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Chapter 1 Technology-Driven Consumer Behavior REVIEW AND DISCUSSION QUESTIONS 1.1 Describe the interrelationship between consumer behavior and the marketing concept. The term consumer behavior refers to the behavior that consumers display in searching for, purchasing, using, evaluating and disposing of products and services that they expect will satisfy their needs. The study of consumer behavior is the study of how individuals make consumption-related decisions. The key assumption underlying the marketing concept is that a company must determine the needs and wants of specific target markets, and deliver the desired satisfaction better than the competition. The marketing concept is based on the premise that a marketer should make what they can sell, instead of trying to sell what they have made. Thus, a company which adopts the marketing concept must continuously research and monitor its customers’ and potential clients’ needs and consumption-related behavior in order to develop, effectively promote, and deliver products and services which satisfy clients’ needs better than the competition. 1.2 A company is introducing a new e-Reader. Suggest segmentation, targeting, and positioning strategies for the new product. The focus of the marketing concept is consumer needs. Three elements for creating a strategic framework for discovering and analyzing those needs are market segmentation, market targeting, and positioning. Market segmentation is the process of dividing a market into subsets of consumers with common needs or characteristics. Because most companies have limited resources, few companies can pursue all of the segments identified for the company to pursue. Targeting is selecting one or more of the segments identified for the company to pursue. Because many companies have adopted the marketing concept, the marketplace is filled with many products and services claiming to satisfy consumer needs. Positioning is developing a distinct image for the product or service in the mind of the consumer, an image that will differentiate the offering from competing ones and squarely communicate to consumers that the particular product or service will fulfill their needs better than competing brands. In answering this question, students need to think about the need or want for an e-Reader. As thought starters, the instructor may ask the students, “what segment of the market is most interested in an e-Reader? What segment also has the resources to purchase an eReader?” These questions should get the conversation started. 1.3 Define the societal marketing concept and discuss the importance of integrating marketing ethics into the company’s philosophy and operations. The societal marketing concept requires marketers to fulfill the needs of the target audience in ways that improve, preserve, and enhance society’s well-being while simultaneously meeting their business objectives. Not all companies focus on society, but some companies believe socially responsible marketing is a part of organizational effectiveness. Generally speaking, if society prospers, firms prosper, so it is in the marketer’s best interest, in the long-run, to focus on external stakeholders as well as profits. 1.4 Describe how technology enhances the exchange between marketers and consumers. Marketers provide value to consumers in the form of information, including opportunities to customize products easily and entertainment content. Consumers provide value to marketers by “revealing themselves” while online, which enables companies to market their products more efficiently and precisely. Consumers “pay” for the Internet’s seemingly free content by providing virtually unlimited information about themselves to marketers, who gather, analyze, and use it to target buyers. The information allows marketers to customize promotional messages and products. Technology also improves the ability to compare prices, distribution, and allows consumers with the ability to interact with the firm, which may improve satisfaction and, ultimately, retention. 1.5 It is often said that consumers receive “free” content online. Is this the case? Why or why not? Consumers “pay” for the Internet’s seemingly free content by providing virtually unlimited information about themselves to marketers, who gather, analyze, and use it to target buyers. 1.6 Discuss the interrelationships among customer expectations and satisfaction, perceived value, and customer retention. Why is customer retention essential? Perceived value is relative and subjective while customer satisfaction is the individual’s perception of the performance of the product or service in relation to his or her expectation. The concept of customer satisfaction is a function of customer expectations. Customers whose experiences match expectations will be satisfied and customers whose expectations are exceeded will be very satisfied or delighted. The overall objective of providing value to customers continuously and more effectively than to competition is to have and to retain highly satisfied customers. This is called customer retention. The purpose of customer retention is to make it the best interest of customers to stay with the company rather than switch to another firm. The reason that customer retention is essential is that in almost all business situations, it is more expensive to win new customers than to keep existing ones. 1.7 How can marketers use technology to improve customer retention and enhance their bonds with customers? The Internet and cell phones have helped marketers maintain closer relations with their consumers and have opened easier channels for the customer to contact the company if they have questions, problems, or suggestions. Marketers also use databases to track revenues by consumer, which allows marketers to categorize customers based on profitability and customize benefits to consumers accordingly. 