Consumer Behavior

Session-1st

By : -Neeraj Gupta
Consumer Insights

 Who Knows Mansukh Bhai Prajapati from

Gujarat?

 MittiCool Owner
Consumer Insights

 Hector Beverages – Manufacturer of

Tzinga(Backed by N R Narayanamurthy-
invested Rs. 6 crores)
 Neeraj Kakkar – CEO and Co-founder
 Paper Boat
Consumer Insights

 Poochka Corner

 Naman Kandoi,
 Esha Guha and
 Supratik Guha –
 Left 7 cr package
 MBA from Denmark
Consumer Insights

 Foodpanda.in

 Rohit Chadda – Co-Founder

Consumer Insights

 Cadbury’s dairy milk.

 Not using insights properly –

 Nokia,
 Jeep
 Ambassador
 “Remember
“Remember
Me?”
Me?”
I'm the fellow who goes into a restaurant, sits down and patiently
waits while the waitresses do everything but take my order. I'm
the fellow who goes into a department store and stands quietly
while the sales clerks finish their little chitchat. I'm the man who
drives into a gasoline station and never blows his horn, but waits
patiently while the attendant finishes reading his comic book.

"Yes, you might say, I'm a good guy. But do you know who else I
am? I am the fellow who never comes back, and it amuses me to
see you spending thousands of dollars every year to get me back
into your store, when I was there in the first place, and all you
had to do to keep me was to give me a little service; show me a
little courtesy."

Source: From a Better Business Bureau bulletin submitted by An

Arkansas Reader to Dear Abby
Some thing Very Unique about India
 India Country of 1.35 billion people

 Sheer Diversity and Factors which makes us so

vast

 Constantly evolving Needs, aspirations and

behaviors of People

 Size & Structure of family, language, place of

origins, caste and religious backgrounds each
plays the major role
 In Past decade two important things happened in
India:

 1. Growing Customer incomes, aspiration and

explosion of choice in the market has given rise to
continuously changing purchase behaviors
 2. We are buying the things differently that we
did. Open format, self service shops, E-
Commerce is new way in which many of is
increasingly shops of different items
The most
important thing
is to forecast
where customers
are moving, and
be in front of
them.
Consumer Behavior
Processes a consumer uses to
make purchase decisions, as well
as to use and dispose of purchased
goods or services to satisfy their
needs and desires, also includes
factors that influence purchase
decisions and the product use
The American Marketing Association has defined consumer behaviour as, “The
dynamic interaction of affect (emotions or feelings) and cognition (knowledge,
perception or feeling about product of servie), behaviour, and the environment by
which human beings conduct the exchange aspects of their lives.”
Peter D. Bennett, ed. Dictionary of Marketing Terms, 2nd ed. 1995.
Chapter 4 Version 3e 11
 CONSUMER BEHAVIOR DEFINED

 Consumer activities associated with the purchase,

use, and disposal of goods and services.
 Consumers’ emotional, mental, and behavioral
responses to marketing activities.

Consumer Behavior

Consumer Activities Consumer Responses

• Purchase • Affect
• Use • Cognition
• Disposal • Behavior

© 2011 Cengage Learning. All Rights Reserved.

May not be scanned, copied, or duplicated, or posted to a publicly accessible website, in whole or in part.
Slide 12
 ‘Consumer Behaviour’ help Company as
well as any company to carefully study its
prospective and existing customers.

 It helps to gain a better understanding of

the needs, requirements, desires,
opinions of the product, consumer’s view
of the product and company image, etc.
 People Buy for their Needs

People buy for

their Needs

• People Buy for their Needs:

o A ‘need’ is anything which is necessary
but lacking.
o Hence, a need has to be fulfilled.
 General Characteristics of
Consumer Behavior
 The consumer is the king
 The consumer behavior can be known
 The consumer’s behavior can be influenced
Important questions to be asked about
customers are:

 What are the consumers buying?

 Who is important in the buying decision?
 How do they buy?
 What are their choice criteria?
 Where do they buy from?
 When do they buy?
Why Study Consumer Behavior?

 Leads to effective segmentation

 Development of an effective marketing mix
 Help to assess new market opportunities
Why Study Consumer Behavior?
Consumer Behavior Determines the
Economic Health of a Nation
Consumer Behavior Determines the
Success of Marketing Programs
Consumer Behavior Determines the
Economic Health of Everyone
Consumer Behavior Helps Formulate
Public Policy
Consumer behavior affects public policy
Consumer Behavior and its
applications
1. What do consumers think about our products and those of our
competitors?

2. What do they think of possible improvements in our products?

3. How do they actually use our products?

4. What are their attitudes toward our products and our

promotional efforts?

