CHAPTER ONE Consumer Behavior: Meeting Changes and Challenges Learning Objectives • To Understand What Consumer Behavior Is • Role of Marketing: – Satisfy customers needs and wants • Different marketing orientations • STP framework – Build long-term relationship with consumers Copyright 2010 Pearson Education, Inc. publishing as Prentice Hall Chapter One Slide 2 To Which Segment of Consumers Will This Ad Appeal? Copyright 2010 Pearson Education, Inc. publishing as Prentice Hall Chapter One Slide 4 A Segment of Consumers Who are Environmentally Concerned Copyright 2010 Pearson Education, Inc. publishing as Prentice Hall Chapter One Slide 5 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. Copyright 2010 Pearson Education, Inc. publishing as Prentice Hall Chapter One Slide 5 Development of the Marketing Concept Production Orientation Sales Orientation Copyright 2010 Pearson Education, Inc. publishing as Prentice Hall Marketing Concept Chapter One Slide 6 Production Orientation • From the 1850s to the late 1920s • Companies focus on production capabilities • Consumer demand exceeded supply Production Orientation Sales Orientation Copyright 2010 Pearson Education, Inc. publishing as Prentice Hall Marketing Concept Chapter One Slide 7 Sales Orientation • From the 1930s to the mid 1950s • Focus on selling • Supply exceeded customer demand Production Orientation Sales Orientation Copyright 2010 Pearson Education, Inc. publishing as Prentice Hall Marketing Concept Chapter One Slide 8 Marketing Concept • 1950s to current - Focus on the customer! • Determine the needs and wants of specific target markets • Deliver satisfaction better than competition Production Orientation Sales Orientation Copyright 2010 Pearson Education, Inc. publishing as Prentice Hall Marketing Concept Chapter One Slide 9 Societal Marketing Concept • Considers consumers’ long-run best interest • Good corporate citizenship Copyright 2010 Pearson Education, Inc. publishing as Prentice Hall Chapter One Slide 10 Discussion Questions 1. What two companies do you believe grasp and use the societal marketing concept? 2. Why do you believe this? Copyright 2010 Pearson Education, Inc. publishing as Prentice Hall Chapter One Slide 11 The Marketing Concept Embracing the Marketing Concept • • • • Consumer Research Segmentation Market Targeting Positioning Copyright 2010 Pearson Education, Inc. publishing as Prentice Hall • The process and tools used to study consumer behavior Chapter One Slide 12 The Marketing Concept Implementing the Marketing Concept • • • • Consumer Research Segmentation Market Targeting Positioning Copyright 2010 Pearson Education, Inc. publishing as Prentice Hall • Process of dividing the market into subsets of consumers with common needs or characteristics Chapter One Slide 13 Discussion Questions 1. What products that you regularly purchase are highly segmented? 2. What are the different segments? 3. Why is segmentation useful to the marketer for these products? Copyright 2010 Pearson Education, Inc. publishing as Prentice Hall Chapter One Slide 14 The Marketing Concept Implementing the Marketing Concept • • • • Consumer Research Segmentation Market Targeting Positioning Copyright 2010 Pearson Education, Inc. publishing as Prentice Hall The selection of one or more of the segments identified to pursue Chapter One Slide 15 The Marketing Concept Implementing the Marketing Concept • • • • Consumer Research Segmentation Market Targeting 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 Copyright 2010 Pearson Education, Inc. publishing as Prentice Hall Chapter One Slide 16 The Marketing Mix Product Price Marketing Mix Place Copyright 2010 Pearson Education, Inc. publishing as Prentice Hall Promotion Chapter One Slide 17 Customer Value, Satisfaction, Trust, and Retention Successful Relationships Customer value High level of customer satisfaction Copyright 2010 Pearson Education, Inc. publishing as Prentice Hall Strong sense of customer trust Customer retention Chapter One Slide 18 Successful Relationships Value, Satisfaction, • Defined as the ratio between Trust, and Retention