copyright © 2002 all rights reserved. 1 chapter 3 trends in determinants of customer behavior
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Copyright © 2002
All rights reserved.1
CHAPTER 3CHAPTER 3
Trends in Determinants of Customer Behavior
Trends in Determinants of Customer Behavior
CUSTOMER BEHAVIOR: A MANAGERIAL PERSPECTIVECUSTOMER BEHAVIOR: A MANAGERIAL PERSPECTIVE
PART 1:PART 1:
CUSTOMER BEHAVIOR: A MANAGERIAL PERSPECTIVECUSTOMER BEHAVIOR: A MANAGERIAL PERSPECTIVE
PART 1:PART 1:
CHAPTER 3CHAPTER 3PART 1Customer Behavior: A Managerial Perspective
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Factors that Influence Customer BehaviorFactors that Influence Customer Behavior
Three factors that are expected to cause the most significant change in customer behavior are: Changes in demographics Advances in technology Changes in public policy
CHAPTER 3CHAPTER 3PART 1Customer Behavior: A Managerial Perspective
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Conceptual FrameworkConceptual Framework
Payer
UserBuyer
DemographicsDemographics
• Aging population• Women in the workforce• Single-person households• Declining middle-class• Ethnic diversity• Geographic distribution
• Aging population• Women in the workforce• Single-person households• Declining middle-class• Ethnic diversity• Geographic distribution
Public PolicyPublic Policy
• Pragmatism over ideology• Rights of passive
consumers• Regional economic
integration
• Pragmatism over ideology• Rights of passive
consumers• Regional economic
integration
TechnologyTechnology
• Control over information• Smart products• Access to products• Mass customization
• Control over information• Smart products• Access to products• Mass customization
CHAPTER 3CHAPTER 3PART 1Customer Behavior: A Managerial Perspective
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Benefits of Anticipating Trendsin Customer BehaviorBenefits of Anticipating Trendsin Customer Behavior
Anticipating trends can give companies a key strategic advantage
By sighting a trend, the industry can create a market by channeling a latent need
Anticipating trends creates positive public opinion for the company and the industry, portraying them as responsive
CHAPTER 3CHAPTER 3PART 1Customer Behavior: A Managerial Perspective
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Demographic TrendsDemographic Trends
Aging of the population
Rise in number of working women
Increase in single-person households
Decline of the middle class
Increase in ethnic diversity
Geographic redistribution
CHAPTER 3CHAPTER 3PART 1Customer Behavior: A Managerial Perspective
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Aging of the PopulationAging of the Population
Populations age for two key reasons Birth rate is declining Life expectancy is rising
The aging population has concerns: Wellness Financial well-being Safety and security Recreational needs
CHAPTER 3CHAPTER 3PART 1Customer Behavior: A Managerial Perspective
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Women in the WorkforceWomen in the Workforce
Effects of the working women trend: A significant change in the resources of a
household Time shortage: lack of free time Time shift: the time when nonwork-related
activities may be pursued A shift in the lifestyle of families
With both spouses working, households have turned into roommate families
CHAPTER 3CHAPTER 3PART 1Customer Behavior: A Managerial Perspective
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Single-person HouseholdSingle-person Household
Implications of the living alone trend include: Loneliness Self-respect and autonomy Cocooning Impulse buying
CHAPTER 3CHAPTER 3PART 1Customer Behavior: A Managerial Perspective
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The Declining Middle ClassThe Declining Middle Class
Four key implications: An increasing range in prices of products More customer militancy Affordability The neo rich
CHAPTER 3CHAPTER 3PART 1Customer Behavior: A Managerial Perspective
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Ethnic DiversityEthnic Diversity
Two distinct implications: Segmented markets Cultural diversity
CHAPTER 3CHAPTER 3PART 1Customer Behavior: A Managerial Perspective
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Geographic RedistributionGeographic Redistribution
Geographical redistribution separates different generations in different space and time zones Increases gaps both within and between generations
People living in different areas of the country reflect different values, lifestyles, and attitudes Regional marketing responds to and feeds the
differences by exposing newly arrived residents to regional tastes
CHAPTER 3CHAPTER 3PART 1Customer Behavior: A Managerial Perspective
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Technological TrendsTechnological Trends
Technology is shaping future customer values
Advances in technology have already given customers Increased access to information Newer generations of products Automation of transaction processes to provide
customers with greater flexibility and control Access to some customized products
CHAPTER 3CHAPTER 3PART 1Customer Behavior: A Managerial Perspective
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Customer Responses toNew TechnologyCustomer Responses toNew Technology
Technological developments will stimulate changes in customer behavior Customers will:
Take on the role of coproducers Engage in disintermediation Engage in outsourcing Engage in automation of consumption
CHAPTER 3CHAPTER 3PART 1Customer Behavior: A Managerial Perspective
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Trends in Public PolicyTrends in Public Policy
