CHAPTER ONE

The Foundations of Consumer Behavior

Learning Objectives
1. To Understand What Consumer Behavior Is and the Different Types of Consumers. 2. To Understand the Relationship Between Consumer Behavior and the Marketing Concept, the Societal Marketing Concept, as Well as Segmentation, Targeting, and Positioning. 3. To Understand the Relationship Between Consumer Behavior and Customer Value, Satisfaction, Trust, and Retention. 4. To Understand How New Technologies Are Enabling Marketers to Better Satisfy the Needs and Wants of Consumers.
Copyright 2010 Pearson Education, Inc. publishing as Prentice Hall Chapter One Slide 2

To Understand How Marketers Are Increasingly Able to Reach Consumers Wherever Consumers Wish to Be Reached. To Understand the Makeup and Composition of a Model of Consumer Behavior. publishing as Prentice Hall Chapter One Slide 3 . To Understand How the World’s Economic Condition Is Leading to Consumption Instability and Change. 8.Learning Objectives (continued) 5. Inc. 7. 6. To Understand the Structure of This Book Copyright 2010 Pearson Education.

Inc. publishing as Prentice Hall Chapter One Slide 4 . Copyright 2010 Pearson Education. and disposing of products and services that they expect will satisfy their needs. using.Consumer Behavior • The behavior that consumers display in searching for. evaluating. purchasing.

or for a friend. for the use of a family member. government agency. or other institution (profit or nonprofit) that buys the goods. Copyright 2010 Pearson Education. services.Two Consumer Entities Personal Consumer • The individual who buys goods and services for his or her own use. Chapter One Slide 5 . for household use. and/or equipment necessary for the organization to function. publishing as Prentice Hall Organizational Consumer • A business. Inc.

Development of the Marketing Concept Production Orientation Sales Orientation Marketing Concept Copyright 2010 Pearson Education. publishing as Prentice Hall Chapter One Slide 6 . Inc.

Inc. publishing as Prentice Hall Chapter One Slide 7 .Production Orientation • From the 1850s to the late 1920s • Companies focus on production capabilities • Consumer demand exceeded supply Production Orientation Sales Orientation Marketing Concept Copyright 2010 Pearson Education.

Inc. publishing as Prentice Hall Chapter One Slide 8 .Sales Orientation • From the 1930s to the mid 1950s • Focus on selling • Supply exceeded customer demand Production Orientation Sales Orientation Marketing Concept Copyright 2010 Pearson Education.

Inc.Focus on the customer! • Determine the needs and wants of specific target markets • Deliver satisfaction better than competition Production Orientation Sales Orientation Marketing Concept Copyright 2010 Pearson Education.Marketing Concept • 1950s to current . publishing as Prentice Hall Chapter One Slide 9 .

Inc.Societal Marketing Concept • Considers consumers’ long-run best interest • Good corporate citizenship Copyright 2010 Pearson Education. publishing as Prentice Hall Chapter One Slide 10 .

Inc.The Marketing Concept Embracing the Marketing Concept • • • • Consumer Research Segmentation Market Targeting Positioning • The process and tools used to study consumer behavior Copyright 2010 Pearson Education. publishing as Prentice Hall Chapter One Slide 11 .

publishing as Prentice Hall Chapter One Slide 12 .The Marketing Concept Implementing the Marketing Concept • • • • Consumer Research Segmentation Market Targeting Positioning • Process of dividing the market into subsets of consumers with common needs or characteristics Copyright 2010 Pearson Education. Inc.

Inc. publishing as Prentice Hall Chapter One Slide 13 .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 Copyright 2010 Pearson Education.

publishing as Prentice Hall . Inc.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 – Communicating a unique selling proposition Chapter One Slide 14 Copyright 2010 Pearson Education.

Inc. publishing as Prentice Hall Promotion Chapter One Slide 15 .The Marketing Mix Product Marketing Mix Price Place Copyright 2010 Pearson Education.

