Consumer Behaviour

Cultural Diversity
• INDIA - States & UT
• Cultures and Sub-cultures
– Food,
– cuisine,
– Languages
– practices,
– traditions,
– Beliefs & myths,
– consumption,
– Religion(within), casts,
– professions,
– regions ……… etc.
 Cultural Diversity

• Hamlets – diversity
• Purchasing Power
– Rural & urban,
– developing and developed.
• Niche Market for different products.
 Cultural Diversity

• Culture Influences consumer preferences :

– Kelloggs : when introduced cereal breakfast ( USP
Crispy), consumers were not in habit of using cold
milk in breakfast. – culture
 Cultural Diversity

• lifestyle and preferences,

• Indian consumers reflect a range of behaviour
from price sensitive based value expectations to
showcasing brand symbolism.
• Changing Lifestyles & Values – TVS Streak &
Honda Pleasure – Young aspiring independent
urban women different to male dominated
society.
 Cultural Diversity

• Functional value – associated with mass market –

brand offering at lowest price – FMCG – Small
Serving 1-2 occasions – Shampoos, tea, chocolate,
coffee, toothpaste, hair oil, detergents, soaps, cream
etc..
• Brand Penetration – India Max Films- max
celebrities Film stars & sports
 Cultural Diversity

• Diversity in Retail : - Kariana Shops.

• Market need to develop sound business models after
considering psychological , cultural, socio-cultural,
socio-economic based consumer segmentation.
 Cultural Diversity

• Unorganized Market – Not branded offering

– Manufactured by small units,
– low priced,
– Geographical units place of production
– illegal duplicates are also part
• Unorganized bigger than organised
– Eg. Watches, footwear, Detergent,
– tea, CD, apparel, cooking utensil,
– optical wear, bakery products etc.
 Cultural Diversity

• Categories like – Rice, wheat, jewelry branded

offering account for – 1-3% only,
– In such categories loyalty to middlemen than
products.
• Indian Youth(15-25 years ) 200 to 215 millions.
• Marketers to ensure the judicious mix of values,
customs, traditions, life styles, practices, theories
etc.
 Customer and Consumer

• Traditionally, customer was used to define the

– people whom the organization dealt with
externally and
– refers to the purchaser of the product or service.
 Customer and Consumer
• However, 1990s witnessed a dramatic shift and
differentiation between customer and consumer,
wherein consumer refer to
– individual who purchases product and services
– for personal consumption and are end user of a product
or service
– addresses both internal and external system, purchases
for personal consumption
– hence includes the process of obtaining, consuming and
disposing.
 Consumer Behaviour

• Consumer behaviour is relatively new field of study

developed in the mid to late 60s by the marketing
theorists having borrowed concepts from psychology,
sociology, anthropology, economics to form new
marketing discipline.
• Consumer behaviour was traditionally been a study of
“why people buy” as it becomes easier to develop
strategies to influence consumers, once marketer
knows the reasons people buy specific products or
brands.
 Consumer Behaviour
• Eventually CB expended its domain to decision
making process involving the acts of consumer
directly involved in obtaining, using and
disposing of economic goods and services
• Wherein CB means all Acts of Buying :
– Why,
– where,
– how,
– what, and
– how often.
 Consumer Behaviour

• According to Loudon & Bita

• “ CB may be defined as the decision process and
physical activity, individuals engage in, when
evaluating, acquiring, using or disposing of
goods and services.
 Consumer Behaviour

• Schiffman and Kanuk “ CB can be defined as the

behaviour the consumer display in searching
for, purchasing, using, evaluating and
disposing of products, services and ideas,
which they expect will satisfy their needs.”
 Consumer Behaviour

• As per Blackwell “activities people undertake

when obtaining, consuming, and disposing of
products and services”
• Three primary activities included in the definition
are :
– Obtaining,
– Consuming and
– Disposing
 Consumer Behaviour
• Obtaining refers to the activities leading up to and
including the purchase or receipt of a product.
These activities include searching for product
features and choices, evaluating alternative
products or brands, and purchasing, how
consumer buy, do they shop at special
stores/shoping malls/internet.
• Other issues include in obtaining are payment
mode, transportation, own consumption or gift,
information search, impact of brand on
consumer choice.
 Consumer Behaviour

