Module 2

Analyzing Consumer Behaviour

nsumer Behaviour, Consumer Purchase Decision Process, Buying Roles, Buying Motives, Buyer Behaviour M

Connecting with consumers and consumer in sighting, Factors influencing Consumer Behaviour, Consumer characteristics
influencing buying behaviour- personal factors and cultural factors. Consumer Buying Decision Process, Buying Roles, Buying
Motives. The black box model of consumer behaviour. Psychological Processes underlying consumer behaviour.
Market Segmentation: Concept of Market Segmentation, Benefits, Requisites of Effective Segmentation, Bases for Segmenting
Consumer Markets, Market Segmentation Strategies. Segmentation method – Geographic segmentation and Demographic
segmentation, psychographic segmentation, behavioural segmentation, volume segmentation, deep segmentation. Indian
Consumer- Features about consumer India, Classifying Indian consumer by Income B2B marketing Vs Consumer Marketing.
Assignment- Live projects on Consumer Behaviour.

INTRODUCTION

Though similar, consumers are unique in themselves; they have needs and want which are varied
and diverse from one another; and they have different consumption patterns and consumption
behavior. The marketer helps satisfy these needs and wants through product and service
offerings. For a firm to survive, compete and grow, it is essential that the marketer identifies
these needs and wants, and provides product offerings more effectively and efficiently than other
competitors. A comprehensive yet meticulous knowledge of consumers and their consumption
behavior is essential for a firm to succeed. Herein, lies the essence of Consumer Behavior, an
interdisciplinary subject, that emerged as a separate field of study in the 1960s

Consumer behavior is the study of when, why, how, and where people do or do not buy a
product. It blends elements from psychology, sociology, social anthropology and economics. It
attempts to understand the buyer decision making process, both individually and in groups.

It studies characteristics of individual consumers such as demographics and behavioral variables

in an attempt to understand people's wants. It also tries to assess influences on the consumer
from groups such as family, friends, reference groups, and society in general.

Customer behavior study is based on consumer buying behavior, with the customer playing the
three distinct roles of user, payer and buyer. Relationship marketing is an influential asset for
customer behavior analysis as it has a keen interest in the rediscovery of the true meaning of
marketing through the re- affirmation of the importance of the customer or buyer. A greater
importance is also placed on consumer retention, customer relationship management,
personalization, customization and one-to-one marketing. Social functions can be categorized
into social choice and welfare functions.

Consumer Behavior is a branch which deals with the various stages a consumer goes through
before purchasing products or services for his end use.

DEFINING CONSUMER BEHAVIOR:

Consumer Behavior may be defined as “the interplay of forces that takes place during a
consumption process, within a consumers’ self and his environment.

-this interaction takes place between three elements viz. knowledge, affect and behavior

-it continues through pre-purchase activity to the post purchase experience

-it includes the stages of evaluating, acquiring, using and disposing of goods and services

The “consumer” includes both personal consumers and business/industrial/organizational

consumers.

Consumer behavior explains the reasons and logic that underlie purchasing decisions and
consumption patterns; it explains the processes through which buyers make decisions. The study
includes within its purview, the interplay between cognition, affect and behavior that goes on
within a consumer during the consumption process: selecting, using and disposing of goods and
services

“The behavior that consumers display in searching for, purchasing, using, evaluating and
disposing of products and services that they expect will satisfy their needs.”- Schiffman and
Kanuk

“the decision process and physical activity engaged in when evaluating, acquiring, using or
disposing of goods and services." - Loudon and Bitta

“The study of consumers as they exchange something of value for a product or service that
satisfies their needs”- Wells and Prensky

“Those actions directly involved in obtaining, consuming and disposing of products and services
including the decision processes that precede and follow these actions”.-Engel, Blackwell,
Miniard

“The dynamic interaction of effect and cognition, behavior and the environment by which human
beings conduct the exchange aspects of their lives”-American Marketing Association

NATURE AND SCOPE OF CONSUMER BEHAVIOR

i. The subject deals with issues related to cognition, affect and behaviour in
consumption behaviours, against the backdrop of individual and environmental
determinants. The individual determinants pertain to an individual’s internal self and
include psychological components like personal motivation and involvement,
perception, learning and memory, attitudes, self-concept and personality, and,
decision making. The environmental determinants pertain to external influences
surrounding an individual and include sociological, anthropological and economic
components like the family, social groups, reference groups, social class, culture, sub-
culture, cross-culture, and national and regional influences.

ii. The subject can be studied at micro or macro levels depending upon whether it is
analysed at the individual level or at the group level.

iii. The subject is interdisciplinary. It has borrowed heavily from psychology (the study
of the individual: individual determinants in buying behaviour), sociology (the study
of groups: group dynamics in buying behaviour), social psychology (the study of how
an individual operates in group/groups and its effects on buying behaviour),
anthropology (the influence of society on the individual: cultural and cross-cultural
issues in buying behaviour), and economics (income and purchasing power).

iv. Consumer behaviour is dynamic and interacting in nature. The three components of
cognition, affect and behaviour of individuals alone or in groups keeps on changing;
so does the environment. There is a continuous interplay or interaction between the
three components themselves and with the environment. This impacts consumption
pattern and behaviour and it keeps on evolving and it is highly dynamic.

v. Consumer behaviour involves the process of exchange between the buyer and the
seller, mutually beneficial for both.

vi. As a field of study it is descriptive and also analytical/ interpretive. It is descriptive as

it explains consumer decision making and behaviour in the context of individual
determinants and environmental influences. It is analytical / interpretive, as against a
backdrop of theories borrowed from psychology, sociology, social psychology,
anthropology and economics, the study analyses consumption behaviour of
individuals alone and in groups. It makes use of qualitative and quantitative tools and
techniques for research and analysis, with the objective is to understand and predict
consumption behaviour.
 vii. It is a science as well as an art. It uses both, theories borrowed from social sciences to
understand consumption behaviour, and quantitative and qualitative tools and
techniques to predict consumer behaviour
The study of consumer behavior deals with understanding consumption patterns and behavior.

