Consumer Behavior: Meeting

Changes and Challenges

CHAPTER
ONE
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.
 Two Consumer
Entities

Consumer behavior focuses

on how individuals make
decisions to spend their
available resources on
consumption-related items.
As consumers, we play a
vital role in the health of the
economylocal, national,
and international.
Marketers need to know
everything they can about
consumers.
 Marketers need to
understand the personal and
group influences that affect
consumer decisions and how
these decisions are made.
Marketers need to not only
identify their target
audiences, but they need to
know where and how to
reach them.

Development of the
Marketing Concept
How did consumer
behavior study
originate?
 The strategic and applied
field of consumer behavior
is rooted in three
philosophically different
business orientations that
lead up to an extremely
important business
orientation known as the
marketing concept.
Production
Orientation
From the 1850s to the late
1920s
Companies focus on
production capabilities
 Consumer demand
exceeded supply

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

Societal Marketing
Concept
Considers consumers
long-run best interest
Good corporate citizenship
 Business Leaders Who
Understood Consumer
Behavior
Alfred Sloan, General Motors
Colonel Sanders, KFC
Ray Kroc, McDonalds

The Marketing
Concept
Consumer Research
Segmentation
Market Targeting
Positioning
 The process and tools used to
study consumer behavior

The Marketing
Concept
Consumer Research
Segmentation
Market Targeting
Positioning
Process of dividing the market
into subsets of consumers with
common needs or
characteristics. Group of
people exhibiting similar
buying behaviour
 Discussion
Questions
What products that you
regularly purchase are
highly segmented?
What are the different
segments?
Why is segmentation
useful to the marketer for
these products?
The Marketing
Concept
Consumer Research
Segmentation
 Market Targeting
Positioning
The selection of one or more of
the segments identified to
pursue
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
Communicating a unique selling
proposition

The Marketing Mix

Customer Value,
Satisfaction, Trust,
and Retention
Successful
Relationships
Customer Value
 Customer Satisfaction
Customer Trust
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
Discussion
Questions
 How does McDonalds
create value for the
consumer?
How do they communicate
this value?
Successful
Relationships
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 on
loyalty include loyalists,
apostles, defectors, terrorists,
hostages, and mercenaries

Ensuring Customer
Satisfaction
Loyalistscompletely
satisfied customers who
keep purchasing.
Apostlesthose whose
experiences exceed their
expectations and who
provide very positive word of
mouth about the company
to others.
 Defectorsthose who feel
neutral or merely satisfied
and are likely to stop doing
business with the company.
Ensuring Customer
Satisfaction
Terroriststhose who have
had negative experiences
with the company and who
spread negative word of
mouth.
Hostagesunhappy
customers who stay with the
company because of no
choice (or other reasons).
 Mercenariesvery satisfied
customers but who have no
real loyalty to the company
and may defect.
Successful
Relationships
Customer Value
Customer Satisfaction
Customer Trust
Customer Retention

Successful
Relationships
Customer Value
 Customer Satisfaction
Customer Trust
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
Servicing them is cheaper
They spread positive word of
mouth
 Top 10 Ranked U.S.
Companies in Terms of
Consumers Trust and
Respect of Privacy
Table 1.2
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

Impact of Digital
Technologies
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
Consumer Behavior
Is Interdisciplinary
CONSUMER
BEHAVIOR AND
DECISION MAKING
ARE
INTERDISCIPLINARY
Psychologythe study of
the individual.
Sociologythe study of
groups.
 Social psychologythe
study of how an individual
operates in groups.
Anthropologythe
influence of society on the
individual.
Economicsto form the
basis of this new
marketing discipline.
 Many early theories
concerning consumer
behavior were based on
economic theory, the idea
that individuals act
rationally to maximize
their benefits
(satisfactions) in the
purchase of goods and
services.
 Later research discovered
that consumers are just as
likely to purchase
impulsively, and to be
influenced not only by
family, friends, advertisers
and role models, but by
mood, situation, and
emotion.

A Simple Model of Consumer

Decision Making - Figure 1.4
1. What is the
relationship
between the study
of consumer
behavior and the
marketing concept
 The term consumer
behavior refers to the
behavior that consumers
display in searching for,
purchasing, using,
evaluating and disposing
of products and services
that they expect will
satisfy their needs. The
study of consumer
behavior is the study of
how individuals make
consumption-related
decisions.
 the marketing concept
-determine the needs and
wants of specific target
markets, and deliver the
desired satisfaction better
than the competition.
Marketer should make
what they can sell, instead
of trying to sell what they
have made. Thus, a
company which adopts the
marketing concept must
continuously research and
monitor its customers and
potential clients needs
and consumption-related
behavior in order to
develop, effectively
promote, and deliver
products and services
which satisfy clients needs
better than the
competition.