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Consumer Behaviour

Kolhan University Semiester 4 Sandeeep Ghatuary

Consumer Behaviour

Unit 1 Introduction of Consumer Behavior and Marketing Strategy Consumer behavior can be defined as the decision-making process and physical activity involved in acquiring, evaluating,
using and disposing of goods and services. It is the study of when, why, how, and where people do or do not buy a product. It blends elements from psychology, sociology, social anthropology and economics. It is based on consumer buying behavior, with the customer playing the three distinct roles of user, payer and buyer. It is difficult to predict, even for experts in the field. Examples Psychology: - Some consumers believe that products that are costly are more effective like they prefer Dove in comparison to Santo or. Sociology:-Still in many villages people resist using any other brand other than Lifebuoy. Economics: - some people experiments with their brands according to their economic capability. A process of buying starts in the minds of the consumer, which leads to the finding of alternatives between products that can be acquired with their relative advantages and disadvantages. This leads to internal and external research.

Consumer Behavior Varies


Difference in a way consumer buys. May buy from upscale store or from modest store or nearby. Product is used differently. Variation in purchase reflects different values. May or May not consult others.

Consumer or Buyer Role: Initiator Influencer Payer Decider Buyer User

Factors in consumer Behavior


1. Personal Process in consumer Behavior Consumer Perception Process =It can be define as the process by which we receive information through our five senses. Learning = It is a process of receiving and assimilating information. It leads to permanent change in behavior of the consumer. Habit =the natural extension of learning is habit. Attitude = It is acquired mental position we hold in regard to a brand. Motivation Positive attitude towards a brand will not necessarily translate into a purchase. 2. Interpersonal Influence Family = our attitude and belief are strongly influenced by our firm. Society = we are also a member of broader group the community that influences us very strongly. Reference Groups = It consist of people whose approval matter to us, whom we wish to copy. Opinion Leader = an Opinion leader is any person /organization whose opinion in his field of expertise is respected by us. Culture & Sub Culture = It impose definite influence on the consumers. 3. Non Personal Influence Environment Place Time

Consumer Behaviour

Marketing strategy It is a process that can allow an organization to concentrate its limited resources on the greatest opportunities to increase sales and achieve a sustainable competitive advantage Strategies are formulated to provide superior customer value. In formulating market strategies, the 4-ps are directed at the target market. Product, Price, Promotion, Place ----> Target Market (figure) Product- Product is anything that is offered to the consumer which is tangible and can satisfy a need and has some value. Price - Price is the amount of money one must pay to obtain the right to use the product Place (Distribution) -The goods can be distributed by many channels. These could be retailers, wholesalers, agents or by direct selling. Distribution outlets play an important role in reaching the goods to the consumer Promotion - Promotion is the means of changing the attitudes of the consumer, so that it becomes favorable towards the company's products. Various means of promotion are advertising, personal selling, sales promotion and publicity.
What types of Marketing Strategies can you use to launch your Business?
Many types of marketing strategies available in a business today are unlimited. Still, marketing itself is a new concept - people and businesses have been engaged in marketing for centuries. But with the passing of time, the best marketers recognize and accept the fact that marketing is as much psychology as it is technique. Combining these two elements effectively can yield your business fantastic marketing results. There are three broad types of marketing strategies: 1. Offline (or traditional forms of) marketing: - The term offline market is a term that acknowledges the fact that the Internet has radically altered the way the world relates and communicates. It refers to those types of marketing strategies which have long been accepted because of their proven and consistent results. It can be cheap or expensive, but if done correctly, is still highly effective. In fact, despite the introduction of the internet as a powerful marketing tool, offline marketing still prevails as the main form of advertising for many large organizations. Print - like newspapers, magazines, yellow pages, ads, flyers, coupons, etc. Television and radio 2. Online marketing Today, the Internet is a goldmine for businesses because of the ability to reach and service customers globally while reducing operating costs significantly. It offers businesses opportunities which would be insanely expensive in the offline world - at a fraction of the cost. Imagine wanting to broadcast an advertisement globally on TV for a new product - how much would that cost you? With the Internet, you can accomplish that same goal at a relatively low cost. The ability to target your audience more finely - and more quickly. There are several types of marketing strategies online Performance marketing Banner marketing Email marketing and press releases. Social Networking and Social Bookmarking Affiliate Marketing. 3. Word-of-Mouth marketing:-which is the oldest and arguably the most effective still today. By far the most powerful form of marketing is and will always be word of mouth. People trust their friends and family and other users more than they trust banners or ads. Word of mouth advertising transcends beyond all other forms of marketing because it can fit into any one of them. Take for example, the logo on a can of Coke. Someone drinks a Coke and leaves the can on the table. That in itself is powerful marketing. Even though there technically was no word of mouth, the mere fact someone drank a Coke.

4 Types of Marketing Strategies to Spice up Your Campaigns


Cause Marketing It is also known as cause-related marketing, links a company and its products and services to a social cause or issue. Relationship Marketing It is focuses on customer retention and satisfaction in order to enhance your relationships with existing customers to increase loyalty. Scarcity Marketing It creates a perception of a shortage which aims to entice customers to purchase out of fear that they may not be able to get it in the future. Undercover Marketing It is also known as stealth marketing, involves marketing to consumers in a way that they do not realize they are being marketed to.

Consumer Behaviour

Unit 2 Consumer Involvement & Buyer Decision Making Process Consumer Involvement & Decision Making The scope of marketer to effectively influence the consumer
decision making process depends upon two major considerations the kind of decision making involved and the level of involvement of the customer with the purchase.

