Ec2009 ch04 consumer behavior


Published on

Chapter 04
Consumer behavior

Published in: Education, Business, Technology
1 Like
  • Be the first to comment

No Downloads
Total views
On SlideShare
From Embeds
Number of Embeds
Embeds 0
No embeds

No notes for slide

Ec2009 ch04 consumer behavior

  1. 1. Chapter 4 Consumer Behavior, Online Market Research, and Customer Relationship Management
  2. 2. Learning Objectives <ul><li>Describe the factors that influence consumer behavior online. </li></ul><ul><li>Understand the decision-making process of consumer purchasing online. </li></ul><ul><li>Describe how companies are building one-to-one relationships with customers. </li></ul><ul><li>Explain how personalization is accomplished online. </li></ul><ul><li>Discuss the issues of e-loyalty and e-trust in EC. </li></ul>
  3. 3. Learning Objectives (cont.) <ul><li>Describe consumer market research in EC. </li></ul><ul><li>Describe CRM, its methods, and its relationship with EC. </li></ul><ul><li>Explain the implementation of customer service online and describe its tools. </li></ul><ul><li>Describe Internet marketing in B2B, including organizational buyer behavior. </li></ul>
  4. 4. Learning about Consumer Behavior Online <ul><li>Model of consumer behavior online </li></ul><ul><ul><li>independent (or uncontrollable) variables </li></ul></ul><ul><ul><li>intervening or moderating variables </li></ul></ul><ul><ul><li>decision-making process </li></ul></ul><ul><ul><li>dependent variables </li></ul></ul>
  5. 6. Learning about Consumer Behavior Online (cont.) <ul><li>Independent variables </li></ul><ul><ul><li>Personal characteristics </li></ul></ul><ul><ul><li>Environmental variables </li></ul></ul><ul><ul><ul><li>Social variables </li></ul></ul></ul><ul><ul><ul><li>Cultural/community variables </li></ul></ul></ul><ul><ul><ul><li>Other environmental variables </li></ul></ul></ul>
  6. 7. Learning about Consumer Behavior Online (cont.) <ul><li>Intervening (moderating) variables </li></ul><ul><ul><li>variables are those that can be controlled by vendors </li></ul></ul><ul><li>Dependent variables: the buying decisions </li></ul><ul><ul><li>customer makes several decisions </li></ul></ul><ul><ul><li>“ to buy or not to buy?” </li></ul></ul><ul><ul><li>“ what to buy?” </li></ul></ul><ul><ul><li>“ where, when, and how much to buy?” </li></ul></ul>
  7. 8. Consumer Decision Making Process <ul><li>Roles people play in the decision making process </li></ul><ul><ul><li>Initiator </li></ul></ul><ul><ul><li>Influencer </li></ul></ul><ul><ul><li>Decider </li></ul></ul><ul><ul><li>Buyer </li></ul></ul><ul><ul><li>User </li></ul></ul>
  8. 9. Consumer Decision Making Process (cont.) <ul><li>5 phases of the generic purchase decision model: </li></ul><ul><ul><li>need identification </li></ul></ul><ul><ul><li>information search </li></ul></ul><ul><ul><li>evaluation of alternatives </li></ul></ul><ul><ul><li>purchase and delivery </li></ul></ul><ul><ul><li>after-purchase evaluation </li></ul></ul>
  9. 10. Consumer Decision Making Process (cont.) <ul><li>Product brokering: Deciding what product to buy </li></ul><ul><li>Merchant brokering: Deciding from whom (from what merchant) to buy a product </li></ul>What? Where?
