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VALUE AND RETENTION FOCUSED MARKETING AND CONSUMER DECISION MAKING PROCESS

<< INTRODUCTION TO CONSUMER PSYCHOLOGY:Customer Value, Perceived Value
CONSUMER RESEARCH:Quantitative Research, Qualitative Research >>
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Consumer Psychology (PSY - 514)
VU
Lesson 05
VALUE AND RETENTION FOCUSED MARKETING
AND
CONSUMER DECISION MAKING PROCESS
OBJECTIVES:
o  Understanding Value and Retention Focused Marketing
Comparison between Tradition Marketing Concept and Value and Retention Focused
Marketing
Consumer Decision Making Process
What Consumer Psychologists Do?
1. Tradition Marketing Concept and Value and Retention Focused Marketing
The Traditional Marketing Concept
Value and Retention Focused Marketing
Make only what you can sell instead of trying to
Use technology that enables customers to
sell what you can make
customize what you make
DO not focus on the product; focus on the need
Focus on products perceived value as well as the
that it satisfies
need that it satisfies
Make products and services that match
Utilize an understanding of customers needs to
customers needs better than competitors
develop offerings that customers perceive as more
offerings
valuable than competitor's offerings
Research consumers needs and characteristics
Research levels of profit associated with various
consumers needs and characteristics
Understand the purchase process and influences
Understand consumer behavior in relation to a
upon consumer behavior
company's product
Realize that each customer transaction is a direct
Make each customer transaction as part of on-
sales
going relationship with the customer
Segment the market based on customers
Use hybrid segmentation that combines thee
geographic, demographic, psychological, socio-
traditional segmentation bases with data on
cultural, lifestyle and product usage related
customers' purchase levels and patterns of use of
characteristics
the company's products
Target large groups of customers that share
Invest in technologies that enable you to send
common characteristics with messages
one-to-one promotional messages via digital
transmitted through mass media
channels
Use one way promotions whose effectiveness is
Use interactive communications in which
measured through sales data or marketing
messages to customers are tailored according to
surveys
their responses to previous communications
Create loyalty programs based upon the volume
Create customer tiers based on both volume and
purchased
consumption patterns
Encourage customers to stay with the company
Make it very unattractive for your customers to
and buy more
switch to a competitor and encourage them to
purchase "better" ­ in a manner that will raise the
company's profitability levels
Determine marketing budgets on the basis of the
Base your marketing budget on the "lifetime
numbers of customers you are trying to reach
value" of typical customers in each of the
targeted segments compared with resources
needed to acquire them as customers
Conduct customer satisfaction surveys and
Conduct customer satisfaction surveys that
present the results to management
include a component that studies the customer's
word- of ­mouth about the company, and use the
results immediately to enhance customer
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Consumer Psychology (PSY - 514)
VU
relationships
Create customer trust and loyalty to the company
Create customer intimacy bonds with completely
and high levels of customer satisfaction
satisfied. "Delighted" customers.
Source: Joseph Wisenblit, "Beyond Marketing Concept: From `Make Only What You Can Sell to `Let Customers
Customize What you Can Make', "The Still man School of Business, Steon Hall University, South Orange, NJ.
2. Consumer Decision Making
The process of consumer decision making can be viewed as three distinct but interlocking stages:
1. The Input Stage: influences the consumer's recognition of a product need and consists of two major sources
of information:
THE FIRM'S MARKETING EFFORTS (the product itself, its price, promotion and the place where it is sold)
EXTERNAL SOCIOLOGICAL INFLUENCES (family, friends, neighbors, other informal and non-commercial sources,
social class and cultural and sub cultural memberships)
2. The Process Stage: focuses on how consumers make decisions. The psychological factors inherent in each
individual (motivation, perception, learning, personality, and attitudes) affect how external inputs from the Input
Stage influence the consumer's recognition of a need, prepurchase search for information, and evaluation of
alternatives
3. Output Stage: of the consumer decision making consists of two closely related post decision activities:
Purchase Behavior
Post Purchase Evaluation
Consumer decision making process will be explored in detail in the subsequent part of the course.
C
External Influences
O
N
S
Socio-cultural Environment
Firm's Marketing Efforts:
U
Family
INPUT
Product
M
Informal Sources
Promotion
E
Other non-commercial sources
Price
R
Social Class
D
Consumer Decision Making
E
C
Psychological Field
I
Need Recognition
Motivation
S
Pre-purchase Search
PROCESS
Perception
I
O
Learning
Evaluation of Alternatives
N
Personality
M
Experience
A
K
I
Post-decision Behavior
N
Purchase
G
OUTPUT
Trial
Repeat Purchase
Post purchase Evaluation
3. What Consumer Psychologists Do
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Consumer Psychology (PSY - 514)
VU
Consumer psychologists are educators, researchers, consultants, managers, administrators, and policy makers. The
majority of them work in universities, although increasing numbers are also employed in management- and policy-
level positions within both the public and private sectors. Academic positions for consumer psychologists are
found most frequently in business schools, although a significant number also work within schools and
departments that focus on advertising and communication.
