1. Session 1
Introduction to Consumer; Significance & Essentials of
Consumer Behavior
CONSUMER BEHAVIOR

2. AGENDA POINTS
 Why so much focus on this entity called the “Consumer”: what is
her/his significance to Marketing?
 Consumer Behavior Essentials: what does it comprise?
 What do we mean by buzz-phrases like “Customer Orientation”,
“Understanding Consumer Needs”, “Customer Value”, “Customer
Satisfaction”, “Life-time Value”
 Is understanding the consumer a complex process? If so, why?
 What do we mean by Diversity of Consumer Behavior? What do
we mean by Market Segmentation?

3. WHO IS A CONSUMER?
 General Discussion
 “All those who buy or could potentially buy & use any good or
service generated in the economy”
 Individuals
 Households
 Organizations
 Therein also lies the subtle difference between Consumer &
Customer

4. WHY SO MUCH CONSUMER FOCUS?
 General Discussion
 Consumer at the very heart of the Marketing concept that
evolved in the late 1950s
 Production of only those goods & services that the consumers would buy
 Hence, consumer understanding began assuming huge
significance for businesses at large
 Terms such as Understanding Consumer Needs, Customer
Orientation & Customer Value started becoming buzzwords
 Customer Needs: Understanding what Consumers want
 Customer Orientation: Thinking “Consumer” at all times & orienting one’s
business accordingly to deliver as per Consumer & Customer Needs
 Customer Value: Difference between a Customer’s perceived benefits &
the resources used to obtain those benefits

5. WHY SO MUCH CONSUMER FOCUS?
 Further, in the context of Brand Marketing, Brands are valuable to
companies because they are valuable to consumers
 People will pay more for a branded product than a generic one & more for
a favored brand than the alternatives
 Obvious then that a brand that has forged a strong, enduring
bond with consumers should provide a financial advantage to a
company
 Particularly in the context of increasing competitiveness
 Hence, terms such as Customer Satisfaction & Customer
Retention an integral part of Marketing lexicon today
 Customer Satisfaction: Customer’s perception of the performance of a
product in relation to his/her expectation
 Customer Retention: Retaining satisfied customers
 In short, our Consumption related behavior impacts New Product
Development & Success/Failure of Businesses

6. QUESTIONS MARKETERS FACE?
 WHAT products & brands do people buy?
 WHY do people buy the products & brands that they do?
 WHEN do they buy them?
 WHERE do they buy them?
 HOW OFTEN do they buy them?
 HOW do they actually use them?
 HOW OFTEN do they use them?
 HOW do they evaluate them after the purchase? What do
consumers think about our products & those of our competitors?
What do they think about possible improvements in our
products?
 WHAT are their attitudes towards our products & our
promotional efforts?

7. CONSUMER BEHAVIOR?
“The Behavior that people display in searching for, purchasing,
using, evaluating & disposing of products & services that they
expect will satisfy their needs.”
“The mental & emotional processes & the physical activities of
people who purchase & use goods & services to satisfy particular
needs & wants.”
“The mental & emotional processes & the observable behavior of
people during searching, purchasing & post consumption of a
product or service.”
In short, the term “Consumer Behavior” subsumes the entire
process…
From Planning to Acquire something, to Actual Consumption
through till Post Consumption & even Disposal

8. CONSUMER BEHAVIOR?
Discuss Consumer Behavior across Products & Services
Car / Motor Bike
Toilet Soap
Casual Shirt
Formal Shoes
Refrigerator
House
Career choice
Insurance
Music System
Eating Out
Vacation

9. CONSUMER BEHAVIOR?
Study of Consumer Behavior for a product/service will reveal
answers to critical questions such as:
 What kinds of consumers buy that product/service?
 Why do they buy it? What do they look for in it? What benefits do
they seek?
 How much are they willing to pay?
 How many are likely to buy now?
 Do they wait for prices to come down? Do they look for some
freebies?
These have a DIRECT bearing on Marketing - designing the product
as well as the marketing mix

10. SO, IS CONSUMER UNDERSTANDING COMPLEX ?
Discuss
 Is it really a complex process at all?
 If so, in what way is it complex?
 What makes it so complex?

11. NEEDS
 All of us have different kind of needs:
 Physiological / Biological Needs: Air, Water, Food, Clothing, Shelter, Sex
 Acquired / Psychological Needs: Self-Esteem, Prestige, Affection, Power,
Achievement
 Broadly similar Biological Needs: however, vastly different
Acquired Needs

12. DIVERSITY OF CONSUMER BEHAVIOR
 All of us consumers are unique
 Different Attitudes & Beliefs about Life in general
 Different things that drive us, interest us, engage us
 Different Needs & Wants
 Different Roles that we play in life & in the entire Consumption
process – varies from one product to another

