CONSUMER BEHAVIOR

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We don’t sell lipsticks. We sell dreams.

Perfume is made in the factory, ‘hope’ is sold in the store.

In the factory we make cosmetics. In the store we sell hope.

- Charles Revson

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 How a product or service is converted to a sale?

Designing a logo Communicating the brand

Evaluating the message • Understanding needs

Advertising the • Bringing value to
product or service consumers
to consumers • How a consumer
Segmenting and Positioning reacts and behaves

Creating a brand image Consumer Behavior

Marketing strategy

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Consumer Behavior

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 What to expect in this course?
• Fundamentals of consumer behavior
• Coverage of consumer behavior theories
• How consumers make decisions? – Consumer decision making process
• Framework for interpreting consumer reactions to marketing stimuli
• Consumer behavior applications in marketing
• Consumer behavior practices in organizations

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 LEARNING OBJECTIVES

INTRODUCTION TO CONSUMER BEHAVIOR

➢What is consumer behavior?

➢Consumer behavior and Marketing concept

➢Why is the study of consumer behavior important?

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 LEARNING OBJECTIVES

INTRODUCTION TO CONSUMER BEHAVIOR

➢What is consumer behavior?

➢Consumer behavior and Marketing concept

➢Why is the study of consumer behavior important?

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APPLICATION OF CONSUMER BEHAVIOR – Kellogg’s

If consumers in developed markets

had been consuming cornflakes with
cold milk for decades,

Why should a brand like Kellogg’s

advertise that cornflakes can be
taken with hot milk, almost two
decades after its entry into India?

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WHAT IS CONSUMER BEHAVIOR?→People consumer

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 WHAT IS CONSUMER BEHAVIOR?

Study of how individuals, groups, and organizations

select, buy, use, and dispose of goods, services,
ideas or experiences to satisfy their needs and wants.

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 HOW CAN A CAR EXPRESS ABOUT ITS OWNER?
➢Why do people buy cars?

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 HOW CAN A CAR EXPRESS ABOUT ITS OWNER?
➢Why do people buy cars? Volvo
Porsche

Tagline: Protects what’s

important to you
Tagline: Unfilled dreams cost a
lot more Volvo's campaign: "For Life"
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HOW CAN A CAR EXPRESS ABOUT ITS OWNER?

➢Why do people buy cars?

• Need: Personal transportation

• Types of cars they purchase: reflect psychological and

sociological characteristics and lifestyles, including
financial resources.

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FACTORS WHICH INFLUENCE CONSUMER BEHAVIOR
INTERNAL FACTORS EXTERNAL FACTORS

• Individual - Personal factors • Social factors

• Demographics • Reference groups
• Age • Family
• Gender • Friends, Neighbors, Coworkers
• Life cycle • Social roles and status
• Occupation and economic
circumstances • Culture
• Lifestyle • Environmental
• Economy
• Personality • Political
• Consumer psychology

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 CONSUMER BEHAVIOR MODEL
Stimulus- response model

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 How to apply consumer behavior in daily life?
Share your experiences as consumers, not only as students!
Think as Business and Marketing Managers.
➢ How did you purchase shoes?

➢ What factors influence you to buy a soap/shower gel?

➢ What are the different factors I considered when buying a mobile phone?

➢ What factors influenced my decision in selecting MBA college?

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 WHY DO WE STUDY CONSUMER BEHAVIOR?

• Why consumers were drawn to a particular brand?

• What makes us choose one brand over another?

• What information passes through our brain’s filter and what
information doesn’t?

• What would be key to truly building brands of the future?

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 WHY DO WE STUDY CONSUMER BEHAVIOR?
Consumer behavior explains:
➢ All the psychological and behavioral aspects of consumer’s decision making process

➢ How and Why consumers make decisions based on several factors (Internal / External)
than facts and rationality

➢ How people decide to spend their money, time, and effort on goods that marketers offer for
sale

➢ All stages of consumer behaviour process : Need recognition – Information processing –

Brand evaluation – Purchase – Postpurchase evaluation

➢ Describes which products and brands consumers select - Why, when and where they
purchase them

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 COURSE OUTLINE
• Introduction to consumer
behavior
• Consumer decision making and
buying process
➢ Course content and Session Plan • Micro forces
• Macro forces
➢ Mini project • 4 case studies
➢ Field research project

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 LEARNING OBJECTIVES
INTRODUCTION TO CONSUMER BEHAVIOR

➢What is consumer behavior?