1.8 Discuss the role of the social and behavioral sciences in developing the consumer decision-making model. Consumer behavior was a relatively new field of study in the mid- to late-1960s. Because it had no history or body of research of its own, marketing theorists borrowed heavily from concepts developed in other scientific disciplines. These disciplines were psychology (the study of the individual), sociology (the study of groups), social psychology (the study of how an individual operates in groups), anthropology (the influence of society on the individual), and economics. Many early theories concerning consumer behavior were based on economic theory on the notion that individuals act rationally to maximize their benefits (satisfactions) in the purchase of goods and services. Later research discovered that consumers are just as likely to purchase impulsively and to be influenced not only by family, friends, advertisers, and role models, but also by mood, situation, and emotion. All of these factors combine to form a comprehensive model of consumer behavior that reflects both the cognitive and emotional aspects of consumer decision-making. HANDS-ON ASSIGNMENTS 1.9 Locate two websites that you visit regularly and discuss how they track your behavior and enable marketers to target you more effectively. Two websites that I visit regularly are Amazon and YouTube. Here's how they track behavior and enable marketers to target users more effectively: 1. Amazon: Amazon tracks user behavior primarily through cookies, which are small pieces of data stored on your computer. They also use tracking pixels, which are tiny, invisible images embedded in web pages. Amazon tracks what products you view, add to your cart, and purchase. They also track your search history, wish lists, and items you've rated or reviewed. This data is used to create a profile of your interests and shopping habits, allowing Amazon to recommend products that you might be interested in and to personalize your shopping experience. Marketers can use this data to target you with ads for products similar to ones you've shown interest in or purchased. 2. YouTube: YouTube tracks user behavior through cookies, device identifiers, and other technologies. They track the videos you watch, how long you watch them, and what you search for. They also track your likes, dislikes, and comments. This data is used to personalize your recommendations, suggest new videos and channels to subscribe to, and to target you with ads. Marketers can use this data to target users who have watched certain types of videos or who have shown interest in specific topics. In both cases, these websites use the data they collect to create a detailed profile of each user, which allows marketers to target users more effectively with personalized ads and recommendations. Instructor’s Discussion In order to answer this question, students should take notice of the use of information technology, databases, interactive communications, and usage of satisfaction surveys. Students might also wish to be aware of how technology’s impact on our understanding of and interactions with consumers might be relevant to the exercise. The idea behind targeting is related to customer value, since collecting information should allow marketers to provide more attractive offerings based on their understanding of your preferences. Note that customer value is defined as being the ratio between the customer’s perceived benefits (economic, functional, and psychological) and the resources (monetary, time, effort, and psychological) used to obtain those benefits. 1.10 Locate two examples (e.g., advertisements, articles, etc.) depicting practices that are consistent with the societal marketing concept and two examples of business practices that contradict this concept. Explain your choices. Examples consistent with the societal marketing concept: 1. Patagonia's "Don't Buy This Jacket" Campaign: In 2011, outdoor clothing company Patagonia ran an ad in The New York Times on Black Friday with the headline "Don't Buy This Jacket." The ad encouraged customers to think twice before purchasing new products and promoted the idea of reducing consumption and waste. This campaign aligned with the societal marketing concept by promoting sustainability and encouraging responsible consumption. 2. TOMS Shoes' One for One Campaign: TOMS Shoes is known for its One for One campaign, where for every pair of shoes purchased, the company donates a pair to a child in need. This initiative aligns with the societal marketing concept by addressing a social issue (lack of adequate footwear for children) while also running a profitable business. Examples contradicting the societal marketing concept: 1. Fast Fashion Industry: Fast fashion brands are often criticized for their business practices, which prioritize quick production and low prices over sustainability and ethical labor practices. These companies frequently contribute to environmental damage and poor working conditions in their supply chains, contradicting the societal marketing concept's focus on societal well-being. 