2. Module 1 : INTRODUCTION
• Introduction to Consumer Behaviour – Consumer mind as black box-
Rational and irrational behavior of consumer- A managerial &
consumer perspective; Need to study Consumer Behaviour; Role of
Consumer Behaviour in Marketing; Applications of consumer
behaviour knowledge; current trends in Consumer Behaviour; Market
segmentation & consumer behaviour-Demographics and market
segmentation-lifestyle and psychographic segmentation-usage and
benefit segmentation
3. Consumer Behaviour
• Consumer buyer behavior refers to the buying behavior of final consumers –
individuals and households who buy goods and services for personal
consumption-Kotler
• Study of how people buy, what they buy, when they buy and why they buy.
• Attempts to understand the buyer decision making process, both individually
and in groups.
• Studies characteristics of individual consumers such as demographics,
psychographics, and behavioral variables
6. MODELS
• Marketing and other
stimuli enter the buyers
“black box” and produces
certain choices /
purchase response
• Marketers must figure
out what is inside the
buyers “black box” and
how stimuli are changed
to responses
8. Rational and irrational behaviour of consumer- A managerial &
consumer perspective
• Rational-“individuals rely on rational calculations to achieve outcomes that are
in line with their personal objectives.” Traditional economists believe that
consumers buy products with the most amount of utility for the least amount of
money.
• Durability
• Variety of uses
• Economical
• Safety
• Convenience
9. Rational and irrational behaviour of consumer- A managerial &
consumer perspective
• Behavioral economists assert that consumers do not
always act in their best interests because they lack self-
control and are emotionally driven.
• Although there are products of comparable quality available at lower prices in
grocery stores, people opt to shop at farmers’ markets because they want to shop
locally, reduce their carbon footprint, promote sustainable farming, support the
ethical treatment of animals, and so on.
• Consumer perceptions that the brand is an extension of the self. This connection is
based on the closeness of the match between the ‘personality’ of the brand and
the consumer’s own personality.”
10. Need to study CB
• Because no longer can we take the customer/consumer for granted.
• Consumer Behavior determines the economic health of a nation.
• Consumer behavior determines the success of marketing programs
• Failure rates of new products high-Only 8% of new product concepts offered by 112 leading
companies reached the market. Out of that 83% failed to meet marketing objectives.
• High Significance in daily lives-Much of our time is spent directly in the market place,
shopping or engaging in other activities.
• Application to decision making-Certain decisions are significantly affected by their behavior
or expected
11. Role of Consumer Behaviour in Marketing
• Retention of Consumers: Consumer behavior is of most
importance to marketers in business studies as the main aim is to create
and retain customers,”
• When a customer is happy about a particular product, he/she will repeat
the purchase. Therefore, marketing the product should be done in such a
way that it will convince customers to buy the product again and again.
• Thus, it is very evident that creating customers and retaining them is
very important. This can be done only by understanding and paying
attention towards the consumer’s buying behavior.
12. • Predicting Market Trend:
• Consumer behavior analysis will be the first to indicate a shift in market trends. For example, the
recent trend of consumers is toward environment-friendliness and healthy food. This changing
market trend was observed by many brands including McDonalds. Based on consumer
behavior, McDonald’s brought healthy food options.
• By conducting a consumer behavior study, a company saves a lot of resources that might otherwise
be allocated to produce a product that will not be sold in the market. For example, in summer a
brand will not waste its resources producing a product that will not sell in summer. Based on
consumer behavior the company decides on a production strategy which will save on warehouse
costs and marketing costs.
13. • Consumer Differentiation:
• In marketing, consumer differentiation is a way to distinguish a consumer from several other consumers. This
helps to make a target group of consumers with the same or similar behavior.
• Though you have a targeted customer demographic in your business, you can still have variations between
individual customers. Each group of consumers are different and their needs and wants differ from other
groups. When a marketer is knowledgeable about the differentiation of each group of consumers, he can
design separate marketing programs.
• Consumer differentiation will help to tailor your strategies to the needs of varying customer groups. When
consumer differentiation is done, you can expand the width and breadth of your services. You will be able to
effectively serve a wider group of people.
14. Competition
• One of the most important reasons to study consumer behavior is to find
out answers to some of the questions:
Is the customer buying from your competitor?
Why is a consumer buying from your competitor?
