CONSUMER BEHAVIOUR
Consumer Behaviour
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Consumer Behavior is the study of when, why, how
and where people do or do not buy a product. It
basically depends on the psychology of the
consumer. It attempts to understand the buyer
decision making process both individually & in
groups. It studies the individual consumers such as
demographics & behavioural aspects to understand
the people’s wants.
In the study of Consumer Behaviour main focus is
the customer satisfaction because customer is the
only person with whose presence businesses
actually exists
Types of consumer
Consumer
Ultimate
Consumer
Buyer
Institutional
Buyer
Customer
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Consumer: According to International Dictionary of
Management “Consumer is a purchaser of goods
and services for immediate use or consumption”.
Buyer: He is the person who purchase goods either
for resale or for use in production or for use of
somebody else.
Customer: He is the one who purchases goods for
his own use or for the use of others or else he is
regular customer of a particular product and he is a
regular customer of particular shop.
Institutional buyer: These are either govt. institutions
or private organizations.
Characteristics of consumer behaviour
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It is a process where consumer decide what to buy, when to
buy, how to buy, where to buy & how much to buy.
It comprises of both mental and physical activities of consumer.
Consumer behaviour is very complex and dynamic which
keeps on changing constantly.
Individual buying behaviour is affected by various internal
factors like his needs, wants, attitudes & motives and also by
external factors like social groups, culture , status,
environmental factors etc.
Consumer behaviour starts before buying and even after
buying.
Importance/Need of study of consumer
behaviour
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To make better strategies for increasing profits.
To take into consideration customer’s health,
hygiene & fitness.
To know the buying decisions and how consumer
make consumption.
Consistent change in Consumer’s tastes or
preferences.
Consumer behavior study is necessary to make
pricing policies.
To avoid future market failures.
Types of Consumer
Behaviour
Complex
Dissonance
Reducing
Habitual
Variety seeking
Buying Motives
According to D.J.Ducan, “Buying Motives
are those influences or considerations which
provide the impulse to buy, induce action or
determine choice in the purchase of goods
and services”.
Types of Buying Motives
A.
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Product & Patronage Motives
1.Product Motives
Primary
Secondary
2.Patronage Motives
Price
Quality
Location
Services
Variety
Personality of the owner
B. Emotional & Rational Motives
1.
Emotional Motives
 Love of others
 Social acceptance motive
 Vanity Motive
 Recreational motive
 Emulate motive
 Comfort & convenience motive
2. Rational Motives
 Monetary gain
 Efficiency in operation
 Dependability
C. Inherent & Learned motives
1. Inherent motives are those which come from
physiological & basic needs such as hunger,
thirst, sleep etc. If these motives are not
satisfied then consumer feels dissatisfied and
feels mental tension.
2. Learned motives are those which are learned
or acquired by a person from environment and
education like social status, acceptance, fear,
security etc.
D. Physiological & Social buying
Motives
1.
2.
Physiological motives are those which are
driven by learning, perception or attitude.
Social buying motives are those which are
influenced by the society in which the
consumers live.
CONSUMER DECISIONS:
Theory and Reality in Consumer Buying
PROBLEM
RECOGNITION/
Recognition of
unsatisfied
need
IDENTIFICATION OF
ALTERNATIVE/
INFORMATION
SEARCH
EVALUATION OF
ALTERNATIVES
PURCHASE
POSTPURCHASE
EVALUATION/
BEHAVIORS
Factors influencing consumer
behaviour
Psychological factors
1. Consumer needs &
motivation (Maslow’s need
hierarchy theory
2. Perception
3. Learning
4. Beliefs & attitudes
 Cultural factors
1. Culture
2. Sub culture
3. Social class
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Social Factors
1. Reference group
2. Role and status
3. Family
 Personal factors
1. Age
2. Stages in life cycle
3. Occupation in economic
status
4. Life style
5. Personality
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Economic factors
1.Personal income
2.Family income
3.Income expectations
4.Savings
5.Liquidity position
6.Consumer credit
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Environmental
Factors
1.Political situation
2.Legal forces
3.Technological
advancement
4.Ethical considerations
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Market Segmentation
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Segmentation is essentially an identification of the subsets
of buyers within a market that share a similar needs and
demonstrates similar buyer behaviour. The world is made
up of billion buyers with there own set of needs and
behaviour. Segmentation made to match different group of
buyers with different set of needs & buyer behaviour. Such
a group is known as “segment.”
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A customer is allocated
to one market segment
by the customer's
individual
characteristics.
