Chapter 1

Introduction: The Impact of the Digital Revolution on Consumer Behavior

Consumer Behavior,Consumer Behavior,Eighth EditionEighth Edition

SCHIFFMAN & KANUK

OpeningVignette

Objectives of One-to-One Marketing

• To attain customers• Sell them more products• Make a profit

Digital Revolution in the Marketplace

• Allows customization of products, services, and promotional messages like never before

• Enhances relationships with customers more effectively and efficiently

Changes in the Business Environment

• Increased consumer power

• Access to information

• More products and services

• Interactive and instant exchanges

• Access to customer patterns and preferences

• Evolution to other -Web connection

– PDAs

– HDTV

– Mobile phones

The behavior that consumers display in searching for, purchasing, using, evaluating, and disposing of products and services that they expect will satisfy their needs. It focuses on how individuals make decisions to spend their resources – time, money and effort – on consuming products and services.

Consumer Behavior

Consumer Behavior

• It includes what they buy, why they buy it, when they buy it, where they buy it, how often they buy it, how often they use it, how they evaluate it, and how they dispose it.

Personal ConsumerThe 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, i.e., end users or ultimate consumers.

Organizational ConsumerWhen profit & not-for-profit businesses, government agencies and institutions buy products & services in order to run their organizations, i.e., they are intermediary consumers.

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. Here demand is excessively higher than supplies.

• 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. Demand is still greater than supply.

• 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. Now supply is catching up with demand.

• 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. Now, supplies are greater than demand.

• Marketing objectives:– Profits through customer satisfaction

Business Leaders Who Understood Consumer

Behavior• Alfred Sloan, General Motors

• Colonel Sanders, KFC

• Ray Kroc, McDonald’s

The Marketing ConceptA consumer-oriented philosophy that suggests that satisfaction of consumer needs provides the focus for product development and marketing strategy to enable the firm to meet its own organizational goals.

BOC BD VIEW OF THEIR CUSTOMERSCustomers are the most important person in our business.Customer is not dependent upon us; we are dependent

upon him/her.Customer is not an interruption of work – he/she is the

purpose of it.Customer does us a favor when he/she buys from us – we

are not doing him/her a favor.Customer is part of our business – not an outsider.Customer is not a cold statistic – he is a flesh & blood

human being with feeling and emotions like our own.Customer is not someone to argue with or match wit with.Customer is one who brings us his/her wants – it is our job

to fulfill his/her need.

Implementing the Marketing Concept

• Consumer Research• Marketing Research• Segmentation• Targeting• Positioning:• Marketing Mix: Product, Price, Place,

Promotion, Packaging, People, etc• Value = Perceived Benefits / Resources

Used• Satisfaction• Retention

Consumer Research

• The process and tools used to study consumer behavior.

• Two perspectives:– Positivist approach– Interpretivist approach

Segmentation, Targeting, and Positioning

• Segmentation: process of dividing the market into subsets of consumers with common needs or characteristics

• Targeting: selecting one ore more of the segments to pursue

• Positioning: developing a distinct image for the product in the mind of the consumer

Successful Positioning

• Communicating the benefits of the product, rather than its features

• Communicating a Unique Selling Proposition for the product

The Marketing Mix• Product

• Price

• Place

• Promotion

Successful Relationships

Customer Value

Customer Satisfaction

Customer Retention

Types of Customers

• Loyalists

• Apostles

• Defectors

• Terrorists

• Hostages

• Mercenaries

Customer Profitability-Focused Marketing

Tier 1: Platinum

Tier 2: Gold

Tier 3: Iron

Tier 4: Lead

Societal Marketing Concept

A revision of the traditional marketing concept that suggests that 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.

The Societal Marketing Concept

• All companies prosper when society prospers.

• Companies, as well as individuals, would be better off if social responsibility was an integral component of every marketing decision.

• Requires all marketers adhere to principles of social responsibility.

Firm’s Marketing Efforts1. Product2. Promotion3. Price4. Channels of distribution

Sociocultural Environment1. Family2. Informal sources3. Other noncommercial

sources4. Social class5. Subculture and culture

Output

Process

Input

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Postpurchase Evaluation

Purchase1. Trial2. Repeat purchase

Need Recognition

Prepurchase Search

Evaluation of Alternatives

Psychological Field1. Motivation2. Perception3. Learning4. Personality5. Attitudes

Experience

Figure 1-1: A Model of Consumer Decision Making