to the way we live through the activities weengage in and interests we express.
• In simple terms it is what we value out of life.
•
Lifestyle is often determined by how we spend our time andmoney.
• Products and services are purchased to support consumers‘lifestyles.
•
Marketers have researched on how consumers in their targetmarkets live their lives since this information is key todeveloping products, suggesting promotional strategies andeven determining how best to distribute products
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Internal Influence(Motivation)
• Motivation relates to our desire to achieve a certainoutcome.
• When making purchase decisions a customers‘
motivation could be affected by such issues asfinancial position (e.g., Can I afford the purchase?),time constraints (e.g., Do I need to make the
purchase quickly?), overall value (e.g., Am I getting my money’s worth?), and perceived risk (e.g., What happens if I make a bad decision?).
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• Motivation also which relates to how much effort the consumer willexert in making a decision.
• Highly motivated consumers will want to get mentally andphysically involved in the purchase process.
•
Not all products require a high percentage of involvement.(e.g.,buying milk).• Products/services that may require high level of consumer
involvement should have options that will be attractive toconsumers.
•
For instance, marketers should make it easy for consumers tolearn about their product (e.g., information on website, free videopreview) and, for some products, allow customers to experiencethe product (e.g., free trial) before committing to the purchase.
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Internal Influence(Motivation)
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Internal Influences(Roles)
• Roles represent the position we feel we hold or othersfeel we should hold when dealing in a groupenvironment.
•
In support of their roles, consumers will make productchoices that may vary depending on which role they areassuming.
• E.g. a person who is responsible for selecting snacks
for an office party that his boss will attend may choosehigher quality products than he would choose whenselecting snacks for his family.
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I l I fl
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• Advertisers often show how the benefits of their products aid consumers as they perform certainroles.
• Typically the message of this promotional approachis to suggest that using the advertiser‘s product will
help raise one‘s status in the eyes of others while
using a competitor‘s product may have a negativeeffect on status.
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Internal Influences(Roles)
E l I fl
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External Influences(Culture)
• Consumer purchasing decisions are often affected byfactors that are outside of their control but have director indirect impact on how we live and what weconsume.
• An example of this are cultural factors.
• Culture represents the behavior, beliefs and, in manycases, the way we act which is learned by interacting
with or observing other members of society.• Much of what we do is shared behavior, passed along
from one member of society to another.
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External Influences(Group Membership)
• Besides cultural influences, consumers belong to manyother groups with which they share certaincharacteristics and which may influence purchase
decisions.• Often these groups contain Opinion Leaders who have
a major influence on what the customer purchases.
•
Some of the basic groups a consumer may belong toinclude:
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• Social Class – represents the social standing onehas within a society based on such factors asincome level, education, occupation.
• Family – one‘s family situation can have a strongeffect on how purchase decisions are made.
• Reference groups – most consumers
simultaneously belong to many other groups withwhich they associate or, in some cases, feel theneed to disassociate
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External Influences(Group Membership)
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• Identifying and understanding the groups consumersbelong to is a key for marketers.
• This helps identify target markets, develop new
products, and create appealing marketing promotionsto which consumers can relate.
• Marketers seek to locate group leaders and others towhom members of the group look for advice or
direction.• These opinion leaders, if well respected by the group,
can be used to gain insight into group behavior.
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External Influences(Group Membership)
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External Influences(Purchase Situation)
• A purchase decision can be strongly affected by the situationin which a consumer finds himself.
• A situation is the circumstances a person faces when makinga purchase decision, which could be the nature of their
physical environment, their emotional state, or timeconstraints.• Not all situations are controllable, in which case a consumer
may not follow their normal process for making a purchasedecision.
• For instance, if a person needs a product quickly and a storedoes not carry the brand they normally purchase, thecustomer may choose a competitor‘s product.
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Types of ConsumerPurchase Decisions
• Consumers are faced with purchase decisionsalmost every day.
• But not all decisions are treated the same.
• Some decisions are more complex than others andtherefore require more effort by the consumer.
• Other decisions are fairly routine and require littleeffort.
• Consumers face four types of purchase decisions:
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T f C
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• Minor New Purchase – these purchases representsomething new to a consumer but in the customer‘s
mind is not a very important purchase in terms of need,
money or other reason (e.g., status within a group).• Minor Re-Purchase – these are the most routine of all
purchases and often the consumer returns to purchase
the same product without giving much thought to other product options (i.e., consumer is brand loyal).
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Types of ConsumerPurchase Decisions
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CUSTOMER CENTRIC
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CUSTOMER CENTRICORGANIZATIONS
• Creating a positive consumer experience atthe point of sale and post-sale.
• A customer-centric approach can add value to
a company by enabling it to differentiate itself from competitors who do not offer the same experience.
