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CHAPTER

ONE
Consumer
Behavior:
Meeting
Changes and
Challenges
Learning Objectives

1. 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.

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Learning Objectives
(continued)
5. To Understand How Marketers Are
Increasingly Able to Reach
Consumers Wherever Consumers
Wish to Be Reached.
6. To Understand the Makeup and
Composition of a Model of Consumer
Behavior.

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To Which Segment of
Consumers Will This Ad
Appeal?

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4
A Segment of Consumers
Who are Environmentally
Concerned

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5
Cologne and Perfume Usage by
Country and gender
Country Men % Women %
China 4 23
France 70 92
Germany 85 94
Great Britain 70 88
Saudi Arabia 53 84
United States 57 79
Italy 83 72
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 Entities

Personal Organizational
Consumer Consumer
The individual A business,
who buys goods government
and services for agency, or other
his or her own institution (profit
use, for or nonprofit) that
household use, buys the goods,
for the use of a services, and/or
family member, equipment
or for a friend. necessary for the
organization to
function.11 Chapter One
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Development of the
Marketing Concept

Producti
Sales Marketin
on
Orientati g
Orientati
on Concept
on

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Production Orientation

From the 1850s to the late 1920s


Companies focus on production
capabilities
Consumer demand exceeded supply
Productio
Sales Marketin
n
Orientati g
Orientati
on Concept
on

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Sales Orientation

From the 1930s to the mid 1950s


Focus on selling
Supply exceeded customer demand

Productio
Sales Marketin
n
Orientati g
Orientati
on Concept
on

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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
competition
Productio
Sales Marketin
n
Orientati g
Orientati
on Concept
on

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Discussion Questions

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

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

1. 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?

Copyright 2010 Pearson Education, Inc. publishing as Prentice Hall 20 Chapter One Slide
The Marketing Concept
Implementing the
Marketing
Concept
Consumer
Research
Segmentation
Market The selection of one
Targeting or more of the
Positioning segments identified
to pursue

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The Marketing Concept
Implementing the
Marketing
Developing a distinct
Concept
Consumer image for the product in
Research the mind of the consumer
Successful positioning
Segmentation
includes:
Market Communicating the
Targeting benefits of the product
Positioning Communicating a
unique selling
proposition
Copyright 2010 Pearson Education, Inc. publishing as Prentice Hall 22 Chapter One Slide
Segmentation, Targeting
and Positioning with
Captive Consumers
Captive consumers: consumers
captured by a product/vendor and
are resistant to use another
product/vendor due to
Switching cost
Habitual product
Search cost is high
Invested time already

23
Segmentation, Targeting
and Positioning with
Captive Consumers
Think>
What captive consumers at airport
hold several possibilities for
marketers?
Impulse buying
Strengthening brand
association
Kiosk and brochures

24
The Marketing Mix

Product Price
Marketing
Mix

Place Promotion

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Consumer Behavior and
Brand Success
Biscuit category:
Previously
Unorganized
Dominated by local brands and bakeries
Consumption by low end market

26
Consumer Behavior and
Brand Success
Britannia Tiger biscuits
Value proposition
Price point
Crisps and nutritious
Created association with semi-urban
and rural areas
Reinforced with cultural perspective

27
Customer Value,
Satisfaction, Trust, and
Retention

Successful Relationships
High
Strong
level of Custome
Custome sense of
customer r
r value customer
satisfacti retention
trust
on

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Successful Relationships
Value,
Satisfaction, Defined as the ratio
between the
Trust, and
Customer customers perceived
Retention
Value benefits and the
Customer resources used to
Satisfaction obtain those benefits
Customer Perceived value is
Trust relative and subjective
Developing a value
Customer
proposition is critical
Retention
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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 Relationships
Value, The individual's
Satisfaction, perception of the
performance of the
Trust, and
Customer product or service in
Retention
Value relation to his or her
Customer expectations.
Satisfaction Customer groups
Customer based on loyalty
Trust include loyalists,
apostles, defectors,
Customer
terrorists, hostages,
Retention
and mercenaries
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Successful Relationships
Value,
Satisfaction, Establishing and
Trust, and
Customer maintaining trust
Retention
Value is essential.
Customer Trust is the
Satisfaction
Customer
foundation for
Trust maintaining a
Customer long-standing
Retention relationship with
customers.
Copyright 2010 Pearson Education, Inc. publishing as Prentice Hall 32 Chapter One Slide
The objective of
Successful Relationships providing value is to
retain highly satisfied
Value, customers.
Satisfaction, Loyal customers are
key
Trust,
Customer and
They buy more
Retention
Value products
Customer They are less price
Satisfaction sensitive
Customer Servicing them is
Trust cheaper
Customer They spread
Retention positive word of
mouth
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33 Chapter One Slide
Self-Assessment

In terms of customer value, all of


the following are examples of
resources used to obtain
benefits EXCEPT:
A. effort to purchase the product
B. monetary benefit.
C. time.
D. functional benefit
34
Self-assessment

The two types of consumers that


are the focus of consumer
behavior are personal consumers
and household consumers.
A. True
B. False

35
Top 10 Ranked U.S. Companies in Terms
of Consumers Trust and Respect of
Privacy
Table 1.2
Top 10
Companies
American
Express
eBay
IBM
Amazon
Johnson &
Johnson
Hewlett-Packard
U.S. Postal
Service
Copyright 2010 Pearson Education, Inc. publishing as Prentice Hall Chapter One Slide 26
Customer Profitability-
Focused Marketing
Tracks costs and
revenues of Platinum
individual consumers
Categorizes them Gold
into tiers based on
consumption Iron
behavior
A customer pyramid Lead
groups customers
into four tiers

Copyright 2010 Pearson Education, Inc. publishing as Prentice Hall 37 Chapter One Slide
THE TRADITIONAL MARKETING VALUE- AND RETENTION-
CONCEPT FOCUSED MARKETING
Make only what you can sell instead Use technology that enables
of trying to sell what you make. customers to customize what you
make.
Do not focus on the product; focus on Focus on the products perceived
the need that it satisfies. value, as well as the need that it
satisfies.
Market products and services that Utilize an understanding of customer
match customers needs better than needs to develop offerings that
competitors offerings. customers perceive as more valuable
than competitors offerings.
Research consumer needs and Research the levels of profit
characteristics. associated with various consumer
needs and characteristics.
Understand the purchase behavior Understand consumer behavior in
process and the influences on relation to the companys product.
consumer behavior.
Realize that each customer Make each customer transaction part
transaction is a discrete sale. of an ongoing relationship with the
customer.
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38 Chapter One Slide
Self-assessment

A good positioning strategy focuses


on the features of the product
instead of the benefits that the
product will provide to the consumer
A. True
B. False

39
Impact of Digital Technologies

Marketers Consumers

More products and Power


services through Information
customization Computers, phones,
Instantaneous PDA, GPS, smart TV
exchanges
Collect and analyze
data

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A Simple Model of Consumer Decision
Making - Figure 1.4

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Self-assessment

Mass marketing ideas are the


basic assumptions in the
marketing concept.
A. True
B. False

42
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photocopying, recording, or otherwise, without the prior
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States of America.

Copyright 2010 Pearson Education, Inc.


Publishing as Prentice Hall
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43 Chapter Seven Slide