B2C Flashcards
customer behavior
the study of individuals, groups or organizations and the processes they use to select, secure, use and dispose of porducts… to satisfy needs and the impacts of these processes on customer and society
customer behavior implications
understand of customer behavior enables firms to adapt and improve their campaigns and strategies
and furthermore enables them to reach and satisfy the needs of their customers
- problem recognition:
concept of needs
subjectively perceived deficiancies,
difference between actual and desired state of being
- information search
heightened attention - more open to information about products
information search - more intense searcher who seeks out different sources (reading material, peers, friends, users…)
- information search:
sources of information
personal
commercial
experimental
public
- evaluation of alternatives
achieve a place in customer´s awareness set, evoked set and especially choice set
recognize competitors in choice set
identify customers information sources and evaluate their relative influence
- evaluation of alternatives:
definitions of sets
number of products or brands the customer will become aware of
number of alternatives considered
number of products or brands for which more information is processed
- evaluation of alternatives:
definitions of sets
number of products or brands the customer will become aware of
number of alternatives considered
number of products or brands for which more information is processed
- purchase decision
in some cases a customer may decide not to evaluate each product and/or intervening factors may affect the decision - attitudes of others, unanticipated situational factors -
- post pruchase behavior
confirmation disconfirmation paradigm perception vs expectation delight satisfaction dissatisfaction
- post purchase behavior:
ways to influence
increase performance
influence perception
manage expectations
Decision theory / biases
normative theory - best decision to take (fully informed & rational)
descriptive theory - explains how individuals actually make decisions and takes into account psychological influences and limited information processing capacity
explains irrationality and decision anomalies
decision making:
influencing factors
psychological influences
marketing mix influences
sociocultural influences
situational influences
biases / behavioural effects
framing effect
anchoring effect
endowment effect
status quo bias
framing effect
change in risk preferences depending on how choices are described
anchoring effect
point of reference (influences person towards given value)
in developing their final estimate decision makers adjust the considered anchor but tend to do so insufficiently
endowment effect
demand higher price for item endowed with than oneself would pay for it (overestimation of value / psychological influence)
loss when given up, gain when acquired
status quo bias
tendency of maintaining one´s current (previous) decision
prospect theory definition
descriptive decision theory
describes decision between akternatives that involve risk and probabilities are known
-predicts real life choices
prospect theory concept
two phases of choice process:
early phase of editing
subsequent phase of evaluation
prospect theory assumptions
a) natural reference point
b) function is concave for gains, convex for losses
c) loss function is steeper than gain function
i. e. losses loom larger than gains
editing phase
organize and reformulate available options
coding (define outcomes relative to neutral reference point)
combination (simplifiy prospects by combining probabilities for identical outcomes)
segregation (riskless / risky - decomposition into sure gain and risky prospect)
evaluation phase
individual will choose alternative with highest subjective value (SV)
prospect theory implications / take aways
response of market to offer
how to frame advertising
pricing and adjustment of premium customer is willing to pay
how product´s price s perceived to competition
how new product is positioned
look at implications for marketing of customer irrationality effects
… adoption barriers
buying price vs selling price
negative framing
positive framing to customer type ( risk-averse/taking)
price partitioning, bundling, negotiations
Marketing mix in b2c marketing
changing market conditions: single channel - emergence of information technologies - multi channel!
clicks and mortar business model
+ availability and convenience; cut costs
- diffcult to run two businesses at same time
bricks and mortar business model
+ location-based attraction; adress senses; higher trust
- limited opening hours, huge overhead costs, fixed location
shopping via mobile devices
offer unique value, add convenience, entertain, offer incentives, provide social value
flash sales
+ sell overstock & unwanted products
customers are attracted by deals
stimulate short-term demand
visit more frequently
- lower brand´s perceived value and reference price
attraction of bargain hunters (will not pay normal price)
freemium
+ generate revenue after basic relationship
attracts new users (trial)
low marginal costs
minimal marketing costs
fast user increase, potential for commercials
- low value perception
more freeloaders than paying: costs outweigh revenue
risk of too many features in free version
Customer relationship management
tools & methods to maintain custoemr relationships and promote customer loyalty
c.l. : interaction, bonuses/rewards, building barriers
relevance of CRM
challenging market conditions:
increasing individualization of customer needs
differentiation via CRM needed (product/service not sufficient)
impact chain of CRM
customer satisfaction
- x customer retention (re-buying, cross-buying, recommendation)
- x increase in profit (sales volume, price, costs)
economic success relationship success
increase in profit
new customer loyalty view
vs old
vorher Gegenteil , implication loyal customers lead to higher profits
- cost more to keep
- pay lower prices because of knowledge
- do not always act as word-of-mouth marketers
implication: focus on loyal AND profitable customers
customer satisfation - loyalty graph
cool satisfaction / area of indefference
move, converst to valuable customers
customer loyalty matrix
…
Tools for identifying important customers
ABC analysis
Customer lifetime value
Customer portfolio
Scoring model
Disadvantages ABC analysis
single criterion only revenue (profit is more informative) static retrospective / everything else equal assumption no consideration of future potential
Five-stage model of customer decision process
assumption: customer is cognitive
1. problem recognition
2. information search
3. evaluation of alternatives
4. purchase decision
5. post purchase behavior
scoring model
…. assessment criteria
customer portfolio
attractiveness of customer: size of wallet, growth of purchases/year, knowhow of customer, image of customer
own position:
share of wallet
stability of relationship
switching costs
revenue cost relationship
different evolutions (problematic)
CLV +-
re buying, cross buying
expect discounts
lowered customer reference price
three drivers of customer value
acquistion - incresing customer base
margin - growing profit from existing customers
retention - minimize defection
CLV analysis take-aways for CRM
acquiring customer - liik for positive CLV / flows from customer exceed costs
costs of satisfying customer needs must be considered
customer retention is costly too - allocate resources efficiently
customers=risky assets - have a well-balanced /diversified portfolio
