Customer Behavior
Module 1
What Is Customer Behavior?
Module 1
What is Customer Behavior?
Customer behavior is defined as the mental and
physical activities undertaken by household
and business customers that result in
decisions and actions to pay for, purchase,
and use products and services.
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Customer Behavior
Module 1
Customers: Types, Roles &
Behaviors
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Customer Behavior
Module 1
The Domain of Customer
Behavior
Household
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Business
Products
Consumer
Products
Business
Products
Services
Consumer
Services
Business
Services
Customer Behavior
Module 1
Why Understanding Customer
Behavior Is Important?
To achieve the
purpose of business
customer satisfaction
To carry out the
marketing concept
Business
Success
To achieve a customer
focus business
democracy
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Customer Behavior
Module 1
Customer Satisfaction
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
Peter F. Drucker believes that the
purpose of business is to create and
then retain a satisfied customer.

Making money is a necessity, not a
purpose. It is the end result, a
desirable outcome, of creating a
satisfied customer.

Global enterprises are moving
towards a "Customer Culture"
Customer Behavior
Module 1
BA applying Customer
Culture
 Responding
to the desire of first class
travelers:
the airline offers flyers the option
of having dinner on the ground in the
first class lounge.
– Once they get on board, the passengers then slip into
BA pajamas and sleep through an uninterrupted flight to
their destination.
– After arriving BA serves breakfast, offers the use of
comfortable dressing rooms and showers, and will even
press their clothes before they go off to a business
meeting.
Customer Behavior
–
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Module 1
Consumer Behavior And
Marketing Strategy

helps organizations improve their marketing strategies
by understanding issues such as :
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–
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The psychology of how consumers
think, feel, reason, and select between
different alternatives (e.g., brands,
products)
The psychology of how the consumer is
influenced by his or her environment
(e.g., Culture, Family, Signs, Media)
The behavior of consumers while
shopping or making other marketing
decisions
Customer Behavior
Module 1
Customer Behavior & Customer
Orientation

Customer Orientation means
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
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understanding customers' needs and wants,
the competitive environment,
and the nature of the market used to formulate all of the firm's
plans and actions to create satisfied customers.
Organizations that become more customer oriented:
–
gain a remarkable competitive advantage in external
marketplace.
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And , internally they are able to cultivate satisfied employees
who feel pride in their jobs.
Customer Behavior
Module 1
Competitive Advantages Arising
From A Customer Orientation
Customer
Orientation
Customer
Retention
Increased profitability from:
•Cost efficiencies of serving repeat
customers.
•Willingness to pay a premium
price.
•Protection against Corporate Crisis.
Revenue Growth From:
•Increased word of mouth
•One – stop Shopping
•New – product innovations
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Customer Behavior
Module 1
Cost Efficiencies from Repeat
Customers

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According to some estimates,
it costs five times more to attract
a new customer than to retain one.
–
Producing the same item for the same
customer would cost less due to
accumulated learning, resulting in
increased productivity.
–
Dissatisfied customers increase the costs
of doing business.
Customer Behavior
Module 1
Costs of Serving a
Customer
Economies Of Scale From Repeat
Buying
60
50
40
30
20
10
0
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Repeat Buying
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Customer Behavior
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Module 1
Premium Prices from Established
Customers

Established customers are unlikely to switch their current
suppliers.

Lower prices or higher performance are offered by competitors in
order to capture your satisfied customers.

It is estimated that a minimum of 5% price advantage is generated
through customer satisfaction. This is because of:
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Product Excellence.
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Service Excellence.
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Brand Reputation.
–
Customer – Oriented Culture.
Customer Behavior
Module 1
Protection Against Corporate
Crisis
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
Loyal Customers will resist unfair and unethical
business practices of competitors against a company
they really like.

Loyal customers expose any illegal unethical
activities they might come to know about
competitors.
Customer Behavior
Module 1
Increased Word-Of-Mouth

The best way to grow a business is to gain new
customers through word-of-mouth communication.

Research indicates that satisfied customers talk to three
other customers.
Word of mouth communication is especially
important when the product is risky.

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Customer Behavior
Module 1
One-Stop Shopping
Another source of business growth for
customers is the increase in the number of
products a satisfied customer buys from the
same company.
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Customer Behavior
Module 1
Why Customers prefer to do
one – stop shopping ?
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It is more economical for customers because of
volume discounts, favorable terms, better support
services
It is more convenient since the procedures for
ordering, payments and delivery are standardized.
It eliminates the uncertainty that comes with doing
business with a new company.
Gives the company the ability to expand its product
line and generate more growth without significant
risk.
Customer Behavior
Module 1
Customer Orientation Creates
Pride in Employees
Employees brag about a company that gives them
a sense of pride. This is especially true for front
line employees if they experience job
satisfaction.
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Customer Behavior