Consumer involvement The concepts of involvement focused on the issue of whether or not a customer cares much about brand choice, decision while buying a product. There are two type of involvement = *Low involvement *high involvement. Low involvement low involvement is a situation where a consumer needs to buy a product but does not need to patronize a particular brand. Such will be the case while selecting the bath soap, biscuits e.tc usually such products are low priced, frequently purchased convenience goods. High Involvement high involvement is a situation where a consumer carefully selects a brand due to significant price, style, attractiveness , quality or other difference among various brand that are available products like consumer durable , high priced items , goods that are infrequently purchased or products where offering are dissimilar falls in this category. A high involvement purchaser is termed as an active consumer and low involvement purchaser is termed as passive consumer. If a customer is more involved in purchase decision, he will carefully choose a brand and will repeat his purchase, so every brand manager aims at increasing the level of involvement with his offering .to achieve this he has to link his brand to some central and silent issue in a customer life. Broadly speaking decision are of two kinds, ones taken from heart (emotional decision) and other which result from an application of mind (rational decision) purchase of medicine is a rational decision that of a perfume an emotional one. Any kind of involvement situation low or high can be coupled with either thinking kind of decision making or feeling kind of decision making. Effects of Consumer Involvement
Information search Information processing Depth of comprehension Extent of cognitive elaboration Extent of external arousal Greater emotional arousal Information transmission

Causes of Consumer Involvement


1. Personal factors - Products image and needs it serves are congruent with a consumers self-image, values and needs? High involvement 2. Product factors The greater the perceived risk the greater consumer involvement The more alternatives there are to choose from, the greater the involvement The higher the hedonic value of goods, the greater the involvement The more socially visible a product is, the greater the involvement

Consumer Behaviour

Decision Making By Consumer A consumer moves from one stage to avoid in order achieving at a final purchase
decision.

Consumer Decision Process


Behind the visible act of making a purchase lies a decision process that must be investigated. The purchase decision process is the stages a buyer passes through in making choices about which products and services to buy.

Five Stages of Consumer Behavior


1. Problem Recognition: Perceiving a Need: Perceiving a difference between a person's ideal and actual situations big enough to trigger a decision. Can be as simple as noticing an empty milk carton or it can be activated by marketing efforts 2. Information Search: Seeking Value:Two steps of information search Internal search When past experience or knowledge is insufficient The risk of making a wrong purchase decision is high The cost of gathering information is low. External search Personal sources, such as friends and family. Public sources, including various product-rating organizations such as Consumer Reports. Marketer-dominated sources, such as advertising, company websites, and salespeople 3. Alternative Evaluation: Assessing Value The information search clarifies the problem for the consumer by Suggesting criteria to use for the purchase Developing consumer value perception. A consumer's evaluative criteria represent both - the objective attributes of a brand and -The subjective factors. 4. Purchase Decision: Buying Value Three possibilities Do not buy From whom to buy which depends on such considerations? Of Terms of sale Past experience buying from the seller and Return policy. When to buy which can be influenced by? Store atmosphere Time pressure A sale Pleasantness of the shopping experience 5. Post purchase Behavior: Value in Consumption or Use After buying a product, the consumer compares it with expectations and is either satisfied or dissatisfied. Cognitive Dissonance- The feelings of post purchase psychological tension or anxiety a consumer often experiences Firms often use ads or follow-up calls from salespeople in this post purchase stage to try to convince buyers that they made the right decision.

Consumer Behaviour

Unit 3 Information search process Information search starts the moment a need is recognized. Once he need has been felt, the customer needs information
on various dimensions related to need satisfying objects. So a consumer is constantly recognizing problems. Having recognized the problem he moves on the next stage in the decision making process i.e. information search. We receive information about products or service from a wide range of source. And even we have no plans to make purchase we pick up all kinds of information through incidental learning. When we do have a plan to purchase of course our attention to such information is active and intense.

Information Sources
Own personal experience. Shop window display e.tc Word of mouth. A lecture on the product.

Consumer decision making required information inputs form the following process
1. Evaluate Criteria If a consumer decide to buy a product his first thought would be why do I need the product and what feature will meet with my requirements .then he would engage in an internal & external search to determine the features required to meet his needs. 2. Appropriate Alternatives After searching for appropriate evaluative criteria our prospective buyer would try to locate various alternative brands again he will engage in internal & external to come up with a comprehensive awareness set. 3. Alternative Characteristics The consumer compares them on the basis of relevant evaluative criteria this process naturally requires the consumer to gather information on each brand on each evaluative criteria. 4. Information collection & processing All the brands known to the customer constitute his awareness set. The awareness set in turn consists of three sub categories. Evoked Set This comprises of those brands which he thinks are worthy further consideration since they can solve his problem. Inept Set This comprises of those brands which he thinks are unworthy of further consideration. Inert Set Consumer will generally accept favorable information about brands in this set. Brands in this set will be considered only if the preferred brands are not available.

Type of search
1. Internal Search It is a mental process of recalling and reviewing information stored in memory relating to a purchase situation. There are two dimensions of internal search Extent of search The degree of internal search can be widely from a simple recall of only a brand name to a more complete search through memory for relevant information, feeling and experience. Kind of information retrieved A consumer generally recall four major kinds of information .Brand name, attribute, evaluation done earlier and experience. 2. External Search if information in the memory is missing, inadequate or is a suspect then an external search is required. It can be from personal sources i.e. friends, exports, sales people or from impersonal sources i.e. advertising, media reports e.tc.

Consumer Behaviour

Evaluate Criteria Evaluate Criteria are typically product features or attributes associated either with benefits desired by
the customer or the cost he has to incur. To assess the benefits offered by goods a consumer uses a range of evaluative criteria. It can be tangible such as price, color, and size shape or performance characteristics or intangible such as brand image. Evaluate criteria can differ in number, type and importance. They also vary from customer to customer from product to product and situation to situation. For example while buying a pair of trouser one person may go by the fit factors while the other may go for the styling, color, and price. There are two important issues in understanding the use of evaluative criteria in selecting from several alternatives. Number of Evaluative Criteria The more important the purchase is for the consumer the more will be the evaluative criteria. While purchasing something of less importance the consumer will assess the product on fewer evaluative criteria. Importance of Evaluative criteria Many criteria may go into selection/relative importance varies for some consumer price is the most important and for others tech. is the model.

Selection of Evaluative Criteria To develop a sound strategy to influence consumer decision a marketing manager has to
determine. Which evaluate criteria is used by a consumer. What is the relative importance of these criteria? How the consumer perceives the various alternative on each of these criteria.

Determination of salient evaluative criteria There are direct and indirect method available to determine as to which
criteria are used by the consumer while making a product choice. Direct Method It include asking the consumer straightway as to what information they use in a particular purchase. Indirect Method Indirect measurement technique assume that the consumer will not or cannot state their evaluative criteria. Two techniques are frequently used to know the consumer mind observation method. Projective technique Perceptual mapping.

Consumer Decisions Rules Rules govern the way in which different consumer evaluate different products in different
buying situation. Consumer may use either compensatory or non compensatory processes as decision rules in evaluating attributes of the alternative products under consideration. 1. Non Compensatory Decision Rules A non compensatory rule is on in which the weakness of a possible alternative of a possible alternative is not offset by its strength .There are four types of non compensatory rules. Disjunctive Rule Using this rule the consumer first decide which criteria are determinants of his choice while which one are not. Then he establishes a minimum score on each one. Conjunctive Rules Using this rule a consumer considers all evaluative criteria as determinant and a minimum acceptable value or score is established for each one. Lexicography Rule The consumer using this rule rank each of the evaluative criteria in order of importance. If two suppliers score the same on the highest rank criterion, then the consumer uses the second, the third and so on Elimination by Aspects Rules Here the consumer ranks the evaluative criteria and also sets minimum score that must be met on each of them. The alternative that don't meet each minimum are eliminated. 2. Compensatory Decision Rules Compensatory rule are more practical as here the consumer is able to make trade off while comparing alternative. If one attribute is very strong, it may compensate for the weakness in another. This approach therefore uses more than one evaluation criterion for assessment by consumer. There are two types of compensatory rules Simple Additive Rule Using the simple additive rule the consumer totals the score on all evaluative criterions for each alternative and the highest score wins. This rule assumes that all criteria are of equal importance. Weighted Additive Rule Using this rule the consumer assigns a relative weight to each evaluative criteria based on its perceived importance. Then the score on each evaluative criterion is multiplied by the relative weight to produce a weighted score. These weighted score are summed up and brand with highest weighted score chosen.

Consumer Behaviour

Unit 4 Consumer Motivation Motivation is an inner drive that reflects goal-directed arousal. In a consumer behavior context, the results are a desire for a
product, service, or experience. It is the drive to satisfy needs and wants, both physiological and psychological, through the purchase and use of products and services.

Five stages of the motivation process:


Latent needs Drive Want or desire Goal Behavior

Motivational Levels - Depending on how important a purchase is to an individual, his motivational levels may vary from low to high. Influences include familiarity with the purchase, status factors and overall expense and value. Where fulfillment rewards are low, as with groceries, motivation levels are also relatively low and involve little decision-making behavior. Conversely, with a complex, risky and emotionally-charged process such as buying a new house, the drive to achieve the "right" result is high. Motivational Behavior - The behavioral aspect of consumer motivation concerns the actions someone takes before
purchasing and consuming goods or services. A person might do a lot of research--evaluating alternatives, testing and samplingbefore making a selection. She might decide to buy something based on which goods or services most closely meet and satisfy motivational wants and needs. Marketers aim to gain the most impact and eventual sales by linking their products and services to clearly defined consumer needs and by understanding what motivates people to buy.

Behavioral Models of Motivation


Maslows hierarchy of needs .Motivation as a means of satisfying human needs five types of needs: Physiological: food, water, sleep, exercise, sex Safety: security, shelter, normalcy in daily life Love and belonging: affection and acceptance as part of a family or group Esteem or status: self-respect and the respect of others; the need to feel competent, confident, important, and appreciated Self-actualization: the need to realize ones own potential, to achieve dreams and ambitions

Accessing Motivation - Companies and marketers use a number of different tools to help them understand consumer
motivation in relation to their products and services. This may help them orient their markets according to different buyer motivation. Marketers use pre-purchase and post-purchase focus groups, one-to-one interviews and online or postal surveys to develop their understanding of consumers' motivational drivers

Consumer Behaviour

Consumer Perception Consumer perception theory is any attempt to understand how a consumers perception of a product or service influences their behavior. Those who study consumer perception try to understand why consumers make the decisions they do, and how to influence these decisions. Usually, consumer perception theory is used by marketers when designing a campaign for a product or brand. However, some people study consumer perception in order to understand psychology in a much more general sense.
Perception - In general psychological terms, perception is our ability to make some kind of sense of reality from the external sensory stimuli to which we are exposed. Several factors can influence our perception, causing it to change in certain ways. like, repeated exposure to one kind of stimuli can either make us oversensitive or desensitized to it. Branding - The goal of a brand is to set a product or service apart from others of its kind, and influence the consumers to
choose the product over similar products simply because of its associations.

Positioning, Repositioning or De positioning - Positioning is the process whereby marketers attempt to build a brand.
Repositioning is the process of altering this image, usually in order to influence a larger target market. De-positioning is the practice of trying to devalue alternative, competing brands in the perceptions of a shared target market.

