CONSUMER BEHAVIOUR

CONSUMER BEHAVIOUR
1. Introduction to Consumer Behavior
2. The Consumer as an Individual
3. Consumers in their social and Cultural Setting
4. Consumer Decision Making Process
5. Online Behavior

Consumer Behaviour
 Consumer Behavior is the study of when, why, how
and where people do or do not buy a product. It
basically depends on the psychology of the consumer.
It attempts to understand the buyer decision making
process both individually & in groups. It studies the
individual consumers such as demographics &
behavioural aspects to understand the people’s wants.
 In the study of Consumer Behaviour main focus is the
customer satisfaction because customer is the only
person with whose presence businesses actually exists

Types of consumer
Ultimate
Consumer
Institutional
Buyer
Customer
Consumer
Buyer

 Consumer: According to International Dictionary of
Management “Consumer is a purchaser of goods
and services for immediate use or consumption”.
 Buyer: He is the person who purchase goods either
for resale or for use in production or for use of
somebody else.
 Customer: He is the one who purchases goods for
his own use or for the use of others or else he is
regular customer of a particular product and he is a
regular customer of particular shop.
 Institutional buyer: These are either govt. institutions
or private organizations.

Characteristics of consumer behaviour





It is a process where consumer decide what to buy, when to
buy, how to buy, where to buy & how much to buy.
It comprises of both mental and physical activities of consumer.
Consumer behaviour is very complex and dynamic which
keeps on changing constantly.
Individual buying behaviour is affected by various internal
factors like his needs, wants, attitudes & motives and also by
external factors like social groups, culture , status,
environmental factors etc.
Consumer behaviour starts before buying and even after
buying.

Importance/Need of study of consumer
behaviour
 To make better strategies for increasing profits.
 To take into consideration customer’s health,
hygiene & fitness.
 To know the buying decisions and how consumer
make consumption.
 Consistent change in Consumer’s tastes or
preferences.
 Consumer behavior study is necessary to make
pricing policies.
 To avoid future market failures.

CHALLENGES IN CONSUMER BEHAVIOUR
a) If the behavior of the consumers changes time to time, the new production or
services would be needed to meet the demands of the consumers. If a
businessman or manufacturer changes its business product, it would lead to high
cost of production.
b) If the cost of production is the major focus of the business, none of the other
activities would more attention. Ultimately, quality of the work, design, packaging
and distribution, would get suffered.
c) Business organization will not compete with competitors. Because if the
organization considers only cost, other parameters are suffered and
predetermined goals of the business cannot be achieved.
d) Business organization gets success only when all the business activities (internal
environment) go smoothly. If there is unrest in the internal environment of the
organization regarding the „change‟, business cannot get success.
e) Need to acquire heavy capital funds to cope with change in consumer behavior.
f) Requirement of new machinery and recent technology.
g) Trained Human Resource capital is needed to face cut throat competitors.

THE CONSUMER RESEARCH PROCESS

Market Segmentation and Strategic Targeting
SEGMENTATION :
Market segmentation is defined as the process
of dividing the market into distinct groups that share
common characteristics, needs ,purchasing behavior,
or consumption patterns. Market segmentation is a
strategy that recognizes the need of ‘specialization’ to
suit the needs of a segment of the market rather then
trying to be ‘all things to all people

Market Segmentation and Strategic Targeting
SEGMENTATION :
Market segmentation is defined as the process
of dividing the market into distinct groups that share
common characteristics, needs ,purchasing behavior,
or consumption patterns. Market segmentation is a
strategy that recognizes the need of ‘specialization’ to
suit the needs of a segment of the market rather then
trying to be ‘all things to all people

Strategic Targeting
Targeting is the choice of a single segment or group of
segments that the organization wishes to select.
Companies can evaluate and select market
segment on the basis of:-
• Segment size and growth
• Segment structural attractiveness
• Company objective and resources

Market coverageStrategy
The target market selection involves the dynamic process of
matching the changing variety of products and services with the
changing variety of customer wants.
Companies need to consider several factors while choosing a
market coverage strategy. Some of them are as follows:-
• Company’s resources
• Degree of product homogeneity
• Product life cycle stages
• Market homogeneity
• Competitor’s marketing strategies

Internal Factors
 Motivation
 Personality
 Perception
 Learning
 Values
 Beliefs
 Attitude
External Factors
 Personal Influence
 Reference Groups
 Family
 Social Class
 Culture
 Sub-culture

Those inner psychological characteristics that both
determine and reflect how a person responds to his or her
environment.
- Schiffman
Nature of Personality
 Reflects individual differences
 Consistent & enduring
 Can change

Those inner psychological characteristics that both
determine and reflect how a person responds to his or her
environment.
- Schiffman
Nature of Personality
 Reflects individual differences
 Consistent & enduring
 Can change

 Process by which an individual selects, organizes
and interprets stimuli into a meaningful and
coherent picture of the world.

