Introduction Recap of Marketing Basics (3/9) Consumer Behavien, Definition of marketing management Marketing Management is the art & science of & (a) choosing target markets (b) getting, keeping and growing customers, (c) creating, communicating and delivering superior value to customers (d) more efficiently than the competitorsIntroduction Recap of Marketing Basics (3/s) Definition of marketing management What is marketed? (1) Goods (2) Services, (3) Events (4) Experiences (5) Persons (6) Organizations (7) Properties (8) Places (9) Information and (10) IdeasIntroduction Recap of Marketing Basics (4/9) uy Consumer Behavior ‘What do we mean by - Market?, Industry? What is STP? — Segmentation - dividing the market into distinct subsets of customers with similar needs and characteristics that lead them to respond in similar manner to products or programs. — Targeting - — Positioning -= Targeting - evaluation of relative attractiveness (in terms of potential, growth rate, firm's capabilities etc) in order to choose the segments to serve - Positioning -Earlier SEC (Urban) E Literate no| School up [School $-| $SC/ ‘aang Graduate/ec | S*euste/ graduate | 0°71 professional nsled led Workers ty traders hop Owners jusinessmen with No nployees usinessmen with [9 employees usinessmen with 10+ mployees elf Employed rofessional lerical/Salesman upervisony LevelEarlier SEC (Urban) Literate no) Schoo! up ‘Same college, not eraduate Graduate/PG general ‘Graduatey PG fessionalConsumer Behavior Education lecorate| Literate no! School School up tod years ISchool s- S years Some college, not graduate Graduate/PG general Graduate] PG rofessional nailed killed Workers iy traders hop Owners jusinessmen with No c a _ pmplovees Bf snessmen 4 «|e ee) ee Ft employees @ [Businessmen wit —_—— mpioyes rofessional lerica/Salesman f= EmployedConsumer Behavior Education titerate|Ut&"2% | School up |Schoal S| sscy Graduateypc | aeuste/ Scheol | toa years | 9years | HSC general | ofesatonal nskllled o D D illed Workers a c 52 Bi ty traders D 2 D © © BR 82 hoo Owners D 2 o c Bz a wsinessmen with No | 5 = ou lise _ PmBlovees § Businessmen with B3 employees <_ |S WE Ae (ES |e 2 i wsinessmen with 10+ | gy e 7 mployees 3 fel Employed rofessional = . a lerical/Selesmen B D D D z i it supervisory Level D D D c < oa BiEarlier SEC (Rural) Consumer Behavior Type of House Illiterate] Literate | School no | upto4 School | years Kuchha Semi- pucca Ra School =o years Ra SSC/_] Some |Graduate/] Gaaiatey HSC | college,| PG professional not | general graduate R Ra Rs Rs Ra Ra Ra RaSegmentation § SEC Categories (3/9) Consumer Behavior Earlier SEC (Urban + Rural) Mn Nos. and % a* fiSEC Categories (4/9) Mie: Consumer Behavior New SEC Grid - Durables owned / Have access at Home lacy Cannecton Ty Ca vi ating Fan ca v ine Stere <> v Teswhealar > Vv Seberny => v be Retrigeater o> cf Washing Machen on Personal Computed anton o® eacltepivon ca aE ab Agricultural Land Ca v o| THE NeW SEC SYSTEMConsumer Sehavior New SEC (Urban + Rural) — : : Chief Earner's education (7) eee berate oi ome raduate f [radiate / Durables: iterate Echoolingy Pte kcehaee plage tind yo BS years Diploma) bultraduate: Graduate eee eal le jotGrad General —_ professional 4 years _ : al Professional 1 2 a 4 5 (Cuma nn: | Nene _| 1 2 3 4 5 6 above:Segmentation SEC Categories ( (urban + rural ) New SEC SystemBases of Segmentation (Usually a combination — Hybrid) User/Consumer attributes Consumer Behavior, Usage/Consumption attributes Who they are? (Demographic) Facts Where they are? (Geographic) SEC Classification Attribute type CognitionBases of Segmentation (Usually a combination — Hybrid) Usage/Consumption User/Consumer attributes attributes Facts Personality - Innovators, NFC Attribute type 5 Lifestyles (Activities, Interests, Cognition | Ooinions) - ACORN, VALS, PRIZM Socio-cultural values and beliefsBases of Segmentation (Usually a combination — Hybrid) ward a ' Usage/Consumption User/Consumer attributes sate Usage rate - H/M/L, RFM. Brand loyalty (behavior) Usage situation/occasion Facts Attribute type CognitionIntroduction Recap of Marketing Basics (5/10) Consumer Behavior, Bases of Segmentation (Usually a combination — Hybrid) Usage/Consumption User/Consumer attributes attributes Facts Benefit sought Attribute type Level of involvement Brand loyalty (attitudinal) CognitionIntroduction Recap of Marketing Basics (6/10) Any other bases of segmentation? ‘Consumer Behavior, How should we segment for effective targeting? LA Measurable, Sizable, Stable, Accessible and Congruent with firm’s objectivesAssignment- —_ Indian Consumer Insights (Census of India, other sources) Each group to submit 5-slide PPT. email Urban/Rural, Rich/poar, Digital divide, Demographic dividend...Targeting options depending on if demand homogeneous, clustered or fragmentedPositioning / Re-positioning Strategy: Step-wise Process 4) Understand relevant product/service attributes - Features, Benefits, Ingredients, Process, Qualified personnel.. (IA & CA) 5) Identify the important and determinant attributes for target market -— Conjoint , Kano model (MA)Positioning / Re-positioning Strategy: Step-wise Process (8? 6) Analyze possibilities for differentiation — Perceptual map, value curve (CA) 7) Select benefits to emphasize and articulate desired position in the market - Write Positioning statement / Value proposition (MA, IA and CA)Introduction Recap of Marketing Basics (3/10) Consumer Behavior, Marketing mix - The 4Ps Product - Levels (core, basic, expected, augmented, potential) - Classification (Consumer - Conv., shopping, Spl., unsought Industrial - R/M, Comp, CG, Supplies & Sve) - Product Mix (width, length, depth, consistency) Price Promotion PlacePrice - Strategy (Penetration or Skimming) - 3C considerations PromotionPrice Promotion - Mix (Advt., SP, PR & Publicity, Events, Direct & interactive marketing, word of mouth, personal selling) PlacePrice Promotion Place - Channel (Levels, mix) - Strategy (Exclusive / Selective / Intensive)7 Ps for Services (Traditional 4Ps + 3 additional Ps) (= bend Services consumed as soon as produced, customers in the firm’s factory People — Employees: €.g. Call centre agent, Guard at ATM, Relationship Manager Customer: e.g. Ability to use net-banking Other customers: e.g. Other customer arguing at the bank counter Processes —7 Ps for Services (Traditional 4Ps + 3 additional Ps) Services consumed as soon as produced, customers in the firm’s factory \ People — Processes - Procedures, mechanism for service delivery. E.g. Quality judged from refund process, is the process Standardized/Ad-hocPeople — Processes — Physical Evidence - All tangible presentations of service (Brochure, Signage, Website, Network..)Recap of Marketing Basics (10/10) Where does CB fit-in? Political Socio-cultural | Nee Ecological; \ P 4 A Legal M K 7 iE wr Competitive | 8 scm Finance Technological W/R | Economic |} S&DWhat do we understand by Consumer Behavior? fe Examples — You are required to buy a Kindle (~ ¥ 10K) * For yourself + Asa gift to be given by a group of friends to your office colleague + To be givenas one of the Lucky Draw gifts on purchase of 55”+ TV ‘Festival Scheme!Consumer behavior is defined as activities people undertake * i Bi BECB 2s a subject Comrows from Pagchobogy — Svocéologyg — Social Payehotogy — Authnropology — Economies —Consumer Behavior Introduction - (5/5) CB is closely related with Value for customers Customer satisfaction ‘Customer Trust — Retention“Consumer Echavie, CB is closely related with Value for customers ( Ratio of Perceived benefits to total costs, value proposition Customer satisfaction - Customer Trust — Retention -CB is closely related with Value for customers Customer satisfaction — Perception Vs Expectations, WOM Customer Trust - Retention —Bis closely related with Value for customers Customer satisfaction Customer Trust - a measure of quality of relationship, key to secure commitment Retention —Introduction - (5/5) Are Consumer Behavior CBis closely related with Value for customers Customer satisfaction Customer Trust Retention — Costs less than acquisition. Loyalty-based segmentsCB has significantly changed in the past two decades due to Globalization IT/Telecom/internetCDM viewed in several