It includes within its ambit the answers to the following: -

‘What’ the consumers buy: goods and services-

‘Why’ they buy it: need and want-

‘When’ do they buy it: time: day, week, month, year, occasions etc.-

‘Where’ they buy it: place-

‘How often they buy’ it: time interval-

‘How often they use’ it: frequency of use

The scope of consumer behavior includes not only the actual buyer but also the various roles
played by him/ different individuals

Nature of Consumer Behavior

 Systematic Process
 Different for Different Customers
 Varies Across Regions
 Reflects Status
 Improves Standard of Living
 Information Search
 Influenced by Various Factors
 Different for Different Products
 Vital for Marketers
 Result in Spread-effect
 Undergoes a Change
 Brand Loyalty
I) Systematic Process: Consumer behavior is a systematic process relating to buying decisions of
the customers.

2) Influenced by Various Factors: Consumer behavior is influenced by marketing, personal,

psychological, situational, social, cultural etc.

3) Different for Different Customers: All consumers do not behave in the same manner. Every
customer behaves differently. The difference in consumer behavior is due to individual factors
such as nature of the consumer's life style, culture, etc.
4) Different for Different Products: Consumer behavior is different for different products. There
are some consumers who may buy more quantity of certain items and very low/no quantity of
some other items.

5) Varies across Regions: The consumer behavior vary across states, region & countries. For
instance the behavior of urban consumers is different from that of rural consumers. Normally,
rural consumers are conservative (traditional) in their buying behavior.

6) Vital for Marketers: Marketers need to have a good knowledge of consumer behavior. They
need to study the various factors that influence consumer behavior of their target customers. The
knowledge of consumer behavior enables marketers to take appropriate marketing decisions.

7) Reflects Status: Consumers buying behavior is not only influenced by status of a consumer,
but it also reflects it. Those consumers who own luxury cars, watches and other items are
considered by others as persons of higher status.

8) Improves Standard of Living: Consumer buying behavior may lead to higher standard of
living. The more a person buys the goods and services, the higher is the standard of living.

9) Undergoes a Change: The consumer's behavior undergoes a change over a period of time
depending upon changes in age, education and income level etc., for example, kids may prefer
colorful dresses, but as they grow up as teenagers and young adults, they may prefer trendy
clothes.

10) Brand Loyalty: Brand loyalty is another characteristic of consumer behavior. Brand loyalty is
the tendency of a consumer to buy products or services from a certain company that one likes or
equates, with having high quality goods and services.

For example, if Naina s first car was a Honda as a teenager and the car lasted 200,000 miles, she
might have a tendency to buy Honda’s in the future due to her previously when considering her
next vehicle positive experience. This brand loyalty may be so strong that she forgoes the
information search all together

NEED OR IMPORTANCE OF CONSUMER BEHAVIOUR

 The study of consumer behaviour for any product is of vital

importance to marketers in shaping the fortunes of their organisations.
 It is significant for regulating consumption of goods and thereby maintaining economic

 It is useful in developing ways for the more efficient utilisation of resources of

marketing. It also helps in solving marketing management problems in more effective
 manner
 Today consumers give more importance on environment friendly products. They are
concerned about health, hygiene and fitness. They prefer natural products. Hence detailed
study on upcoming groups of consumers is essential for any firm.
 The growth of consumer protection movement has created an urgent need to understand
how consumers make their consumption and buying decision.
 Consumers’ tastes and preferences are ever changing. Study of consumer behaviour gives
information regarding colour, design etc.
 To design the best possible product or service that fully satisfies consumer's needs and
demands.
 To decide where the service or product would be made available for easy access of
consumers.
 To decide the price at which the consumers would be ready to buy that product or
service.
 To find out the best method of promotion that will prove to be effective to attract
customers to buy a product.
 To understand why, when, how, what and other factors that influence buying decision of
the consumers.
 To understand Buying Behaviour of consumers
 To create and retain customers though online stores
 To Understand the factors influencing Consumer's buying Behaviour
 To understand the consumer's decision to dispose a product or services
 To increase the knowledge of sales person influence consumer to buy product
 To help marketers to sale of product and create focused marketing strategies

FACTORS AFFECTING CONSUMER BEHAVIOR

Consumer behavior refers to the selection, acquisition and consumption of goods and services to
meet their needs. There are different processes involved in consumer behavior. Initially, the
consumer tries to find what products you would like to consume, and then select only those
products that promise greater utility. After selecting the products, the consumer makes an
estimate of available funds that can happen. Finally, the consumer looks at the current prices of
commodities and makes the decision about which products to consume. Meanwhile, there are
several factors that influence consumer purchases, such as social, cultural, personal and
psychological. The explanation of these factors is as follows.

1. CULTURAL FACTORS
Consumer behavior is deeply influenced by cultural factors, such as buyer’s culture, subculture
and social class.

• Culture - Essentially, culture is the share of each company and is the major cause of the person
who wants and behavior. The influence of culture on the purchasing behavior varies from
country to country; therefore sellers have to be very careful in the analysis of the culture of
different groups, regions or even countries.

Cultural factors comprise of set of values and ideologies of a particular community or group of
individuals. It is the culture of an individual which decides the way he/she behaves. In simpler
words, culture is nothing but values of an individual. What an individual learns from his parents
and relatives as a child becomes his culture

• Subculture - Each culture has different subcultures, such as religions, nationalities,

geographical regions, racial, etc. marketing groups may use these groups, segmenting the market
in several small portions. For example, marketers can design products according to the needs of a
specific geographical group.

• Social Class - Every society has some kind of social class is important for marketing because
the buying behavior of people in a particular social class is similar. Thus marketing activities
could be adapted to different social classes. Here we should note that social class is not only
determined by income, but there are several other factors such as wealth, education, occupation
etc.

