CHAPTER 1: TECHNOLOGY-DRIVEN CONSUMER BEHAVIOR
Marketing The activity, set of institutions and processes for creating, communicating,
delivering and exchanging offerings that have value for customers, clients,
partners and society
Consumer behavior Study of consumer’s actions during searching for, purchasing, using, evaluating,
and disposing of product and services that they expect will satisfy their needs
Marketing concept Satisfying customers’ needs, creating value and retaining customers to meet
organizational goals(only produce goods that consumers would buy)
Production concept Consumers are mostly interested in product availability at low prices, marketing
objectives are cheap, efficient production and intensive distribution
Product concept Consumers buy product with highest quality, best performance and most features
Selling concept Marketer’s primary focus is selling product that they have decided to produce
Hard sell approach Does not consider customer satisfaction, because consumers who are
aggressively induced to buy products they do not need, will not buy them again
Marketing myopia Focus on product rather than on the needs of consumers it presumers to satisfy
Consumer research Process and tools used to study consumer behavior (form of market research)
Market research Process that links consumers/customers to market through information in order to
identify marketing opportunities and problems, evaluate actions and strategies
Market Process of dividing a market into subsets of consumers with common needs or
segmentation characteristics (identifying homogeneous groups with shared needs)
Targeting Selecting segments that the company views as prospective customers
Positioning Process by which company creates a distinct image/identity in consumers’ minds
Marketing mix (4Ps) - Product/service (features, design, packaging and post-purchase benefits)
- Price (list price, discounts, allowances and payment methods)
- Place (distribution of product/service through stores and outlets)
- Promotion (advertising, promotion and public relations to build awareness)
Societal marketing Requires marketers to fulfill needs of target audience in ways to improve, preserve
concept and enhance society’s well-being while meeting their business objectives
Information Enable marketers to place ads that ‘follow’ consumers into other websites
exchange networks featuring products that consumers have examined or purchased previously
Cross-screen Tracking and targeting users across their computers/phones/tablets (new software
marketing enables marketers to figure out when a phone user is the same as a tablet user)
Customer value Ratio between customers’ perceived benefits (economic/functional/psychological)
and resources (monetary/time/effort/psychological) they use to obtain the benefits
Customer Customers’ perceptions of the performance of the product/service in relation to
satisfaction their expectations
Customer retention Turning individual consumer transactions into long-term customer relationships:
- Emotional bonds (customer’s high level of personal commitment to company)
- Transactional bonds (mechanics and structures that facilitates exchanges)
Customer 4 ways to categorize (transaction-based/emotional-based) relationships:
relationships 1. Fans (high purchases, high bonds, high level of commitment)
2. Loyal customers (frequent purchasers, no high bonds, not emotional attached)
3. Delighted customers (modest purchasers, high bonds, just satisfied)
4. Transactional customers (infrequent purchasers, low bonds, price-sensitive)
,Social media Means of interaction among people in which they create, share and exchange
information/ideas in virtual communities/networks (best tool to bond). Structure:
- Profiles (consumers tell others about themselves)
- Friends (trusted members of social network users)
- Groups (users find people with similar interests)
- Interactions (among group members via discussion boards and post pictures)
- Opt-ins and opt-outs (users control information they share and receive)
Customer Determinants:
satisfaction social - Adaption (purchase recommendations match needs)
media - Interactivity (view offerings from different perspectives)
- Nurturing (receiving reminders and providing relevant information)
- Commitment (delivering goods on time, responding to problems, taking care)
- Network (useful for sharing experiences)
- Assortment (wide assortment and selection of products, satisfies needs)
- Transaction ease (user-friendly and enables quick transactions)
- Engagement (design is attractive and feels comfortable)
