Consumer Behavior,Ninth Edition
Schiffman & Kanuk
MKT 344 Chapter 1 Consumer Behavior: Meeting Changes and Challenges
Chapter Outline
Overview of Consumer BehaviorThe Marketing ConceptThe Marketing Mix and RelationshipsDigital TechnologiesSocietal Marketing ConceptA 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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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.
SchoolsUniversitiesPrisons
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Development of the Marketing Concept
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Production Concept
Selling Concept
Product Concept
Marketing Concept
The Production Concept
Assumes that consumers are interested primarily in product availability at low prices
Marketing objectives of the companies: Cheap, efficient production Intensive distribution Market expansion (don’t focus on
product innovation or product 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: A short-sighted and inward looking approach to
marketing that focuses on the needs of the company instead of defining the company and its products in terms of the customers' needs and wants.
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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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The Marketing Concept
Consumer Research The process and tools used to study
consumer behavior Segmentation Targeting Positioning
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Implementing the Marketing Concept
The Marketing Concept
Consumer Research Segmentation
Process of dividing the market into subsets of consumers with common needs or characteristics
Targeting Positioning
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Implementing the Marketing Concept
The Marketing Concept
Consumer Research Segmentation Targeting
The selection of one or more of the segments to pursue
Positioning
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Implementing the Marketing Concept
The Marketing ConceptC
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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
The Marketing Mix
ProductPricePlacePromotion
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Successful Relationships
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Customer Value
Customer Satisfaction
Customer Retention
Successful Relationships
Customer Value Defined as the ratio between the
customer’s perceived benefits and the resources used to obtain those benefits
Perceived value is relative and subjective Developing a value proposition is critical
▪ Value proposition: an innovation, service, or feature intended to make a company or product attractive to customers.▪ Lexus: value proposition: delivering quality, zero defects in
manufacturing, superior personal post purchase service
Value, Satisfaction, Trust and Retention
Successful Relationships
Customer Satisfaction The individual's perception of the performance
of the product or service in relation to his or her expectations.
Types of customers based on loyalty:▪ Loyalists: keep purchasing and very loyal▪ Apostles: provide positive word of mouth▪ Defectors: neutral of merely satisfied▪ Terrorists: spread negative word of mouth▪ Hostages: unhappy customers but sticking to the company
for some reason like monopoly or low price etc▪ Mercenaries: satisfied by not loyal. Can switch any time
Value, Satisfaction, Trust and Retention
Successful Relationships
Trust: Customer trust depends on:
▪ Other customers’ positive word of mouth▪ Newspaper▪ Customer opinion posted online ▪ Brand website▪ Ads before movies▪ Search engine ad▪ Online banner ad▪ text ads on mobile phone
Delight: when trust is low, company try to set things right to the customers and give the customer a vibe that s/he is very much valued
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Value, Satisfaction, Trust and Retention
Successful Relationships
Customer Retention Strategy of customer retention is designed to make it
in the best interest of customers to stay with a company rather than switch to another company
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▪ They spread positive word of mouth
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Value, Satisfaction, Trust and Retention
Retention: Selective relationship:
▪ Ranking customers in terms of profitability. i.e. focusing on customers who purchase frequently and a regular customer will get intensive customer service; moderate purchaser will have limited customer service and irregular customers will be ignored
▪ Customer profitability focused marketing: Tracks costs and revenues of individual consumers Copyright 2007 by Prentice Hall
Successful Relationships
Value, Satisfaction, Trust and Retention
Platinum: Heavy users
Gold: heavy user but not profitable, price sensitive,
ask for discounts
Iron: light user and not profitable
Lead: wants more attention than the spending, spread
negative WOM
Retention: Customer
profitability focused marketing: Tracks costs and revenues of individual consumers
Customer pyramid
Successful Relationships
Value, Satisfaction, Trust and Retention
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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A Simplified Model of Consumer Decision Making – Figure 1-1
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