5. What they feel are their roles in the family and society?

6. What are their hopes and dreams for themselves and their
families?
 e d
fi n
D e Marketing Concept

The essence of marketing consists

of satisfying consumers’ needs,
creating value, and retaining
customers.
The Marketing Concept

Implementing the
Marketing Concept
 Consumer  The process and tools
Research used to study
 Segmentation consumer behavior
 Targeting  Two perspectives:
 Positioning
 Positivist approach
 Interpretivist approach

Copyright 2007 by Prentice

Hall
 Evolution of Marketing Concept

Consumers’ Increasing Influence

Wholesaler Manufacturer Retailer Consumer

Production Product Selling Marketing Consumer

U.S. 1750-1850 1850-WWII 1970-2000 2000+

Europe 1750-1850 1760-WWII 1970-2000 2000+

Socially Responsible Marketing

What is the societal

marketing concept?
Successful Relationships
To understand the interrelationships among
customer value, satisfaction, and retention, and
technology’s revolutionary role in designing
effective retention measures and strategies.
Consumer Insights

 Ford Soccer Moms in US

 Haier in China
 Teaching customers how to use new
products
 Nestle did it in China, Got Milk did it in Japan,
 Apple Ipod
 Virginia Lights
Technology and Customer Relationships

For Discussion:
• Provide two examples where brands used

 Technology to engage consumers (Dell, Sunsilk

Gang of Girls)
 Enhance customer relationships (PVR, Credit

card firms, Majority of Retail stores)

• Provide two examples where technology was

used to add value to the consumer (Jio Mart, Big

Basket, Zomato, Ola, Oyo rooms etc.)
Societal Marketing Concept

Marketers adhere to principles of social

responsibility in the marketing of their goods
and services; that is, they must endeavor to
satisfy the needs and wants of their target
markets in ways that preserve and enhance
the well-being of consumers and society as a
whole.

Copyright 2007 by Prentice

Hall
 Disciplines involved in study of Consumer Behavior

 Psychology – study of human mind and its functions

 Sociology - groups, social relationships, social interactions

 Social psychology – study of human mind and its functions in context of

groups

 Cultural anthropology - human beings in society

 Economics
Consumer and Customer
Personal Consumer

The individual who buys goods and services for

his or her own use, for household use, for the
use of a family member, or for a friend.

Copyright 2007 by Prentice

Hall
Organizational Consumer

A business, government agency, or other

institution (profit or nonprofit) that buys the
goods, services, and/or equipment necessary
for the organization to function.

Copyright 2007 by Prentice

Hall
BUYING ROLES
Buyers and Users
The person who buys a particular product may not
necessarily be the user, or the only user of this product.
Likewise, it is also true that the person who purchases the
product may not be the decision-maker.

Role Description
Initiator The initiator is the individual who ascertains that some
need or want is not being satisfied and authorises a
purchase to correct the situation.
Gatekeeper Influences the family’s information processing. The
gatekeeper has
the most expertise in obtaining and
evaluating the information.
Influencer The influencer is someone who intentionally or otherwise,
by word or action, influences the purchase decision, actual
purchase and/or the use of product or service.
Decider The de
cider is the person or persons who actually decides
which product or service will be chosen.
Buyer Buyer is any individual who actually makes the final
purchase transaction.
User(s) User is a person most directly involved in the use or
consumptiontheof purchased product
Selected Consumer Behaviour Roles
Buyers and Users

Role Description
Initiator The initiator is the individual who ascertains that some
need or want is not being satisfied and authorises a
purchase to correct the situation.
Gatekeeper Influences the family’s information processing. The
gatekeeper has the most expertise in obtaining and
evaluating the information.
Influencer The influencer is someone who intentionally or otherwise,
by word or action, influences the purchase decision, actual
purchase and/or the use of product or service.
Decider The decider is the person or persons who actually decides
which product or service will be chosen.
Buyer Buyer is any individual who actually makes the final
purchase transaction.
User(s) User is a person most directly involved in the use or
consumption of the purchased product
Selected Consumer Behaviour Roles
Strategic Applications of Consumer Behavior

 Consumer Behaviour Applications in

Marketing
 Analysing market opportunity
 Selecting target market
 Marketing- mix decisions
 Product
 Price
 Promotion
 Distribution
 Use in Social and Non-profits Marketing
Any idea...who is he...and why is he
here in your class...?
Brief Introduction

 The Economic Times Awardee The

Entrepreneur of the Year 2004, C. K.
Ranganathan, Managing Director of CavinKare
Private Limited.

 CavinKare, has shown the world that it is

possible to beat the multinationals even in the
most difficult market of fast moving consumer
goods.

