MKT 344

Fall 2015

Chapter 1

CONSUMER BEHAVIOR:
Meeting Changes &
Challenges

Concept of Consumer
Behavior
The

behavior

that

consumers

display

in

searching for, purchasing, using, evaluating and

disposing of products and service which they
expect will satisfy their needs.
Consumer behavior describes 2 different kinds of
consuming entities: Personal consumers and
Organizational consumers.
End-use

consumption

pervasive.

is

perhaps

the

most

CB & the Marketing

Concept
Consumer behavior is rooted in 3 philosophically

different business orientations.

the First of the 3 orientations is labeled as

Production concept; which focused on gearing up

manufacturing skills in order to expand production.
the Second one is labeled as Selling concept;

which put emphasize on selling what the

manufacturing unit was able to produce.
the Third orientation is labeled as Marketing

concept; mainly focused on consumer and their

preferences.

The Marketing Concept

It says, to be successful a firm must determine the

needs and wants of specific target market and deliver

the desired satisfaction better than the competitors.

The marketing concept has effectively served to keep

reminding the business that consumer needs should
be kept up-front when contemplating new product &
service and crafting marketing communication and
strategies.

more modified and extensive version of Marketing

Concept is Social Marketing concept.

Embracing Marketing
Concept
Different

consumer segments may have

different needs.
To identify the needs and demands, the
Marketing research process is important.
After

conducting the research and finding out

the actual needs, marketers must set their

objectives to target different market
segments with different products and
services to satisfy all customers.

Segmentation-TargetingPositioning
Segmentation

is basically dividing the whole

market into small subsets of consumers

having common needs and characteristics.
Market

Targeting is the selection of one or

more of the segments identified for the

company to pursue.
Positioning

refers to the development of a

distinct image for the product or service in the

mind of the consumers.

The Marketing Mix

It

consists of a companys service

and product offerings to consumers

and the methods and tools it
selects to accomplish the exchange.
The

Marketing Mix is consist of 4

elements (known as four Ps) :

Product, Price, Place and Promotion.

Value, Satisfaction, Trust,

Retention
Smart

marketers realized that in order

to outperform the competitors, it is

important to make the customers the
core of the organizations culture.
Customers

should be viewed as

Relationship factor, not as

Transactions.

Providing Customer
Value
Perceived

value is the ratio between

the customers perceived benefits and

the resources.
Successful

positioning of a Brand also

depends on developing a value

proposition (also known as Unique
selling proposition).

Ensure Customer
Satisfaction
Customer satisfaction is the perception of an
individual about the performance of a product or
service.
Level

of customer satisfaction is linked to customer

behavior pattern and has created several types of

customer segments, such as
Loyalists
Apostles
Defectors

Terrorists

Hostages

Mercenaries

Building Customer Trust

Word-of-mouth

communication by

other customers is an excellent way to

build trust among consumers.
Research

says that, Newspapers, Online

community groups and Web sites are

highly effective sources for creating
consumer trust about any Brand.

Securing Customer
Retention
Keeping

the old customers is very necessary

for several reasons

a) loyal customers are less price sensitive.

b) loyal customers buy more products.
c) providing service to same, old customers
is cheaper than that to new customers.
d) loyal customers spread good word-ofmouth.

Securing Customer
Retention (cont..)
Customer

Profitability-focused marketing tracks

cost and revenues and then categorizes each

customer into tiers based on consumption
behavior:
Platinum tier, includes Heavy users who are not
price sensitive.
Gold tier, who are not that heavy users because
they are more price sensitive.
Iron

tier, consumer are not that much profitable.

Lead tier, is mostly costly and spread negative
word of mouth.

Impact of New
Technologies

The emergence of new technologies

have enabled the marketers to better
customize their products, and services.

It has made the marketers to adapt the

elements of the Marketing Mix and
quickly and efficiently build customer
relationships.

Impact of New
Technologies (cont..)

Online communications and emerging

digital technologies have introduced several
dramatic changes, such as
i.

Consumers have more power than ever before.

ii.

They have more access to information through

online communities and websites.

iii. Marketers must offer more services and

products and customize products in reasonable

prices.
iv.

Increasing instantaneous exchanges.

Impact of New Technologies

(cont..)
v. Marketers can gather more

information about consumers,

more quickly and easily.
vi. Impact reaches beyond the PC-

based connection of the Web.

The Mobile Consumer

Cell phone screens are creating

opportunities to secure large advertising

profits.
Cellular service providers are trying to

contact entertainment providers to

develop games, contests and TV-shows
and trying to secure revenues from
advertisers.

Consumer Decision
Making
Consumer

decision making process can be designed based

on 3 distinct but interlocking stages:

Input Stage influences the consumers recognition of
a product need and consists of 2 major sources of
information: Companys marketing effort & External
Sociological Influences.
Process Stage of the model, focuses on how
consumers make decisions. The psychological factors
inherent in each individual affect how the external inputs
from the input stage influence the consumers
recognition of a need and information.

Consumer Decision
Making (cont..)

Output Stage of the consumer

decision-making model consists two
closely related post-decision activities:
purchase behavior and post-purchase
evaluation.

End of Chapter 1