Overview of Consumer Behavior The Marketing Concept The Marketing Mix and Relationships Consumer Behavior: Its Origins & Strategic Applications Overview of Consumer Behavior

1. Consumer Behavior,
Ninth Edition
Schiffman & Kanuk
Session 2
Consumer Behavior
Prepared By
Prof. Nishant Agrawal

2. Session Outline
• Customer Value , Satisfaction, Trust & Retention
• The Impact of New Technology on Marketing
• A Simplified Model of Consumer Decision Making

3. Successful Relationships
Customer
Value
Customer
Satisfaction
Customer
Retention

4. 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

5. Discussion Question
• How does McDonald’s create value for the
consumer? Ex. Dell , Apple
• How do they communicate this value?

6. 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

7. 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

8. 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

9. Customer Profitability-Focused Marketing
Tier 1: Platinum
Tier 2: Gold
Tier 3: Iron
Tier 4: Lead

10. 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

11. 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

12. 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

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

14. 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

15. Thank you