 Process through which the individuals acquire
information and experience about a consumption,
which they apply to future buying behavior.

 Expression of favor or disfavor towards a person,
place, thing or event.

 Value is the concept that describes the beliefs of an
individual or culture.
 Belief is consumer’s subjective perception of how well
a product or brand performs on different attributes.

WHAT IS FAMILY??
A family is a group of two or more persons
related by blood, marriage or adoption who
reside together.
.hat is the role of fThe nuclear family is the immediate
group of father, mother, and children living together.
The extended family is the nuclear family, plus other
relatives, such as grand parents, uncles and aunts,
cousins, and parents-in law. The family into which
one is born is called the family orientation.
What is the role of family?
The family provide banks & boundaries for its Members.

STRUCTURAL VARIABLES
AFFECTING FAMILIES :-
It includes the age of the head of the family, martial status, presence of children, and
employment status. Children increases family demand for clothing, food, furniture,
homes, medical care and education, while they decrease demand for many
discretionary items, including travel, higher-priced restaurants, and adult clothing.
Marketers can understand family decisions better by examining the sociological
dimensions of how families make consumer decisions.
cohesion adaptability communication

Cohesion:-
Is the emotional bonding between family members. It measures
how close to each other family members feel on an emotional level
.Cohesion reflects a sense of connectedness to or separateness from
other family.
Adaptability :-
Measures the ability of a family to change its power structure, role
relationships, and relationship rules in response to situational and
developmental stress. The degree of adaptability shows how well a
family can meet the challengespresented by changing situations.
Communication: -
Is a facility dimension, critical to movement on the other two
dimensions .Positive Communication skills (Such as empathy,
reflective, listening, support comments.) Changing needs as they relate
to cohesion and adaptability.

FAMILY DECISION MAKING :-
Individual members of families often serve different roles in
decisions that ultimately draw on shared family resources.
DYNAMICS OF HUSBAND WIFE DECISIOIN MAKING :-
Marketers are interested in the relative amount of influence that a
husband and wife when its come to family consumption choices the
relative influence of husband and wives can be classified as :-
HUSBAND DOMINATED
WIFE DOMINATED , AND
JOINT ANDAUTONOMIC
FOR EX. During the 1950’s the purchase of a new automobile was
strongly husband dominated, whereas food and financial banking
decisions more often were wife dominated.
Husband-wife decision making also appears to be related to cultural
influence.

ROLES OF CHILDREN IN FAMILY DECISION MAKING:-
Children also playing a most important role in family decision making process
This shift in influence has occurred as a result of families having fewer children ,
more dual income couples who can afford to permit their children to make a greater
no. of the choices, and the encouragement by the media to allow children to express
themselves.

THE FAMILY LIFE
CYCLE:-
The emotional and intellectual stages you pass through from childhood to your retirement
years as a member of a family are called the family life cycle. In each stage, you face
challenges in your family life that cause you to develop or gain new skills. Developing
these skills helps you work through the changes that nearly every family goes through.
Not everyone passes through these stages smoothly.

Contin
ue ....Situations such as severe illness, financial problems, or the death of a lovedone
can have an effect on how well you pass through the stages. Fortunately, if you
miss skills in one stage, you can learn them in later stages. Several factors
influence the ways in which they spend. Most important them are family
lifecycle .
TRADITIONAL FAMILYCYCLE:-
The traditional family cycle is a progression of stages through which many
families pass, starting with bachelorhood, moving on to marriage, then to
family growth, to family contraction, and ending with the dissolution of the
basic units. Traditional FLC:
Bachelorhood,
Honeymooners,
 parenthood,
Post parenthood,
 Dissolution.