• Consuming means how, where, when, and

under what circumstances consumer use
products.
– Eg. Usage for at home or office, usage as per
instructions or unique way, experience of using
product is entertaining or purely functional.
– Do they use entire product before disposing of
it or is some of it never consumed.
 Consumer Behaviour
• Disposing refers to how consumers get rid of
products and packaging.
• Consumer Analysts might examine CB from an
ecological standpoint: How do consumer dispose of
product packaging or product remains.
• Are products biodegradable.Can they be recycled.
• Consumers might also choose to extend the life of
some products by handing them down to younger
children, donating them to charity thrift shops or
selling them on eBay.
 Consumer Behaviour
• Historically, the study of CB has focused on buyer
behaviour, or “why people buy”.
• More recently researchers and practitioners have
focused on consumption analysis, which refers to
why and how people use products in addition to why
and how they buy.
• Consumption analysis is a broader conceptual
framework than buyer behaviour because it includes
issues that arise after the purchase process occurs
- issues that often affect how people buy and the
satisfaction they receive from their purchases.
 Consumer Behaviour

• Consumer behavior is thus

– a study of individuals, groups, or
organizations and
– the processes they use to select, secure, use,
and dispose of products, services, experiences,
or ideas to satisfy needs and
– the impacts that these processes have on the
consumer and society.
 Nature of Consumer Behaviour

• External Influences

• Internal Influences
 Implications of definition

• Totality of Decisions (all decisions)

– Whether?
– What?
– Why?
– How?
– When?
– Where?
– How much?
– How often?
 Consumer Behaviour

• Consumer behavior
– may involve several people (decision making units)
– is dynamic (changes over time)
Applications of Consumer Behaviour

• Marketing Strategy
• Regulatory (Public) Policy
• Social Marketing
• Personal / Professional Skills
 Orientations to study Consumer
Behaviour

• Anthropology
• Economics
• History and geography
• Psychology
• Sociology
 Consumer Behaviour is
Interdisciplinary

•
 Psychology

• Study of human thinking and behavior

• Some issues
– Personality
– Personal development
– Cognition (thinking), perception
– Attention and its limitations
– “Learning”—e.g., acquired tastes
 Anthropology

• The study of people within and across

cultures
• Emphasis on cross-cultural differences
• Questioning of assumptions within own
culture
 Economics

• Basic economic issues

– Supply and demand
– Rational decision making
– Perfect information
• Emphasis on predicting behavior
• Complications in real life
• Behavioral economics—e.g., “mental accounting”
 History and Geography

• Origins of behavior, perspectives, and

traditions
• Impact of geography on individuals
– Isolation
– Language development
– Climate
• Geographic determinism
 Sociology

• Cultural and interpersonal influences on

consumption—e.g.,
– Fads, fashions
– Diffusion of innovation
– Popular culture
Marketing and Consumer Behaviour

Consumer Market
“Consists of all the individuals and
households who buy or acquire goods and
services for personal consumption.”
Two Consumer Entities
Development of the
Marketing Concept

36
 Production Orientation

• From the 1850s to the late 1920s

• Companies focus on production capabilities
• Consumer demand exceeded supply

37
 Sales Orientation

• From the 1930s to the mid 1950s

• Focus on selling
• Supply exceeded customer demand

38
 Marketing Concept

• 1950s to current - Focus on the customer!

