CHAPTER

ONE

Consumer Behavior:
Mee1ng Changes and
Challenges

Learning Objec1ves
1. To Understand What Consumer Behavior Is and the
Dierent Types of Consumers.
2. To Understand the Rela?onship Between Consumer
Behavior and the Marke?ng Concept, the Societal
Marke?ng Concept, as Well as Segmenta?on, Targe?ng,
and Posi?oning.
3. To Understand the Rela?onship Between Consumer
Behavior and Customer Value, Sa?sfac?on, Trust, and
Reten?on.
4. To Understand How New Technologies Are Enabling
Marketers to BePer Sa?sfy the Needs and Wants of
Consumers.
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Chapter One Slide 2

Learning Objec1ves (con1nued)

5. To Understand How Marketers Are Increasingly
Able to Reach Consumers Wherever Consumers
Wish to Be Reached.
6. To Understand How the Worlds Economic
Condi?on Is Leading to Consump?on Instability
and Change.
7. To Understand the Makeup and Composi?on of
a Model of Consumer Behavior.
8. To Understand the Structure of This Book
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Chapter One Slide 3

To Which Segment of
Consumers Will This Ad Appeal?

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Chapter One Slide 4

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, evalua?ng,
and disposing of products and services that
they expect will sa?sfy their needs.

The what, why, when, where, and how of consumer

purchases are examined in consumer behavior.
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Chapter One Slide 6

Two Consumer En11es

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.
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Organiza1onal
Consumer
A business,
government agency,
or other ins?tu?on
(prot or nonprot)
that buys the goods,
services, and/or
equipment necessary
for the organiza?on
to func?on.
Chapter One Slide 7

Development of the
Marke1ng Concept

Produc?on
Orienta?on

Sales
Orienta?on

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Marke?ng
Concept

Chapter One Slide 8

Produc1on Orienta1on
From the 1850s to the late 1920s
Companies focus on produc?on capabili?es
Consumer demand exceeded supply
Produc?on
Sales
Orienta?on Orienta?on

Marke?ng
Concept

This was the time that the control was in

the hands of the producers who said, if
we make it they will buy it.
Copyright 2012 Pearson Educa?on, Inc. publishing as Pren?ce Hall

Chapter One Slide 9

Sales Orienta1on
From the 1930s to the mid 1950s
Focus on selling
Supply exceeded customer demand
Produc?on
Sales
Orienta?on Orienta?on

Marke?ng
Concept

the manufacturers focused on selling the

product which they had overproduced

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Chapter One Slide 10

Marke1ng Concept
1950s to current - Focus on the customer!
Determine the needs and wants of specic
target markets
Deliver sa?sfac?on bePer than compe??on
Produc?on
Sales
Orienta?on Orienta?on

Marke?ng
Concept

Understanding the consumer and in

delivering products that meet their needs
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Chapter One Slide 11

Societal Marke1ng Concept

Considers
consumers long-run
best interest
Good corporate
ci?zenship

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Chapter One Slide 12

The Marke1ng Concept

Embracing the Marke0ng
Concept

Consumer Research
Segmenta?on
Market Targe?ng
Posi?oning

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The process and tools

used to study consumer
behavior

Chapter One Slide 13

The Marke1ng Concept

Implemen0ng the
Marke0ng Concept

Consumer Research
Segmenta?on
Market Targe?ng
Posi?oning

Copyright 2012 Pearson Educa?on, Inc. publishing as Pren?ce Hall

Process of dividing the

market into subsets of
consumers with
common needs or
characteris?cs

Chapter One Slide 14

The Marke1ng Concept

Implemen0ng the
Marke0ng Concept

Consumer Research
Segmenta?on
Market Targe?ng
Posi?oning

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The selec?on of one or

more of the segments
iden?ed to pursue

Chapter One Slide 15

The Marke1ng Concept

Implemen0ng the
Marke0ng Concept

Consumer Research
Segmenta?on
Market Targe?ng
Posi?oning

Developing a dis?nct image for

the product in the mind of the
consumer
Successful posi?oning includes:
Communica?ng the benets
of the product
Communica?ng a unique
selling proposi?on

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Chapter One Slide 16

The Marke1ng Mix

Price

Product
Marke?ng
Mix

Place
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Promo?on
Chapter One Slide 17

Customer Value, Sa1sfac1on, Trust,

and Reten1on

Successful Rela?onships
High level
Strong
of
sense of
Customer
customer customer
value
sa?sfac?on
trust

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Customer
reten?on

Chapter One Slide 18

Successful Rela1onships
Value, Sa0sfac0on,
Dened as the ra?o
Trust, and Reten0on between the customers
Customer Value
Customer
Sa?sfac?on
Customer Trust
Customer
Reten?on

perceived benets and the

resources used to obtain
those benets
Perceived value is rela?ve
and subjec?ve
Developing a value
proposi?on is cri?cal

