Consumer Behavior
Chapter 1 – An Introduction to the Study of Consumer Behavior
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
2 consumer Entities:
1. Personal Consumer = the individual who buys goods + services for his/her
own use, for the use of a family member or friend (also called end user or
ultimate consumer)
2. 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
1.1 Development of the Marketing Concept and the Discipline of Consumer
Behavior
Production companies wanted efficient production (e.g. Ford)
Product companies focus on product features + quality
common in competitive industries
consumers wants are neglected (e.g. Kodak, Nokia)
Sales Supply exceeded customer demand
Consumers are aggressively persuaded (nowadays only used for unsought
products)
Marketing determine the needs + wants of specific target markets
deliver satisfaction better than competition
Societal Marketing considers consumers’ long-run best interest
good corporate citizenship
1.1.1 Embracing the Marketing Concept
Consumer Research = the process and tools used to study consumer behavior
Positivists tend to be objective + empirical, to seek causes for behavior, and
to conduct research studies that can be generalized to larger populations
Interpretivists tend to be qualitative based on small samples
Market Segmentation = process of dividing the market into subsets of consumers
with common needs or characteristics
Consumer needs differ
Differentiation helps products compete
, Segmentation helps identify media
Market Targeting = the selection of one or more of the segments identified for the
company to pursue
5 criteria for effective targeting
1. Identifiable
2. Sizeable
3. Stable
4. Accessible
5. Congruent (with company’s objectives + resources)
Positioning = developing a distinct image for the product or service in the mind of the
consumer
Communicating the benefits of the product
Communicating a unique selling proposition (= a distinct benefit or point of
difference, also called value proposition)
1.1.2 The Marketing Mix
1. Product/Service (incl. name, design, features)
2. Price (list price, discounts, payment methods)
3. Place (how company will distribute)
4. Promotion (how they will let customers know about product + its benefits)
1.2 Customer Value, Satisfaction, and Retention
Customer Value = the ratio between the customer’s perceived benefits (economic,
functional and psychological) and the resources (monetary, time,
effort, psychological) used to obtain those benefits
Perceived value is relative + subjective
Developing a value proposition is critical
Customer Satisfaction = the individual’s perception of the performance of the product
or service in relation to his/her expectations
different customer groups
Loyalists ( highly satisfied and continue purchase)
Apostles ( provide very positive word of mouth)
Defectors ( disappointed or neutral)
Terrorists ( provide negative word of mouth)
, Hostages ( unhappy but stay)
Mercenaries ( satisfied, but not really loyal)
Customer Trust
Establishing + maintaining trust is essential
Trust is the foundation for maintaining a long-standing relationship with
customers
Customer Retention = overall objective of providing value to customers continuously
and more efficiently than the competition to have highly
satisfied (or even delighted) customers that are loyal to the
company
Loyal customers are the key
They buy more products
They are less price sensitive
Servicing them is cheaper
They spread positive word of mouth
Customer Profitability Focused Marketing
Tracks costs + revenues of individual consumers
Categorizes them into tiers based on consumption behavior
Customer pyramid groups customers into four tiers
Platinum includes havy users who are not price sensitive + who are
willing to try new offerings
Gold consists of customers who are heavy users but not as
profitable because they are more price sensitive, ask for more
discounts + are likely to buy from several providers
Iron consumers whose spending volume + profitability do not merit
special treatment from the company
Lead customers who actually cost the company money because they
claim more attention than is merited by their spending, tie up
company resources + spread negative word-of-mouth
1.3 The Impact of Digital Technologies on Marketing Strategies
Marketers Consumers
• More products and services • Power
through customization • Information
• Instantaneous exchanges • Computers, phones, PDA, GPS,
• Collect + analyze data smart TV
• Broaden the target groups
Consumer Behavior is interdisciplinary
Psychology, Sociology, Social psychology, Anthropology, Economics
Chapter 1 – An Introduction to the Study of Consumer Behavior
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
2 consumer Entities:
1. Personal Consumer = the individual who buys goods + services for his/her
own use, for the use of a family member or friend (also called end user or
ultimate consumer)
2. 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
1.1 Development of the Marketing Concept and the Discipline of Consumer
Behavior
Production companies wanted efficient production (e.g. Ford)
Product companies focus on product features + quality
common in competitive industries
consumers wants are neglected (e.g. Kodak, Nokia)
Sales Supply exceeded customer demand
Consumers are aggressively persuaded (nowadays only used for unsought
products)
Marketing determine the needs + wants of specific target markets
deliver satisfaction better than competition
Societal Marketing considers consumers’ long-run best interest
good corporate citizenship
1.1.1 Embracing the Marketing Concept
Consumer Research = the process and tools used to study consumer behavior
Positivists tend to be objective + empirical, to seek causes for behavior, and
to conduct research studies that can be generalized to larger populations
Interpretivists tend to be qualitative based on small samples
Market Segmentation = process of dividing the market into subsets of consumers
with common needs or characteristics
Consumer needs differ
Differentiation helps products compete
, Segmentation helps identify media
Market Targeting = the selection of one or more of the segments identified for the
company to pursue
5 criteria for effective targeting
1. Identifiable
2. Sizeable
3. Stable
4. Accessible
5. Congruent (with company’s objectives + resources)
Positioning = developing a distinct image for the product or service in the mind of the
consumer
Communicating the benefits of the product
Communicating a unique selling proposition (= a distinct benefit or point of
difference, also called value proposition)
1.1.2 The Marketing Mix
1. Product/Service (incl. name, design, features)
2. Price (list price, discounts, payment methods)
3. Place (how company will distribute)
4. Promotion (how they will let customers know about product + its benefits)
1.2 Customer Value, Satisfaction, and Retention
Customer Value = the ratio between the customer’s perceived benefits (economic,
functional and psychological) and the resources (monetary, time,
effort, psychological) used to obtain those benefits
Perceived value is relative + subjective
Developing a value proposition is critical
Customer Satisfaction = the individual’s perception of the performance of the product
or service in relation to his/her expectations
different customer groups
Loyalists ( highly satisfied and continue purchase)
Apostles ( provide very positive word of mouth)
Defectors ( disappointed or neutral)
Terrorists ( provide negative word of mouth)
, Hostages ( unhappy but stay)
Mercenaries ( satisfied, but not really loyal)
Customer Trust
Establishing + maintaining trust is essential
Trust is the foundation for maintaining a long-standing relationship with
customers
Customer Retention = overall objective of providing value to customers continuously
and more efficiently than the competition to have highly
satisfied (or even delighted) customers that are loyal to the
company
Loyal customers are the key
They buy more products
They are less price sensitive
Servicing them is cheaper
They spread positive word of mouth
Customer Profitability Focused Marketing
Tracks costs + revenues of individual consumers
Categorizes them into tiers based on consumption behavior
Customer pyramid groups customers into four tiers
Platinum includes havy users who are not price sensitive + who are
willing to try new offerings
Gold consists of customers who are heavy users but not as
profitable because they are more price sensitive, ask for more
discounts + are likely to buy from several providers
Iron consumers whose spending volume + profitability do not merit
special treatment from the company
Lead customers who actually cost the company money because they
claim more attention than is merited by their spending, tie up
company resources + spread negative word-of-mouth
1.3 The Impact of Digital Technologies on Marketing Strategies
Marketers Consumers
• More products and services • Power
through customization • Information
• Instantaneous exchanges • Computers, phones, PDA, GPS,
• Collect + analyze data smart TV
• Broaden the target groups
Consumer Behavior is interdisciplinary
Psychology, Sociology, Social psychology, Anthropology, Economics