  10. 13. One-to-One Marketing and Personalization in EC <ul><li>One-to-one marketing: Marketing that treats each customer in a unique way </li></ul><ul><li>Personalization: The matching of services, products, and advertising content to individual consumers </li></ul><ul><li>User profile: The requirements, preferences, behaviors, and demographic traits of a particular customer </li></ul>
  11. 15. One-to-One Marketing and Personalization in EC (cont.) <ul><li>Major strategies used to compile user profiles </li></ul><ul><ul><li>Solicit information directly from the user </li></ul></ul><ul><ul><li>Observe what people are doing online </li></ul></ul><ul><ul><li>Build from previous purchase patterns </li></ul></ul><ul><ul><li>Perform marketing research </li></ul></ul>
  12. 16. One-to-One Marketing and Personalization in EC (cont.) <ul><li>Cookie: A data file that is placed on a user’s hard drive by a Web server, frequently without disclosure or the user’s consent, that collects information about the user’s activities at a site </li></ul>
  13. 17. One-to-One Marketing and Personalization in EC (cont.) <ul><li>Collaborative filtering: A personalization method that uses customer data to predict, based on formulas derived from behavioral sciences, what other products or services a customer may enjoy; predictions can be extended to other customers with similar profiles </li></ul>
  14. 18. One-to-One Marketing and Personalization in EC (cont.) <ul><li>Variations of collaborative filtering: </li></ul><ul><ul><li>Rule-based filtering </li></ul></ul><ul><ul><li>Content-based filtering </li></ul></ul><ul><ul><li>Activity-based filtering </li></ul></ul><ul><li>Legal and ethical issues in collaborative filtering </li></ul><ul><ul><li>Invasion-of-privacy issues </li></ul></ul><ul><ul><li>Permission-based personalization tools to request customer permission </li></ul></ul>
  15. 19. One-to-One Marketing and Personalization in EC (cont.) <ul><li>Customer loyalty </li></ul><ul><ul><li>Customer loyalty: Degree to which a customer will stay with a specific vendor or brand </li></ul></ul><ul><ul><li>Increased customer loyalty produces cost savings through: </li></ul></ul><ul><ul><ul><li>lower marketing costs </li></ul></ul></ul><ul><ul><ul><li>lower transaction costs </li></ul></ul></ul><ul><ul><ul><li>lower customer turnover expenses </li></ul></ul></ul><ul><ul><ul><li>lower failure costs </li></ul></ul></ul><ul><ul><li>E-loyalty: Customer loyalty to an e-tailer </li></ul></ul>
  16. 20. One-to-One Marketing and Personalization in EC (cont.) <ul><li>Trust in EC </li></ul><ul><ul><li>Trust: The psychological status of involved parties who are willing to pursue further interaction to achieve a planned goal </li></ul></ul><ul><ul><li>Trust is influenced by many variables </li></ul></ul>
  17. 22. One-to-One Marketing and Personalization in EC (cont.) <ul><li>How to increase EC trust </li></ul><ul><ul><li>between buyers and sellers trust is determined by: </li></ul></ul><ul><ul><ul><li>degree of initial success that each party experienced with EC and with each other </li></ul></ul></ul><ul><ul><ul><li>well-defined roles and procedures for all parties involved </li></ul></ul></ul><ul><ul><ul><li>realistic expectations as to outcomes from EC </li></ul></ul></ul>
  18. 23. One-to-One Marketing and Personalization in EC (cont.) <ul><li>Issues in personalization </li></ul><ul><ul><li>brand recognition </li></ul></ul><ul><ul><li>security mechanisms help solidify trust </li></ul></ul><ul><ul><li>disclose and update latest business status and practices to potential customers and to build transaction integrity into the system </li></ul></ul><ul><ul><li>guarantee information and protection privacy through various communication channels </li></ul></ul>
  19. 24. Market Research for EC <ul><li>Goal of market research is to find information and knowledge that describes the relationships among: </li></ul><ul><ul><li>consumers </li></ul></ul><ul><ul><li>products </li></ul></ul><ul><ul><li>marketing methods </li></ul></ul><ul><ul><li>marketers </li></ul></ul>
  20. 25. Market Research for EC (cont.) <ul><li>Aim of marketing research is to: </li></ul><ul><ul><li>discover marketing opportunities and issues </li></ul></ul><ul><ul><li>establish marketing plans </li></ul></ul><ul><ul><li>better understand the purchasing process </li></ul></ul><ul><ul><li>evaluate marketing performance </li></ul></ul><ul><ul><li>develop advertising strategy </li></ul></ul>
  21. 26. Market Research for EC (cont.) <ul><li>Market segmentation: The process of dividing a consumer market into logical groups for conducting marketing research, advertising, and sales </li></ul><ul><li>Market research tools </li></ul><ul><ul><li>data modeling </li></ul></ul><ul><ul><li>data warehousing </li></ul></ul>
