Download Chapter 3 Market Segmentation

Chapter 1
Consumer Behavior:
Its Origins and
Strategic Applications
Consumer Behavior,
Ninth Edition
Schiffman & Kanuk
Copyright 2007 by Prentice Hall
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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Customers Search for Products
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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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Government Buying
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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 buyer’s needs
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The Marketing Concept
Implementing the
Marketing Concept
• Consumer
Research
• Segmentation
• Targeting
• Positioning
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• 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
• Consumer
Research
• Segmentation
• Targeting
• Positioning
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• Process of dividing
the market into
subsets of
consumers with
common needs or
characteristics
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Segmentation Used
by Sports Illustrated
The Marketing Concept
Implementing the
Marketing Concept
• Consumer
Research
• Segmentation
• Targeting
• Positioning
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The selection of one
or more of the
segments to pursue
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The Marketing Concept
Implementing the
Marketing Concept
• Consumer
Research
• Segmentation
• Targeting
• Positioning
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• 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.
The Marketing Mix
•
•
•
•
Product
Price
Place
Promotion
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SUCCESSFUL RELATIONSHIPS
Today’s marketer views any exchange with a customer as apart
of a customer relationship, not as a transaction.
The three drivers of successful relationship between customer
and the marketer are customer value, high level of customer
satisfaction and building a structure that ensure customer
retention.
Customer
Value
Customer
Retention
Customer
Satisfaction
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Successful Relationships
Value, Satisfaction,
and Retention
• Customer
Value
• Customer
Satisfaction
• Customer
Retention
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• Defined as the ratio between
the
customer’s
perceived
benefits and the resources
used to obtain those benefits
• Perceived
value
can
be
economic,
functional
and
psychological.
• Resources can be monetary,
time, effort, psychological
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Discussion Question
• How does McDonald’s create value for
the consumer?
• -Quality, service, cleanliness
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Successful Relationships
Value, Satisfaction,
and Retention
• Customer
Value
• Customer
Satisfaction
• Customer
Retention
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• 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, defectors, terrorists,
hostages, and mercenaries
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• Loyalist: who keep purchasing
• Apostles: whose experience exceed the expectation & provide
positive WOM
• Defectors: who feel neutral or merely satisfied and just like to
stop doing business
• Terrorist: who had negative experience & spread negative WOM
• Hostages: who stay with product just because of monopoly
• Mercenaries: who are satisfied but easily shift to another
product for short term benefit
– “Co should strive to create apostles, raise the satisfaction
of defectors and turn them into loyalist, avoid having
terrorist/ hostages and reduce the no of mercenaries.”
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Successful Relationships
Value, Satisfaction,
and Retention
• Customer
Value
• Customer
Satisfaction
• Customer
Retention
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• 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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Traditional Marketing Concept Vs. Value
and Retention Focused Marketing
Table 1-2
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 product’s
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
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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 wellbeing of consumers and society as a
whole.
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A Simplified Model of Consumer
Decision Making – Figure 1-1
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