2. SOCIAL FACTORS

Social factors also influence the purchasing behaviour of consumers. Human beings are social
animals. We need people around to talk to and discuss various issues to reach to better solutions
and ideas. We all live in a society and it is really important for individuals to adhere to the laws
and regulations of society.

Social Factors influencing consumer buying decision can be classified as under:

 Reference Groups
 Immediate Family Members
 Relatives
 Role in the Society
 Status in the society
• Reference groups - Reference groups have the potential for the formation of an attitude or
behaviour of the individual. The impact of reference groups vary across products and brands. For
example, if the product is visible as clothing, shoes, car etc., the influence of reference groups
will be high. Reference groups also include opinion leader (a person who influences others by his
special skill, knowledge or other characteristics).
• Family - Buyer behaviour is strongly influenced by a family member. So vendors are trying to
find the roles and influence of the husband, wife and children. If the decision to purchase a
particular product is influenced by the wife of then sellers will try to target women in their ad.
Here we should note that the purchase of roles change with changing lifestyles of consumers.

• Roles and Status - An individual from an upper middle class would spend on luxurious items
whereas an individual from middle to lower income group would buy items required for his/her
survival.

Each person has different roles and status in society in terms of groups, clubs, family, etc.
organization to which it belongs. For example, a woman working in an organization as manager
of finance. Now she is playing two roles, one of the chief financial officer and the mother.
Therefore, purchasing decisions will be influenced by their role and status.

Role in the Society - Each individual plays a dual role in the society depending on the group he
belongs to. An individual working as Chief Executive Officer with a reputed firm is also
someone’s husband and father at home. The buying tendency of individuals depends on the role
he plays in the society.

3. PERSONAL FACTORS

Personal factors may also affect consumer behavior. Some of the important factors that influence
personal buying behavior are: lifestyle, economic status, occupation, age, personality and self-
esteem.

• Age - Age and life cycle have a potential impact on the purchasing behavior of consumers. It is
obvious that consumers change the purchase of goods and services over time. Family life cycle
consists of different stages as young singles, married couples, and unmarried couples etc. that
help marketers to develop suitable products for each stage.

Age and human lifecycle also influence the buying behavior of consumers. Teenagers would be
more interested in buying bright and loud colors as compared to a middle aged or elderly
individual who would prefer decent and subtle designs.

A bachelor would prefer spending lavishly on items like beer, bikes, music, clothes, parties, and
clubs and so on. A young single would hardly be interested in buying a house, property,
insurance policies, gold etc. An individual who has a family, on the other hand would be more
interested in buying something which would benefit his family and make their future secure.

• Occupation - The occupation of a person has a significant impact on their buying behaviour.
For example, a marketing manager of an organization is trying to buy business suits, while a low
level worker in the same organization buy-resistant clothing works.
The occupation of an individual plays a significant role in influencing his/her buying decision.
An individual’s nature of job has a direct influence on the products and brands he picks for
himself/herself.

• Economic situation - economic situation of the consumer has a great influence on their buying
behaviour. If income and savings a customer is high, then going to buy more expensive products.
Moreover, a person with low income and savings buy cheap products.

The buying tendency of an individual is directly proportional to his income/earnings per month.
How much an individual brings home decides how much he spends and on which products?

Individuals with high income would buy expensive and premium products as compared to
individuals from middle and lower income group who would spend mostly on necessary items.
You would hardly find an individual from a low income group spending money on designer
clothes and watches. He would be more interested in buying grocery items or products necessary
for his survival.

• Lifestyle - Lifestyle clients is another factor affecting import purchasing behaviour of

consumers. Lifestyle refers to the way a person lives in a society and express things in their
environment. It is determined by the client’s interests, opinions, etc. and activities shape their
whole pattern of acting and interacting in the world.

Lifestyle, a term proposed by Austrian psychologist Alfred Adler in 1929, refers to the way an
individual stays in the society. It is really important for some people to wear branded clothes
whereas some individuals are really not brand conscious. An individual staying in a posh locality
needs to maintain his status and image. An individual’s lifestyle is something to do with his
style, attitude, perception, his social relations and immediate surroundings.

• Personality - Personality changes from person to person, time to time and place to place.
Therefore, it can greatly influence the buying behaviour of customers. In fact, personality is not
what one has, but is the totality of the conduct of a man in different circumstances. Has a
different characteristic, such as dominance, aggression, confidence etc. that may be useful to
determine the behaviour of consumers to the product or service.

An individual’s personality also affects his buying behaviour. Every individual has his/her own
characteristic personality traits which reflect in his/her buying behaviour. A fitness freak would
always look for fitness equipment’s whereas a music lover would happily spend on musical
instruments, CDs, concerts, musical.

4. PSYCHOLOGICAL FACTORS
There are four major psychological factors that affect the purchasing behaviour of consumers.
These are: perception, motivation, learning, beliefs and attitudes.

• Motivation - The level of motivation also affects the purchasing behaviour of customers. Each
person has different needs, such as physiological needs, biological needs, social needs, etc. The
nature of the requirements is that some are more urgent, while others are less pressing.
Therefore, a need becomes a motive when it is most urgent to lead the individual to seek
satisfaction.

• Perception - Select, organize and interpret information in a way to produce a meaningful

experience of the world is called perception. There are three different perceptual processes which
are selective attention, selective distortion and selective retention. In the case of selective
attention, sellers try to attract the attention of the customer. Whereas in case of selective
distortion, customers try to interpret the information in a way that supports what customers
already believe. Similarly, in the case of selective retention, marketers try to retain information
that supports their beliefs.

• Beliefs and Attitudes - Client has specific beliefs and attitudes towards different products.
Because such beliefs and attitudes shape the brand image and affect consumer buying behaviour
so traders are interested in them. Marketers can change beliefs and attitudes of customers with
special campaigns in this regard.

DECISION MAKING

A decision is defined as choosing an option of the few/many available. Decision making is the
process of choosing between two or more alternatives; it is the selection of an alternative out of
the few/many choices that are available.

