cb 01 meeting changes and challenges

Consumer Behavior: Mee1ng Changes and

Challenges

CHAPTER ONE

Learning Objec1ves

1.  To Understand What Consumer Behavior Is and the Different Types of Consumers.

2.  To Understand the Rela?onship Between Consumer Behavior and the Marke?ng Concept, the Societal Marke?ng Concept, as Well as Segmenta?on, Targe?ng, and Posi?oning.

3.  To Understand the Rela?onship Between Consumer Behavior and Customer Value, Sa?sfac?on, Trust, and Reten?on.

4.  To Understand How New Technologies Are Enabling Marketers to BePer Sa?sfy the Needs and Wants of Consumers.

Copyright 2012 Pearson Educa?on, Inc. publishing as Pren?ce Hall 2 Chapter One Slide

Learning Objec1ves (con1nued)

5.  To Understand How Marketers Are Increasingly Able to Reach Consumers Wherever Consumers Wish to Be Reached.

6.  To Understand How the World’s Economic Condi?on Is Leading to Consump?on Instability and Change.

7.  To Understand the Makeup and Composi?on of a Model of Consumer Behavior.

8.  To Understand the Structure of This Book


To Which Segment of Consumers Will This Ad Appeal?

Chapter One Slide 4 Copyright 2012 Pearson Educa?on, Inc. publishing as Pren?ce Hall

A Segment of Consumers Who are Environmentally Concerned

Copyright 2012 Pearson Educa?on, Inc. publishing as Pren?ce Hall Chapter One Slide 5

Consumer Behavior

•  The behavior that consumers display in searching for, purchasing, using, evalua?ng, and disposing of products and services that they expect will sa?sfy their needs.

The what, why, when, where, and how of consumer purchases are examined in consumer behavior.


Two Consumer En11es

Copyright 2012 Pearson Educa?on, Inc. publishing as Pren?ce Hall 7

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.

Organiza1onal Consumer

• A business, government agency, or other ins?tu?on (profit or nonprofit) that buys the goods, services, and/or equipment necessary for the organiza?on to func?on.

Chapter One Slide

Development of the Marke1ng Concept


Produc?on Orienta?on

Sales Orienta?on

Marke?ng Concept

Chapter One Slide

Produc1on Orienta1on

•  From the 1850s to the late 1920s •  Companies focus on produc?on capabili?es •  Consumer demand exceeded supply



Sales Orienta?on

Marke?ng Concept

Chapter One Slide

This was the time that the control was in the hands of the producers who said, “if we make it they will buy it.”

Sales Orienta1on

•  From the 1930s to the mid 1950s •  Focus on selling •  Supply exceeded customer demand



Sales Orienta?on

Marke?ng Concept

Chapter One Slide

the manufacturers focused on selling the product which they had overproduced

Marke1ng Concept

•  1950s to current -‐ Focus on the customer! •  Determine the needs and wants of specific target markets

•  Deliver sa?sfac?on bePer than compe??on



Sales Orienta?on

Marke?ng Concept

Chapter One Slide

Understanding the consumer and in delivering products that meet their needs

Societal Marke1ng Concept

•  Considers consumers’ long-‐run best interest

•  Good corporate ci?zenship


The Marke1ng Concept

•  Consumer Research •  Segmenta?on •  Market Targe?ng •  Posi?oning

•  The process and tools used to study consumer behavior

Copyright 2012 Pearson Educa?on, Inc. publishing as Pren?ce Hall

Embracing the Marke0ng Concept

Chapter One Slide 13



•  Process of dividing the market into subsets of consumers with common needs or characteris?cs


Implemen0ng the Marke0ng Concept




The selec?on of one or more of the segments iden?fied to pursue






•  Developing a dis?nct image for the product in the mind of the consumer

•  Successful posi?oning includes: –  Communica?ng the benefits of the product

–  Communica?ng a unique selling proposi?on




The Marke1ng Mix

Product Price

Place Promo?on

Marke?ng Mix


Customer Value, Sa1sfac1on, Trust, and Reten1on


Successful Rela?onships

Customer value

High level of

customer sa?sfac?on

Strong sense of customer trust

Customer reten?on

Chapter One Slide

Successful Rela1onships

•  Customer Value •  Customer Sa?sfac?on

•  Customer Trust •  Customer Reten?on

•  Defined as the ra?o between the customer’s perceived benefits and the resources used to obtain those benefits

•  Perceived value is rela?ve and subjec?ve

•  Developing a value proposi?on is cri?cal


Value, Sa0sfac0on, Trust, and Reten0on



•  Customer Value

•  Customer Sa?sfac?on

•  Customer Trust

•  Customer Reten?on

•  The individual's percep?on of the performance of the product or service in rela?on to his or her expecta?ons.

