VALUE AND RETENTION FOCUSED MARKETING AND CONSUMER DECISION MAKING PROCESS

<< INTRODUCTION TO CONSUMER PSYCHOLOGY:Customer Value, Perceived Value

CONSUMER RESEARCH:Quantitative Research, Qualitative Research >>

Consumer Psychology (PSY - 514)

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

Consumer Psychology (PSY - 514)

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.

External Influences

Socio-cultural Environment

Firm's Marketing Efforts:

Family

INPUT

Product

Informal Sources

Promotion

Other non-commercial sources

Price

Social Class

Consumer Decision Making

Psychological Field

Need Recognition

Motivation

Pre-purchase Search

PROCESS

Perception

Learning

Evaluation of Alternatives

Personality

Experience

Post-decision Behavior

Purchase

OUTPUT

Trial

Repeat Purchase

Post purchase Evaluation

3. What Consumer Psychologists Do

Consumer Psychology (PSY - 514)

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

Consumer Psychology (PSY - 514)

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.

Table of Contents: