LEARNING OBJECTIVES - CHAPTER 1 Technology-Driven Consumer Behavior L...

Copyright © 2015 Pearson Education, Inc. publishing as Prentice Hall

CHAPTER 1

Technology-Driven Consumer Behavior

LEARNING OBJECTIVES

After reading, studying and analyzing this chapter, students should be able to understand: 1.1 The evolution of the marketing concept, the most prominent tools used to implement marketing strategies, and the objectives of socially responsible marketing.

1.2 How the Internet and related technologies improve marketing transactions by adding value that benefits both marketers and customers.

1.3 The interrelationships among customer value, satisfaction and retention, and technology’s revolutionary role in designing effective retention measures and strategies.

1.4 Consumer behavior as an interdisciplinary area, consumer decision making, and the book’s structure.

CHAPTER SUMMARY

Learning Objective 1.1: To understand the evolution of the marketing concept, the most prominent tools used to implement marketing strategies, and the objectives of socially responsible marketing.

Marketing is 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 consists of consumers’ actions during searching for, purchasing, using, evaluating, and disposing of products and services that they expect will satisfy their needs.Consumer behavior explains how marketers can do so and how individuals make decisions to spend their available resources (i.e., time, money, effort) on products and services. Marketing and consumer behavior stem from the marketing concept, which maintain that the essence of marketing is satisfying consumers’ needs, creating value and retaining customers. Subsequently, companies must they produce only those goods they had already determined that consumers would buy. Marketing myopia, that is, a focus on the product rather than on the needs it presumes to satisfy. The marketing mix (also known as the Four Ps) consists of four elements: Product, price, place (distribution) and promotion. Market segmentation, targeting and positioning are the foundation of turning consumers into customers. Market segmentation is the process of dividing a market into subsets of consumers with common needs or characteristics. It consists of groups with shared needs that are different from those shared by other groups.Targeting is selecting the segments that the company views as prospective customers and pursuing them. Positioning is the process by which a company creates a distinct image and identity for its products, services, and brands in consumers’ minds. The image must differentiate the company’s offering from competing ones and communicate to the target audience that the particular product or service fulfills their needs better than competing offerings. The societal marketing concept requires marketers to fulfill the needs of the target audience in ways that improve, preserve, and enhance society’s wellbeing and simultaneously meeting their business objectives.

(Consumer Behavior 11e Leon Schiffman, Joseph Wisenblit) (Solution Manual all Chapters) 1 / 4

Copyright © 2015 Pearson Education, Inc. publishing as Prentice Hall Learning Objective 1.2: To understand how the Internet and related technologies improve marketing transactions by adding value that benefits both marketers and customers.

Technology has revolutionized the marketing mix, segmentation, targeting, positioning, and customer retention. When consumers use their computers, mobile phones, electronic readers, tablets and other electronic gadgets, they provide marketers with the kind of information that enables companies to target them immeasurably more effectively than during the pre-Internet days. Thus, online technologies create a “value exchange”: Marketers provide value to consumers in the form of information that turns shoppers into sophisticated customers, opportunities to customize products easily, entertainment content, and much more. While online, consumers provide value to marketers by “revealing themselves,” which enables companies to market their products more efficiently and precisely. Surfing online allows consumers to locate the best prices for products or services, bid on various marketing offerings, bypass distribution outlets and middlemen, and shop for goods around the globe and around the clock. They can also compare the features of different product models and engage in social networks with consumers who share the same interests, and provide and receive information about their purchases. Online communications created sophisticated and discerning consumers, who are hard to attract, satisfy, and retain. More than ever before, marketers must customize their products, add value to the physical product or the core of a service, provide the right benefits to the right consumer segments, and position their products effectively. Technology also enables marketers to refine their strategies because they can readily customize their offerings and promotional messages, offer more effective pricing, shorter distribution channels, and build long-term relationships with customers. By using rapidly advancing technologies track consumers, marketers can identify opportunities for creating new offerings, as well as improving and extending existing products and services. They can gather comprehensive consumer information by tracking consumers online, requiring prospective buyers to register at their websites, and combining this knowledge with demographic and lifestyle data gathered off line

Learning Objective 1.3: To understand the interelationships among customer value, satisfaction and retention, and technolgy’s revolutinary role in designing effective retention measures and strategies.