Value and Quality - Value refers to the perceptions a consumer has of a product's benefits when weighed against its cost. It can be measured both qualitatively&-the emotional a consumer derives from a product or service. Quality can be related to value, and may be taken into account when measuring the value of a product or service. Buyers remorse - Buyers remorse is a strong feeling of regret which occurs after a purchase has been made. It is a specific
case of cognitive dissonance, or the psychological state of worry or unease which comes about when attempting to come to terms with conflicting ideas, perceptions or motives.

Selective Organization of perception


Selective Attention We may attention to some of messages not all. Attractive ads force our attention toward the message. Selective Distortion New sensation independent of previous perception do not exist. We distort the message to suit our belief & attitude. Selective Retention Out of all messages that we receive we tend to retain some of them. Then these messages are either retained in our short memory or in our long term memory.

Determinant of perception
Stimulus factors Perceptual org. are primarily dictated by the physiological events occurring in the nervous sys of an individual as a direct reaction to the stimulation by the physical object. Functional factors Since perception is always selective perceive only those things that make sense within the context of our cognitive structure. On one hand we screen out messages we do not want to pay attention to on the other we distort, modify and even add elements so as to see what we wish to.

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Attitude Attitude is a relatively permanent organizing of cognitive, perceptual, emotional and motivational process with
respect to some aspect of our environment. It is primarily a learned predisposition to respond in a consistently favorable or unfavorable manner with respect to a given object. Thus an attitude is a way we think, feel and act toward some aspect of our environment such as a product, a brand, an advertising for it e.tc.

Characteristics
1. Attitude has an object It must have a focal point. This could be a physical object, or a service or an action. 2. Attitude has direction, degree & Intensity An attitude expresses how a person feels towards an object. It expresses Direction The person is either for or against an object. Degree The Extent of like or dislike towards the object. Intensity How strongly a person feel about his conviction. 3. Attitude has Structure Attitude display a certain amount of organization. This implies that they have internal consistency, are fairly stable have varying degree of salience and are general sable. If a person faces problem with a product he tends in believe that all the products of that brand are prone to cause trouble. 4. Attitude is learned Learning precedes attitude formation and change, attitude are also derived from both direct and indirect experience in life.

Components of Attitude
Cognitive Components Attitude primarily consist of a consumer belief about an object. Most of the beliefs held by the consumers are evaluative in nature. More the number of positive about a brand and the greater the positiveness of each positive belief more favorable the overall cognitive component of attitude is likely to be. Affective Component A consumer feeling or emotional reaction to an object represent the affective component. Consumer reactions to certain object are in context of certain specific situation. A consumer affective reaction to a product may change as the situation changes. Behavioral Component The behavioral component of an attitude is ones tendency to respond in a certain manner towards an object or activity. A series of decision to purchase or not to purchase a certain brand or to recommend it or any other brand to friends reflects the behavioral component of an attitude.

How do I Change Consumer Attitudes?


Companies may focus on changing consumer attitudes for a variety of reasons. Dropping sales, increased product or service complaints and new, or renewed, competition in the marketplace can all necessitate a hard look at the reasons behind trends related to consumer perceptions and attitudes. Deciphering the cause of negative perceptions requires appropriate planning and the commitment to make the necessary changes to ensure success.. Steps 1 - Identify consumer perceptions. In order to develop an action plan for changing consumer attitudes, you need to understand current perceptions of products and services. Evaluate captured feedback, such as customer service contact statistics regarding complaints and concerns. Step 2 - Compile data for interpretation. Interpretations derived from statistical data can provide immediate feedback related to possible product or service defects. Evaluate survey responses for information related to consumer views and perceptions of the business's products or services. Focus on repeated or habitual problems experienced by customers. Step 3 - Create a plan of action. Once you have identified consumer perceptions, develop a plan to improve areas where consumer perceptions reflect a negative attitude toward the company, product or service. This can include improved employee training to handle concerns and help cultivate customer loyalty. Involve product development on needed product improvements. Step 4 - Share vital information with affected employees. Educate the appropriate personnel on the goals of any new campaigns and promotions. Ensure customer service representatives understand the impact of creating a positive customer environment. Changing consumer attitudes is essential to ensuring future loyalty and creating a secure job environment. Step 5 -Measure success. Use customer service metrics as one way to measure success. This can include keeping track of incident reports, positive feedback and complaints. Signs of a shift in consumer attitudes include reduced complaints and increased sales.

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Unit 5 Personality and Self Concept Personality Personality is the relatively long lasting personal quality that allow as to respond to the world around us.
Personalities, therefore are meaningful to consumer and thus of importance to marketing manager. It is the personality of the consumer which guide and directs the behavior chosen to accomplish goals in different situation. It can be defined as a consistent pattern of responses to the world across situation and overtime. it is an internalized system which include all the aspects of a person that are inherited as well as those that are learned. Personality is the composite sum of an individual traits, characteristics motive, attitude, belief and outlook. There are two broad new on development of personality. State Approach to personality - This approach advocates that an individual should be understood as a whole. Here the focus is on understanding the individual response tendencies under variety of condition. This approach takes into account external influence like family, group, peers, and cultural e.tc on an individual behavior. Trait Approach to personality Personality traits are consistent tendencies to respond to a given situation in certain ways. The fundamental assumption of trait theory is that all individual share the same trait though they are exhibited at different levels for different groups resulting in different personalities. Personality & Consumer Behavior The association between consumer behavior and personality may be stronger for some consumer than for others. Certain type of personality traits may be more related to consumer behavior that others. We take the following influence: Optimal Stimulation level (OSL) Some activities have the potential to provide us with some sort of physiological arousal. Those with high stimulation needs are likely to be the innovators, seek information about new products and engage in variety seeking behavior. Dogmation Consumer can also vary in terms of how open or closed minded they are. Dogmation refers to an individual tendency to be more resistant to change and new idea. Different group consider different level of arousal as optimal. Need for cognition Individual may vary in terms in terms of how much pleasure they derive from effortful thinking, deliberating and contemplating. Consumer who enjoys thinking about things like products, attributes and benefits would be high in need of cognition. Those who are low need for cognition do not like to deliberate much and prefer shortcut. Susceptibility to Influence Some consumer has a greater desire to enhance their image as observed by others and therefore is willing to be influenced or guided by them. Also consumer with low social and information processing confidence tends to be more influenced by ads. Self monitoring behavior Individual differ in degree to which they look to others for cues on how to behave. High self monitor are typically sensitive to the desire and influence of others to guide their own behavior and low self monitor are guided more by their own preference and desire and are less influenced by normative expectation.

