Consumer Behaviour: An Introduction

Introduction to Consumer Behaviour

• Consumer behaviour is the study of why people buy certain products or brands.
• Understanding consumer behaviour helps marketers develop strategies to influence consumers.
• Engel et al.(1995) defined consumer behaviour as individuals obtaining, using, and disposing of economic goods and services, including decision-making.
• Schiffman and Kanuk(2004) defined consumer behaviour as consumers searching for, purchasing, using, evaluating, and disposing of products, services, and ideas.
• Study of consumer behaviour provides insights into individual's decision making to optimize utility from consumption with available resources like money, time, and effort.
• Consumer behaviour addresses what consumers buy, why, how, when, where, and how often.

Consumer Buying Roles

• Initiator: The person who decides to start the buying process.
• Influencer: The person who tries to convince others about the need for the product.
• Decider: The person who makes the final decision to purchase.
• Buyer: The person who pays for the product
• User: The person who uses the product, regardless of their involvement in the buying process.

Nature and Scope of Consumer Behaviour

• Knowledge of consumer needs, wants, attitude, and beliefs helps firms to improvise their marketing strategies.
• Marketers gain understanding of how consumers:
  • Think, feel, comprehend, and select brands.
  • Are influenced by their environment (culture, family, media).
  • Exhibit shopping behaviour.
  • Determine motivational parameters.
  • Adapt their decision strategies based on perceived importance.
• Marketers adapt and improve marketing campaigns/strategies to efficiently reach consumers.

Consumer Behaviour Trends

• A shift from collectivism to individualism.
• Consumers trade up and down between brands and seek value.
• Emphasis on health and fitness.
• Increased consumer assertiveness.
• Increase in online shopping.

Characteristics of Indian Consumers

• India has 28 states, over one billion population and 120+ dialects/languages.
• Indian consumers consist of diverse segments based on social class, location, caste, race, and other factors.
• Indian consumers have a high value orientation, making them among the most sensitive globally.
• Indian consumers have a high degree of family orientation.

Segments of Indian Consumers

• The Socialites
• The Conservatives
• The Working Women
• The segments of Indian Rich consumers are rich, the super rich, the ultra rich, the sheer rich, and the obscenely rich.

Indian Rural Consumers

• The rural market has grown both quantitatively and qualitatively.
• Rural markets are growing twice as fast as urban markets.
• There is an increase in sales of typical urban kitchen gadgets.
• Rural India shows a trend to increased purchases in lifestyle products.

Changing Rural Purchase Patterns

• Increased agricultural output.
• Growth in education.
• Exposure to mass media.
• Innovative pricing and distribution.
• Growing interaction with urban consumers.

Impact of Consumer Profile Changes on Marketing Decisions

• There is an increase in online marketing and celebrity endorsements
• Markets are offering More quality-oriented outlets
• Increased sales promotion offers
• Greater consumer inclination towards eco-friendly and herbal products

Marketing Using Consumer Behaviour Principles

• Determine the task the product/service performs for consumers and its significance.
• Identify the product's most significant attributes/features for the target market.
• Determine packaging and labeling to attract consumers and generate the desired image.
• Determine suitable pre- and post-sales services.
• Ascertain number of models, variations, or sizes to meet target market demands.

Pricing and Consumer Behaviour

• Determine consumers willingness to pay for the product.
• Determine the price at which consumers judge the product's worth.
• Identify specific prices that align product quality.
• Evaluate if lowered prices lead to continued purchases when they return to full price.
• Determine if increased prices deter purchasing.
• Assess price significance for specific consumers

Marketing and Media

• Identify the most effective media for reaching a target market.
• Determine the image advertising should create.
• Identify most effective sales promotions.
• Determine the sales approach to match consumer needs with products
• Determine the publicity task to communicate with consumers.

Consumer Preferences for Purchasing Channels

• Whether consumers prefer in-store, mail-order catalogs, or sales representatives.
• What consumer perceptions that various stores and chains might have influence purchasing behaviour.
• Whether various stores create specific environments that affect purchase decisions.

Five-Stage Consumer Decision Process

• Need recognition
• Information search
• Evaluation of alternatives
• Purchase decision
• Post-purchase behaviour

Benefits of Anticipating Customer Behaviour Trends

• Companies can achieve a key calculated gain.
• Industries can craft a market by channeling a latent need.
• Enhanced responsiveness to change is realized
• Adapting to change leads to survival

Major Worldwide Changing Trends

• Demographics:
  • Aging population
  • Increased women in the workforce
  • Increasing single-person households
  • Declining middle class in W1 countries
  • Rising middle-class in W2 countries
• Technology:
  • Control over information
  • Smart products
  • Access to products
  • Mass customization
• Public Policy:
  • Pragmatism over ideology
  • Rights of passive consumers
  • Regional economic integration

Demographic Trends

• Aging population
• Rising fitness trends
• Single-Parent Households
• Increased number of women in the workforce
• Declining middle-class in W1 countries, rising one in W2 and W3

