copyright © 2002 all rights reserved. 1 chapter 3 trends in determinants of customer behavior

Copyright © 2002

All rights reserved.1

CHAPTER 3CHAPTER 3

Trends in Determinants of Customer Behavior

Trends in Determinants of Customer Behavior

CUSTOMER BEHAVIOR: A MANAGERIAL PERSPECTIVECUSTOMER BEHAVIOR: A MANAGERIAL PERSPECTIVE

PART 1:PART 1:

CUSTOMER BEHAVIOR: A MANAGERIAL PERSPECTIVECUSTOMER BEHAVIOR: A MANAGERIAL PERSPECTIVE

PART 1:PART 1:

CHAPTER 3CHAPTER 3PART 1Customer Behavior: A Managerial Perspective

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All rights reserved. Copyright © 1999 by Thomas Southwestern. All rights reserved.2

Factors that Influence Customer BehaviorFactors that Influence Customer Behavior

Three factors that are expected to cause the most significant change in customer behavior are: Changes in demographics Advances in technology Changes in public policy


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Conceptual FrameworkConceptual Framework

Payer

UserBuyer

DemographicsDemographics

• Aging population• Women in the workforce• Single-person households• Declining middle-class• Ethnic diversity• Geographic distribution

• Aging population• Women in the workforce• Single-person households• Declining middle-class• Ethnic diversity• Geographic distribution

Public PolicyPublic Policy

• Pragmatism over ideology• Rights of passive

consumers• Regional economic

integration

• Pragmatism over ideology• Rights of passive

consumers• Regional economic

integration

TechnologyTechnology

• Control over information• Smart products• Access to products• Mass customization

• Control over information• Smart products• Access to products• Mass customization


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Benefits of Anticipating Trendsin Customer BehaviorBenefits of Anticipating Trendsin Customer Behavior

Anticipating trends can give companies a key strategic advantage

By sighting a trend, the industry can create a market by channeling a latent need

Anticipating trends creates positive public opinion for the company and the industry, portraying them as responsive


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Demographic TrendsDemographic Trends

Aging of the population

Rise in number of working women

Increase in single-person households

Decline of the middle class

Increase in ethnic diversity

Geographic redistribution


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Aging of the PopulationAging of the Population

Populations age for two key reasons Birth rate is declining Life expectancy is rising

The aging population has concerns: Wellness Financial well-being Safety and security Recreational needs


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Women in the WorkforceWomen in the Workforce

Effects of the working women trend: A significant change in the resources of a

household Time shortage: lack of free time Time shift: the time when nonwork-related

activities may be pursued A shift in the lifestyle of families

With both spouses working, households have turned into roommate families


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Single-person HouseholdSingle-person Household

Implications of the living alone trend include: Loneliness Self-respect and autonomy Cocooning Impulse buying


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The Declining Middle ClassThe Declining Middle Class

Four key implications: An increasing range in prices of products More customer militancy Affordability The neo rich


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Ethnic DiversityEthnic Diversity

Two distinct implications: Segmented markets Cultural diversity


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Geographic RedistributionGeographic Redistribution

Geographical redistribution separates different generations in different space and time zones Increases gaps both within and between generations

People living in different areas of the country reflect different values, lifestyles, and attitudes Regional marketing responds to and feeds the

differences by exposing newly arrived residents to regional tastes


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Technological TrendsTechnological Trends

Technology is shaping future customer values

Advances in technology have already given customers Increased access to information Newer generations of products Automation of transaction processes to provide

customers with greater flexibility and control Access to some customized products


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Customer Responses toNew TechnologyCustomer Responses toNew Technology

Technological developments will stimulate changes in customer behavior Customers will:

Take on the role of coproducers Engage in disintermediation Engage in outsourcing Engage in automation of consumption


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Trends in Public PolicyTrends in Public Policy

Economic pragmatism is prevailing over ideology

Many governments are concerned with protection of passive consumers

Governments on an international level are pursuing regional economic integration


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The Government’s Role in the National EconomyThe Government’s Role in the National Economy

Historically, three ideologies have shaped the government’s role in national economic affairs Political Religious Central planning


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Implications of Ideology vs. Economic PragmatismImplications of Ideology vs. Economic Pragmatism

Economic Pragmatism

• Government ownership + regulation

• Limited product and service offerings

• Locally produced products and services

• Government ownership + regulation

• Limited product and service offerings

• Locally produced products and services

Ideology(political, religious, central planning)

Ideology(political, religious, central planning)

• Greater competition due to privatization & deregulation

• Better products & lower prices due to greater competition

• Internationalization of products & services due to open boundaries

• Greater competition due to privatization & deregulation

• Better products & lower prices due to greater competition

• Internationalization of products & services due to open boundaries

Economic PragmatismEconomic Pragmatism


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Implications for Customer BehaviorImplications for Customer Behavior

Greater competition Customer orientation is a must

All three customer roles will benefit The payer by lower prices The user by better products The buyer by ease of doing business

More standardization


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Implications of the Trends for the Three Customer RolesImplications of the Trends for the Three Customer Roles

The foregoing trends in demographics, technology, and public policy will influence all three customer roles User Payer Buyer


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Influence of Major Trends in Demographics on the Three Customer RolesInfluence of Major Trends in Demographics on the Three Customer Roles

User Payer Buyer

DEMOGRAPHICS

Aging population Increased health and security and recreational needs.

Cost containment for health-care needs a high concern.

Home delivery and convenience in buying important.

Working women Time-saving appliances; cooking, cleaning, child care outsourced.

Affordability somewhat improved.

Male-female role specialization in buying further diluted.

Single-person households Social and emotional values in products acquire prominence.

Better affordability. More impulse and experiential buying.

Declining middle class Demand for extreme upscale and downscale merchandise.

Financing progressively more important.

More diligent buying effort among the expanded downscale customer groups.

Increasing ethnic diversity

Greater ethnic diversity in customer tastes.

Cross-ethnic differences in affordability.

Expected customer service levels differ across ethnic groups.

Geographic redistribution Greater regional diversity in customer tastes.


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User Payer Buyer

TECHNOLOGY

Access to information More customized products. Better information on competitor prices.

Product search on the Internet.

Product information on demand.

Smart products Smart products with memory for users preferences.

New methods of identity verification ensure security against frauds.

Automated purchase

Buying direct from the factory.

Liberated customer behavior

Buyers will need to be technology-savvy.

Mass customized lifestyles

Influence of Major Trends in Technology on the Three Customer RolesInfluence of Major Trends in Technology on the Three Customer Roles


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Influence of Major Trends in Public Policy on the Three Customer RolesInfluence of Major Trends in Public Policy on the Three Customer Roles

User Payer Buyer

PUBLIC POLICY

Economic pragmatism Better products due to open-market economy.

Better prices due to competitive economy.

Easier access to global products.

Easier to do business with companies.

Rights of passive consumers Consumers assured protection against passive consumption.

Financial penalties for offensive consumption.

Access to societally harmful product/services made more difficult.

Regional economic integration Seasonal products available for year round consumption.

Exposure to diverse consumption cultures.

More economically produced and more economically priced products and services.

Easier to acquire products and services from diverse consumption cultures

Local availability of global products.


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Overall Implications for MarketersOverall Implications for Marketers

The economy will become more service-oriented requiring companies to make significant changes: Measure customer value of products and services in

terms of time and money Make safety and quality, and courteous efficiency an

integral part of the service offered Adopt mass customization Offer instant marketing

copyright © 2002 all rights reserved. 1 chapter 3 trends in determinants of customer behavior

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