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Chapter One Slide 19

Successful Rela1onships
Value, Sa0sfac0on,
Trust, and Reten0on

The individual's percep?on

Customer
of the performance of the
Value
product or service in
rela?on to his or her
Customer
expecta?ons.
Sa?sfac?on
Customer groups based on
Customer
loyalty include loyalists,
Trust
apostles, defectors,
Customer
terrorists, hostages, and
Reten?on
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Chapter One Slide 20

Customer Sa1sfac1on
When customers are highly sa?sed,
they con?nue to purchase

Provide very posi?ve word-of-mouth
Apostles
When customers are disappointed, they
Defectors

move to the compe??on
Terrorists
Who spread nega?ve word-of-mouth
Hostages
Dissa?sed customers and they stay
with the company but are very unhappy

Mercenaries Sa?sed but are not really considered
loyal and will move from company to
company
21
Loyalists

The Customer Sa1sfac1on

Loyalty Rela1onship

Loyalty (Retention)

100

Apostle

Zone of Affection

80
60
40

Near Apostle

Zone of Indifference

Zone of Defection

20

Terrorist

0
1

Very
Dissatisfied
Dissatisfied

Neither

Satisfied

Satisfaction

Very
Satisfied

Source: Adapted from Thomas O. Jones and W. Earl Sasser, Jr., Why Satisfied Customers Defect,
Harvard Business Review, November-December 1995, p. 91.

Successful Rela1onships
Value, Sa0sfac0on,
Trust, and Reten0on
Customer Value
Customer
Sa?sfac?on
Customer Trust
Customer
Reten?on

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Establishing and
maintaining trust is
essen?al.
Trust is the
founda?on for
maintaining a long-
standing rela?onship
with customers.
Chapter One Slide 23

Successful Rela1onships
Value, Sa0sfac0on,
Trust, and Reten0on
Customer Value
Customer
Sa?sfac?on
Customer Trust
Customer
Reten?on

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The objec?ve of providing

value is to retain highly
sa?sed customers.
Loyal customers are key
They buy more products
They are less price
sensi?ve
Servicing them is
cheaper
They spread posi?ve
word of mouth
Chapter One Slide 24

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
HewleP-Packard
U.S. Postal Service
Procter and Gamble
Apple
Na?onwide

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Chapter One Slide 26

Customer Protability-Focused
Marke1ng
Tracks costs and
revenues of
individual consumers
Categorizes them
into ?ers based on
consump?on
behavior
A customer pyramid
groups customers
into four ?ers

Pla?num
Gold
Iron
Lead

Segmentation scheme used by

marketers is to segment customers by
their profitability to the firm
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Chapter One Slide 26

Eec1ve Tiering of Service

The Customer Pyramid
Good Relationship
Customers

Which segment sees high value in

our offer, spends more with us over
time, costs less to maintain, and
spreads positive word-of-mouth?

Platinum
Gold
Iron
Lead
Poor Relationship
Customers

Which segment costs us time,

effort, and money, yet does not
provide return we want? Which
segment is difficult to do
business with?

Source: Valarie A Zeithaml, Roland T Rust, and Katharine N. Lemon, The Customer Pyramid:
Creating and Serving Profitable Customers, California Management Review 43, no. 4, Summer 2001,
pp.118142.

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 sa?ses.

Focus on the products perceived value, as

well as the need that it sa?ses.

Market products and services that match

customers needs bePer than compe?tors
oerings.

U?lize an understanding of customer needs to

develop oerings that customers perceive as
more valuable than compe?tors oerings.

Research consumer needs and characteris?cs. Research the levels of prot associated with
various consumer needs and characteris?cs.
Understand the purchase behavior process and Understand consumer behavior in rela?on to
the inuences on consumer behavior.
the companys product.
Realize that each customer transac?on is a
discrete sale.

Make each customer transac?on part of an

ongoing rela?onship with the customer.

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Chapter One Slide 28

Impact of Digital Technologies

Marketers

Consumers

More products and

services through
customiza?on
Instantaneous exchanges
Collect and analyze data

Power
Informa?on
Computers, phones, PDA,
GPS, smart TV

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Chapter One Slide 29

The Mobile Consumer

Wireless Media
Messages will
expand as:

Penetra?on of Internet Usage Among Mobile

Subscribers in 16 Countries - FIGURE 1.3

Flat-rate data
trac increases
Screen image
quality is enhanced
Consumer-user
experiences with
web applica?ons
improve

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Chapter One Slide 30

Consumer Behavior Is
Interdisciplinary
Psychology

Economics

Anthropology

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Sociology

Social
psychology

Chapter One Slide 31

A Simple Model of Consumer Decision Making - Figure 1.4

This model will

guide our studies
of consumer
behavior

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Chapter One Slide 32