Becamex Business School Chapter 1 Technology-Driven Consumer Behavior Changing in Consumer Behavior • Business operations started shifting away from traditional to advance digitalized processes • A further boost to the e-commerce industry, making the online environment more competitive • However, a consumer market that is not involved in online shopping at developing countries • From pandemic, drastic changes to the way consumers used to form their intention and behave toward digitalized solutions (Sajid, Rashid & Haider, 2022) |2 |3 |4 How Will Consumer Behavior Change In 2023? • Despite Economic Gloom, Spending Will Increase • money in the bank will spur them on to greater spending • Consumers Will Gravitate Toward Blended Experiences • blend newly gained digital fluidity with old-fashioned familiarity • Less Will Be More, And Quality Will Trump Quantity • More selective Squeeze maximum value out of each outlay (much pickier about which streaming subscription to keep) (Forbes, 2023) |5 Chapter 1 Learning Objectives 1.1 To understand the evolution of the marketing concept, the most prominent tools used to implement marketing strategies, the relationship between value and customer retention, and the objectives of socially responsible marketing. 1.2 To understand how the Internet and related technologies improve marketing transactions by adding value that benefits both marketers and customers. 1.3 To understand the interrelationships among customer value, satisfaction, and retention, and technology’s revolutionary role in designing effective retention measures and strategies. 1.4 To understand consumer behavior as an interdisciplinary area, consumer decision-making, and the structure of this book. Marketing ? Consumer Behavior ? |7 MARKETING • Marketing, more than any other business function, deals with customers • Marketing is managing profitable customer relationships • telling and selling” • satisfying customer needs • 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 |8 CONSUMER BEHAVIOR • The study of consumers’ actions during searching for, purchasing, using, evaluating, and disposing of products and services that they expect will satisfy their needs • Explains how individuals make decisions to spend their available resources (i.e., Time, money, effort) on goods that marketers offer for sale • Describes what products and brands consumers buy, why they buy them, when they buy them, where they buy them, how often they buy them, how often they use them, how they evaluate them after the purchase, and whether or not they buy them repeatedly |9 How can a car help express its owners’ characteristics? • Personal transportation - Needs - Express characteristics Appeal to buyers’ psychology “fulfill their dreams rather than deny them.” “It is expensive to fulfill one’s dreams, but it is worth the expense.” Porsche’s classic tagline: “Porsche. There is no substitute.” - Egotism and power - Face challenges, and feel powerful and in control of their environment Not a “me too” item Porsche and Toyota target contrasting groups of people because their prices are very far apart | 11 • It is hard to understand consumer behavior because it often defies logic and common sense | 12 Learning Objective 1.1 1.1 To understand the evolution of the marketing concept, the most prominent tools used to implement marketing strategies, the relationship between value and customer retention, and the objectives of socially responsible marketing. Marketing Concept • The essence of marketing consists of satisfying consumers’ needs, creating value, and retaining customers • Marketers must satisfy consumer needs effectively by making only those products that consumers are likely to buy • Not try to persuade consumers to buy what the firm had already produced; instead, they make only products that satisfy consumers’ needs and aim to convert first-time buyers into long-term loyal customers | 15 Marketing Concept Application How does Classico’s ad relate to the marketing concept? Satisfy and turn them into loyal customers Development of the Marketing Concept Production Concept Product Concept Selling Concept Marketing Concept Production concept • Consumers are mostly interested in product availability at low prices; its implicit marketing objectives are cheap, efficient production and intensive distribution • “The best way to serve the customer is the way the customer wants to be served,” - Alfred Sloan – leader of General Motor (1923) • All consumers are not alike: firms must study consumers’ diverse needs and satisfy the desires of specific customer segments | 18 Product concept • Companies studied customers’ needs and offered products that satisfied them well, • Companies began offering more and more versions, models, and features, often indiscriminately • Assumes that consumers will buy the product that offers them the highest quality, the best performance, and the most features • Marketing myopia • A focus on the product rather than on the needs it presumes to satisfy • Look “in the mirror rather than through the window.” | 19 Selling concept • Marketers’ primary focus is selling the products that they have decided to produce • Consumers are unlikely to buy the product unless they are aggressively persuaded to do so—mostly through the “hard sell” approach | 20 Marketing Concept Requirements • Consumer Research Consumer behavior (Chapter 16) • Market Segmentation, Targeting and Positioning (STP) • The Marketing Mix (4 Ps) • Product or service • Price • Place • Promotion Socially Responsible Marketing What is the societal marketing concept? “fulfill the needs of the target audience in ways that improve, preserve, and enhance society’s well-being while simultaneously meeting their business objectives” Learning Objective 1.2 1.2 To understand how the Internet and related technologies improve marketing transactions by adding value that benefits both marketers and