Introduction to Consumer

Behaviour
Lecture 1

SRABANTI MUKHERJEE
 Learning Objectives

 Nature and scope of consumer behaviour

 Application of consumer behaviour principles to strategic

marketing

 Characteristics of worldwide consumers

 Special characteristics of Indian consumers

 Distinctive characteristics of Indian rural customers

 Simple five-stage consumer decision process

 Who is a Consumer?

 A consumer is a person or an organizational unit that plays a role in

the consumption of a transaction with the marketer or an entity.
The term consumer refers to both the household and the business
markets.

 The five main buying roles are as follows:

a. The initiator – the person who decides to start the buying process.
b. The influencer – the person who tries to convince others that they
need the product.
c. The decider – the person who makes the final decision to
purchase.
d. The buyer – the person who is going to pay
e. The user – the person who ends up using your product, whether
he had a say in the buying process or not
 What is Consumer Behaviour?

 Consumer behaviour has traditionally been thought of as the study of “why people buy”, with
the premise that it becomes easier to develop strategies to influence consumers once a marketer
knows why people buy certain products or brands.

 Engel et al.(1995) defined consumer behaviour as “those acts of individuals directly involved in
obtaining, using, and disposing of economic goods and services including the decision process
that precedes and determines those acts”.

 Schiffman and Kanuk(2004) defined consumer behaviour as the behaviour that a consumer
displays in searching for, purchasing, using, evaluating, and disposing of products, services, and
ideas which they expect will satisfy their needs.

 In short, the study of consumer behaviour provides an eye opening lesson regarding
individual’s decision making to optimize utility from consumption with their available
resources (money, time, and effort).

 In other words, the study of consumer behaviour answers the following questions about the
consumers– what they buy, why they buy it, how they buy it, when they buy it, where they buy it
and how often they buy it.
 What is Consumer Behaviour?

Consumer behaviour refers to those acts of

individuals that are directly involved in obtaining
and using economic goods and services, including the
decision processes that precede and determine these
acts (Engel et al.,1995) .
 Nature and Scope of Consumer Behaviour

 The knowledge of consumer’s needs, wants, attitude, and beliefs helps

firms to improvise their marketing strategies by understanding issues such
as:

 how the consumers think, feel, comprehend, and select amongst

various competing brands;
 how they are influenced by their environment (e.g., culture, family,
signs, media);
 what is the pattern of shopping behaviour they are exposed to;
 what are their motivational parameters;
 how their decision strategies differ between products that differ in
their perceived level of importance.

 These understandings help the marketers to adapt and improve their

marketing campaigns and strategies to more efficiently reach the
consumer.
 Important changes in the nature of the modern
consumers

 Movement from collectivism to individualism

 Trade up and trade down and value vaulters

 Focus on health and fitness

 Increased consumer assertiveness

 Boom in online shopping

 Characteristics of Indian Consumers

 India is a huge country with 28 states, over one billion

populous and 120 dialect/languages.

 The Indians consist of diverse segments of consumers,

depending on the various social classes, place of
inhabitancy, caste, race, and various other spectra.

 The Indian consumers have a towering scale of value

orientation, which projects them as one of the most
sensitive consumers in the world.

 Indian consumers have high degree of family orientation.

Different Segments of Indian Consumers(MARTRADE
Chennai, October, 2005)

 The Socialites

 The Conservatives

 The Working Women

 Indian Rich
(a) The rich
(b) The super rich
(c) The ultra rich
(d) The sheer rich
(e) The Obscenely rich
 Indian Rural Consumers of 21st Century

Change in Purchasing Pattern

 The rural market grown in quantitative as well as

qualitatively too it has undergone a significant change.

 Trends indicate that the rural markets are coming up in a

big way and growing twice as fast as the urban markets,
witnessing a rise in sales of hitherto typical urban kitchen
gadgets such as refrigerators, mixer–grinders, and
pressure cookers.