The following examples, which are by no means exhaustive, will help to demonstrate the range of activities that are
undertaken by consumer psychologists.
 In the laboratory - a psychologist is photographing eye movements for a package design company as his
research participants observe a succession of soft drink containers.
 At a government bureau - a psychologist presents the results of a study concerning consumer response
to an advertising claim that is literally true but has false inferential implications.
 On an overseas flight - a psychologist is administering a series of projective questions to a sample of
travelers for an airline.
 At an automobile company - a psychologist assesses consumer response to various combinations of
product features to help engineers determine the optimal combination.
 At a university - a psychologist is helping develop a theoretical model of financial decisions made by
families.
 At an advertising agency - a psychologist is presenting study findings that show how well alternative
commercials communicate, and improve attitudes toward a brand of coffee.
 In the classroom - a psychologist is teaching students about children's responses to advertisements and
to children's television programs that promote program-related toys and action figures.
 At a research firm - a psychologist is conducting a group discussion with eight women who have stopped
serving meat to their families.
 At a kitchen table - a psychologist is observing a successful life insurance salesman talk with a prospect.
 In the courtroom - a psychologist is testifying as an expert witness in a trademark infringement case.
 In an Asian capital - a psychologist studies how consumers from different cultures use a product
differently.
4. Training in Consumer Psychology
In the early years of the discipline, consumer psychologists were individuals who had a PhD in psychology or a
related quantitative discipline (statistics, economics). Today many consumer psychologists have advanced degrees
in marketing, management, or advertising. Therefore, an undergraduate student with a degree in psychology and a
genuine interest in consumer psychology would be wise to seek graduate training within a professional school or
department. If the ultimate goal is an academic position at a university, then students should apply to doctoral
programs in the type of department where they will ultimately be seeking an academic position (e.g., advertising,
marketing). Students who feel they would like to pursue consumer psychology in a business setting would also
benefit from business training. If, however, a student does wish to continue their graduate training in a psychology
department, then they should take additional courses from the graduate programs in the relevant professional
school, and also consider working with a faculty member from that school on research projects.
Regardless of the ultimate career goal of a student of consumer psychology, rigorous training in research methods
is critical. Graduate students must master the basics of experimental methodology, survey research methods, and
statistical analysis before they can study more advanced research methods such as covariance structure modeling,
response latency-based methodologies, and computer simulation. Such training should enable students to produce
well-designed experiments that rule out alternative explanations for a cause-effect relationship, and/or
questionnaires that minimize question-wording effects, order effects, memory biases, and response-scale effects.
Finally, knowledge of the appropriate statistical procedures must also be acquired so as to control for sampling
error and for other sources of variation in participants' responses.
Many leading graduate programs in psychology, marketing, and communications/advertising have faculty members
that specialize in consumer psychology. The best way to identify the programs that are most appropriate for you is
to read the journals listed below. The articles that interest you also provide information about the authors and
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Consumer Psychology (PSY - 514)
VU
about their affiliations. Often the address of at least one of the authors is provided in a footnote. This information
should prove to be useful in helping you to develop a list of programs to which you may apply.
 Journal of Consumer Psychology. This journal is the primary outlet for research in consumer psychology.
Sponsored by the Society for Consumer Psychology (SCP - Division 23), it is devoted entirely to
consumer psychology.
 Journal of Consumer Research. This interdisciplinary journal, sponsored by the Association for Consumer
Research, contains a great deal of research in consumer psychology. It also contains research in consumer
anthropology and sociology.
 Business research journals such as the Journal of Advertising, the Journal of Marketing Research, and the Journal
of Marketing also contain research focused on consumer psychology.
 Finally, research in consumer psychology can be found in the major journals in social psychology,
including the Journal of Personality and Social Psychology; the Journal of Experimental Social Psychology; Personality
and Social Psychology Bulletin; Public Opinion Quarterly; the Journal of Applied Social Psychology; and the Journal of
Applied Psychology; as well as in the major journals in cognitive psychology, including Psychological Review; the
Journal of Experimental Psychology: Learning, Memory, and Cognition; Cognitive Psychology; Memory & Cognition; and
the Journal of Behavioral Decision Making.
Just as there is tremendous diversity in the backgrounds, theoretical and methodological expertise, and interests of
consumer psychologists, there are diverse paths toward a job in consumer psychology. A student's academic
background and prior business experience (as well as the current economic conditions) will determine how quick
and successful that student will be in a job search. Prime sources of job listings are the APA Monitor, Marketing
News, Advertising Age, and the Wall Street Journal. Students who are interested in working in the private sector can
also use the business library to look up the names of the research directors of major corporations and advertising
agencies. Finally, professional contacts can be made through becoming an active member in organizations such as
the Society for Consumer Psychology. More information about SCP and related organizations can be found at our
website: http://fisher.osu.edu/marketing/scp/.
