chapter 1 consumer behavior: its origins & strategic applications

Consumer Behavior,Ninth Edition

Schiffman & Kanuk

Session 2

Consumer Behavior

Prepared By Prof. Nishant Agrawal

Session Outline

• Customer Value , Satisfaction, Trust & Retention

• The Impact of New Technology on Marketing

• A Simplified Model of Consumer Decision Making

Successful Relationships

Customer Value

Customer Satisfaction

Customer Retention

Successful Relationships

• Customer

Value

• Customer

Satisfaction

• Customer

Retention

• Defined as the ratio between the

customer’s perceived benefits (economic

& functional) & the resources (time,

effort) used to obtain those benefits

• Perceived value is relative & subjective

• Developing a value proposition is critical.

Ex. Hotel

Value, Satisfaction, and Retention

Discussion Question

• How does McDonald’s create value for the

consumer? Ex. Dell , Apple

• How do they communicate this value?

Successful Relationships

• Customer

Value

• Customer

Satisfaction

• Customer

Retention

• The individual's perception of the

performance of the product or service

in relation to his or her expectations.

• Customer whose experience fall down

below expectation will be dissatisfied.

Vice versa

( Ex. Cold fries served at McD )

Value, Satisfaction, and Retention

Successful Relationships

• Customer

Value

• Customer

Satisfaction

• Customer

Retention

• 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

Value, Satisfaction, and Retention

Customer Profitability-Focused Marketing

• Tracks costs and revenues of individual consumers

• Categorizes them into tiers based on consumption

behavior

• A customer pyramid groups customers into four tiers

Customer Profitability-Focused Marketing

Tier 1: Platinum

Tier 2: Gold

Tier 3: Iron

Tier 4: Lead

Customer Pyramid

Platinum •Customers who are not price sensitive •Who are willing to try new offering

Gold •Customers who are more price sensitive•Ask for discount, likely to buy from several providers

Iron •Customer who do not merit special treatment

Lead• Customer who cost the company

because they claim more attention & Spread negative word of mouth

Traditional Marketing Concept Vs. Value and Retention Focused Marketing

Traditional Marketing Concept Value and Retention Focused Marketing

Make only what you can sell instead

of trying to sell what you make

Use technology that enables

customers to customize what you

make

Do not focus on the product; focus on

the need that it satisfies

Focus on the product’s perceived

value, as well as the need that it

satisfies

Market products and services that

match customers’ needs better than

competitors’ offerings

Utilize an understanding of customer

needs to develop offerings that

customers perceive as more valuable

than competitors’ offerings

Impact of Digital / New Technologies

• Consumers have more power than ever before

• 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

A Simplified Model of Consumer Decision Making – Figure 1-1

Overview of Chapter 1

• Overview of Consumer Behavior

• The Marketing Concept

• The Marketing Mix and Relationships

• Customer Value , Satisfaction, Trust & Retention

• The Impact of New Technology on Marketing

• A Simplified Model of Consumer Decision Making

Thank you