1. Customers
9/26, 2017

2. Key Customer Markets Consumer markets Business markets Global markets
Nonprofit & governmental markets

3. Types of Customers
Organizational buyers purchase good and services for businesses, government agencies, and other institutions, such as hospitals and schools.
Consumers buy goods and services for their own use or for gifts to others

4. Customers Customers Buyers vs. Users
Current customers of a given product
Customers of competitors
Current noncustomers of the product category
Buyers vs. Users
Initiator
Influencer
Decider
Purchaser
User

5. An Understanding of Customers
Who buys and uses the product?
What customers buy and how they use it?
Where customers buy?
When customers buy?
How customers choose?
Why they prefer a product?
How they respond to marketing programs?
Will they buy it (again)?

6. Customer Value
The customer’s perception of the total benefits to be derived from a product or service versus the total perceived costs of acquisition and ownership
Customer typically have some implicit preconception about the “right” ratio of benefits to costs
Having compared available alternatives, customers select the one that they think will give them best value
Value is a relative concept; it is perceived relative to competitor offerings

7. Customer Value (II)
Customer Value = Perceived Benefits – Perceived Costs
Perceived Benefits = Functional Benefits + Social Benefits + Personal Benefits + Experiential Benefits
Perceived Costs=Monetary Costs + {Temporal Costs+ Psychological Costs + Behavioral Costs}
Shopping Costs or
Transaction Costs

8. Value Proposition

9. Virgin Atlantic
Virgin Atlantic created a new name—Upper Class—for a service with first class standards at business class prices
The first airline to offer a limousine service, a check-in service in the parking area, and an unconventional passenger lounge

10. Virgin Atlantic’s Tailoring Service
One of the finest examples of its customer orientation was the tailoring service it offered for a time on its London to Hong Kong flight
A tailor in Virgin’s business lounge at Heathrow would measure passengers waiting for their flight, then phoned the details to another tailor in Hong Kong, who would make up the outfit while the plane was in flight
The Virgin Atlantic passenger would pick up a brand new, pressed, tailor-made suit on arrival in Hong Kong

11. A Competitive Perspective
Marketing books with the term “warfare” in title
The traditional view of the marketing concept is a focus on the needs and wants of the customer
Since the 1980, it has become increasingly clear that meeting customer needs is not enough for success
What is critical to a product’s success is meeting customer needs better than a competitor can, often at a lower cost
“The biggest enemy of good is better!”--Voltaire

12. Competitors
Coca-Cola and Pepsi-Cola are a classic example of competitors

13. Network of the Marketing Mix
Functions
Tools
Relative
Performance
Transaction-
based Exchange
F.E.E.D.
4 Ps or
Others
Value
Creation
Long-term
Relationship-
based Exchange
Trust
Objectives
Marketing Mix
Outcome
Exchange

14. FEED Values to Customers
Fulfilling Benefit Requirements
Establishing “Total” Acceptable Transaction Costs
Engaging in Product-Inherent Value Message Communication
Delivering Process-Inherent Transaction Facilitators

15. Value Creation and Delivery
Choose the Value
Provide the Value
Communicate the Value

16. Consumer Buying Behavior
Refers to the buying behavior of people who buy goods and services for personal use.
These people make up the consumer market.
The central question for marketers is:
“How do consumers respond to various marketing efforts the company might use?”

17. Model of Buyer Behavior

18. Buyer Decision Process

19. Marketing communications often stimulate need recognition.
Buyers recognize a need or problem as a result of internal or external stimuli.
Marketing communications often stimulate need recognition.

20. Information Search
For some types of purchases, consumers will search for more information before they are willing to make a decision.

21. Information Search Information Sources Information Sources Personal
Family, friends, neighbors, and casual or work acquaintances
Commercial
Advertising, salespeople, dealers, Web sites, packaging, and displays
Information Sources
Public
Mass media articles or news programs, Internet searches, consumer rating organizations
Experiential
Using, handling, or examining the product

22. Evaluation of Alternatives
Some decisions involve a careful, logical, and systematic evaluation by the consumer.
Other decisions – such as impulse buys – are made with virtually no thought at all.
Friends, consumers guides, or salespeople may or may not influence the decision.
Marketers must study how targeted consumers make evaluations, so they will be in a better position to influence evaluations.