Decision making is:

a) A goal oriented process.

b) It is a problem solving process: helps take advantage of opportunities and fight threats.

Decisions making can be of two types,

a) Programmed decision making, and,

b) Non-programmed decision making.

a) Programmed decision making: This is applied for problems that are routine and regular. Such
problems are simple to deal with and guidelines to sort out such problems exist. Such decisions
are made without much thought. With respect to marketing, these are decisions related to day to
day purchases or convenience and shopping goods; these are generally low involvement
purchases. They may also be habitual in nature, and brand loyalty could easily develop.
Examples: Purchases made for staples, toiletries etc.

b) Non-programmed decision making: This is applied for problems that arise suddenly and are
unique or novel. As the problem is sudden and novel, it is complex and requires a lot of
information gathering, deliberation and thought. With respect to marketing, these are decisions
related to infrequent purchases or specialty goods and emergency goods; these are high
involvement purchases. Examples: Purchases made for laptops, real estate etc.

CONSUMER PURCHASE DECISION PROCESS

1. Problem/need recognition

This is often identified as the first and most important step in the customer’s decision process. A
purchase cannot take place without the recognition of the need. The need may have been
triggered by internal stimuli (such as hunger or thirst) or external stimuli (such as advertising or
word of mouth).

2. Information search

Having recognised a problem or need, the next step a customer may take is the information
search stage, in order to find out what they feel is the best solution. This is the buyer’s effort to
search internal and external business environments, in order to identify and evaluate information
sources related to the central buying decision. Your customer may rely on print, visual, online
media or word of mouth for obtaining information.

3. Evaluation of alternatives

As you might expect, individuals will evaluate different products or brands at this stage on the
basis of alternative product attributes – those which have the ability to deliver the benefits the
customer is seeking. A factor that heavily influences this stage is the customer’s attitude.
Involvement is another factor that influences the evaluation process. For example, if the
customer’s attitude is positive and involvement is high, then they will evaluate a number of
companies or brands; but if it is low, only one company or brand will be evaluated.

4. Purchase decision

The penultimate stage is where the purchase takes place. Philip Kotler (2009) states that the final
purchase decision may be ‘disrupted’ by two factors: negative feedback from other customers
and the level of motivation to accept the feedback

5. Purchase

A need has been created, research has been completed and the customer has decided to make a
purchase. All the stages that lead to a conversion have been finished. However, this doesn’t mean
it’s a sure thing. A consumer could still be lost. Marketing is just as important during this stage
as during the previous.

6. Post-purchase behaviour

In brief, customers will compare products with their previous expectations and will be either
satisfied or dissatisfied. Therefore, these stages are critical in retaining customers. This can
greatly affect the decision process for similar purchases from the same company in the future,
having a knock-on effect at the information search stage and evaluation of alternatives stage. If
your customer is satisfied, this will result in brand loyalty, and the Information search and
Evaluation of alternative stages will often be fast-tracked or skipped altogether.

On the basis of being either satisfied or dissatisfied, it is common for customers to distribute
their positive or negative feedback about the product. This may be through reviews on website,
social media networks or word of mouth. Companies should be very careful to create positive
post-purchase communication, in order to engage customers and make the process as efficient as
possible.

BUYING ROLES

Consumer decision making is a complex process. It is interplay of reactions amongst a consumer

and his cognition, affect and behaviour on the one hand, as well as the environmental forces on
the other hand. The actual transaction/ exchange are preceded by considerable amount of thought
processes and influences.

This could be explained in terms of the five “Buying Roles” viz., Initiator, Influencer, Decider,
Buyer and, User.

The marketer needs to understand these roles so as to be able to frame suitable strategies to target
them.

a) Initiator: The person who identifies a need and first suggests the idea of buying a particular
product or service.

b) Influencer: The person(s) who influences the buyer in making his final choice of the product.

c) Decider: The person who decides on the final choice: what is to be bought, when, from where
and how?

d) Buyer: The person who enters into the final transaction and exchange process or is involved in
the physical activity of making a purchase.

e) User: The person(s) who actually consumes the product or service

offering. The various buying roles can be illustrated through examples:

Example: 1

A kindergarten girl needs to buy colour crayons to use in class.

i) Initiator: The girl

ii) Influencer: Her teacher or her classmates
iii) Decider: Either of the parents
iv) Buyer: Either of the parents or a sibling.
v) User: The girl herself.

Example: 2
The mother of the house is a housewife; she loves watching TV when her husband and children
go for work. She has been complaining that the present TV set at home has been giving problem.
She also says that the model is now an old one and that that the family should own a new model.

i) Initiator: The lady

ii) Influencer: Her neighbours and friends.
iii) Decider: Joint: Her husband, she herself and the children.
iv) Buyer: Husband or son or daughter or she herself.
v) User: The family

BUYING MOTIVES

Buying motive is the urge or motive to satisfy a desire or need that makes people buy goods or
services. Behind every purchase there is a buying motive.

It refers to the thoughts, feelings, emotions and instincts, which arouse in the buyers a desire to
buy an article. A buyer does not buy because s/he has been persuaded by the salesman, but s/he
buys for the aroused desire in him or her. Motives should be distinguished from instincts.

A motive is simply a reason for carrying out a particular behaviour and not an automatic
response to a stimulus, whereas instincts are pre-programmed responses, which are inborn in the
individual and involuntary. Thus hunger is an instinct whereas desire to purchase pizza is a
buying motive. According to Prof. D. J. Duncan, “Buying Motives are those influences or
considerations which provide the impulse to buy, induce action and determine choice in the
purchase of goods and services.” Buying motives are can be divided by the following way:

Classification of Buying Motives: Product Buying and Patronage Buying

Product Buying Motives:

Product buying motives refer to those influences and reasons, which prompt (i.e. induce) a buyer
to choose a particular product in preference to other products. They include the physical
attraction of the product (i.e. the design, shape, dimension, size, colour, package, performance,
price etc. of the product) or the psychological attraction of the product (i.e. the enhancement of
the social prestige or status of the purchaser through its possession), desire to remove or reduce
the danger or damage to life or body of the possessor, etc. In short, they refer to all those
characteristics of a product, which induce a buyer to buy it in preference to other products.