- Loyalty (not considering switching to another site)
- Inertia (unless becoming dissatisfied, changing to new site is not worth it)
- Trust (site is reliable and honest)
Types of customers - Loyalist (completely satisfied who keeps purchasing, apostles)
- Defector (neutral/merely satisfied, likely to switch to company with lower price)
- Terrorist (negative experiences with company, spread negative word-of-mouth)
- Hostage (unhappy customer, but stays because low price/monopolist)
- Mercenary (very satisfied customer who have no real loyalty to company)
Profitability Categorizing in tiers:
customers 1. Platinum tier (heavy user, not price-sensitive, willing to try new offerings)
2. Gold tier (heave user, more price-sensitive, likely to buy elsewhere)
3. Iron tier (spending volume/profitability not merit special treatment)
4. Lead tier (customers who cost company money, negative)
Retention - Customer valuation (value customers financially/strategically to invest or not)
measuring methods - Retention rates (% customers at begin of year who are customers end of year)
- Analyzing defections (look for root causes, not symptoms)
Internal marketing Organization’s marketing to personnel (employees treat each other as customers)
Psychology* Traditional study (explain consumer decisions and behavior) of human mind and
mental factors that affect behavior (experiment or survey)
Sociology* Traditional study (explain consumer decisions and behavior) of development,
structure, functioning and problems of human society (experiment or survey)
Cultural Interpretative study (understand and describe consumption) of human societies’
anthropology* culture and development (interview and focus group)
Marketing science* Communication process (predict) of imparting/exchanging information personally
or through media channels and using persuasive strategies (economics statistics)
Consumer - Input stage (marketing mix + sociocultural influences + communication sources)
decision-making* - Process stage (consumer decisions + psychological influences + learning)
- Output stage (purchase behavior + post-purchase evaluation)
Approaches - Economic (select best alternative, maximizing)
consumer behavior - Passive (consumer reacts (outcome), self-serving interest and effort, minimizing)
- Cognitive (actively seeking information, satisfying)
- Emotional (impulses/moods/feelings/emotions determine behavior, satisfying)
Consumer behavior Consumer/customer + product + situation (different customers want different
piramid products in different situations)
, CHAPTER 2: SEGMENTATION, TARGETING AND POSITIONING
Market segment To be an effective target, a market segment must be:
- Identifiable
- Sizeable (enough customers to make targeting profitable)
- Stable and growing
- Reachable/accessible
- Congruent with marketer’s objectives and resources
Homogeneous - Behavioral data (evidence-based)
groups - Consumer-intrinsic factors (age/gender/status/income/education)
- Consumption-based factors (quantity/frequency of purchase)
- Cognitive factors (in consumer’s mind)
- Consumer-intrinsic factors (traits/values/attitudes)
- Consumption-based factors (benefits and attitudes/preferences)
Demographic Divides consumers according to age, gender, ethnicity, income and wealth,
segmentation occupation, marital status, household type and size and geographical location
Family life cycle Classification of phases that families go through (each stage is a target segment)
Social class Income, education and occupation (hierarchical)
Geodemographics Hybrid segmentation scheme based on the premise that people who live close to
one another are likely to have similar financial means/preferences/lifestyles/habits
Green consumers - Environmental activists (adopt lifestyles focused on health and sustainability)
- Organic eaters (sustaining own health and not sustaining planet)
- Economizers (buying eco-friendly products in order to save money)
- True greens (protect environment, convincing others, make sacrifices)
- Donor greens (feel guilty, willing sacrifice financially, unwilling change behavior)
- Learning greens (not actively engaged, still learning, easy ways to support)
- Non-greens (people who do not care about environmental issues)
Innovators Consumers who are open-minded and generally perceive less risk than others in
trying new things (more likely to buy a new product)
Psychographics Lifestyles (in marketing), including consumers’ activities, interests and opinions
VALS* Values and lifestyles. Widely used segmentation method that classifies groups
based on consumer responses to both attitudinal and demographic questions.