23. Cognitive Dissonance
Cognitive Dissonance: after making a purchase, buyers often doubt whether they made the right decision.
Marketers can minimize dissonance by:
Reassuring consumers they made the right choice and minimizing the potential for product misuse (product literature and instructions).
Offering mechanisms for lodging complaints (1-800 phone numbers, Web forms, etc.).
Being responsive to problems and questions.

24. Model of Business Buyer Behavior

25. Business Markets & Business Buyer Behavior
The business market is vast and involves far more dollars and items than do consumer markets.
Business buyer behavior refers to the buying behavior of the organizations that buy goods and services for use in the production of other products and services that are sold, rented, or supplied to others.

26. Business Markets Market Structure and Demand:
Contains far fewer but larger buyers.
Customers are more geographically concentrated.
Business demand is derived from consumer demand.
Nature of the Buying Unit:
Business purchases involve more decision participants.
Business buying involves a more professional purchasing effort.

27. Types of Decisions and the Decision Process
Business buyers usually face
more complex buying decisions.
Business buying process
tends to be more formalized.
Buyers and sellers are much
more dependent on each other.

28. Value Propositions in Business Markets
All Benefits
Favorable Points of Difference
Resonating Focus
Consist of:
All benefits customers receive from a market offering
All favorable points of difference a market offering has related to the next best alternative
The one or two points of difference whose improvement will deliver the greatest value to the customer for the foreseeable future
Answers the customer question:
“Why should our firm purchase your offering?
“Why should our firm purchase your offering instead of your competitor’s?”
“What is most worthwhile for our firm to keep in mind about your offering?”
Requires:
Knowledge of own market offering
Knowledge of own market offering and next best alternative
Knowledge of how own market offering delivers superior value to customers, compared to next best alternative
Has the potential pitfall:
Benefit assertion
Value presumption
Requires customer value research

29. The Multiattribute Model
The multiattribute model of decision making is composed of four parts:
The products or alternatives in a product category are assumed to be collections of attributes
Each customer is assumed to have a perception about how much of each attribute the alternatives in a product category contain
Each customer is assumed to place an importance value or weight on obtaining each attribute when making a choice in the category
Customer are assumed to combine the attribute and importance weight information using some process, or rule, to develop their most preferred option in the product category

30. Types of Attributes Features Benefits Functions
Theoretically, the three basic types of attributes occur in sequence; a feature permits a certain function, which in turn leads to a benefit

31. Combining the Information
A compensatory rule:
Simply multiplies each attribute importance weighted by the attribute value and sums these terms for each person and product (all attributes are considered and weaknesses in one can be compensated for by strength of another)
A lexicographic rule:
First compares all products on the most important characteristic alone and eliminates those which are not at the top
A conjunctive rule:
Assumes the customer set minimum cutoffs on each dimension and rejects a product if it has any characteristic below the cutoff

32. Trade-Off (Conjoint) Analysis
Conjoint analysis is a technique that is more commonly used in concept evaluation
It is based on the simple premise that consumers evaluate the value or utility of a product/service/idea (real or hypothetical) by combining the separate amounts of utility provided by each attribute
The researcher first constructs a set of real or hypothetical products or services by combining the selected levels of each attribute
These hypothetical products are then presented to respondents who provide only their overall evaluations

33. Example Thickness Spiciness Color Actual Ranking Estimated Ranking
Regular Mild Red 4 4
Regular Mild Green 3 3
Regular Medium-Hot Red
Regular Medium-Hot Green 6 8
Regular Extra-Hot Red
Regular Extra-Hot Green
Thick Mild Red 2 2
Thick Mild Green 1 1
Thick Medium-Hot Red 8 6
Thick Medium-Hot Green 5 5
Thick Extra-Hot Red
Thick Extra-Hot Green
Extra-Thick Mild Red 7 7
Extra-Thick Mild Green 9 9
Extra-Thick Medium-Hot Red
Extra-Thick Medium-Hot Green
Extra-Thick Extra-Hot Red
Extra-Thick Extra-Hot Green

34. Conjoint Analysis Output
Spiciness
Color
Thickness 2 1
Utility -1 1 -2
Regular Thick Ex-Thick
Mild Medium-Hot Ex-Hot
Red Green
Importance of Attributes %
Spiciness
59.8%
34.6%
Thickness
Color
5.6%