Chapter 1

Consumer Behavior:
Its Origins and
Strategic Applications

Consumer Behavior,
Ninth Edition

Schiffman & Kanuk

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 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

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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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 Customers Search for Products

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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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 Government Buying

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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
• Marketing objectives:
– Make what you can sell
– Focus on buyer’s needs

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

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

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

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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?

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

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 The Marketing Concept
Implementing the
Marketing Concept
• Consumer • Developing a distinct image
Research for the product in the mind
of the consumer
• Segmentation
• Successful positioning
• Targeting includes:
• Positioning – Communicating the
benefits of the product
– Communicating a unique
selling proposition
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This product is
positioned as
a solution to
facial redness.
 The Marketing Mix
• Product
• Price
• Place
• Promotion

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 Successful Relationships

Customer Customer
Value Retention

Customer
Satisfaction

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 Successful Relationships
Value, Satisfaction,
and Retention
• Defined as the ratio between
• Customer the customer’s perceived
Value benefits and the resources
• Customer used to obtain those
Satisfaction benefits
• Perceived value is relative
• Customer
and subjective
Retention
• Developing a value
proposition is critical

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 Discussion Question
• How does McDonald’s create value for
the consumer?
• How do they communicate this value?

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

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 Successful Relationships
Value, Satisfaction,
and Retention
• The objective of providing value
• Customer is to retain highly satisfied
Value customers.
• Customer • Loyal customers are key
Satisfaction – They buy more products
• Customer – They are less price sensitive
Retention – 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
Table 1-2
Traditional Marketing Value and Retention
Concept Focused Marketing
Make only what you can sell instead Use technology that enables
of trying to sell what you make customers to customize what
you make
Do not focus on the product; focus on Focus on the product’s
the need that it satisfies perceived value, as well as the
need that it satisfies
Market products and services that Utilize an understanding of
match customers’ needs better than customer needs to develop
competitors’ offerings 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 well-
being of consumers and society as a
whole.

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 Consumer Behavior Is
Interdisciplinary
• Psychology
• Sociology
• Social psychology
• Anthropology
• Economics

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 A Simplified Model of Consumer
Decision Making – Figure 1-1

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