INFLUENCE OF SOCIAL CLASS
ON
CONSUMER BEHAVIOR

WHAT IS SOCIAL CLASS ?
The division of members of a society into a hierarchy of distinct status
classes, so that members of each class have either higher or lower status
than members of other classes.
Or
we can say that social class can be thought of as a continuum which includes a range
of social position on which each member of society can be placed , divided into a
small number of specific social classes or strata . Within this frame work, the concept
of social class is used to assign individuals or families to a social class category .
SOCIAL CLASS AND SOCIALSTATUS:-
Social class often measure in terms of social status,
Status is frequently thought of as the relative rankings of members of eachsocial class
• wealth
• power
• prestige

THE MEASUREMENT OF SOCIALCLASS:-
Systematic approaches for measuring social class fall into the following
category :-
Subjective Measures:
individuals are asked to estimate their own social-class positions
Four categories best describe your social class:
Lower class
Lower – middle class
Upper - middle class
Upper class
Objective Measures:
individuals answer specific socioeconomic questions and then arecategorized
according to answers.
Objective measure of social class fall into two basic categories:

Composite-
variable indexes
• Index of Status
Characteristics
• Socioeconomic
Status Score
•Single-variable
indexes
•Occupation
•Education
•Income
•Other
Variables

LIFE STYLE PROFILES OF THE SOCIAL CLASSES :-
To capture the lifestyle composition of various social – class
grouping pieced together from numerous sources , of the
member of the following six social classes :-
• Upper - upper class
• Lower upper class
• Upper- middle class
• Lower - middle class
• Upper – lower class
• Lower- lower class
COnsumer behavior applications of social classes:-
Social – class profiles provide broad picture of the values , attitudes ,
behavior , that distinguish the member of various social classes .
Consumer researchers find the consumption behavior of various social
classes .
1. CLOTHING , FASHION , AND SHOPPING:-
Social class is also an important variable in determining where a
consumer shops . People tend to avoid stores that have the image of

Continue..
2.SAVING , SPENDING ,
AND CREDIT :-• Saving , spending and credit card uses all seems to be related to social class
standing . Upper class consumer are more future oriented and confident of there
financial acumen ; they are more willing to invest in insurance , stocks, and real
estate .
• In comparison , lower class consumers are generally more concern with
immediate gratification ;when they do save, t hey are primarily in safety and
security.
3. SOCIAL CLASS AND COMMUNICATION:-
• Upper classes have a broader and more general view of the world
•Regional variations in language rise as we move down the socialladder
•Exposure to media varies by social class

Buying Motives
According to D.J.Ducan, “Buying Motives
are those influences or considerations which
provide the impulse to buy, induce action or
determine choice in the purchase of goods
and services”.

Types of Buying Motives
A. Product & Patronage Motives








1.Product Motives
Primary
Secondary
2.Patronage Motives
Price
Quality
Location
Services
Variety
Personality of the owner

B. Emotional & Rational Motives


1. Emotional Motives
Love of others
Social acceptance motive




Vanity Motive
Recreational motive
Emulate motive
Comfort & convenience motive
2. Rational Motives



Monetary gain
Efficiency in operation
Dependability

1. Inherent motives are those which come from
physiological & basic needs such as hunger,
thirst, sleep etc. If these motives are not
satisfied then consumer feels dissatisfied and
feels mental tension.
2. Learned motives are those which are learned
or acquired by a person from environment and
education like social status, acceptance, fear,
security etc.
C. Inherent & Learned motives

D. Physiological & Social buying
Motives
1. Physiological motives are those which are
driven by learning, perception or attitude.
2. Social buying motives are those which are
influenced by the society in which the
consumers live.

CONSUMER DECISIONS:
Theory and Reality in Consumer Buying
IDENTIFICATION OF
ALTERNATIVE/
INFORMATION
SEARCH
PROBLEM
RECOGNITION/
Recognition of
unsatisfied
need
EVALUATION OF
ALTERNATIVES
PURCHASE
POSTPURCHASE
EVALUATION/
BEHAVIORS

Factors influencing consumer
behaviour
 Psychological factors
1. Consumer needs &
motivation (Maslow’s need
hierarchy theory
2. Perception
3. Learning
4. Beliefs & attitudes
 Cultural factors
1. Culture
2. Sub culture
3. Social class
 Social Factors
1. Reference group
2. Role and status
3. Family
 Personal factors
1. Age
2. Stages in life cycle
3. Occupation in economic
status
4. Life style
5. Personality

 Economic factors
1.Personal income
2.Family income
3.Income expectations
4.Savings
5.Liquidity position
6.Consumer credit
 Environmental
Factors
1.Political situation
2.Legal forces
3.Technological
advancement
4.Ethical considerations

Market Segmentation
 Segmentation is essentially an identification of thesubsets
of buyers within a market that share a similar needs and
demonstrates similar buyer behaviour. The world is made
up of billion buyers with there own set of needs and
behaviour. Segmentation made to match different group of
buyers with different set of needs & buyer behaviour. Such
a group is known as “segment.”

