Schiffman Consumer Behavior Chap 01

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Consumer Behavior: Meeting Changes and Challenges:

Consumer Behavior: Meeting Changes and Challenges CHAPTER ONE

Learning Objectives:

Learning Objectives To Understand What Consumer Behavior Is and the Different Types of Consumers. To Understand the Relationship Between Consumer Behavior and the Marketing Concept, the Societal Marketing Concept, as Well as Segmentation, Targeting, and Positioning. To Understand the Relationship Between Consumer Behavior and Customer Value, Satisfaction, Trust, and Retention. To Understand How New Technologies Are Enabling Marketers to Better Satisfy the Needs and Wants of Consumers. Copyright 2010 Pearson Education, Inc. publishing as Prentice Hall 2 Chapter One Slide

Learning Objectives (continued):

Learning Objectives (continued) To Understand How Marketers Are Increasingly Able to Reach Consumers Wherever Consumers Wish to Be Reached. To Understand How the World’s Economic Condition Is Leading to Consumption Instability and Change. To Understand the Makeup and Composition of a Model of Consumer Behavior. To Understand the Structure of This Book Copyright 2010 Pearson Education, Inc. publishing as Prentice Hall 3 Chapter One Slide

What Are Segments?:

What Are Segments? 4

Movers and Shakers:

Movers and Shakers 5

New Empty Nesters:

New Empty Nesters 6

Blue Blood Estates:

Blue Blood Estates 7

To Which Segment of Consumers Will This Ad Appeal?:

A Segment of Consumers Who are Environmentally Concerned:

Consumer Behavior:

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. Copyright 2010 Pearson Education, Inc. publishing as Prentice Hall 10 Chapter One Slide

Two Consumer Entities:

Development of the Marketing Concept:

Production Orientation:

Production Orientation From the 1850s to the late 1920s Companies focus on production capabilities Consumer demand exceeded supply Copyright 2010 Pearson Education, Inc. publishing as Prentice Hall 13 Chapter One Slide

Sales Orientation:

Marketing Concept:

Marketing Concept 1950s to current - Focus on the customer! Determine the needs and wants of specific target markets Deliver satisfaction better than competition Copyright 2010 Pearson Education, Inc. publishing as Prentice Hall 15 Chapter One Slide

Discussion Questions:

Discussion Questions What two companies do you believe grasp and use the marketing concept? Why do you believe this? Copyright 2010 Pearson Education, Inc. publishing as Prentice Hall Chapter One Slide 16

Societal Marketing Concept:

The Marketing Concept:

The Marketing Concept Consumer Research Segmentation Market Targeting Positioning The process and tools used to study consumer behavior Copyright 2010 Pearson Education, Inc. publishing as Prentice Hall Embracing the Marketing Concept Chapter One Slide 18

The Marketing Concept:

The Marketing Concept Consumer Research Segmentation Market Targeting Positioning Process of dividing the market into subsets of consumers with common needs or characteristics Copyright 2010 Pearson Education, Inc. publishing as Prentice Hall Implementing the Marketing Concept Chapter One Slide 19

Discussion Questions:

Discussion Questions What products that you regularly purchase are highly segmented? What are the different segments? 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:

The Marketing Concept Consumer Research Segmentation Market Targeting Positioning The selection of one or more of the segments identified to pursue Copyright 2010 Pearson Education, Inc. publishing as Prentice Hall Implementing the Marketing Concept Chapter One Slide 21

The Marketing Concept:

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 Copyright 2010 Pearson Education, Inc. publishing as Prentice Hall Implementing the Marketing Concept Chapter One Slide 22

What is a Positioning Statement?:

What is a Positioning Statement? Step 1 - To [the target customer with a problem or need], Step 2 - [your brand] is the [frame of reference], Step 3 - -that is the [benefit oriented point of difference] Step 4 - evidenced by [product features] Step 5 - The Reason to buy [your brand] is [what?] 23

The Marketing Mix:

Customer Value, Satisfaction, Trust, and Retention:

Successful Relationships :

Successful Relationships Customer Value SCustomer Satisfaction Customer Trust Customer Retention 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 Copyright 2010 Pearson Education, Inc. publishing as Prentice Hall Value, Satisfaction, Trust, and Retention Chapter One Slide 30

Successful Relationships :

Successful Relationships Customer Value Customer Satisfaction Customer Trust Customer Retention 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 Copyright 2010 Pearson Education, Inc. publishing as Prentice Hall Value, Satisfaction, Trust, and Retention Chapter One Slide 31 Value Proposition It is a Specific …Measurable …Favorable Outcome

Discussion Questions:

Successful Relationships :

