Marketing Management (MKT600)
Anna Zarkada
MM BB AA
Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 5-2
Developing Exchange Relationships
Who are the buyers ?
What do buyers want?
Why do people choose the things they do?
How do we find the answers?
Where should we target our efforts?
Which is the best approach for out target
market?
Consumers and
Industrial Buyers
Products and Services VALUE
Buyer Behaviour
Market and Buyer Behaviour Research
Market Segmentation
Product Positioning
Techniques
Theories
Strategy
What is consumer behaviour?
Consumer behaviour is the study of
how individuals or groups buy, use and
dispose of goods, services, ideas or
experiences to satisfy
their needs and wants.
Model of Consumer Behavior
Figure 7.2 Model of consumer behaviour
CONSUMER PSYCHOLOGY
Key Psychological Processes
Motivation
•Maslow
•Freud
•Yung
Memory
• Short term
• Long term
• Associative network
Learning behavioral changes in response to
• experience
• drive
• cues
• discrimination (the process by which we
learn to make different responses to different stimuli)
• hedonic bias (I passed / he failed me)
Perception
• Selective attention
•Selective distortion
•Selective retention
• Subliminal perception
Learning
CONSUMER
CHARACTERISTICS
Consumer Characteristics
•Cultural
•Social
•Personal
Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 5-10
Culture: Definition
Culture is
• shared
• learned
• dynamic
• adaptive but resilient
Culture provides
• identity
• context
• cohesion Culture: Characteristics
Material Culture • Artefacts
• Materialism
• Technology • Determinism
• Science, Exploration & R&D
• Economics • Production, distribution & consumption
• Wealth creation, accumulation & distribution
• Migration, Colonisation & Imperialism
Language & Communication • Verbal
•Translation & Interpretation
• Perfect Language & Lingua Franca
• Non-verbal • Space & Time
• Body Language
Social Structure • Stratification
• Mobility
• Organisations • Association
• Kinship
Religion • Beliefs
• Practice
• Morality
Aesthetics • Beauty
• Good taste
• Form, Shape and Colour
• Art • Popular & High Art
• Humour
Culture: Elements
Basic Assumptions
Norms & Values
Behaviours,
Artefacts & Products
Culture: A model
Hall
Comparing Cultures I
• sin
• ind • phil
• ita
• gre
• jap
• mex • fra
• fin
• isr
• aus • ger
• saf
• nzl • usa
• den • gbr
Hofstede
Comparing Cultures II
CULTURAL VARIEGATION “Santa Died for your Mastercard”
Subcultures
Nationalities
Religions
Racial groups
Geographic regions
Social Factors
Reference groups
• Membership
• primary
• secondary
• Non membership
• aspirational
• dissassociative
Social
roles
Status(es)
Family
Family of Orientation
(parents and siblings)
Family of Procreation
(spouse and children)
Roles of family members in the
buying decision process
• income earner
• decision maker
• influencer
• user
• buyer
• payer
Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 6-21
Personal Factors
Age /
Generation
Values
Life cycle
stage
Occupation
Personality
Self-
concept
Wealth
Lifestyle
Age VS Generation
Lost Generation (1883–1900)
Greatest Generation (1901–1924)
Silent Generation (1925–1942)
Baby Boomer (1943–1960)
Generation X (1961–1981)
Generation Y-millennials-9/11* (1982–
2001) * people who were between the ages of 10 and 20 on September 11, 2001
? Generation Z-Generation@-
Net/iGeneration-Plurals* (2001 - ) * expected to be the first generation to earn less than their parents
Digital
Immigrants
Digital
Natives
Life Cycle Stage
◦ early years (<14) ◦ new consumers (15-17) ◦ young adults (18-34) single married no children married with children single parents
◦ middle years (35-54) single married no children married with children single parents empty nesters
◦ elderly (>55)
VALS™ survey – Values-Lifestyle
culture-personality
LOHAS
(Lifestyles of Health and
Sustainability) market segments
• Sustainable economy
• Healthy lifestyles
• Ecological lifestyles
• Alternative health care
• Personal development
CONSUMER DECISION
MAKING
Philosophical Perspectives on Buyer
Behaviour
• Homo Œconomicus – rational,
focused on use and cost
• Passive man – receiver of
messages, Pavlov’s dogs and
cockroaches
• Cognitive man – collector of
information
• Emotional man - consumed by
subjective criteria
• Postmodern man – the variegated
one
Problem
recognition Information
search
Evaluation Choice Purchase
decision
Post Purchase
Behaviour
•Buy
•re-buy
•Loyalty …
Core
Product Tangible
Product
Augmented
Product
Buyer Decision model of the Homo
Œconomicus
Sources of information
Personal
Experiential Public
Commercial
Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall
Evaluation: Successive Sets Involved
in PC Consumer Decision Making
Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 6-31
Perceived Risk
Functional
Physical
Financial
Social
Psychological
Time
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How Customers Use and Dispose of
Products
Post-purchase behaviour
Post-purchase behaviour
Post-purchase satisfaction/ dissonance
Post-purchase actions
Post-purchase use and disposal
Questions
• What are customer
• value,
• satisfaction, and
• Loyalty
and
• how can companies deliver them?
