Module2: Consumer

Behaviour and Market

Segmetation
 Content
• Consumer Behaviour
• Meaning and Concept of Consumer and
Customer
• Nature and Importance
• Consumer Decision making process-Concept
of Consumer Decision
• Changing Indian Consumer Behaviour-Drivers
of Change
• Factors influencing consumer buying behavior
 Learning Objectives
At the end of this session, you should understand:
• The various approaches to studying buyer behaviour
• The Different models in consumer behaviour
• The nature of buyer and consumer behaviour
• The Consumer Decision making; Levels, and model
• The impact of drivers of Change and changing consumer
trends on consumer behaviour
• The Rural consumer behaviour
• New consumption patterns
• The difference between individual and Organisational
buying behaviour
 Ice Breaking activity
• Discussion:
– One product or service that you bought
recently?
 Ice Breaking activity
• Discussion:
– One product or service that you bought
recently?
– Why did you buy it?
 Ice Breaking activity
• Discussion:
– One product or service that you bought
recently?
– Why did you buy it?
– What particular personal factor/s influenced
your purchase decision?
 Ice Breaking activity
• Discussion:
– One product or service that you bought
recently?
– Why did you buy it?
– What particular personal factor/s influenced
your purchase decision?
– Did any marketing messages or activities
influence
your decision?
 Ice Breaking activity
• Discussion:
– One product or service that you bought recently?
– Why did you buy it?
– What particular personal factor/s influenced your
purchase decision?
– Did any marketing messages or activities
influence
your decision?
– Do you think that the purchase may have been
different for someone else? If so, how?
 Few Examples
Pay for 3 pieces of ‘Liril’ and get the 4th free !!!
Buy one ‘Harpic’ and get an ‘Odonil’ free !!!
Exchange your Maruti Alto for a Maruti Swift at a
Rs 40,000/- discount !!!
Buy ‘Fast Track’ watches and get 5 different
colored wrist-bands free !!!
New LG Television with unique ‘Child Lock’
feature !!!
Why are such offers given to consumers??
 Few more
• ‘Dar ke aage jeet hai’ ….. Mountain Dew
• ‘Pappu Pass ho gaya’ ….. Cadbury’s
• ‘We also make steel’ …… Tata Steel
• ‘Filmi sitaron ka saundarya sabun’ …….. Lux
• ‘Jaago India Jaago’ …….. Tata Tea
• ‘Desh ki Dhadkan’ ……… Hero Honda
• ‘An Idea can change your life’ ……. Idea

How do such slogans impact consumers??

 Consumer Behaviour
Meaning:
• All such activities done by a consumer,
while obtaining , consuming and
disposing of products and services. This
includes the decision making processes
that precede and follow such actions.
 Consumer Behaviour
Definition
• Consumer behaviour is the study of how
individual customers, groups or
organizations select, buy, use, and
dispose ideas, goods, and services to
satisfy their needs and wants.
• It refers to the actions of
the consumers in the marketplace and
the underlying motives for those actions.
 Consumer and Customer

A customer buys products, services or ideas

from businesses, while a consumer uses the
business products, services or ideas.
 Consumer and Customer
BASIS FOR
CUSTOMER CONSUMER
COMPARISON

The purchaser of goods or The end user of goods or

Meaning services is known as the services is known as a
Customer. Consumer.

A customer can be a
business entity, who can
Resell No
purchase it for the purpose of
resale.

