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CHAPTER ONE

Consumer Behavior:
Meeting Changes and Challenges
1. 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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Consumer Behavior

Consumer Behavior includes all the decisions


a consumer makes when spending their time
and money. The what, why, when, where, and
how of consumer purchases are examined in
consumer behavior. It is not just individuals,
but households, families, and groups that
influence the decisions we make.

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Two Consumer Entities

Organizational
Personal Consumer
Consumer
The individual who A business,
buys goods and government agency,
services for his or her or other institution
own use, for (profit or nonprofit)
household use, for that buys the goods,
the use of a family services, and/or
member, or for a equipment necessary
friend. for the organization to
function.

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Two Consumer Entities

The Personal Consumer is sometimes called the end user or


ultimate consumer. This is you when you go to an Electronic
Products Store to purchase a new television for your home.

The Organizational Consumer is buying for the


organization or to re-sell to the personal consumer. Although
both types of consumer entities are important, we will be
focusing on the personal consumer throughout these
presentations.

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2. The Consumer Behavior and
Development of the Marketing
Concept

Production Sales Marketing


Orientation Orientation Concept

Chapter One Slide 6


Production Orientation

From the 1850s to the late 1920s


Companies focus on production capabilities
Consumer demand exceeded supply

Production Sales Marketing


Orientation Orientation Concept

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Production Orientation

During the production orientation, companies wanted


efficient production lines to mass produce products for the
consumer. Because the demand was higher than the
supply, consumers were content to get a product and were
not focused on product variation. This was the time that
the control was in the hands of the producers who said, if
we make it they will buy it.

Production Sales Marketing


Orientation Orientation Concept

Chapter One Slide 8


Sales Orientation

From the 1930s to the mid 1950s


Focus on selling
Supply exceeded customer demand

Production Sales Marketing


Orientation Orientation Concept

Chapter One Slide 9


Sales Orientation

There was overproduction during the production orientation,


which led to excess product. Although the products were still
similar and there was little variation, during the sales
orientation period, the manufacturers focused on selling the
product which they had overproduced.

Production Sales Marketing


Orientation Orientation Concept

Chapter One Slide 10


Marketing Concept

1950s to current - Focus on the customer!


Determine the needs and wants of specific
target markets
Deliver satisfaction better than competition

Production Sales Marketing


Orientation Orientation Concept

Chapter One Slide 11


Marketing Concept

Rather than focus on what can be manufactured, the focus


shifts with the marketing concept to what consumers prefer.
It became a time to put the customer first and to understand
their needs and wants. With this information, marketers can
deliver satisfaction to their target markets. We are remaining
focused on the marketing concept today as marketers become
more sophisticated in understanding the consumer and in
delivering products that meet their needs.

Production Sales Marketing


Orientation Orientation Concept

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Societal Marketing Concept
Considers consumers long-run best interest
Good corporate citizenship
The societal marketing concept was developed from the
marketing concept. Marketers and consumers are
increasingly taking stock of what is good for themselves,
their family, their country, and the planet. Marketing
looks for opportunities to provide products and services
to help consumers reach their goals while also making
profitable decisions for their companies.

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The Marketing Concept
Embracing/Acceptance of
the Marketing Concept
Consumer Research The process and tools
Segmentation used to study consumer
Market Targeting behavior
Positioning

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

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

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

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The Marketing Mix

Product Price

Marketing
Mix

Place Promotion

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Customer Value, Satisfaction, Trust,
and Retention

Successful Relationships
High level Strong
Customer of sense of Customer
Value Customer Customer Retention
Satisfaction Trust

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Customer Value, Satisfaction, Trust, and
Retention
The goal of all marketers is to build and maintain successful
relationships with their consumers. This occurs by offering a
product which has benefits that the consumer values. In addition,
they see the value of those benefits as exceeding the cost of the
product the cost in terms of money, time, and opportunity costs.
If a product delivers value, the company is likely to have a high
level of customer satisfaction. They will trust the marketer and
continue to purchase the product. In addition, they will tell others
about the product and speak highly of it when asked or when
reviewing the product online.

