Chapter 1

Consumer Behavior:
Its Origins and
Strategic Applications

Consumer Behavior,
Ninth Edition

Schiffman & Kanuk

 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.

Consumer behavior is
the engine of marketing

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 Consumer Behaviour
The dynamic interaction of cognition,
behaviour and environmental events by
which human beings conduct the
exchange aspects of their lives
(American Marketing Association)

A discipline dealing with how and why

consumers consumers purchase (or
dont purchase) products and services.
(Neal et al.)

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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

weblink

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 Development of the Marketing
Concept
Production
Concept

Product Concept

Selling 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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Product concept is the idea that
consumers will favor products that offer
the most quality, performance, and
features. Organizations should
therefore devote its energy to making
continuous product improvements.
(TQM)
Four criteria
ZD
CI
Customer involvement
CS
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 Marketing Myopia

Managements failure to recognize a

companys scope of business.

Sellers pay more attention to the specific

products they offer than to the benefits
and experiences produced by the
products.
They focus on the wants and lose sight
of the needs.
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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 buyers needs

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 The Marketing Concept
Implementing the
Marketing Concept
Consumer The process and
Research tools used to study
Segmentation consumer behavior
Targeting Two perspectives:
Positioning Positivist approach
Interpretivist
approach

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 weblink

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

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

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 The Marketing Concept
Implementing the
Marketing Concept
Consumer Developing a distinct image
Research for the product in the mind
of the consumer
Segmentation
Successful positioning
Targeting includes:
Positioning Communicating the
benefits of the product
Communicating a unique
selling proposition
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This product is
positioned as
a solution to
facial redness.
 The Marketing Mix
Product
Price
Place
Promotion

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 Successful Relationships

Customer Customer
Value Retention

Customer
Satisfaction

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 Successful Relationships
Value, Satisfaction,
and Retention
Defined as the ratio between
Customer the customers perceived
Value benefits and the resources
Customer used to obtain those
Satisfaction benefits
Perceived value is relative
Customer
and subjective
Retention
Developing a value
proposition is critical

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 Successful Relationships
Value, Satisfaction,
and Retention
Customer The individual's perception of
the performance of the product
Value
or service in relation to his or
Customer her expectations.
Satisfaction Customers identified based on
Customer loyalty include loyalists,
apostles, defectors, terrorists,
Retention
hostages, and mercenaries

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 Successful Relationships
Value, Satisfaction, and Retention
The objective of providing value
is to retain highly satisfied
customers.
Customer
Loyal customers are key
Value
They buy more products
Customer They are less price sensitive
Satisfaction They pay less attention to
Customer competitors advertising
Retention Servicing them is cheaper
They spread positive word of
mouth
Cost of lost customer is huge
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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 and
marketing investment pyramid

Tier 1: Platinum
Tier 2: Gold
Tier 3: Iron
Tier 4: Lead

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 Tools for measuring customer
satisfaction

Lost customer analysis

Customer satisfaction survey
Ghost shopping
Complaint and suggestion systems

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 Customer development process
Suspects
Prospects
First time customer
Repeat customer
Clients (law products)
Members ( super store)
Advocate (opinion leader/reference
group)
Partner ( marriage).
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 Traditional Marketing Concept Vs. Value
and Retention Focused Marketing
Table 1-2
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
the need that it satisfies perceived value, as well as the
need that it satisfies
Market products and services that Utilize an understanding of
match customers needs better than customer needs to develop
competitors offerings offerings that customers
perceive as more valuable than
competitors offerings

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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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 Social Marketing

Society
(Human Welfare)

Socital
Marketing
Orientation

Consumers Company
(Satisfaction) (Profits)
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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
Figure 1-1

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