Consumer Behavior: Meeting Changes and Challenges CHAPTER ONE

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 2Chapter One Slide

Consumer behavior What they buy? Why they buy it? When they buy it? Where they buy it? How often they buy it? How often they use it How they evaluate it after the purchase? How they dispose of it? Focuses on how individuals make decisions

Two Consumer Entities Copyright 2010 Pearson Education, Inc. publishing as Prentice Hall 4 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. Chapter One Slide

Customer and Consumer A Customer – Purchases and pays for a product or service A Consumer – Is the ultimate user of the product or service Example – For a food manufacturing business that makes own- label Italian ready meal Customer is the super market to whom it supplies meal Consumer is the individual who eats meal

Development of the Marketing Concept Copyright 2010 Pearson Education, Inc. publishing as Prentice Hall 6 Production Orientation Sales Orientation Marketing Concept Chapter One Slide

Production Orientation From the 1850s to the late 1920s Companies focus on production capabilities Consumer demand exceeded supply Control was in the hands of the producers – “if we make it they will buy it” Copyright 2010 Pearson Education, Inc. publishing as Prentice Hall 7 Production Orientation Sales Orientation Marketing Concept Chapter One Slide

Sales Orientation From the 1930s to the mid 1950s Focus on selling Supply exceeded customer demand Copyright 2010 Pearson Education, Inc. publishing as Prentice Hall 8 Production Orientation Sales Orientation Marketing Concept Chapter One Slide

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 9 Production Orientation Sales Orientation Marketing Concept Chapter One Slide

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Societal Marketing Concept Considers consumers’ long-run best interest Good corporate citizenship The image of the Siemens ad suggests the company is committed to developing products that are safe for customers and the environment. Copyright 2010 Pearson Education, Inc. publishing as Prentice Hall Chapter One Slide11

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 Slide12

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 Slide13

Why Segmentation is Necessary Consumer needs differs Differentiation helps products compete Segmentation helps identify media Copyright 2010 Pearson Education, Inc. Publishing as Prentice Hall14Chapter Three Slide 1.What products that you regularly purchase are highly segmented? 2.What are the different segments?

Bases for Segmentation Copyright 2010 Pearson Education, Inc. Publishing as Prentice Hall15Chapter Three Slide

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 Slide16

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 Slide17

The Marketing Mix ProductPrice PlacePromotion Marketing Mix Copyright 2010 Pearson Education, Inc. publishing as Prentice Hall 18Chapter One Slide

Customer Value, Satisfaction, Trust, and Retention Copyright 2010 Pearson Education, Inc. publishing as Prentice Hall 19 Successful Relationships Customer value High level of customer satisfaction Strong sense of customer trust Customer retention Chapter One Slide

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 Slide20

Discussion Questions How does McDonald’s create value for the consumer? How do they communicate this value? Copyright 2010 Pearson Education, Inc. publishing as Prentice Hall 21Chapter One Slide

Discussion Questions 1.They create 1.bundled meals and dollar menus to create value for price-conscious consumers. 2. value to the health-conscious consumer by offering salads, fruit, and healthy options for Happy Meals. 2.They communicate this value through television ads, in-store signage, and their website. 22

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 Slide23

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 Slide24

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 Slide25

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 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 27 PlatinumGoldIronLead Chapter One Slide

Copyright 2010 Pearson Education, Inc. publishing as Prentice Hall Chapter One Slide 28 THE TRADITIONAL MARKETING CONCEPTVALUE- 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.

Consumer Behavior Is Interdisciplinary Psychology Sociology Social psychology Anthropology Economics Copyright 2010 Pearson Education, Inc. publishing as Prentice Hall 29Chapter One Slide

A Simple Model of Consumer Decision Making - Figure 1.4 Chapter One Slide30 Copyright 2010 Pearson Education, Inc. publishing as Prentice Hall