Consumer Behavior:

Meeting Changes and Challenges

CHAPTER ONE
 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.

Chapter One Slide 2

 Consumer Behavior

• Consumer Behavior includes all the decisions

a consumer makes when spending their time
and money. The what, why, when, where, and
how of consumer purchases are examined in
consumer behavior. It is not just individuals,
but households, families, and groups that
influence the decisions we make.

Chapter One Slide 3

Two Consumer Entities

Chapter One Slide 4

 Two Consumer Entities

The Personal Consumer is sometimes called the end user or

ultimate consumer. This is you when you go to an Electronic
Products Store to purchase a new television for your home.

The Organizational Consumer is buying for the

organization or to re-sell to the personal consumer. Although
both types of consumer entities are important, we will be
focusing on the personal consumer throughout these
presentations.

Chapter One Slide 5

Development of the
Marketing Concept

Chapter One Slide 6

 Production Orientation

• From the 1850s to the late 1920s

• Companies focus on production capabilities
• Consumer demand exceeded supply

Chapter One Slide 7

 Production Orientation

During the production orientation, companies wanted

efficient production lines to mass produce products for
the consumer. Because the demand was higher than the
supply, consumers were content to get a product and
were not focused on product variation. This was the time
that the control was in the hands of the producers who
said, “if we make it they will buy it.”

Chapter One Slide 8

 Sales Orientation

• From the 1930s to the mid 1950s

• Focus on selling
• Supply exceeded customer demand

Chapter One Slide 9

 Sales Orientation

• There was overproduction during the production orientation,

which led to excess product. Although the products were still
similar and there was little variation, during the sales
orientation period, the manufacturers focused on selling the
product which they had overproduced.

Chapter One Slide 10

 Marketing Concept

• 1950s to current - Focus on the customer!

• Determine the needs and wants of specific
target markets
• Deliver satisfaction better than competition

Chapter One Slide 11

 Marketing Concept
• Rather than focus on what can be manufactured, the focus
shifts with the marketing concept to what consumers prefer.
It became a time to put the customer first and to understand
their needs and wants. With this information, marketers can
deliver satisfaction to their target markets. We are remaining
focused on the marketing concept today as marketers become
more sophisticated in understanding the consumer and in
delivering products that meet their needs.

Chapter One Slide 12

 Societal Marketing Concept
• Considers consumers’ long-run best interest
• Good corporate citizenship
• The societal marketing concept was developed from the
marketing concept. Marketers and consumers are
increasingly taking stock of what is good for themselves,
their family, their country, and the planet. Marketing
looks for opportunities to provide products and services
to help consumers reach their goals while also making
profitable decisions for their companies.

Chapter One Slide 13

 The Marketing Concept
Embracing the Marketing
Concept
• Consumer Research • The process and tools
• Segmentation used to study consumer
• behavior
Market Targeting
• Positioning

Chapter One Slide 14

 The Marketing Concept
Implementing the
Marketing Concept
• Consumer Research • Process of dividing the
• Segmentation market into subsets of
• consumers with common
Market Targeting
needs or characteristics
• Positioning

Chapter One Slide 15

 The Marketing Concept
Implementing the
Marketing Concept
The selection of one or
• Consumer Research more of the segments
• Segmentation identified to pursue.
• Market Targeting
• Positioning

Chapter One Slide 16

 The Marketing Concept
Implementing the • Developing a distinct image for
Marketing Concept the product in the mind of the
consumer
• Consumer • Successful positioning includes:
Research – Communicating the benefits
• Segmentation of the product
• Market Targeting – Communicating a unique
selling proposition
• Positioning

Chapter One Slide 17

The Marketing Mix

Chapter One Slide 18

Customer Value, Satisfaction, Trust,
and Retention

Chapter One Slide 19

 Customer Value, Satisfaction, Trust, and
Retention
The goal of all marketers is to build and maintain successful
relationships with their consumers. This occurs by offering a
product which has benefits that the consumer values. In
addition, they see the value of those benefits as exceeding the
cost of the product – the cost in terms of money, time, and
opportunity costs.
If a product delivers value, the company is likely to have a high
level of customer satisfaction. They will trust the marketer and
continue to purchase the product. In addition, they will tell
others about the product and speak highly of it when asked or
when reviewing the product online. WOM

Chapter One Slide 20

 Customer Value, Satisfaction, Trust, and
Retention
A company with strong customer relationships will be able to
achieve a high level of customer retention – their customers will
not defect to the competitor or stop using their product. They
will retain these customer over time and will be more profitable
due to these valuable loyal customers.