Self Concept Self concept is a narrower dimension of personality. It has become a popular concept in recent years to investigate possible relationship between how individual perceive them and how they behave as consumer. It can be defined as the totality of an individual thought and feeling having reference to him as an object. Basically one's self concept is comprised of the attitude one holds toward one self. The self concept is broadly divided in two parts are 1. Actual and Ideal - Actual refers to who I am now and Ideal refers to who I would like to be. 2. Private and Social component - The private self refers to how I would like to be myself and how I am and social self pertains to how I am seen by others and how I would like to be seen by others.
Role of self concept in Marketing - marketing use self concept to design their marketing strategies. The relationship
between self concept and product purchase can be logically explained with the help of following sequence. An individual has a self concept. One's self concept is valuable to oneself. Since self concept is valuable an individual always strives to enhance it. Certain product serves as social symbol and communicates social meaning about those who own and use such products. The use of product as symbols communicates meaning to one's self and to others. Certain products therefore are brought because they project a desired self concept. The brand purchased must match the self concept of the consumer to result in satisfaction. In brief we can say that individual have of themselves actual and ideal; private and social serve as a guide for many products and brand choice. As marketer strives to develop new product and new appeal for customer they need to keep in mind this important variable. Basically consumer prefers brands that are similar to their self concept.

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Unit 6 Psychographics and life style, Reference group influence Psychographics psychographics describe people in terms of their day to day activities, interest, opinion, personalities and
personal values. Psychographics research mainly focuses on the measurement of AIO (Activity, Interest, and Opinion). A psychographic profile indicates how well each lifestyle statement describes him or her. AIO response reveals the lifestyle of an individual. They can be contrasted with demographic variables (such as age and gender), behavioral variables (such as usage rate or loyalty), and firm graphic variables (such as industry, seniority and functional area).Psychographics should not be confused with demographics. For example, historical generations are defined by psychographic variables like attitudes, personality formation, and cultural touchstones. The traditional definition of the "Baby Boom Generation" has been the subject of much criticism because it is based on demographic variables where it should be based on psychographic variables while all other generations are defined by psychographic variables, the Boomer definition is based on a demographic variable: the fertility rates of its members' parents. When a relatively complete profile of a person or group's psychographic make-up is constructed, this is called a "psychographic profile". Psychographic profiles are used in market segmentation as well as in advertising. Some categories of psychographic factors used in market segmentation include: Activity, Interest, Opinion (AIOs) Attitudes Values In fact psychographic connote the idea of consumer and involve the investigation of three different aspect which are used to assist market strategic Life style Personalities Demographics. The marketer can use this information on personality and psychographic for segmenting customers, for positioning products for designing media strategy e.tc. Psychographics can also be seen as an equivalent of the concept of "culture" as used most commonly in national segmentation. "Psychographics is the study of personality, values, attitudes, interests, and lifestyles"

Life Style

The concept of life style is highly co related with consumer's value system and his personality. Life style is reflected by consumers AIO (Activity, Interest & Opinion). The basic logic between the life style segmentation is that consumers who engage in different activities and have different interest and opinion from others can be clustered together to form a homogeneous segment. Then research can reveal the product usage pattern that is unique to this segment. This enable the marketers to understand as how is product fit into the customer general pattern of behavior.

Life Style Characteristics


It is a group phenomenon:-A personal lifestyle bears the influence of his participation in social group and the influence of his relationship with others. Lifestyle pervades various aspect of life: - Knowing the person conduct in one aspect of life may enable one to product how the person may be having in other areas. Lifestyle implies a central life interest: - For every individual there are certain interests that are central to his life like family, work, politics e.tc. Life style may vary according to sociologically relevant variables The rate of change in the society has a great deal to do with variation in life style.

Approaches of study of life style


AIO Approach One of the most popular ways for segmentation, targeting and positioning is to study the life style variable through an activity interest and opinion inventory. In constructing an inventory of such lifestyle statement first go through market research and could be of help in isolating psychographic variables. Life style Approach In India life style profile of kids, junior executive, housewife e.tc have been prepared. These categories exhibit different value system and life style pattern. A study of those patterns then in turn gives the idea to marketer of various products whether their offering will fit into their respective lifestyle or not.