ways. 4 common views are eo «Consumers make rational decisions in the world of perfect competition PetCDM viewed in several ways. 4 common views are Economic | Emotional ag re * Consumer is submissive to self- serving interests andCDM viewed in several ways. 4 common views are er ul ) *Consumers are thinking problem D7 solvers. Acquire and process info toCDM viewed in several ways. 4 common views are * Consumer buying decisions are based on their emotions, impulses and moods PUT View ereConsumer Decision Making. Three Categories - (1/2) Consumer decision making is ‘response to a problem’ Nature and scope of problem varies widely Same response does not suit all problemsIndividual Consumer’s approach to the situation also differs with Consumer Involvement in object (perceived relevance of an object) Product (expensive, complex, imp, high perceived risk ~ Message SituationProduct (expensive, complex, imp, high perceived risk - Functional, Financial, Temporal, Physical, Psychological, Social, Sensory) Message SituationIndividual Consumer's approach to the situation also differs with Consumer involvement in object (perceived relevance of an abject) Product Message Situation (store, place of consumption.)Consumer Decision Making Three Categories - (1/2) En ® Individual Consumer's approach to the situation also differs with Consumer Involvement in object (perceived relevance of an object) Three categories of (CDM) Cognitive Habitual AffectiveConsumer Decision Making Three Categories - (2/2) Consume Behave” Three categories of (CDM) Habitual (Behavioral, Unconscious, Automatic) - RPS Choice with little or no conscious efforts (factors below the level of conscious awareness) Satisficing solutions (bounded rationality) Heuristic - familiar brand, COO effect, higher price > better quality-onsumer Decision Making Three Categories - (2/2) Three categories of (CDM) Habitual (Behavioral, Unconscious, Automatic) - RPS Affective (Emotional, Instantaneous) Many decisions driven by emotional responses (affect) Many messages aim to alter the mood and link to affect response +ve affect e.g. Music, scent in stores > shopping, -ve affect e.g. Insurance productsConsumer Decision Making Three Categories - (2/2) Bo? Consumer Behav, Three categories of (CDM) Habitual (Behavioral, Unconscious, Automatic) - RPS Affective (Emotional, Instantaneous) Cognitive (Deliberate, Rational, Sequential) - EPSConsumer Decision Making CDP Model 1) Need recognition 2) Search 3) Pre-purchase evaluation 4) Purchase 5) Consumption 6) Post-purchase evaluation ipl 7) DivestmentConsumer Decision Making: CDP Model Consumer Behav, Individual differences: Personality, Consumer ) resources, Motivation, ' +) Need recognition ro perceoto mans cee, uw [ 2) Search } ulus IN| (3) repurchase evaluation | | gas), = Experiences /LearingConsumer Decision Making CDP Model Sodety/culture, Consume Behari ape f social class, Family, Personal associates, situational factors ' (— Need recognition | (— Need recognition | recognition —1 WW (9) Search) ul 3) Pre-purchase evaluation > (cremains |]Consumer Decision Making COP Mode Re orsurer Gea, Environmental Marketers! Society/culture, Inputs. social class, Family, Dae aPsi7Ps Personal associates, situational factors | (4) Need recognition " 2) Search I ("3)Pre-purchase evaluation | T Se ( crpeiences LearningConsumer Decision Making CDP Model “Consumer Behave Lops] & Individual differences: Mm } Se } | [outputConsumer Decision Making CDP Model - 1) Need Recognition Coraumer Behave + Common Triggers - Consumption, Time elapsed, Internal / Ext stimulus = Need recognition result of gap in AS (Actual State) and DS (Desired State)... — AS Change: — DS Change:Consumer Decision Making CDP Model - 1) Need Recognition + Common Triggers - Consumption, Time elapsed, Internal / Ext stimulus nny + Marketers must understand needs and influence need recognition — Make consumers perceive their actual state as inadequate (RAM, Camera) — Product improvementiinnovations to alter desired state (Listerine mouthwash, Camera for reversing a car) — Stimulate recognition (Oral-B fading bristles), Remind consumers — Offer sales promotion schemes (brand switching)Consumer Decision Making CDP Model - 1) Need Recognition Consumer chou + Common Triggers - Consumption, Time elapsed, Internal / Ext stimulus + Marketers must understand needs and influence need recognition + Activation of need recognition may be = Generic for product category (undifferentiated products - packaged water) — Selective for specific brand (toothpaste with salt - Colgate)Consumer Decision Making CDP Model - 2) Search ‘Consumer Behar * Consumers search for info on (a) Evaluation criteria (b) Brands available and (c) Performance of various brands + Information Sources Internal - Motivated activation of knowledge stored in memory External -Consumer Decision Making . CDP Model - 2) Search Consumers search for info on (a) Evaluation criteria (b) Brands available and (c) Performance of various brands + Information Sources Internat ~ = Own experience (for the same need or by brand extension) External ~ LConsumer Decision Making CDP Model - 2) Search Consumer Behar Consumers search for info on (a) Evaluation criteria (b) Brands available and (¢) Performance of various brands + Information Sources Internal - External - — Info from F&F, Experts, TV/Radio/Print Advt., Store sales executives, catalogs, POP, Internet Blogs, Forums ete.Consumer Decision Making CDP Model - 2) Search + Consumers search for info on (a) Evaluation criteria (b) Brands available and (c) Performance of various brands + Information Sources Internal - External ~ + Search efforts depend on nature of product, perceived risk.Consumer Decision Making CDP Model - 2) Search Consume Behave + Consumers search for info on (a) Evaluation criteria (b) Brands available and (¢) Performance of various brands + Information Sources Internal — External - + Search efforts depend on nature of product, perceived risk.. Perceived benefit of info > perceived costs. Inverted U relationship with level of knowledgeConsumer Decision Making CDP Model - 2) Search ‘Consumers search for info on (a) Evaluation criteria (b) Brands available and (c) Performance of various brands + Information Sources Internal - External - Search efforts depend on nature of product, perceived risk.. Plan the Promotion in line with info searched, sources tappedConsumer Decision Making CDP Model - 3) Pre-purchase evaluation (1/2) Consume BM + Evaluations are based on PoPs (imp attributes) and PoDs (determinants) + Consumers do brand processing (one brand evaluated ata time: brandwise) Ly” ( or attribute processing (comparison of brands: attribute-wise)Consumer Decision Making CDP Model - 3) Pre-purchase evaluation (1/2) Consumer Behav, + For evaluating alternatives — Consumers use existing evaluations (in memory) to select product/service, brand and retail store (Awareness / Retrieval Set - TOMA) - Coke/Pepsi Getting into ‘Consideration set” (Evoked set) is key for marketersConsumer Decision Making CDP Model - 3) pre-purchase evaluation (1/2) Consumer Behan + For evaluating alternatives — Consumers use existing evaluations (in memory) — Ifa product is new to consumer, Consideration Set is constructed by search, discussion and by use of either Categorization: assign an alternative to a category e.g. Breakfast/snacks or Piecemeal process: Compensatory or non-compensatoryConsumer Decision Making 5 CDP Model - 3) pre-purchase evaluation (2/2) — Piecemeal process: Compensatory approach + Non-compensatory Display 40% Excellent (5) Excellent (5) Very Good (4) Excellent (5) Comera 30% VeryGood (4) Good(3)_— Excellent (5)———Fair(2) ‘Memory 20% Good@3)_—— Good (3) Poor (i) Excellent (5) Battery 10% Fair(2) Good(3) Good (3)_Excellent (5) Compensatory Additive | Weighted additive (Brand processing)Consumer Decision Making CDP Model - 3) Pre-purchase evaluation (2/2) Consumer chavo, ~ Piecemeal process: + Compensatory approach + Non-compensatory Pause Time) nantes | sande Display 40% Excellent (5) Excellent (5) Very Good (4) Excellent (5) Camera 30% VeryGood(4) Good (3) Excellent(5)_——_Fair(2) Memory 20% Good (3) Good (3) Poor (1) Excellent (5) Battery tox Fair(2) Good (3) Good (3) Excellent(5) Non-compensatory