Consumer Behavior Chapter 1

Consumer Behavior: Meeting Changes and

Challenges

CHAPTERONE

What is Consumer Behavior?

• The behavior that consumers display in – searching for– purchasing– using– evaluating, and – disposing of products(consuming ideas; e.g. green

consumption) and services that they expect will satisfy their needs.

2Chapter One Slide

Two Consumer Entities

3Chapter One Slide

Development of the Marketing Concept

4Chapter One Slide

1. Production Orientation

• From the 1850s to the late 1920s• Companies focus on production/manufacturing

capabilities in order to expand production• No product variation• Consumer demand exceeded supply

5Chapter One Slide

2. Sales Orientation

• From the 1930s to the mid 1950s• Too many products: from production to selling• Focus on selling: sell more of what the

manufacturing department was able to produce• Supply exceeded customer demand

6Chapter One Slide

3. Marketing Concept

• 1950s to current - Focus on the customer!• Determine the needs and wants of specific target

markets• Deliver satisfaction better than competition

7Chapter One Slide

The Marketing Concept

• Consumer Research

• Segmentation• Market Targeting• Positioning

• Consumers are highly complex• Subject to a variety of social and

psychological needs quite apart from their basic functional needs

• The process and tools used to study consumer behavior

Embracing the Marketing Concept

Chapter One Slide 8


• Consumer Research

• Segmentation• Market Targeting• Positioning

• Many people develop the same needs. • This commonality of needs constitutes

many of the “ingredients” of a consumer market segment

• Process of dividing the market into subsets of consumers with common needs or characteristics

Implementing the Marketing Concept

Chapter One Slide 9


• Consumer Research• Segmentation

• Market Targeting• Positioning

• The selection of one or more of the segments identified to pursue

• Low calories drink as a criteria for selecting targeting markets


Chapter One Slide 10


• 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 rather than the product features

– Communicating a unique selling proposition-that is a distinctive benefit or point of difference for the product or service



The Marketing Mix

12Chapter One Slide

Customer Value, Satisfaction, Trust, and Retention

13Chapter One Slide

• Good marketers today realize that in order to outperform competitors they must achieve the full potential from each and every customer.

• Employees should view any exchange with a as part of a customer relationship and not a transaction.

Successful Relationships

• Customer Value• Customer

Satisfaction• Customer Trust• Customer

Retention

• Defined as the ratio between the customer’s perceived benefits (economic, functional, psychological) and the resources (monetary, time, effort used to obtain those benefits, psychological)

• Perceived value is relative and subjective

• Developing a value proposition is critical (a unique selling proposition)

Value, Satisfaction, Trust, and Retention



• 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. (function of customer expectation)

Expectations=Experience SatisfiedExpectations>Experience delightedExpectations<Experience dissatisfied

• Customer groups based on loyalty include loyalists, apostles, defectors, terrorists, hostages, and mercenaries



• Loyalist: Keep purchasing• Apostles: Experiences exceed expectations, provide positive word of

mouth • Defectors: feel neutral or merely satisfied• Terrorists: had bad experience, spread negative word of mouth• Hostages: unhappy customers, stay with the company only because of

monopolistic environment/frequent complains• Mercenaries: being satisfied but do not have any real loyalty

Companies should strive to create apostles, raise the satisfaction of defectors loyalists and avoid having terrorists/hostages and reduce the number of mercenaries

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• Customer Trust• Customer

• Establishing and maintaining trust is essential to online and off-lien retailers

• Trust is the foundation for maintaining a long-standing relationship with customers; increases the chance of customer loyalty (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; pay less

attention to competitor’s ads – Servicing them is cheaper– They spread positive word of mouth

• Marketing aimed to attract new customers is expensive



Impact of Digital Technologies

19Chapter One Slide

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

20Chapter One Slide

Penetration of Internet Usage Among Mobile Subscribers in 16 Countries - FIGURE 1.3

Consumer Behavior Is Interdisciplinary

21Chapter One Slide

A Simple Model of Consumer Decision Making


Consumer Behavior Chapter 1

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