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Examples of characteristics
used for segmentation:
Gender
Price
Interests
Location
Religion
Income
Size of Household
Process of Market Segmentation
Establish overall
strategy
The org must clearly state its segmentation strategy
in consistent to its mission n objectives as well as its
current situation- its strengths , weaknesses,
opportunities n threats.
Decide the basis
For
segmentation
Any marketer should do segmentation on basis of differe
factors may be demographic or psychographic, he should
have the idea of market characteristics of consumer and
buying behaviour.
Select
segmentation
variables
After selecting bases of segmentation, segmentation
Variables like in demographic, age, income, occupation
etc should taken into consideration.
Profile the
segments
After segmenting the market, marketers has to analyze
his customers in those segments, like what type of
customers are there in that market.
Evaluate
segment
attractiveness
Evaluation is done on the basis of estimating the profit
contribution by each sector. most importantly he’ll see the
demand potential of customers from each segment, and
the revenue earned out of each segment & expenditure
incurred. Other criteria like measurability, accessibility,
Responsiveness, risk etc.
Select segment
Every marketer can consider only one segment at a time
even if the other segments are profitable. ultimately he
will select the most profitable segment, this is called targe
marketing.
Objectives of Market Segmentation
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To understand the needs, wants, desires and buying
habits of customers.
To formulate marketing programs for each consumer
groups according to their nature.
To develop new products according to consumer’s
changing needs.
To expand market & market share.
To provide satisfaction to consumers.
To make the marketing strategies and policies
consumer oriented.
Product Differentiation
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It is the process of distinguishing a product or offering from others, to make
it more attractive to a particular target market.
This involves differentiating it from competitors' products as well as a firm's
own product offerings.
Difference between market segmentation & product differentiation
Market Segmentation
•Consumer oriented
•Focuses on group of customers
•Attempt to match the supply
•With demand.
•Aims at increasing sales
•Concentrates on a limited mkt
Product differentiation
•Production oriented
•Focuses on product differences
•Attempt to match demand with supply
•Aims at facing intense comp
•Concentrate on large mkt.
•It helps to win the competition.
Criteria for successful segmentation
Segment
Segment must
must be
be large
large
Substantiality
Substantiality
enough
enough to
to warrant
warrant aa special
special
marketing
marketing mix.
mix.
Identifiability
Segments
Identifiability
Segments must
must be
be identifiable
identifiable
and
Measurability
and their
their size
size measurable.
measurable.
Measurability
Members
Members of
of targeted
targeted segments
segments
Accessibility
Accessibility
must
must be
be reachable
reachable with
with
marketing
marketing mix.
mix.
Unless
Unless segment
segment responds
responds to
to aa
Responsiveness
Responsiveness marketing
marketing mix
mix differently,
differently, no
no
separate
separate treatment
treatment is
is needed.
needed.
Homogeneity
Customers in one particular Segment
should be similar in terms of their responses
Profitability
There should be sufficient demand
for goods in the segment selected
Advantages of Market Segmentation
A. Advantages to firms
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Increase in sales volume.
Helps to prepare effective marketing plans.
Enables to take decisions
Helps to understands needs of consumers.
Helps to win competition.
Makes best use of resources.
Achieve marketing goals
Specialized marketing
Creates innovations
Higher market share.
B. Advantages to Consumers
 Customer
oriented
 Quality products at reasonable prices
 Other benefits (discounts, buy 1 get 1 free
offer, customers become the winner)
Reasons for development of market
segmentation
 Rapid
change in technology
 Adoption of cost reducing techniques.
 Implementation of marketing programs &
marketing mix.
 Introduction of new products.
 Cut- throat competition in the market.
Patterns for segmentation or Market
strategies
Undifferentiated marketing: In this marketing only one mix is
used for all customers. For eg: soft drinks.
2. Differentiated marketing: In this, different marketing mix is used
for each set of segment. Eg; consumer products.
3. Concentrated marketing: In this, all the marketing mix are
concentrated and applied at each segment.
4. Customized or personalized marketing: When marketer see
each customer as separate segment and apply marketing strategy
as per the requirements of customer. For eg: Interior designers,
civil engineering firms design roads as per the requirement of
customers.
1.
LEVELS OF MARKET SEGMENTATION
 Segment
Marketing: Consists of group of
customers who share similar set of needs
and wants. can offer better price, design and
can fine tune the marketing activities. For eg:
Air Deccan.
 Niche marketing: more narrowly defined
customer group seeking a distinctive mix of
benefits. For eg: some companies make
clothes for oversized customers.
