1-1 1 Consumer Behaviour-Schiffman & Kanuk

CONSUMER BEHAVIOUR
Consumer Behaviour- Schiffman & 1

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Market today….
• Substantial increase in the buying power
• Greater variety of goods and services
• Information explosion
• Greater ease of placing and receiving orders
• Digital Revolution in the market place
• Increased attention towards customer
retention
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• “Yeh customer maange more!”
• Customer has become choosy and will select the one
which will give more benefits.
• ‘Delighting’ is the ultimate goal.
• Customer has changed in terms of income and exposure.

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• Marketing opportunities for young and women
segment.
• 2001 census- 20-44 age group is the largest
segment.
• Youth - quick adapters of change.
• Tendency to buy on credit

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Consumer Behavior
‘The behavior that consumers display in
searching for, purchasing, using,
evaluating, and disposing of products and
services that they expect will satisfy their
needs’.
Schiffman & Kanuk

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The Scope of Consumer Behavior
How do individuals make decisions to spend their
resources (time, money, effort)? Includes:
• What the consumers buy?
• Why they buy it ?
• When they buy it ?
• Where they buy it ?

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• How often they buy it ?
• How often they use it ?
• How they evaluate it after the purchase ?
• The impact of such evaluations on the

future purchases
• And how they dispose of it ?

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What is the difference between a
consumer and a customer?
• Customer Person who purchases the
goods/service is customer
• Consumer whereas the end users who
consumes the good/service is consumer
• For e.g.. If a person buys a chocolate for his
son, he is called customer & his son is
consumer

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• The term consumer behavior describes
two different entities:
1. The Personal Consumer
2. The Organizational consumer

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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.

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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.

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Why Study Consumer Behavior?
• In order to design new products and marketing
strategies that would fulfill consumer needs, we
have to study consumers and their consumption
behavior in depth
• By studying consumer behavior we try to

understand & gain insight into:
– Consumer decision making processes
– What we buy, how we buy, and why we buy

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• Enables us to become better consumers and
marketers
• We try to gain a better understanding of consumer

related behavior and understand why individuals
act in the ways they do.
• The task of marketing is to identify consumers’

needs and wants accurately, then to develop
products and services that will satisfy them.

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•For marketing to be successful, it is not sufficient to
merely discover what customers require, but to find
out why it is required.
•Only by gaining a deep and comprehensive

understanding of buyer behavior can marketing’s
goals be realized.

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• Such an understanding of buyer behavior works to
the mutual advantage of the consumer and
marketer
• Allows the marketer to become better equipped to

satisfy the consumer’s needs efficiently
• Establish a loyal group of customers with positive

attitudes towards the company’s products.

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Why & how the field of Consumer
Behavior developed

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Development of the Marketing
Concept
Production
Concept
Product Concept
Selling Concept
Marketing
Concept
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Production Concept

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The Production Concept
• Assumes that consumers are interested

primarily in product availability at low
prices
• Marketing objectives:
– Cheap, efficient production
– Intensive distribution
– Market expansion

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Product Concept

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The Product Concept
• Assumes that consumers will buy the

product that offers them the highest quality,
the best performance, and the most features
– Quality improvement
– Addition of features

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Product Oriented vs Market Oriented
Definitions of a Business
Product Oriented Market Oriented
Tata Motors We make cars More car per car
Colgate We make toothpaste Get strong teeth
Xerox We make copiers Office productivity
Liril We make soap Feel Fresh
Tata Tea We make tea Refreshing tea
LIC We sell insurance Protect your future
Deccan We are an airline Simply fly

airways
KBC We run quiz program Earn crores

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Selling Concept

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The Selling Concept
• Assumes that consumers are unlikely to buy

a product unless they are aggressively
persuaded to do so
– Sell, sell, sell
• Lack of concern for customer needs and
satisfaction

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Marketing Concept

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The Marketing Concept
• Assumes that to be successful, a company
must determine the needs and wants of
specific target markets and deliver the
desired satisfactions better than the
competition
– Profits through customer satisfaction

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Consumer Behavior
• Consumer Behavior is essentially a Marketing

Concept since marketers have to know needs &
wants of consumers.
• Study of Consumer Behavior gives us deep
insight into needs & wants of Consumers
• Hence, the field of Consumer Behavior
developed as an integral part of development
of Marketing Management Philosophies

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Marketing strategy and Consumer behavior
• Market Analysis
• Segmentation
• Targeting
• Positioning
• The marketing mix

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Marketing
strategy
and Consumer
Behavior
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Kanuk
• Customer Value, Satisfaction ,and
retention

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Customer Value
• It is defined as the ratio between the customer’s
perceived benefits(economic,functional,and
psychological) and the resources
(monetary,time,effort,psychological) used to
obtain those benefits
• Developing a value proposition (unique selling

proposition) is the core of successful positioning.

