Consumer Behaviour

Introduction to Consumer Behaviour

Definition
Consumer Behaviour can be defined as processes a person goes through when purchasing and using Products and Services, including Mental and Social processes that precede and follow these actions

C.B. encompasses the behaviour that consumers display in searching for, purchasing, using, evaluating and disposing of products and services that they expect will satisfy their needs. It is a study of the decisions of individuals, groups and organizations to spend available resources on consumption related items

Durable Good: The Personal Computer (PC)

What kind of Consumers buy PC for home use? What features do they look for? What benefits do they seek? What type of programmes do they use? For what reasons? The answers to these questions can be vital inputs for PC manufacturers

 The Consumer is Sovereign Consumer Behaviour can be understood

through market research

Consumers can be influenced

Consumer influence is a socially legitimate

activity

Applications of Consumer Behaviour Marketing Management

Consumer needs and wants

Company Objective Integrated Strategy

Market Opportunity Analysis

Target Market Selection

Applications of Consumer Behaviour

Demarketing
The term Demarketing refers to efforts to encourage consumers to reduce or stop the consumption of products and services
E.g. Programmes designed to reduce drug abuse, gambling, liquor etc.

Applications of Consumer Behaviour

Social Marketing
Government and Society have the responsibility to educate people and create awareness about hazards to human beings, and to society itself. E.g. Vivek Oberoi features in advertisements which educates rural people about the precautions and treatment for T.B., it is sponsored by the Health Ministry

Applications of Consumer Behaviour

Government Decision- Making

The relevance of CB in Government decisionmaking has become evident It is government policy which provides services to the public and designs legislation to safeguard their interests

Roles of a Consumer

Initiator Influencer Buyer

User

Consumer Research

Consumer Research
Consumer Research is the systematic collection and analysis of consumer information for the purpose of important decision making in marketing

Consumer Research
Consumer Research plays an important role in marketing process, helps in consumer measurement, market potential, sales forecast, each element like product mix, distribution mix, price effectiveness of an advertisement campaign or consumer acceptance of a product

Consumer Research
Consumer Research and Analysis

Consumer Behaviour Environment

Marketing Strategy Development

Marketing Strategy Implementation

Types of Data
Primary Data Data collected first hand either by the researcher or by someone else especially for the purpose of study is known as primary data

Types of Data
Secondary Data
Data which has been collected earlier for
some other purpose by some other

researcher which is available in hand to the

present researcher is Secondary Data

Observation Method
It is a method of collecting past and current data by recording observation The advantage of this approach is that it can be used to collect the data even when the consumer is hostile or unwilling to share the data The data can be collected as it occurs and in its natural environment

Observation Method
It is possible to record the information, which most respondents would have ignored It is less demanding as it doesnt include development of a questionnaire and involves less bias The disadvantage is that it is a slow and relatively expensive process. The researcher should also have interpretation skills and hence should be used with care and understanding

Survey Research
A Survey Research is a Communication approach, which involves questioning respondents and recording their responses It is the most versatile approach for the collection of abstract information of all types It offers an economical and efficient means of learning opinions and attitudes, intentions and expectations of respondents Interpretation of question by the respondent can greatly vary the responses

Consumer Segmentation

Market Segmentation
Definition Market Segmentation can be defined as the process of dividing the potential market into distinct subsets of the consumer with common needs or characteristics and selecting one or more segments to target with a distinct marketing mix

Market Segmentation
Market Segmentation aims at dividing the market into distinct subsets of consumers with homogenous needs or characteristics and selecting one or more segments to target them with a unique marketing mix

Market Segmentation
Companies employing market segmentation rely heavily on consumer research to locate appropriate target markets and approach them effectively

Bases for Market Segmentation

For segmentation to be viable the market must be:

identifiable and measurable accessible substantial responsive

Market Coverage Strategies

COMPANY MARKETING MIX

A. UNIFERRENTIAL MARKETING

MARKET

COMPANY MARKETING MIX 1 COMPANY MARKETING MIX 2 COMPANY MARKETING MIX 3 B. DIFFERENTIAL MARKETING

SEGMENT 1 SEGMENT 2 SEGMENT 3

SEGMENT1 COMPANY MARKETING MIX SEGMENT 2 SEGMENT 3 C. CONCENTRATED MARKETING

GEOGRAPHIC SEGMENTATION

Markets are divided into different geographic units such as nations, states, regions, cities or neighbourhoods The idea behind such segmentation is that people who live in the same area have similar needs and wants E.g. In toothpaste category powder form is sold in rural area, whereas tubes are preferred by urban citizens

DEMOGRAPHIC SEGMENTATION

Demography is the study of Human Population.

Demographic characteristics such as age, sex, martial status, income, occupation and education are most often used as a basis of segmentation
Demographic segmentation is the most accessible and cost- effective way to identify a target market

Consumer wants, preferences and usage rates are often highly associated with demographic variables.
E.g. Educated consumers are more likely to be conscious in the product, brand and store choices. They are also more alert of the quality, packaging and advertising messages. Affluent class are more likely to buy premium products and products of high quality

Limitations of demographic segmentation

Fails to predict or explain consumer behaviour though it could explain the buying behaviour Demographic studies can provide information on the potential for usage ( percentage of.) but not why a particular brand. Tends to be one-dimensional and doesnt differentiate between brands

E.g.

Using demographic studies one can predict that consumers whose monthly income is approx. Rs. 20,000 are likely to purchase a two-wheeler but cannot predict which brand

Demographic studies can determine the percentage of people likely to seek insurance cover, but cannot predict which insurance provider will they approach

Psychographic Segmentation and Lifestyle Segmentation

It is one of the newest and promising approaches to selecting target markets Lifestyle is viewed as a unique pattern of living that influences and is reflected by ones consumption behaviour Psychographics may be viewed as the method of defining lifestyle in measurable terms

Psychography is the systematic use of relevant activity, interest and opinion constructs to quantitatively explore and explain the communicating, purchasing and consuming behaviours of persons for brands, products and clusters of product

The technique of lifestyle segmentation research measures:

How people spend their time engaging in

activities

What is of most interest or importance to them

in their immediate surroundings

Consumers opinions and views about

themselves

BEHAVIOUAL SEGMENTATION
USAGE SEGMENTATION

Markets can be segmented based on product or

brand usage by consumers.

Users can be segmented as those who buy frequently versus those who buy occasionally (either brand or product) or into those users who usually loyal to one brand versus who switch brands

SITUATION SEGMENTATION

 A manufacturer or retailers product line can be

seen as a range of items appealing to the needs of diverse person- situation market segments

This segmentation approach divides the market

by groups of consumers within usage situations

This assumes that consumers often select

products on the basis of which usage situations they expect to encounter

E.g. Archies cards

LOYALTY SEGMENTATION

 Marketers are often interested in brand-loyalist,

those who consistently purchase a particular brand

Brand loyal buyers are identified and their

characteristics are analysed thoroughly

Then appropriate marketing are developed to

attract competitors buyers who have similar
characteristics

 Loyalty Segmentation is also used to increase

the loyalty rate among current less-loyal buyers

The newly developed relationship marketing

concept aims at generating ways to maintain and augment loyalty among the targeted

customers