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Local marketing: Tailored to the needs & wants of
local consumers in trading areas, neighborhoods and
even individual stores. For eg: matrimonial websites
like Bharat matrimony who are further offering other
websites for each n every community say Punjabi,
Bengali, Muslim, Sikh etc.
Individual marketing: Designing the product &
service offerings of individual choices. For eg Asian
paints, in which you can mix desired colour n
quantities of their own choice as per the
requirement.
Bases of Market Segmentation
Demographic
variables
Behavioral
variables
Geographic
variables
Psychographic
variable
Geographical Segmentation
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In this type of segmentation market is divided into different
geographical units like:
Regions (by country, nation, state, neighborhood)
Population Density (Urban, suburban, rural)
City size (Size of area, population size and growth rate)
Climate (Regions having similar climate pattern)
A company, either serving a few or all geographic segments,
needs to put attention on variability of geographic needs and
wants.
After segmenting consumer market on geographic bases,
companies localize their marketing efforts (product, advertising,
promotion and sales efforts)
Demographic Segmentation
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In , market is divided into small segments based on demographic
variables like:
Age
Gender
Income
Occupation
Education
Family size
Family life cycle
Religion
Demographic factors are most important factors for segmenting the
customers groups. Consumer needs, wants, usage rate these all
depend upon demographic variables. So, considering demographic
factors, while defining marketing strategy, is crucial.
Psychographic Segmentation
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In this type of segmentation, segments are defined on the basis
of social class, lifestyle and personality characteristics.
Psychographic variables include:
Interests
Opinions
Personality
Self Image
Activities
Values
Attitudes
A segment having demographically grouped consumers may
have different psychographic characteristics.
Behavioral Segmentation
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In this segmentation market is divided into segments based on
consumer knowledge, attitude, use or response to product.
Behavioral variables include:
Product segmentation.
Product benefits segmentation.
Brand Loyalty segmentation
Occasions segmentation (holidays like mother’s day, New Year
and Eid)
User Status (First Time, Regular or Potential)
Behavioral segmentation is considered most favorable
segmentation tool as it uses those variables that are closely
related to the product itself.
Limitations of Market Segmentation
 High
cost of production.
 High advertising & promotional costs.
 High working capital & storage expenses
required.
 High administration expenses.
 Difficult to choose variable segments.
 Difficulty in getting skilled & experianced
workers.
TARGET MARKETING
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A target market is a group of customers at whom
entire marketing efforts are directed. In target
marketing ,marketer identifies some parts of market,
selects one or more of them and develop suitable
products & other elements (price ,place, promotion)
for each target market selected.
For e.g.: Mercedes target high status consumers,
.whereas Hyundai target sensitive customers
Approaches for selecting target market
 Total
market approach: in this company
develops a single marketing mix and direct it
t the entire market for a particular product.
 Concentration approach: in this organisation
approach a single marketing segment
through a single market mix, total market
consists of many segments but this will
select only one segment as target mkt.
 Multi
segment approach: In this organisation
targets two or more segments by developing
marketing mix for each segment. Eg: P7 G.
toyota.
Advantages of target marketing
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It enables the firm to tap marketing opportunities
better.
Firm can offer suitable product to each target mkt,
thus they can serve better nad also could develop
loyal customers.
It can expand the market share
Possible to build up company image in the market.
It is suitable in case of services.
Product positioning
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Consumers will position the product in there minds
because they find some unique features in the
product as compare to other products.
The act of creating an image about the product in the
minds of the customers is known as Product
positioning.
For eg; Close up has looked upon by consumers as
mouth freshener than teeth cleaner and pepsodent is
looked upon as a germ killer in consumer’s mind.
Steps in Product positioning
 Identifying
potential competitve advantages.
 Identify the competitors positions.
 Choosing the right competitive advantage.
(may be in terms of technology, quality, costs
etc)
 Communicating the competitive advantage.
 Monitoring the position strategy.
Techniques of product positioning
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Positioning by corporate identity (eg: Tata , Sony, Godrej etc.)
Positioning by brand endorsement.
Positioning by product attributes and benefits. (Eg: Colgate
positioned itself on the basis of fresh breath, tooth decay)
Positioning bye use occasion & time. Eg:Dettol for nicks n cuts,
vicks for children at night.
Positioning by price and quality: Eg Nirma detergent powder.
Positoning y product category: For eg & up earlier was
positioned as a fresh clean taste now it has been positioned as
soft drink.
Positioning by product user: Eg: Farex.
Positioning by competitor.