2. Learning Objectives
After studying this chapter, you should be able to:
•Classify customer value
•Analyze the characteristics of customer value
•Understand the concept of customer satisfaction and
customer delight
•Learn the basics of consumer behavior
• Factors effecting Consumer Behaviour
3. Few Jargons
• Customer value and satisfaction.
• Total Customer Value, economic,
functional and psychological benefits,
• Total customer cost,
• Customer roles, Payer, User, Gate
Keeper
• Perceived Value, Benefits, Consumers,
5. • A customer expects different kinds of benefits in
purchasing a product.
• The basic benefit is the feature or physical product
benefit.
• When he is buying a brand, he is also getting some
amount of brand and company name benefits.
• Emotional Benefit: Benefits that are specifically
attached to brands, their particular features, and
advertising, which arouses the customer’s interest
in buying that product or availing the services.
• Made in India, Cadbury Chocolates, Tanishq, Malabar,
Kalyan Jewellers
02-09-2022
Consumer Benefits Expectations
6. • Service Benefit: Benefit derived from a service
which provide the customer time, place and ease of
task as the convenience in form of benefit.
- LG India, ATM (24*7), Paytm, Airtel Payment
Bank etc.
• Performance Benefits: Benefits on the basis of
which a customer can measure the value of
product. Customer lays various attributes of a
product based on which he compares his purchase
with the ones of competitor. Those attributes
defines the performance of the product.
• Asian Paints, Uflex wires, Syka Lighting Solutions
02-09-2022
Consumer Benefits Expectations
7. • Brand/Company Benefits: The benefits offered by the
company’s brand name, symbols, product attributes, and
the distinct features which make the product/service
distinct from that of competitors product is the
brand/company benefit.
• McDonalds, Starbucks, A TATA Product, Michael Kors
• Product Benefit: Actual factor of product i.e. its design,
usage and performance and the perceived factors of a
product i.e. its brand image, popularity etc. when
satisfies customer’s needs and wants is termed as
product benefit.
02-09-2022
Consumer Benefits Expectations
10. • Value is defined as the net of customer’s expected benefits over the cost
of the product or services
• Customer Delivered Value
• It is the difference between total customer value and the total customer
cost. Total customer value is the bundle of benefits that customers expect
form given product or service.
• Total Customer Cost
• It is the bundle of costs customer expect to incur in evaluating,
obtaining, using, and disposing of the product or service.
02-09-2022
Value, Customer Value
11. • Customer choices rests on following premises;
• Consumer choice is a function of a small number of
consumption values.
• Specific consumption values make differential contributions
in any given choice of situations.
• All the consumption values are independent of each other.
02-09-2022
Rationale for Consumer Choices
12. • Value is also defined as a quantitative measure of the power one
good or service has to attract another good or service in an
exchange. But this definition is very primitive and is defined in the
context of a physical exchange, known as barter system.
• Customer value is summarized as ‘the be all and the end all’ of
business activity; the only purpose of all organizations, all business
enterprises. It is the only path for sustained growth and for winning
the battle for market leadership. A market value is the potential of a
product or service to satisfy consumer needs and wants. Customer
value is created only if the product or service has the capability to
satisfy a customer’s needs and wants. A product may be very
valuable for one customer and less for another, so it is difficult to
standardize the offer for all. The marketer can look at majority of
customers and create a customer context to make the product more
valuable.
02-09-2022
Value & Customer Value
13. • Functional Value: The functional value of a
consumer choice is the perceived functional,
utilitarian or physical performance utility received
from the choice product’s attributes. It is associated
with economic utility theory, popularly expressed in
terms of rational economic reason. At the heart of
such a value definition is the set of attributes like
reliability, durability and price.
• Toothpaste, Any smart mobile phone, Milk, Soap
02-09-2022
Consumer Value Classification
14. • Social Value: The social value of a choice is the
perceived utility acquired because of the associations
between one or more specific social groups and
consumer choice. A consumer’s choice gains social
value by being linked with positively or negatively
stereotyped demographic socio-economic and cultural-
ethnic groups i.e. reference groups.
