CB Chapter 1 pptx on consumer behavior of BBA

Consumer behavior

1. Chapter 1 Technology-Driven Consumer Behavior Reference Book Leon G. Schiffman Lesile Lazar Kanuk S. Ramesh Kumar 11 th Edition

2. Consumer Behavior Consumer behavior is the study of consumers’ actions during searching for, purchasing, using, evaluating, and disposing of products and services that they expect will satisfy their needs. The core of marketing is identifying unfilled needs and delivering products and services that satisfy these needs.

3. Consumer Behavior Rationale: “It is expensive to fulfill one’s dreams, but it is worth the expense.” The ad anticipates that some buyers will feel guilty after purchasing the car and assures them that “of all the emotions you can expect while driving a Boxster, regret will never be one of them.” It ends with Porsche’s classic tagline: “Porsche. There is no substitute

4. Consumer Behavior Rationale: Egotism and power are pervasive psychological needs. Toyota positioned Scion as a car for drivers who like to face challenges, and feel powerful and in control of their environment. Positioning is conveying the product’s benefits and image to potential (or existing) customers, so that the product stands out distinctly in their minds and is not viewed as a “me too” item

5. Consumer Behavior

6. Consumer Behavior and the Marketing Concept

7. Marketing Concept A company must determine the needs and wants of specific target markets and deliver the desired satisfactions better than the competitors . Essence of marketing consists of satisfying consumers’ needs, creating value, and retaining customers.

8. Consumer Research Consumers are complex individuals, subject to a variety of psychological and social needs, and the needs and priorities of different consumer segments differ dramatically. Consumer research refers to the process and tools used to study consumer behavior. Consumer research is a process that links the consumer, customer, and public to the marketer through information to identify marketing opportunities and problems, evaluate actions, and judge the performance of strategies.

9. Segmentation, Targeting and Positioning Commonality of need/interest constitutes a market segment, enabling the marketer to target consumers with specifically designed products/promotional appeals that satisfy the segment needs

10. The Marketing Mix

11. Socially Responsible Marketing The societal marketing concept requires marketers to fulfill the needs of the target audience in ways that improve, preserve, and enhance society’s well-being while simultaneously meeting business objectives.

12. Technology Enriches the Exchange Between Consumers and Marketers A “value exchange”- consumers “pay” for the Internet’s seemingly free content by providing virtually unlimited information about themselves to marketers, who gather, analyze, and use it to target buyers. More than ever before, marketers must customize products, add value to the physical product or the core, provide the right benefits to right consumer segments, and position products effectively.

13. Behavioral Information and Targeting In online world, specialized “information exchanges” track interest through “cookies”. Assume Hilton’s criterion is people who looked for flights to Paris. Upon logging in, the exchange ( eXelate or BlueKai ) tells Hilton cookies that meet its criterion are for sale and then Hilton bids on the price, competing against other advertisers wishing to buy the same cookies. If Hilton wins the auction, it can show its ads to the persons with these cookies embedded in their browsers, and send ads to them whenever they go online, regardless of the sites they visit.

14. Behavioral Information and Targeting The Internet drastically improved consumers’ access to the information they need when they buy products for the first time or replace them. Simultaneously, the Internet enables marketers to gather truly behavioral data about consumers, because they can observe shopping behavior.

15. Interactive and Novel Communication Channels Marketers can gauge the effectiveness of their promotional messages instantly, instead of relying on delayed feedback by, clicking on links within websites or leaving them quickly. Another facet of interactivity is promotional messages that are designed largely by the customers themselves. Marketers also embed promotional messages directly into TV shows Cross-screen marketing consists of tracking and targeting users across their computers, mobile phones, and tablets.

16. Customizing Products and Promotional Messages Customization requires customers to clearly understand preferences and express them, and be involved with the product. This indicates “high involvement” products (infrequently purchased and pricey items) represent the best prospects for customization. Companies can also customize promotional messages. For example, an online drugstore may vary the initial display that returning buyers see when they revisit its website.

17. Better Prices and Distribution The Internet allows consumers to compare prices more effectively than ever before. Marketers have begun to use advanced technologies-smartphone apps, to target shoppers in stores. Distribution strategies are also improving. Combating failed package delivery, Amazon has installed large metal cabinets (Amazon Lockers), functioning like virtual doormen, accepting packages for customers for later pickup.

