Consumer Behavior,

Ninth Edition

Schiffman & Kanuk

Consumer Behavior:
Meeting Changes and Challenges
 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 explains-
– How, why, when, where, how frequently, consumers make
decisions
– The evaluation criteria of the consumers before and after
purchase

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 Types of Consumers
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.
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.
–Schools
–Universities
–Prisons

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 Development of the Marketing Concept

Production Concept

Product Concept

Selling Concept

Marketing Concept

Societal Marketing Concept

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 The Production Concept
• Assumes that consumers are interested
primarily in product availability at low prices
• Example: Ford
• Marketing objectives of the companies:
– Cheap, efficient production
– Intensive distribution
– Market expansion (don’t focus on product
innovation or product 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
 Example: GM (General Motors)
 Marketing objectives:
 Quality improvement
 Addition of features
 Tendency toward Marketing Myopia:
 A short-sighted and inward looking approach to marketing that
focuses on the needs of the company instead of defining the
company and its products in terms of the customers' needs and
wants.
 Example: Apple vs Microsoft in 1980

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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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 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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 The Marketing Concept
Implementing the Marketing Concept

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 The Marketing Concept
Implementing the Marketing Concept
• Consumer Research The process and tools used to study
consumer behavior
– Segmentation Process of dividing the market into subsets of
consumers with common needs or characteristics
• Targeting The selection of one or more of the segments to
pursue
• 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

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Successful Relationships

Customer
Trust
Customer Customer
Value Retention

Customer
Satisfaction

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 Successful Relationships
Value, Satisfaction, Trust
and Retention
• Customer Value
– 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 proposition: an innovation, service, or feature intended to
make a company or product attractive to customers.
– Lexus: value proposition: delivering quality, zero defects in
manufacturing, superior personal post purchase service
– BMW: The Ultimate driving machine 14
 Successful Relationships
Value, Satisfaction, Trust and Retention
• Customer Satisfaction
– The individual's perception of the performance of the
product or service in relation to his or her expectations.
– Types of customers based on loyalty:
• Loyalists: keep purchasing and very loyal
• Apostles: provide positive word of mouth
• Defectors: neutral of merely satisfied
• Terrorists: spread negative word of mouth
• Hostages: unhappy customers but sticking to the company for some
reason like monopoly or low price etc
• Mercenaries: satisfied by not loyal. Can switch any time
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 Successful Relationships
Value, Satisfaction, Trust and Retention
 Trust:
 Customer trust depends on:
▪ Other customers’ positive word of mouth
▪ Newspaper
▪ Customer opinion posted online
▪ Brand website
▪ Ads before movies
▪ Search engine ad
▪ Online banner ad
▪ text ads on mobile phone
 Delight: when trust is low, company try to set things
right to the customers and give the customer a vibe that
s/he is very much valued
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 Successful Relationships
Value, Satisfaction, Trust and Retention

• Customer Retention
– Strategy of customer retention is designed to make it in the best
interest of customers to stay with a company rather than switch to
another company
– 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
• They spread positive word of mouth

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 Successful Relationships
Value, Satisfaction, Trust and Retention
• Retention:
– Selective relationship:
• Ranking customers in terms Platinum: Heavy users
of profitability. i.e. focusing
on customers who purchase
frequently and a regular Gold: heavy user but not profitable, price
sensitive, ask for discounts
customer will get intensive
customer service; moderate
purchaser will have limited
Iron: light user and not profitable
customer service and
irregular customers will be
ignored
Lead: wants more attention than the spending,
 Customer profitability spread negative WOM
focused marketing: Tracks
costs and revenues of
individual consumers
 Customer pyramid
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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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A Simplified Model of Consumer Decision
Making

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