Product buying motives may be sub-divided into two groups, viz., (1) emotional product buying
motives and (2) rational product buying motives.

A. Emotional Product Buying Motives:

When a buyer decides to purchase a product without thinking over the matter logically and
carefully (i.e., without much reasoning), she is said to have been influenced by emotional
product buying motives. Emotional product buying motives include the following:

1. Pride or Prestige: Pride is the most common and strongest emotional buying motive. Many
buyers are proud of possessing some product (i.e., they feel that the possession of the product
increases their social prestige or status). In fact, many products are sold by the sellers by
appealing to the pride prestige of the buyers. For instance, diamond merchants sell their products
by suggesting to the buyers that the possession of diamonds increases their prestige or social
status.

2. Emulation or Imitation: Emulation, i.e., the desire to imitate others, is one of the important
emotional buying motives. For instance, a housewife may like to have a silk saree for the simple
reason that all the neighbouring housewives have silk sarees.

3. Affection: Affection or love for others is one of the stronger emotional buying motives
influencing the purchasing decisions of the buyers. Many goods are purchased by the buyers
because of their affection or love for others. For instance, a husband may buy a costly silk saree
for his wife or a father buy a costly watch for his son or daughter out of his affection and love.

4. Comfort or desire for comfort: Desire for comfort (i.e., comfortable living) is one of the
important emotional buying motives. In fact, many products are bought comfort. For instance,
fans, refrigerators, washing machines, cushion beds, etc. is bought by people because of their
desire for comfort.

5. Sex appeal or sexual attractions: Sex appeal is one of the important emotional buying motives
of the buyers. Buyers buy and use certain things, as they want to be attractive to the members of
the opposite sex. Men and women buy cosmetics, costly dresses, etc., because of this emotional
motive, i.e., sex appeal.
6. Ambition: Ambition is one of the emotional buying motives. Ambition refers to the desire to
achieve a definite goal. It is because of this buying motive that, sometimes, customers buy
certain things. For instance, it is the ambition that makes many people, who do not have the
facilities to pursue their college education through regular colleges, pursue their education
through correspondence courses.

7. Desire for distinctiveness or individuality: Desire for distinctiveness, i.e., desire to be distinct
from others, is one of the important emotional buying motives. Sometimes, customers buy
certain things, because they want to be in possession of things, which are not possessed by
others. Purchasing and wearing a particular type of dress by some people is because of their
desire for distinctiveness or individuality.

8. Desire for recreation or pleasure: Desire for recreation or pleasure is also one of the emotional
buying motives. For instance, radios, musical instruments, etc. are bought by people because of
their desire for recreation or pleasure.

9. Hunger and thirst: Hunger and thirst are also one of the important emotional buying motives.
Foodstuffs, drinks, etc. are bought by the people because of this motive.

10. Habit: Habit is one of the emotional considerations influencing the purchasing decision of the
customers. Many customers buy a particular thing because of habit, (i.e. because they are used to
the consumption of the product). For instance, many people purchase cigarettes, liquors, etc.
because of sheer habit.

B. Rational Product Buying Motives:

When a buyer decides to buy a certain thing after careful consideration (i.e. after thinking over
the matter consciously and logically), s/he is said to have been influenced by rational product
buying motives. Rational product buying motives include the following:

1. Safety or Security: Desire for safety or security is an important rational buying motive
influencing many purchases. For instance, iron safes or safety lockers are bought by the people
because they want to safeguard their cash, jewelleries etc., against theft. Similarly, vitamin
tablets, tonics, medicines, etc., are bought by the people because of this motive, i.e. they want to
safeguard their health and protect themselves against diseases.

2. Economy: Economy, i.e. saving in operating costs, is one of the important rational buying
motives. For instance, Hero Honda bikes are preferred by the people because of the economy or
saving in the operating cost, i.e. petrol costs.

3. Relatively low price: Relatively low price is one of the rational buying motives. Most of the
buyers compare the prices of competing products and buy things, which are relatively cheaper.
4. Suitability: Suitability of the products for the needs is one of the rational buying motives.
Intelligent buyers consider the suitability of the products before buying them. For instance, a
buyer, who has a small dining room, naturally, goes in for a small dining table that is suitable,
i.e. that fits in well in the small dining room.

5. Utility or versatility: Versatility or the utility of a product refers to that quality of the product,
which makes it suitable for a variety of uses. Utility of the product is one of the important
rational buying motives. People, often, purchase things that have utility, i.e. that can be put to
varied uses.

6. Durability of the product: Durability of the product is one of the most important rational
buying motives. Many products are bought by the people only on the basis of their durability.
For instance, buyers of wooden furniture go in for teak or rosewood table, though they are
costlier, as they are more durable than ordinary wooden furniture.

7. Convenience of the product: The convenience of the product (i.e. the convenience the product
offers to the buyers) is one of the important rational product buying motives. Many products are
bought by the people because they are more convenient to them. For instance, automatic
watches, gas stoves, etc., are bought by the people because of the convenience provided by them.

Patronage Buying Motives:

Patronage buying motives refer to those considerations or reasons, which prompt a buyer to buy
the product wanted by him from a particular shop in preference to other shops. In other words,
they are those considerations or reasons, which make a buyer, patronize a particular shop in
preference to other shops while buying a product.

Patronage buying motives also may be sub-divided into two group’s viz. a) Emotional patronage
buying motives and b) Rational patronage buying motives.

