Chapter 1 Consumer Behavior: Its Origins and Strategic Applications Consumer Behavior, Ninth Edition Schiffman & Kanuk

Copyright 2007 by Prentice Hall

Chapter Outline
Overview of Consumer Behavior The Marketing Concept The Marketing Mix and Relationships Digital Technologies Societal Marketing Concept A Simplified Model of Consumer Decision Making

Copyright 2007 by Prentice Hall

1-2

Consumer Behavior
The behavior that consumers display in searching for, purchasing, using, evaluating, and disposing of products and services that they expect will satisfy their needs.

Copyright 2007 by Prentice Hall

1-3

Customers Search for Products

weblink

Copyright 2007 by Prentice Hall

1-4

Personal Consumer
The 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.

Copyright 2007 by Prentice Hall

1-5

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

Copyright 2007 by Prentice Hall

1-6

Government Buying

weblink

Copyright 2007 by Prentice Hall

1-7

Development of the Marketing Concept

Production Concept
Product Concept Selling Concept Marketing Concept
Copyright 2007 by Prentice Hall 1-8

The Production Concept

Assumes that consumers are interested primarily in product availability at low prices Marketing objectives:
Cheap, efficient production Intensive distribution Market expansion

Copyright 2007 by Prentice Hall

1-9

The Product Concept

Assumes that consumers will buy the product that offers them the highest quality, the best performance, and the most features Marketing objectives:
Quality improvement Addition of features

Tendency toward Marketing Myopia

Copyright 2007 by Prentice Hall 1 - 10

The Selling Concept

Assumes that consumers are unlikely to buy a product unless they are aggressively persuaded to do so Marketing objectives:
Sell, sell, sell

Lack of concern for customer needs and satisfaction

Copyright 2007 by Prentice Hall

1 - 11

The Marketing Concept

Assumes that to be successful, a company must determine the needs and wants of specific target markets and deliver the desired satisfactions better than the competition Marketing objectives:
Make what you can sell Focus on buyers needs

Copyright 2007 by Prentice Hall

1 - 12

Discussion Question
What two companies do you believe grasp and use the marketing concept? Why do you believe this?

Copyright 2007 by Prentice Hall

1 - 13

The Marketing Concept

Implementing the Marketing Concept
Consumer Research Segmentation Targeting Positioning The process and tools used to study consumer behavior Two perspectives:
Positivist approach Interpretivist approach

Copyright 2007 by Prentice Hall

1 - 14

weblink

Copyright 2007 by Prentice Hall

1 - 15

The Marketing Concept

Implementing the Marketing Concept
Consumer Research Segmentation Targeting Positioning Process of dividing the market into subsets of consumers with common needs or characteristics

Copyright 2007 by Prentice Hall

1 - 16

Segmentation Used by Sports Illustrated

Discussion Question
What products that you regularly purchase are highly segmented? What are the different segments? Why is segmentation useful to the marketer for these products?

Copyright 2007 by Prentice Hall

1 - 18

The Marketing Concept

Implementing the Marketing Concept
Consumer Research Segmentation Targeting Positioning The selection of one or more of the segments to pursue

Copyright 2007 by Prentice Hall

1 - 19

The Marketing Concept

Implementing the Marketing Concept
Consumer Research Segmentation Targeting Positioning
Developing a distinct image for the product in the mind of the consumer Successful positioning includes: Communicating the benefits of the product Communicating a unique selling proposition
1 - 20

Copyright 2007 by Prentice Hall

This product is positioned as a solution to facial redness.

The Marketing Mix

Product Price Place Promotion

Copyright 2007 by Prentice Hall

1 - 22

Successful Relationships

Customer Value

Customer Retention

Customer Satisfaction

Copyright 2007 by Prentice Hall

1 - 23

Successful Relationships
Value, Satisfaction, and Retention
Customer Value Customer Satisfaction Customer Retention
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
1 - 24

Copyright 2007 by Prentice Hall

Discussion Question
How does McDonalds create value for the consumer? How do they communicate this value?

Copyright 2007 by Prentice Hall

1 - 25

Successful Relationships
Value, Satisfaction, and Retention
Customer Value Customer Satisfaction Customer Retention
The individual's perception of the performance of the product or service in relation to his or her expectations. Customers identified based on loyalty include loyalists, apostles, defectors, terrorists, hostages, and mercenaries

Copyright 2007 by Prentice Hall

1 - 26

Successful Relationships
Value, Satisfaction, and Retention
Customer Value Customer Satisfaction Customer 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 They pay less attention to competitors advertising Servicing them is cheaper They spread positive word of mouth
1 - 27

Copyright 2007 by Prentice Hall

Customer Profitability-Focused Marketing

Tracks costs and revenues of individual consumers Categorizes them into tiers based on consumption behavior A customer pyramid groups customers into four tiers

Copyright 2007 by Prentice Hall

1 - 28

Customer Profitability-Focused Marketing

Tier 1: Platinum
Tier 2: Gold Tier 3: Iron Tier 4: Lead
Copyright 2007 by Prentice Hall 1 - 29

Traditional Marketing Concept Vs. Value and Retention Focused Marketing Table 1-2
Traditional Marketing Concept
Make only what you can sell instead of trying to sell what you make

Value and Retention Focused Marketing

Use technology that enables customers to customize what you make

Do not focus on the product; focus on Focus on the products the need that it satisfies 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
1 - 30

Copyright 2007 by Prentice Hall

Impact of Digital Technologies

Consumers have more power and access to information Marketers can gather more information about consumers The exchange between marketer and customers is interactive and instantaneous and goes beyond the PC. Marketers must offer more products and services

Copyright 2007 by Prentice Hall

1 - 31

Societal Marketing Concept

Marketers adhere to principles of social responsibility in the marketing of their goods and services; that is, they must endeavor to satisfy the needs and wants of their target markets in ways that preserve and enhance the wellbeing of consumers and society as a whole.

Copyright 2007 by Prentice Hall

1 - 32

Consumer Behavior Is Interdisciplinary

Psychology Sociology Social psychology Anthropology Economics

Copyright 2007 by Prentice Hall

1 - 33

A Simplified Model of Consumer Decision Making Figure 1-1

Copyright 2007 by Prentice Hall

1 - 34