CHAPTER ONE

Consumer Behavior: Meeting Changes and Challenges

What is Consumer Behavior?

The behavior that consumers display in
searching for purchasing using evaluating, and disposing of products(consuming ideas; e.g. green consumption) and services that they expect will satisfy their needs.

Chapter One Slide 2

Two Consumer Entities

Organizational Consumer
A business, government agency, or other institution (profit or nonprofit) organizations that buys the goods, services, and/or equipment necessary for the organization to function. Need to run organizations

Personal Consumer
End user = individual who buys goods and services for his or her own use, for household use, for the use of a family member, or for a friend.

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Development of the Marketing Concept

Production Orientation

Sales Orientation

Marketing Concept

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1. Production Orientation
From the 1850s to the late 1920s Companies focus on production/manufacturing capabilities in order to expand production No product variation Consumer demand exceeded supply

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2. Sales Orientation
From the 1930s to the mid 1950s Too many products: from production to selling Focus on selling: sell more of what the manufacturing department was able to produce Supply exceeded customer demand

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3. Marketing Concept
1950s to current - Focus on the customer! Determine the needs and wants of specific target markets Deliver satisfaction better than competition

Production Orientation

Sales Orientation

Marketing Concept

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The Marketing Concept

Embracing the Marketing Concept
Consumer Research
Segmentation Market Targeting Positioning

Consumers are highly complex Subject to a variety of social and psychological needs quite apart from their basic functional needs The process and tools used to study consumer behavior

Chapter One Slide

The Marketing Concept

Implementing the Marketing Concept
Consumer Research

Segmentation
Market Targeting Positioning

Many people develop the same needs. This commonality of needs constitutes many of the ingredients of a consumer market segment

Process of dividing the market into subsets of consumers with common needs or characteristics
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The Marketing Concept

Implementing the Marketing Concept
Consumer Research Segmentation

Market Targeting
Positioning

The selection of one or more of the segments identified to pursue Low calories drink as a criteria for selecting targeting markets

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The Marketing Concept

Implementing the Marketing Concept
Consumer Research Segmentation Market Targeting

Positioning

Developing a distinct image for the product in the mind of the consumer Successful positioning includes:
Communicating the benefits of the product rather than the product features Communicating a unique selling proposition-that is a distinctive benefit or point of difference for the product or service
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The Marketing Mix

Product
Features Design Brand Packaging Warranties & Return Policies

Price
List price Discounts, Allowances Payment methods Marketing Mix

Place
Distribution of the product Store or nonstore outlets

Promotion
Advertising Sales promotion Public relations Personal Selling

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Customer Value, Satisfaction, Trust, and Retention

Successful Relationships
Customer value High level of customer satisfaction Strong sense of customer trust Building a structure that ensures customer retention

Good marketers today realize that in order to outperform competitors they must achieve the full potential from each and every customer. Employees should view any exchange with a as part of a customer relationship and not a transaction.
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Successful Relationships
Value, Satisfaction, Trust, and Retention
Customer Value Customer Satisfaction Customer Trust Customer Retention
Defined as the ratio between the customers perceived benefits
(economic, functional, psychological) and the resources (monetary, time, effort used to obtain those benefits, psychological)

Perceived value is relative and subjective Developing a value proposition is critical (a unique selling proposition)
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Successful Relationships
Value, Satisfaction, Trust, and Retention
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. (function of customer expectation)
Expectations=Experience Satisfied Expectations>Experience delighted Expectations<Experience dissatisfied

Customer groups based on loyalty include loyalists, apostles, defectors, terrorists, hostages, and mercenaries
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 Loyalist: Keep purchasing Apostles: Experiences exceed expectations, provide positive word of mouth Defectors: feel neutral or merely satisfied Terrorists: had bad experience, spread negative word of mouth Hostages: unhappy customers, stay with the company only because of monopolistic environment/frequent complains Mercenaries: being satisfied but do not have any real loyalty Companies should strive to create apostles, raise the satisfaction of defectors loyalists and avoid having terrorists/hostages and reduce the number of mercenaries

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Successful Relationships
Value, Satisfaction, Trust, and Retention
Establishing and maintaining trust is essential to online and off-lien retailers Trust is the foundation for maintaining a long-standing relationship with customers; increases the chance of customer loyalty (Trust)
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Customer Trust Customer

Successful Relationships
Value, Satisfaction, Trust, and Retention
The objective of providing value is to retain highly satisfied customers. Loyal customers are key
They buy more products They are less price sensitive; pay less attention to competitors ads Servicing them is cheaper They spread positive word of mouth

Customer Retention

Marketing aimed to attract new customers is expensive

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Impact of Digital Technologies

Marketers Consumers

More products and services through customization Instantaneous exchanges Collect and analyze data

Power Information: reviews Computers, phones, PDA, GPS, smart TV

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The Mobile Consumer

Wireless Media Messages will expand as:
Flat-rate data traffic increases Screen image quality is enhanced Consumer-user experiences with web applications improve
Penetration of Internet Usage Among Mobile Subscribers in 16 Countries - FIGURE 1.3

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Consumer Behavior Is Interdisciplinary

Psychology Study of individuals

Economics (rational human being-try to maximize benefits)

Sociology Study of groups

Anthropology The influence of society on the individual

Social psychology Study of how an individual operates in groups

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A Simple Model of Consumer Decision Making

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