Three primary motivations:
- Ideals motivated (segments guided by knowledge and principles)
- Achievement motivated (looking for products that are a success to peers)
- Self-expression motivated (desire social/physical activity, variety and risk)
Benefit Based on benefits that consumers seek from products and services
segmentation
Media-based Marketers must study benefits that consumers seek from adopting media/
segmentation communication tools, so they can advertise in these media effectively
Usage rate Differences among heavy, medium, light users and non-users of a product, service
segmentation or brand (targeting heavy users is common, more profitable, but also expensive)
Product awareness Degree of consumer’s awareness of the product and its features, and whether or
status not he/she intends to buy it reasonably soon (relevance: product involvement)
Usage occasion Segmentation that recognizes that consumers purchase some products for
segmentation specific occasions
Behavioral targeting Sending consumers personalized, prompt offers and promotional messages
designed to reach the right consumers and deliver them relevant messages at the
right time (tracking online navigation, current location and purchase behavior)
Marketing The activity, set of institutions and processes for creating, communicating,
delivering and exchanging offerings that have value for customers, clients,
partners and society
Consumer behavior Study of consumer’s actions during searching for, purchasing, using, evaluating,
and disposing of product and services that they expect will satisfy their needs
Marketing concept Satisfying customers’ needs, creating value and retaining customers to meet
organizational goals(only produce goods that consumers would buy)
Production concept Consumers are mostly interested in product availability at low prices, marketing
objectives are cheap, efficient production and intensive distribution
Product concept Consumers buy product with highest quality, best performance and most features
Selling concept Marketer’s primary focus is selling product that they have decided to produce
Hard sell approach Does not consider customer satisfaction, because consumers who are
aggressively induced to buy products they do not need, will not buy them again
Marketing myopia Focus on product rather than on the needs of consumers it presumers to satisfy
Consumer research Process and tools used to study consumer behavior (form of market research)
Market research Process that links consumers/customers to market through information in order to
identify marketing opportunities and problems, evaluate actions and strategies
Market Process of dividing a market into subsets of consumers with common needs or
segmentation characteristics (identifying homogeneous groups with shared needs)
Targeting Selecting segments that the company views as prospective customers
Positioning Process by which company creates a distinct image/identity in consumers’ minds
Marketing mix (4Ps) - Product/service (features, design, packaging and post-purchase benefits)
- Price (list price, discounts, allowances and payment methods)
- Place (distribution of product/service through stores and outlets)
- Promotion (advertising, promotion and public relations to build awareness)
Societal marketing Requires marketers to fulfill needs of target audience in ways to improve, preserve
concept and enhance society’s well-being while meeting their business objectives
Information Enable marketers to place ads that ‘follow’ consumers into other websites
exchange networks featuring products that consumers have examined or purchased previously
Cross-screen Tracking and targeting users across their computers/phones/tablets (new software
marketing enables marketers to figure out when a phone user is the same as a tablet user)
Customer value Ratio between customers’ perceived benefits (economic/functional/psychological)
and resources (monetary/time/effort/psychological) they use to obtain the benefits
Customer Customers’ perceptions of the performance of the product/service in relation to
satisfaction their expectations
Customer retention Turning individual consumer transactions into long-term customer relationships:
- Emotional bonds (customer’s high level of personal commitment to company)
- Transactional bonds (mechanics and structures that facilitates exchanges)
Customer 4 ways to categorize (transaction-based/emotional-based) relationships:
relationships 1. Fans (high purchases, high bonds, high level of commitment)
2. Loyal customers (frequent purchasers, no high bonds, not emotional attached)
3. Delighted customers (modest purchasers, high bonds, just satisfied)
4. Transactional customers (infrequent purchasers, low bonds, price-sensitive)
,Social media Means of interaction among people in which they create, share and exchange
information/ideas in virtual communities/networks (best tool to bond). Structure:
- Profiles (consumers tell others about themselves)
- Friends (trusted members of social network users)
- Groups (users find people with similar interests)
- Interactions (among group members via discussion boards and post pictures)
- Opt-ins and opt-outs (users control information they share and receive)
Customer Determinants:
satisfaction social - Adaption (purchase recommendations match needs)
media - Interactivity (view offerings from different perspectives)
- Nurturing (receiving reminders and providing relevant information)
- Commitment (delivering goods on time, responding to problems, taking care)
- Network (useful for sharing experiences)
- Assortment (wide assortment and selection of products, satisfies needs)
- Transaction ease (user-friendly and enables quick transactions)
- Engagement (design is attractive and feels comfortable)
- Loyalty (not considering switching to another site)