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E.g. Diners at an exclusive French restaurant
in Washington., where a meal with
beverages may cost up to $300 per person,
may expect unique & delicious food,
immaculate service, & beautiful décor.
Some diners may receive even more than they
had expected & will leave the restaurant
feeling that the experience was worth the
money & other resources expended.

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Customer Satisfaction
• Customer Satisfaction is the individual’s
perception of the performance of the
product or service in relation to his or her
expectations.

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Types of Customers
• Loyalists: Completely satisfied customers who keep
purchasing
• Apostles: Whose experiences exceed their
expectations and who provide very positive word of
mouth to others
• Defectors: Who feel neutral or merely satisfied and
are just as likely to stop doing business with the
company
• Terrorists: who have had negative experiences with
the company and who spread negative word of mouth

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Contd……….
• Hostages: are unhappy customers who stay with the

company because of a monopolistic environment or
low prices and who are difficult and costly to deal
with because of their frequent complaints
• Mercenaries :are very satisfied customers who have

no real loyalty to the company and may defect
because of a lower price elsewhere

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Company should strive for
• Creating apostles
• Raise the satisfaction of defectors and turn
them into loyalists
• Avoid having terrorists or hostages ,and
reduce the number of mercenaries

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Customer retention
• The maintenance of the patronage of people
who have purchased a company's goods or
services once and the gaining of repeat
purchases. Customer retention occurs when
a customer is loyal to a company, brand, or
to a specific product or service, expressing
long-term commitment and refusing to
purchase from competitors
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Customer pyramid
• Customers are grouped into four tiers
• The Platinum tier :heavy users who are not price

sensitive and who are willing to try new offerings
• The Gold tier: consists of customers who are heavy

users but not as profitable because they are more price
sensitive than those in the higher tier, ask for more
discounts ,and are likely to buy from several providers

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• The iron tier :consists of customers whose spending
volume and profitability do not merit special
treatment from the company.
• The lead tier :includes customers who actually cost

the company money because they claim more
attention than is merited by their spending, and
spread negative word of mouth

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The Traditional Marketing concept Versus –Value -and
Retention –Focused Marketing
The Traditional Marketing Value -and Retention –
concept Focused Marketing
1. Make only what you can sell 1. Use technology that enables
instead of trying to sell what you customers to customise what you
make make
2. Do not focus on the product; 2. Focus on the product’s perceived

focus on the need it satisfies value ,as well as the need it satisfies
3. Market products and services 3. Utilize an understanding of

that match customers’ needs customer needs to develop
better than competitors’ offerings that customers perceive
offerings as more valuable than competitor’s
offerings

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4. Research Consumer needs 4. Research the levels of profit
and characteristics associated with various consumer
needs and characteristics
5. Understand the purchase 5. Understand consumer behaviour

behaviour process and the in relation to the company’s
influences on consumer product
behaviour
6. Realise that each customer 6. Make each customer transaction

transaction is a discrete sale part of an ongoing relationship
with the customer

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7.. Segment the market based on 7. Use hybrid segmentation that

customers’ geographic, combines the traditional
demographic,psychological,socioc segmentation bases with data on the
ultural ,lifestyle, & product- customer’s purchase levels and
usage related characteristics patterns of use of the company’s
products
8. Target large groups of customers 8. Invest in technologies that enables

that share common you to send one-to-one promotional
characteristics with messages messages via digital channels
transmitted through mass media
9. Use one way promotions whose 9. `Use interactive communications

effectiveness is measured through in which messages to customers are
sales data or marketing surveys tailored according to their
responses to previous
communications

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Contd…
10. Create loyalty programs based on the 10. Create customer tiers based on
volume purchased both volume and consumption
patterns
11. Encourage customers to stay with the 11. Make it very unattractive for your
company and buy more customers to switch to a competitor
and encourage them to purchase
‘better’ –in a manner that will
raise the company’s profitability
levels
12. Determine marketing budgets on the
basis of the numbers of customers 12. Base your marketing budget on the
'lifetime value’ of typical customers
you are trying to reach in each of the targeted segments
compared with the resources
needed to acquire them as
customers

