Lessons on Customers | Marketing Teacher

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Table of Contents

  1. Consumer Behavior and Eating Habits
  2. Consumer Behavior and Science
  3. Consumer Behavior Atmospherics
  4. Consumer Behavior Online Shopping
  5. Consumer Behavior Shopping Habits
  6. Consumer Behavior Situational Influences
  7. Consumer Behavior Time
  8. Consumer Buyer Behaviour
  9. Customer relationships
  10. What is a customer?


LESSON 1

Consumer Behavior and Eating Habits

Situational Influences and Eating Habits

What and how people choose to eat is not a conscious decision; it is affected by colors, smells, lighting, plate size and culture. Numerous studies on eating habits have revealed some surprising facts:

  • Teens who buy lunch with cash buy more junk food than if they use a debit card.
  • People will eat more M&M’s if they are in 10 colors rather than 7 because they’ll crave the variety. People who have more menu options eat more and if there is any semblance of variety (colors) it ups the intake even more.
  • In an experiment, people in a movie theater were given tubs of stale popcorn, those who got bigger tubs still ate 35% more.
  • Professional bartenders cannot overcome this one– they always pour more alcohol into a short wide glass rather than a tall skinny glass.
  • People who eat at Subway, thinking it is healthy, compensate later by filling up on more snacks than a McDonalds eater.

What Does The World Eat? Take a look at the Hungry Planet.
  • A bigger spoon causes people to eat 15% more.
  • A bigger plate causes people to eat 25% more.
  • A cold restaurant will make people eat more food, as will fresh flowers on the table.
  • People will eat 28% more food if the plates are cleared from the table, rather than piled up.
  • Red tablecloths will increase the appetite and people will eat more.


LESSON 2

Consumer Behavior and Science

The Science Behind Shopping

a. Shopping activities. Until the proliferation of the Internet shopping depended on physical stores being located near potential shoppers. Now consumers are purchasing product from around the globe and having it shipped right to their door via the Internet. Consumers can also purchase in other non-traditional ways such as vending machines and the use of their Smartphones to make a purchase from anywhere. There are usually one of four reasons why consumers go to a store (or visit a shopping website):
i. Which direction do customers turn when they enter the store?
ii. Where are the sale items located?
iii. How long do customers linger in a store/given area?
iv. Which areas of the store are the most/least crowded?
v. What impediments to shopping are there?
vi. How long are lines?
d. Theory of the Butt Brush
i. During an early study of Bloomingdales in New York City, by Paco Underhill (author of The Science of Shopping) he put a camera in one of the main entrances of the store hoping to study how shoppers negotiated the doorway during its busiest time. Instead, they noticed that shoppers – especially women – don’t like being brushed from behind. They noticed this by looking at the tie rack that was located right near the doorway they were studying. People would go to the rack and browse through the ties that were on display. Then they would be bumped by people heading in and out of the store. After a few bumps the shopper would leave the rack. Paco told this to his client and his client noted that the sales of the ties were lower than usual. They moved the tie rack and sales went up quickly and substantially.
b. Four Types of Shopping Activities
i. Acquisitional Shopping—Customers go to the store intending to make purchases and acquire product or services.
ii. Epistemic Shopping—Customers shop to obtain information about the products they intend to purchase in the near future.
iii. Experiential Shopping—Recreational activities to satisfy the customer’s need for fun and relaxation. Sometimes people shop just for the experience or due to boredom.
iv. Impulsive Shopping—Spontaneous shopping that leads to a need for self-fulfillment. Consumers often purchase things without thinking and don’t consider the consequences.
c. Anthropology (behavioral science) has devoted a branch to the study of modern shoppers…. It studies shoppers interacting with retail environments (and not only stores – this includes banks and restaurants), so this means they study every rack, counter, display, entrance, exit, cashier line, parking lot… every nook and cranny that you could imagine of a retail environment. Research in the study of shopping is not high-tech. The most important research tool is a person called a tracker. A tracker is a field researcher of the shoppers. Trackers make their way through stores following every little move a shopper makes. They follow a shopper around inconspicuously and record virtually everything the shopper does – such as how many ties they pick up or how many towels they may touch. The trackers notice things about the retail environment that a normal employee wouldn’t notice. They apply extreme attention to a specific area and then analyze what could make that retail space better for the shopper and more profitable for the retailer. Here are some of the things a tracker will analyze:

LESSON 3

Consumer Behavior Atmospherics

Situational Influences and Atmospherics

The three major situational influences are Time, Place and Conditions.
  • Time—If a customer is in a hurry or the store is crowded this can change the way information is processed. The customer may not have time to consider all the brand alternatives and this will affect what they purchase.
  • Point‑of‑purchase displays can attract attention to a brand and produce a greater likelihood of purchasing that brand. For example, an end‑of‑aisle display featuring a particular brand of snack food will increase purchases of this brand over normal shelf sales.
  • Color—colors mean different things to different cultures, and the store (or website) needs to have full understanding of colors and their meanings. Colors are used to affect customers and in most cases they won’t even know it! In the US red is an energy color and is often used to stimulate the appetite, where as blue is a calming color.
  • Smell—the study of smell and how they affect shopping habits is just beginning, however we already know one thing—if a store smells bad, customers won’t shop long!
  • Music—music influences a customers’ mood. Slow tempo music relaxes the customer and causes them to linger in the store longer, whereas fast tempo music may be better for stores and restaurants that need rapid turnover. Music isn’t just about speed, the type of music must match the store. A Texas barbeque themed restaurant would attract more customers with country music rather than pop music.
  • Crowds—are always going to lead to negative shopping experiences. The more crowded a store is the more likely customers are going to feel confined and unhappy and will find a way to spend less time in the store and may make uninformed shopping decisions.
  • Promotional deals, such as cents‑off sales or 2‑for‑the‑price‑of‑1, offer an economic purchase incentive. This is done quite often in the promotion of frequently purchased products like toothpaste.
  • Stock‑out means that a store has run out of a product (or has not restocked the product) and this can lead to brand switching or store switching. There are several things a customer would do in this situation:
CUSTOMER BEHAVIOR IN A STOCKOUT SITUATION
PURCHASE BEHAVIOR
Buy a substitute product at the original store, this may replace the intended brand for future purchases
Wait to purchase until the intended product is available
Not make any purchase
Purchase the intended brand at another store
VERBAL BEHAVIOR
Consumer makes negative comments about the original store
Consumer makes positive comments about the substitute store
Consumer makes positive comments about the substitute product
ATTITUDE CHANGE
Consumer has a negative attitude about the original store
Consumer has a positive attitude about the substitute store
Consumer has a positive attitude about the substitute product
Retail outlets are physical (or virtual online) stores that sell product/services. Manufacturing companies make the products that retail outlets sell. Retail outlets can be an independent retailer, a chain store or a franchise. An independent retailer usually only has one location and is a small business owned by a person or group of people. A chain store is a store with many locations throughout a region. A franchise is when a corporation sells partial ownership of their store locations to local businesspeople. The owner then runs the store for the corporation and in turn makes a percentage of the sales as profit. McDonald’s is perhaps the best known franchise in the world. There are several different types of retail outlets, each with its own level of service and product assortment. The amount of gross margin a company makes often depends on their level of product turnover. The less product turnover a company has the more likely they are to need high prices in order to make a profit. Here is a chart with some examples of the different types of retail outlets:

Chart of Retail Outlets

Type of Retailer Example Service Level Product Assortment Price Gross Margin Description
Department Store Macy’s, Bloomingdales, JC Penny Medium to High Wide High High Due to the high overhead and the exclusivity, product doesn’t turnover quickly so prices are high, and profit must be made off of the price
Specialty Store Harley Davidson Store, Pet Smart, IKEA High Narrow Medium to High High Sell only special items in one category and therefore don’t have high turnover so profit must be made off of prices
Supermarket Kroger, A&P, Publix, Albertsons Low Wide Low to High Low Profit is made from turnover of product and the number of customers—if more customers come into the store they will have more sales; and the more time customers are in the store the more money they will spend
Convenience Store 7-11, Shell, Exxon, BP Low Narrow High Medium to High Usually a small store attached to a gas station—prices are high due to the small selection and the lack of options by the customer
Drugstore Walgreens, CVS, Rite Aid Low (high at the pharmacy counter) Medium Medium Low A store with a limited selection of convenience items with a pharmacy counter inside
Full-Line Discounter (Big Box Store) Wal-Mart, Target, www.amazon.com Low to Medium Wide Low to Medium Low Profit is made from turnover of product and the number of customers—if more customers come into the store they will have more sales; and the more time customers are in the store the more money they will spend
Supercenter Wal-Mart Supercenter, Super Target Low to Medium Wide Low to Medium Low A Full-Line Discounter with a grocery store attached
Specialty Discounter Ross, Marshalls, www.overstock.com Low Medium Low to Medium Low These stores sell product that did not sell at more expensive stores. Products are usually brand names, prices are lower and store usually specializes in one type of product—such as clothes and shoes.
Warehouse Club Costco, Sam’s Club Low Wide Low (but have to buy in bulk) low Customers have to pay a membership fee to shop; Product is sold in bulk; Wide product assortment including groceries, home goods and electronics at discounted prices
Off-Price Retailer Big Lots, Dollar Tree, Family Dollar Low Narrow to Medium Low Low These stores sell product that did not sell at other stores. Prices are lower and there is a high rotation of product so the store may not sell the same products all the time.
Thrift Store Salvation Army, Goodwill Low Medium Very Low Very Low Products are donated and have been used by other people. Prices are extremely low and most of the profit is given to charity.
Restaurant McDonalds, Starbucks, La Bernadin (in New York City) Very Low to Very High Very Narrow Very Low to Very High Low to High An establishment that serves food prepared by chefs in a kitchen; this can range from fast food to a lavish 10 course sit down meal. Prices vary according to service level. Product is narrow because restaurants specialize in one type of food category.
  • Place—the décor, furniture, colors and clothing of the employees will affect the motivation of the consumer. For example, a restaurant selling seafood seems to have more credibility in an “ocean” themed décor environment.
  • Conditions—Women tend to purchase more when they shop with friends, taking your kids to the grocery store increases your likelihood of spending more money 150% because parents shopping with children are more likely to be influenced by the product preferences of their children. Climate will affect purchases, if it is cold outside you would be more likely to purchase a hot drink.
Marketers have researched customer behavior enough to know that certain environmental factors will affect their shopping habits—smell, lights, music, colors, crowds, safety and employees. The term for this research is called atmospherics. Atmospherics is the physical manipulation of the store environment (physical or online) to change the mood of the customer. Creating a positive store environment causes people to stay in the store longer and the longer a customer spends in a store the more money they are likely to spend. Creating positive feelings about a store also generates loyal customers and repeat shopping visits.
  • Physical Features—décor, lights, sounds, weather, employee clothing, store layout and visible configuration of shelves and merchandise. All of these things combine to create feelings in customers. A department store that wants to sell expensive clothing needs to have stylish fixtures, colors and furnishings, and the employees should fit into this stylish atmosphere. Sales personnel can often persuade a consumer to purchase or not purchase a particular brand based on their mood, attitude, clothing and knowledge of the products. Store layout can also affect brand purchase as well as the total in‑store expenditure. Grocery stores are arranged to maximize exposure to items not routinely purchased while obtaining normal grocery purchases.


LESSON 4

Consumer Behavior Online Shopping

Situational Influences and Online Shopping

a. Why consumers shop online

i. Convenience: What could be easier than shopping from your own home (or on the go with a smartphone) anytime you want?

c. Online Consumer Lifestyle Segmentation

i. Click and Mortar— Only shop online for research, then go to the physical store to make purchases.
ii. Hunter Gatherers— Enjoy going online for the thrill of auctions and bargain hunting
iii. Brand Loyalists– Enjoy going online, but only to look at websites and products they are comfortable with.
iv. Time Sensitive Materialists– Only go online for news update, stock updates.
v. Hooked, online and Single— Young, (tweens, teens, college students) who are extremely tech proficient and use the Internet for news, networking and shopping.
vi. Ambivalent Newbies— Not technologically proficient, may only go online occasionally or to check e-mail.

