12-1 Small Business Management, 11th edition Longenecker, Moore, and Petty © 2000 South-Western College Publishing Chapter 12 Customer Loyalty and Product Strategy In the Spotlight: PC Connection In the Spotlight: PC Connection

12-2 Small Business Management, 11th edition Longenecker, Moore, and Petty © 2000 South-Western College Publishing Learning Objectives: Chapter Explain how customer satisfaction influences customer loyalty. 2. Identify the key characteristics of consumer behavior. 3. Explain product strategy and related concepts. 4. Describe the components of a firm’s total product offering. 5. Understand the legal environment affecting product decisions.

12-3 Small Business Management, 11th edition Longenecker, Moore, and Petty © 2000 South-Western College Publishing Relationship of Customer Service to Customer Loyalty High Level of Customer Service Tactic Customer Satisfaction Response Customer Loyalty Goal

12-4 Small Business Management, 11th edition Longenecker, Moore, and Petty © 2000 South-Western College Publishing Simplified Model of Consumer Behavior Sociological Factors Culture Social Class Reference Groups Opinion Leaders Psychological Factors Needs Perceptions Motivations Attitudes Decision-Making Process Problem Recognition Information Search and Evaluation Purchase Decision Post-Purchase Evaluation

12-5 Small Business Management, 11th edition Longenecker, Moore, and Petty © 2000 South-Western College Publishing Consumer Options for Dealing with Product or Service Dissatisfaction Publicly complain to governmental agency Privately seek redress from business Warn friends about product or service Publicly obtain legal action against business Privately complain to business Stop buying product or service Take no action Dissatisfaction occurs Source: Adapted from Del I. Hawkins, Roger J. Best, and Kenneth A. Coney, Consumer Behavior, 7th ed. (Boston: McGraw Hill, 1998), p. 622.

12-6 Small Business Management, 11th edition Longenecker, Moore, and Petty © 2000 South-Western College Publishing Services Marketing Versus Goods Marketing Characteristics Pure Services Marketing Pure Goods Marketing Tangibility Production/ Consumption Standardization Perishability Intangible goods Occur at the same time Less standardization Greater perishability Tangible goods Occur at different times Greater standardization Less perishability Hybrid Services/ Goods Marketing

12-7 Small Business Management, 11th edition Longenecker, Moore, and Petty © 2000 South-Western College Publishing The Total Bundle of Satisfaction Physical Product or Core Service Packaging Labeling Branding Customer Service Warranty

12-8 Small Business Management, 11th edition Longenecker, Moore, and Petty © 2000 South-Western College Publishing The Product Life Cycle Sales Curve Dollars Time Introduction GrowthMaturityDecline Profit Curve

12-9 Small Business Management, 11th edition Longenecker, Moore, and Petty © 2000 South-Western College Publishing The Product Development Curve Number of New Ideas Time Idea Accumulation Business Analysis Total Product Development Product Testing

12-10 Small Business Management, 11th edition Longenecker, Moore, and Petty © 2000 South-Western College Publishing Product Strategy Options One Market Multiple Markets One Product Modified Product Multiple Products (1) (2) (3) (4) (5) (6) Product Mix Strategy Alternatives Target Market(s) Key to Strategy Alternatives (1) One product/one market(4) Modified product/multiple markets (2) One product/multiple markets(5) Multiple products/one market (3) Modified product/one market(6) Multiple products/multiple markets

12-11 Small Business Management, 11th edition Longenecker, Moore, and Petty © 2000 South-Western College Publishing Legal Protection Nutrition Labeling and Education Act of 1990 Consumer Product Safety Act of 1992 Trademark protection Patent protection Copyrights: Copyright Act of 1976 Trade dress Consumer Protection Protection of Intangible Assets U.S. Patent and Trademark Office

12-12 Small Business Management, 11th edition Longenecker, Moore, and Petty © 2000 South-Western College Publishing Benefits of Trademark Registration 1.The right to sue in federal court for trademark infringement. 2.Court injunction against a competitor’s use or imitation of the trademark. 3.Recovery of damages and costs in a federal court infringement action and the possibility of treble damages and attorney’s fees. 4.Constructive notice of claim of ownership (which eliminates a good faith defense for a party adopting the trademark subsequent to registrant’s date of registration). 5.The right to deposit the registration with Customs in order to stop the importation of goods bearing an infringing mark. 6.Prima facie evidence of the validity of the registration, of the registrant’s ownership of the mark, and of the registrant’s exclusive right to use the mark in commerce in connection with the goods or services specified in the certificate. 7.The possibility of incontestability, in which case the registration constitutes conclusive evidence of the registrant’s exclusive right, with certain limited exceptions, to use the registered mark in commerce. 8.Limited grounds for attacking a registration once it is five years old. 9. Availability of criminal penalties and treble damages in an action for counterfeiting a registered trademark. 10.A basis for filing trademark applications in foreign countries.