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 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 Book
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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 Entities

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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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 supply Can we produce the product? Can we produce enough of it?
Production Orientation Sales Orientation Marketing Concept

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Sales Orientation
From the 1930s to the mid 1950s Focus on selling Supply exceeded customer demand Can we sell the product? Can we charge enough for it?
Production 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 competition
Production Orientation Sales Orientation Marketing Concept

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Marketing Concept
What do customers want? Can we develop it while they still want it? How can we keep our customers satisfied? In response to these customers, firms began to adopt the marketing concept, which involves:

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Marketing Concept
Focusing on customer needs before developing the product Aligning all functions of the company to focus on those needs Realizing a profit by successfully satisfying customer needs over the long-term

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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 Targeting Positioning The process and tools used to study consumer behavior

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The Marketing Concept

Implementing 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 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?

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The Marketing Concept

Implementing 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 Concept

Implementing 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 proposition
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The Marketing Mix

Product
Marketing Mix

Price

Place
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Promotion
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Customer Value, Satisfaction, Trust, and Retention

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

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Successful Relationships
Value, 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 critical
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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, 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 25

Successful Relationships
Loyalists: Satisfied customers, who keep purchasing Apostles: Experiences exceed their expectations,+ ve. Word of mouth. Defectors: On - ve side. Feel neutral or just likely to stop business. Consumer Terrists, who spread negative word-ofmouth. Some dissatisfied customers become

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Successful Relationships

hostages and stay with the company but are very unhappy. Stay due to monopoly. Mercenaries are satisfied but are not really considered loyal and will move from company to company.

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Successful Relationships
Value, 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.
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Successful Relationships
Value, 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 mouth
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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 Procter and Gamble Apple Nationwide
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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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Platinum
Gold Iron Lead

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THE TRADITIONAL MARKETING CONCEPT

Make 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.

VALUE- AND RETENTION-FOCUSED MARKETING

Use 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 consumer needs and characteristics.

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.
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Impact of Digital Technologies

Marketers 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 improve
Penetration of Internet Usage Among Mobile Subscribers in 16 Countries - FIGURE 1.3

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Consumer Behavior Is Interdisciplinary

Psychology

Economics

Sociology

Anthropology

Social psychology

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A Simple Model of Consumer Decision Making - Figure 1.4

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