What features attract a consumer to your competitor's products?
What gaps are your consumers identifying in your products when compared
to your competitors?
• Studying consumer behavior facilitates understanding and facing
competition. Based on consumers’ expectations, your brand can offer
competitive advantages.
15. Innovate New Products:
• We all know some of the big names such as New Coke, Crystal Pepsi, Colgate Kitchen Entrées, Earring Magic Ken Doll,
and Wheaties Dunk-a-Balls Cereal. Can you see the similarities in these products? Yes, they all failed!!
• The sad truth is that most new products and new ideas end up in failure. There is an estimate of new product failures – they
range from 33% to 90% based on the kind of industry.
• Companies consistently strive hard to improve the success rate of their new products or new ideas. One of the most
important ways is to conduct a sound and thoughtful consumer behavior study.
16. Improve Customer Service
• Consumers require different levels of customer service, and understanding the differences within your
customer base will help you provide the most appropriate service for individual needs.
• For example, if you own an electronics store, high school or college students who buy a new laptop are more
likely to understand the features they’re looking for than a person buying his first computer. With the first
demographic, your service goal will be to provide information about the latest trends in technology, while
with the second demographic, you’ll need to spend more time educating the customer, finding out what his
specific needs are, and even teaching him how to use the features of his new electronic device.
17. Stay Relevant in the Market
• When the world is changing as rapidly as it is happening today, the biggest challenge we all face is staying
relevant to our target market. And do you know what is the main reason behind the rapid changes? It is the
ever-changing behavior of our customers.
• Today’s consumers have greater choices and opportunities, which means they can easily switch to a company
that offers better products and services.
• “The pre-eminent skill required to shift ahead in the twenty-first century is the ability to see and seize.” -
Adamson and Steckel, authors of Shift Ahead.
• Losing relevance will only cost the company its market share. Haven’t we seen Sony Walkman failing to stay
relevant in the digital music era, and the taxi industry doom with no preparedness to battle the UBER uprise!!
18. Design Relevant Marketing
Program:
• Understanding consumer behavior allows you to create effective marketing campaigns. Each
campaign can speak specifically to a separate group of consumers based on their behavior.
• For example, while targeting the kid's market, you may have to look out for venues such as TV ads,
school programs, and blogs targeting young mothers. You will need to take different messaging
approaches for different consumer groups.
• A study of consumer behavior enables marketers to understand what motivates consumers to make
purchases. Furthermore, the same motive can be utilized in advertising media to stir the desire to
make a purchase. Moreover, marketers should take decisions regarding the brand logo, coupons,
packing, and gifts on the basis of consumer behavior.
19. SEGMENTING CONSUMER MARKETS
• Demographic ( Age, gender, income, occupation )
• Behavioural ( frequency, brand loyalty, benefits )
• Psychographic ( motivation , priorities, social status )
• Geographic ( Area , region , climatic condition )
42. - Consumers are inspired by one of the three primary
motivations-
• Ideals: those primarily motivated by ideals are guided by
knowledge and principles.
• Achievement: those primarily motivated by achievements
are guided by products and services that demonstrate
success to their peers.
• Self-expression: those primarily motivated by self-
expression are guided social or physical activity, variety
and risk.
VALS Network
43. The four groups with higher resources are:
• Innovators-Successful, sophisticated, active, ‘take-charge’ people with
high self-esteem. Purchases often reflect cultivated tastes for relatively
upscale, niche-oriented products and services.
• Thinkers- Mature, satisfied, and reflective people who are motivated by
ideals and who value order, knowledge and responsibility. They seek
durability, functionality and value in products.
• Achievers- Successful, goal-oriented people who focus on career and
family. They favor premium products that demonstrate success to their
peers.
• Experiencers- Young, enthusiastic, impulsive people who seek variety
and excitement. They spend a comparatively high proportion of income
on fashion, entertainment and socializing.
VALS Network
44. 10-44
VALS Network
The other four groups with lower resources are:
Believers- Conservative, conventional and traditional people with
concrete beliefs. They prefer familiar products and are loyal to
established brands.
Strivers- Trendy and fun-loving people who are resource-constrained.
They favor stylish products that emulate the purchases of those with
greater material wealth.
Makers- Practical, down-to-earth, self-sufficient people who like to
work with their hands. They seek products with a practical or
functional purpose.