Demographic Trends Implications on Consumer Behaviour

• Increased aging population relates to:
  • Augmented health and security needs (user)
  • Cost containment for healthcare is an anxiety (payer)
  • Home delivery and handiness in purchase is crucial (buyer)
• More working women relates to:
  • Emphasis on timesaving cooking, cleaning gadgets, crèche for childcare, fast food for children (user)
  • Affordability is fairly improved. Many families are DINKS (double-income-no-kids). Their affordability is quite high (payer)
  • Male-female role specialization no longer exists. Females now take part in those buying decisions (buyer)
• Single-person households relates to:
  • Products of social and emotional values attain importance. Emphasis on timesaving cooking, cleaning gadgets, crèche for childcare, fast food for children (user)
  • High affordability (payer)
  • Tendency for more impulse buying and pragmatic decisions (buyer)
• Increasing middle class relates to:
  • Demand for medium priced goods (user)
  • Ready to pay premium price for luxury goods but price sensitive in case of routine goods (payer)
  • Very cautious customers and first-time buyers for many products (buyer)

Technological Trends

• An interconnected world 24/7
• More access to information.
• Introduction of smart products.
• More tech-savvy customers

Technological Trends Implications on Consumer Behaviour

• Greater access to information correlates to:
  • More tailored products (user)
  • More information about the competing brands' prices (payer)
  • Shopping on the Web/virtual shopping malls (buyer)
• Smart products correlate to:
  • A smart product with memory for user's likings (user)
  • Updated methods of customers' and marketers' identity verification guarantee protection against deceptions (payer)
  • Automated purchase from virtual malls or buying direct from the factory by electronic data interchange system (buyer)
• Tech-savvy buyers correlate to:
  • Uses of hi-tech electronic gadgets are increasing (user)
  • Customers are becoming more and more technology-savvy (payer)
  • Buyers can purchase from virtual shopping centers (buyer)

Trends in Public Policy

• Economic Pragmatism Over Ideology:
  • Pragmatism over political ideology
  • Pragmatism over religious ideology
• Increase in the 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.)

Public Policy Trends Implications on Consumer Behaviour

• Economic pragmatism implies:
  • Superior products due to open-market economy (user)
  • Reduced prices due to tough competition amongst the multinational corporates (payer)
  • Easy and fast movement of the global across the globe (buyer)
• Rights of passive consumers implies:
  • Consumer's rights for information, the consumer forum, and the consumer court legally ensured protection against passive consumption (user)
  • A financial penalty for consumption disturbing other's health or property (payer)
  • Difficult to use societal harmful products/services in public places (buyer)
• Regional economic integration implies:
  • Seasonal products available for year-round consumption everywhere across the globe (user)
  • More cost-effectively created and more cheaply priced products and services (payer)
  • Easier to obtain products and services from varied consumption cultures (buyer)

Implications of Changing Consumer Behaviour Trends for Marketers

• Marketing strategies will significantly evolve.
• Strategies will shift from product orientation to service orientation.
• Organizations will focus on security, excellence, and enhanced capability.
• Products will be tailored more in consultation with customers.
• Productions and distribution will focus on smart, timesaving methods.
• In addition to rampant promotion, more emphasis on emotive, cultural, values, and ethos

Consumerism Definition

• Kotler (1972) defined the term, "Consumerism" as a social movement seeking to augment the rights and powers of buyers in relation to sellers.
• Maynes (1990) defined the term, "Consumerism" as the voicing of consumer discontent and the furtherance of corrective actions.
• McIlhenny (1990) defined the term, "Consumerism" as a citizens' movement that will make broad-reaching social, ecological, and political demands on suppliers of goods and services.
• Onah (1979) defined the term, "Consumerism" 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.

Consumerism Issues

• How the products and wealth we devour are created.
• If there is any negative impact on the environment, society, or individual.
• If forms of consumption pose any threat to the environment, society, or individuals.
• If purchases are a necessity or simply lavishness.
• Measure consumption basket is influenced by advertising strategies.

Consumerism in Developing Countries

• Thorelli's (1990) study of consumerism in Singapore, India, Nigeria, and Kenya highlights:
  • scans consumerism's prevalence and judges them against marketing strategy dimensions.
  • symbolizes Africa and Asia, providing an interesting continent comparison.
• In developing countries, consumerism arises from
  • a lack of quality control in locally manufactured products.
  • poor logistics services.
  • vendors' perceived low importance of consumer satisfaction.
• Governement Policy & legislation is a subject of Consumerism in W3 countries, mainly enactment of policies instead of public support

Marketers Response to Consumerism

• Spotting and foreseeing consumer needs and wants.
• Identifying groups of people who really need, use, and purchase their products directly.
• Checking of pricing strategies and finding out their relevance and appropriateness to general consumers.
• Scrutinizing the effectiveness of the existing distribution channel.
• Distribution strategies are pinpointed towards sales from multiple touch points.

