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CHAPTER ONEConsumer Behavior: Meeting Changes and Challenges

Learning Objectives1. To Understand What Consumer Behavior Is and the Different Types of Consumers. 2. To Understand the Relationship Between Consumer Behavior and the Marketing Concept, the Societal Marketing Concept, as Well as Segmentation, Targeting, and Positioning. 3. To Understand the Relationship Between Consumer Behavior and Customer Value, Satisfaction, Trust, and Retention. 4. To Understand How New Technologies Are Enabling Marketers to Better Satisfy the Needs and Wants of Consumers.Copyright 2010 Pearson Education, Inc. publishing as Prentice Hall Chapter One Slide 2

Learning Objectives (continued)5. To Understand How Marketers Are Increasingly Able to Reach Consumers Wherever Consumers Wish to Be Reached.6. To Understand How the Worlds Economic Condition Is Leading to Consumption Instability and Change. 7. To Understand the Makeup and Composition of a Model of Consumer Behavior. 8. To Understand the Structure of This BookCopyright 2010 Pearson Education, Inc. publishing as Prentice Hall Chapter One Slide 3

To Which Segment of Consumers Will This Ad Appeal?

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A Segment of Consumers Who are Environmentally Concerned

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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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Two Consumer EntitiesPersonal 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.Copyright 2010 Pearson Education, Inc. publishing as Prentice Hall

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.Chapter One Slide 7

Development of the Marketing Concept

Production Orientation

Sales Orientation

Marketing Concept

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Production Orientation From the 1850s to the late 1920s Companies focus on production capabilities Consumer demand exceeded supplyProduction Orientation Sales Orientation Marketing Concept

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Sales Orientation From the 1930s to the mid 1950s Focus on selling Supply exceeded customer demandProduction Orientation Sales Orientation Marketing Concept

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Marketing Concept 1950s to current - Focus on the customer! Determine the needs and wants of specific target markets Deliver satisfaction better than competitionProduction Orientation Sales Orientation Marketing Concept

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Discussion Questions1. What two companies do you believe grasp and use the marketing concept? 2. Why do you believe this?

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Societal Marketing Concept Considers consumers long-run best interest Good corporate citizenship

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The Marketing ConceptEmbracing the Marketing Concept Consumer Research Segmentation Market Targeting Positioning The process and tools used to study consumer behavior

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

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Discussion Questions1. What products that you regularly purchase are highly segmented? 2. What are the different segments? 3. Why is segmentation useful to the marketer for these products?

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

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The Marketing ConceptImplementing the Marketing Concept 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 Communicating a unique selling propositionChapter One Slide 18

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The Marketing MixProductMarketing Mix

Price

PlaceCopyright 2010 Pearson Education, Inc. publishing as Prentice Hall

PromotionChapter One Slide 19

Customer Value, Satisfaction, Trust, and Retention

Successful RelationshipsCustomer value High level of customer satisfaction Strong sense of customer trust Customer retention

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Chapter One Slide 20

Successful RelationshipsValue, Satisfaction, Defined as the ratio between Trust, and Retention the customers perceived Customer Value Customer Satisfaction Customer Trust Customer Retention benefits and the resources used to obtain those benefits Perceived value is relative and subjective Developing a value proposition is criticalChapter One Slide 21

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Discussion Questions How does McDonalds create value for the consumer? How do they communicate this value?

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Successful RelationshipsValue, Satisfaction, Trust, and Retention The individual's perception Customer of the performance of the Value product or service in relation to his or her Customer expectations. Satisfaction Customer groups based on Customer Trust loyalty include loyalists, Customer apostles, defectors, Retention terrorists, hostages, and Copyright 2010 Pearson Education, Inc. publishing as Prentice Hall mercenaries Chapter One Slide 23

Successful RelationshipsValue, Satisfaction, Trust, and Retention Customer Value Customer Satisfaction Customer Trust Customer Retention

Establishing and maintaining trust is essential. Trust is the foundation for maintaining a longstanding relationship with customers.Chapter One Slide 24

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Successful RelationshipsValue, Satisfaction, Trust, and Retention Customer Value Customer Satisfaction Customer 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 Servicing them is cheaper They spread positive word of mouthChapter One Slide 25

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Top 10 Ranked U.S. Companies in Terms of Consumers Trust and Respect of Privacy Table 1.2Top 10 Companies

American Express eBay IBM Amazon Johnson & Johnson Hewlett-Packard U.S. Postal Service Procter and Gamble Apple NationwideChapter One Slide 26

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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 tiersCopyright 2010 Pearson Education, Inc. publishing as Prentice Hall

PlatinumGold Iron Lead

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THE TRADITIONAL MARKETING CONCEPTMake only what you can sell instead of trying to sell what you make. Do not focus on the product; focus on the need that it satisfies. Market products and services that match customers needs better than competitors offerings. Research consumer needs and characteristics.

VALUE- AND RETENTION-FOCUSED MARKETINGUse technology that enables customers to customize what you make. Focus on the products perceived value, as well as the need that it satisfies. Utilize an understanding of customer needs to develop offerings that customers perceive as more valuable than competitors offerings. Research the levels of profit associated with various consumer needs and characteristics.

Understand the purchase behavior process and Understand consumer behavior in relation to the influences on consumer behavior. the companys product. Realize that each customer transaction is a discrete sale. Make each customer transaction part of an ongoing relationship with the customer.Chapter One Slide 28

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Impact of Digital TechnologiesMarketers Consumers

More products and services through customization Instantaneous exchanges Collect and analyze data

Power Information Computers, phones, PDA, GPS, smart TV

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

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Consumer Behavior Is InterdisciplinaryPsychology

Economics

Sociology

Anthropology

Social psychology

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A Simple Model of Consumer Decision Making - Figure 1.4

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All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted, in any form or by any means, electronic, mechanical, photocopying, recording, or otherwise, without the prior written permission of the publisher. Printed in the United States of America.

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Copyright 2010 Pearson Education, Inc. Publishing as Prentice Hall

Chapter Seven Slide 33