customers. Technology Benefits Consumers and Marketers • Technological innovations: transformed consumer behavior and marketers’ selection and targeting of potential customers • Ex: Integrated Marketing Communication (IMC) • Recent marketing plans: improving digital sites, increasing social media activity, and switching resources from traditional to digital media | 24 Find a hotel room in a strange city? • so-called “click-to-call ad” • online technologies create a “value exchange” | 25 The value exchange • Computers, mobile phones, electronic readers, tablets, and other electronic gadgets • Provide marketers with detailed data target consumers immeasurably more effectively than during the pre-internet days • Companies’ value by providing customers • means to shop more efficiently, become better informed, buy customized products, and have access to entertainment and information • Consumers: React and interact? • Advertisers: offer more original content online, shift dollars from traditional tools, worry about fragmented and microscopic among consumers | 26 | 27 Lower prices, more information, and customized products • Increasingly, consumers have been relying on information from websites and purchasing daily-use products digitally • Nevertheless, still buy some products (apparels) in physical stores • Order online and pick-up in physical stores • Online shoppers are more frugal and fewer buy on impulse • Marketers now can • customize their offerings and promotional messages, offer more effective pricing and shorter distribution channels, and build long-term relationships with customers more easily | 28 | 30 Most popular mobile messaging apps in the United States as of September 2019, by monthly active users(in millions) | 31 Behavior Information and Precise Targeting • Specialized information exchanges • Cookies • Consumer access to information • Consumer’s benefit • Marketer’s benefit • Product comparisons • Comparable brands in a single screen • One-click access to more tech-information | 33 Interactive communication • Enable a two-way interactive exchange • Companies can gauge the effectiveness of their promotional messages instantly, instead of relying on delayed feedback • Ex: Keep track of shoppers’ purchases provide personalized coupon at the checkout counter • Enables promotional messages designed by the customers themselves • Cross-screen marketing | 34 Individual Assignment – Question 1 • How does technology affect the Marketing Mix? • Tips: Please specify in your recent activities for relevance in each element of Marketing mix Learning Objective 1.3 1.3 To understand the interrelationships among customer value, satisfaction, and retention, and technology’s revolutionary role in designing effective retention measures and strategies. Successful Relationships Customer value High level of customer satisfaction Customer retention Value, Satisfaction, and Retention • The ratio between customers’ perceived benefits (economic, functional, and psychological) and the • Customer Value resources (monetary, time, effort, psychological) they use to obtain those benefits • Customer Satisfaction • Dinner at expensive French restaurants • Customer Retention • Visit thousands of McDonalds restaurants (core standards) | 37 Group Discussion Questions In case of Food and Beverage sector during Covid-19 outbreak, please demonstrate • How do they create value for the consumer? • How do they communicate this value? Value, Satisfaction, and Retention • Customers’ perceptions of the performance of the product or service in relation to their • Customer Value • Customer Satisfaction • Customer Retention expectations • Different expectation of expensive French restaurant or McDonalds • Dissatisfied and satisfied | 39 Value, Satisfaction, and Retention • Turning individual consumer transactions into long-term customer relationships by making it • Customer Value • Customer Satisfaction • Customer Retention in the best interests of customers • Stay with the company rather than switch to another firm • More expensive to win new customers than to retain existing ones | 40 Individual Assignment – Question 2: Technology and Customer Relationships For Discussion: • Provide two examples where brands used technology to engage consumers/enhance customer relationships. • Provide two examples where technology was used to add value to the consumer. 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 Platinum Gold Iron Lead Measures of customer retention • Customer Valuation • Value and categorize customers by financial strategic worth • Retention Rates (%) • At the beginning – the end of the year • Analyzing defections • Talking to former customers • Analysis customer’s complain • Benchmarking against customer’s defection rate | 43 Profitability-Focused Segmentation Discussion Questions • What is the difference between emotional and transactional bonds? • Identify and describe four of the eleven determinants of customer satisfaction with online merchants. Characterize each selected determinant as primarily driven by emotion or stemming from the mechanics of the transaction. Why is Internal Marketing Important? Learning Objective 1.4 1.4 To understand consumer behavior as an interdisciplinary area, consumer decision-making, and the structure of this book. Psychology Commun ication Sociology Anthropology Consumer Decision Making • Inputs • Firm marketing efforts • Sociocultural influences • Process • Psychological factors • Need Recognition, Decision Type, Prepurchase Search, Evaluation of Alternatives • Learning • Outputs • Purchase • Post-purchase evaluation | 49 | 50 | 51 All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted, in any form or by any means, electronic, mechanical, photocopying, recording, or otherwise, without the prior written permission of the publisher. Printed in the United States of America. Copyright © 2015 Pearson Education, Inc.