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CUSTOMER CENTRIC
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• Being Customer Centric is about an ability for everyone in the company to continuously learnabout its customers and the market.
• It is also the responsibility of everyone in thecompany to respond appropriately to what theylearn (about the customer).
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CUSTOMER CENTRICORGANIZATIONS
CUSTOMER CENTRIC
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• Customer centric does not mean simply doingeverything the customer wants, irrespective of theimpact on the business.
• Products, services and resources should be utilizedin line with the organizations overall strategy as wellas meeting the needs of customers.
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CUSTOMER CENTRIC
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• Customer centric strategy has to be wellcommunicated throughout the whole company andsenior managers have to be seen to be setting
examples by practicing what they preach.• Customer centric strategy must fit the culture and
values of the organization.
• Organizations must document and clearly explainand communicate their values to ensure a customer centric organization.
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CUSTOMER CENTRICORGANIZATIONS
CUSTOMER CENTRIC
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• Being Customer centric means better relationshipsacross the organization and customers which leadsto increased revenues.
• Organizations must have a strong, shared set of beliefs that guides how customers are treated.
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CUSTOMER CENTRICORGANIZATIONS
CUSTOMER CENTRIC
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• A major impediment to building a customer-centricorganization is the conflicting goals of theprimary customer-facing departments: sales,
marketing and service.• Somehow, in the drive to achieve goals, each
department loses sight of customers as people andsees them only as "objects" that need to be
optimized.• Shift the focus back to customers.
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CUSTOMER CENTRICORGANIZATIONS
CUSTOMER CENTRIC
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• When some companies have tried to standardize goals, their revenues decreased, customer satisfaction fell and loyalty droppedoff, because the three primary customer-facing groups failed tocooperate.
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CUSTOMER CENTRICORGANIZATIONS
CUSTOMER CENTRIC
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• Treat customers like humans.
• Leon Leonwood Bean, the founder of L.L.Bean (aprivately held mail-order, online and retail company
based in Freeport, Maine, United States, specializing inclothing and outdoor recreation equipment. Its annualsales were USD 1.78 billion in 2006) believed that youshould "sell good merchandise at a reasonable profit,
treat your customers like human beings, and they willalways come back for more."
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CUSTOMER CENTRICORGANIZATIONS
CUSTOMER CENTRIC
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• It's all about leadership.
• Customer centricity is not a fad; it's a cornerstone of all successful businesses.
• Customers like to do business with companies thatknow who they are and demonstrate that they reallycare.
•
The linchpin (key player) is senior leadership.• Enterprises can change, but it has to come from the
top.
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CUSTOMER CENTRICORGANIZATIONS
CORE VALUES OF CUSTOMER
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• Every interaction with customers (or lack of interaction)tells customers how much they are truly valued.
• Customer interactions are moments of truth when a
customer learns if promises made to them will behonored or not.
• Experiences must match the level of
importance/value/meaning of the interaction. That is, a―wow‖ experience is NOT always required, in fact it
might be viewed as wasteful by the customer.
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CORE VALUES OF CUSTOMERCENTRIC ORGANIZATIONS
CORE VALUES OF CUSTOMER
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• In order to create great experiences for customers,organizations must define what they want customers tothink, feel, and do at every stage of the customer lifecycle.
• Processes must be developed with business goals ANDcustomer experience in mind.
• Customer experience ―failures‖ are analyzed to learnhow to create great experiences and value WITH – not
for – customers.• Communities of customers and prospects are actively
fostered and supported.
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CORE VALUES OF CUSTOMERCENTRIC ORGANIZATIONS
SOME COMMON FEATURES OF
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SOME COMMON FEATURES OFCUSTOMER CENTRIC ORGANIZATIONS
• Market Intelligence/Knowledge:
• 1.Meeting with customers to determinecurrent/future needs.
• 2.An in-house market research department.
• 3.Ability to detect changes in customers' productpreferences.
• 4.At least annual surveys of customer perceptions.
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• Communication to all employees:
• 1.Regular interdepartmental meetings on markettrends and developments.
• 2.Important events in the market or with keycustomers are shared quickly with all affecteddepartments.
• 3.Regular dissemination of customer satisfactiondata at all levels of the company.
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• Responsiveness:• 1.Recognition of changes in customers' product or
service needs.• 2.Alignment of product development efforts with
customer needs.• 3.Regular, interdepartmental planning to respond to
changes in the business environment.• 4.Responsiveness to customer complaints.• 5.Making concerted efforts to modify products or
services to fit customer needs.
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SOME EXAMPLES OF CUSTOMERCENTRIC ORGANIZATIONS
• Some examples of companies that are great atfocusing on the customer and the experience theyhave.