Lexicographic (Attribute Processing): ABD, AConsumer Decision Making CDP Model - 3) Pre-purchase evaluation (2/2) — Piecemeal process: + Compensatory approach + Non-compensatory a Display 40% Excellent (5) Excellent (5) Very Good(4) Excellent (5) Camera 30% Very Good(a) —Good(3)__—Excellent(5)_—_ Fair (2) Memory 20% Good(3) Good (3) Poor (i) Excellent (5) Battery 108 Fair) Good(3)__Good(3)_—_ Excellent (5) Non-compensatory _Lexicographic Elimination (Attribute Processing): Disp (E), Cam (VG)- A; Disp (VG) Cam (E)-CConsumer Decision Making CDP Model - 3) Pre-purchase evaluation (2/2) Consumer Behavior — Piecemeal process: + Compensatory approach + Non-compensatory a Excellent(5) Excellent (5) Very Good (4) Excellent (5) Camera 30% VeryGood (4) Good (3)_—Excellent(5)_—Fair(2) ‘Memory 20% Good(3)_—— Good (3) Poor(1) Excellent (5) Battery sox Faia) Good(3) Good (3) __Excellent (5) Noncompensatory _Lexicographic Elimination Conjunctive At least good on each (BP) - Drop A, GD Disjunctive At least VG for DISP, G on each (BP) - Select BDefinition Consumer behavior os defined ae when obtaining, li ing of products and sewicesConsumer Decision Making CDP Model - 4) Purchase Consumer Bohai + Recognition of need answers the Why of purchase + inthis stage, consumers decide Whether to buy (tial, repeat, long term) — What- Fully / Partially planned / Unplanned purchase Product & Brand decided / Brand undecided / both undecidedConsumer Decision Making CDP Model - 4) Purchase Corser Bei + Recognition of need answers the Why of purchase + Inthis stage, consumers decide Whether to buy (trial, repeat, long term) — Where to buy? - Type of channel/store, deciding on Specific retail outlet (location, merchandize, service, pricing...)Consumer Decision Making CDP Model - 4) Purchase ES Consumer eho Recognition of need answers the Why of purchase In this stage, consumers decide Whether to buy (tral, repeat, long term) — Consumer Budgets - Money, Time, Attention (cognitive resources) How to “3 ‘ash or Card a i ealConsumer Decision Making CDP Model - 5) consumption Cone ca + Consumption behavior — When? A — Where? — How? — How much? + Consumption experienceConsumer Decision Making CDP Model - 5) consumption + Consumption behavior — When? (Immediate, on occasions, Any time, Never) + Consumption experienceConsumer Decision Making CDP Model - 5) consumption Conair + Consumption behavior — When? — Where? (At home, restaurant, picnic..) + Consumption experienceConsumer Decision Making CDP Model - 5) consumption + Consumption behavior ‘When? ‘Where? How? (Could be varied e.g, Milk, Rice) How much? + Consumption experienceConsumer Decision Making CDP Model - 5) consumption Corer BG + Consumption behavior ‘When? Where? wy How? How much? (People consume more per use when they buy large packs!) Focus: increasing frequency of use, more consumption per use + Consumption experienceConsumer Decision Making CDP Model - 5) consumption Conse aca + Consumption behavior &® + Consumption experience — How does it feel — How rewarding/punishing is the experience?Consumer Decision Making CDP Model - 5) consumption Consumer Bahai + Consumption behavior + Consumption experience — How rewarding/punishing is the experience? It provides Positive reinforcement Negative reinforcement PunishmentConsumer Dex n Making CDP Model - 6) Post Consumption Consumer Behavior 6) Post-purchase Evaluation — Post-purchase Cognitive Dissonance heed. + Incase of high-involvement goods, decision not easily reversible — Usage/Consumption and reaction 7) DivestmentConsumer Decision Making CDP Model - 6) Post Consumption Consumer Bhar 6) Post-purchase Evaluation — Post-purchase Cognitive Dissonance a + Incase of high-involvement goods, decision not easily reversible + Caused by inconsistency in attitudes or attitude and behavior + Consumers seek reinforcement for their choice + Marketers must help customers quickly overcome the Dissonance — Usage/Consumption and reaction 7) DivestmentConsumer Decision Making CDP Model - 5) consumption + Consumption behavior iad — How much? (People consume more per use when they buy large packs!) Consumption