MKT 344MKT 344Fall 2015Fall 2015

Chapter 1

CONSUMER BEHAVIOR: Meeting Changes &

Challenges

Concept of Consumer Concept of Consumer BehaviorBehavior

The behavior that consumer’s display in searching

for, purchasing, using, evaluating and disposing of

products and service which they expect will

satisfy their needs.

Consumer behavior describes 2 different kinds of consuming entities: Personal consumers and Organizational consumers.

End-use consumption is perhaps the most pervasive.

CB & the Marketing CB & the Marketing ConceptConcept

Consumer behavior is rooted in 3 philosophically different business orientations. the First of the 3 orientations is labeled as

Production concept; which focused on gearing up manufacturing skills in order to expand production.

the Second one is labeled as Selling concept; which put emphasize on selling what the manufacturing unit was able to produce.

the Third orientation is labeled as Marketing concept; mainly focused on consumer and their preferences.

The Marketing ConceptThe Marketing Concept It says, to be successful a firm must determine the

needs and wants of specific target market and deliver the desired satisfaction better than the competitors.

The marketing concept has effectively served to keep reminding the business that consumer needs should be kept up-front when contemplating new product & service and crafting marketing communication and strategies.

A more modified and extensive version of Marketing Concept is Social Marketing concept.

Embracing Marketing Embracing Marketing ConceptConcept

Different consumer segments may have different needs.To identify the needs and demands, the Marketing research process is important.

After conducting the research and finding out the actual needs, marketers must set their objectives to target different market segments with different products and services to satisfy all customers.

Segmentation-Targeting-Segmentation-Targeting-PositioningPositioning

Segmentation is basically dividing the whole market into small subsets of consumers having common needs and characteristics.

Market Targeting is the selection of one or more of the segments identified for the company to pursue.

Positioning refers to the development of a distinct image for the product or service in the mind of the consumers.

The Marketing MixThe Marketing Mix

It consists of a company’s service and product offerings to consumers and the methods and tools it selects to accomplish the exchange.

The Marketing Mix is consist of 4 elements (known as four P’s) : Product, Price, Place and Promotion.

Value, Satisfaction, Trust, Value, Satisfaction, Trust, RetentionRetention

Smart marketers realized that in order to outperform the competitors, it is important to make the customers the core of the organization’s culture.

Customer’s should be viewed as Relationship factor, not as Transactions.

Providing Customer Providing Customer ValueValue

Perceived value is the ratio between the customer’s perceived benefits and the resources.

Successful positioning of a Brand also depends on developing a value proposition (also known as Unique selling proposition).

Ensure Customer Ensure Customer SatisfactionSatisfaction

Customer satisfaction is the perception of an individual about the performance of a product or service.

Level of customer satisfaction is linked to customer behavior pattern and has created several types of customer segments, such as –LoyalistsApostles

× Defectors× Terrorists

× Hostages × Mercenaries

Building Customer TrustBuilding Customer Trust

Word-of-mouth communication by other customers is an excellent way to build trust among consumers.

Research says that, Newspapers, Online

community groups and Web sites are highly effective sources for creating consumer trust about any Brand.

Securing Customer Securing Customer RetentionRetention

Keeping the old customers is very necessary for several reasons –

a) loyal customers are less price sensitive.b) loyal customers buy more products.c) providing service to same, old customers is cheaper than that to new customers.d) loyal customers spread good word-of-mouth.

Securing Customer Securing Customer Retention Retention (con’t..)(con’t..)

Customer Profitability-focused marketing tracks cost and revenues and then categorizes each customer into tiers based on consumption behavior:

Platinum tier, includes Heavy users who are not price sensitive.

Gold tier, who are not that heavy users because they are more price sensitive.

Iron tier, consumer are not that much profitable. Lead tier, is mostly costly and spread negative

word of mouth.

Impact of New Impact of New TechnologiesTechnologies

The emergence of new technologies have enabled the marketers to better customize their products, and services.

It has made the marketers to adapt the elements of the Marketing Mix and quickly and efficiently build customer relationships.

Impact of New Impact of New Technologies Technologies (con’t..)(con’t..)

Online communications and emerging digital technologies have introduced several dramatic changes, such as –i. Consumers have more power than ever before.

ii. They have more access to information through online communities and websites.

iii. Marketers must offer more services and products and customize products in reasonable prices.

iv. Increasing instantaneous exchanges.

Impact of New Technologies Impact of New Technologies (con’t..)(con’t..)

v. Marketers can gather more information about consumers, more quickly and easily.

vi. Impact reaches beyond the PC-based connection of the Web.

The Mobile ConsumerThe Mobile Consumer

Cell phone screens are creating opportunities to secure large advertising profits.

Cellular service providers are trying to contact entertainment providers to develop games, contests and TV-shows and trying to secure revenues from advertisers.

Consumer Decision Consumer Decision MakingMaking

Consumer decision making process can be designed based on 3 distinct but interlocking stages: Input Stage influences the consumer’s recognition

of a product need and consists of 2 major sources of information: Company’s marketing effort & External Sociological Influences.

Process Stage of the model, focuses on how consumers make decisions. The psychological factors inherent in each individual affect how the external inputs from the input stage influence the consumer’s recognition of a need and information.

Consumer Decision Consumer Decision Making Making (con’t..)(con’t..)

Output Stage of the consumer decision-making model consists two closely related post-decision activities: purchase behavior and post-purchase evaluation.

End of Chapter 1