CHAPTER

ONE
Consumer Behavior:
Meeting Changes and
Challenges
 To Which Segment of
Consumers Will This Ad Appeal?

Copyright 2010 Pearson Education, Inc. publishing as Prentice Hall Chapter One Slide 4
A Segment of Consumers Who are Concerned
about luxurious brand

Copyright 2010 Pearson Education, Inc. publishing as Prentice Hall Chapter One Slide 5
4
5
 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.

The what, why, when, where, and how of consumer

purchases are examined in consumer behavior.

Copyright 2010 Pearson Education, Inc. publishing as Prentice Hall Chapter One Slide 6
 Two Consumer Entities

Organizational
Personal Consumer
Consumer
The individual who A business,
buys goods and government agency,
services for his or her or other institution
own use, for (profit or nonprofit)
household use, for that buys the goods,
the use of a family services, and/or
member, or for a equipment necessary
friend. for the organization to
function.
Copyright 2010 Pearson Education, Inc. publishing as Prentice Hall Chapter One Slide 7
8
Factor Influencing consumer behavior

9
The Buyer Decision Process
Buyer Decision Making Process
 The Buyer Decision Process
Need Recognition

Occurs when the buyer recognizes a

problem or need triggered by:
Internal stimuli
External stimuli
 The Buyer Decision Process
Information Search
Sources of Information
Personal sourcesfamily and friends
Commercial sourcesadvertising, Internet
Public sourcesmass media, consumer organizations
Experiential sourceshandling, examining, using the
product
 The Buyer Decision Process
Evaluation of Alternatives

How the consumer processes information to

arrive at brand choices
 The Buyer Decision Process
Purchase Decision

The act by the consumer to buy the most

preferred brand
The purchase decision can be affected by:
Attitudes of others
Unexpected situational factors
 The Buyer Decision Process
Post-Purchase Decision
The satisfaction or dissatisfaction that the
consumer feels about the purchase
Relationship between:
Consumers expectations
Products perceived performance
The larger the gap between expectation and
performance, the greater the consumers
dissatisfaction
Cognitive dissonance is the discomfort caused
by a post-purchase conflict
 The Buyer Decision Process
Post-Purchase Decision

Customer satisfaction is a key to building

profitable relationships with consumers
to keeping and growing consumers and
reaping their customer lifetime value
 The Buyer Decision Process for New
Products
Adoption process is the mental process an
individual goes through from first learning
about an innovation to final regular use.
Stages in the process include:

Awareness Interest Evaluation Trial Adoption

 Development of the
Marketing Concept

Production Sales Marketing

Orientation Orientation Concept

Copyright 2010 Pearson Education, Inc. publishing as Prentice Hall Chapter One Slide 20
 Production Orientation

From the 1850s to the late 1920s

Companies focus on production capabilities
Consumer demand exceeded supply

Production Sales Marketing

Orientation Orientation Concept

This was the time that the control was in

the hands of the producers who said, if
we make it they will buy it.
Copyright 2010 Pearson Education, Inc. publishing as Prentice Hall Chapter One Slide 21
 Sales Orientation

From the 1930s to the mid 1950s

Focus on selling
Supply exceeded customer demand

Production Sales Marketing

Orientation Orientation Concept

the manufacturers focused on selling the

product which they had overproduced

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

1950s to current - Focus on the customer!

Determine the needs and wants of specific
target markets
Deliver satisfaction better than competition

Production Sales Marketing

Orientation Orientation Concept

Understanding the consumer and in

delivering products that meet their needs

Copyright 2010 Pearson Education, Inc. publishing as Prentice Hall Chapter One Slide 23
 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 The process and tools
Segmentation used to study consumer
Market Targeting behavior
Positioning

Copyright 2010 Pearson Education, Inc. publishing as Prentice Hall Chapter One Slide 25
 The Marketing Concept
Implementing the
Marketing Concept
Consumer Research Process of dividing the
Segmentation market into subsets of
Market Targeting consumers with
common needs or
Positioning characteristics

Copyright 2010 Pearson Education, Inc. publishing as Prentice Hall Chapter One Slide 26
 The Marketing Concept
Implementing the
Marketing Concept
Consumer Research The selection of one or
Segmentation more of the segments
Market Targeting identified to pursue
Positioning