Purchase of goods Yes Not necessary

Purpose Resale or Consumption Consumption

Price of product or May not be paid by the

Paid by the customer
service consumer

Individual, Family or Group of

Person Individual or Organization
people
 Consumer Learning
A process by which individuals acquire the
purchase and consumption knowledge and
experience that they apply to future related
behaviour.
Marketers are in business of teaching
consumers about products, attributes, benefits,
where to buy. How to use, maintain and dispose
of them
 Consumer Learning

Learning and Marketer:

The process by which individuals acquire
purchase and consumption knowledge and
experience that they apply in future related
behaviour
 Learning Processes
• Learning is both:
• Intentional
– learning acquired as a result of a careful
search for information
• Incidental
– learning acquired by accident or without much
effort
 Elements of Learning
• Motivation
• Cues
• Response
• Reinforcement
 Importance of Learning
• Marketers must teach consumers:
– where to buy
– how to use
– how to maintain
– how to dispose of products
 Consumer Decision making process-Concept of
Consumer Decision

The term consumer decision produces an

image of an individual evaluating the
attributes of a set of products, brands, or
services and rationally selecting the one that
solves a clearly recognized need for the
minimum cost.
Levels of Consumer Decision Making
 Routine Response Behavior
• Little involvement in selection process
• Frequently purchased low cost goods
• May stick with one brand
• Buy first/evaluate later
• Quick decision
 Limited Decision Making
• Low levels of involvement
• Low to moderate cost goods
• Evaluation of a few alternative brands
• Short to moderate time to decide
 Extensive Decision Making
• High levels of involvement
• High cost goods
• Evaluation of many brands
• Long time to decide
• May experience cognitive dissonance
Consumer Decision Making Model
 Problem recognition
• Problem or Need Recognition is the first stage
of the buying decision process.
• The existence and the manifestation of the
need can be caused by internal or by external
stimuli.
• The internal stimuli can be triggered by the
most basic needs
• External stimuli, a well designed advertisement
or a mere discussion with a friend
 Information search and the identification
of alternatives
• Information is fundamental for the future buying decision.
The quantity and the accuracy of the information depend
on:
– the consumer;
– the product or the service to be purchased.
• There are two levels of arousal.
• The first search state is called heightened attention. In
this stage, a person simply becomes more receptive to
information about a product or a service.
• The next level in the arousal of the attention is active
information search, which generally implies looking for
reading material, discussing with friends, searching on
the Internet etc.
 Evaluation of alternatives
• Evaluation of alternatives degree of complexity
of the evaluation process is influenced by
various factors, among which the most
important are:
– The consumer’s experience;
– The importance of the service/product considered;
– The cost of making a bad decision;
– The complexity of the evaluated alternatives;
– The urgency with which the decision must be
taken
 Evaluation of alternatives
• The identification of the attributes is the first
aspect of the evaluation process.
• The second aspect in the evaluation of
alternatives is the consumer’s beliefs and
attitudes.
• “A belief is a descriptive thought that a person
holds about something.”
• The beliefs about the attributes and benefits of a
product influence the consumer’s buying decision.
• “An attitude is a person’s enduring favourable or
unfavourable evaluation, emotional feeling and
action tendencies about some object or idea.”
 The Purchase Decision
• The consumer’s purchase decision will be to buy
the most preferred brand, but at least two factors
can come between the purchase intention and the
purchase decision:
– The attitudes of others
– The unexpected situational factors
• The consumer also decides upon his decisional
behaviour
– The decision of buying the product or the service;
– The decision of not buying the product or the service;
– The decision to postpone the purchase;
– The decision of replacing the product or service that he
wants with another product or service
 Post-purchase behaviour
• In this phase, the consumer analyses the extent
to which his purchase decision was good or not.
• The answer lies in the relationship between the
consumer’s expectations and the product’s
perceived performance.
• There are 3 factors happening under this phase
– Post-purchase satisfaction
– Post-purchase actions
– Post-purchase use and disposal
 Changing Indian Consumer Behaviour-Drivers of Change

•Rapid Urbanization
•Increasing Income Levels
•Shift in approach towards family systems
 Changing Consumer Trends
• Purchasing Power
• Group Influence
• Personal Preferences
• Economic Conditions
• Marketing Campaigns
 Rural Consumer Behaviour

RURAL CONSUMER BEHAVIOUR refers to the

acts of individuals directly involved in obtaining
and using goods and services and includes the
decision process that provide a purchase.
Factors which influence the final choice Attitude of others Advice of the retailer
Experience at the retail outlet Demonstration of products Mood swing
Perceived risk

Lifestyle of rural consumer :

• Lifestyle of rural consumer Rural consumer is very religious Rural
consumers prefer to work hard themselves Strong family ties & respect for
family values Likes to play cards etc.