Successful Relationships Customer Value Customer Satisfaction Customer Trust Customer Retention The individual's perception of the performance of the product or service in relation to his or her expectations. Customer groups based on loyalty include loyalists, apostles, defectors, terrorists, hostages, and mercenaries Copyright 2010 Pearson Education, Inc. publishing as Prentice Hall Value, Satisfaction, Trust, and Retention Chapter One Slide 33

Satisfaction?:

Satisfaction? If you fall below the consumer's expectations, then the consumer is not satisfied, but if you exceed expectations then you can create “customer delight.” 34

Customer Segments - Satisfaction:

Customer Segments - Satisfaction Loyalists - customers that are highly satisfied – repeat purchase Apostles , who provide very positive word-of-mouth Defectors - When customers are disappointed, they can become defectors and move to the competition Terrorists - who spread negative word-of-mouth Hostages - dissatisfied customers, stay with a company but are very unhappy Mercenaries are satisfied but are not loyal, move from company to company 35

Successful Relationships :

Successful Relationships Customer Value Customer Satisfaction Customer Trust Customer Retention Copyright 2010 Pearson Education, Inc. publishing as Prentice Hall Establishing and maintaining trust is essential. Trust is the foundation for maintaining a long-standing relationship with customers. Value, Satisfaction, Trust, and Retention Chapter One Slide 36

Successful Relationships :

Trust:

Trust 38 Warmth Intensity of emotion, affection Competency adequacy, qualifications, ability

Successful Relationships :

Successful Relationships 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 Copyright 2010 Pearson Education, Inc. publishing as Prentice Hall Value, Satisfaction, Trust, and Retention Chapter One Slide 39

Word of Mouth - Today:

Word of Mouth - Today 40 http://youtu.be/Wp_i-Cq7ec8

Top 10 Ranked U.S. Companies in Terms of Consumers’ Trust and Respect of Privacy Table 1.2:

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 Copyright 2010 Pearson Education, Inc. publishing as Prentice Hall Chapter One Slide 26

Customer Profitability-Focused Marketing:

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 Copyright 2010 Pearson Education, Inc. publishing as Prentice Hall 43 Chapter One Slide

Customer Profitability-Focused Marketing:

Customer Profitability-Focused Marketing Heavy Users – Not price sensitive – adopters product line extensions Copyright 2010 Pearson Education, Inc. publishing as Prentice Hall 44 Chapter One pg 13 Slide Heavy Users – less profitable, seek deals, switch brands Moderate Users – Spending & Volume not enough special treatment Cost Company Money - Bad WOM, picky customers

Slide 45:

Copyright 2010 Pearson Education, Inc. publishing as Prentice Hall Chapter One Slide 45 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 satisfies. Focus on the product’s perceived value, as well as the need that it satisfies. Market products and services that match customers’ needs better than competitors’ offerings. 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 the influences on consumer behavior. Understand consumer behavior in relation to the company’s product. Realize that each customer transaction is a discrete sale. Make each customer transaction part of an ongoing relationship with the customer.

Impact of Digital Technologies:

The Mobile Consumer:

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 Copyright 2010 Pearson Education, Inc. publishing as Prentice Hall 47 Chapter One Slide Penetration of Internet Usage Among Mobile Subscribers in 16 Countries - FIGURE 1.3

Consumer Behavior Is Interdisciplinary:

A Simple Model of Consumer Decision Making - Figure 1.4 :

A Simple Model of Consumer Decision Making - Figure 1.4 Chapter One pg 18 Slide 50 Copyright 2010 Pearson Education, Inc. publishing as Prentice Hall The input stage includes sources of information to the consumer – how they learn and are influenced by the marketer and their environment.

A Simple Model of Consumer Decision Making - Figure 1.4 :

A Simple Model of Consumer Decision Making - Figure 1.4 Chapter One pg 18 Slide 51 Copyright 2010 Pearson Education, Inc. publishing as Prentice Hall The process stage the decision-making process the consumer undergoes when considering a purchase. It moves from the inputs to the psychological factors involved in recognizing a need, searching for information, and evaluating alternatives.

A Simple Model of Consumer Decision Making - Figure 1.4 :

A Simple Model of Consumer Decision Making - Figure 1.4 Chapter One pg 18 Slide 52 Copyright 2010 Pearson Education, Inc. publishing as Prentice Hall The output stage involves the actual purchase and the post-purchase evaluation. This post-purchase evaluation ties to the satisfaction topics discussed earlier in this presentation and the importance of customer loyalty to marketing’s profitability.

Slide 53:

All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted, in any form or by any means, electronic, mechanical, photocopying, recording, or otherwise, without the prior written permission of the publisher. Printed in the United States of America. Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall 53 Copyright 2010 Pearson Education, Inc. Publishing as Prentice Hall Chapter Seven Slide