 A business which he started with only with Rs

15,000 is now worth more than Rs 5 billion
 What Influences Consumers’ Buying Decision
Process? Personal
Age & Life-Cycle
Cultural Stage

Culture Occupation
Economic Situation
Subculture
Lifestyle
Social Class Personality & Self-
Concept
Values
Psychological
Social
Motivation
Reference
Groups Perception
Family Learning
Roles & Beliefs &
Status Attitudes
Cultural Factors
Cultural Factors
Social
Class

Culture

Subcult
ure
Subcultures

Nationalities
Nationalities

Religions
Religions

Racial
Racial groups
groups

Geographic
Geographic regions
regions
Social Classes

Upper uppers
Lower uppers
Upper middles
Middle class
Working class
Upper lowers
Lower lowers
Social Factors
Reference
Groups

Family

Role and
Status
Reference Groups

Membership
Membership groups
groups

Primary
Primary groups
groups

Secondary
Secondary groups
groups

Aspirational
Aspirational groups
groups

Dissociative
Dissociative groups
groups
Personal Factors
Personality

Age

Life Cycle
Stage
Personal Factors
Occupation Valu
es

Lifestyle
Economic
Lifestyle Influences

Multi-tasking

Time-starved

Money-constrained
Age and Stage of Lifecycle
Lifestyle and Values
Faysal Bank
of Pakistan
has extended
banking
hours for
time-pressed
executives.
Psychological Factors

There are various psychological

factors that influence consumer
behavior or consumer buying
Perception decisions such as follows:

Motivation

Learning

Beliefs and
Attitudes
Consumer Decision Making
Problem Recognition

“I’m
Hungry”

Stimulus
•Internal
•External
The Problem Recognition Process

Desired consumer lifestyle Current situation

The way consumer would Temporary factors affecting
like to live and feel the consumer

Desired state Actual state

The condition the consumer The condition the consumer
would like to be in at this perceives to be in at this
point of time point of time

Nature of discrepancy
Differences between the consumer's desired and
perceived conditions

Desired state Actual state

No difference exceeds actual exceeds desired
state state

Satisfaction Problem recognised

 Example of an Active Problem
Types of Problem Recognition

Immediacy of solution
Expectancy Immediate Immediate
Of solution solution not
problem required required

Occurrence of
Problem Routine Planning
expected
Occurrence of
problem Emergency Evolving
unexpected
Situations that can Cause Problem Recognition

Influencers Influencers

Culture/sub-culture Past decisions

Social status Evaluation
Normal depletion
Reference group Brand/product
Family characteristics - Less than?
Desired Actual performance
Financial situation state State Individual growth
Earlier decisions - Equal to?
Emotions
Individual growth Govt./consumer
Emotions - More than?
group
Motives Product availability
Situation Situation

Cont….

Non-marketing Factors Influencing Problem Recognition

Approaches to Activating Problem Generic problem recognition.
Ordinary tap water is not safe.
Recognition
1. Generic problem recognition focuses on
helping consumers feel a discrepancy that a
number of brands within a product category can
reduce. Generally, a marketer will use this
approach when the problem is either latent or of
low importance and one of the following
conditions exists.
i. Product is in the early stage of its life cycle.
ii. The marketer has very high market share.
iii. After problem recognition, consumers'
external search tends to be limited.
iv. It is a situation of industry-wide cooperative Cont….

effort.
 Selective problem recognition. Getting a
2. Selective problem recognition job is high priority for most students in
focuses on a discrepancy that only a India.

particular brand can solve. Marketers use

this approach to causing problem
recognition in an attempt to increase or
maintain market share

Cont….
Marketing Strategy and Problem Recognition
1. Activity Analysis- Such as cleaning house,
Influencing the desired state
preparing meal, or travel etc.
2. Product Analysis- Examining the purchase
and or use of particular product, service or
brand
3. Problem Analysis
4. Human Factors Research-Helpful in
identifying consumer functional Problems they
are not aware about.
5. Emotion Research

Marketers also attempt to influence consumers' perceptions about their existing state. Women
do not want to use a soap that dries their skin. They desire to have fresh and smooth skin and
the advertisement of Dove soap is designed to generate concern about the existing state of their
skin
 Information Search
Commer Public
cial

Persona Experiential
 Sources of Information for Purchase Decision-making

Sources of
Information

Internal External
information

information

Acquired Acquired Acquired

actively passively actively

Past Personal Low-involvement Personal Independent Marketer Others’

searches experience learning sources sources controlled experiences

Cont….
Nature of Information Search
Extended decision-making represents a significantly more involving purchase
situation. External information can refer to any of the following:
1. The opinions, beliefs, attitudes, behaviours and feelings of relatives, friends,
neighbours and strangers contacted on the Internet.
2. Professional information contained in handouts, pamphlets, articles,
magazines, the Internet and provided by personal professional contacts.
3. Direct experiences with product through trial, or inspection.
4. Marketer-initiated info included in advertisements, and by sales personnel.
Consumer decision-making requires three types of information:
1. The Evaluative Criteria
2. Appropriate Alternatives
3. Attributes of Alternatives
Evaluative Information
criteria? Yes
search
terminates

Performance Is the information

level of each enough to make a
solution on balanced
each criterion? decision?