 Even in lifestyle products, rural India shows a trend to be

significant over the next five years.
Reasons for Changing Purchase Patterns in Rural
India

 Increase in the agricultural output

 Growth in Education
 Exposure to Mass Media
 Innovative pricing and non-conventional
distribution
 Growing interaction with the urban consumers
Impact of Change in Consumers Profile on
the Marketing Decisions

 Increase in online marketing

 Increasing celebrity endorsements
 More quality oriented outlets
 More sales promotion offers
 Inclination towards eco-friendly and herbal products
The Application of Consumer Behaviour
Principles to Marketing
To decide:

 What task does this product or service dish up for the consumers in
a target market? And what does it signify to them?
 What attributes or features of the product are most significant to
the target market?
 What types of packaging and labeling information would best dole
out consumers and draw them to purchase the product? What
brand name and trademark for the product would generate the
appropriate image in the target market?
 What kinds of pre-sales or post sales services would gratify
consumers in the target market?
 How many models, variations, or sizes of the product are needed to
gratify various target markets?
 Godrej Chotookool

Image source: http://officeneeds.sulekha.com/low-cost-chotukool-refrigerator- Image source: https://www.chotukool.com/

from-godrej_602985_blog
The Application of Consumer Behaviour on
Principles to Marketing
To decide:

 How much are the consumers in a target market ready to pay for a
particular product?
 At what price would consumers in this market judge this product is
of worth?
 What do specific prices correspond to consumers about the quality
of a particular product?
 If the price of a product were lowered in the short run, would
consumers carry on to buy the product when it reverts to full price?
 Would consumers stop purchasing the product if the price were
increased enduringly?
 How significant is price to consumers in a fastidious target market?
The Application of Consumer Behaviour on
Principles to Marketing

To decide:

 What are the finest media for reaching a target market

for a particular product?
 What image should advertising try to craft about a
product?
 What types of sales promotions would be most effectual
for getting customers to buy a product?
 What should be the salespeople’s approach to match
consumers’ needs and wants with particular products?
 What task should publicity perform in communicating
with customers about a product?
The Application of Consumer Behaviour on
Principles to Marketing

To decide:

 Would consumers have a preference to purchase a product

in stores or from different channels, such as mail-order
catalogs or store sales people?
 What reflection does various stores and chains have that
might influence consumer preference and purchase
behaviour for various products?
 Do various stores have particular environment that might
influence consumer purchase of a product?
The Simple Five Stage Consumer Decision
Process
The Changing Patterns of
Consumer Behaviour
Lecture 2

SRABANTI MUKHERJEE
 Learning Objectives

 The benefits of anticipating trends in

customer behaviour

 Worldwide trends consumer dynamics

 Implications for the trends for the three

consumer roles
Benefits of Foreseeing Trends in Customer
Behaviour

 Anticipating trends can give companies a key

calculated gain.

 By unearthing a trend, the industry can craft a

market by channeling a latent need.

 Anticipating trends render quickness to respond to

change. As Charles Darwin says, “It’s not the
strongest of the species that survives, nor the most
intelligent; it is the one most adaptable to change”.
The Major Worldwide Changing Trends
 Demographic Trends

 Aging of the Population

 Fitness at the Rise

 Single parent households

 Women in the workforce

 The Declining of middle-class in W1 vs. the

Rising of middle-class in W2 and W3 (Hines,
2008)
 Innovative Senior Care-US

Innovative Senior Care (ISC), the in-house therapy

division of Brookdale® Senior Living, is slowly
changing the lives of US senior residents. Their
Care3 Wellness programs “help minimize the effects
of aging by providing treatments promoting
functional independence, improving overall health
and techniques for preventing pain and disability”.
(Source: http://www.brookdalecareers.com/why-innovative-senior-care.cfm)
 Tanishq- Mia (My Expression Contest)

"With this campaign, we wanted to venture into a new

space and reach out to a different set of consumers,
the young working women - who are largely
disconnected from traditional jeweller”

----------- said Sirish Chandrashekhar, Senior

Marketing Manager, Tanishq

(Source: http://www.campaignindia.in/article/tanishq-gets-young-women-to-
interpret-design-utility-for-mia/416737)
Implications on Demographic Trends on
Consumer Behaviour
 Technological Trends

