Consumer Behavior and Customer Retention Strategies

Consumer Behaviour - Unit 1

• This unit introduces consumer behaviour, markets, and technology.
• Key learning objectives involve understanding the evolution of the marketing concept, marketing tools, the relationship between value and customer retention, and socially responsible marketing.
• Students need to understand how the internet and related technologies improve marketing transactions by adding value for both marketers and customers.
• The interrelationships among customer value, satisfaction, and retention in today's marketing are crucial. Understanding effective customer retention is also important.
• Consumer behavior should be viewed as an interdisciplinary area, including consumer decision-making.

What is Consumer Behaviour?

• Consumer behavior is the study of all consumer decisions (relating to acquisition, use, and disposal of marketing offers, goods, and services) at different times (hours, days, weeks, months, and years).
• This includes searching for, purchasing, using, evaluating, and disposing of products or services to meet needs.

Market Offering

• A market offering is anything that promises to fulfill customer needs and wants.
• Market offerings include goods, services, events, experiences, places, organizations, information, and ideas.

Learning Objective 1.1

• Understand the evolution of the marketing concept, tools used in marketing strategies, the connection between values and customer retention, and socially responsible marketing.

Marketing Orientations/Philosophies

• These philosophies guide marketing strategies.
• Specific concepts include:
  • Production concept
  • Product concept
  • Selling concept
  • Marketing concept
  • Societal marketing concept

Production Concept

• Consumers favor widely available, affordable products.
• Focus: Production and distribution efficiency.

Product Concept

• Consumers favor high-quality, superior performance, and innovative products.
• Focus: Continuous product improvement

Selling Concept

• Consumers will not buy enough of a company’s products unless it undertakes large-scale selling and promotion efforts.

Marketing Concept

• Knowing the needs and wants of target markets and providing desired satisfaction better than competitors is key to achieving organizational goals.
• Focus: Customer needs and suitable offerings.

Societal Marketing Concept

• Marketing decisions should consider consumers’ wants, company requirements, consumers' long-term interests, and society's long-run interests.
• Focus: Sustainable practices for the collective good of all stakeholders.

Selecting Customers to Serve

• Consider the entire collection of actual and potential buyers.

Market Segmentation

• Divide the market into groups of customers with similar needs and wants (homogeneous).

Target Marketing

• Focus resources on reaching a specific customer group(s).

Marketing Mix

• Using a combination of tactical tools.
• Tools used by marketers to execute strategy include product, price, place, and promotion. For services, also consider people, process, and physical evidence.

Learning Objective 1.3

• Understand how the internet and related technologies improve marketing transactions by adding value to both marketers and consumers.

Marketing & Technology

• Technology has significantly revolutionized the marketing mix.
• Technology creates value exchanges, allowing for lower prices and customized products.
• Consumers provide data, allowing for better, precise targeting of customers.
• Consumers have greater access to information and products.

Learning Objective 1.4

• Understanding the interrelationships among customer value, satisfaction, and retention and technology's revolutionary role in creating effective retention measures and strategies is critical.

Successful Relationships: Value, Satisfaction, Retention

• Successful relationships require high customer value, satisfaction, and retention.

Customer Value

• The ratio between a customer's perceived benefits and the resources used to obtain them.

Customer Satisfaction

• Perception of how well a product or service meets expectations.

Customer Groups

• Loyalists, Apostles, Defectors, Terrorists, Hostages, Mercenaries

Customer Retention

• Objective in providing value is to keep satisfied customers, who buy more products, care less about price, and spread positive word-of-mouth.

Measures to Assess Customer Retention

• Customer Valuation, Retention Rates, and Analyzing Defections

Learning Objective 1.5

• Understand consumer behavior as an interdisciplinary area, encompassing consumer decision making.

Interdisciplinary Nature of Consumer Behaviour

• The influence of psychology, sociology, social psychology, anthropology, and communication studies.

Interdisciplinary Influences

• Various factors, including neuro-science/neuro-marketing, experimental psychology, developmental psychology, human ecology, microeconomics, social psychology, macroeconomics, semiotics/literary criticism, demography, history, cultural anthropology, affect and influence consumer behaviour

Consumer Decision Making Model

• Stages in the consumer decision-making process (input, process, and output).

Tutorial Session

• Tutors cover segmentation, targeting, and positioning.

Chapter 2 Learning Objectives

• Understand the interrelationships among market segmentation, targeting, and positioning.
• Understand segmentation bases (demographics, psychographics, product benefits sought, and usage-related factors).

Learning Objective 2.1

• Understand the interrelationships among market segmentation, targeting, and positioning. This includes selecting the best target markets.

Market/Segmentation/Targeting

Why is Segmentation Necessary

• Consumer differences necessitate different strategies.
• Segmentation helps tailor products and messaging.

Selecting Target Markets

• Target segments should be identifiable, profitable, stable, and reachable, congruently aligning with objectives and resources.

Criteria for Effective Targeting

• Identifiable segments, sizeable segments, stable segments, accessible segments, segments congruent with the company's objectives & resources

Learning Objective 2.2

• Understand segmentation bases: Demographics, Psychographics, Product Benefits Sought, and Usage-Related Factors.

Market Segmentation

• Demographic (age, gender, FLC, social class, etc.)
• Geographical (Geo-demographic)
• Psychographic (lifestyle, activities, interests, opinions, values)
• Behavioral (benefit, usage rate, awareness, occasion)

Quantitative Factors

• Factors measurable in numerical terms (demographics, geographics, usage rate, purchase frequency).

Cognitive Factors

• Factors residing in consumers’ minds (personality traits, cultural values, attitudes, preferences).

Psychographic Segmentation

• Consumers' lifestyles; activities, interests, and opinions. These factors explain purchase decisions.

Personality Traits

• Consumer innovators, Open-mindedness

VALS

• Values and lifestyles segmentation system categorizing consumers by primary motivation and resources (Innovators, Thinkers, Believers, Achievers, Experiencers, Strivers, Makers, Survivors).

Brand Loyalty

Usage Rate, Usage Occasion Segmentation

RTB (Real-Time Bidding)

• A technique that enables advertisers to precisely target users by determining bids on a per-impression basis.
• Involves tracking user interests by observing their behaviour/actions including website visits, and purchase history

Profiling Impressions

• Profiling includes using (invisible) cookies on Web pages to track users behaviours (website visits, usage, engagement),

Predictive Analytics

• Measures designed to predict consumers' future purchases using information obtained from their prior data and personalized promotions

Tracking Online Navigation

• Websites visited, engagement on sites, lifestyles/personalities, purchase, returns, and exchanges

Instagram Advertisements

Learning Objective 2.3

• Understand behavioral targeting, including real-time bidding, and its role in modern marketing.

Learning Objective 2.4

• Understanding how to position, differentiate, and reposition products

Positioning

• Process of creating a distinct image and identity for products, services, or brands in consumers' minds.

Umbrella Positioning

• Statement or slogan describing the universal benefit of a company's offering

Other Types of Positioning

• Premier positioning, positioning against competition, key attribute positioning, unowned positioning

Perceptual Map

• Diagram illustrating consumers' perceptions of competing brands along relevant product attributes.

Positioning Statement Example

Repositioning

• Strategically changing a product's image/identity in consumers' minds.

Recap – Implementing STP

• Stages in implementing STP (Segmentation, Targeting, Positioning)

Next Steps – Consumer Research

• The next step in marketing strategy is consumer research.