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Copyright 2007 by Prentice Hall

• Consumer Behavior,Ninth Edition

• Schiffman & Kanuk

Chapter 1Consumer Behavior:

Its Origins and Strategic Applications

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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

Selling Concept

Product 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

• Consumer Research

• Segmentation

• Targeting

• Positioning

• The process and tools used to study consumer behavior

• Two perspectives:

– Positivist approach

– Interpretivistapproach

Implementing the

Marketing Concept

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weblink

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The Marketing Concept

• Consumer Research

• Segmentation

• Targeting

• Positioning

• Process of dividing the market into subsets of

consumers with common needs or characteristics

Implementing the

Marketing Concept

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Segmentation Used by Sports Illustrated

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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

• Consumer Research

• Segmentation

• Targeting

• Positioning

The selection of one or more of the segments to pursue

Implementing the

Marketing Concept

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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

Implementing the

Marketing Concept

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This product is

positioned as a solution to

facial redness.

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The Marketing Mix

• Product

• Price

• Place

• Promotion

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Successful Relationships

Customer

Value

Customer

Satisfaction

Customer

Retention

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Successful Relationships

• Customer Value

• Customer Satisfaction

• Customer Retention

• 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, Satisfaction,

and Retention

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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

• 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

Value, Satisfaction,

and Retention

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Successful Relationships

• 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

Value, Satisfaction,

and Retention

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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

Utilize an understanding of

customer needs to develop

offerings that customers perceive as more valuable than

competitors’ offerings

Market products and services that

match customers’ needs better than

competitors’ offerings

Focus on the product’s

perceived value, as well as the

need that it satisfies

Do not focus on the product; focus on

the need that it satisfies

Use technology that enables

customers to customize what

you make

Make only what you can sell instead

of trying to sell what you make

Value and Retention Focused Marketing

Traditional Marketing Concept

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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

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THE PLAN OF THIS BOOK

The book is divided into four parts, as follows:

• Part I gives an Introduction to the Study of Consumer Behavior.

• Part II discusses the Consumer as an Individual.

• Part III examines Consumers in Their Social and Cultural Settings.

• Part IV synthesizes all of the variables discussed earlier into the Consumer Decision-Making Process.