1. Value and the Consumer Behaviour Value Framework CHAPTER 2
BABIN / MURRAY CB
PART 1
Value and the
Consumer Behaviour
Value Framework
CHAPTER 2
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2. Learning Outcomes LO1 LO2 LO3
Describe the Consumer Value Framework, including its basic components.
Define consumer value and compare and contrast two key types of value.
Apply the concepts of marketing strategy and marketing tactics to describe the way firms go about creating value for consumers.
LO1
LO2
LO3
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3. Learning Outcomes LO4 LO5 LO6
Explain the way market characteristics like market segmentation and product differentiation affect marketing strategy.
Analyze consumer markets using elementary perceptual maps.
Justify consumers’ lifetime value as an effective focus for long-term business success.
LO4
LO5
LO6
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4. Describe the Consumer Value Framework, including its basic components.
LO1
Describe the Consumer Value Framework, including its basic components.
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5. The Consumer Value Framework (CVF)
LO1
Represents consumer behaviour theory illustrating factors that shape consumption-related behaviours and ultimately determine the value associated with consumption.
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6. Exhibit 2.1: The Consumer Value Framework (CVF)
LO1
Relationship quality is a key component of value. Ask students for examples of companies that have done this well. How did they accomplish this?
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7. Internal Influences LO1 Psychology of the consumer
Personality of the consumer
Psychology: How consumers process and react to information, form attitudes, remember.
Personality: What makes individuals different—includes motivation, values, individual lifestyle, and emotion.
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8. Psychology of the Consumer
Cognition—the thinking or mental processes that go on as we process and store things that can become knowledge.
Affect—refers to the feelings experienced during consumption activities or associated with specific objects.
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9. Personality of the Consumer
LO1
Individual differences include things like personality and lifestyles.
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10. External Influences: Interpersonal Influences
LO1
Social Environment
Situational Influences
Social environment includes reference groups, opinion leaders (friends, family, celebrities).
Situational influences on purchase decisions include store design, lighting, music, etc.
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11. Define consumer value and compare and contrast two key types of value.
LO2
Define consumer value and compare and contrast two key types of value.
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12. Exhibit 2.2 The Value Equation
LO2
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13. Consumer Value
LO2
Value is a personal assessment of the net worth obtained from an activity.
Value is subjective, influenced by factors such as expectations and consumer personality. The same consumption experience can be assessed very differently by two individuals.
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14. Types of Value Utilitarian Hedonic LO2
While some products deliver purely functional value (a clean floor) and others purely hedonic (the pleasure of seeing your favourite band perform live), many products and services combine both kinds of value. Ask for examples.
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15. Exhibit 2.3: Consumption Activities Can Fall into Any of These Categories
LO2
Ask students to describe the utilitarian and hedonic elements of a restaurant.
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16. LO3
Apply the concepts of marketing strategy and marketing tactics to describe the way firms go about creating value for consumers.
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17. Exhibit 2.4: Business Strategy Exists at Different Levels
LO3
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18. Total Value Concept
LO3
Why do you think Coca-Cola has such a large share of the market?
Blind taste tests have proven that many loyal consumers cannot distinguish their preferred cola on taste alone. Where does loyalty come from?
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19. Total Value Concept
LO3
Every product’s value is made up of the basic benefits, plus the augmented product, plus the “feel” benefits.
Challenge students to list elements of hedonic, utilitarian, and “negative” value. Note how many link to each other (e.g., well-designed engine provides functional value—transportation, hedonic value—thrill of driving, and negative value—speeding tickets).
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20. Value Is Co-Created
LO3
Value co-creation is the realization that a consumer is necessary and must play a part in order to produce value.
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21. LO4
Explain the way market characteristics like market segmentation and product differentiation affect marketing strategy.
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22. Market Segmentation and Product Differentiation
LO4
Product differentiation is a marketplace condition in which consumers do not view all competing products as identical to one another.
Market segmentation is the separation of a market into groups based on different demand curves associated with each group.
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23. Exhibit 2.6: Total Market Sales and Sales within Market Segments
LO4
Orange line: segment is highly price sensitive
Green line: segment is not price sensitive
Violet line: segment is price sensitive BUT volume goes DOWN as price goes down (good opportunity to discuss price as signal of quality; premium positioning, etc.)
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24. Product Category Demand
LO4
Chanel No. 5 is in high demand at about $250 an ounce.
Would sales of Chanel No. 5 drop if the price were lowered?
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25. Analyze consumer markets using elementary perceptual maps.
LO5
Analyze consumer markets using elementary perceptual maps.
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26. Exhibit 2.7: A Perceptual Map for a Local Rock Music Radio Market
Stars indicate ideal mix of news/talk and type of music for six segments.
Each radio station in the market is plotted according to its format.
Ask students to identify the best place to position a new station. Ask them which stations should tweak their format to better serve an identified segment.
Students could also develop a perceptual map for restaurants or stores in their area.
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27. LO6
Justify consumers’ lifetime value as an effective focus for long-term business success.
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28. Customer Lifetime Value (CLV)
LO6
Customer lifetime value (CLV) represents the approximate worth of a customer to a company in economic terms.
CLV = npv(sales-costs) + npv(equity)
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29. Authenticity
LO6
Some consumers will recognize the real Stilton cheese from the pretenders and are willing to pay more for the real deal.
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30. Value and Baseball: The Toledo Mud Hens
Watch this clip to see how the Toledo Mud Hens increase consumer value.
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