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Marketing 410 Chapter 1 Notes

by: Stephanie Marie

Marketing 410 Chapter 1 Notes Marketing 410

Marketplace > University of Massachusetts > Marketing > Marketing 410 > Marketing 410 Chapter 1 Notes
Stephanie Marie
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About this Document

Chapter 1 Notes from the book for Exam 1
Consumer Behavior
Iyer Earswar
Class Notes




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This 5 page Class Notes was uploaded by Stephanie Marie on Wednesday February 10, 2016. The Class Notes belongs to Marketing 410 at University of Massachusetts taught by Iyer Earswar in Winter 2016. Since its upload, it has received 31 views. For similar materials see Consumer Behavior in Marketing at University of Massachusetts.

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Date Created: 02/10/16
Marketing 410 Chapter 1 What is consumer behavior? ● behavior that consumers display in searching for, purchasing, using, evaluating  and disposing of products and services that they expect will satisfy their needs ● describes two types of consuming entities ○ personal consumer­ buys goods and services for his or her own  use, for the use of the household, or as a gift for a friend ○ organizational consumer­ includes profit and not for profit  businesses, government agencies, and institutions, all of which must buy  products, equipment, and services in order to run their organization Consumer Behavior and the Marketing Concept ● 3 philosophically different business orientations ○ production orientation ■ 1850s­1920s ■ gearing up manufacturing skills to expand  production ■ demand exceeded supply  ■ example: simple and inexpensive car that generally worked well ○ sales orientation ■ 1930s­1950s ■ sell more of what they were able to produce ■ supply was greater than demand ○ marketing orientation ■ mid 1950s on ■ time for businesses to focus more of their attention  on consumers and their preferences  ● What is the marketing concept? ○ in order to be successful a company must determine the needs  and wants of specific target markets and deliver the desired satisfactions better  than competition ○ one of the first people to understand this­ Colonel Sanders of KFC ○ societal marketing concept­ consumers on occasion may respond  to their immediate needs and wants, while overlooking what is in effect in their  own long run best interest or the best interest of their family and neighbors, best  interest of their country or region, or even best interest of their entire planet  Embracing the Marketing Concept ● consumer research­ represents the process and tools used to study consumer  behavior  Segmentation, Targeting, and Positioning ● segmentation­ the process of dividing the market into subsets of consumers with  common needs or characteristics  ● targeting­ the selection of one or more of the segments identified for the  company to pursue  ● positioning­ the development of a distinct image for the product or service in the  min of the consumer, an image that will differentiate the offering from competing ones  and their needs better than competing brands  ○ communicating the benefits that the product will provide rather  than the product’s features ○ unique selling proposition The Marketing Mix ● consists of a company’s service and or product offerings to consumers and the  methods and tools it selects to accomplish the exchange ● Four Ps ○ product ○ price ○ place ○ promotion Customer Value, Satisfaction, Trust and Retention ● Drivers of successful relationships with customers ○ Providing Customers with Value ■ ratio between the customer’s perceived benefits  and the resources used to obtain those benefits ■ developing a value proposition and looking for the  impact of emerging megatrends are influential factors in attaining  successful positioning of a brand ○ Ensuring Customer Satisfaction ■ the individual consumer’s perception of the  performance of a product or service in relation to his or her expectations ■ function of customer expectations  ■ several types of customers ● completely satisfied­ loyalists who  keep purchasing ● apostles whose experiences exceed  their expectations and who provide very positive word of mouth  about the company ● defectors who feel neutral or merely  satisfied and are just as likely to stop doing business with the  company  ● terrorists­ have had negative  experiences with the company and spread negative word of mouth ● hostages­ unhappy customers who  stay with the company because of a monopolistic environment or  low prices and who are difficult and costly to deal with because of  their frequent complaints  ● mercenaries satisfied but do not  have any real loyalty to the company and may defect at any point  for lower prices elsewhere  ○ Building Customer Trust ■ many people trust sources such as word of mouth  and recommendations ■ delight­ a company seeks to recover in the eyes  and minds of consumers by setting things right with the consumer and  further demonstrates to that consumer that he or she is valued as a  customer  ○ Securing Customer Retention ■ designed to make it in the best interest of  customers to stay with a company rather than switch to another company  ■ more expensive to secure new customers than to  keep existing ones ■ loyal customers buy more products  ■ loyal customers are less price sensitive and pay  less attention to competitor’s advertising  ■ serving existing customers who are familiar with the company offerings and processes is cheaper,  ■ loyal customers spread positive word of mouth and  refer other customers  ■ customer profitability focused marketing tracks  costs and revenue of individual customers and then categorizes them into tiers based on consumption behaviors that are specific to the company’s  offerings  ■ Customer Pyramid ● platinum tier­ heavy users who are  not price sensitive and who are willing to try new offerings ● gold tier­ customers who are heavy  users but not as profitable because they are more price sensitive  than those in the higher tier, ask for more discounts, and are likely to buy from several providers ● iron tier­ customers whose spending  volume and profitability do not merit special treatment from the  company  ● lead tier­ customers who actually  cost the company money because they claim more attention than  is merited by their spending, tie up company resources, and  spread negative word of mouth  The Impact of New Technologies of Marketing Strategies ● Consumers have more power than ever before ○ example : Tivo lets customers decide if they want to view the  commercials ● Consumers have more access to information than ever before ○ can easily find reviews for products  ○ click a button to see features of a product  ○ participate in viral communities of people who share the same  interest  ● Marketers Can and must offer more services and products than ever before ○ customize products and promotional messages ● Increasing Instantaneous Exchanges between Marketers and Customers ○ two way interactive exchange in which customers can instantly  react to the marketer’s message by for example clicking links within a given web  site ● Marketers can gather more information about consumers more quickly and easily ○ marketers can track someone’s online behavior and gather  information by requiring visitors to the Web­ site and provide some background  information before they get access to the site’s features  ○ narrowcasting­ a method that enables them to develop and deliver more customized messages to increasingly smaller market segments on an  ongoing basis ● Impact reaches beyond the pc­based connection of the web ○ mobile phone or pda are likely to be preferred access tool The Mobile Consumer ● expect expanded use of wireless media messages as  ○ the availability of flat rate data traffic to consumers increases  ○ with creation of enhanced screen image quality  ○ increased consumer user experiences with improved web related  applications  Consumer Behavior and Decision Making are Interdisciplinary ● A Model of Consumer Decision Making ○ input stage ■ influences the consumer’s recognition of a product  need and consists of two major sources of information: the company’s  marketing efforts and the external sociological influences on the  consumer ○ process stage ■ focuses on how customers make decisions ■ psychological factors inherent in each individual  affect how the external inputs from the input stage influence the  consumer’s recognition of a need, evaluation of alternatives, and how  they use what they buy ○ output stage ■ two post decision activities ● purchase behavior ● post purchase evaluation 


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