 A customer isallocated
to one market segment
by the customer's
individual
characteristics.








Examples of characteristics
used for segmentation:
Gender
Price
Interests
Location
Religion
Income
Size of Household

Process of Market Segmentation
Establish overall
strategy
Decide the basis
For
segmentation
Select
segmentation
variables
The org must clearly state its segmentation strategy
in consistent to its mission n objectives as well as its
current situation- its strengths , weaknesses,
opportunities n threats.
Any marketer should do segmentation on basis of differe
factors may be demographic or psychographic, he shoul
have the idea of market characteristics of consumer and
buying behaviour.
After selecting bases of segmentation, segmentation
Variables like in demographic, age, income, occupation
etc should taken into consideration.

Profile the
segments
Evaluate
segment
attractiveness
Select segment
After segmenting the market, marketers has to analyze
his customers in those segments, like what type of
customers are there in that market.
Evaluation is done on the basis of estimating the profit
contribution by each sector. most importantly he’ll see the
demand potential of customers from each segment, and
the revenue earned out of each segment & expenditure
incurred. Other criteria like measurability, accessibility,
Responsiveness, risk etc.
Every marketer can consider only one segment at a time
even if the other segments are profitable. ultimately he
will select the most profitable segment, this is called targe
marketing.

Objectives of Market Segmentation
 To understand the needs, wants, desires and buying
habits of customers.
 To formulate marketing programs for each consumer
groups according to their nature.
 To develop new products according to consumer’s
changing needs.
 To expand market & market share.
 To provide satisfaction to consumers.
 To make the marketing strategies and policies
consumer oriented.

Product Differentiation
 It is the process of distinguishing a product or offering from others, to make
it more attractive to a particular target market.
 This involves differentiating it from competitors' products as well as a firm's
own product offerings.
Difference between market segmentation & product differentiation
Market Segmentation
•Consumer oriented
•Focuses on group of customers
•Attempt to match the supply
•With demand.
•Aims at increasing sales
•Concentrates on a limited mkt
Product differentiation
•Production oriented
•Focuses on product differences
•Attempt to match demand with supply
•Aims at facing intense comp
•Concentrate on large mkt.
•It helps to win the competition.

Advantages of Market Segmentation
A. Advantages to firms










Increase in sales volume.
Helps to prepare effective marketing plans.
Enables to take decisions
Helps to understands needs of consumers.
Helps to win competition.
Makes best use of resources.
Achieve marketing goals
Specialized marketing
Creates innovations
Higher market share.

B. Advantages to Consumers
 Customer oriented
 Quality products at reasonable prices
 Other benefits (discounts, buy 1 get 1 free
offer, customers become the winner)

Reasons for development of market
segmentation
 Rapid change in technology
 Adoption of cost reducing techniques.
 Implementation of marketing programs &
marketing mix.
 Introduction of new products.
 Cut- throat competition in the market.

Patterns for segmentation or Market
strategies
1. Undifferentiated marketing: In this marketing only one mix is
used for all customers. For eg: soft drinks.
2. Differentiated marketing: In this, different marketing mix is used
for each set of segment. Eg; consumer products.
3. Concentrated marketing: In this, all the marketing mix are
concentrated and applied at each segment.
4. Customized or personalized marketing: When marketer see
each customer as separate segment and apply marketing strategy
as per the requirements of customer. For eg: Interior designers,
civil engineering firms design roads as per the requirement of
customers.

LEVELS OF MARKET SEGMENTATION

 Segment Marketing: Consists of group of
customers who share similar set of needs
and wants. can offer better price, design and
can fine tune the marketing activities. For eg:
Air Deccan.
 Niche marketing: more narrowly defined
customer group seeking a distinctive mix of
benefits. For eg: some companies make
clothes for oversized customers.