d. 8 Types of Online Shoppers

Please see the next lesson called the 8 Types of Online Shoppers.
ii. Communication: Instantly correspond with other consumers, sellers and company representatives to easily gather information about a purchase.
iii. Choice: Consumers can rapidly search through multiple stores from all over the globe instantly. Consumers can also easily research a company/product capabilities and popularity.
iv. Cost: Consumers feel empowered when they can shop around at such a fast speed, they can make more informed purchasing decisions especially when it comes to prices. Companies need to make sure they are offering prices comparable to their competitors, because customers will figure it out and not purchase from them!
v. Customization: Another positive aspect of the Internet is the ability for the customer to purchase a product exactly how they want it; and the company avoids paying inventory storage costs and overhead for a retail location since the products are made and then shipped directly to the customer. Dell Computers turned their small operation into a multi-million dollar company on this marketing idea.
vi. Control: Customers seem to have more control over quantity, size, style, color, price and the type of vendor that they purchase from when using the Internet. Purchases for second-hand products can be made on e-bay, creating a whole new genre of stores.

b. The 7 C’s of Driving Website Commerce

i. Context: A website’s layout, visual design and use of colors, white space, graphics and information have to all create a theme that makes sense for the company and products.
ii. Commerce: A website’s ability to allow customers to make purchases safely, and also to make returns.
iii. Connection: Links to other websites. The amount of links depends on the company and the products.
iv. Communication: A website can allow communication between the company and the consumer, some sites use live chat capabilities, others use a message board or email.
v. Context: A websites use of text, fonts, sounds, music, video demonstrations to convey a theme or help convince customers to purchase.
vi. Community: Some websites will allow customers to talk to each other via message boards or leave comments about products.
vii. Customization: A website can be customizable by the customer and tailor itself to different users. Amazon.com makes personal recommendations based on past purchases. Some gaming websites will allow the user to choose to see information on only the games they own.


LESSON 5

Consumer Behavior Shopping Habits

Situational Influences and Shopping Habits

a. Overview

Studies find that it’s part of our psychological makeup to do the same things over and over again. Essentially humans are pretty predictable, and stores take advantage of that to get us to buy more.
i. If a shopper touches or picks up the merchandise they are more likely to buy it. (that’s why certain items are in easy reach).

c. The 5 Types of Shoppers.

The Way You Shop Can Influence How Much You Spend. If you’ve ever come home after shopping and wondered, “why in the world did I buy that?” the answer might have to do with your shopping personality type.
  • 1. The Touchy-Feely Shopper—a shopper that picks something up and then usually purchases it.
  • 2. The Mall Lingerer –these shoppers take their time going through a store.
  • 3. Guerrilla Shopper–the opposite of the mall lingerer. This person waits until the last minute, especially around the holiday season, and then runs around frantically, trying to get all the shopping done in one shot.
  • 4. The Sales Junkie–these people are subjected to a spillover effect. If they see one bargain, they think everything in the store is a bargain, making them apt to spend more money. For instance, some dollar-store items (like peroxide, tomato sauce and Gatorade) are sometimes cheaper at supermarkets/discount stores. Warehouse stores like Costco may be a bargain when it comes to batteries and cereals, but less so when it comes to items like digital cameras.
  • 5. The Social Shopper– this type enjoys shopping with friends and almost never shops alone, they tend to make a lot of impulsive purchases.

d. Six motivation-based shopping orientations of college students

i. Chameleons: shopping styles are situation-specific or constantly changing. Their shopping approach is based on product type, shopping impetus, and purchase task.
ii. Collectors/Gathers: stockpile items and to purchase large quantities to either save money or alleviate the need for shopping. They attempt to get the best price and take advantage of retailer guarantees.
iii. Foragers: motivated to purchase only the desired items. They are willing to search extensively and have little store loyalty. They like to shop alone.
iv. Hibernants: are indifferent toward shopping. There shopping patterns are opportunistic rather than need driven and they will often postpone even required purchases.
v. Predators: speed oriented in their shopping. They plan before shopping and like to shop alone. They don’t enjoy shopping and tend to shop outlets where they are assured of getting the items they need quickly.
vi. Scavengers: enjoy shopping both to make purchases and as an activity. They like to go to sales and consider shopping to be entertainment. They make numerous unplanned purchases.

