Marketing Chapter 5

  1. Customer-Centric Marketing Approach
    A business philosophy in which a co. bases all its plans and actions on customer wants and needs, and fulfilling those needs, to establish relationships with customers.
  2. Customer Behavior
    All the mental, emotional, and physical activities that ppl engage in when they choose, purchase, and use products and svcs. AKA buyer behavior.
  3. Consumer
    Person who buys products & svcs for personal or household use.
  4. Organizational Buyer
    Person who buys products/svcs for business purposes.
  5. Problem-Solving Strategy
    A means of getting info to use in making a purchase decision.
  6. Routine Response Strategy
    A problem solving strategy that involves decisions that are automatic or take little thought by customers making the purchase decisions.
  7. Low-Involvement Product
    Low priced, frequently bought product that takes little info for a customer to decide to purchase.
  8. Limited Problem-Solving Strategy
    A problem solving strategy that customers use for products they buy only occasionally or when they need to get & use info to evaluate product alternatives before making a purchase decision.
  9. High-Involvement Product
    Product bought infrequently, is unfamiliar product category, and takes large cash outlay.
  10. Extensive Problem-Solving Strategy
    A problem solving strategy to gather lots of info before making buy and use several criteria to evaluate alternative brand choices.
  11. External Factor
    In customer behavior, an influence on purchase decisions that exists apart from an individual or organization and can be measured and observed.
  12. Subculture
    Ethnic, regional, religious, racial, age, or social group that exhibits characteristic patterns of behavior strong enough to set its members apart form others within the overall culture or society.
  13. Social Class
    A social division of individuals or groups fitting into distinct societal hierarchy based on characteristics like wealth, education, and occupation.
  14. Reference Group
    Any group with which an individual identifies so closely that the individual adopts many of the beliefs, values, and norms held by the group as a whole.
  15. Primary Group
    A reference group that is small enough to allow group members to interact with one another face to face.
  16. Secondary Group
    A reference group whose members share common interests or skills.
  17. Role
    A socially expected behavior pattern that an individual in a particular position is supposed to follow.
  18. Status
    The socially defined position an individual holds in relation to other members of a reference group.
  19. Consumer Socialization
    The process by which young ppl develop the skills, knowldge & attitudes they need to function as consumers in the marketplace.
  20. Buying Center
    An informal, cross-departmental decision unit whose main goal is to acquire, spread, and process info pertaining to purchase decisions.
  21. Customer Relationship
    A mutual bond that forms as a result of all interactions b/t a customer and a business organization.
  22. Internal Factor
    In customer behavior, an influence on purchase decisions that operates w/in the minds of consumers or organizational buyers and affects their behavior. AKA psychological factor.
  23. Motivation
    In customer behavior, the internal force that drives ppl to exhibit certain behavior or to take certain actions to reach a purchase decision.
  24. Need
    In customer behavior, an unsatisfactory condition w/in a customer that leads to a specific action to improve the customer's condition.
  25. Physiological Need
    A need that is physically or biologically determined, such as food, shelter, sex and clothing.
  26. Psychological Need
    A need arising from customer's social environment, such as the need for belonging, fulfillment, affiliation and achievement.
  27. Hierarchy of Needs
    Concept developed by psychologist Abraham Maslow that classifies needs into five hierarchical categories: (1)physiological needs, (2) security/safety needs, (3) social needs, (4) esteem needs (5) self actualization needs.
  28. Want
    In customer behavior, a desire to have more than is absolutely necessary to improve a condition that is unsatisfying.
  29. Perception
    The process by which ppl select, organize, and interpret info to give it meaning.
  30. Selective Perception
    A persons decision to acknowledge certain peices of info and ignore the rest.
  31. Preconceptions
    A preconceived or fixed idea that a person develops over time about what is reality based on their own needs, values, attitudes, beliefs, learning, and previous expereiences.
  32. Selective Distortion
    The process by which ppl block out or modify info that conflicts with their preconceptions until it supports their perceptions.
  33. Selective Retention
    The process by which customers remember and internalize info that supports their preconceptions.
  34. Brand Loyalty
    A purchase behavior that is exhibited when a customer has a favorable attitude tward a specific brand that usually leads to consistent and habitual purchases of the same product over an extended period of time.
  35. Problem Recognition
    Stage in the purchase decision process where an individual or organization realizes that a difference exists b/t a desired state and the actual state; the differnce can be created by an unmet need or a potential opprtunity.
  36. Personal Source
    External source of purchase info including family, friends, associates.
  37. Public Source
    External source of purchase info including gov't agencies, associations, product-testing org's, magazine & newspaper stories, info from the www.
  38. Marketer-Dominated Source
    External source of purchase info including advertising, salesppl, sales promo literature, point-of-purchase displays, web sites, etc. co's use to sell their products or svcs to consumers & org buyers.
  39. Evoked Set
    A set of alternatives customers are left with at the end of the info search and from which they make a purchase decision.
  40. Evaluative Criteria
    Features, characteristics, or specs that a customer considers when making a choice.
  41. Buyer Remorse
    A psychological state where customers question whether they should have bought a product at all, or whether they should have bought another brand/product other than the one they actually bought.
  42. Cognitive Dissonance
    A psychological state where customer decides that his purchase behavior is inconsistent with his self-image and, because he cant change the behavior that created the dissonance, redefines his perception of the behavior in terms that support rather than challenge his self image.