2. Tobacco Industry Marketing: The tobacco industry has a long history of marketing practices that contradict the societal marketing concept. Despite the known health risks associated with smoking, tobacco companies have historically targeted vulnerable populations, including youth, with advertising that promotes smoking as glamorous or socially desirable. These examples highlight how some companies align their marketing and business practices with the societal marketing concept, focusing on creating value for both customers and society, while others prioritize profits over societal well-being, leading to practices that are detrimental to society. Instructor’s Discussion The societal marketing concept is described as being one where the marketer is required to adhere to the principles of social responsibility in the marketing of their goods and services; that is, they should endeavor to satisfy the needs and wants of their target markets in ways that preserve and enhance the well-being of consumers and society as a whole. Thus, the restructured definition of the marketing concept calls on marketers to fulfill the needs of the target audience in ways that improve society as a whole, while fulfilling the objectives of the organization. A serious deterrent to widespread implementation of the societal marketing concept is the short-term orientation embraced by most business executives in their drive for increased market share and quick profits. Students should be clear as to why examples fit the pro and con approaches. Open the discussion with a clear definition of what the societal marketing concept is (see above). Next, match this concept to the supplied advertisements or articles. Conclude the discussion with comments on the applicability of the concept to modern business. 1.11 Locate two examples of technological innovations designed to enhance customer retention and discuss them in class. Two examples of technological innovations designed to enhance customer retention are loyalty programs and personalized marketing: 1. Loyalty Programs: Loyalty programs use technology to track customer purchases and behavior, offering rewards and incentives to encourage repeat business. These programs often use mobile apps or digital cards to track points or rewards. For example, Starbucks' mobile app allows customers to earn points for purchases, which can be redeemed for free drinks or food items. This type of technology not only incentivizes customers to return but also provides valuable data for businesses to personalize their marketing efforts. 2. Personalized Marketing: Advances in technology, such as data analytics and machine learning, have enabled businesses to personalize their marketing efforts. By analyzing customer data, businesses can create targeted marketing campaigns that are more likely to resonate with individual customers. For example, Amazon uses data analytics to recommend products to customers based on their past purchases and browsing behavior. This personalized approach can enhance customer retention by providing relevant and timely offers to customers. Instructor’s Discussion Student examples may vary. Take the opportunity to remind students how the examples relate to satisfaction, which contributes to retention, and review the advantages of customer retention. Also, ask students to differentiate between technological innovations that facilitate emotional bonds from those that facilitate transactional bonds. S.T.A.R. PROJECTS Ethical Issues in Consumer Behavior S.T.A.R. Project #1 H&R Block is the 500-pound gorilla of individual income tax preparation. The company has a significant presence in the U.S. market (especially during the spring tax season). H&R Block has always been an aggressive competitor in this highly competitive market. A trade organization for accountants believes that H&R Block became too aggressive when it ran an ad campaign that showed a consumer running in a dark alley confronted with neon signs flashing “Prestige CPA,” “Taxes Here,” and “Tax Consortium.” The consumer appears confused and frightened. At the end of the alley a solution to the fear and confusion appeared in the form of a warm and friendly H&R Block sign that promised that consumers do not have to pay until they are completely satisfied. Non-Block CPA professionals question whether H&R Block has fairly represented their businesses and consumer policies. a. Is this form of advertising ethical? Why or why not? b. With respect to what you have learned about the societal marketing concept in the chapter, what suggestions do you have for H&R Block? a. The advertising campaign described could be considered unethical for several reasons. It portrays competing CPA professionals in a negative light by suggesting that they are confusing and intimidating, which may not accurately represent their businesses or consumer policies. This type of advertising can also create fear and anxiety in consumers, which may not be an ethical way to promote a product or service. Additionally, the campaign may be seen as misleading if it implies that H&R Block is the only solution to the perceived problem, when in reality there are many reputable tax professionals available to assist consumers. b. In light of the societal marketing concept, H&R Block could consider revising their advertising approach to focus more on the value they provide to customers and society as a whole. Instead of portraying competitors in a negative light, they could highlight their own strengths and benefits, such as their expertise, convenience, and customer satisfaction guarantees. Additionally, they could emphasize their commitment to ethical business practices and transparency in their dealings with customers. By taking a more