Economic pragmatism is prevailing over ideology
Many governments are concerned with protection of passive consumers
Governments on an international level are pursuing regional economic integration
CHAPTER 3CHAPTER 3PART 1Customer Behavior: A Managerial Perspective
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The Government’s Role in the National EconomyThe Government’s Role in the National Economy
Historically, three ideologies have shaped the government’s role in national economic affairs Political Religious Central planning
CHAPTER 3CHAPTER 3PART 1Customer Behavior: A Managerial Perspective
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Implications of Ideology vs. Economic PragmatismImplications of Ideology vs. Economic Pragmatism
Economic Pragmatism
• Government ownership + regulation
• Limited product and service offerings
• Locally produced products and services
• Government ownership + regulation
• Limited product and service offerings
• Locally produced products and services
Ideology(political, religious, central planning)
Ideology(political, religious, central planning)
• Greater competition due to privatization & deregulation
• Better products & lower prices due to greater competition
• Internationalization of products & services due to open boundaries
• Greater competition due to privatization & deregulation
• Better products & lower prices due to greater competition
• Internationalization of products & services due to open boundaries
Economic PragmatismEconomic Pragmatism
CHAPTER 3CHAPTER 3PART 1Customer Behavior: A Managerial Perspective
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Implications for Customer BehaviorImplications for Customer Behavior
Greater competition Customer orientation is a must
All three customer roles will benefit The payer by lower prices The user by better products The buyer by ease of doing business
More standardization
CHAPTER 3CHAPTER 3PART 1Customer Behavior: A Managerial Perspective
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Implications of the Trends for the Three Customer RolesImplications of the Trends for the Three Customer Roles
The foregoing trends in demographics, technology, and public policy will influence all three customer roles User Payer Buyer
CHAPTER 3CHAPTER 3PART 1Customer Behavior: A Managerial Perspective
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Influence of Major Trends in Demographics on the Three Customer RolesInfluence of Major Trends in Demographics on the Three Customer Roles
User Payer Buyer
DEMOGRAPHICS
Aging population Increased health and security and recreational needs.
Cost containment for health-care needs a high concern.
Home delivery and convenience in buying important.
Working women Time-saving appliances; cooking, cleaning, child care outsourced.
Affordability somewhat improved.
Male-female role specialization in buying further diluted.
Single-person households Social and emotional values in products acquire prominence.
Better affordability. More impulse and experiential buying.
Declining middle class Demand for extreme upscale and downscale merchandise.
Financing progressively more important.
More diligent buying effort among the expanded downscale customer groups.
Increasing ethnic diversity
Greater ethnic diversity in customer tastes.
Cross-ethnic differences in affordability.
Expected customer service levels differ across ethnic groups.
Geographic redistribution Greater regional diversity in customer tastes.
CHAPTER 3CHAPTER 3PART 1Customer Behavior: A Managerial Perspective
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User Payer Buyer
TECHNOLOGY
Access to information More customized products. Better information on competitor prices.
Product search on the Internet.
Product information on demand.
Smart products Smart products with memory for users preferences.
New methods of identity verification ensure security against frauds.
Automated purchase
Buying direct from the factory.
Liberated customer behavior
Buyers will need to be technology-savvy.
Mass customized lifestyles
Influence of Major Trends in Technology on the Three Customer RolesInfluence of Major Trends in Technology on the Three Customer Roles
CHAPTER 3CHAPTER 3PART 1Customer Behavior: A Managerial Perspective
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Influence of Major Trends in Public Policy on the Three Customer RolesInfluence of Major Trends in Public Policy on the Three Customer Roles
User Payer Buyer
PUBLIC POLICY
Economic pragmatism Better products due to open-market economy.
Better prices due to competitive economy.
Easier access to global products.
Easier to do business with companies.
Rights of passive consumers Consumers assured protection against passive consumption.
Financial penalties for offensive consumption.
Access to societally harmful product/services made more difficult.
Regional economic integration Seasonal products available for year round consumption.
Exposure to diverse consumption cultures.
More economically produced and more economically priced products and services.
Easier to acquire products and services from diverse consumption cultures
Local availability of global products.
CHAPTER 3CHAPTER 3PART 1Customer Behavior: A Managerial Perspective
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Overall Implications for MarketersOverall Implications for Marketers
The economy will become more service-oriented requiring companies to make significant changes: Measure customer value of products and services in
terms of time and money Make safety and quality, and courteous efficiency an
integral part of the service offered Adopt mass customization Offer instant marketing