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Value and the Consumer Behavior Value Framework

CHAPTER 2

PART 1

2-1

Learning Outcomes

Describe the Consumer Value Framework, including its basic components.

Define consumer value and compare & contrast 2 key types of value.

Apply the concepts of marketing strategy and marketing tactics to describe the way firms go about creating value for consumers. Explain the way market characteristics like market segmentation and product differentiation affect marketing strategy.

Analyze consumer markets using elementary perceptual maps.

Justify consumers’ lifetime value as an effective focus for long-term business success.

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Describe the Consumer Value Framework, including its basic

components.

2-3

The Consumer Value Framework (CVF)

Represents consumer behavior theory illustrating factors that shape consumption-related behaviors and ultimately determine the value associated with consumption.

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2-5 NOTE: CS/D=Consumer Satisfaction / Dissatisfaction

Internal Influences

Psychology of the

consumer

Personality of the

consumer

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Things that are Processed Inside the mind of the Consumer.

Psychology of the Consumer

•  Cognition—the thinking or mental processes that go on as we process and store things that can become knowledge.

•  Affect—refers to the feelings experienced during consumption activities or associated with specific objects.

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Personality of the Consumer

Individual differences include things like personality and lifestyles.

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External Influences: Interpersonal

Influences

Social Environment

Situational Influences

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Define consumer value and compare and contrast two key

types of value.

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2-11 VALUE = WHAT YOU GET – WHAT YOU GIVE UP

Consumer Value

Value is a personal assessment of the net worth obtained from an activity.

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Types of Value

Utilitarian – Value that helps a customer solve a problem or accomplish tasks.

Rational explanations are given to explain a purchase.

Hedonic – Immediate gratification that comes from experiencing some activity. Hedonic value is an end in and of itself,

rather than a means to an end.

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Apply the concepts of marketing strategy and marketing tactics to describe the way firms go about

creating value for consumers.

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Marketing Myopia A short sighted condition when companies view themselves in a product business rather than in a value or benefits Producing business.

Total Value Concept

Why do you think Coca- Cola has such a large share of the market?

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Coke adds life! Hedonic Value added to Utilitarian Value

Total Value Concept

Every product’s value is made up of the basic benefits, plus the augmented product, plus the “feel” benefits.

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•  Transportation – Utilitarian value •  Service Plan – Utilitarian value added •  Excitement – Hedonic value •  Positive feelings of ownership – Elite membership •  Negative feelings of ownership - Expensive

Value Is Co-Created

Value co-creation is the realization that a consumer is necessary and must play a part in order to produce value.

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Are you part of a co-created value proposition?

Explain the way market characteristics like market segmentation and product

differentiation affect marketing strategy.

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Market Segmentation & Product Differentiation

Market segmentation is the separation of a market into groups based on different demand curves associated with each group.

Product differentiation is a marketplace condition in which consumers do not view all competing products as identical to one another.

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Product Category Demand

Chanel No. 5 is in high demand at about $250 an ounce.

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Analyze consumer markets using elementary perceptual maps.

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Perceptual Map for a Local Rock Music Radio Market

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Stars indicate ideal mix of news/talk and type of music for six segments. Each radio station in the market is plotted according to its current format. 1. Identify the best place to position a new station. 2. Which stations should tweak their format to better serve an identified segment.

Justify consumers’ lifetime value as an effective focus for

long-term business success.

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Customer Lifetime Value (CLV)

Customer lifetime value (CLV) represents the approximate worth of a customer to a company in economic terms.

CLV = npv(sales-costs) + npv(equity)

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Copyright  ©  Nelson  Educa6on  Ltd.  2014   27

Authenticity

Some consumers will recognize the real Stilton cheese from the pretenders and are willing to pay more for the real deal.

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Other examples?