First of all
to avoid misunderstanding between consumer and customer, in this research it is used customer term to describe either the consumer or the buyer, since all of the terms have the same meaning.
From the marketing definitions, it is explicitly stated that marketing really shows high relationship between the company and its customer. Therefore, customer is considered as important entity in marketing world and that’s why the customer behavior becomes one of the most popular concepts in today’s marketing world.
Customer behavior is defined as a direct action to acquire and consume products or services including the decision process that precedes those actions (Umar, 2000). In short, customer behavior studies about how a customer reacts against the company marketing strategy. Basically, the company uses its sales amount as the indicator of the strategy effectiveness. When the strategy meets the customer demands, usually the sales amount will increase.
However, it is difficult to know even to guess the customer reaction in daily life. Therefore, a model is needed to describe the relationship between the company strategy and the customer behavior. Kotler, et.al (1994) have suggested a customer behavior model (see figure 2.1). They also noted, “Marketers must figure out what is in the buyer’s black box.” (Kotler, et.al 1994, p.136).
As a result, company must be the customer driven company, where the entire strategies now must follow the customer demands. The goal is to satisfy the customers, which at the end could also increase the company profit significantly. As Kotler said:
To succeed, or simply to survive, companies need a new philosophy. To win in today’s marketplace, companies must be customer-centered; they must deliver superior value to their target customers. They must become adopt in building customer, not just building products. They must be skillful in market engineering, not just product engineering. (Kotler, et.al 1994, p.551).
Several reasons have been promoted that explains why the customer satisfaction is really important (Kotler, et.al 1994, p.555; Kalakota, et.al 2001, pp.170):
· It costs six times more to sell to a new customer than to sell to an existing one.
· A typical dissatisfied customer will tell eight to ten people about his or her experience. In contrast, highly satisfied customer will tell more people about his/her good experience.
· The odds of selling a product to a new customer are 15 percent, whereas the odds of selling a product to an existing customer are 50 percent.
·They are less price sensitive.
· They remain for customer for a longer period.
·They buy additional products over time as the company introduces related products or improvement.