• Choices involving highly visible products like bicycles
and food, and services to be socially shared like gifts,
products used in entertainment are often driven by
social values.
02-09-2022
Consumer Value Classification
15. • Emotional Value: The emotional value of a choice
is the perceived utility acquired from its capacity to
stimulate the consumer’s emotions or feelings. A
choice acquires emotional value when associated
with specific feelings or when it triggers or sustains
those feelings. Products and services are frequently
associated with emotional responses. What can be
the emotional value associated with a detergent
cake? It is definitely related to the health of the
consumer’s children and the protection that it
provides to his/her family members.
- A consumer buying ‘Dettol’ or ‘Lifebuoy’ soap
in lieu of safeguarding the health of his children is
an emotional value of the product.
02-09-2022
Consumer Value Classification
16. • Epistemic Value: The epistemic value of a choice is the
perceived utility that comes from the choice’s ability to foster
curiosity, provide novelty and satisfy a desire for knowledge.
• New purchase and consumption experiences, especially, offer
epistemic value. However, even a simple change like a shift from
one ice cream flavor to another also provides the consumer with
epistemic value. Since all new products provide some novelty,
marketers should try to build some novelty around the product.
- Milk, flavored milk, yoghurt, fruit flavored yoghurt.
02-09-2022
Consumer Value Classification
17. • Conditional value: Conditional value of a choice is the
perceived utility acquired by a choice as an outcome of
some particular situation or circumstances facing the
customer.
• Products associated with a particular time or event like
coffee at breakfast.
- Sunscreen lotion, Body lotion, Visit to hospital in
case of medical emergency, Chyawanprash, sanitizers,
02-09-2022
19. • The value expectation may undergo a change depending on what role the
consumer is playing.
• According to Seth and Mittal, customers can play three roles namely user,
payer and customer.
• The user is the person who actually consumes the product or receives the
benefits of the product and service.
• The payer is the person who finances the purchase and the buyer is the
person who participates in the procurement of the product from the
marketplace.
• Each of these roles may be carried out by same person or can be done by
different people.
• A person can be a buyer for the family and pay the money whereas a child
may be the user of the product.
• Marketers are aware about such roles and target their marketing programs to
each of the roles. Customer value can be classified on the basis of customer
roles and values.
02-09-2022
Consumer Role
21. • Customer profitability (CP) is the profit the firm makes
from serving a customer or customer group over a specified
period of time, specifically the difference between the
revenues earned from and the costs associated with
the customer relationship in a specified period.
• The specific amount of profit you stand to gain from each of
your customer groups or personas is known as customer
profitability.
• https://www.youtube.com/watch?v=F_MhHzVRf5k
02-09-2022
Customer profitability (CP)
22. • Let's imagine two customers, Parag and Prayas and pretend you sell a
particularly Sugar Free Juice “SugNil”.
• Parag buys your “SugNil” in bulk — so much so that you wonder if he's
using it recreationally or something because nobody has that many juice
pack requirement. He's never returned an order and he rarely calls customer
support. He's a low maintenance, loyal customer.
• Prayas, on the other hand, buys his orders in small quantities. He prefers
several tiny, individual boxes of “SugNil” as opposed to larger orders —
more than half of which he returns immediately. He's constantly calling
customer support about how to keep the juices fresh till long." In all, Prayas
is a loyal customer, but his loyalty isn't cheap.
• You, the “SugNil” mogul, stand to make more money from one of those
customers than the other. If their buying patterns hold true, Who is a more
valuable customer and Why???. 02-09-2022
Lets Understand CP
25. Consumer Behavior
25
Processes a consumer uses to make
purchase decisions, as well as
to use and dispose of purchased
goods or services, also includes
factors that influence purchase
decisions and the product use.
30. Need Recognition
30
Marketing helps consumers recognize
an imbalance between
present status and preferred state.