 24×7 interconnected world

 More access to information
 Introduction of smart products
 More tech savvy customers
Implications on Technological Trends on
Consumer Behaviour
 Trends in Public Policy

 Economic Pragmatism over Ideology

 Pragmatism over Political Ideology
 Pragmatism over Religious Ideology

 Increase in Rights of Passive Consumers

 Regional Economic Integration

 NAFTA (United States, Canada, Mexico)
 SAFTA ( India, Pakistan, Bangladesh, Bhutan, Maldives,
Sri Lanka)
 ASEAN(Indonesia, Malaysia, The Phillipines, Singapore,
Thailand, Brunei Darussalam, Vietnam etc.)
Implications of Public Policy Trends on
Consumer Behaviour
 Overall Implications of Changing Trends
of Consumer Behaviour for the Marketers

 Significant move in marketing strategies will take place in the forthcoming years.

 A sway will occur from product oriented strategies to the service oriented ones.

 Most of the organizations will propose for more security, excellence, and enhanced
capability.

 Marketers will need to tailor their products more and more in consultation with the
customers.

 Smart and timesaving methods of productions and distribution will emerge.

 Apart from just rampant promotion, more emphasis has to be laid on boosting up
the emotive, cultural, and social values and ethos as a part of their marketing
strategy in the 21st century.
Dimensions of Consumerism
Lecture 3

SRABANTI MUKHERJEE
 Learning Objectives

 Concept of consumerism
 Issues related to consumerism
 Threats of child consumerism and its
implication particularly in India
 Consumer Protection Act, India, 1986
 What is consumerism?

 Consumerism is “a social movement seeking to augment the rights

and powers of buyers in relation to sellers”: Kotler (1972)

 Consumerism is “the voicing of consumer discontent and the

furtherance of corrective actions”: Maynes (1990)

 It is defined as “a citizens’ movement which will make broad-

reaching social, ecological, and political demands on suppliers of
goods and services”: McIlhenny(1990)

 From the W2 and W3 angle, consumerism has been delineated as

“the efforts made either by the consumer himself, the government,
and/or independent organizations to protect the consumer from the
unscrupulous practices of businesses in their quest for profit”: Onah
(1979).
 Issues pertaining to consumerism

 How the products and wealth we devour are created?

 Is there any negative impact of that process of

production on the environment, society, or
individual?

 Do our forms of consumption pose any threat to the

environment, society, or individuals?

 Is our purchase a necessity or simply lavishness?

 To what extent is our consumption basket influenced

by advertising strategies of the marketers?
 Consumerism in Developing Countries

The study of Thorelli (1990) on attitudes toward consumerism in four developing

countries Singapore, India, Nigeria, and Kenya—is worth mentioning.

This study scans the present extent of consumerism in these countries and judges them
against the underlying dimensions of marketing strategies. These countries symbolize
two different continents (Africa and Asia). Hence, the study provides an interesting
facet to the evaluation of dimensions of consumerism in two different continents.

According to this study, consumerism in developing countries arises out of the

following reasons:

(a) Lack of quality control of locally manufactured products,

(b) Poor logistics services,
(c) Perceived low importance of consumer satisfaction to the vendors who willingly
trade adulterated products.

However, consumerism in most W3 countries is a subject of government policy and

legislation. In particular, it is the proficient enactment of such policies rather than an
issue of affianced public support system.
 Marketers’ Response to Consumerism

 Consumerism is a prospect for those corporate managers who are able to

spot and foresee the consumer's needs and wants.

 Explicitly, the corporate needs to identify those groups of people who really
need, use, and purchase their products directly.

 Consumer-oriented marketing also calls for checking of pricing strategies

by the companies and finding out their relevance and appropriateness to
general consumers.

 It also involves the process of scrutinizing the effectiveness of the existing

distribution channel. These tests are performed to assess a particular
store's aptness to carry a product title.