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Customer Value, Satisfaction, Trust, and
Retention
A company with strong customer relationships will be able to
achieve a high level of customer retention their customers will
not defect to the competitor or stop using their product. They will
retain these customer over time and will be more profitable due
to these valuable loyal customers.

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

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Successful Relationships
It is best to think of value as the
consumers perception of what
Value, Satisfaction, they gained vs. what they gave up
Trust, and Retention to purchase a product or use a
Customer Value service.
Customer Marketers are developing value
Satisfaction propositions which are
statements of the value their
Customer Trust
product offers to consumers. If
Customer the value propositions are clear
Retention and applicable to the consumer,
they will understand the strength
of the product benefits.
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Successful Relationships

Value, Satisfaction, Actual Performance is below


Trust, and Retention Expectations Dissatisfied
Customer Value
Actual Performance is equal
Customer to Expectations Satisfied
Satisfaction
Customer Trust Actual Performance exceeds
Customer the Expectations Delighted/
Retention Very Satisfied

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

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Successful Relationships
Customer Satisfaction with respect to customer satisfaction
there might be several types of customers.
Loyalists completely satisfied customers who keep purchasing.
Apostles whose experiences exceed their expectations and
who provide very positive word of mouth about the company to
others.
Defectors who feel neutral or merely satisfied and are likely to
stop doing business with the company.
Terrorists who have had negative experiences with the
company and who spread negative word of mouth.
Hostages who are unhappy customers who stay with the
company because of no choice (or other reasons).
Mercenaries very satisfied customers but who have no real
loyalty to the company and may defect.
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Successful Relationships
Value, Satisfaction,
Trust, and Retention Establishing and
Customer Value maintaining trust is
Customer essential.
Satisfaction
Trust is the
Customer Trust
foundation for
Customer
Retention maintaining a long-
standing relationship
with customers.
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Successful Relationships
Value, Satisfaction, The objective of providing
Trust, and Retention value is to retain highly
satisfied customers.
Customer Value
Loyal customers are key
Customer
Satisfaction They buy more products
Customer Trust They are less price
sensitive
Customer
Retention Servicing them is
cheaper
They spread positive
word of mouth
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Customer Profitability-Focused
Marketing
Tracks costs and
revenues of Platinum
individual consumers
Categorizes them Gold
into tiers based on
consumption Iron
behavior
A customer pyramid Lead
groups customers
into four tiers

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Customer Profitability-Focused
Marketing
Platinum Tier - includes heavy users who are not price
sensitive and who are willing to try new offerings.
Gold Tier consists of customers who are heavy users but not
as profitable because they are more price sensitive than those in
the higher tier, ask for discounts and are likely to buy from several
providers.
Iron Tier - consists of customers whose spending volume and
profitability do not merit special treatment from the company.
Lead Tier includes customers who actually cost the company
money because they claim more attention than is merited by their
spending , tie up the company resources and spread negative
word of mouth.
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3.The Impact of Digital Technologies on Marketing and Consumer

Marketers Consumers

More products and Power


services through Information
customization Computers, phones, PDA,
Instantaneous exchanges GPS, smart TV
Collect and analyze data

Copyright 2010 Pearson Education, Inc. publishing as Prentice Hall Chapter One Slide 31
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4. Consumer Behavior Is
Interdisciplinary

Psychology

Economics Sociology

Social
Anthropology
psychology

Copyright 2010 Pearson Education, Inc. publishing as Prentice Hall Chapter One Slide 32
Consumer Behavior Is
Interdisciplinary
Psychology the study of the individual.
Sociology the study of groups.
Social Psychology the study of how an individual
operates in groups.
Anthropology the influence of society on the
individual.
Economics to form the basis of this new marketing
discipline.

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5. A Simple Model
of Consumer
Decision Making

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END OF CHAPTER # 1

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