Present
Status
Preferred
State
31. Recognition of Unfulfilled Wants
• When a current product isn’t
performing properly
• When the consumer is
running out of a product
• When another product seems
superior to the one currently used
31
32. Information Search
32
Internal Information Search
Recall information in memory
External Information search
Seek information in outside
environment
Nonmarketing controlled
Marketing controlled
33. External Information Searches
33
Need More
Information
More Risk
Less knowledge
Less product experience
High level of interest
Lack of confidence
Less Risk
More knowledge
More product experience
Low level of interest
Confidence in decision
Need Less
Information
34. Evoked Set
34
Group of brands resulting from an
information search, from which a
buyer can choose.
35. Evaluation of Alternatives
and Purchase
35
Evoked Set
Purchase!
Analyze product attributes
Rank attributes by
importance
Use cutoff criteria
36. Purchase
36
To buy
or not to buy...
Determines which attributes
are most important
in influencing a
consumer’s choice
40. Postpurchase Behavior
Consumers can reduce dissonance by:
• Seeking information that reinforces positive ideas
about the purchase
• Avoiding information that contradicts the purchase
decision
• Revoking the original decision by returning the
product
40
Marketers can minimize through:
Effective Communication
Follow-up
Guarantees
Warranties
Service during and after the sale
41. Consumer Buying Decisions and
Consumer Involvement
41
More
Involvement
Less
Involvement
Routine
Response
Behavior
Limited
Decision
Making
Extensive
Decision
Making
42. Five Factors of Consumer Involvement
42
1. Level of consumer involvement
2. Length of time to make decision
3. Cost of good or service
4. Degree of information search
5. Number of alternatives considered
44. Routine Response Behavior
• Little involvement in selection process
• Frequently purchased low cost goods
• May stick with one brand
• Buy first/evaluate later
• Quick decision
44
45. Limited Decision Making
• Low levels of involvement
• Low to moderate cost goods
• Evaluation of a few alternative brands
• Short to moderate time to decide
45
46. Extensive Decision Making
• High levels of involvement
• High cost goods
• Evaluation of many brands
• Long time to decide
• May experience cognitive dissonance
46
47. Factors Determining
the Level of Consumer Involvement
47
Situation
Social Visibility
Interest
Perceived Risk of Negative
Consequences
Previous Experience
48. Marketing Implications of Involvement
48
High-involvement
purchases require:
Extensive and informative
promotion to target market
Low-involvement
purchases require:
In-store promotion,
eye-catching package
design, and good displays.
Coupons, cents-off,
2-for-1 offers
49. Factors Influencing Buying Decisions
49
Social
Factors
Individual
Factors
Psycho-
logical
Factors
Cultural
Factors
CONSUMER
DECISION-
MAKING
PROCESS
BUY /
DON’T BUY
50. Cultural Influences on
Consumer Buying Decisions
50
Identify and understand
the cultural factors
that affect consumer
buying decisions.
51. Culture
51
Sets of values, norms,
attitudes, and other meaningful
symbols that shape human
behavior and the artifacts, or
products, of that behavior as
they are transmitted from one
generation to the next.
57. Social Class
57
A group of people in a society
who are considered nearly
equal in status or community
esteem, who regularly socialize
among themselves both formally
and informally, and who share
behavioral norms.
64. Influences of Reference Groups
1. They serve as information
sources and influence
perceptions.
2. They affect an individual’s
aspiration levels.
3. Their norms either constrain or
stimulate consumer behavior.
64
68. 68
Social Factors
Direct Indirect
Reference
Groups Primary Secondary Aspirational Nonaspirational
Opinion
Leaders
People
you know
Socialization Process
Family
Celebrities
Initiators Decision Makers Consumers
Influencers Purchasers
69. Individual Influences on
Consumer Buying Decisions
69
Identify and understand
the individual factors
that affect
consumer buying decisions.
75. Motivation
75
Maslow’s Hierarchy of Needs-
A method of classifying human
needs and motivations into five
categories in ascending order
of importance.
78. Beliefs and Attitudes
78
Belief
Attitude
An organized pattern of
knowledge that an individual
holds as true about his or her
world.
A learned tendency to
respond consistently toward a
given object.