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Reference Group A reference group is the group whose imitation an individual does while forming values, beliefs, attitudes, opinions and behavior. In general reference group is a group is a group of people whom you refer while making buying decision. It influences consumer behavior by building aspirations for the individual and helping him to choose the product for a particular lifestyle. They are small groups and consist of family, close friends or any other group of people you associate with reference group affect consumer by importing information.
Types of Reference Group
1. Membership of a Group Primary Vs Secondary A primary reference group is one with which the individual has frequent face to face contact. Member exerts significant influence on each member example family. Secondary reference group is one in which interaction with other members is less frequent. The power to influence is far less than primary group. Example club members. Formal Vs Informal A formal group is one in which some sort of structure and in some cases there could be specific member requirements. Informal groups are those that have no special membership or attendance requirement other than some common interest thus friends form an informal group. Aspirational Group All the above mentioned groups are membership group. A group to which an individual does not belong is known as Aspirational group. Here individual may attempt to emulate group member d by acting, dressing and even thinking the way they see that the member do. 2. Positive Vs Negative Group Reference group can also be classified as to whether they attract or repel the individual. Positive groups are those with whom a person wants to be identified where as negative groups those whom a person avoids are being identified.

Reference Group Influence


Reference group tends to influence individual consumption behavior in at least two ways They offer hints to an individual as to what kind of consumption pattern he should aspire for. They define items appropriate for a member to lead a particular life style. There are broadly three types of reference group influence. It is important to distinguish among these carefully since the marketing strategies depend on the type of influence involved. 1. Informational Influence This occurs when an individual uses the behavior and opinion of reference group members as potentially useful bits of information. For example you may like to try a new burger introduced by McDonald because a friend with similar taste recommended it. 2. Normative Influence This occur when an individual fulfills group expectation to gain a direct reward or to avoid a sanction. One may thus wear reebock shoes and not action brand to avoid being ridiculed by other member of the group who always sport the best possible brand. 3. Identification Influence This occur when an individual uses the perceived group norms and values as a guide for his own values as a guide for his own attitude and values. Thus the individual is using the group as the reference point for his own self image.

Consumer Behaviour Unit 7 Industrial or Organizational Buying Behavior

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Organization buying is the decision-making process by which formal organizations establish the need for purchased products and services and identify, evaluate, and choose among alternative brands and suppliers. Organizational buying is heavily influenced by derived demand, that is, demand for an end product or for a product or service sold by the buyers customers. The demand for components by a manufacturer will be dependent on demand coming from their customers, the retailers and wholesalers, who in turn are reacting to demand from their customers, the consumers. A good portion of organizational buying is controlled or constrained by the economic situation. Components, ingredients and supplies must fit with the conversion process and with the economic objectives of the final outcome. Organizational buying is not entirely predictable or entirely rational. Consumer market is a huge market in millions of consumers where organizational buyers are limited in number for most of the products.

Characteristics of organizational buyers are:


The purchases are in large quantities. Close relationships and service are required. Demand is derived from the production and sales of buyers. The organizational buyers are trained professionals in purchasing. Several persons in organization influence purchase. Lot of buying occurs in direct dealing with manufacturers.

Organizational Buying/Purchasing/Procurement Process


1. Stage 1: Problem recognition - Problem can be identified from either internal stimuli or external stimuli. Internal Stimuli like Company would like to launch new product hence it searches for the suppliers who can supply the material and equipments required for the new product. External stimuli like trade show, conference also helps the company to identify the problem. 2. Stage 2: Need description: After finalizing the problem, companies will define need description. The need description includes. For the complex products team assessment is required. The required items are assessed on the basis of reliability, durability, price, and other attributes needed in the item. 3. Stage 3: Product specification: Organizations develop detailed product specification with value analysis. In the value Analysis Company analyzes the components and their production process. Here emphasis is given to find the alternative methods of producing the components and finding the optimum method that suits the company. 4. Stage 4: Supplier search: The buyer now tries to identify the most appropriate suppliers. The suppliers task is to get listed in major business directories, develop a strong advertising and promotion program, and build a good reputation in the Marketplace. Suppliers who lack the required production capacity or suffer from a poor reputation will be rejected 5. Stage 5: Proposal solicitation: The buyer will now invite qualified suppliers to submit proposals. Some suppliers will send only a catalog or a sales representative. Where the item is complex or expensive, the buyer requires a detailed written proposal from each qualified supplier. The buyer will invite qualified suppliers to make formal presentations. Thus business marketers must be skilled in researching, writing and presenting proposals. 6. Stage 6: Supplier selection: This stage is also known as vendor selection. During this stage companies will prepare the checklist. Weight ages are assigned against each checklist point and evaluated. Some of the important attributes those commonly found in the vendor evaluations are - Quality, Delivery, Communication, Competitive prices, Servicing and Reputation 7. Stage 7: Order routine specifications: The buyer now negotiates the final order with the chosen supplier(s), listing the technical specifications The quantity needed, the expected time of delivery, return policies, warranties and so on. In case of MRO items (Maintenance, Repair and Operating items), buyers are increasingly moving towards blanket contracts rather than periodic purchase orders. 8. Stage 8: Performance review: In this stage organization review the performance of the suppliers. This will help it to decide whether to continue with existing suppliers or should search for the new vendor. These eight stages are very much essential for new task but not necessary for straight re-buy or modified re-buy. To know which stages are important in the new task, a straight re-buy or modified re-buy we will study Buy grid Model

Consumer Behaviour Buying roles in the Industrial marketing

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Business buying process, the number of people involved in the decision making is more inthe Industrial marketing.Therefore may business organizations constitute the buying center or buying committee. The characteristics of buying center are listed below Several individuals can occupy a given role (e.g. many users / influencers) and one individual can occupy multiple roles. The buying center may include people outside the organization such as government officials, consultants, and technical advisors and other members of the marketing channel. Different members of the buying centre have different influences, for e.g. the engineering department may be concernd with actual performance of the product, whereas production may be more interested in ease of use and reliability of Supply Members of buying centre have different personal motivations, perceptions and Preferences which in turn are dependent on age, income, education, job position, personality, attitudes towards risk and culture

