lecture3 customers
TRANSCRIPT
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Understanding the
Customers
An audience is never wrong. An individual member of it may be animbecile but a thousand imbeciles to ether in the dark -- that iscritical genius.
-- Billy Wilder, U.S. film director
Mgmt. 411A Fall 2009
Customer Analysis
What are the customers needs and wants?
o ves, pro ems, cons ra n s
What are the sources of value for the customer fromour product?
Functional, financial, and psychological value
How do they make decisions and shop?
Consumer behavior, decision making processes
What consumer research do we have that informs usabout our customers?
Behavior vs opinion, research techniques
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Customer Analysis
What are the customers needs and wants?
Value Motives: the goals consumers are trying toachieve
Is the customer trying to
solve a problem?
avoid perceived risks or threats?
constraints?
achieve social belonging, status, or self-fulfillment?
Issues in Identifying Value
Motives
Customers cant (or wont) always tell you which valuemotives the are tr in to fulfill.
Manifest motives: Latent motives:
It will demonstratethat I am successful
It will be large &
comfortable
wealthy
It will help me lookpowerful
It will keep me safe
It performs well, ishigh in quality
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Ads Without Products
Consumers do not buy
products.they buy motive
satisfaction, or problem
solutions they buy
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, ,
pleasure, sophistication
Customer Analysis
What are the sources of value for thecustomer from our product?
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Levels of product benefits
What is your products primary source
Self-Expressive
Benefits
EmotionalBenefits
What does your iPhone say about you?Based on intangible, psychosocial attributes: the
augmented product
How does the iPhone make you feel?Based on intangible or aesthetic attributes
Financial Benefits
Functional Benefits
How does the iPhone save you money?Price often most important attribute; may also
be based on cost reduction
What needs does the iPhone meet?Tangible attributes: what it does
Product Components for
Functional Value
Components of a product
ang e pro uc : ys ca a r u es
Core product: Functional benefit offered
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Determining Economic Value
Level 1 analysis: product price
Level 2 analysis: economic valueanalysis
Also called value in use analysis
Price plus other sources of value
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Example: energy efficient appliances
Note: this is an important source of valuefor business customers (B2B)
Psychological Value and the
Extended Self Do possessions ever become not only a manifestation of
the self-concept, but an integral part of self-identity?
Extended self = Self + possessions
Augmented product: intangible, psychosocial attributes
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Customer Analysis
How do they make decisions and shop?
Rational versus Real consumers
Three broad types of Decision Modes
Consumer Decision Making Process
Consumer Decision Making:
The Rational Consumer
Perfectly defines his/her problem
Knows all relevant alternatives
Identifies all relevant criteria
Accurately weighs all the criteria according to their goals
Accurately assesses each alternative on each criterion
Accurately calculates and chooses the alternative with the
highest value
In other words, consumers are efficient utility maximizers . . .
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Consumer Decision Making:
The Real Consumer
Is emotional as well as rational
Forgets
Takes shortcuts
Is not motivated
Is sensitive to framing effects
How do customers simplify decisions?
Three Broad Types of Decision
Modes
One way to simplify decisions is to use choiceheuristics, which reduce the decision to a limited setof factors
We can categorize these into three broad decisionmodes:
Utilitarian
Price/performance driven, most rational
Mundane
Low involvement, habitual
Self-Expressive
Emotional
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UtilitarianRational Evaluation of AlternativesPrice as trade-off factorChoice heuristic: Bu the Best Value
Variations in Consumer Choice Behavior:The Effect of Price
Mundane Self-Expressive
Limited/No Evaluation of AlternativesPrice as deciding factorChoice heuristic: Buy the Cheapest/Familiar
Rationalizing Evaluation of AlternativesPrice as secondary factorChoice heuristic: Buy What I Like
Utilitarian
Keys to Continuity: Product PerformanceDeliver Information
Central Threats: Better performing alternative
Variations in Consumer Choice Behavior:
The Effect of Brand
Brand Loyalty: Cont ingent on performance
Mundane Self-Expressive
Keys to Continuity: Saliency of Brand
Central Threat: Availability
Brand Loyalty: Fleeting, habitual
Keys to Continuity: Relevant Brand Image
Central Threat: Change in self or brand image
Brand Loyalty: Affective commitment
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Decision Mode Also Varies by
Person
Within the same product category, customers
Examples:
A refrigerator is utilitarian for most buyers, butSub-Zero is self-expressive
Toothpaste is mundane for most, but Toms could
For some wealthy individuals, a Mercedes-Benz
may be mundane
Consumer Decision Making
Search
Evaluation of Alternatives
Memory or
Stimuli
Weighing
ofAttributes/
Motivations& needs
Choice
Outcomes
Benefits
Heuristic orSystematicEvaluation
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Customer Analysis
What consumer research do we havethat informs us about our customers?
Using Research to Discover What
Consumers Want
Can consumers tell you directly?
Will consumers tell you directly?
Need to design research accordingly
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Some Types of Research Data
Behavior Opinion
Primary
(Custom)
Test markets
Clickstreams
Purchase History
Focus Groups
Projective Techniques
Customer Surveys
Secondar IRI/AC Nielsen Data National surveys
(Standard)Census Data Previous surveys
Behavior vs. Opinion
consumers real-time reactions in the marketplace No data collection biases
Asks the real question: Will the customer pay for this?
Stated opinions are the responses elicited by asking
people what they think Excellent for new product development
Good for learning what people think about existing products
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Many Different Methods of
Listening to Customers
Qualitative: Observation:
Focus groups
Interviewing, projectivetechniques
Quantitative:
Attitude and Usagesurve s
Ethnographic studies
Clickstream data
Web chat rooms
Scanner data
Perceptual Mapping
Experimentation
Conjoint Analysis
Customer databases
Creative Qualitative Research
Techniques
Projective Techniques
Twists on Focus Groups
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Projective Techniques
deeper level by having them imagine differentscenarios:
If Mountain Dew were throwing a party, whatwould you see there?
Gotmilk? Focus Groups
First round:
Milk is boring, not much to say
Milk is good with certain foods
Second round:
Force consumers to live without milk
Deprivation strategy emerges
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Summary
Consumers
re mo va e y eren nee s an goa s
Look for products to provide value that is consistentwith their underlying motives
Can vary in decision mode, and dont always deciderationally
Marketers need to use a variet of researchmethods to understand consumer behavior
Qualitative methods and quantitative methods
Next: Land Rover N.A.
How should LRNA position the Discovery in