• How can companies cultivate strong
customer relationships?
• How can companies both attract and retain
customers?
Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 5-36
Organizational Philosophies
Figure 11.1 Traditional organisation vs. modern customer-oriented company organisation
EXPECTATIONS ->
VALUE->
SATISFACTION->
LOYALTY
Five Types of Customer Needs 1.Stated needs: what the customer explicitly
asks for “I want an inexpensive car”
2.Real needs: what the customer has in mind but
might not want to ask for ‘It’s not only the price, I want low running costs as well’
3.Unstated needs: what the customer expects,
especially in terms of service, but assumes will
be provided without having to ask for it he’s polite, he listens to me, I trust him
4.Delight needs: vaguely formed customer
expectations of ‘freebies’ that make the
customer happy he’s giving me the GPS for free!!!!
5.Secret needs: innermost and very personal
desires that are never explicitly expressed wait till my neighbors see this car!
words
thoughts
emotions
reactions
Related to the
product/service
value.
They have to be
fulfilled for the
exchange to take
place
Related to the
exchange
process. They
have to be fulfilled
to create
customer
satisfaction
dreams
Related to the
exchange and
post-purchase
experience.
They have to be
fulfilled to create
customer loyalty
Extension of the Five Types of Customer Needs
Determinants of
Customer Perceived Value
Image benefit Psychological cost
Personal benefit Energy cost
Services benefit Time cost
Product benefit Monetary cost
Total customer benefit Total customer cost
Customer
Perceived
Value
What is
customer perceived value?
Customer perceived value is the
difference between the prospective
customer’s evaluation of all the benefits
and all the costs of an offering and the
perceived alternatives.
The value proposition
The value proposition
consists of the
whole cluster of
benefits the
company promises
to deliver
Safety is a leading, but not the only, benefit promised in Volvo’s value proposition Source: Courtesy of Volvo Car Corporation / Agency: Arnold
How do buyers form their
expectations?
Expectations result from past buying
experience, friends’ and associates’ advice,
and marketers’ and competitors’ information
and promises.
Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 5-43
What is Quality?
Quality is the totality of features and
characteristics of a product or
service that bear on its
ability to satisfy
stated or implied needs.
Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 5-44
Measuring Customer Satisfaction
Periodic Surveys
Customer Loss Rate
Mystery Shoppers
Monitor competitive
performance
What is loyalty?
Loyalty is a deeply held
commitment
to re-buy or re-patronise a
preferred product or service in the
future
despite situational influences and
marketing efforts having the
potential to cause switching
behaviour.
What is customer relationship
management (CRM)?
CRM is the process of carefully managing
detailed information about individual
customers and all customer touchpoints to
maximise customer loyalty.
Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 5-47
Framework for CRM
Identify prospects and customers
Differentiate customers by
their needs and
value to our company
Interact to improve knowledge
Customize for each customer
Figure 11.6 The customer-development process Source: J. Griffin (1995) Customer Loyalty: How to Earn It, How to Keep It, New York: Lexington Books, p. 36. See also M. Raphel and N. Raphel (1995) Up the Loyalty Ladder:
Turning Sometime Customers Into Full-Time Advocates of Your Business, New York: HarperBusiness
Figure 11.5 Customer-product profitability analysis
Copyright © 2009 Pearson Education, Inc. Publishing as Prentice Hall 5-50
CRM Strategies to increase the
value of customer base
Reduce the rate of defection
Increase longevity
Enhance “share of wallet” ,
cross selling & up selling
Terminate low-profit
customers
Focus more effort on
high-profit customers
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