CONSUMER BEHAVIOUR

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

Consumer

Ultimate
Buyer Customer
Consumer

Institutional
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.
 Types of Consumer
Behaviour

Dissonance
Complex Variety seeking
Reducing

Habitual
 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
 C. Inherent & Learned motives
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.
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

PROBLEM
RECOGNITION/ IDENTIFICATION OF
Recognition of ALTERNATIVE/
unsatisfied INFORMATION
need SEARCH

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

 Segmentation is essentially an identification of the subsets

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 is allocated  Examples of characteristics
to one market segment used for segmentation:
by the customer's
 Gender
individual  Price
characteristics.  Interests
 Location
 Religion
 Income
 Size of Household
 Process of Market Segmentation

The org must clearly state its segmentation strategy

Establish overall in consistent to its mission n objectives as well as its
strategy current situation- its strengths , weaknesses,
opportunities n threats.

Decide the basis Any marketer should do segmentation on basis of differe

For factors may be demographic or psychographic, he should
segmentation have the idea of market characteristics of consumer and
buying behaviour.

Select After selecting bases of segmentation, segmentation

segmentation Variables like in demographic, age, income, occupation
variables etc should taken into consideration.
 After segmenting the market, marketers has to analyze
Profile the his customers in those segments, like what type of
segments customers are there in that market.

Evaluation is done on the basis of estimating the profit

Evaluate contribution by each sector. most importantly he’ll see the
segment demand potential of customers from each segment, and
attractiveness 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
Select segment 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
Product differentiation
•Consumer oriented
•Production oriented
•Focuses on group of customers
•Focuses on product differences
•Attempt to match the supply
•Attempt to match demand with supply
•With demand.
•Aims at facing intense comp
•Aims at increasing sales
•Concentrate on large mkt.
•Concentrates on a limited mkt
•It helps to win the competition.
 Criteria for successful segmentation
Segment
Segment mustmust be
be large
large
Substantiality
Substantiality enough
enough to
to warrant
warrant aa special
special
marketing
marketing mix.
mix.
Identifiability
Identifiability Segments
Segments mustmust be
be identifiable
identifiable
Measurability
Measurability and
and their
their size
size measurable.
measurable.
Members
Members of of targeted
targeted segments
segments
Accessibility
Accessibility must
must be
be reachable
reachable with
with
marketing
marketing mix.
mix.
Unless
Unless segment
segment responds
responds to to aa
Responsiveness
Responsiveness marketing
marketing mix
mix differently,
differently, nono
separate
separate treatment
treatment is is needed.
needed.
Customers in one particular Segment
Homogeneity should be similar in terms of their responses

There should be sufficient demand

Profitability for goods in the segment selected
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

Demographic
variables

Behavioral Geographic
variables variables

Psychographic
variable
 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.
 Multisegment 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.