•  Customer groups based on loyalty include loyalists, apostles, defectors, terrorists, hostages, and mercenaries




Customer Sa1sfac1on

Loyalists

Apostles Defectors

Terrorists Hostages Mercenaries

•  When customers are highly sa?sfied, they con?nue to purchase

•  Provide very posi?ve word-‐of-‐mouth •  When customers are disappointed, they move to the compe??on

•  Who spread nega?ve word-‐of-‐mouth •  Dissa?sfied customers and they stay with the company but are very unhappy

•  Sa?sfied but are not really considered loyal and will move from company to company

21

The Customer Sa1sfac1on Loyalty Rela1onship

0

20

40

60

80

100

1 2 3 4 5

Loya

lty (R

eten

tion)

Very Dissatisfied

Dissatisfied Neither

Satisfied Very Satisfied

Satisfaction

Near Apostle

Zone of Defection

Zone of Indifference

Zone of Affection

Terrorist

Apostle

Source: Adapted from Thomas O. Jones and W. Earl Sasser, Jr., “Why Satisfied Customers Defect,” Harvard Business Review, November-December 1995, p. 91.





•  Establishing and maintaining trust is essen?al.

•  Trust is the founda?on for maintaining a long-‐standing rela?onship with customers.






•  The objec?ve of providing value is to retain highly sa?sfied customers.

•  Loyal customers are key – They buy more products – They are less price sensi?ve

– Servicing them is cheaper

– They spread posi?ve word of mouth




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 •  HewleP-‐Packard •  U.S. Postal Service •  Procter and Gamble •  Apple •  Na?onwide


Customer Profitability-‐Focused Marke1ng

•  Tracks costs and revenues of individual consumers

•  Categorizes them into ?ers based on consump?on behavior

•  A customer pyramid groups customers into four ?ers


Pla?num

Gold

Iron

Lead

Chapter One Slide

Segmentation scheme used by marketers is to segment customers by

their profitability to the firm

Effec1ve Tiering of Service The Customer Pyramid

Which segment sees high value in our offer, spends more with us over time, costs less to maintain, and spreads positive word-of-mouth?

Which segment costs us time, effort, and money, yet does not provide return we want? Which segment is difficult to do business with? Lead

Iron

Gold

Platinum

Good Relationship Customers

Poor Relationship Customers Source: Valarie A Zeithaml, Roland T Rust, and Katharine N. Lemon, “The Customer Pyramid:

Creating and Serving Profitable Customers,” California Management Review 43, no. 4, Summer 2001, pp.118–142.


THE TRADITIONAL MARKETING CONCEPT VALUE-‐ AND RETENTION-‐FOCUSED MARKETING

Make only what you can sell instead of trying to sell what you make.

Use technology that enables customers to customize what you make.

Do not focus on the product; focus on the need that it sa?sfies.

Focus on the product’s perceived value, as well as the need that it sa?sfies.

Market products and services that match customers’ needs bePer than compe?tors’ offerings.

U?lize an understanding of customer needs to develop offerings that customers perceive as more valuable than compe?tors’ offerings.

Research consumer needs and characteris?cs. Research the levels of profit associated with various consumer needs and characteris?cs.

Understand the purchase behavior process and the influences on consumer behavior.

Understand consumer behavior in rela?on to the company’s product.

Realize that each customer transac?on is a discrete sale.

Make each customer transac?on part of an ongoing rela?onship with the customer.

Impact of Digital Technologies


Marketers

• More products and services through customiza?on

• Instantaneous exchanges • Collect and analyze data

Consumers

• Power • Informa?on • Computers, phones, PDA, GPS, smart TV

Chapter One Slide

The Mobile Consumer

•  Wireless Media Messages will expand as: –  Flat-‐rate data traffic increases

–  Screen image quality is enhanced

–  Consumer-‐user experiences with web applica?ons improve


Penetra?on of Internet Usage Among Mobile Subscribers in 16 Countries -‐ FIGURE 1.3

Consumer Behavior Is Interdisciplinary

Psychology

Sociology

Social psychology Anthropology

Economics


A Simple Model of Consumer Decision Making -‐ Figure 1.4

Chapter One Slide 32 Copyright 2012 Pearson Educa?on, Inc. publishing as Pren?ce Hall

This model will guide our studies of consumer behavior

cb 01 meeting changes and challenges

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