Customer value is the ratio between customers’ perceived benefits (economic, functional and psychological) and the resources (monetary, time, effort, psychological) they use to obtain those benefits. Customer satisfaction is customers’ perceptions of the performance of the product or service in relation to their expectations. Customer retention is turning individual consumer transactions into long-term customer relationships by making it in the best interests of customers to stay with the company rather than switch to another firm. It is more expensive to win new customers than to retain existing ones. Technologies often enhance customer relationships and retention by engaging consumers with brands. In addition to engaging customers with marketers, social media has transformed market research. Many companies can easily collect input and customers’ preferences, and, sometimes without actively questioning consumers. The objective of understanding customers’ emotional and transactional motives when buying from a company is to understand the drivers of customer satisfaction, which lead to customer retention and long-term relationships. As consumer buy more and more online, it has become important to understand what makes them satisfied during electronic Customers who are highly satisfied or delighted keep purchasing the same products and brands, provide positive and encouraging word-of-mouth to others, and often become “customers for life.” On the other hand, those who less satisfied or feel neutral either switch to a competitor immediately or wait until another marketer offers them a somewhat lower price and then do so. In addition, highly dissatisfied customers spread negative and often exaggerated word-of-mouth. Internal marketing is marketing the organization to its 2 / 4

Copyright © 2015 Pearson Education, Inc. publishing as Prentice Hall personnel. Behavioral and motivational experts agree that employees would “go the extra mile” to try and retain customers only if they are treated like valued “internal customers” by their employer.

Learning Objective 1.4: To understand consumer behavior as an interdisciplinary area, consumer decision making, and the book’s structure.

Consumer behavior stems from four disciplines: Psychology is the study of the human mind and the mental factors that impact behavior (i.e., needs, personality traits, perception, learnt experiences, and attitudes). Sociology is the study of the development, structure, functioning and problems of human society (the most prominent social groups are family, peers and social class).Anthropology compares human societies’ culture and development (e.g., cultural values and subcultures). Communication is the process of imparting or exchanging information (including media and persuasive strategies).

The process of consumer decision-making consists of: the input, process and output. The “input stage” of includes two influencing factors: the firm’s marketing efforts (i.e., the product, its price and promotion, and where it is sold) and socio-cultural influences (i.e., family, friends, neighbors, social class, and cultural and subcultural entities). This stage also includes the methods of transmitting the information from firms and socio-cultural sources to consumers. The “process stage” focuses on how consumers make decisions. The psychological factors (i.e., motivation, perception, learning, personality, and attitudes) affect how the external inputs from the input stage influence the consumer’s recognition of a need, prepurchase search for information, and evaluation of alternatives. The “output stage” consists of two post-decision activities: purchase behavior and post-purchase evaluation.

This book includes five parts. Part One provides an overview of marketing and consumer behavior and the components of strategic marketing. Part Two describes the consumer as an individual and explains the psychological factors that impact consumer behavior. Part Three addresses the communication and persuasion process along its four components: The sender, message, media, and receiver. Feedback is the mechanism that alerts the sender as to whether the intended message was, in fact, received. Part Four examines consumers in their social and cultural settings. Part Five includes a discussion the consumer decision-making process, consumers’ reactions to innovative products, marketers’ social responsibility and potential ethically questionable marketing practices, and the methodology of consumer research.

CHAPTER OUTLINE

INTRODUCTION

• Consumer behavior is the study of consumers’ actions when searching for,

purchasing, using, evaluating, and disposing of products and services that they expect will satisfy their needs.

• Consumer purchases are determined not by needs alone, but also by how the product

helps owners express their characteristics.

*****Use Key Term consumer behavior Here, Use Figures #1.1 and #1.2 Here*****

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Copyright © 2015 Pearson Education, Inc. publishing as Prentice Hall The Marketing Concept

• Marketing and consumer behavior stem from the marketing concept, which

maintains that the essence of marketing consists of satisfying consumers’ needs, creating value, and retaining customers.

*****Use Key Term marketing concept Here, Use Learning Objective #1.1 Here; Use Figure #1.3 Here; Use Review and Discussion Question 1.1 Here*****

• The production concept focused on cheap, efficient production and intensive

distribution.

a) It assumes consumers are mostly interested in product availability at low prices.

b) It works if consumers are more interested in obtaining the product than in

getting the features they really want.

• The product concept assumes consumers will buy the product that offers the highest

quality, the best performance and the most features.

a) A product orientation leads companies to focus on quality and add features if

feasible (vs. if desired by the end consumer).

b) A product orientation may lead to marketing myopia, or a nearsighted focus on

the product and its direct competitors vs. the market’s needs.

• The selling concept maintains that marketers should sell the products they have

decided to produce.

*****Use Key Terms production concept, product concept, marketing myopia, selling concept Here*****

Consumer Research

• Consumers are highly complex individuals, subject to a variety of psychological and

social needs quite apart from their basic functional needs.

a) The needs and priorities of different consumer segments differ dramatically.

b) The objectives of a company should be to target different products and services

to different market segments in order to better satisfy different needs.

c) In order to design new products and marketing strategies that would fulfill

consumer needs, they had to study consumers and their consumption behavior in depth.

• The term consumer research represents the process and tools used to study

consumer behavior.

*****Use Key Term consumer research Here *****

Market Segmentation, Targeting, and Positioning

• The focus of the marketing concept is satisfying consumer needs.
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