BBM2123 CONSUMER BEHAVIOR

CHAPTER 1 CONSUMER BEHAVIOR: ITS ORIGINS AND STRATEGIC APPLICATIONS

Lecturer: Indira Tabyldy Email: indira@limkokwing.edu.kh

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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
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The Book:

Leon Schiffman, Lesle Lazar th Kanuk, Consumer Behavior, 9 Edition, Pearson International Edition, 2007

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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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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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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.

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Development of the Marketing Concept

Production Concept
Product Concept Selling Concept Marketing Concept
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The Production Concept

Assumes that consumers are interested primarily in product availability at low prices Marketing objectives:
Cheap, efficient production Intensive distribution Market expansion

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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

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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

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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 buyers needs

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The Marketing Concept

Implementing the Marketing Concept
Consumer Research The process and tools used to study consumer behavior Two perspectives:
Positivist approach Interpretivist approach

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The Marketing Concept

Implementing the Marketing Concept
Segmentation Process of dividing the market into subsets of consumers with common needs or characteristics

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Segmentation Used by Sports Illustrated

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The Marketing Concept

Implementing the Marketing Concept
The selection of one or more of the segments to pursue

Targeting

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The Marketing Concept

Implementing the Marketing Concept
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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This product is positioned as a solution to facial redness.

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The Marketing Mix

Product Price Place Promotion

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Successful Relationships

Customer Value

Customer Retention

Customer Satisfaction
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Successful Relationships
Value, Satisfaction, and Retention
Customer Value
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

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Successful Relationships
Value, Satisfaction, and Retention
Customer Satisfaction
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 (provide positive word-ofmouth), defectors (neutral), terrorists (spread negative word-of-mouth), hostages (unhappy customers who stay with the company because of a monopolistic environment or low price), and mercenaries (satisfied customers with no loyalty)
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Customer Satisfaction
The researchers propose that companies should strive to create apostiles, raise the satisfaction of defectors and turn them into loyalists, avoid having terrorists or hostages, and reduce the number of mercenaries

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Successful Relationships
Value, Satisfaction, and Retention
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 They pay less attention to competitors advertising Servicing them is cheaper They spread positive word of mouth
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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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Customer Profitability-Focused Marketing

Tier 1: Platinum
Tier 2: Gold Tier 3: Iron Tier 4: Lead
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Traditional Marketing Concept Vs. Value and Retention Focused Marketing

Traditional Marketing Concept
Make only what you can sell instead of trying to sell what you make

Value and Retention Focused Marketing

Use technology that enables customers to customize what you make

Do not focus on the product; focus on Focus on the products the need that it satisfies 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

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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

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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.
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Consumer Behavior Is Interdisciplinary

Psychology Sociology Social psychology Anthropology Economics

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A Simplified Model of Consumer Decision Making Figure 1-1

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References
These slides are taken from Schiffman & Kanuk, Consumer Behavior, 9th Edition, 2007

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