• As a result, these organizations tend to build a loyalcustomer base – the kind that will increasepurchases with time, and that will generate long-
term profits.
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• Bose – Supports its customers by honoring thewarranty without question, even a few days pastexpiration.
• After buying an expensive product (say, a $300 pair of headphones), its nice to know the investment isprotected.
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• Apple – Their stores are inviting, and are a place wherecustomers can try virtually all of the products beforepurchase.
• Customers can and do check email on the computers, listen
to music on an iPod or make a phone call from an iPhone.• Free technical support is available at the Genius Bar, and you
can even schedule a personal shopping appointment, so thatan expert can help you buy the right products for you.
• Defective products are replaced on the spot, no questionsasked.
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• Kroger – One of the largest grocery chains in theU.S. uses data from it‘s Kroger Plus shopper card,
sending loyal customers personalized coupons four
times a year.• The coupons have an extremely high redemption
rate, since each customer gets coupons only for
products or categories that they have previouslypurchased.
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• Baristas happily and without question take backany beverage not made to a customer‘s liking, and
will make a new one that the customer chooses.
• Customers with dietary restrictions can usually finda product for them.
• For example, the company offers soy milk as an
option for beverages,
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CUSTOMER LOYALTY AND
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CUSTOMER LOYALTY ANDPROFITABILITY
• Customers are becoming a lot more demanding,and in most markets they have more options tochoose from than ever before.
• The inconveniences of changing supplier, are beingreduced.
• The growth of internet and telephone banking has
presented consumers with a breadth of newalternatives
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• Why does customer loyalty matter?• It has been demonstrated that it is more expensive
to acquire a new customer than it is to keep an
existing one.• They come to you. One of the key benefits of
establishing a good level of customer loyalty is thatyou don't have to sell to them, they will come to youwhen they need a product or service, and they mayeven come to see if you have new products.
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• Buy more often. Loyal customers come back moreoften, since they enjoy the service they receive fromyou.
• Try new products. If customers are happy withwhat they've bought from you before, they will bemore willing to try new products. Perhaps they will
even trust you to suggest products suitable for them.
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• Recommend you. Loyal customers can becomeyour most effective marketing tool (far moretrustworthy than salesmen in the eyes of other
customers) and they're free.• Buy only from you. A strong relationship of trust
can mean that customers will prefer you even if it ismore difficult or more costly to use you than a
competitor and they will not go to the trouble of shopping around before buying.
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• Why are loyal customers more profitable than newcustomers?
• Acquisition costs:
Gaining a new customer typically requires somemarketing expenses such as advertising, salescommissions, sales force overhead, etc. unlike
existing and loyal customers
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• Revenue growth: With most companies customer spending tends toincrease over time as customers become more
familiar with the company and its product andservice offerings.
• Cost savings:
The longer you have a customer the more efficientyou become in servicing them.
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• Referrals:Long term customers tend to recommend your business to others because of their satisfaction with
your company.• Price Premium:
In most industries, old customers tend to pay
effectively higher prices than new ones who mayreceive trial discounts, introductory offers, etc.
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• Loyal customers may not be the most profitableones:
• Research finds a majority of ―loyal‖ customers—
often more than 50%—are not profitable for mostcompanies, because their loyalty is driven largely byexpectations of great deals.
• Long term (loyal customers) usually pay less thannewer customers because they are moreknowledgeable about the product‘s quality, price.
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• Some customers tend to buy from the same companyout of sheer inertia and who want to avoid theinconvenience of shopping for new companies.
• Such customers do not necessarily advocate your company to others.
• Organizations sort customers based on how often and
how much they spend. It is important to scrutinizecustomers on the profit that they are generating for theorganization that they are buying from.
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• It is important also to analyze the profitability of each customer and treat them differently.
• A swanky hotel in Düsseldorf, noticed that some of
their most loyal customers constantly telephonedthe concierge with impossible requests.
• These "attention-seekers" were often less profitable
than other loyal customers who made fewer demands but spent more.
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• Customer loyalty does not always equal profits.• Many companies don‘t know how to recognize—
and thus encourage—the kind of customer loyalty
that‘s really not worth having. • Instead of making sure that you have enough loyal
customers a company should be asking
•
1) which loyal customers are good for the business,2) how do we hang onto them, and 3) how do weget more customers like them.
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CUS O OPROFITABILITY
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• Unprofitable loyal customers tend to be loyal for oneof two reasons: 1) they are driven by unprofitablepricing or exchange policies, or 2) they demand an
excessive amount of service that they are not willingto pay fairly to receive.
• Profitable Loyals on the other hand are almost
always driven by differentiating aspects of productor service offering.
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PROFITABILITY
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• While not every customer has the potential to be aProfitable Loyal, it is important to remember that theyare the ideal customers of the firm—they feel an
attachment to the firm/brand, have a high share of category spend, and contribute profits to the firm.