- Inertia (unless becoming dissatisfied, changing to new site is not worth it)
- Trust (site is reliable and honest)
Types of customers - Loyalist (completely satisfied who keeps purchasing, apostles)
- Defector (neutral/merely satisfied, likely to switch to company with lower price)
- Terrorist (negative experiences with company, spread negative word-of-mouth)
- Hostage (unhappy customer, but stays because low price/monopolist)
- Mercenary (very satisfied customer who have no real loyalty to company)
Profitability Categorizing in tiers:
customers 1. Platinum tier (heavy user, not price-sensitive, willing to try new offerings)
2. Gold tier (heave user, more price-sensitive, likely to buy elsewhere)
3. Iron tier (spending volume/profitability not merit special treatment)
4. Lead tier (customers who cost company money, negative)
Retention - Customer valuation (value customers financially/strategically to invest or not)
measuring methods - Retention rates (% customers at begin of year who are customers end of year)
- Analyzing defections (look for root causes, not symptoms)
Internal marketing Organization’s marketing to personnel (employees treat each other as customers)
Psychology* Traditional study (explain consumer decisions and behavior) of human mind and
mental factors that affect behavior (experiment or survey)
Sociology* Traditional study (explain consumer decisions and behavior) of development,
structure, functioning and problems of human society (experiment or survey)
Cultural Interpretative study (understand and describe consumption) of human societies’
anthropology* culture and development (interview and focus group)
Marketing science* Communication process (predict) of imparting/exchanging information personally
or through media channels and using persuasive strategies (economics statistics)
Consumer - Input stage (marketing mix + sociocultural influences + communication sources)
decision-making* - Process stage (consumer decisions + psychological influences + learning)
- Output stage (purchase behavior + post-purchase evaluation)
Approaches - Economic (select best alternative, maximizing)
consumer behavior - Passive (consumer reacts (outcome), self-serving interest and effort, minimizing)
- Cognitive (actively seeking information, satisfying)
- Emotional (impulses/moods/feelings/emotions determine behavior, satisfying)
Consumer behavior Consumer/customer + product + situation (different customers want different
piramid products in different situations)
, CHAPTER 2: SEGMENTATION, TARGETING AND POSITIONING
Market segment To be an effective target, a market segment must be:
- Identifiable
- Sizeable (enough customers to make targeting profitable)
- Stable and growing
- Reachable/accessible
- Congruent with marketer’s objectives and resources
Homogeneous - Behavioral data (evidence-based)
groups - Consumer-intrinsic factors (age/gender/status/income/education)
- Consumption-based factors (quantity/frequency of purchase)
- Cognitive factors (in consumer’s mind)
- Consumer-intrinsic factors (traits/values/attitudes)
- Consumption-based factors (benefits and attitudes/preferences)
Demographic Divides consumers according to age, gender, ethnicity, income and wealth,
segmentation occupation, marital status, household type and size and geographical location
Family life cycle Classification of phases that families go through (each stage is a target segment)
Social class Income, education and occupation (hierarchical)
Geodemographics Hybrid segmentation scheme based on the premise that people who live close to
one another are likely to have similar financial means/preferences/lifestyles/habits
Green consumers - Environmental activists (adopt lifestyles focused on health and sustainability)
- Organic eaters (sustaining own health and not sustaining planet)
- Economizers (buying eco-friendly products in order to save money)
- True greens (protect environment, convincing others, make sacrifices)
- Donor greens (feel guilty, willing sacrifice financially, unwilling change behavior)
- Learning greens (not actively engaged, still learning, easy ways to support)
- Non-greens (people who do not care about environmental issues)
Innovators Consumers who are open-minded and generally perceive less risk than others in
trying new things (more likely to buy a new product)
Psychographics Lifestyles (in marketing), including consumers’ activities, interests and opinions
VALS* Values and lifestyles. Widely used segmentation method that classifies groups
based on consumer responses to both attitudinal and demographic questions.
Three primary motivations:
- Ideals motivated (segments guided by knowledge and principles)
- Achievement motivated (looking for products that are a success to peers)
- Self-expression motivated (desire social/physical activity, variety and risk)
Benefit Based on benefits that consumers seek from products and services
segmentation
Media-based Marketers must study benefits that consumers seek from adopting media/
segmentation communication tools, so they can advertise in these media effectively
Usage rate Differences among heavy, medium, light users and non-users of a product, service
segmentation or brand (targeting heavy users is common, more profitable, but also expensive)
Product awareness Degree of consumer’s awareness of the product and its features, and whether or
status not he/she intends to buy it reasonably soon (relevance: product involvement)
Usage occasion Segmentation that recognizes that consumers purchase some products for
segmentation specific occasions
Behavioral targeting Sending consumers personalized, prompt offers and promotional messages
designed to reach the right consumers and deliver them relevant messages at the
right time (tracking online navigation, current location and purchase behavior)