 In this era of "customer is the king", all distribution strategies are

pinpointed towards the lone goal of selling multiple assortments from
multiple touch points to intensify the business
 Child Consumerism: The Veritable Threat

With almost the similar properties arising out of the

rapid societal change in this century, the most
pertinent question for the Indian children is: how does
the rising trend of consumerism shape their destiny?
 Consumer Protection Act, 1986

The Consumer Protection Act, 1986 (Act no. 68 of

1986) is a signpost in the history of socio-economic
legislation in the nation.

The key object of this latest law is to endow the

consumers with better safety and security by offering
uncomplicated, prompt, and economical remedy to
aggrieved consumer.
 How to file complaints?

A complaint, either handwritten or typed on a plain

paper, can be filed by a consumer, a registered
consumer organization, central or state government
and one or more consumers identified by common
concern.

In this processing stamp or court fee is not required.

 On which grounds?

 Any unfair trade practice or restrictive trade practice

adopted by the trader
 Defective goods
 Deficiency in service
 Excess price charged by the trader
 Unlawful goods sale, which is hazardous to life and
safety when used
 Consumer Courts

 District Forum: For claims up to Rs. 20 lakh

 State Commission: For claims above Rs.20 lakh but
less than Rs. 1 crore
 National Commission: For claims above Rs.1 crore
 But..

 The nature of complaint and the relief sought by the consumer must
be evidently cited.

 It has to be filed in quadruplicate in district forum or state

commission (as the case may be) if it is against only one opposite
party.

 In case of multiple parties, additional copies are to be filed

simultaneously.

 By and large complaint should resolute within 90 days from the

date of notice issued to the opposite party.

 In case a sample testing of any product is needed, a complaint is to

be disposed off within 150 days.
 Consumer courts may grant the petitioner the
following reliefs:

 Repair of defective goods.

 Replacement of defective goods.
 Refund of price paid for the defective goods or
service.
 Removal of deficiency in service.
 Refund of extra money charged
Use of Market
Segmentation
in Consumer
Behaviour
Lecture 4
Dr. Srabanti Mukherjee

Vinod Gupta School of Management,

Indian Institute of Technology
Kharagpur
Need for Market Segmentation

– Market segmentation is one of the most significant concepts in consumer

behaviour and marketing literature.
– A large portion of consumer research is concerned with segmentation. Selecting
a suitable target market is dominant in developing a marketing strategy.
– Earlier, many marketers focused on target markets in an all-purpose, non-
personal way.
– But today enhanced methods of marketing research and efficient computers
that can handle large databases give the marketers a detailed personal
information on many members of their target market.
– This facilitates the firm to target appropriate and profitable segments to market
its products.
Defining Segmentation

Market segmentation can be defined as the

process of dividing a market into groups of
individuals with homogenous needs. It is the
process of identifying and describing potential
target markets.
Steps of Market Segmentation

Step 1: The first job involved in segmenting the markets is analyzing consumer-
product relationships. This necessitates analysis of the affect and
cognitions, behaviours and environments involved in the
purchase/consumption process of a particular product.
Step 2: The second task of the marketers is to decide the relevant bases for
segmenting the markets.
Step 3: The third task of the marketers is to choose the suitable segmentation
strategy.
Bases of Market Segmentation
Criteria for useful segmentation

However, whether or not to go for market segmentation depends on the following criteria:
–
 Measurability It refers to the ability of the firm to obtain information about the
 size, nature, and behaviour of a market segment.

 Accessibility It is the degree to which the targeted segments can be reached.
 Sustainability It refers to the size of the market, i.e., whether the segment can
 generate adequate volume of sales for its feasibility or not.
 Congruity It refers to how similar the members within the segment are in
terms of behaviours or characteristics that correlate with the behaviour.
Micromarketing

Micro-marketing is the process of treating each customer

is treated as single segments (Etzel et al. 2001) or targeting
specific customers within a niche market.