A. Emotional Patronage Buying Motives:

When a buyer patronizes a shop (i.e. purchases the things required by him from a particular
shop) without applying his mind or without reasoning, he is said to have been influenced by
emotional patronage buying motives. Emotional patronage buying motives include the
following:

1. Appearance of the shop: Appearance of the shop is one of the important emotional patronage
buying motives. Some people make their purchases from a particular shop because of good or
attractive appearance of the shop,
2. Display of goods in the shop: Attractive display of goods in the shop also makes the buyers
patronize a particular shop.

3. Recommendation of others: Recommendation of others also constitutes one of the important

emotional patronage buying motives. Some people purchase their requirements from a particular
shop because that shop has been recommended to them by others, i.e., by their friends and
relatives.

4. Imitation: Imitation also is one of the emotional patronage buying motives influencing the
purchases of buyers. Some people make their purchases from a particular shop just because other
people make their purchases from that shop.

5. Prestige: Prestige is one of the emotional patronage buying motives of the buyers. For
instance, some people consider it a prestige to take coffee from a five-star hotel.

6. Habit: Habit is also one of the important emotional patronage buying motives. Some people
make their purchases from a particular shop for the simple reason that they have been habitually
making their purchases from that shop.

B. Rational Patronage Buying Motives:

When a buyer patronizes a shop after careful consideration (i.e. after much logical reasoning and
careful thinking) he is said to have been influenced by rational patronage buying motives.
Rational patronage buying motives include the following:

1. Convenience: Convenient location proximity of a shop is one of the considerations influencing

the purchases of many buyers from a particular shop. Many buyers, usually, buy their
requirements from a near-by shop, as it is convenient to them to make their purchases.

Similarly, convenient working hours of the shop also influence the purchases of good many
buyers. For instance, if a shop works for a longer period of time every day and even on Sundays,
it will be very convenient to the buyers. As such, many buyers may make their purchases from
such a shop.

2. Low price charged by the shop: Price charged by the shop also influences the buyers to
patronize a particular shop. If the price charged by a shop for a particular product is relatively
cheaper, naturally, many people will make their purchases from that shop.

3. Credit facilities offered: The credit facilities offered by a store also influence the buying of
some people from a particular shop. People who do not have enough money to make cash
purchases every time prefer to make their purchases from a shop which offers credit facilities.
4. Services offered: The various sales and after-sale services, such as acceptance of orders
through phone, home delivery of goods, repair service, etc., offered by a shop also induce the
buyers to buy their requirements from that shop. Rational buyers are, often, influenced by the
various services or facilities offered by the shop.

5. Efficiency of salesmen: The efficiency of the salesmen employed by a shop also influences the
people in patronizing a particular shop. If the employees are efficient and are capable of helping
the buyers in making their purchases, people naturally would flock to such a shop.

6. Wide choice: Wide choice of goods offered by a shop is one of the rational considerations
making the buyers patronize a particular shop. People generally prefer to make their purchases
from a shop, which offers wide choice (i.e. wide varieties of goods).

7. Treatment: The treatment meted out by a shop to the customers is one of the rational
considerations influencing the buyers to patronize a particular shop. Usually, people would like
to purchase their requirements from a shop where they get courteous treatment.

8. Reputation of the shop: Reputation of the shop for honest dealings is also one of the rational
patronage buying motives. Usually, people would like to make their purchases from a store
having reputation for fair dealings

BUYER BEHAVIOR MODELS

A model may be described as a representative of an actual system. It represents the similar

characteristics of a system. However various models have been proposed based on various
factors such as scope, social, environmental, psychological, etc.

Uses of Consumer Behavior Models

The chief purpose of proposing models is to identify the purchasing behavior of consumers.
However, these models can be utilized in determining.

• Buying attitudes of consumers.

• Useful variables while purchasing.
• The characteristics of various variables and
• Interrelationships among them.

Classification of Consumer Behaviour Models

• Economic Model – According to economic model, buying power of a consumer depends

on the concept of utility which states that if an individual has certain sum of money and defined
sets of requirements and a set of products then he or she will spend his or her money only on
those products which yields him or her maximum benefits.

The economic model of consumer behaviour focuses on the idea that a consumer’s buying
pattern is based on the idea of getting the most benefits while minimizing costs. Thus, one can
predict consumer behaviour based on economic indicators such as the consumer’s purchasing
power and the price of competitive products. For instance, a consumer will buy a similar product
that is being offered at a lower price to maximize the benefits; an increase in a consumer’s
purchasing power will allow him to increase the quantity of the products he is purchasing

• The Learning Model – The learning model is entirely based in the capability of an
individual to learn, forget and discriminate. It is based on Pavlov's stimulus response which
states that in order to bring changes in buyer's behaviour one must change the drives, stimuli and
responses as per buyer's attitude or perceptions.

This model is based on the idea that consumer behaviour is governed by the need to satisfy basic
and learned needs. Basic needs include food, clothing and shelter, while learned needs include
fear and guilt. Thus, a consumer will have a tendency to buy things that will satisfy their needs
and provide satisfaction. A hungry customer may pass up on buying a nice piece of jewellery to
buy some food, but will later go back to purchase the jewellery once her hunger is satisfied.

The four central concepts of the Pavlovian theory are briefly discussed below.

a) Drive: In the Pavlovian learning model, drive, also referred to as "needs" or "motives", implies
strong stimuli internal to the individual, which activate action. Two types of drives are
distinguished by psychologists, namely primary physiological and learned drives. Primary
physiological drives refer to basic individual factors, such as hunger, thirst, pain, cold and sex.
Learned drives, which are derived socially, include factors such as COM operation, fear and
acquisitiveness.

b) Cue: According to the model, a drive is very general and a particular response is impelled only
in relation to a particular configuration of cues. Cues are further more perceived as weaker
stimuli in the individual and the environment and will determine where, when, and how a subject
responds. As an example, an advertisement for coffee may act as a cue, which stimulates the
thirst drive. The response will be influenced by this cue as well as other cues, for example time
of day and availability of other thirst -quenchers.

c) Response: Response implies the reaction to the configuration of the cues. It should, however,
be noted that the exact configuration of cues will not necessarily generate the same response. The
same response depends on the degree to which the experience was rewarding.

d) Reinforcement: A rewarding experience will result in the reinforcement of a particular

response. It is therefore implied that the tendency is formed where the same response will be
repeated when the same configuration of cues appears. If, however, a learned response or habit is
not reinforced, the habit may eventually be extinguished, since the strength of the habit decreases

• The Psychoanalytical Model – Since, the psychoanalytical model is a combination of

two words 'psychology' and 'analyses,' it mainly deals with the analysis of psychology of
consumers. According to this model, every purchasing decision has a complex motive by a
purchaser which can be influenced by his or her sense of desires and longings.