Author note. Portions of this article were drawn from material prepared by William O. Bearden and Leon B. Kaplan,
and later modified by Frank R. Kardes, Lynn R. Kahle, Sharon Shavitt, and Curt Haugtvedt. The complete
document can be found on the SCP website (http://fisher.osu.edu/marketing/scp/) under the "Education and
Training" link. Thanks also to John Mowen, past-president of SCP, for information on the history of Division 23.
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Table of Contents:
  1. INTRODUCTION TO CONSUMER PSYCHOLOGY:Consumer Behavior
  2. INTRODUCTION TO CONSUMER PSYCHOLOGY:Consumer research
  3. INTRODUCTION TO CONSUMER PSYCHOLOGY:Marketing Mix, Product, Price
  4. INTRODUCTION TO CONSUMER PSYCHOLOGY:Customer Value, Perceived Value
  5. VALUE AND RETENTION FOCUSED MARKETING AND CONSUMER DECISION MAKING PROCESS
  6. CONSUMER RESEARCH:Quantitative Research, Qualitative Research
  7. MAJOR STEPS IN CONSUMER RESEARCH PROCESS:Design of Primary research
  8. QUANTITATIVE RESEARCH DESIGNS & DATA COLLECTION METHODS
  9. QUANTITATIVE RESEARCH DATA COLLECTION TECHNIQUES:ATTITUDE SCALES
  10. QUALITATIVE RESEARCH DESIGNS & DATA COLLECTION METHODS
  11. CUSTOMER SATISFACTION MEASUREMENT, SAMPLING, AND DATA ANALYSIS AND REPORTING
  12. MARKET SEGMENTATION AND ITS BASES:Geographical Segmentation
  13. BASES FOR SEGMENTATION: DEMOGRAPHIC SEGMENTATION PSYCHOGRAPHIC SEGMENTATION
  14. BASES FOR SEGMENTATION: SOCIOCULTURAL SEGMENTATION USE RELATED SEGMENTATION USAGE SITUATION SEGMENTATION
  15. BASES FOR SEGMENTATION: BENEFIT SEGMENTATION:Intrinsic Cues
  16. BASES FOR SEGMENTATION: HYBRID SEGMENTATION STRATEGIES
  17. MARKET SEGMENTATION IMPLEMENTING SEGMENTATION STRATEGIES ENVIRONMENTAL INFLUENCES CULTURE
  18. HOW CULTURE IS LEARNT ENVIRONMENTAL INFLUENCES:Formal Learning
  19. CULTURE AND ITS MEASUREMENT ENVIRONMENTAL INFLUENCES
  20. MEASUREMENT OF CULTURE ENVIRONMENTAL INFLUENCES:Consumer Fieldwork
  21. SUBCULTURE CHAPTER 4: ENVIRONMENTAL INFLUENCES
  22. AGE AND GENDER SUBCULTURE CHAPTER 4: ENVIRONMENTAL INFLUENCES
  23. BASES FOR SEGMENTATION: BENEFIT SEGMENTATION:Market Segmentation
  24. SOCIAL CLASS CHAPTER 4: ENVIRONMENTAL INFLUENCES:Occupation
  25. CONSUMER SOCIAL CLASSES CHAPTER 4: ENVIRONMENTAL INFLUENCES:Affluent Consumer
  26. CONSUMER SOCIAL CLASSES CHAPTER 4: ENVIRONMENTAL INFLUENCES:Membership Group
  27. CONSUMER SOCIAL CLASSES CHAPTER 4: ENVIRONMENTAL INFLUENCES:Shopping Groups
  28. UNDERSTANDING PERSONALITY CHAPTER 5: INDIVIDUAL DETERMINANTS OF CONSUMER BEHAVIOR
  29. CONSUMER PERSONALITY, TRAIT THEORY AND SELF IMAGES
  30. CONSUMER MOTIVATION:Needs, Goals, Generic Goals
  31. UNDERSTANDING LEARNING:Intentional and Incidental Learning, Implications for Marketers
  32. INSTRUMENTAL CONDITIONING, INFORMATION PROCESSING AND MEMORY
  33. ATTITUDES:Characteristics of Attitudes, Attitudes have consistency
  34. ATTITUDE FORMATION AND CHANGE:How attitudes are learned?
  35. ATTITUDE CHANGE STRATEGIES:Resolving two conflicting attitudes
  36. INTRODUCTION TO CONSUMER DECISION MAKING:Decision Complexity
  37. Problem Recognition, Search and Evaluation and Decision and Purchase
  38. Decision and Purchase:Consumer Decision Rules, Output, Relationship Marketing
  39. Decisions Related to Post Purchase:Product Set up and Use
  40. Marketing Implications of Decisions Related to Post Purchase:Understanding
  41. Post Purchase Evaluation:Determinants of Satisfaction, Consumer Complaint Behavior
  42. Post Purchase Dissonance:Dissonance Reduction, Marketing Implications
  43. Consumerism:Roots of Consumerism, The Nature of Consumerism
  44. Consumerism Issues and Responses:Environmental Concerns, Consumer Privacy
  45. Review Consumer Psychology Course:Consumer Research, Consumerism