  22. 27. Market Research for EC (cont.) <ul><li>Conducting market research online </li></ul><ul><ul><li>faster and more efficient than off-line methods </li></ul></ul><ul><ul><li>accesses a more geographically diverse audience </li></ul></ul><ul><ul><li>large studies done much more cheaply </li></ul></ul><ul><ul><li>not well developed at this time </li></ul></ul>
  23. 28. Market Research for EC (cont.) <ul><li>What are we looking for in EC online research? </li></ul><ul><ul><li>personal profile that helps marketers explain and predict online buying behavior </li></ul></ul>
  24. 29. Market Research for EC (cont.) Procter & Gamble <ul><li>Example: Internet market research expedites time-to-market for Procter & Gamble </li></ul><ul><ul><li>In the past developing a major new product, from concept to market launch, took over 5 years </li></ul></ul><ul><ul><li>In September 2000 introduced Whitestrips on the Internet, offering the product for sale on P&G’s Web site </li></ul></ul>
  25. 30. Market Research for EC (cont.) <ul><li>Online market research methods </li></ul><ul><ul><li>Web-based surveys </li></ul></ul><ul><ul><li>Online focus groups </li></ul></ul><ul><ul><li>Hearing directly from customers </li></ul></ul><ul><ul><li>Customer scenarios </li></ul></ul><ul><ul><li>Tracking customer movements </li></ul></ul>
  26. 31. Market Research for EC (cont.) <ul><ul><li>Transaction log </li></ul></ul><ul><ul><ul><li>A record of user activities at a company’s Web site </li></ul></ul></ul><ul><ul><li>Clickstream behavior </li></ul></ul><ul><ul><ul><li>Customer movements on the Internet; and, what the customer is doing there </li></ul></ul></ul>
  27. 32. Market Research for EC (cont.) <ul><ul><li>Cookies, Web Bugs, and Spyware </li></ul></ul><ul><ul><ul><li>Web bugs: Tiny graphics files embedded on e-mail messages and in Web sites that transmit information about the user and their movements to a Web server </li></ul></ul></ul><ul><ul><ul><li>Spyware: Software that gathers user information, through an Internet connection, without the user’s knowledge </li></ul></ul></ul><ul><ul><li>Analysis of B2C clickstream data </li></ul></ul>
  28. 33. Market Research for EC (cont.) <ul><li>Limitations of online market research </li></ul><ul><ul><li>too much data may be available—need business intelligence to organize, edit, condense, and summarize it </li></ul></ul><ul><ul><li>accuracy of responses </li></ul></ul><ul><ul><li>loss of respondents because of equipment problems </li></ul></ul><ul><ul><li>ethics and legality of Web tracking </li></ul></ul>
  29. 34. Market Research for EC (cont.) <ul><ul><li>Online shoppers tend to be wealthy, employed, and well educated </li></ul></ul><ul><ul><li>The lack of clear understanding of the online communication process and how online respondents think and interact in cyberspace </li></ul></ul>
  30. 35. CRM and Its Relationship with EC <ul><li>Customer relationship management (CRM): A customer service approach that focuses on building long-term and sustainable customer relationships that add value both for the customer and the company </li></ul>
  31. 36. CRM and Its Relationship with EC (cont.) <ul><li>Classification of CRM programs </li></ul><ul><ul><li>Loyalty program </li></ul></ul><ul><ul><li>Prospecting </li></ul></ul><ul><ul><li>Save or win back </li></ul></ul><ul><ul><li>Cross-sell/up-sell </li></ul></ul><ul><li>eCRM: Customer relationship management conducted electronically </li></ul>
  32. 37. CRM and Its Relationship with EC (cont.) <ul><li>Scope of CRM </li></ul><ul><ul><li>Foundation of service </li></ul></ul><ul><ul><li>Customer-centered services </li></ul></ul><ul><ul><li>Value-added services </li></ul></ul>CRM
  33. 38. CRM and Its Relationship with EC (cont.) <ul><li>Extent of service </li></ul><ul><ul><li>Customer acquisition (prepurchase support) </li></ul></ul><ul><ul><li>Customer support during purchase </li></ul></ul><ul><ul><li>Customer fulfillment (purchase dispatch) </li></ul></ul><ul><ul><li>Customer continuance support (postpurchase) </li></ul></ul>
  34. 39. CRM and Its Relationship with EC (cont.) <ul><li>Benefits of CRM </li></ul><ul><ul><li>Provides: </li></ul></ul><ul><ul><ul><li>choices of products and services </li></ul></ul></ul><ul><ul><ul><li>fast problem resolution and response </li></ul></ul></ul><ul><ul><ul><li>easy and quick access to information </li></ul></ul></ul><ul><li>Limitations of CRM </li></ul><ul><ul><li>Requires integration with a company’s other information systems which is costly </li></ul></ul><ul><ul><li>Difficult to support mobile employees </li></ul></ul>
  35. 40. CRM and Its Relationship with EC (cont.) <ul><li>CRM implementation issues </li></ul><ul><ul><li>Steps in building EC strategy focused on customer: </li></ul></ul><ul><ul><ul><li>focus on the end customer </li></ul></ul></ul><ul><ul><ul><li>systems and business processes that are designed for ease of use and from the end customer’s point of view </li></ul></ul></ul><ul><ul><ul><li>efforts to foster customer loyalty </li></ul></ul></ul>
