Marketing and Consumer Behavior

Psychological Value

• A product's psychological value is the innate satisfaction it creates for the customer
• Example: A Rolex watch's prestige and beauty create deep psychological benefit for some customers, who ascribe economic worth to it
• Consumer products often create more psychological than monetary value, focusing on satisfaction and pleasure

Market Research and Share

• A manufacturer of uniforms thought they had an 85% market share, but market research revealed that customers considered competitive offerings from other clothing sellers, not just uniform manufacturers
• The actual market share was 35%, revealing many missed sales opportunities

Establishing Competitive Reference Price

• Gathering accurate price data and ensuring it's comparable to the product's pricing is crucial
• Competitive prices must be measured in terms familiar to customers in the segment (e.g., price per pound, price per hour) and stated in the same units as the product

Estimating Monetary Value

• Monetary value drivers are tied to the customer's financial outcomes via tangible cost reductions or revenue increases
• Understanding how the product category affects the customer's costs and revenues is essential
• Example: A hybrid car provides monetary benefits like lower fuel and maintenance costs, which can be quantified using readily available data

Conjoint Analysis

• Conjoint Analysis is a technique to discern the hidden values customers place on product features
• It decomposes a product into feature groups and provides customers with choices to understand which they prefer
• Value estimates from conjoint studies can be used as input for pricing decisions

Value-Based Market Segmentation

• Value-based segmentation facilitates pricing commensurate with actual value perceived and delivered to customers
• The goal is to divide a market into subgroups with common criteria that differentiate their buying behaviors

Determining Basic Segmentation Criteria

• Choosing segmentation criteria starts with a descriptive profile of the total market to identify obvious segments and differences
• Basic segmentation criteria include:
  • Demographics (age, gender, income) in consumer markets
  • Firmographics (revenue, industry, number of employees) in enterprise markets

Identifying Discriminating Value Drivers

• Value drivers are purchase motivators that vary the most among segments
• Identifying value drivers that drive willingness-to-pay and purchase decisions is crucial for effective marketing and pricing

Learn about the psychological value of products and how it affects consumer behavior, as well as the importance of market research in understanding market share.