positive and customer-centric approach to their advertising, H&R Block could enhance their reputation and build stronger relationships with consumers and competitors alike. Instructor’s Discussion The H&R Block case is a good example of aggressive marketing that might exceed acceptable limits. The ad is much different than the H&R Block approach used on their Web site (see www.hrblock.com). Could a code of ethics help H&R Block? Possibly. CPA professionals do not see themselves as neon sign merchants nor do they believe that the average citizen has complaints with their preparation practices or guarantees. When does innuendo and appearance become unethical? This should be an interesting issue for the students to discuss. It will also be a good way to introduce the concept of a code of ethics. (See the exercise below for more work on a code of ethics.) S.T.A.R. Project #2 Many consumers trust their medical supply needs to Johnson & Johnson. Johnson & Johnson is very clear as to its mission and commitment to the health and safety of its customers. The company is often cited as an example of how to do things right with respect to relations with customers and the public. Johnson & Johnson has gone so far as to construct a company credo that it features on its Web site (see www.jnj.com : Our Company: Our Credo Values). a. Assume that you have just been hired as a customer relations expert by Johnson & Johnson to answer a growing number of complaints that JNJ products are overpriced and have lost their sense of value for the consumer. The complainants cite lower priced private labels and store brands as illustrations of frustrations with JNJ. As one consumer states, “A band aid is just a band aid after all!” What would be your response? b. How could you use the Johnson & Johnson Credo to aid you in your response? a. In responding to complaints about Johnson & Johnson products being overpriced and losing their value for the consumer, I would first acknowledge the concerns and thank the customers for bringing them to our attention. I would then explain that Johnson & Johnson is committed to providing high-quality products that meet the highest standards of safety and efficacy. While it is true that our products may be priced higher than some private labels and store brands, this is because we invest heavily in research, development, and quality control to ensure that our products are safe and effective for our customers. I would also emphasize that our products are backed by the Johnson & Johnson brand, which has a long history of trust and reliability in the medical supply industry. b. The Johnson & Johnson Credo can be used to aid in this response by highlighting our commitment to putting the needs and well-being of our customers first. The Credo states that our first responsibility is to the doctors, nurses, and patients who use our products and services, and that we must constantly strive to improve the quality, effectiveness, and value of our products. I would emphasize these points in my response, explaining that our pricing reflects the value and quality of our products, and that we are committed to maintaining the trust and loyalty of our customers. Instructor’s Discussion First, all students should read the JNJ Credo. The credo itself can be the discussion in this question. Next, students must carefully think about the scenario that has been presented. How could the company use its commitment to quality as an answer? How could the company comment without disparaging the competition? How can the company focus on value? Take the two to three best responses and read them in class. An additional aid is to download the JNJ credo and prepare it as a handout. What does the JNJ credo say about the company’s commitment to ethical behavior? Small Group Projects S.T.A.R. Project #3 Who designed the chicken sandwich? According to information provided on the Chick-fil-A Web site (www.chick-fil-a.com) it was Chick-fil-A founder Truett Cathy. Mr. Cathy is also known for his unique approach to the fast food business. This unique approach has at its center an appreciation of family values (the restaurants are closed on Sundays and all children’s toys emphasize values rather than gimmicks or cartoon characters). After visiting the company Web site, your group’s assignment is to list the ways that Chick-fil-A provides customer value, satisfaction, and retention for its customers. Chick-fil-A provides customer value, satisfaction, and retention through several key strategies: 1. High-Quality Food: Chick-fil-A is known for its high-quality, freshly prepared food. They use premium ingredients and have a menu that includes a variety of options, including their famous chicken sandwich. 2. Exceptional Customer Service: Chick-fil-A is renowned for its exceptional customer service. Employees are trained to be polite, attentive, and responsive to customer needs, creating a welcoming and enjoyable dining experience. 3. Family-Focused Environment: Chick-fil-A's commitment to family values is evident in its operations, such as being closed on Sundays. This approach resonates with customers who value family time and reinforces their loyalty to the brand. 4. Community Involvement: Chick-fil-A is actively involved in the communities where it operates, supporting local events and organizations. This involvement helps to build a strong connection with customers and enhances their loyalty to the brand. 5. Innovative Marketing: Chick-fil-A's marketing strategies, such as its "Eat Mor Chikin" campaign featuring the iconic cows, are creative and memorable, helping to differentiate the brand and maintain customer interest. 