e. Impulse Purchasing vs. Unplanned Shopping

i. All consumers are confronted with unplanned and impulsive shopping decisions, and there is a difference between making an impulsive product choice and an unplanned one.
ii. A consumer may make an unplanned purchase because something in the store, such as a point of purchase display, triggers a reminder that they need something. Unplanned purchases are usually made because of a need.
iii. An impulsive purchase is made spontaneously and usually without regard to costs or negative consequences. They are usually motivated by the need for immediate self-gratification.
iv. How do retailers encourage consumers to make impulse purchases?
  • 1. Placing certain products together in the store—such as putting the peanut butter next to the bread—will help consumers remember how well those product go together.
  • 2. Add-on purchases. Employees can ask consumers to purchase an umbrella to go with their new raincoat, or socks to go with their new shoes.
  • 3. Make the consumer feel good. Give the customer personal attention, a “special” deal or free products can create positive feelings.
  • 4. Make it easy for the customer to buy. Give the customer less time to think about the purchase with things like automatic one-click buying on a website.
  • 5. Promotional sales and discounts. Buy one get one free offers, or buy 2 for $5.00, causes the consumer to think the products are on sale, when they may not be, and lowers their ability to think about the consequences.
ii. The more time you spend in a store, the more you buy; 30-40 minutes = average $72.00, but 3 hours or more = average $200.
iii. Stores are designed to keep you there for hours on end so you’ll buy more! If customers can see over the shelves, they will spend more time in the store because they can see the available merchandise. Also, notice how you have to walk through the store to get to the escalator, the sale items, and the bathrooms?
iv. You will overspend if you wait until the last minute and make one big trip to the store.
v. Shop once a week = 66% chance of making an impulse buy; Shop 3 or more times a week = 57% chance of making an impulse buy.
vi. You will be more likely to make an impulse buy when shopping with another person, the more people you shop with, the more likely you are to splurge.

b. Research Discoveries.

Here are some other shopping habits that Paco Underhill (author of The Science of Shopping) uncovered through his research:
i. The higher the “interception rate” (contacts with employees), the higher the chance of purchase.
ii. Placement of key merchandise in a “transition zone” near the door — but not too near — is advised.
iii. The “boomerang rate” (the percentage of shoppers who failed to walk down the full aisle), determines the “capture rate” (the percentage of customers who actually “see” a given product on the shelf)
iv. What Shoppers Like
  • 1. Touching the product
  • 2. Mirrors
  • 3. Discovering Bargains
  • 4. Talking to employees
  • 5. Recognition by employees
v. What Shoppers Do Not Like
  • 1. Too Many Mirrors
  • 2. Long Lines
  • 3. (Being Forced to ask) Dumb Questions
  • 4. Merchandise out of stock
  • 5. Obscure Price Tags
  • 6. Intimidating Service
  • 7. Crowded stores and aisles


LESSON 6

Consumer Behavior Situational Influences

Situational influences on consumer behavior (outlet selection)

Shopping is an activity that everyone in the world participates in, but what exactly is it? Is a store necessary for shopping to take place? What motivates someone to shop?

References

Age, Life Phase and Consumption. (24 October 2007). Culture and consumption.
Baker, D. (2003). Consumer decision making.
BBB Online. (2007). Market segmentation.
Child Development Institute. (2007). Birth order.
Consumer Decision Making Process. (n.d.). The consumer decision making process.
deMesa, A. (2008). Marketing and tweens. Retrieved on February 21, 2008.
Elegant, S. (5 November 2007). China’s me generation. Time Magazine.
Generational Generalities. (2005). America’s generations.
Generational Imperative. (2006). Meet Americas 5 living generations.
Hawkins, D., Best, R., and Coney, K. (2001). Consumer behavior. 8th Ed., McGraw-Hill, Boston.
Kluger, J. (29 October 2007). The power of birth order. Time Magazine.
Marketing Vox. (2008). Generation Z.
Norris, M. (2005). Hungry Planet: What the World Eats.
Parents. (December 2007). Check out this news. Parents Magazine, p.166.
Pearson Education Canada. (2003). Why people buy: Consumer behavior.
Penley, J. (2007). Motherstyles.
Pertner, L. (n.d.). Consumer decision making.
PBS. (2007). People like us.
PBS Kids Go. (2005). Family birth order: It’s my life.
Setoodeh, R. and Yabroff, J. (26 November 2007). Princess power.
Sound Vision. (2007). Wedding statistics in the United States.
Stein, J. (27 September 2007). Taste tests. Time Magazine.
Vrechopoulos A., and Siomkos, J. (n.d.) Virtual store atmosphere in non store retailing.
Marketers, retailers and manufacturers spend lots of money to get consumers to shop, but not every shopping trip results in a purchase. Shopping is an important factor in any economic system and changes the standard of living. Economic systems depend on consumers buying products and services. Companies depend on loyal customers and repeat purchases to bring in sales and profit and to pay their employees. Employees become consumers as they spend their earned paycheck on products and services. Consumers depend on purchases to give them value and satisfaction.
The motivation to shop can depend on factors that cannot be controlled by the consumer or the marketer; if the consumer is in a hurry or relaxed, shopping alone or with friends or with their kids, if the store is crowded or empty—situational influences can affect purchasing decisions. Situational Influences are factors specific to a time and place that a customer reacts to.