18. Better Prices and Distribution Electronic systems will replace cash and credit cards, several retailers have developed mobile-payments systems to compete with similar products from Google and cell phone companies. Online merchants now offer an “automatic recurring shipment” feature, appealing to shoppers who like to order habitually needed products, like paper goods and personal care products, online. Web enables marketers to improve customer service inexpensively. Grocers like Safeway and Kroger are offering individualized prices based on shoppers’ behaviors encouraging them to spend more. Some stores have a mobile app allowing shoppers to scan products. When they do, the store identifies them through their frequent shopper/phone number and special e-coupons are created on the spot.

19. Customer Value, Satisfaction, Trust and Retention Providing Customers with Value The ratio between the customers’ perceived benefits (economic, functional and psychological) and the resources(monetary, time, effort, psychological) used to obtain those benefits Developing a value proposition (Unique Selling Proposition)

20. 2. Securing Customer Retention A strategy of customer retention is designed to make it in the best interest of customers to stay with a company rather than switch to another company Loyal customers buy more products Long-term customers are an asset when new products and services are developed and tested Loyal customers are less price sensitive and pay less attention to competitors’ advertising Servicing existing customers, who are familiar with the company’s offerings and processes, is cheaper Loyal customers spread positive WOM and refer customers Marketing efforts aimed at attracting new customers are expensive. Low customer turnover is correlated with higher profit Increased customer retention & loyalty makes employees’ jobs easier and satisfying

21. Technology and Customer Relationships Technologies often enhance customer relationships and retention by engaging consumers with brands. A website called Nature Valley Trail View uses cameras showing hikers, in real time. No sales pitch on the site and only a small Nature Valley logo appears. The marketer’s objective is to feature lifestyles its customers care about, engage and build brand awareness and loyalty. Researchers have identified two interrelated forms of customer engagement with marketers: Emotional bonds represent customer’s high level of personal commitment and attachment to the company (Social Media). Transactional bonds are the mechanics and structures facilitating exchanges between consumers and sellers.

22. Emotional Bonds versus Transaction-Based Relationships Determinants of customer satisfaction with online websites and merchants Adaptation: Purchase recommendations match one’s needs Interactivity: Ability to view offerings from different perspectives Nurturing: making an effort to increase business with the customer Commitment: Delivering goods on time; taking good care of customers Network: Customers sharing experiences about product purchases on website Assortment: Merchant provides “one-stop shopping” for most online purchases Transaction ease: Merchant’s website can be navigated intuitively Engagement: The merchant’s site design is attractive; feel comfortable Loyalty: Seldom consider switching to another merchant Inertia: Unless becoming dissatisfied, changing merchants would not be worth the bother Trust: Counting on the merchant to complete purchase transactions successfully

23. Emotional Bonds versus Transaction-Based Relationships Some determinants are driven by emotions (engagement and nurturing), others are factors from the mechanics of the transaction (assortment and transaction ease). A four-way categorization of transaction and emotional bond-based customers’ relationships with marketers.

24. 3. Ensuring Customer Loyalty and Satisfaction Individual’s perception of the performance of the product or service in relation to his or her expectations 5 levels of customer satisfaction Loyalists or apostles: Completely satisfied & keep purchasing Defectors: feel neutral with the company and can switch Terrorists: Have had negative experiences and spread negative WOM Hostages: unhappy customers who stay due to a monopolistic environment/low prices Mercenaries: Satisfied customers with no real loyalty, defying satisfaction–loyalty rationale

25. 4. Building Customer Loyalty and Profitability Classifying customers according to profitability involves tracking the revenues obtained from individual customers and then categorizing them into tiers. Sophisticated marketers build selective relationships with customers, based on where customers rank in terms of profitability, rather than merely “striving to retain customers.”

26. Continued….. Customers Tier Cost the company money & spread negative WOM

27. Measures of Customer Retention Customer Valuation: Value customers and categorize them according to financial and strategic worth Retention Rates: Percentage of customers at the beginning of the year who are still customers by the end of it Analyzing Defections: Look for the root causes, not mere symptoms Develop and implement corrective plans stemming from the results of such measurements

28. Internal marketing Internal marketing consists of marketing the organization to its personnel. employees will “go the extra mile” to try and retain customers if they are treated like valued “internal customers” by employers

29. The Traditional Marketing Concept vs Value-and Retention Focused Marketing

30. Consumer Behavior Is Interdisciplinary Consumer behavior stems from four disciplines. Psychology is the study of the human mind and mental factors affecting behavior Sociology is the study of development, structure, functioning, and problems of human society Anthropology compares human societies’ culture and development (e.g., cultural values and subcultures). Communication is imparting or exchanging information personally/ media channels and using persuasive strategies

31. Simple Model of Consumer Decision Making