Consumer Behavior:

Meeting Changes and

Challenges
CHAPTER
ONE


1-2
What is Marketed?
Goods (tangible)
Services (intangible)
Events (time basedtrade
shows) and
Experiences (Walt Disney
Worlds Magic kingdom)
Persons (Artists,
Musicians, CEO, Physicians)
Places (Cities, States, Regions,
Nations) and Properties
(Intangible rights of ownership of
real estate or financial properties)
Organizations (Universities,
Museums, Performing Arts
Organization)
Information (Books,
Schools, Magazines)
Ideas (consultation)

3
New Market Economy
4
New Market Economy
5
Understand customer needs and wants

Human needs are physiological, safety, social,
esteem, and self-actualization. These needs are
not created by marketers.

Wants are shaped by ones society and are
described in terms of objects that will satisfy
needs.
BUYER BEHAVIOR
6
7
Understand marketplace, customer needs and wants

While hungry everyone irrespective to any countries needs
something to meet hunger

A Bangladeshi people meet that need through rice, meat, fish
Want .

An American does that through food like Big Mac, French
fries, and soft drinks Want

Wants are shaped by society and culture

When backed by buying power, wants become demand.
BUYER BEHAVIOR
8

In winter a Bangladeshi consumer (typically living in
sub urban area) wants blanket, a Canadian consumer
wants heater and comforter.

In summer a Bangladeshi consumer wants hand Fan,
electric (ceiling or table) Fan, or AC, a western
consumer wants AC or table Fan.

For Bangladesh, in summer, for rich consumer
demand is AC, for middle class demand is electric
Fan, for poor hand Fan.

BUYER BEHAVIOR
9

Market offering is some combination of
products, services, information, or experiences
offered to a market to satisfy a need or want
Many sellers make the mistake of
paying more attention to the
specific products (wants) they
offer than to the benefits and
experiences produced by these
products (needs).
BUYER BEHAVIOR
10

Suppose a customer is buying a floppy disk to store
data.
So, the seller may think to upgrade the attributes of
the floppy disk.
But the customers need that Floppy disk to fulfill
his/her problem to store data from computer.
So his/her main expectation is not the floppy disk
rather better data storage.
So when other company can provide some different
innovative offers like CD, USB memory device that can
satisfy his/her needs, the customer is switched.
BUYER BEHAVIOR
11
BUYER BEHAVIOR
Design a customer-Driven Marketing strategy

To design a winning marketing strategy, the marketing
manager must answer two important questions:

1. What customers will we serve (What is
our target market)?

2. How can we serve these customers best
(What is our value proposition)?
To answer these questions, we
should know buyer behavior

12
BUYER BEHAVIOR FOR MARKETING DECISION
Some definitions for buyer behavior

Buyer/Consumer Behavior is the decision process and
physical activity individuals engage in when evaluating,
acquiring, using or disposing of goods and
services

Buyer/Consumer Behavior reflects the totality of
consumers decisions with respect to the acquisition,
usage and disposition of goods, services, time
and ideas by (human) decision making units (over time)

13
BUYER BEHAVIOR FOR MARKETING DECISION
Buyer Behavior reflects:

thetotality aboutthe ofan bydecisionover
ofdecisionconsumptionofferingmakingunitstime
Whether
What
Why
How
When
Where
How
much/
How
often/
How long

Acquisition

Usage

Disposition

Products

Services

Time

Ideas

Information
gatherer
Influencer
Decider
Purchaser
User

Hours

Days

Weeks

Months

Years
MarketingstrategiesandTactics
14
BUYER BEHAVIOR FOR MARKETING DECISION
Three perspectives on Buyer Behavior
The Decision Making perspective
Views the buyer as a rational, decision maker moving through a series of steps
when making a purchase

The Experiential perspective
Views the buyer as someone who buys on impulses also and hence not always a
rational, decision maker
Impulse buying is an unplanned purchase characterized by relatively rapid
decision-making, and subjective bias for immediate possession
Purchases of new products result more from impulse than from prior planning
Impulsive buying is a sudden, compelling, hedonically complex behavior in
which rapidity of purchase decision precludes thoughtful, deliberate
consideration of all information and choice alternatives

The Behavioral Influence perspective
Views the buyer as propelled by circumstances created by strong environmental
forces to make a purchase without necessarily developing strong feelings for the
product
15
BUYER BEHAVIOR FOR MARKETING DECISION
Why study Consumer Behavior?
(Micro) Marketing Implications
Marketing Concept/Consumer Primacy
Market Segmentation, Targeting and Positioning (S-T-P)
Influencing Product/Service Choices
(Macro) Societal Implications
Understanding Popular Culture--e.g., fast food
Understanding Consumer Culture around the World--e.g.,
Global trend
How does Marketing Affect Consumers?--e.g., Happiness,
Materialism
What Else?
An Increasingly Significant Part of Human Behavior
Understanding Our Own Consumption
Does it excite you?
16
What about - LUX ?
17
To Which Segment of
Consumers Will This Ad Appeal?
Chapter One Slide 4
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A Segment of Consumers Who are
Environmentally Concerned
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Chapter One Slide 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.

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20 Chapter One Slide
Two Consumer Entities
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21
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
Development of the
Marketing Concept
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22
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
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23
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
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24
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
25
Production
Orientation
Sales
Orientation
Marketing
Concept
Chapter One Slide
Discussion Questions
1. What two companies do
you believe grasp and use
the marketing concept?
2. Why do you believe this?
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Chapter One Slide 26
Societal Marketing Concept
Considers consumers
long-run best interest
Good corporate
citizenship
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Chapter One Slide 27
The Marketing Concept
Consumer Research
Segmentation
Market Targeting
Positioning
The process and tools
used to study consumer
behavior

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Embracing the Marketing
Concept
Chapter One Slide 28
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 29
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?
Copyright 2010 Pearson Education, Inc. publishing as Prentice Hall
30 Chapter One 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 Slide 31
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



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Implementing the
Marketing Concept
Chapter One Slide 32
The Marketing Mix
Product Price
Place Promotion
Marketing
Mix
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33 Chapter One Slide
Customer Value, Satisfaction, Trust,
and Retention
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34
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 customers 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 35
Discussion Questions
How does McDonalds
create value for the
consumer?
How do they
communicate this
value?
Copyright 2010 Pearson Education, Inc. publishing as Prentice Hall
36 Chapter One Slide
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 37
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 38
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
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
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41
Platinum
Gold
Iron
Lead
Chapter One Slide
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Chapter One Slide 42
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 products 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 companys 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
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43
Marketers
More products and
services through
customization
Instantaneous exchanges
Collect and analyze data
Consumers
Power
Information
Computers, phones, PDA,
GPS, smart TV




Chapter One Slide
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
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44 Chapter One Slide
Penetration of Internet Usage Among Mobile
Subscribers in 16 Countries - FIGURE 1.3
Consumer Behavior Is
Interdisciplinary
Psychology
Sociology
Social
psychology
Anthropology
Economics
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45 Chapter One Slide
A Simple Model of Consumer Decision Making - Figure 1.4
Chapter One Slide 46
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Prentice Hall
47 Copyright 2010 Pearson Education, Inc. Publishing as Prentice Hall Chapter Seven Slide