Ch 1- Introduction

Consumer Behavior,Ninth Edition

Schiffman & Kanuk

Copyright 2007 by Prentice Hall

Chapter 1 Consumer Behavior:

Its Origins and Strategic Applications

1 - 2Copyright 2007 by Prentice Hall

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


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.


Customers Search for Products

weblink


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.


Government Buying

weblink


Development of the Marketing Concept

Production Concept

Selling Concept

Product Concept

Marketing Concept


The Production Concept

• Assumes that consumers are interested primarily in product availability at low prices

• Marketing objectives:– Cheap, efficient production– Intensive distribution– Market expansion


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


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


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


Discussion Question

• What two companies do you believe grasp and use the marketing concept?

• Why do you believe this?



• Consumer Research

• Segmentation• Targeting• Positioning

• The process and tools used to study consumer behavior

• Two perspectives:– Positivist approach– Interpretivist

approach

Implementing the Marketing Concept


weblink





• Process of dividing the market into subsets of consumers with common needs or characteristics


Segmentation Used by Sports Illustrated


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?





The selection of one or more of the segments to pursue






• 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


This product is positioned as a solution to

facial redness.


The Marketing Mix

• Product

• Price

• Place

• Promotion


Successful Relationships



• Customer Value

• Customer Satisfaction

• Customer 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

Value, Satisfaction, and Retention


Discussion Question

• How does McDonald’s create value for the consumer?

• How do they communicate this value?



• Customer Value



• 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



• 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 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


Customer Profitability-Focused Marketing

Tier 1: Platinum

Tier 2: Gold

Tier 3: Iron

Tier 4: Lead


Traditional Marketing Concept Vs. Value and Retention Focused Marketing

Table 1-2Traditional Marketing

ConceptValue 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

competitors’ offerings


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


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.


Consumer Behavior Is Interdisciplinary

• Psychology

• Sociology

• Social psychology

• Anthropology

• Economics


A Simplified Model of Consumer Decision Making – Figure 1-1

Business

Ch 1- Introduction