Survivors- Elderly, passive people who are concerned about change.
They are loyal to their favorite brands.
51. •User and usage related variables
• Occasions
• User status
• Non users, ex-users, potential users, first time users, regular
users
• Usage rate – Light, medium and heavy
users
• Buyer readiness stage
• Unaware, aware, informed, interested, desire, intend to buy
• Loyalty status – Hard core, split, shifting,
switchers
• Attitude – enthusiastic, positive,
indifferent, negative, hostile
• Multiple bases
53. 10-53
Table: Major Segmentation Variables for
Consumer Markets
Geographic
Region South India, western Region, North, East
City
Class-I Cities, Class-II Cities, Metro Cities, Cities with a
Population of 0.5 Million o 1 Million, Cities with a
Population of Over 1 Million
Rural and Semi-Urban
Areas
Urban, suburban, rural
Climate Northern southern
Demographic
Age Under 6, 6-11, 12-19, 20-34, 35-49, 50-64, 65+
Family size Young, single; young, married, no children; young,
married, youngest child under 6; young, married, youngest
child under 6 or over ; older, married, with children; older,
married, no children under 18; older, single; other
54. Table: Major Segmentation Variables for Consumer Markets
Gender Male, female
Income Low, lower middle, middle, upper middle, and high
Occupation
Unskilled worker, skilled worker, petty traders, shop
owners, businessman/industrialist, self-employed
Education
Illiterate, school upto 4 years, school between 5 to 9
years, SSC/ HSC, non-graduate,
graduate/postgraduate (general),
graduate/postgraduate (professional)
Psychographic
Socioeconomic
Classification (SEC)
A1, A2, B1, B2, C, D, E1, E2
Lifestyle Culture-oriented, sports-oriented, outdoor-oriented
Personality Compulsive, gregarious, authoritarian, ambitious
55. Behavioral
Occasions Regular, special
Benefits Quality, service, economy, speed
User Status
Non-user, ex-user, potential user, first-time user,
regular user
User Rate Light, medium, heavy
Loyalty Status None, medium, strong, absolute
Readiness Stage Unaware, aware, informed, interested, desirous,
intending to buy
Attitude Toward
Product
Enthusiastic, positive, indifferent, negative, hostile
56. Current Trends in Consumer Behaviour
• Health Conscious
• Awareness of Mental health-Hyatt, the hotel company, has recently partnered with the
meditation app company Headspace to offer free meditation and sleep therapy sessions as part of
their ‘Get Some Headspace with World of Hyatt’ campaign. Users also get a 30 day free trial for
Headspace Pro.
• Snap has also taken a similar approach. During the height of global lockdown, they introduced a
mental wellbeing tool on Snapchat aimed at delivering relevant content, including videos created by
experts.
• Community driven-Coca-Cola’s new global campaign, ‘The Great Meal’ also speaks to the
current heightened sense of togetherness felt worldwide. The ad depicts families and communities
coming together to share in the simple joy of cooking. Creating campaigns that celebrate
community is a sure fire way to resonate with consumers right now.
57. Current Trends in Consumer Behaviour
• Virtual workers and learners-
• Fuss free online shoppers-Embracing shoppable features on social media – such as
Instagram shoppable posts and Pinterest Shop the Look Pins, makes it easy for customers to shop
for products via the platforms they love.
• Visual search is also an exciting e-commerce feature not to be overlooked. 27% of online
consumers worldwide intend to research more items before shopping physically in a store,
especially in Latin America where 36% consumers said they would now browse online more before
heading to physical stores.
• Another interesting trend which consumers in China turned to during lockdown was livestream
shopping (or shopstreaming). Shopstreaming allows consumers to buy products directly from a live
video.
• When shopping online, consumers want speed. In fact, 53% of mobile visits are abandoned if a site
takes longer than 3 seconds to load
58. Current Trends in Consumer Behaviour
• Flexible first- Consumers want flexibility with their purchases in order to take away the
pressure of losing money in a time of recession. In the travel industry especially, policies which
allow for fully refundable cancellations at the last minute, or which allow people to shift bookings,
will help customers feel comfortable when parting with their money.
• Eco-friendly- to celebrate Earth Day, Pinterest added products from small to medium-sized
sustainable brands onto Pinterest Shop so that customers could locate them easily.