Factors that influences on business buyers


Supply conditions: rawmaterials required should be matched with the demand condition of the company. If there is an Irregular or seasonal demand exists then company should adjust their supplies. Any shortage of the raw materials will Force the company to go out of the company. Political and Legal environment: the unstable government will have unpredictable policies. Any change in the Government policy will have direct or indirect impact on the company. Competitive environment: Business buying is very complex. The numbers of buyers are very few. Any technology Change adopted by the competitor should be carefully observed. If the company not able to identify the competitors Move Survival will become difficult. Culture and customs: Every country has its own culture and customs. Why one should not sell beef products in India, in Same way business buying is also influenced by the culture and customs Organizational policies and procedures: Companiespolicies like centralization versus decentralization of buying and Selling will have direct impact on the companys production. Organization structure and systems: Lesser the hierarchy more will be the flexibility in the organization.Companies with more number of hierarchies will have plenty of problems to be addressed. Interpersonal factors: business buying will have different outcome on the basis of authority, status, empathy and Persuasiveness that customer and organization posses Individual factors: Age, education, job position, Personality risk attitudes of individual will determine the buying Behavior of Each role and in turn these changes will have direct impact on the organization buying.

Consumer Behaviour Unit 8 Models of Consumer Behavior Engel Koll at - the Blackwell model

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The Blackwell model used concepts of behavioral science in an attempt to model, in a way both detailed and capable of general applications, the process which the consumers must go through in decision. (Tuck 1976) This model is designed to show the development in the amount of knowledge in customers behaviour. In the model there are five stages, this involves problem recognition, alternate evaluation, search for alternatives and purchase and outcomes. It is not essential for the customers to go through all those stages. The customers would get data from marketing and non marketing research; this would influence the problem recognition. This is the first stage of the decision making process for the customer. If the customers have still not come to a final decision, the consumer would go to the next stage of the Blackwell model. The EKB model of consumer behavior was originally designed to save as framework for organizing the fast growing body of knowledge concerning consumer behavior. Like Howard Sheth model it has gone through a no. of revision aimed at improving its descriptive ability & clarifying basic relationship between component & sub component. Steps 1. Decision Process Stage - Central focus of model is on 5 basic decisions Problem recognition Search Evaluation of alternative Purchase Outcome 2. Information Input - Information from marketing & non marketing source feed into information processing section of model. It has little influence at the problem recognition stage of decision making process. 3. Information Processing - The information processing section of model consists of consumer exposure, attention, comprehension / retention of marketer dominated & none dominated. 4. Variable Influence the decision process - Last model of individual & environmental influence that affect all 5 stage of decision process. Individual characteristic include - motive, value, lifestyle, & personality. Social influence is culture reference group & family. Situation influence such as consumer financial condition influence the decision process. As well known consumer motivation and behavior expert Mr. Nicosia presented his buyer model in 1966 which attempts to establish linkages between the marketing firm and its consumer. The essence is how the activities of the firm influence the consumer and result in his direction to buy. According to his model the messages from the firm first influence the predisposition of the consumer towards the product; he develops a certain attitude towards the product depending on the situation. It leads to a search for the product or on evaluation of the product. In case, these steps have a positive impact on him it may result in decision to by. This is the sum and substances of the explanation. His model lumps these activities into four basic fields. Field One has two sub-fields namely, the firms attribute and the consumer attributes. An ad message from the firm reaches consumers attributes. Depending on the way the messages received by the consumer, a certain attribute may develop and this becomes the input for the field Two. Field Two is the area of search and evaluation of the advertised product and other alternatives. If this process results in a motivation to buy, it becomes the input for field three. Field Three consist of the act of purchase. The field Four consists of use of the purchased item. There is an output from field four --- feed back of sales results to the firm. This buying Model based on the technique of computer flowcharting. The product adoption model - *Innovators*Early adopters*Early majority*Late majority*Laggards

Nicosia model:

The Nicosia model is divided into four major fields


Field 1: the consumer attitude based on the firms messages., Field 2: search and evaluation , Field 3: The act of the purchase Field 4: Feed back The Nicosia model offers no detail explanation of the internal factors, which may affect the personality of the consumer, and how the consumer develops his attitude toward the product. For example, the consumer may find the firms message very interesting, but virtually he cannot buy the firms brand because it contains something prohibited according to his beliefs. Apparently it is very essential to include such factors in the model, which give more interpretation about the attributes affecting the decision process.

Consumer Behaviour

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The Howard - Sheth Model - Howard and Sheths model on consumer behavior was introduced in 1969. This model
makes it simple for customers to make a decision. There are three stages in this model. The first stage is the extensive problem solving stage, the second stage is the limited problem solving and the third stage is the habitual response behavior. At the first stage of the Howard's and Sheths model the customers do not have much information about the brand, at this stage customers will carry out research to find out about the brand. At the second stage customers have some information at the product or brand. At the final stage of the model, the consumer will have enough information on the product or brand to make a fair decision on buying the product or not. It is also known as electric / multivariable models of consumer behavior. The Howard Sheth model of buying behavior attempts to explain the complexity of the consumer decision making process in case of incomplete information. This model suggests three levels of decision making 1. Extensive problem solving At this level the consumer does not have any basic information or knowledge about the brand and he does not have any preference for any product. In this situation, the consumer will seek information about all the different brands in the market before purchasing. 2. Limited problem solving This situation exists for consumers who have little knowledge about the market, or partial knowledge about what they want to purchase. In order to arrive at a brand preference some comparative brand information is sought. 3. Habitual response behavior In this level the consumer knows very well about the different brands and he can differentiates between characteristics of each product. According to the Howard Sheth model there are four major sets of variables - Inputs, Perceptual and learning constructs, Outputs, Exogenous (external) variables. Inputs - this input variable consist of three distinct types of information sources in the consumer's environment -Significative ,Symbolic ,Consumer's social environment Perceptual and learning construct - It deals with the psychological variables involved when the consumer is making a decision. - Consumer goals, information about brands, criteria for evaluation alternatives, preference and buying intentions are all included. Output - The output are the results of the perceptual and learning variables and how the consumers will response to these variable. Exogenous (external) variables - Some relevant exogenous variable include - Consumer personality traits, Religion, Time pressure.