  43. Customer Relationship Marketing
    The enterprise-wide busness strategy that allows a co. to create, maintain, and enhance relationships with customers and other stakeholders by creating customer value and satisfaction.
  44. Low-Value Customer
    A customer that has very little value to a co becos the individual only occasionally buys a co's product or has needs that cannot be satisfied by a co's products, prices or svcs.
  45. Customer Sacrifice
    • The gap b/t what the customer wants and what the co. can provide.
    • If this gap is large, the cost of attempting to satisfy the customer is likely to be high, and the co might be better off targeting other customer groups.
  46. Opportunity Cost
    A benefit that is forfeited or given up in choosing one decision alternative over another.
  47. High-Value Customer
    A customer that offers great economic value to a co. bcos the custmr often buys a co's products or has needs that a co's products,prices or svcs can satisfy.
  48. Pareto's Principle
    A principle of customer profitability that states that 80% of a co's profits are generated by 20% of its customers. AKA 80-20 Principle.
  49. Core Customer
    A high value customer whose needs a co can satisfy effectively and efficiently and whose business is dependable and profitable.
  50. Lifetime Customer Value
    The economic benefit a co gets from its relationship w/a customer calculated over time; generally measured by the extent to which the profits a customer generates over time exceed the co's cost of acquiring, developing, serving, and retaining the customer. AKA Lifetime Value.
  51. Historical Value
    With respect to lifetime customer value, the value of all transactions to date b/t a co. and a customer.
  52. Current Value
    W/respect to lifetime custmr value, the present value of all expected transactions b/t the co and the customer, assuming the existing customer behavior pattern remains the same.
  53. Potential Value
    With respect to lifetime customer value, the value a co could realize if it could persuade a customer to increase future spending and/or reduce expenses by changing behavior patterns.
  54. Customer Retention
    The extent to which a customer remains with a co.
  55. Customer Development
    Process a co. does to maximize customer value by expanding its products and svcs and more effectively satisfying customer needs.
  56. Cross-Selling
    The process of identifying an existing customer's needs for more products while selling, or after selling, a primary product and then promoting products that complement that primary product to provide a more complete solution to the customers needs.
  57. Up-Selling
    A customer relationship marketing strategy that involves promoting a more powerful, more enhanced, or more profitable product than the one a customer originally considers purchasing.
  58. Mass Customization
    A high level personalizing of product offerings and service delivery on a large scale.
  59. Tiered Service
    A customer relationship marketing strategy where the service level and individual customer receives reflects the customers value to the co.
  60. Fee Variance
    One of the ways a co. offers tiered svc to a customer that involves offering a consistent level of svc to each customer but varying the fees a customer pays for the service based on the customers profitability to the co.
  61. Service Variance
    One of the ways a co. offers tiered svc to a customer that involves varying the number and level of services a customer receives based on the customers value to the co.
  62. Life Event-Oriented Marketing
    The practice of timing sales and promotional efforts around significant events in customers lives.
  63. Total Customer Benefit
    The total of all the svcs, personal attention, recognition, and image the customer gains from the relationship that develops thru repeated interactions with a co.
  64. Total Customer Cost
    The total of all the time, energy, and emotion a customer invests in a relationship with a co.
  65. Customer Satisfaction
    The state in which the customer perceives that a co's products and svc meet or exceed the customers expectations and satisfy the customers needs.
  66. Customer Retention
    The extent to which a customer remains with a company.
  67. Persistency
    Retention of business that occurs when an insurance policy remains in force as a result of the continued payment of the policies renewal premiums.
  68. Persistency Rate
    measurement of persistency of a block of insurance policies determined by the % of business in force at the beginning of a specified period that remains in force at the end of the period.
  69. Lapse Rate
    The ratio of business in force that terminates for nonpayment of premium, whether by surrender or lapse, to the total business in force at the beginning of a specified period.
  70. 13-month Lapse Rate
    A lapse rate based on the proportion of new policies on which no part of any required second-year-premium has been paid.
  71. Well-Written Business
    A policy sale in which (1) the co identifies the specific needs of the customer and the cstmr recognizes that those needs are important, (2) the ins product meets those needs, (3) the customer is financially capable of paying the premium. AKA quality business.
  72. Surrender Charge
    an expense charge imposed on some types of life insurance policies when the policyowner surrenders the policy.
  73. Persistency Bonus
    Extra earnings a co. may offer to producers for favorable persistency results that serve as a sales force incentive.
  74. Conservation Unit
    A dept. in an ins co staffed with personnel specially trained to conserve - or keep in force - policies.
  75. Orphaned Policyowner
    A policyowner who does not currently have a relationship with a producer.
  76. Replacement
    The act of surrendering or lessening the value of one life insurance policy or annuity contract to buy another life ins policy or annuity.
  77. 1035 Exchange
    In the US, a tax-free repl of an ins pol for another ins contract covering the same person that is performed in accordance with the conditions of Section 1035 of the Internal Revenue Code.
  78. Customer Loyalty
    The commitment of a customer to remain a customer of and to place repeat busness w/a co., despite influences and marketing efforts of competing co's that may cause other customers to switch.
  79. Customer Defection
    A customers abandonment of a current co for a competing co. AKA customer attrition.
Card Set
Marketing Chapter 5
Customer Behavior and Customer Relationship Marketing