For example: Designing dresses of a hero in a particular

movie
Targeting

– A target market is the group of potential customers for

whom the entire marketing efforts are planned and the
marketing mix is designed.
For e.g.: Dove targets high income consumers and
Lifebuoy targets the base of the pyramid.
Targeting are of three types:

– undifferentiated strategy
– concentration strategy
– multiple-segment strategy
 Behavioural Targeting
(Schiffman, Wisenblit and Kumar(2016), Consumer
behaviour; Pearson Education. 11th ed)

– Tracking online navigation

– Geographical Location and Mobile targeting
– Purchase behaviour
– The information “Arms Race”.
Guidelines in selecting a target
market
Check the target markets’ compatibility with the firm’s
goals and image.
Check the target markets’ match the firm’s resource
capacities and abilities.
The target market should be realistic and have profit
potential.
Analyse the nature of competition in the target segment.
Positioning and re-positioning

– Positioning is the act of designing the company’s offering and image to occupy a
distinctive place in the mind of the target market.

Defining
Associations

Points of Points of
Parity Difference
Steps of Positioning and
Repositioning
A. Selecting the concept of positioning —determine what features,
price etc. are important to the target market.
B. Designing the points of parity and points of difference that most
effectively conveys the position
C. Designing the marketing mix components to convey a consistent
position.
D. Repositioning—recreating an identity or creating a new identity
when the firm’s position has eroded.
 Process of
motivation
Lecture 5

Dr. Srabanti Mukherjee

Vinod Gupta School of Management,
Indian Institute of Technology Kharagpur
Chapter Goals

 The importance of understanding customer motives

 The process of motivation
 Motivation-Defined

 Motivation is the defined state of drive or arousal that propels behaviour toward a goal object.

 Motivation is comprised of two components: drive or arousal and goal object. In other words, motivation
may be referred as the state of mind that energizes and directs goal-oriented behaviour.

 Eminent psychologists state that motivation might be entrenched from the basic need to quench thirst
or satisfy hunger to less-apparent reasons like satisfying hedonism, altruism, morality, or avoiding
mortality.

 Fonvielle (1997) advocated that if a company’s marketing section needs to figure out how to stimulate a
target group to persuade in favour of their brands, they first have to identify what their target group
actually needs. Here the central question of consumer behaviour is rooted: how the purchase motives
are spawned.
The Process of Motivation
 The Steps

 Drive or Arousal
- When a person feels a difference between the present state and the ideal
state, an inner force directs him towards attainment of the ideal state. This
inner force is called the drive.

 Goal Directedness
- Motivation is directed towards the attainment of one’s goal. Marketers try to
produce goods and services that will endow the customers with desired
benefits and allow them to trim down the state of tension
 The Steps (contd…)

 Motivational Conflicts

Kurt Lewin (September 9, 1890–February 12, 1947), a distinguished German-born psychologist

and the founder of social psychology, shaped the conflict theories about individual’s experience
as:

1. Approach–approach conflict: An individual must opt between two enviable alternatives.

2. Avoidance–avoidance conflict :When an individual needs to make a choice between two

undesirable alternatives, avoidance–avoidance conflict occurs.

3. Approach–avoidance conflict: An approach–avoidance conflict occurs when one goal contains both
positive and negative characteristics.
 The Steps (contd…)

 Outcome
– Outcome relates to motivation generated out of this process. It can be of two types—intrinsic and
extrinsic.

– Intrinsic motivation comes from rewards inherent in a task or action itself, like the pleasure of
solving a puzzle or the passion for playing chess.

– Extrinsic motivation comes from external factors like money..

– In fact, Lewin’s social psychological research pointed that extrinsic satisfactions can well lead over
to rationalization and a subsequent diminution in intrinsic motivation. Extrinsic incentives at times
can wane the motivation as well.

– D. Greene and M.R. Lepper, in 1974, had written a classic article titled ‘How to turn play into Work’
while focusing on the intrinsic behavioural pattern of the kids when they played with toys. In their
study, it was observed that children who were sumptuously rewarded for sketching with felt-tip
pens later showed little interest in playing with the pens again.
The Steps (contd…)

Feedback

The experience in the motivational process

results in increased drive or internal force to
attain the goal.