B2C marketing Flashcards
Customer behavior
The study of individuals, groups, or organizations and the processes they use to select, secure, use, and dispose of products, services, experiences, or ideas to satisfy needs and the impacts that these processes have on the customer and
society
Five-stage model of the customer decision process
Definition: describes how customers process information during a purchase decision
Assumption: customer is cognitive (=problem-solving)
- Problem recognition
=the buying process begins when the customer acknowledges a problem or a need
Needs:
arise when there is a perceived difference between the actual and desired states of being
- Information search
Two stages of information search:
1. Heightened attention: desribes a person who is more open to information about products
- Active information search: more intense searcher who seeks out reading material, assessing information from friends,
Evaluation of Alternatives
Evaluation of alternatives: Expectancy-value model
Steps between Stage 3 and Stage 4:
- Purchase decision
–> 5. Post purchase behavior
- Post purchase behavior
= a customer´s satisfaction determines if they will buy the product again and talk favorably or unfavorably about the product to their peers
Normative vs. descriptive decision theory
Normative decision theory = concerning the identificitaion of the best decision to take,
->assuming an ideal decision maker who is fully informed, able to compute with perfect accurarcy, and fully rational.
Desriptive decision theory = explains how individuals actually make decisions and takes into account psychological influences and limited information processing capacity. Descriptive decision theory explains irrationality and decision anomalies, e.g. prospect theory.
Prospect Theory
=descronbes decisions between alternative that involve risk, where the probabilities are know. The theory predicts real-life choices, rather than optimal decisons.
It distinguishes between two phrases of the process:
1) early phase of editing (=preliminary analysis)
2) subsequent phase of evaluation (=prospect is chosen)
Prospect theory: 1) Editing phase
= available options are organized and reformulated in order to simplify the subsequent evaluation.
Prospect theory: 2)Evaluation Phase
Prospect theory: Implications
Prospect theory has substantially improved understanding of human decision making
• Prospect theory yields implications for marketing, e.g.
‐ What markets will respond to what type of offer,
‐ How an advertising message is framed,
‐ How a product is priced and the premium a customer is willing to pay,
‐ How a product’s price is perceived relative to the competition and customer
expectations,
‐ How a new product is positioned.
Customer irrationality: Endowment effect
Definition: refers to the increased value of a good to an individual when the good becomes part of the individual´s endowment.
Customer irrationality: Endowment effect
Definition: refers to the increased value of a good to an individual when the good becomes part of the individual´s endowment.
Customer irrationality: Status quo bias
refers to individual´s tendency of doing nothing or maintaining one´s current or previous decision
Customer irrationality: Framing effect
refers to the changes in risk preferences as a result of how choices are described (framed)
Customer irrationality: Anchoring effect
= a heuristic that influences the way we intuitively assess probabilities; refers to a biaed estimate toward an arbitrary valuce considered by judges before makng a numerical estimate
B2C Marketing mix:
Brick-and mortar” retailers increasingly transform to “clicks-and mortar” retailers
Trend goes towards a multichannel strategy and clicks-and mortar
A new pricing model - Flash sales
Definition:
- time limited online sale of branded goods,
- deal of the day principle
- especially used in e-Commerce via website, emails and social media
- special websites that announce flash sales
A new pricing model - Freemium
Defintion:
- give away core product for free while selling premium versions/add-ons
- Premium for advanced features, functionality or virtual goods
- often applied in software, media, games, and web services
Relevance of customer relationship management (CRM)
Challenging Market conditions
Custmer relationship management
Customer loyality
The impact chain of CRM
- ->Customer satisfaction
- -> Customer retention (re-buying, Cross-buying, recommendation
- -> Increase in profit (sales volume, Price, Costs)
Customer loyalty - Multi-dimensional phenomenon
The relationship between customer satisfaction and customer loyalty
Means to flank the establishment of customer loyalty
Not all loyal customers are profitable customers