  36. 41. CRM and Its Relationship with EC (cont.) <ul><li>Five factors required to implement a CRM program effectively: </li></ul><ul><ul><li>Customer-centric strategy </li></ul></ul><ul><ul><li>Commitments from people </li></ul></ul><ul><ul><li>Improved or redesigned processes </li></ul></ul><ul><ul><li>Software technology </li></ul></ul><ul><ul><li>Infrastructure </li></ul></ul>
  37. 42. CRM and Its Relationship with EC (cont.) <ul><li>Justifying customer service and CRM programs </li></ul><ul><li>Metrics: Standards of performance; may be quantitative or qualitative </li></ul>
  38. 43. CRM and Its Relationship with EC (cont.) <ul><li>Web-related metrics a company uses to determine the appropriate level of customer support: </li></ul><ul><ul><li>Response time </li></ul></ul><ul><ul><li>Site availability </li></ul></ul><ul><ul><li>Download time </li></ul></ul><ul><ul><li>Timeliness </li></ul></ul><ul><ul><li>Security and privacy </li></ul></ul><ul><ul><li>On-time order fulfillment </li></ul></ul><ul><ul><li>Return policy </li></ul></ul><ul><ul><li>Navigability </li></ul></ul>
  39. 44. CRM Applications and Tools: Delivering Customer Service in Cyberspace <ul><li>CRM applications improve upon traditional customer service by means of easier communications and speedier resolution of customer problems </li></ul><ul><li>Customer service adds value to products and services </li></ul><ul><li>It is an integral part of a successful business </li></ul>
  40. 45. CRM Applications and Tools (cont.) <ul><li>Classifications of CRM applications </li></ul><ul><ul><li>Customer-facing applications </li></ul></ul><ul><ul><li>Customer-touching applications </li></ul></ul><ul><ul><li>Customer-centric intelligence applications </li></ul></ul><ul><ul><li>Online networking and other applications </li></ul></ul>
  41. 46. CRM Applications and Tools (cont.) <ul><li>Customer-facing applications </li></ul><ul><ul><li>Customer interaction center (CIC): A comprehensive service entity in which EC vendors address customer service issues communicated through various contact channels </li></ul></ul><ul><li>Intelligent agents in customer service and call centers </li></ul>
  42. 47. CRM Applications and Tools (cont.)
  43. 48. CRM Applications and Tools (cont.)
  44. 49. CRM Applications and Tools (cont.) <ul><li>Autoresponders: Automated e-mail reply systems (text files returned via e-mail), which provide answers to commonly asked questions </li></ul><ul><li>Sales force automation (SFA): Software that automates the tasks performed by sales people in the field, such as data collection and its transmission </li></ul>
  45. 50. CRM Applications and Tools (cont.) <ul><li>Customer-touching applications </li></ul><ul><ul><li>Personalized Web Pages </li></ul></ul><ul><ul><li>E-Commerce Applications </li></ul></ul><ul><ul><li>Campaign Management </li></ul></ul>
  46. 51. CRM Applications and Tools (cont.) <ul><ul><li>Web Self-Service </li></ul></ul><ul><ul><ul><li>Activities conducted by users on the Web to provide answers to their questions (e.g., tracking) or for product configuration </li></ul></ul></ul><ul><ul><ul><li>Self-tracking </li></ul></ul></ul><ul><ul><ul><li>Self-configuration and customization </li></ul></ul></ul>
  47. 52. CRM Applications and Tools (cont.) <ul><li>Customer-centric applications </li></ul><ul><ul><li>Data reports </li></ul></ul><ul><ul><li>Data warehouse </li></ul></ul><ul><ul><ul><li>A single, server-based data repository that allows centralized analysis, security, and control over the data </li></ul></ul></ul>
  48. 53. CRM Applications and Tools (cont.) <ul><li>Data analysis and mining </li></ul><ul><ul><li>Analytic applications automate the processing and analysis of CRM data </li></ul></ul><ul><ul><ul><li>can be used to analyze the performance, efficiency, and effectiveness of an operation’s CRM applications </li></ul></ul></ul><ul><ul><li>Data mining involves sifting through an immense amount of data to discover previously unknown patterns </li></ul></ul>
  49. 54. CRM Applications and Tools (cont.) <ul><li>Online networking and other applications </li></ul><ul><ul><li>Forums </li></ul></ul><ul><ul><li>Chat rooms </li></ul></ul><ul><ul><li>Usenet groups </li></ul></ul><ul><ul><li>E-mail newsletters </li></ul></ul><ul><ul><li>Discussion lists </li></ul></ul>
  50. 55. CRM Applications and Tools (cont.) <ul><li>Mobile CRM </li></ul><ul><ul><li>the delivery of CRM applications to any user, whenever and wherever needed </li></ul></ul><ul><li>Voice communication </li></ul><ul><ul><li>people are more comfortable talking with a person, even a virtual one, than they are interacting with machines. The smile and the clear pronunciation of the agent’s voice increases shoppers’ confidence and trust </li></ul></ul>
  51. 56. CRM Applications and Tools (cont.)