The psychoanalytical model takes into consideration the fact that consumer behaviour is
influenced by both the conscious and the subconscious mind. The three levels of consciousness
discussed by Sigmund Freud (id, ego and superego) all work to influence one’s buying decisions
and behaviours. A hidden symbol in a company’s name or logo may have an effect on a person’s
subconscious mind and may influence him to buy that product instead of a similar product from
another company.

• The Sociological Model – According to the sociological model individual's decisions not
only depends on utility factors but mainly they are dependent on societal factors like levels of
society, groups of society and attitudes of individuals of society. However it should also be noted
that purchasing decisions are governed by societal restrictions also.

The sociological model primarily considers the idea that a consumer’s buying pattern is based on
his role and influence in the society. A consumer's behaviour may also be influenced by the
people she associates with and the culture that her society exhibits. For instance, a manager and
an employee may have different buying behaviours given their respective roles in the company
they work for, but if they live in the same community or attend the same church, they may buy
products from the same company or brand.

• The Nicosia Model – The Nicosia model is one of the examples of systems model where
human being is treated as a system, with inputs as stimuli and behaviour being its output. It is
mainly constructed by considering the marketing viewpoint of a consumer. It was proposed by
Francisco Nicosia, an expert in consumer motivation and behaviour in 1990. It establishes the
relationship between the firms and its consumer. It focuses how the activities of firm target the
consumer to purchase firm's products and finally its usage and evaluation on certain criteria.

• The Howard Sheth Model – The Howard sheth model has been put forward by John
Howard and Jagadish Sheth in 1969. This model states that there exists certain variable which
affects the perception and learning of consumer, apart from inputs and outputs. These variables
are imaginary as it is difficult to measure them directly. It is one of the most comprehensive
models of consumer buying behaviour and it uses the concept of stimulus-response in order to
explain buyer’s brand choice behaviour over a period of time.

The four major components of the model are

 • Input variables
• Output variables
• Hypothetical constructs-Perceptual constructs and Learning constructs
• Exogenous variables

Input variables: The input variables are the stimuli come from the environment. The input
variables consist of informational cues about the attributes of a product or brand (i.e. quality,
price, distinctiveness, service and availability).Significant Stimulus is the actual elements
constituting a brand that the buyer confronts. EG. price, quality, service, availability. They
influence the consumer directly through the brand's attributes.

Output variables: The five output variables in the right hand portion of the model are buyer's
observable responses to stimulus inputs. They are arranged in order from Attention to Actual
Purchase. The purchase is the actual, overt act of buying and is the sequential result of the
attention (buyers total response to information intake), the brand comprehension, brand attitude
(referring to the evaluation of satisfying potential of the brand) and the buyer intention (a verbal
statement made in the light of the above externalizing factors that the preferred brand will be
bought the next time the buying is necessitated.

Hypothetical constructs: Hypothetical constructs have been classified in two groups –

perceptual constructs and learning constructs. The first deals with the way the individual
perceives and responds to the information from the input variables, accounting for stimulus
ambiguity and perceptual bias. The second deals with the stages from the buyer motives to his
satisfaction in a buying situation.

Exogenous variables: The model also includes some exogenous variables which are not defined
but are taken as constant. They can significantly affect buyer decisions. Some major exogenous
variables included in the model are importance of purchase, personality variables, culture, social
class, financial status.

The black box model of consumer behaviour

The buying behaviour of final consumers is influenced by various factors. These factors or
characteristics determine what is going on in the so-called black box of the consumer. The buyer
black box is the consumer’s head.

The buying behaviour is based on stimuli, coming from the environment. The stimuli then go
through the buyer black box, where a decision is formed. The black box consists of two parts.
This reaction on stimuli is based on

1) The buyer’s characteristics, as well as

2) The buyer’s decision process

The black box is the central element of the consumer buying behaviour.

When a person is given certain input or stimulus, that stimulus affects the person's actions. What
happens in the person's mind to cause that behaviour has remained mostly a mystery -- hence the
name "black box."

Cultural Factors in the Buyer Black Box

Culture - Culture is the software of the mind. In other words, the set of basic values, perceptions
and behaviours that distinguishes one group from another. These values and behaviours are
learned by a member of society from family and other institutions. They are so deep-seated that
they steer a person in any situation. Therefore, culture is the most fundamental cause of a
person’s wants and behaviours.

Subculture
Each culture consists of several smaller subcultures. These subcultures are groups of people who
share value systems. This may be based on common experiences and situations. Subcultures can
be nationalities, religions, but also geographic regions. Often, single subcultures make up a
market segment that marketers aim add by tailoring a product to the subculture’s needs

Social Class
Social classes exist in nearly every society. The term social class refers to a certain permanent
division in a society. The social class is an important factor in the buyer black box as it
determines what the consumer’s response will be. A combination of several factors such as
income, occupation and education determine the social class structure. Worthy of note is the fact
that in some societies, it is easier to move between social classes than in other societies.

Social Factors in the Buyer Black Box

Next to cultural factors, social factors influence the Buyer Black Box.