the customer’s perceived • Customer Value • Customer Satisfaction • Customer Trust • Customer Retention benefits and the resources used to obtain those benefits • Perceived value is relative and subjective • Developing a value proposition is critical Copyright 2010 Pearson Education, Inc. publishing as Prentice Hall Chapter One Slide 19 Discussion Questions • How does McDonald’s create value for the consumer? • How do they communicate this value? Copyright 2010 Pearson Education, Inc. publishing as Prentice Hall Chapter One Slide 20 Successful Relationships Value, Satisfaction, Trust, and Retention • The individual's perception • Customer of the performance of the Value product or service in relation to his or her • Customer expectations. Satisfaction • Customer groups based on • Customer Trust loyalty include loyalists, • Customer apostles, defectors, Retention terrorists, hostages, and Copyright 2010 Pearson Education, Inc. publishing as Prentice Hall mercenaries Chapter One Slide 21 Successful Relationships Value, Satisfaction, Trust, and Retention • Customer Value • Customer Satisfaction • Customer Trust • Customer Retention Copyright 2010 Pearson Education, Inc. publishing as Prentice Hall • Establishing and maintaining trust is essential. • Trust is the foundation for maintaining a longstanding relationship with customers. Chapter One Slide 22 Successful Relationships Value, Satisfaction, Trust, and Retention • Customer Value • Customer Satisfaction • Customer Trust • Customer Retention Copyright 2010 Pearson Education, Inc. publishing as Prentice Hall • The objective of providing value is to retain highly satisfied customers. • Loyal customers are key – They buy more products – They are less price sensitive – Servicing them is cheaper – They spread positive word of mouth Chapter One Slide 23 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 • Hewlett-Packard • U.S. Postal Service • Procter and Gamble • Apple • Nationwide Copyright 2010 Pearson Education, Inc. publishing as Prentice Hall Chapter One Slide 26 Discussion: American Express Card • What is your impression of “American Express” • According to the video, what does American Express do to improve the usage rate? • How do they reach the young segment? 25 Impact of Digital Technologies Marketers Consumers • More products and services through customization • Instantaneous exchanges • Collect and analyze data • Power • Information • Computers, phones, PDA, GPS, smart TV Copyright 2010 Pearson Education, Inc. publishing as Prentice Hall Chapter One Slide 26 The Mobile Consumer • Wireless Media Messages will expand as: Penetration of Internet Usage Among Mobile Subscribers in 16 Countries - FIGURE 1.3 – Flat-rate data traffic increases – Screen image quality is enhanced – Consumer-user experiences with web applications improve Copyright 2010 Pearson Education, Inc. publishing as Prentice Hall Chapter One Slide 27 Consumer Behavior Is Interdisciplinary Psychology Economics Anthropology Copyright 2010 Pearson Education, Inc. publishing as Prentice Hall Sociology Social psychology Chapter One Slide 28 Outlook of this course • Part one: introduction of consumer behavior (chp1, chp2) • Part two: psychological characteristics of consumer (chp4, chp5, chp6, chp7 & chp8) • Part three: social and culture influences on consumer behavior (chp7, chp8, chp10, chp11 and chp 13) • Consumer decision making process: chp 14 29 Summary • To Understand What Consumer Behavior Is • Role of Marketing: – Satisfy customers needs and wants • Different marketing orientations • STP framework – Build long-term relationship with consumers Copyright 2010 Pearson Education, Inc. publishing as Prentice Hall Chapter One Slide 30 All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted, in any form or by any means, electronic, mechanical, photocopying, recording, or otherwise, without the prior written permission of the publisher. Printed in the United States of America. Copyright © 2010 Pearson Education, Inc. Publishing as Prentice Hall Copyright 2010 Pearson Education, Inc. Publishing as Prentice Hall Chapter Seven Slide 31