Chapter One Slide 21

 Successful Relationships
Value, Satisfaction,
• Defined as the ratio between
Trust, and Retention the customer’s perceived
• Customer Value benefits and the resources
• Customer used to obtain those benefits
Satisfaction • Perceived value is relative and
• Customer Trust subjective
• Customer • Developing a value proposition
Retention is critical

Chapter One Slide 22

 Successful Relationships
• It is best to think of value as the
consumers’ perception of what
Value, Satisfaction, they gained vs. what they gave up
Trust, and Retention to purchase a product or use a
• Customer Value service.
• Customer • Marketers are developing value
Satisfaction propositions which are statements
of the value their product offers to
• Customer Trust consumers. If the value
• Customer propositions are clear and
Retention applicable to the consumer, they
will understand the strength of the
product benefits.
Chapter One Slide 23
 Successful Relationships

Value, Satisfaction, Actual Performance is below

Trust, and Retention Expectations Dissatisfied
• Customer Value
Actual Performance is equal
• Customer to Expectations Satisfied
Satisfaction
• Customer Trust Actual Performance exceeds
• Customer the Expectations Delighted/
Retention Very Satisfied

Chapter One Slide 24

 Successful Relationships
Value, Satisfaction, • The individual's perception of
Trust, and Retention the performance of the
product or service in relation
• Customer Value to his or her expectations.
• Customer • Customer groups based on
Satisfaction loyalty include loyalists,
• Customer Trust apostles, defectors, terrorists,
• Customer hostages, and mercenaries
Retention

Chapter One Slide 25

 Successful Relationships
Customer Satisfaction – with respect to customer satisfaction
there might be several types of customers.
Loyalists —completely satisfied customers who keep purchasing.
Apostles —whose experiences exceed their expectations and
who provide very positive word of mouth about the company to
others.
Defectors —who feel neutral or merely satisfied and are likely to
stop doing business with the company.
Terrorists —who have had negative experiences with the
company and who spread negative word of mouth.
Hostages —who are unhappy customers who stay with the
company because of no choice (or other reasons).
Mercenaries —very satisfied customers but who have no real
loyalty to the company and may defect.
Chapter One Slide 26
 Successful Relationships
Value, Satisfaction,
Trust, and Retention • Establishing and
• Customer Value maintaining trust is
• Customer essential.
Satisfaction
• Trust is the
• Customer Trust
foundation for
• Customer
Retention maintaining a long-
standing relationship
with customers.
Chapter One Slide 27
 Successful Relationships
Value, Satisfaction, • The objective of providing
Trust, and Retention value is to retain highly
satisfied customers.
• Customer Value
• Loyal customers are key
• Customer
– They buy more products
Satisfaction
– They are less price
• Customer Trust
sensitive
• Customer – Servicing them is
Retention cheaper
– They spread positive
word of mouth
Chapter One Slide 28
 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

Chapter One Slide 29

 Customer Profitability-Focused
Marketing
Platinum Tier - includes heavy users who are not price
sensitive and who are willing to try new offerings.
Gold Tier – consists of customers who are heavy users but not
as profitable because they are more price sensitive than those in
the higher tier, ask for discounts and are likely to buy from several
providers.
Iron Tier - consists of customers whose spending volume and
profitability do not merit special treatment from the company.
Lead Tier – includes customers who actually cost the company
money because they claim more attention than is merited by
their spending , tie up the company resources and spread
negative word of mouth.
Chapter One Slide 30
 Consumer Behavior Is
Interdisciplinary

Copyright 2010 Pearson Education, Inc. publishing as Prentice Hall Chapter One Slide 31
 Consumer Behavior Is
Interdisciplinary
 Psychology — the study of the individual.
 Sociology — the study of groups.
 Social Psychology — the study of how an individual
operates in groups.
 Anthropology — the influence of society on the
individual.
 Economics to form the basis of this new marketing
discipline.

Chapter One Slide 32

A Simple Model
of Consumer
Decision Making

Chapter One Slide 33

END OF CHAPTER # 1

Chapter Seven Slide 34