A. Atmospherics and Situational Influences
B. Time
C. The Science Behind Shopping
D. Shopping Habits
E. Online shopping Habits
F. Eating Habits


LESSON 7

Consumer Behavior Time

Situational Influences and Time

Time is something that customers give up in order to shop and this is a very valuable thing! It is necessary to give up time for consumption to occur, but time can affect consumption in three forms:
iii. Time of Day—Everyone has a circadian rhythm, which helps regulate our sleeping and awake times. Most people are naturally sleeping (or tired) during midnight to 6am and from 1pm to 3pm. People who shop during these hours may have less energy and may not make informed purchases. In order to counteract this many people turn to energy drinks and caffeine in the morning hours. Danes, Italians, French and Americans drink coffee, while those in the UK, and some Asian countries drink tea.
i. Time Pressure— When customers don’t have a lot of time they tend to process less information because time is important for thorough problem solving. Customers in a hurry may choose the well- known (and usually higher priced) brand because they don’t have time to consider the alternatives. Or they may choose the least expensive product and risk buyer’s remorse (cognitive dissonance).
ii. Time of Year—Consumers are affected by the changing seasons, but not just according to the product needs such as coats in winter and sunscreen in summer, they are also affected by the amount of daylight. Due to daylight savings time and the increased amount of darkness in winter, consumers shop earlier in the day, and they tend to purchase more comfort products. Overall consumers tend to spend more money in the summer. Food items vary with the season and holidays.


LESSON 8

Consumer Buyer Behaviour

If a marketer can identify consumer buyer behaviour, he or she will be in a better position to target products and services at them. Buyer behaviour is focused upon the needs of individuals, groups and organisations.
It is important to understand the relevance of human needs to buyer behaviour (remember, marketing is about satisfying needs).
The model is a little simplistic but introduces the concept a differing consumer needs quite well.
Consumer Buyer Process
To understand consumer buyer behaviour is to understand how the person interacts with the marketing mix. As described by Cohen (1991), the marketing mix inputs (or the four P’s of price, place, promotion, and product) are adapted and focused upon the consumer.
The psychology of each individual considers the product or service on offer in relation to their own culture, attitude, previous learning, and personal perception. The consumer then decides whether or not to purchase, where to purchase, the brand that he or she prefers, and other choices.
Let’s look at human motivations as introduced by Abraham Maslow by his hierarchy of needs: The hierarchy is triangular. This is because as you move up it, fewer and fewer people satisfy higher level needs. We begin at the bottom level.
MASLOW
Physiological needs such as food, air, water, heat, and the basic necessities of survival need to be satisfied. At the level of safety, man has a place to live that protects him from the elements and predators. At the third level we meet our social and belongingness needs i.e. we marry, or join groups of friends, etc.
The final two levels are esteem and self-actualisation. Fewer people satisfy the higher level needs. Esteem means that you achieve something that makes you recognised and gives personal satisfaction, for example writing a book. Self-actualisation is achieved by few. Here a person is one of a small number to actually do something. For example, Neil Armstrong self-actualised as the first person to reach the Moon.


