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1
 CHAPTER
ONE
Consumer Behavior:
Meeting Changes and
Challenges

2
 Learning Objectives
1. To Understand What Consumer Behavior Is and the
Different Types of Consumers.
2. To Understand the Relationship Between Consumer
Behavior and the Marketing Concept, the Societal
Marketing Concept, as Well as Segmentation, Targeting,
and Positioning.
3. To Understand the Relationship Between Consumer
Behavior and Customer Value, Satisfaction, Trust, and
Retention.
4. To Understand How New Technologies Are Enabling
Marketers to Better Satisfy the Needs and Wants of
Consumers.

Chapter One Slide 3

 Learning Objectives (continued)

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
Condition Is Leading to Consumption Instability
and Change.
7. To Understand the Makeup and Composition of
a Model of Consumer Behavior.
8. To Understand the Structure of This Book

Chapter One Slide 4

 To Which Segment of
Consumers Will This Ad Appeal?

Chapter One Slide 45

A Segment of Consumers Who are
Environmentally Concerned

Chapter One Slide 56

 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.

Chapter One Slide 7

 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.

Chapter One Slide 8

 Development of the
Marketing Concept

Production Product Sales Marketing

Orientation Orientation Orientation Concept

Chapter One Slide 9

 Production Orientation

• From the 1850s to the late 1920s-Ford

• Companies focus on production capabilities
• Consumer demand exceeded supply

Production Product Sales Marketing

Orientation orientation Orientation Concept

Chapter One Slide 10

 Product Orientation

• From the 1920s-GM

• Companies focus on incorporating more
Feature

Production Product Sales Marketing

Orientation orientation Orientation Concept

Chapter One Slide 11

Marketing Myopia

12
 Sales Orientation

• From the 1930s to the mid 1950s

• Focus on selling
• Supply exceeded customer demand

Production Product Sales Marketing

Orientation Orientation Orientation Concept

Chapter One Slide 13

 Marketing Concept

• 1950s to current - Focus on the customer!

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

Production Product Sales Marketing

Orientation Orientation Orientation Concept

Chapter One Slide 14

Holistic Marketing Dimensions
Societal Marketing Concept

• Considers consumers’
long-run best interest
• Good corporate
citizenship

Chapter One Slide 16

 Core Marketing Concepts
• Needs: the basic human requirements such as
for air, food, water, clothing, and shelter

• Wants: specific objects that might satisfy the

need

• Demands: wants for specific products backed

by an ability to pay
 Discussion Questions

1. What two companies do

you believe grasp and use
the marketing concept?
2. Why do you believe this?

Chapter One Slide 18

 The Marketing Concept
Embracing the Marketing
Concept
• Consumer Research • The process and tools
• Segmentation used to study consumer
• Market Targeting behavior
• Positioning

Chapter One Slide 19

 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

Chapter One Slide 20

 Discussion Questions

1. What products that you regularly purchase

are highly segmented?
2. What are the different segments?
3. Why is segmentation useful to the marketer
for these products?

Chapter One Slide 21

 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

Chapter One Slide 22

 The Marketing Mix

Product Price

Marketing
Mix

Place Promotion

Chapter One Slide 23

 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

Chapter One Slide 24

 Online Core Marketing Concepts

• Impressions: occur when consumers view a

communication

• Engagement: the extent of a customer’s

attention and active involvement with a
communication
• Conversation:
• Transaction:
Customer Value, Satisfaction, Trust,
and Retention

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

Chapter One Slide 26

 Successful Relationships
Value, Satisfaction,
• Defined as the ratio between
Trust, and Retention the customer’s 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

Chapter One Slide 27

 Discussion Questions

• How does McDonald’s

create value for the
consumer?
• How do they
communicate this
value?

Chapter One Slide 28

 Successful Relationships
• The individual's perception
Value, Satisfaction, of the performance of the
Trust, and Retention product or service in
relation to his or her
• Customer Value expectations.
• Customer • Customer groups based on
Satisfaction (P v/s E) loyalty include
• Customer Trust – apostles,
• Customer Retention – loyalists,
– mercenaries
– defectors,
– terrorists,
– hostages, and Chapter One Slide 29
 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.
Chapter One Slide 30
 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
Chapter One Slide 31
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
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

Chapter One Slide 33

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 product’s 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 company’s product.

Realize that each customer transaction is a Make each customer transaction part of an
discrete sale. ongoing relationship with the customer.

Chapter One Slide 34

 Impact of Digital Technologies

Marketers Consumers

• More products and • Power

services through • Information
customization • Computers, phones, PDA,
• Instantaneous exchanges GPS, smart TV
• Collect and analyze data

Chapter One Slide 35

 The Mobile Consumer
Penetration of Internet Usage Among Mobile
• Wireless Media Subscribers in 16 Countries - FIGURE 1.3
Messages will
expand as:
– Flat-rate data
traffic increases
– Screen image
quality is enhanced
– Consumer-user
experiences with
web applications
improve

Chapter One Slide 36

 Consumer Behavior Is
Interdisciplinary

Psychology

Economics Sociology

Social
Anthropology
psychology

Chapter One Slide 37

38
A Simple Model of Consumer Decision Making - Figure 1.4

Chapter One Slide 39