Consumer Behaviour Unit 9 Consumer Behavior Studies In India Concept of consumer behavior

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The Study of consumer behavior is the study of how individual make decisions o spend of what they buy, why they buy it, where they buy it, where they buy it, how often they buy it and how often they use it. "The decision process and physical activity individuals engage in when evaluating, acquiring, using or disposing of goods & services".

Several Aspects of consumer behaviour


Customer and consumer The ultimate consumer Individual buyer The decision process A subset of human behavior.

Importance for studying Consumer Behavior


The study of consumer behavior is vital in framing production policies, price policies, decisions regarding channels of distribution and above all decisions regarding sales promotion. Production policies Price policies Decision regarding channels of distribution Decisions regarding sales promotion.

Characteristics of the Indian Consumer Behavior


The Indian consumers are noted for the high degree of value orientation- Such orientation to value has labeled Indians as one of the most discerning consumers in the world. Even, luxury brands have to design a unique pricing strategy in order to get a foothold in the Indian market. Indian consumers have a high degree of family orientation- This orientation in fact, extends to the extended family and friends as well. Brands with identities that support family values tend to be popular and accepted easily in the Indian market. Indian consumers are also associated with values of nurturing, care and affection- These values are far more dominant that values of ambition and achievement. Product which communicate feelings and emotions gel with the Indian consumers. Apart from psychology and economics, the role of history and tradition in shaping the Indian consumer behavior is quite unique. Perhaps, only in India, one sees traditional products along side modern products. For example, hair oils and tooth powder existing with shampoos and toothpaste.

Consumer Behaviour
Different Segments of Indian Consumers

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The Socialites - Socialites belong to the upper class. They prefer to shop in specialty stores, go to clubs on weekends, and spend a good amount on luxury goods. They are always looking for something different. They are the darlings of exclusive establishments. They go for high value, exclusive products. The Conservatives - The Conservatives belong to the middle class. The conservative segment is the reflection of the true Indian culture. They are traditional in their outlook, cautious in their approach towards purchases; spend more time with family than in partying and focus more on savings than spending. Slow in decision making, they seek a lot of information before making any purchase. The Working Women - The working woman segment is the one, which has seen a tremendous growth in the late nineties. This segment has opened the floodgates for the Indian retailers. The working woman today has grown out of her long-standing image of being the homemaker. Rural Consumer - About three quarters of the Indian population are in the rural areas and with the growing middle class, especially in the Indian cities, the spillover effect of the growing urban middle class is also felt in the rural areas. Indias Rich - Indias rich can be categorized into five major categories as follows:The Rich - The rich have income greater than US$11,000/- per annum. They spend more on leisure and entertainment-activities than on future looking investments. Across the category, backgrounds are distinctly middle class. The Super Rich - The Super Rich have income greater than US$22,000/- per annum.. The Super Rich are mainly professionals and devoted to consumerism. They buy many durables and are status conscious. The Ultra Rich - The Ultra Rich have income greater than US$44,000/- per annum. There is no typical profile of the ultra-rich. Some single earning households are of first generation entrepreneurs. The Sheer Rich - The Sheer Rich is made up by households having income exceeding US$110,000/- per annum. There are joint families as well as nuclear families in this category. They consume services greatly. They own multiple cars and houses. They aspire to social status and power. The Obscenely Rich - The Obscenely Rich is made up of households having income exceeding US$222,000/- per annum. They are first-generation entrepreneurs who have made it big. Some of them are techies. They are just equivalent to the rich in the developed countries. They crave for exclusivity in what they buy. Most premium brands are relevant to them.

Changing Trends in Indian Consumer Behaviour


Bulk Purchasing - Urbanization is taking place in India at a dramatic pace and is influencing the life style and buying behaviour of the consumers. The working urbanites are depending more on fast and ready-to-serve food, they take less pain in traditional method of cooking and cleaning. Bulk purchases from hyper stores seems to be the trend these days with purchasing becoming more of a once-a-week affair, rather than frequent visits to the neighborhood market/store/vendor. The popular growing shopping trend among urbanities is purchasing from super markets to hyper stores. Trendy Lifestyles - The current urban middle and upper class Indian consumer buying behaviour to a large extent has western influence. There is an increase in positive attitude towards western trends. The Indian consumer has become much more open-minded and experimental in his/her perspective. There is now an exponential growth of western trend reaching the Indian consumer by way of the media and Indians working abroad. Foreign brands have gained wide consumer acceptance in India, they include items such as; Beverages, Packed food, Personal care products, Audio/video products, Garment and apparel, Footwear, Toys & Gift items e.tc. Foreign brands vie increasingly with domestic brands for the growing market in India. Foreign made furniture is well accepted by the Indian consumers. Malaysian, Chinese, Italian furniture are growing in popularity in India. Indian consumers have also developed lifestyles which have emerged from changing attitudes and mind sets; exposure to western influences and a need for self-gratification. Beauty parlors in cities, eateries, designer wear, watches, and hi-tech products are a few instances which reflect these changes.