Inc. Trust. publishing as Prentice Hall Chapter One Slide 16 . and Retention Successful Relationships Customer value High level of customer satisfaction Strong sense of customer trust Customer retention Copyright 2010 Pearson Education. Satisfaction.Customer Value.

Successful Relationships Value. publishing as Prentice Hall . Satisfaction. Inc. • Defined as the ratio between Trust. and Retention the customer’s perceived • Customer Value • Customer Satisfaction • Customer Trust • Customer Retention benefits and the resources used to obtain those benefits • Perceived value is relative and subjective • Developing a value proposition is critical Chapter One Slide 17 Copyright 2010 Pearson Education.

hostages. and Copyright 2010 Pearson Education. Satisfaction • Customer groups based on • Customer Trust loyalty include loyalists. Inc. Trust. Satisfaction. defectors. Retention terrorists. publishing as Prentice Hall mercenaries Chapter One Slide 18 .Successful Relationships Value. and Retention • The individual's perception • Customer of the performance of the Value product or service in relation to his or her • Customer expectations. • Customer apostles.

Chapter One Slide 19 Copyright 2010 Pearson Education. Inc. Satisfaction. • Trust is the foundation for maintaining a longstanding relationship with customers. publishing as Prentice Hall .Successful Relationships Value. and Retention • Customer Value • Customer Satisfaction • Customer Trust • Customer Retention • Establishing and maintaining trust is essential. Trust.

• Loyal customers are key – They buy more products – They are less price sensitive – Servicing them is cheaper – They spread positive word of mouth Chapter One Slide 20 Copyright 2010 Pearson Education. Trust. and Retention • Customer Value • Customer Satisfaction • Customer Trust • Customer Retention • The objective of providing value is to retain highly satisfied customers. publishing as Prentice Hall . Satisfaction.Successful Relationships Value. Inc.

Inc.Top 10 Ranked U.S. Postal Service Procter and Gamble Apple Nationwide Chapter One Slide 26 Copyright 2010 Pearson Education. publishing as Prentice Hall . Companies in Terms of Consumers’ Trust and Respect of Privacy Table 1.S.2 Top 10 Companies • • • • • • • • • • American Express eBay IBM Amazon Johnson & Johnson Hewlett-Packard U.

publishing as Prentice Hall Platinum Gold Iron Lead Chapter One Slide 22 .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 2010 Pearson Education. Inc.

publishing as Prentice Hall . Understand the purchase behavior process and Understand consumer behavior in relation to the influences on consumer behavior. Research consumer needs and characteristics. Research the levels of profit associated with various consumer needs and characteristics. Do not focus on the product. Realize that each customer transaction is a discrete sale. VALUE. Utilize an understanding of customer needs to develop offerings that customers perceive as more valuable than competitors’ offerings. as well as the need that it satisfies. Market products and services that match customers’ needs better than competitors’ offerings. Make each customer transaction part of an ongoing relationship with the customer. Focus on the product’s perceived value.AND RETENTION-FOCUSED MARKETING Use technology that enables customers to customize what you make.THE TRADITIONAL MARKETING CONCEPT Make only what you can sell instead of trying to sell what you make. Inc. Chapter One Slide 23 Copyright 2010 Pearson Education. the company’s product. focus on the need that it satisfies.

Impact of Digital Technologies Marketers Consumers • More products and services through customization • Instantaneous exchanges • Collect and analyze data • Power • Information • Computers. phones. smart TV Copyright 2010 Pearson Education. PDA. publishing as Prentice Hall Chapter One Slide 24 . Inc. GPS.

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. publishing as Prentice Hall Chapter One Slide 25 . Inc.3 Copyright 2010 Pearson Education.

Consumer Behavior Is Interdisciplinary Psychology Economics Sociology Anthropology Social psychology Copyright 2010 Pearson Education. publishing as Prentice Hall Chapter One Slide 26 . Inc.

publishing as Prentice Hall Chapter One Slide 27 . Inc.A Simple Model of Consumer Decision Making .Figure 1.4 Copyright 2010 Pearson Education.