Copyright 2010 Pearson Education, Inc. publishing as Prentice Hall Chapter One Slide 27
 The Marketing Concept
Implementing the
Marketing Concept
Consumer Research Developing a distinct image for
the product in the mind of the
Segmentation consumer
Market Targeting Successful positioning includes:
Positioning Communicating the benefits
of the product
Communicating a unique
selling proposition

Copyright 2010 Pearson Education, Inc. publishing as Prentice Hall Chapter One Slide 28
 The Marketing Mix

Product Price

Marketing
Mix

Place Promotion

Copyright 2010 Pearson Education, Inc. publishing as Prentice Hall Chapter One Slide 29
 Customer Value, Satisfaction, Trust,
and Retention

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

Copyright 2010 Pearson Education, Inc. publishing as Prentice Hall Chapter One Slide 30
 Successful Relationships
Value, Satisfaction,
Defined as the ratio between
Trust, and Retention the customers perceived
Customer Value benefits and the resources
Customer used to obtain those
Satisfaction benefits
Customer Trust Perceived value is relative
and subjective
Customer
Retention Developing a value
proposition is critical

Copyright 2010 Pearson Education, Inc. publishing as Prentice Hall Chapter One Slide 31
Value proposition is
an innovation,
service or features
indented to make a
company or
product attractive
to the customers. It
is the full mix of
benefits and price
upon which a
brand is positioned
 Successful Relationships
Value, Satisfaction,
Trust, and Retention
The individual's perception
Customer of the performance of the
Value product or service in
Customer relation to his or her
Satisfaction expectations.
Customer Trust Customer groups based on
Customer loyalty include loyalists,
Retention apostles, defectors,
terrorists, hostages, and
Copyright 2010 Pearson Education, Inc. publishing as Prentice Hall mercenaries Chapter One Slide 33
 Customer Satisfaction
Loyalists When customers are highly satisfied,
they continue to purchase
Apostles Provide very positive word-of-mouth
Defectors When customers are disappointed, they
move to the competition
Terrorists Who spread negative word-of-mouth
Hostages Dissatisfied customers and they stay
with the company but are very unhappy
Mercenaries Satisfied but are not really considered
loyal and will move from company to
company 34
 Successful Relationships
Value, Satisfaction,
Trust, and Retention Establishing and
Customer Value maintaining trust is
Customer essential.
Satisfaction
Trust is the
Customer Trust
foundation for
Customer
Retention maintaining a long-
standing relationship
with customers.
Copyright 2010 Pearson Education, Inc. publishing as Prentice Hall Chapter One Slide 35
 Successful Relationships
Value, Satisfaction, The objective of providing
Trust, and Retention value is to retain highly
satisfied customers.
Customer Value
Loyal customers are key
Customer
Satisfaction They buy more products
Customer Trust They are less price
sensitive
Customer
Retention Servicing them is
cheaper
They spread positive
word of mouth
Copyright 2010 Pearson Education, Inc. publishing as Prentice Hall Chapter One Slide 36
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
Tracks costs and
revenues of Platinum
individual consumers
Categorizes them Gold
into tiers based on
consumption Iron
behavior
A customer pyramid Lead
groups customers
into four tiers
Segmentation scheme used by
marketers is to segment customers by
their profitability to the firm
Copyright 2010 Pearson Education, Inc. publishing as Prentice Hall Chapter One Slide 38
THE TRADITIONAL MARKETING CONCEPT VALUE- AND RETENTION-FOCUSED
MARKETING
Make only what you can sell instead of trying Use technology that enables customers to
to sell what you make. customize what you make.

Do not focus on the product; focus on the Focus on the products perceived value, as well
need that it satisfies. as the need that it satisfies.

Market products and services that match Utilize an understanding of customer needs to
customers needs better than competitors develop offerings that customers perceive as
offerings. 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 Make each customer transaction part of an
discrete sale. ongoing relationship with the customer.

Copyright 2010 Pearson Education, Inc. publishing as Prentice Hall

Chapter One Slide 39