• Determine the needs and wants of specific
target markets
• Deliver satisfaction better than competition

Chapter One Slide

Societal Marketing Concept

• Considers
consumers’ long-run
best interest
• Good corporate
citizenship

40
 The Marketing Concept
Embracing the Marketing
Concept
• Consumer Research • The process and tools
• Segmentation used to study consumer
• Market Targeting behavior
• Positioning

41
 The Marketing Concept
Implementing the
Marketing Concept
• Consumer Research • Process of dividing the
• Segmentation market into subsets of
• Market Targeting consumers with
common needs or
• Positioning characteristics

42
 The Marketing Concept
Implementing the
Marketing Concept
• Consumer Research The selection of one or
• Segmentation more of the segments
• Market Targeting identified to pursue
• Positioning

43
 The Marketing Concept
Implementing the
Marketing Concept
• Consumer Research • Developing a distinct image for
the product in the mind of the
• Segmentation consumer
• Market Targeting • Successful positioning includes:
• Positioning – Communicating the benefits of
the product
– Communicating a unique
selling proposition

Chapter One Slide

The Marketing Mix

45
Customer Value, Satisfaction,
Trust, and Retention

Chapter One Slide

 Successful Relationships
Value, Satisfaction,
• Defined as the ratio between
Trust, and Retention the customer’s perceived
• Customer Value benefits and the resources
• Customer used to obtain those benefits
Satisfaction • Perceived value is relative
• Customer Trust and subjective
• Customer • Developing a value
Retention proposition is critical

47
 Successful Relationships
Value, Satisfaction,
Trust, and Retention
• The individual's perception
• Customer of the performance of the
Value product or service in relation
• Customer to his or her expectations.
Satisfaction • Customer groups based on
• Customer loyalty include loyalists,
Trust apostles, defectors,
• Customer terrorists, hostages, and
Retention mercenaries
48
 Successful Relationships
Value, Satisfaction,
Trust, and Retention • Establishing and
• Customer Value maintaining trust is
• Customer essential.
Satisfaction • Trust is the
• Customer Trust
foundation for
• Customer
Retention maintaining a long-
standing relationship
with customers.
49
 A Simple Model of Consumer Decision Making

Copyright 2010 Pearson Education, Inc. publishing as Prentice Hall Chapter One Slide 50
 Successful Relationships
Value, Satisfaction, • The objective of providing
Trust, and Retention value is to retain highly
satisfied customers.
• Customer Value
• Loyal customers are key
• Customer
– They buy more products
Satisfaction
– They are less price
• Customer Trust sensitive
• Customer – Servicing them is cheaper
Retention
– They spread positive
word of mouth

51
Top 10 Ranked U.S. Companies in Terms of
Consumers’ Trust and Respect of Privacy
Table
Top 1.2
10 Companies
• American Express
• eBay
• IBM
• Amazon
• Johnson & Johnson
• Hewlett-Packard
• U.S. Postal Service
• Procter and Gamble
• Apple
• Nationwide
 Customer Profitability-Focused
Marketing
• Tracks costs and
revenues of
individual consumers
• Categorizes them
into tiers based on
consumption
behavior
• A customer pyramid
groups customers
into four tiers

53
 THE TRADITIONAL MARKETING VALUE- AND RETENTION-
CONCEPT FOCUSED MARKETING
Make only what you can sell instead of trying Use technology that enables customers to
to sell what you make. customize what you make.

Do not focus on the product; focus on the need Focus on the product’s perceived value, as well
that it satisfies. as the need that it satisfies.

Market products and services that match Utilize an understanding of customer needs to
customers’ needs better than competitors’ develop offerings that customers perceive as
offerings. more valuable than competitors’ offerings.

Research consumer needs and characteristics. Research the levels of profit associated with
various consumer needs and characteristics.

Understand the purchase behavior process and Understand consumer behavior in relation to
the influences on consumer behavior. the company’s product.

Realize that each customer transaction is a Make each customer transaction part of an
discrete sale. ongoing relationship with the customer.

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 The Consumer Research Process
• Six steps
– defining the objectives of the research
– collecting and evaluating secondary data
– designing a primary research study
– collecting primary data
– analyzing the data
– preparing a report on the findings
Figure 2.1 The Consumer Research Process

Develop Objectives

Collect Secondary Data

Design Qualitative Research Design Quantitative Research

• Method • Method
• Screener questionnaire • Sample design
• Discussion guide • Data collection instrument

Conduct Research
Collect Primary Data
(Using highly trained
interviewers) (Usually by field staff)
Exploratory
Study
Analyze Data Analyze Data
(Subjective) (Objective)

Prepare Report Prepare report