Profile of rural consumer :

• Profile of rural consumer Traditional outlook Perception and its influence
Less exposure to marketing stimuli Conscious of value for money Realistic
aspirations Concept of quality Attitude towards prestige products Suspects
hype and fear of being cheated

Rural shopping habits: consumer insights :

• Rural shopping habits: consumer insights Preference for small or medium
package Role of retailer Role of opinion leaders for durables
 New Consumption Patterns
• Digital Platforms
• Payment gateway
MARKET SEGMENTATION
 Meaning of Market
Segmentation
Marketing segmentation is the process of
aggregating individuals and businesses
along similar characteristics that pertain to
the use , consumption, or benefits of a
product or service.The result of market
segmentation is groups of customers called
market segments.
 MARKET SEGMENTATION
VARIABLE
• Geographic segments
• Demographic segments
• Psychographic segment
• Behavioral segment

Creating a group of customers based on

where similar likes, tastes, needs, wants or
preferences.
 Geographic segments

Product distribution strategy is a driving force

behind geographic segmentation. A consumer
goods online retailers , such as buy.com , we
want to reach only customers in countries
where it distributes products.
Important geographic segments for e-
marketing are:
Languages on web pages
Local marketing
 Demographic segments
Demographic comes out from the word
demography which means “study of
population”.
As people age their needs and wants
change, some organizations develop
specific products aimed at particular age
groups for example nappies for babies, toys
for children, clothes for teenagers and so on.
Gender segmentation is commonly used
within the cosmetics, clothing and magazine
industry.
 Psychographic segment
User psychographics includes personality,
values, lifestyle, activities, interests and
opinion(AIO).for example:
• Lifestyle groups
• Mobile
• High valued house/flat
• Good Salary
• Young branded car
 Behavioral segment
To commonly use behavioral segmentation
variables are benefits sought and product
usage.
It divides buyers in to groups based on there
knowledge , attitudes, uses or responses to
a product. Many marketers believe that
behavior variables are the best starting point
for building market segments.
Objectives of Market
Segmentation
• Customer satisfaction
• Increase profit
• Allocation of resources
• Marketing Communications
• Segment leadership
 BENIFITS OF MARKET
SEGMENTATION
• Adjustment of product and marketing
appeals
• Better position to spot marketing
oppurtunities
• Allocation of Marketing Budget
• Making the competition effective
• Evaluation of marketing activities
• Increase sales volume and marketing
programs
 Essetials for a successful
market segmentation

• Definable
• Measurable
• Accessible
• Differentiable
• Actionable
• Intensity to competition
 Requisites of a sound Market
Segmentation
• Comany Resources
• Product Characteristics
• Homogenous Nature of Market
• Competitive Marketing Strategies
• Government Policy
 TARGET MARKETING
• Whether target whole market or many
segments or to target individual customer.
• Target marketing may be based on taste,
preferences or location of customer

• Basic Strategies for target marketing

• Selective marketing
– HUL offers products in the family care, home
care and personal care
• Mass market targeting
– Coca-Cola
• Single segment targeting
– Kellogg's
• Product specialization strategy
– Timken

• Market specialization strategy

– SAP German based MNC
 POSITIONING

• Positioning is an act of creating a

distinctive identity in the minds of
target customers for marketer's
product, brand or organization.
 Importance of positioning in marketing
• Provides identity
• Demonstrates the effect of the
products
• Enhances brand value and goodwill
• Influences consumer buying Decision
Process
• Justifies marketer's claim
 Steps in product Positioning
• Identifying and analyze the
competitor
• Differentiate yourself from competitor
• Finalize a marketing mix
• Monitoring response and
modification