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Contd…
13. Conduct customer 13. Conduct customer
satisfaction surveys and satisfaction surveys that
present the results to include a component that
studies the customer’s word
management of mouth about the
company, and use the
results immediately to
enhance customer
relationships
14.Create customer trust and
loyalty to the company and 14. Create customer intimacy
and bonds with completely
high levels of customer satisfied, 'delighted’
satisfaction customers

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Disciplines involved in the Study of
Consumer Behaviour
• Psychology( the study of an individual)
• Sociology( the study of groups)
• Social Psychology (the study of how an
individual operates in a group)
• Anthropology(the influence of society on
the individual)
• Economics (individuals act rationally to
maximise their satisfaction)
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Ethics in Marketing
• Ethics has been experiencing a growth in interest due to:
• Business scandals leading to a study of ethics in business
schools
• Exploitation of consumers leading to the growth of the
consumer movement
• Ethics being seen as a corporate ‘strategic tool’ by many
organizations
• Organizations promoting products to children in
‘unethical’ ways
• The growth of the ‘societal marketing concept’

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Ethics and Marketers
• Do Marketers Manipulate Consumers?
• Do Marketers Create Artificial Needs?
• Do Marketers promise miracles?

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Unethical Marketing Behavior
PRODUCT PRICE
• Safety • Excessive markups
• Shoddy goods • Price differentiation
• Inadequate warranties • Price discrimination
• Environmental pollution • Cartels
PROMOTION
PACKAGING • Exaggerated claims
• Deceptive quantities • Tasteless advertising
• Deceptive quality • Surrogate Advertising
• Deceptive advertising
• Social exploitation

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Unethical Consumer Practices
• Shoplifting
• Returning clothing that has been worn
• Abusing products and returning them as damaged goods
• Returning products bought at sale and demanding the full-price refund
• Stealing belts from store clothing
• Returning partially used products for full store credit
• Abusing warranty or unconditional guarantee privileges
• Damaging merchandise in a store
• Duplicating copyrighted materials without permission

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The Right to Safety - to be protected against the marketing of goods
which are hazardous to health or life.
The Right to Choose - to be assured, wherever possible, access to a
variety of products and services at competitive prices: and in those
industries where competition is not workable and Government regulation
is substituted, an assurance of satisfactory quality and service at fair
prices.
The Right to Information - to be protected against fraudulent, deceitful
or grossly misleading information, advertising, labeling, or other
practices, and to be given the facts s/he needs to make an informed choice.
The Right to be Heard - to be assured that consumer interests will
receive full and sympathetic consideration in the formulation of
Government policy, and fair and expeditious treatment in its
administrative tribunals

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The Consumer Movement In
India
Consumer Protection Act
• Philip Kotler-It is an organised
movement of citizens and government to
enhance the rights and power of buyers
in relation to sellers.
• BIRTH OF ‘COPRA’

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Consumer Protection Act (COPRA)1986
is unique in the world
• Exclusive courts for consumer disputes in
all districts, state and national capitals.
• 6 consumer rights specified.
• Consumer Protection Councils from
national to state and district levels.
• Covers private, public, cooperative sectors.

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Consumer's Rights under Section
6 of Consumer Protection Act
1986
1. Right to SAFETY against hazardous goods and services.
2. Right to be INFORMED about quality, quantity, purity,
standard, price.
3. Right to CHOOSE from a variety at competitive prices.
4. Right to BE HEARD.
5. Right to seek REDRESSAL.
6. Right to CONSUMER EDUCATION.

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Responsibility
• Responsibility towards safe waste disposal
• Most often we consume without sparing any thought for what's going
to be left behind as waste. More and more percentage of waste
generated in urban areas today consists of non-biodegradable waste.
• . Urban consumers are making use of plastic, paper and cardboard

packaging, disposables batteries, plastic throw-away pens, use and
throw nappies ,empty cans etc are becoming a common feature of an
urban dustbin
• Consumers need to become accountable for their consumption patterns

and their serious environmental and economic implications.

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Responsibility to endorse safer
products
· Ecolabelling Eco-mark' is one way of knowing which products conform to
environmental standards and are more envrionment-friendly than others. set by
the Ministry of Environment and Forests.
•Ecolabelling is a methodology practised by many countries in the world,

including India. The Indian government has formulated a scheme whereby
some categories of products are awarded the ‘Ecomark' if they conform to
certain standards set by the Ministry of Environment and Forests.
•Unfortunately, in India, the scheme has not taken off due to consumer apathy
and lack of response. The market has manipulated this situation to lobby with
the government to make ecolabelling a voluntary scheme, which will allow
manufacturers to disclose and cover information at will.