Child Consumerism

• It poses a question about how the rising trend of consumerism shape the destiny of Indian children.

Consumer Protection Act, 1986

• It protects consumers with better safety and security by offering uncomplicated, prompt, and economical remedy to aggrieved consumer.

Filling a Complaint

• A complaint can be filed by a consumer, a registered consumer organization, central or state government and one or more consumers identified by common concern.
• The complaint can be either handwritten or typed on a plain paper.
• Processing stamp or court fee is not required for this
• It can be filed based on any unfair or restrictive trade practice adopted by the trader.
• It can be filed based on any Defective goods and deficiency in service
• It can be filed based on any Excess price charged by the trader or unlawful goods sale, which is hazardous to life and safety when used

Consumer Courts

• District Forum: Claims up to Rs. 20 lakh
• State Commission: Claims above Rs.20 lakh but less than Rs. 1 crore
• National Commission: Claims above Rs.1 crore

Specifics of Consumer Cases

• The complaint must cite the nature and relief sought and file in quadruplicate in the relevant forum
• Additional copies are to be filed simultaneously if the case has multiple parties.
• Complaint resolution should occur within 90 days of notice, but this extends to 150 days if product testing is needed.
• Consumer courts may order repair or replacement of defective goods.
• It can order for a refund of price paid for defective goods or service rendered
• It can also order a removal of deficiency in service with a Refund of extra money charged

Market Segmentation

• Market segmentation involves splitting the market into consumer sub-groups and is a significant concept in consumer and marketing materials.
• Selecting a suitable target market is a key aspect of developing a marketing strategy.
• Firms can target profitable segments and tailor products accordingly.
• It divides market into consumer groups with homogenous needs and also identifies/describes potential target markets.

Steps of Market Segmentation

• Analyze the consumer-product relationships.
• Decide the relevant bases for segmenting the markets.
• Choose the suitable segmentation strategy.

Bases of Marketing Segmentation

• Geographic: region, city/density size, or climate.
• Demographic: age, gender, occupation, household size, education, family lifecycle, social class, and religion.
• Psychographic: motivation, attitude, or lifestyle/values of customer or potential ones.
• Behavioral: usage rate, use status, brand loyalty or specific user-situations.

Criteria for Useful Segmentation

• Measurability: How easily can information about the segment's size and behavior be obtained.
• Accessibility: Can the segment be reached.
• Sustainability: Is market size enough to generate enough sales of a product for feasibility.
• Congruity: Similarity of characteritics in the behaviour of members or those of potential consumers.

Micro-Marketing

• It treats each customer as a single segment or targets specific customers within a niche market.
• Designer dresses of a movie's hero are an example of the concept in practice.

Target Market

• A firm plans its marketing efforts for for a target set of consumers.
• High income individuals are targeted by Dove, those at the base of hte pyramid are targeted by Lifebouy for instance.

Types of Marketing

• Undifferentiated, concetration, and multiple-segment types of marketing are commonly implemented

Behavioral Targeting

• Tracking online navigation, a potential or already loyal user.
• Finding location and mobile targeting in coordination.
• Focusing on Purchase Behavuiour
• Utilizing Information available in an "Arms Race" for the best information.

Selecting Target Market Guidelines

• Checking to see if compatability of resources is maintained, and if abilities are there to maintain compatability.
• Analysing competition's effects on realistic profit potential of the company.

Positioning

• Positioning designs a place to occupy in the target market's brain.
• Defining associations needs parity for points of difference.

Steps of Positioning and Repositioning

• Selecting the pricing of relevant benefits of the product based on market.
• Designing points of parity and difference that best describe the position's points.
• Convet consistent messaging and designing components for the market mix.
• Recreation is done for new or original identities that make a company's position erode.

Defining Motivation

• It is a state made of arousal and drive used to propel behavior toward a goal object for direction.
• Eminent psychologists note the basic need to satiate hedonism, altruism, morality, or avoidance when there is mortality.
• Companiies work to identify what motivates these target group to persuade favorable decisions and spur behavior.

Steps of Motivation

• Arousal drive to eliminate a deviation between preent state of product and what needs to be done for the future: this is called a drive.
• Goal direction allows for services with desirable benefits to reduce tension, marketers supply for this.

More Steps to Motivation

• Conflict arises when having to choose two things: Kurt Lewin developed conflict theories.
• Alternative approach conflicts: a necessity to choose between two attractive options that benefit two scenarios.
• Avoiding one over the other presents a more negative choice that leaves a consumer unsatisfied.
• Goal conflict balances negative over positive attributes.

More Steps to Motivation

• Outcome motivation makes it known to what ends one arrives for internal vs external states.
• The pleasure of solving a puzzle is just one intrinsic way to create reward.
• Earning money, being externally validated represents the alternative goal but there are extrinsic factors to consider as well.

Last Step to Motivation

• Experience increases the process of motivational force in increased drive/power to attain more goals.