Reference Groups
Reference groups influence a buyer’s behaviour. In particular, reference groups are direct or
indirect points of comparison (reference). In other words, a buyer orientates him/herself by
means of a reference group. If the group wears Nike shoes, the buyer must have them as well. If
the reference group prefers certain brands, the buyer will do as well. Therefore, reference groups
expose a person to new lifestyles and new behaviours.
Family
As do reference groups, families strongly influence the buyer black box. In fact, the family is
often the most powerful influence on consumer buying behaviour. For instance, the husband-
wife relationship and involvement may greatly affect an individual’s buying behaviour.

Roles and Status

The role refers to the activities that the person is expected to perform according to the group
members. Also, each role carries a certain status that reflects the general esteem given to it by
society.

Since people usually choose products based on their roles and status, as the above mentioned
example shows, this factor can greatly influence the buyer black box.

Personal Factors in the Buyer Black Box

The Buyer Black Box is greatly influenced by personal characteristics.

Age and lifecycle stage

People do not buy the same goods over their lifetimes. Instead, tastes in food, clothes, furniture
and style are often related to age. In addition, buying behaviour is also influenced by the family
life cycle. Marrying, having children, purchasing a home, divorcing etc. may change the factors
in the buyer black box.

Occupation
Without doubt, the buyer black box is strongly influenced by the person’s occupation. For
instance, blue-collar workers will tend to buy more rugged clothes for work. On the contrary,
executives will prefer business suits. Furthermore, a farmer will probably like a cool beer more
after work than a lawyer, who would go for the wine. Marketers must try to identify these
occupational groups. They should find the one which has the highest interest in their products.

Economic situation
Even more evidently, the buyer’s economic situation affects the buyer black box. It will affect
his/her product and store choices. For instance, personal income, savings and other factors
influence what a buyer will purchase where, when, and how much.

Lifestyle
Lifestyle refers to a person’s pattern of living. This pattern can be expressed in the person’s
activities, interests and opinions, the so-called AIO dimensions. Activities refer to work,
hobbies, sports and similar things. Interests are linked to food, fashion, family etc. Opinions can
be about the person him/herself, social issues, businesses and products.
Personality
The buyer black box is also affected by his or her personality. Personality means nothing else
than the unique psychological characteristics distinguishing one person from another. It is often
described in terms of traits. These can be self-confidence, dominance, aggressiveness and so
further. As is the case with lifestyles, the idea is that brands also have personalities. Consumers
will therefore be likely to choose brands which have personalities matching their own.

Psychological Factors in the Buyer Black Box

Finally, the Buyer Black Box is influenced by psychological factors.

Motivation
Motives are needs that are sufficiently pressing to direct the person to seek fulfilment of the
need. Needs can be of various natures. And those needs can become a motive when they are
sufficiently intensive. The most popular theory that addresses needs is Abraham Maslow’s
Hierarchy of Needs. The latter explains that human needs are arranged in a hierarchy, from the
most pressing one to the least pressing one. According to Maslow, a person tries to satisfy the
most important need first. Not before that need is satisfied is will stop being a motivator. Then,
the person will try to satisfy the next most important need. To understand how motivation works
is crucial for marketers. The reason is that motivation steers the buyer black box, by directing the
decision for and against products.

Perception
Every person has an individual picture of the world. That is a result of perception, which plays a
major role in the buyer black box. Perception is the process by which a person selects, organises
and interprets information. By that process, a meaningful picture of the world is generated.

Therefore, people often have different perceptions of the same stimulus. To understand these
perceptions is important in order to understand the buyer black box.

Learning
Learning is another factor contributing to the stimulus-transformation in the buyer black box.
Every time a person acts, he or she learns. This means a change in his or her behaviour arising
from experience. Imagine a consumer buys a Mercedes-Benz. If the experience is rewarding,
which it will probably be, the consumer’s response will be reinforced. Then, the next time that
consumer buys a car; the probability is greater that he or she will buy a Mercedes again. Thus,
learning can be the decisive factor in the buyer black box.

Beliefs and Attitudes

Through all the doing and learning, a person acquires beliefs and attitudes. These factors, in turn,
influence the buyer black box. If a buyer has negative beliefs about a product based on learning,
it is unlikely that he or she will buy it in the future. Also, the person will have a negative attitude
towards the product. Certainly, beliefs and attitudes of a person are quite difficult to change.
Therefore, marketers should concentrate on trying to fit the products into existing attitudes
instead of attempting to change them.

B2B marketing Vs Consumer Marketing

B2C is the type of marketing people most know. The “B” is the business (that is, the
product/company/service selling the thing) and the “C” is the consumer. That’s us, folks –
individual buyers or prospects.

B2B is, quite literally, “business to business.” It is marketing by one company to another.

For example, at Act-On, our clients are other businesses. We sell our product to marketing
agencies and companies who want to improve their time to market, embrace marketing
automation, and work smarter and faster.

B2B services are all around us ― think about manufacturers who sell RFID technology to
warehouses, or freight carriers who sell their transportation services to businesses to transport
goods. Even farmers who sell produce to restaurants are B2B

10 Key Differences in B2B vs. B2C Marketing

1. Marketers can use industry jargon to excellent effect on B2B platforms, but on B2C,
the voice must be at least relatable to the majority of consumers — meaning fewer
buzzwords and (usually) simpler language.
2.
Drivers matter. The B2B audience is seeking efficiency and expertise, while the
consumer audience is more likely to be seeking deals and entertainment. Accordingly, the
B2B purchase process tends to be rationally and logically driven, while consumer choices
are typically emotionally triggered (whether by hunger, desire, status or cost).

3. B2B clientele want to be educated and provided with expertise. They often want to
look like the workplace rock stars or heroes thanks to their excellent decisions. B2C
customers just want to enjoy themselves, be happy with their purchase and have it
adequately fulfil the needs mentioned in No. 2.

4. Highly detailed content is required for B2B marketing. It’s an audience that expects to
be catered to by a sales and marketing team. On the other hand, B2C social media
activities simply need to meet the basic needs of being useful, humorous and shareable,
which admittedly, can be just as complicated.
5. