1. Chapter 1 Consumer Behavior: Its Origins and Strategic Applications
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Chapter Outline
Overview of Consumer Behavior
The Marketing Concept
The Marketing Mix and Relationships
Digital Technologies
Societal Marketing Concept
A Simplified Model of Consumer Decision Making
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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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4. Customers Search for Products
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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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6. 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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Government Buying
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8. Development of the Marketing Concept
Production
Concept
Product Concept
Selling Concept
Marketing
Concept
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9. The Production Concept
Assumes that consumers are interested primarily in product availability at low prices
Marketing objectives:
Cheap, efficient production
Intensive distribution
Market expansion
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The Product Concept
Assumes that consumers will buy the product that offers them the highest quality, the best performance, and the most features
Marketing objectives:
Quality improvement
Addition of features
Tendency toward Marketing Myopia
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The Selling Concept
Assumes that consumers are unlikely to buy a product unless they are aggressively persuaded to do so
Marketing objectives:
Sell, sell, sell
Lack of concern for customer needs and satisfaction
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The Marketing Concept
Assumes that to be successful, a company must determine the needs and wants of specific target markets and deliver the desired satisfactions better than the competition
Marketing objectives:
Make what you can sell
Focus on buyer’s needs
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Discussion Question
What two companies do you believe grasp and use the marketing concept?
Why do you believe this?
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The Marketing Concept
Implementing the Marketing Concept
Consumer Research
Segmentation
Targeting
Positioning
The process and tools used to study consumer behavior
Two perspectives:
Positivist approach
Interpretivist approach
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The Marketing Concept
Implementing the Marketing Concept
Consumer Research
Segmentation
Targeting
Positioning
Process of dividing the market into subsets of consumers with common needs or characteristics
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17. Segmentation Used by Sports Illustrated

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Discussion Question
What products that you regularly purchase are highly segmented?
What are the different segments?
Why is segmentation useful to the marketer for these products?
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The Marketing Concept
Implementing the Marketing Concept
Consumer Research
Segmentation
Targeting
Positioning
The selection of one or more of the segments to pursue
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The Marketing Concept
Implementing the Marketing Concept
Consumer Research
Segmentation
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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21. This product is positioned as a solution to facial redness.

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The Marketing Mix
Product
Price
Place
Promotion
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23. Successful Relationships
Customer
Value
Customer
Retention
Customer
Satisfaction
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24. Successful Relationships
Value, Satisfaction, and 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
Customer Value
Customer Satisfaction
Customer Retention
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Discussion Question
How does McDonald’s create value for the consumer?
How do they communicate this value?
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26. Successful Relationships
Value, Satisfaction, and Retention
The individual's perception of the performance of the product or service in relation to his or her expectations.
Customers identified based on loyalty include loyalists, apostles, defectors, terrorists, hostages, and mercenaries
Customer Value
Customer Satisfaction
Customer Retention
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27. Successful Relationships
Value, Satisfaction, and 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
They pay less attention to competitors’ advertising
Servicing them is cheaper
They spread positive word of mouth
Customer Value
Customer Satisfaction
Customer Retention
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28. 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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29. Customer Profitability-Focused Marketing
Tier 1: Platinum
Tier 2: Gold
Tier 3: Iron
Tier 4: Lead
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30. Traditional Marketing Concept Value and Retention Focused Marketing
Traditional Marketing Concept Vs. Value and Retention Focused Marketing Table 1-2
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
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31. Impact of Digital Technologies
Consumers have more power and access to information
Marketers can gather more information about consumers
The exchange between marketer and customers is interactive and instantaneous and goes beyond the PC.
Marketers must offer more products and services
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32. Societal Marketing Concept
Marketers adhere to principles of social responsibility in the marketing of their goods and services; that is, they must endeavor to satisfy the needs and wants of their target markets in ways that preserve and enhance the well-being of consumers and society as a whole.
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33. Consumer Behavior Is Interdisciplinary
Psychology
Sociology
Social psychology
Anthropology
Economics
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34. A Simplified Model of Consumer Decision Making – Figure 1-1
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