LESSON 9

Customer relationships

The Customer Relationship

Think about some of the relationships that are important to you. You have parents and friends, and you have workmates and acquaintances. To a greater or lesser extent you have a relationship with all of these people. Say you have a number of roles, such as student, professional, son or daughter, teacher, employer, employee, partner and so on. The customer relationship works in a similar way.
In the past there would have been a simple exchange process which would have seen the delivery of the customer value. However marketers want to retain you as loyal customers. They want to keep you satisfied. So there is a customer relationship which delivers goods and services with which you are satisfied between you and the marketing company. This is a basic customer relationship.
However there is a developing and more substantial field called relationship marketing. Let’s have a look at what relationship marketing is.
The process of identifying and establishing, maintaining, enhancing, and when necessary terminating relationships with customers and other stakeholders, at a profit, so that the objectives of all parties involved are met, where this is done by a mutual giving and fulfilment of promises.
Gronroos (2000).
The Gronroos definition is quite strategic in many ways. When trying to learn about relationship marketing it looks a little complex at first glance. In fact relationship marketing can have both a very practical but also a deeply academic foundation. Let’s look at something a little more practical that we can put straight into use.
The relationship marketing perspective is based on the notion that on top of the value of products and/or services that are exchanged, the existence of the relationship between the two parties creates additional value for the customer and also the supplier or service provider.
Gronroos (2004).
So this more straightforward definition reasons that relationship marketing is a perspective rather than a process, which is based upon some straightforward concepts i.e. the exchange process and the relationship between buyer and seller, and the value delivered to them both. The marketing mix is the bridge between buyer and seller.
There is sometimes a little confusion between relationship marketing and Customer Relationship Management (CRM). They are quite similar with the main difference being that CRM is an IT concept or strategy. CRM and relationship marketing together give the marketer customer information and data which can be used for long-term value delivery and an exchange process which satisfies customer needs.
The relationship marketing approach can also be used not only for external customers, but also for internal customers or what is known as internal marketing. Essentially one focuses upon employees and work colleagues and building relationships.


LESSON 10

What is a customer?

In marketing we tend to use the word customer and consumer almost interchangeably. However our customer and the consumer are not strictly speaking the same. A customer is a person or company who purchases goods and services. A customer becomes a consumer when he or she uses the goods or services i.e. where there is some consumption. Customers can be categorised as B2C which stands for Business-to-Customer (B2C) for example where you buy sweets from a shop, Business-to-Business (B2B) where the shopkeeper uses the services of an accountant to write his tax return, C2B which is Customer-to-Business (C2B) for example where an individual sells his gold watch to a jewellery store and C2C or Customer-to-Customer (C2C) where customers sell goods to each other. A great example for C2C is eBay, where consumers sell goods to other consumers.

A Marketing Oriented Approach

A marketing orientation underpins our focus on the customer/consumer and their needs and wants. Our marketing orientation occurs as a result of all of the people from within our business from the managing director to the receptionist making the satisfaction of customer needs and wants their whole reason for being. Now let’s take a look at how we find information that will shed light on what our customers and consumers need and want. The benefits of a marketing orientation centre on the fact that customers can be grouped into segments and segments can deliver profits to the organisation. Customers also need information about products and services, and how to use them.
Therefore we can define a consumer as an individual who (buys and) uses a product or service. So the consumer could be the customer that goes into the shop to buy the sweets. However the final consumer may not always be the customer. For example, a parent goes into the sweet shop and buys some sweets. He or she does not eat them, and so they are not the consumer. The child would eat the sweets and be the consumer, although he or she did no buy the sweets and so they are not the initial customer.
The reason we need to know the difference between a consumer and the customer is that we will want to design communications and understand the consumer behaviour of the person that instigates and influences a buying decision as well as the final consumer. For example the child will influence the mother’s decision on which sweets to buy. However it can be much more subtle, for example a wife might influence the clothing choices of her husband, or a child might influence the family’s choice of a holiday destination.

Customer needs and wants.

Obviously the terms customer and consumer are often interchanged. So with a definition of marketing, we will aim to anticipate the needs and wants of consumers and/or customers. Needs and wants may differ. So let’s return to our mother and her child, since a mother may wish to feed her child nutritious food at mealtimes, the child may wish to eat sugary and less healthy food. The mother is the customer and she purchases based upon her need, whereas the child is the final consumer and he or she may focus on what they want. So needs and wants may differ between customers and consumers.

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