 Local marketing: Tailored to the needs & wants of
local consumers in trading areas, neighborhoods and
even individual stores. For eg: matrimonial websites
like Bharat matrimony who are further offering other
websites for each n every community say Punjabi,
Bengali, Muslim, Sikh etc.
 Individual marketing: Designing the product &
service offerings of individual choices. For eg Asian
paints, in which you can mix desired colour n
quantities of their own choice as per the
requirement.

Bases of Market Segmentation
Geographic
variables
Demographic
variables
Psychographic
variable
Behavioral
variables

Geographical Segmentation







In this type of segmentation market is divided into different
geographical units like:
Regions (by country, nation, state, neighborhood)
Population Density (Urban, suburban, rural)
City size (Size of area, population size and growth rate)
Climate (Regions having similar climate pattern)
A company, either serving a few or all geographic segments,
needs to put attention on variability of geographic needs and
wants.
After segmenting consumer market on geographic bases,
companies localize their marketing efforts (product, advertising,
promotion and sales efforts)

Demographic Segmentation










In , market is divided into small segments based on demographic
variables like:
Age
Gender
Income
Occupation
Education
Family size
Family life cycle
Religion
Demographic factors are most important factors for segmenting the
customers groups. Consumer needs, wants, usage rate these all
depend upon demographic variables. So, considering demographic
factors, while defining marketing strategy, is crucial.

Psychographic Segmentation









In this type of segmentation, segments are defined on the basis
of social class, lifestyle and personality characteristics.
Psychographic variables include:
Interests
Opinions
Personality
Self Image
Activities
Values
Attitudes
A segment having demographically grouped consumers may
have different psychographic characteristics.

Behavioral Segmentation







In this segmentation market is divided into segments based on
consumer knowledge, attitude, use or response to product.
Behavioral variables include:
Product segmentation.
Product benefits segmentation.
Brand Loyalty segmentation
Occasions segmentation (holidays like mother’s day, New Year
and Eid)
User Status (First Time, Regular or Potential)
Behavioral segmentation is considered most favorable
segmentation tool as it uses those variables that are closely
related to the product itself.

Limitations of Market Segmentation
 High cost of production.
 High advertising & promotional costs.
 High working capital & storage expenses
required.
 High administration expenses.
 Difficult to choose variable segments.
 Difficulty in getting skilled & experianced
workers.

TARGET MARKETING
 A target market is a group of customers at whom
entire marketing efforts are directed. In target
marketing ,marketer identifies some parts of market,
selects one or more of them and develop suitable
products & other elements (price ,place, promotion)
for each target market selected.
 For e.g.: Mercedes target high status consumers,
.whereas Hyundai target sensitive customers

Approaches for selecting target market
 Total market approach: in this company
develops a single marketing mix and direct it
t the entire market for a particular product.
 Concentration approach: in this organisation
approach a single marketing segment
through a single market mix, total market
consists of many segments but this will
select only one segment as target mkt.

 Multi segment approach: In this organisation
targets two or more segments by developing
marketing mix for each segment. Eg: P7 G.
toyota.

Advantages of target marketing
 It enables the firm to tap marketing opportunities
better.
 Firm can offer suitable product to each target mkt,
thus they can serve better nad also could develop
loyal customers.
 It can expand the market share
 Possible to build up company image in the market.
 It is suitable in case of services.

Product positioning
 Consumers will position the product in there minds
because they find some unique features in the
product as compare to other products.
 The act of creating an image about the product in the
minds of the customers is known as Product
positioning.
 For eg; Close up has looked upon by consumers as
mouth freshener than teeth cleaner and pepsodent is
looked upon as a germ killer in consumer’s mind.

Steps in Product positioning
 Identifying potential competitve advantages.
 Identify the competitors positions.
 Choosing the right competitive advantage.
(may be in terms of technology, quality, costs
etc)
 Communicating the competitive advantage.
 Monitoring the position strategy.

Techniques of product positioning








Positioning by corporate identity (eg: Tata , Sony, Godrej etc.)
Positioning by brand endorsement.
Positioning by product attributes and benefits. (Eg: Colgate
positioned itself on the basis of fresh breath, tooth decay)
Positioning bye use occasion & time. Eg:Dettol for nicks n cuts,
vicks for children at night.
Positioning by price and quality: Eg Nirma detergent powder.
Positoning y product category: For eg & up earlier was
positioned as a fresh clean taste now it has been positioned as
soft drink.
Positioning by product user: Eg: Farex.
Positioning by competitor.