, CHAPTER 1
Technology-Driven Consumer Behavior
LEARNING OBJECTIVES
After reading, studying and analyzing this chapter, students should be able to understand:
1.1 The evolution of the marketing concept, the most prominent tools used to implement
marketing strategies, and the objectives of socially responsible marketing.
1.2 How the Internet and related technologies improve marketing transactions by adding
value that benefits both marketers and customers.
1.3 The interrelationships among customer value, satisfaction and retention, and
technology’s revolutionary role in designing effective retention measures and
strategies.
1.4 Consumer behavior as an interdisciplinary area, consumer decision making, and the
book’s structure.
CHAPTER SUMMARY
Learning Objective 1.1: To understand the evolution of the marketing concept, the most
prominent tools used to implement marketing strategies, and the objectives of socially responsible
marketing.
Marketing is the activity, set of institutions, and processes for creating, communicating,
delivering, and exchanging offerings that have value for customers, clients, partners, and society.
Consumer behavior consists of consumers’ actions during searching for, purchasing, using,
evaluating, and disposing of products and services that they expect will satisfy their needs.
Consumer behavior explains how marketers can do so and how individuals make decisions to
spend their available resources (i.e., time, money, effort) on products and services. Marketing and
consumer behavior stem from the marketing concept, which maintain that the essence of
marketing is satisfying consumers’ needs, creating value and retaining customers. Subsequently,
companies must they produce only those goods they had already determined that consumers
would buy. Marketing myopia, that is, a focus on the product rather than on the needs it
presumes to satisfy. The marketing mix (also known as the Four Ps) consists of four elements:
Product, price, place (distribution) and promotion. Market segmentation, targeting and
positioning are the foundation of turning consumers into customers. Market segmentation is the
process of dividing a market into subsets of consumers with common needs or characteristics. It
consists of groups with shared needs that are different from those shared by other groups.
Targeting is selecting the segments that the company views as prospective customers and
pursuing them. Positioning is the process by which a company creates a distinct image and
identity for its products, services, and brands in consumers’ minds. The image must differentiate
the company’s offering from competing ones and communicate to the target audience that the
particular product or service fulfills their needs better than competing offerings. The societal
marketing concept requires marketers to fulfill the needs of the target audience in ways that
improve, preserve, and enhance society’s wellbeing and simultaneously meeting their business
objectives.
,Learning Objective 1.2: To understand how the Internet and related technologies improve
marketing transactions by adding value that benefits both marketers and customers.
Technology has revolutionized the marketing mix, segmentation, targeting, positioning, and
customer retention. When consumers use their computers, mobile phones, electronic readers,
tablets and other electronic gadgets, they provide marketers with the kind of information that
enables companies to target them immeasurably more effectively than during the pre-Internet
days. Thus, online technologies create a “value exchange”: Marketers provide value to consumers
in the form of information that turns shoppers into sophisticated customers, opportunities to
customize products easily, entertainment content, and much more. While online, consumers
provide value to marketers by “revealing themselves,” which enables companies to market their
products more efficiently and precisely. Surfing online allows consumers to locate the best prices
for products or services, bid on various marketing offerings, bypass distribution outlets and
middlemen, and shop for goods around the globe and around the clock. They can also compare
the features of different product models and engage in social networks with consumers who share
the same interests, and provide and receive information about their purchases. Online
communications created sophisticated and discerning consumers, who are hard to attract, satisfy,
and retain. More than ever before, marketers must customize their products, add value to the
physical product or the core of a service, provide the right benefits to the right consumer
segments, and position their products effectively. Technology also enables marketers to refine
their strategies because they can readily customize their offerings and promotional messages,
offer more effective pricing, shorter distribution channels, and build long-term relationships with
customers. By using rapidly advancing technologies track consumers, marketers can identify
opportunities for creating new offerings, as well as improving and extending existing products
and services. They can gather comprehensive consumer information by tracking consumers
online, requiring prospective buyers to register at their websites, and combining this knowledge
with demographic and lifestyle data gathered off line
Learning Objective 1.3: To understand the interelationships among customer value, satisfaction
and retention, and technolgy’s revolutinary role in designing effective retention measures and
strategies.
Customer value is the ratio between customers’ perceived benefits (economic, functional and
psychological) and the resources (monetary, time, effort, psychological) they use to obtain those
benefits. Customer satisfaction is customers’ perceptions of the performance of the product or
service in relation to their expectations. Customer retention is turning individual consumer
transactions into long-term customer relationships by making it in the best interests of customers
to stay with the company rather than switch to another firm. It is more expensive to win new
customers than to retain existing ones. Technologies often enhance customer relationships and
retention by engaging consumers with brands. In addition to engaging customers with marketers,
social media has transformed market research. Many companies can easily collect input and
customers’ preferences, and, sometimes without actively questioning consumers. The objective of
understanding customers’ emotional and transactional motives when buying from a company is to
understand the drivers of customer satisfaction, which lead to customer retention and long-term
relationships. As consumer buy more and more online, it has become important to understand
what makes them satisfied during electronic Customers who are highly satisfied or delighted keep
purchasing the same products and brands, provide positive and encouraging word-of-mouth to
others, and often become “customers for life.” On the other hand, those who less satisfied or feel
neutral either switch to a competitor immediately or wait until another marketer offers them a
, somewhat lower price and then do so. In addition, highly dissatisfied customers spread negative