• Strategies aimed at improving customer loyalty shouldfocus on understanding what differentiates a company‘s
offer from competitors to Profitable Loyals and worktowards strengthening that competitive edge.
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EMOTIONAL ENGAGEMENT
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WITH CUSTOMERS
• It is all about understanding the psychology of thecustomers.
• It requires getting into the mind and heart and head of
customers and ultimately, discovering the clues thatmake them loyal, sometimes irrationally so, to a brand.
• Companies are moving from making and selling to
really sensing and responding.• Creating an emotion by thinking and looking at
everything from the customers point of view.
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• It is fundamental to understand how customersbehave.
• It is necessary to become very concerned about
attitudes.• How customers feel about a company.
• How they feel about its products and brand.
• But the ultimate value is how it causes them to feel
about themselves
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EMOTIONAL ENGAGEMENT
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• Customers consciously and unconsciously filter abarrage of clues and organize them into a set of impressions—some rational, some emotional.
•
Some clues are relayed from human behavior (voice tone, body language) and others aremechanical (design, color, temperature).
• Thus, without consciously knowing it, we are awareof the comfort of a chair in a Coffee Day or how ahotel that you frequent folds towels.
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• Organizations should try to be as transparent aspossible in their interactions with customers so thatcustomers don‘t feel as though the organization is
hiding something from them or lying to them or cheating them.
• Organization‘s managers and its other employees
should ―live the brand‖ with their customers.
• Harley-Davidson executives ride and interact with their customers on H.O.G. (Harley Owners Group) rallies.
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EMOTIONAL ENGAGEMENT
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• Consumers make purchase decisions for manydifferent reasons.
• To fully engage a customer, a company needs tounderstand and appeal to the rational (analytical)
reasoning as well as the irrational (emotional)reasoning.• An organization needs to know when, how, and why to
contact the customer and how to utilize relationship
data to appeal to both the emotional aspects andanalytical reasoning for each individual; constantlylearning and evolving with each contact.
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• Customers can become emotionally involved in abrand and that emotional involvement can becomeextremely powerful.
• Reasons why emotionally engaging your customersis important to your company‘s success:
• People respond well to tugs on their
heartstrings
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• It is not possible to force them, buy them, or turnthem into something they are not ready to be.
• Therefore, by authentically and gently touching on
people‘s emotions, people will get to know, like andultimately trust you over time.
• Take every single opportunity to show you truly care
about your customers, their opinions and how theyexperience the relationship with your business.
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• It generates consumer gratitude, loyalty andrespect.
• It increases positive word of mouth. Apologize
for a mistake, you have a golden opportunity to turna disgruntled customer into an advocate of your brand. Why? Because you took the time to listen
and care about them as an individual.
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• It will increase your bottom line. People like to dobusiness with people they like.
• Implement a culture of caring and communication
into your business, nurture one-to-one relationshipsand watch your customers reward your efforts byusing their new and massively powerful word of
mouth to market your brand for you.
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CUSTOMER PORTFOLIO
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MANAGEMENT
• Learn who your customers are, why they purchase from youand what keeps them buying from you rather than your competitors.
• That doesn't mean that you need to know EACH customer
individually, but to know what types of people buy from you.• In short, develop customer profiles.
• In traditional marketing lingo, this means "marketsegmentation."
• Divide your entire market into smaller groups of potentialcustomers that have similar demographic, psychographic and/ or product usage characteristics.
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• Many companies have adopted marketsegmentation as a corporate strategy, creating andmaintaining detailed profiles for each product or
service group.• This type of program then directs many strategic
decisions and tactical activities in marketing, sales,
product development, and customer support.
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MANAGEMENT
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THE CUSTOMER IS KING!
• The mantra that the ‗Customer is King‘ is thepremise that any product‘s design, production,
distribution and marketing should have one central
focus at the core of all decision-making: thecustomer (remember: in some instances, thecustomer may not necessarily be the end-user or
consumer).
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• Products or brands by themselves do not automaticallyusher in customer loyalty or strengthen customer relations. In today‘s world, customers are looking for
products that suit their purpose best – in terms of price,features, quality and appearance.
• They expect to be treated as "kings" and to receivesales and service support, along with definite solutionsto problems from retailers, dealers or channel partners.
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• Customer First –make customers the central focus of alldecision making; product design, production, distribution andmarketing
• Customers want products that best meet their needs in termsof price, features, quality and appearance.
• Know your customer and predict their needs before they askthe question.
• Tailor products to meet different customer needs.• Simplify the purchase process for your customer.• Add value through innovation and incentives.• Deliver something that goes beyond the basic product.
THE CUSTOMER IS KING!