6. Convenience: Chick-fil-A focuses on providing a convenient dining experience for customers, with efficient drive-thru service and mobile ordering options that make it easy for customers to enjoy their food on the go. 7. Consistent Brand Experience: Chick-fil-A strives to provide a consistent brand experience across all its locations, ensuring that customers know what to expect and can rely on the brand to deliver high-quality food and service every time they visit. Instructor’s Discussion The student group should not have a problem listing the ways that Chick-fil-A provides customer value and satisfaction. Retention may take longer. By making the attempt, however, students will appreciate the chapter comments more fully. After the list is complete, the second assignment sounds easy. Students should, however, observe that Chick-fil-A matches both of the two concepts rather well. The astute student will see that Chick-fil-A may still have some way to go with respect to technological application to the business, databases, and customer segmentation. S.T.A.R. Project #4 Nike is not just for males. This shoe giant has made great strides in market segmentation, customization, and customer relationship development. The result is that Nike is also a premier female shoe company. Your group assignment is split your team and analyze Nike. To do this, one team should review the www.nike.com Web site and analyze its contents based on its appeals to the male market segment (i.e., styles, language, colors, celebrity endorsers, games, customer relationships, etc.). The second team should analyze the Web site based on its appeals to the female segment (i.e., styles, language, colors, celebrity endorsers, games, customer relationships, etc.). The two teams should now match their findings and write a summary report. What has Nike learned about market segments and market targets? How do the two sections of the nike.com Web site assist Nike in its marketing efforts? Analysis of Nike's Marketing Efforts for Male Market Segment: 1. Styles: Nike offers a wide range of athletic shoes and apparel designed specifically for men, including basketball shoes, running shoes, and workout gear. The styles are often bold and dynamic, appealing to men's desire for performance and style. 2. Language: The language used on the website is often focused on performance, strength, and competition, appealing to men's desire for athleticism and achievement. 3. Colors: Nike uses a variety of colors in its products, but there is often a focus on bold and masculine colors such as black, red, and blue. 4. Celebrity Endorsers: Nike often partners with male athletes for endorsements, such as LeBron James, Cristiano Ronaldo, and Michael Jordan, which helps to appeal to men who admire these athletes. 5. Games: Nike may include interactive games or challenges on its website that appeal to men's competitive nature and desire for engagement. 6. Customer Relationships: Nike may use personalized recommendations and targeted marketing to build relationships with male customers, offering them exclusive deals and content based on their preferences. Analysis of Nike's Marketing Efforts for Female Market Segment: 1. Styles: Nike offers a range of athletic shoes and apparel for women, with styles that are often more colorful and feminine compared to the male products. This includes shoes with floral patterns, pastel colors, and sleek designs. 2. Language: The language used on the website may focus on empowerment, selfexpression, and confidence, appealing to women's desire for individuality and strength. 3. Colors: Nike offers a variety of colors for women's products, including pastels, bright colors, and neutrals, catering to different preferences. 4. Celebrity Endorsers: Nike may partner with female athletes or influencers for endorsements, such as Serena Williams or Simone Biles, to appeal to women who admire these figures. 5. Games: Similar to the male segment, Nike may include interactive games or challenges on its website that appeal to women's interests and provide a fun and engaging experience. 6. Customer Relationships: Nike may use personalized recommendations and targeted marketing to build relationships with female customers, offering them products and content that align with their interests and preferences. Summary Report: Nike has learned that market segmentation and targeting are crucial for effectively reaching different demographics. By tailoring its products, marketing messages, and website content to specific segments, Nike is able to connect with consumers on a deeper level and build stronger relationships with them. The two sections of the nike.com website assist Nike in its marketing efforts by providing a platform to showcase products and messages that resonate with each segment. This allows Nike to create a more personalized and engaging experience for both male and female customers, ultimately driving brand loyalty and sales. Instructor’s Discussion This exercise gives two small groups within a larger group the chance to explore Nike’s marketing efforts to two distinct market segments. If you would like to add additional comparison criteria, feel free to do so. Be sure to ask students what they have learned about consumer behavior from the Nike Web site. This exercise will also give groups a chance to learn to work with each other and will pave the way for future group participation projects. Solution Manual for Consumer Behaviour Leon G. Schiffman, Leslie Lozor Konuk, S. Ramesh Kumar 9789332555099, 9780134734828