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Ecomark Logo

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Consumer Bonding The consumer movement needs active
participation of consumers to lobby with the government,
pressure the market to deliver better quality, and to support
consumer rights campaigns.
Young Consumers and Consumer Responsibility Young

consumers should consume in moderation and buy a product
on the basis of its quality and merit and not because of the
brand image

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Societal Marketing Concept
• A revision of the traditional marketing concept that

suggests that 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.
• All companies prosper when society prospers.
• Companies, as well as individuals, will improve if social
responsibility was an integral component of every
marketing decision.
• Requires all marketers adhere to principles of social
responsibility.

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• Societal marketing is the business driven,
profit orientated way of changing the world
as a means of developing revenue based
product. Societal is about the direct
benefits for the organisation (profit) and
secondary benefit for the community

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• Social marketing is about the social gain,
target market’s gain, and the flow of
benefits where profit may not actual exist,
or if it does, then it’s just an incidental
secondary benefit for the campaign.

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Benefits of Consumerism
• Consumer education
• Liaison with the government and the

producer
• Product Research and inform the

Consumers
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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

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Use in social and non-profits
marketing
• Make use of consumer behaviour to sell

their services and products and also try
to motivate people to support this
institutions
• The programme organised by NGO
include family planning, awareness about
AIDS, crime against women etc.

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CONCLUSION
“Customer is a King” in the Market
Customer Delight is the need of the day.

It is a greatest challenge for any company to
retain the existing customer & maintain a
long term relationship with the customer in
order to retain a competitive position in the
market place.

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CONSUMER BEHAVIOUR

Consumer Behaviour- Schiffman & 1

Consumer Behaviour- Schiffman & 3

Consumer Behaviour- Schiffman & 4

Consumer Behaviour- Schiffman & 5

• Why they buy it ?

• When they buy it ?

• Where they buy it ?

Consumer Behaviour- Schiffman & 6

• How often they use it ?

• How they evaluate it after the purchase ?

• The impact of such evaluations on the

• And how they dispose of it ?

Consumer Behaviour- Schiffman & 8

Consumer Behaviour- Schiffman & 9

Consumer Behaviour- Schiffman & 10

A business, government agency, or

Consumer Behaviour- Schiffman & 11

• By studying consumer behavior we try to

Consumer Behaviour- Schiffman & 12

• We try to gain a better understanding of consumer

• The task of marketing is to identify consumers’

Consumer Behaviour- Schiffman & 13

•Only by gaining a deep and comprehensive

Consumer Behaviour- Schiffman & 14

• Allows the marketer to become better equipped to

• Establish a loyal group of customers with positive

Consumer Behaviour- Schiffman & 15

Consumer Behaviour- Schiffman & 16

Consumer Behaviour- Schiffman & 18

• Assumes that consumers are interested

Consumer Behaviour- Schiffman & 19

Consumer Behaviour- Schiffman & 20

• Assumes that consumers will buy the

Consumer Behaviour- Schiffman & 21

Tata Motors We make cars More car per car

Colgate We make toothpaste Get strong teeth

Xerox We make copiers Office productivity

Liril We make soap Feel Fresh

Tata Tea We make tea Refreshing tea

LIC We sell insurance Protect your future

Deccan We are an airline Simply fly

KBC We run quiz program Earn crores

Consumer Behaviour- Schiffman & 23

• Assumes that consumers are unlikely to buy

Consumer Behaviour- Schiffman & 24

Consumer Behaviour- Schiffman & 25

Consumer Behaviour- Schiffman & 26

• Consumer Behavior is essentially a Marketing

Consumer Behaviour- Schiffman & 27

Consumer Behaviour- Schiffman & 28

Consumer Behaviour- Schiffman & 30

• Developing a value proposition (unique selling

Consumer Behaviour- Schiffman & 31

Consumer Behaviour- Schiffman & 32

Consumer Behaviour- Schiffman & 33

Consumer Behaviour- Schiffman & 34

• Hostages: are unhappy customers who stay with the

• Mercenaries :are very satisfied customers who have

Consumer Behaviour- Schiffman & 35

Consumer Behaviour- Schiffman & 36

• The Platinum tier :heavy users who are not price

• The Gold tier: consists of customers who are heavy