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Chapter 1

Consumer Behavior:
Its Origins and
Strategic Applications

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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.

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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.

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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.

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Development of the Marketing


Concept
Production
Concept
Product Concept
Selling Concept
Marketing
Concept
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The Production Concept


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

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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


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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

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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

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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

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The Marketing Concept


Implementing the
Marketing Concept
Consumer
Research
Segmentation
Targeting
Positioning

The selection of one


or more of the
segments to pursue

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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
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The Marketing Mix

Product
Price
Place
Promotion

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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
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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

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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
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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

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Customer Profitability-Focused
Marketing

Tier 1: Platinum
Tier 2: Gold
Tier 3: Iron
Tier 4: Lead
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Traditional Marketing Concept Vs. Value


and Retention Focused Marketing
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
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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

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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.

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A Simplified Model of Consumer


Decision Making

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