experienceConsumer Decision Making CDP Model - 6) Post Consumption 6) Post-purchase Evaluation — Post-purchase Cognitive Dissonance — Usage/Consumption and reactionConsumer Decision Making CDP Model - 6) Post Consumption Gorouer Boavir 6) Post-purchase Evaluation — Post-purchase Cognitive Dissonance A + Consumers seek reinforcement for their choice + Marketers must help customers quickly overcome the Dissonance — Usage/Consumption and reaction PoConsumer Decision Making CDP Model - 6) Post Consumption Corsimer Behave 6) Post-purchase Evaluation — Post-purchase Cognitive Dissonance ed — Usage/Consumption and reaction + Absolute performance (need fulfilment)Consumer Decision Making CDP Model - 6) Post Consumption Consumer bch 6) Post-purchase Evaluation — Post-purchase Cognitive Dissonance “WAN = Usage/Consumption and reaction + Absolute performance (need fulfillment) + Performance Vs Expectations (confirmation or +)- disconfirmation)Consumer Decision Making CDP Model - 6) Post Consumption Corsumer Behave, 6) Post-purchase Evaluation — Post-purchase Cognitive Dissonance a — Usage/Consumption and reaction + Absolute performance (need futillment) + Performance Vs expectations (confirmation or +/- disconfirmation) + Repeat purchase, WOM Recommending is a best measure of loyaltyConsumer Decision Making CDP Model - 6) Post Consumption Conse behav, 6) Post-purchase Evaluation — Post-purchase Cognitive Dissonance — Usage/Consumption and reaction 7) Divestment ‘+ Outright disposal Recycling / Resell / exchangeConsumer Decision Making cpPModel AO Model aaa Marketers’ Input = — a IN ay Prepuresse ataton 1 (civic ] y , ioieasepaeserauat | ounConsumer De cDPModel BRA Model i> Environmental Marketers! inputs 4Ps i ul Dio aal Vv ion Making es aes musConsumer Research Recap of Research Basics (1/4) What is research ? & It is a Systematic and Objective process that involves gathering, recording and analyzing the data for the purpose of - Fither propounding theories or - Making business decisionsConsumer Research Recap of Research Basics (2/4) Consumer Bch The purpose and types of research Ambiguity Uncertainty Certainty <—ateeey = ll”~—” wena vate Say ee wien Describe population [phenomenonConsumer Research Recap of Research Basics (2/4) “Tha parpotaand (ypevoliteskurc ones @ Ambiguity Uncertainty Certainty hae Brand preference > Higher purchases > Brand Loyalty > Differentiator to competePersonality and Consumer Behavior Introduction Consumer Behaviow, Brands also have personalities (crafted by elements of marketing mix) Consumers monitor and shape their Self-Image by buying products that preserve/enhance it, or change by clothing, grooming as per situationPersonality and Consumer Behavior Theories & Implications ‘Consumer Behavior Major theories relevant to CB 1. Freudian (Psychoanalytic Theory) - Id, Superego and Ego Consumer Personality ImplicationsPersonality and Consumer Behavior Theories & Implications Consumer Sehavior, Major theories relevant te CB 1. 2. Jung —2 dichotomies S-N (search & process info) and T-F (evaluation) ‘Consumer Personality ImplicationsPersonality and Consumer Behavior Theories & Implications ‘Consumer Behavior Major theories relevant to CB 1 2 3. Neo-Freudian (Karen Horney’s CAD) - Compliant, Aggressive, Detached Consumer Personality ImplicationsPersonality and Consumer Behavior Theories & Implications “Consumer Behavior, Major theories relevant to CB 1 A 2. %. 4. Trait theory - Single-trait Tests, 16-factor scales, 5-factor model Consumer Personality ImplicationsPersonality and Consumer Behavior Theories & Implications Consumer Behavior, Major theories relevant to CB 1. Freudian 2. Jung - 3. Neo-Freudian (Karen Horney’s CAD)- 4. Trait theory - Consumer Personality Implications a) Innovativeness and related traits - Dogmatism, Social character, NFU, OSL, Variety seekingPersonality and Consumer Behavior Theories & Implications Major theories relevant to CB 1 Freudian 2. Jung- 3. Neo-Freudian (Karen Homey’s CAD)- 4. Trait theory — Consumer Personality Implications a) Innevativeness and related traits b) Cognitive Personality Factors ~ NFC, Visualizers/ Verbalizers