Consumer Behavior

Consumer Behavior - A budget tells us what we can't afford,...

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Unformatted text preview: A budget tells us what we can't afford, but it doesn't keep us from buying it. William Feather Analyzing Consumer Markets & Creating Customer Value Prof. Towns Spring 2012 5-3 Why is it So Important to Understand (and Keep) Customers? 5-4 Customer Retention Acquisition of customers can cost 5 times more than retaining current customers. The average business loses 10% of its customers each year. A 5% reduction to the customer defection rate can increase profits by 25% to 85%. The customer profit rate increases over the life of a retained customer. 5-5 Estimating Lifetime Value Annual customer revenue: $500 Average number of loyal years: 20 Company profit margin: 10% Customer lifetime value: $1000 ($500 x 20 x .10 = $1000) 5-6 Its all about RELATIONSHIPS 5-7 Loyalty A deeply held commitment to re-buy or re-patronize a preferred product or service in the future despite situational influences and marketing efforts having the potential to cause switching behavior. 5-8 Framework for Customer Relationship Management Identify prospects and customers Differentiate customers by needs and value to company Interact to improve knowledge Customize for each customer 5-9 Financial Benefits 5-10 Social Benefits 5-11 Understanding Consumers We talked about Demographics, the marketing environment, market trends, etc. Psychographics = the use of psychological, sociological and anthropological factors to construct market segments Individual Consumer Behavior Psychology Sociology Anthropology etc. Describe their Customers Speaking of Relationships and Loyalty. Speaking of Relationships and Loyalty. Reid Sorenson SUPERVALU Dear Reed, Qwikster? My annoyance at the pricing changes had softened after learning more about the cost structure of the streaming business, but this is completely baffling. You seem to have a fundamental misunderstanding of the market in which you compete. There is no market specifically for streaming video or DVDs by mail: the market is home video consumers. Even after the recent price hike, Netflix offered a unique value proposition in the form of an integrated queue of home visor content. Some of it was delivered on disc, some through streaming. Splitting off the DVD service and breaking apart the two websites destroys a huge amount of intangible value to your customers. There is now zero incentive to choose your DVD service over other disc rental services, and as a standalone service I think you already know that your streaming inventory is far from adequate enough to satisfy the needs of most home video consumers. Reply Like Monday at 7:13pm 5-15 Model of Consumer Behavior 5-16 What Influences Consumer Behavior?...
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Consumer Behavior - A budget tells us what we can't afford,...

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