CHAPTER

ONE
Consumer Behavior:
Meeting Changes and
Challenges
 What is Consumer Behavior?

• The behavior that consumers display in

– searching for
– purchasing
– using
– evaluating, and
– disposing of products(consuming ideas; e.g. green
consumption) and services that they expect will satisfy
their needs.

Chapter One Slide 2

Two Consumer Entities

Chapter One Slide 3

Development of the
Marketing Concept

Chapter One Slide 4

 1. Production Orientation

• From the 1850s to the late 1920s

• Companies focus on production/manufacturing
capabilities in order to expand production
• No product variation
• Consumer demand exceeded supply

Chapter One Slide 5

 2. Sales Orientation

• From the 1930s to the mid 1950s

• Too many products: from production to selling
• Focus on selling: sell more of what the
manufacturing department was able to produce
• Supply exceeded customer demand

Chapter One Slide 6

 3. Marketing Concept

• 1950s to current - Focus on the customer!

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

Chapter One Slide 7

 The Marketing Concept
Embracing the Marketing
Concept
• Consumer • Consumers are highly complex
Research • Subject to a variety of social and
• Segmentation
• Market Targeting
psychological needs quite apart
• Positioning from their basic functional needs
• The process and tools used to study
consumer behavior

Chapter One Slide 8

 The Marketing Concept
Implementing the
Marketing Concept
• Consumer Research • Many people develop the same needs.
• Segmentation • This commonality of needs constitutes
• Market Targeting many of the “ingredients” of a
• Positioning consumer market segment
• Process of dividing the market
into subsets of consumers with
common needs or
characteristics

Chapter One Slide 9

 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
• Low calories drink as a
criteria for selecting
targeting markets

Chapter One Slide 10

 The Marketing Concept
Implementing the
Marketing Concept
• Consumer Research • Developing a distinct image for the
• Segmentation product in the mind of the consumer
• Market Targeting
• Successful positioning includes:
• Positioning
– Communicating the benefits of the
product rather than the product features
– Communicating a unique selling
proposition-that is a distinctive benefit or
point of difference for the product or
service

Chapter One Slide 11

The Marketing Mix

Chapter One Slide 12

Customer Value, Satisfaction, Trust,
and Retention

• Good marketers today realize that in order to

outperform competitors they must achieve the full
potential from each and every customer.

• Employees should view any exchange with a as part

of a customer relationship and not a transaction.

Chapter One Slide 13

 Successful Relationships
Value, Satisfaction,
Trust, and Retention
• Defined as the ratio between the
• Customer Value customer’s perceived benefits
• Customer (economic, functional, psychological)
and the resources (monetary, time,
Satisfaction effort used to obtain those benefits,
• Customer Trust psychological)
• Perceived value is relative and
• Customer
subjective
Retention
• Developing a value proposition is
critical (a unique selling proposition)

Chapter One Slide 14

 Successful Relationships
Value, Satisfaction,
Trust, and Retention • The individual's perception of the
performance of the product or service
• Customer in relation to his or her expectations.
Value (function of customer expectation)

• Customer Expectations=Experience  Satisfied

Satisfaction Expectations>Experience  delighted
Expectations<Experience  dissatisfied
• Customer Trust
• Customer • Customer groups based on loyalty
Retention include loyalists, apostles, defectors,
terrorists, hostages, and mercenaries

Chapter One Slide 15

• Loyalist: Keep purchasing
• Apostles: Experiences exceed expectations, provide positive word of
mouth
• Defectors: feel neutral or merely satisfied
• Terrorists: had bad experience, spread negative word of mouth
• Hostages: unhappy customers, stay with the company only because of
monopolistic environment/frequent complains
• Mercenaries: being satisfied but do not have any real loyalty

Companies should strive to create apostles, raise the satisfaction of defectors

 loyalists and avoid having terrorists/hostages and reduce the number
of mercenaries

16
 Successful Relationships
Value, Satisfaction,
Trust, and Retention
• Establishing and maintaining trust
is essential to online and off-lien
retailers

• Trust is the foundation for

• Customer Trust maintaining a long-standing
relationship with customers;
• Customer increases the chance of customer
loyalty (Trust)

Chapter One Slide 17

 Successful Relationships
Value, Satisfaction,
• The objective of providing value is
Trust, and Retention to retain highly satisfied customers.
• Loyal customers are key
– They buy more products
– They are less price sensitive; pay less
attention to competitor’s ads
– Servicing them is cheaper
– They spread positive word of mouth

• Customer • Marketing aimed to attract new

Retention customers is expensive

Chapter One Slide 18

Impact of Digital Technologies

Chapter One Slide 19

 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 20

Consumer Behavior Is
Interdisciplinary

Chapter One Slide 21

A Simple Model of Consumer Decision Making

Chapter One Slide 22