  52. 57. CRM Applications and Tools (cont.) <ul><li>Role of knowledge management and intelligent agents in CRM </li></ul><ul><ul><li>Automating inquiry routing and answering queries requires knowledge </li></ul></ul><ul><ul><li>Generated from historical data and from human expertise and stored in knowledge bases for use whenever needed </li></ul></ul><ul><ul><li>Intelligent agents support the mechanics of inquiry routing, autoresponders, and so on </li></ul></ul>
  53. 58. Internet Marketing in B2B <ul><li>Organizational buyer behavior </li></ul><ul><ul><li>number of organizational buyers is much smaller than the number of individual buyers </li></ul></ul><ul><ul><li>transaction volumes are far larger </li></ul></ul><ul><ul><li>terms of negotiations and purchasing are more complex </li></ul></ul>
  54. 60. Internet Marketing in B2B (cont.) <ul><li>Methods for B2B online marketing </li></ul><ul><ul><li>Targeting customers </li></ul></ul><ul><ul><ul><li>contact all of its targeted customers individually when they are part of a well-defined group </li></ul></ul></ul><ul><ul><ul><li>affiliation service </li></ul></ul></ul><ul><ul><ul><li>advertising </li></ul></ul></ul><ul><ul><li>Electronic wholesalers </li></ul></ul><ul><ul><ul><li>intermediary sells directly to businesses, but does so exclusively online </li></ul></ul></ul>
  55. 61. Internet Marketing in B2B (cont.) <ul><li>Other B2B marketing services </li></ul><ul><ul><li>Digital Cement </li></ul></ul><ul><ul><ul><li>provides corporate marketing portals that help companies market their products to business customers </li></ul></ul></ul><ul><ul><li>National Systems </li></ul></ul><ul><ul><ul><li>tracks what is going on in an industry </li></ul></ul></ul><ul><ul><li>BusinessTown </li></ul></ul><ul><ul><ul><li>provides information and services to small businesses, including start-ups </li></ul></ul></ul><ul><ul><li>Vantagenet </li></ul></ul><ul><ul><ul><li>offers free tools that help increase traffic to a company’s Web site </li></ul></ul></ul>
  56. 62. Internet Marketing in B2B (cont.) <ul><li>Affiliate programs </li></ul><ul><ul><li>Placing banners on another vendor’s Web site </li></ul></ul><ul><ul><li>Content alliance program in which content is exchanged so that all can obtain some free content </li></ul></ul><ul><li>Infomediaries </li></ul><ul><li>Online data mining services </li></ul>
  57. 63. Managerial Issues <ul><li>Do we understand our customers? </li></ul><ul><li>What do customers want from technology? </li></ul><ul><li>How is our response time? </li></ul><ul><li>How do we measure and improve customer service? </li></ul><ul><li>Is CRM for real? </li></ul>
  58. 64. Managerial Issues (cont.) <ul><li>Do we have to use electronically supported CRM? </li></ul><ul><li>Should we use intelligent agents? </li></ul><ul><li>Who will conduct the market research? </li></ul><ul><li>Are customers satisfied with our Web site? </li></ul><ul><li>Can we use B2C marketing methods and research in B2B? </li></ul>
  59. 65. Summary <ul><li>Essentials of consumer behavior. </li></ul><ul><li>The online consumer decision-making process. </li></ul><ul><li>Building one-to-one relationships with customers. </li></ul><ul><li>Online personalization. </li></ul><ul><li>Increasing loyalty and trust. </li></ul>
  60. 66. Summary (cont.) <ul><li>EC customer market research. </li></ul><ul><li>CRM, its technologies, and EC connection. </li></ul><ul><li>Implementing customer service online. </li></ul><ul><li>B2B Internet marketing and organizational buyers. </li></ul>