Information
Existing
search
solutions? No
continues

All alternatives
Known and unknown

Awareness set Unawareness set

Brands known to Brands not known
consumer to consumer

Evoked set Inept set Inert set

Brands Brands Backup
Considered avoided brands

Cont….

Brand Brands considered

purchased but not purchased
Successive Sets Involved in
Consumer Decision Making
Evaluation of Alternatives
Beli
efs

Attitude
http://
www.flipkart.com/
mobile/compare?
ids=MOBDXZ9WY
C96GTTW,MOBE
Y39PGWFVQHQE
Expectancy-Value Model

Attribute
Memory Graphics Size and
Price
Capacity Capacity Weight
Mode Weight: 40% Weight: 31% Weight: 20% Weight:
l 10%

A 8 9 6 9
B 7 7 7 7
C 10 4 3 2
D 5 3 8 5
Model A = 0.4 (8) + 0.3(9) + 0.2(6) + 0.1(9)
= 8.0
Model B = 0.4 (7) + 0.3(7) + 0.2(7) + 0.1(7)
= 7.0
Model C = 0.4(10) + 0.3(4) + 0.2(3) + 0.1(2)
= 6.0
 Purchase Decision

A B

Bra
nd
Dea
Purchase ler
Quantity
subdecisi
ons Timin
g
Payment
method
Purchase Decision
• Outlet Selection

Need Information Brand

arousal processing evaluation
- Purchase needs - Outlet attributes
- Shopping needs - Outlet image

Feed back

Post-purchase Retail outlet

Evaluation choice

• Outlet Image
• Retailer Brands
• Retail (local) Advertising
• Location of Outlet and Size
• Consumer Attributes and Outlet Selection
• Risk Perception in Store Choice
• Sales Personnel
Postpurchase Behavior
Delighted
Postpurchase Satisfaction
Satisfied

Dissatisfied

Loyal

Stay or Go

Defect Postpurchase Actions

 Types of Consumer Buying
Decisions

Routine
Routine Limited
Limited Extensive
Extensive
Response
ResponseDecision
Decision Decision
Decision
Behavior
Behavior Making
Making Making
Making

Less More
Involvement Involvement
Post-Purchase Evaluation

 Cognitive dissonance occurs as a result of some discrepancy

between a consumer's prior evaluation and the purchase decision.
The dissonance theory was derived from two basic principles:
(1) dissonance is unpleasant and will motivate the person to
reduce it and (2) individuals experiencing dissonance will avoid
situations that produce more dissonance.

 The probability that a consumer will experience dissonance and the

magnitude of such dissonance, is a function of the following factors:
 The degree of irrevocability of the decision
 The importance of decision to the consumer
 The difficulty of choosing among the alternatives
 The individual's tendency to experience anxiety
Levels of Consumer Decision Making/Howard
Sheth Model
 Extensive Problem Solving
 A lot of information needed
 Must establish a set of criteria for evaluation
 Limited Problem Solving
 Criteria for evaluation established
 Fine tuning with additional information
 Routinized Response Behavior
 Usually review what they already know. There are
some products which are used on a daily basis
like food items, soap, shampoo etc. For these
products purchase is routinised. Command Low
Involvement
Levels of Consumer Decision Making
 Purchase Involvement is the level of concern for, or interest
in, the purchase process stimulated by the need to consider a
certain purchase.
 Product involvement refers to a consumer’s level of interest
in a certain product. Marketers communicate many sales
promotions to increase consumer involvement in a product.
 Advertising involvement refers to the consumer’s interest in
processing the ad messages. Television is said to be a low
involvement medium and consumers process information in a
passive manner. In contrast, print is a high-involvement
medium as the readers actively process information.
 Purchase situation involvement may occur while buying the
same item in different contexts.
Marketing Implications of
Involvement
High-involvement Low-involvement
purchases require: purchases
extensive promotion require: in-store
to target market and
promotion and
good advertisement
eye-catching
package design
 Consumer Organizational
Influences Influences

Obtaining Consuming Disposing

Consumer Behavior
The
The Wheel
Wheel of
of Consumer
Consumer
Behavior
Behavior
THANK YOU