13. CONSUMER BEHAVIOR DIVERSITY - UNIQUENESS
 All of us consumers are unique
 Different Attitudes & Beliefs about Life in general
 Different things that drive us, interest us, engage us
 Different ways in which we process various things that we get exposed to
 Different Needs & Wants
 These are conditioned by:
 The Culture that we belong to
 Our Upbringing & Education
 Environment (People around us that we interact with regularly)
 Experiences
 Age & Stage in Life
 Amidst this diversity, many of us are also similar to one another
 “Segmentation”: Dividing one whole mass into groups based upon similarity of
Needs & Wants
 “Targeting”: Addressing specific segments
 “Positioning”: Developing a distinct image for an offering in their minds

14. CONSUMER BEHAVIOR DIVERSITY - BUYING ROLES
 We also play Different Roles in life & in the entire Consumption
process – varies from one product to another
 Initiator: Determines un-fulfilled Need/Want
 Influencer: One who (somehow) influences a Buying decision, Actual
Purchase and/or Use of the Product
 Decider: One who actually determines what will be finally chosen
 Gatekeeper: Influences a Family’s processing of information
 Buyer: One who actually makes the Purchase transaction
 User/s: One who is directly involved with the Use or Consumption of the
purchased product
 Buyer Roles: Exercise
 Car / Motorbike / House / Computer / Detergent / Toothpaste
 Why need to understand ALL ROLES? (Discuss)

15. CONSUMER BEHAVIOR DIVERSITY – CUSTOMER TYPES
 There are also different Customers Types – according to Usage
 Loyalists: Highly Satisfied & Highly Loyal
 Apostles: Experiences exceed Expectations & who actively spread the word
 Defectors: Low Satisfaction & Low Loyalty; Neutral but likely to shift
 Terrorists: Defectors with negative experiences & who will spread the word
 Hostages: Unhappy, but who stay due to either lack of competition or price
 Mercenaries: Highly satisfied, but Low Loyalty & may defect due to lower
price elsewhere or on impulse

16. CONSUMER BEHAVIOR DIVERSITY – CUSTOMER TYPES
High Apostle
Mercenary Loyalist
SATISFACTION
Medium
Defector Hostage
Terrorist
Low
LOYALTY
Low Medium High

17. CONSUMER BEHAVIOR DIVERSITY – CUSTOMER TYPES
Apostle Most Desirable
Loyalist
Mercenary
Hostage
Defector
Terrorist Least Desirable

18. CB IMPLICATION ON MARKETING
 Analyze Market opportunity: Identifying unfulfilled Needs &
Wants
 Examining Trends & Conditions
 Consumers’ Lifestyles
 Income levels
 Emerging Influences
 E.g. Convenience & Leisure products thanks to Dual income households
 Selecting Target Market: Review of Market Opportunities helps
identify distinct Consumer Segments
 Identifying them & how they make purchase decisions
enables the marketer to design & market products/services
as per needs/wants

19. CB IMPLICATION ON MARKETING
 Marketing-mix Decisions: Once unsatisfied needs/wants
identified, determining the right mix of the 4 Ps
 Product:
 Specific decisions w.r.t. Shape, Size, Variants, Features..
 Also Packaging, key aspects of Service, Warranties..
 Price:
 What Price to charge? Is the consumer price-sensitive?
 Should Discounts be given?
 Do consumer equate lower price with lower quality?
 Distribution:
 Should one sell through all retail outlets or selected ones?
 Existing multi-brand outlets or create Exclusive ones?
 Is location a key criterion?
 Is there a case for Direct marketing?

20. CB IMPLICATION ON MARKETING
 Marketing-mix Decisions: Once unsatisfied needs/wants
identified, determining the right mix of the 4 Ps
 Promotion:
 Which among Advertising, Personal Selling, Sales Promotion & Direct
Marketing most suitable to effectively reach consumers?
 Should it be one approach alone or a combination?
 Understanding Consumer habits in the context of the Category the key
(Industrial products v/s Consumer products v/s Pharma v/s Insurance)
 Use in Social & Non-profits Marketing
 Designing Marketing Strategies for social programs

21. CHALLENGE TODAY
 Consumers hold more power
 Have access to more information
 Exchange between Marketers & Customers increasingly
interactive & instantaneous
 Marketers can gather more information about consumers more
quickly & easily
 Impact reaches beyond PC-based connection to the Web

22. CONSUMER BLACK BOX MODEL
ENVIRONMENTAL
BUYER’S BLACK BOX
FACTORS
BUYER’S
Buyer RESPONSE
Marketin Environment
Characteristi Decision Process
g Stimuli al Stimuli
cs
Economic Attitudes Problem recognition
Product choice
Product Technological Motivation Information search
Brand choice
Price Political Perceptions Alternative
Dealer choice
evaluation
Place Cultural Personality
Purchase timing
Purchase decision
Promotion Demographic Lifestyle
Purchase
Post-purchase
amount
Natural Knowledge behavior

23. Session 1
Introduction to Consumer; Significance & Essentials of
Consumer Behavior
CONSUMER BEHAVIOR

24. Session 1
Introduction to Consumer; Significance & Essentials of
Consumer Behavior
CONSUMER BEHAVIOR

25. Session 1
Introduction to Consumer; Significance & Essentials of
Consumer Behavior
CONSUMER BEHAVIOR