➢Consumer behavior and Marketing concept

➢Why is the study of consumer behavior important?

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 MARKETING CONCEPT REQUIREMENTS
STP: Market Segmentation, Targeting, Positioning

The Marketing Mix (4 Ps)

• Product or service
• Price
• Place
• Promotion

The 5 Cs

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 CONSUMER BEHAVIOR IN MARKETING PROCESS
IDENTIFY MARKET
OPPORTUNITIES Customer Company Competitors Collaborators Context
PESTEL

SET STRATEGY Segmentation Targeting Positioning

FORMULATE
MARKETING Product/ Price Place Promotion
PROGRAM Service

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 DEVELOPMENT OF THE MARKETING CONCEPT
The marketing concept was developed over time through three other
important business orientations:

➢ Production Concept

➢ Product Concept

➢ Selling Concept

➢ Marketing Concept

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 PRODUCTION CONCEPT
➢ Marketers focus on product availability at low prices.
➢ Mass production, not product variations.

• Henry Ford
• 1913 – Model T car – Important car in history
• Introduced assembly line –Inexpensive cars,
produced uniformly, at the lowest costs
• Ignored consumers’ preferences
“consumers can have cars in any color they want as long as it’s black.”

• 1923 – General Motors – Alfred Sloan

• All customers are not alike: “Family of cars – automobiles for every purse and purpose.”
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 PRODUCT CONCEPT
Product concept
• Consumers will buy the product that offers them the highest quality, the best
performance, and the most features.

Marketing myopia
• Short-sighted approach
• Focus on the product, ignore market and consumer needs
• Product focus as opposed to customer focus
• Ex: Kodak – “Kodak moments”
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 SELLING CONCEPT
• Focus on selling the products that the marketer has decided to produce
• Hard sell
• “We will sell what we make”
• Assumption: Consumers are unlikely to buy the product unless they are aggressively
persuaded to do so
• Approach does not consider customer satisfaction or customer retention

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 DEVELOPMENT OF THE MARKETING CONCEPT
Before 1950’s:
• Emphasis on Mass-production, Mass-marketing, Economies of scale

MARKETING CONCEPT
• Emerged in 1950’s
• Consumer-oriented view
• Marketers must first define the benefits consumers seek in the
marketplace and gear marketing strategies accordingly

• Impetus for studying consumer behavior in marketing concept

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 LEARNING OBJECTIVES

INTRODUCTION TO CONSUMER BEHAVIOUR

➢What is consumer behaviour?

➢Consumer behaviour and Marketing concept

➢Why is the study of consumer behaviour important?

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Understanding Consumer Behavior: PEPSI Challenge

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 Understanding Consumer Behavior: PEPSI Challenge
➢1975 – Pepsi Challenge
• Experiment known as Pepsi challenge – Blind test
• Unmarked cups - One cup contained Pepsi and the other Coke
• Blind test result: Subjects prefer taste of Pepsi over coke

➢2005 - Malcolm Gladwell in his book ‘Blink’ offered an interpretation

• Why Pepsi prevailed in the taste test, but Coke continued to lead the market?
• Pepsi challenge was a “Sip Test”

➢ 2003 - 28 years after the original Pepsi challenge

• Neuroimaging lab using fMRI to measure
• Results matched the findings of the original experiment – Blind test
• Second stage of the experiment – when subjects knew what they were drinking
Results: Override rational preference for Pepsi. Coke won.
Window into our thought process and decision-making processes.
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WHY IS THE STUDY OF CONSUMER BEHAVIOUR IMPORTANT?
➢Radical changes in the marketing environment

➢In Indian context: Consumer behavior is the backbone of branding

Diverse cultures within the country

➢ Emergence of e-commerce and digital technologies

➢ Empowered consumers in the marketplace – greater access to

information

➢ Increase in time poverty

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WHY IS THE STUDY OF CONSUMER BEHAVIOUR IMPORTANT?
➢More fragmentation of the marketplace - Micromarketing

➢Desire for more customized products to fit consumer needs - Mass-

customization

➢ Understanding of How and Why consumers make decisions based

on several factors than facts and rationality

Marketers can target consumers more effectively with knowledge of

consumer behavior

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 CONSUMER BEHAVIOUR

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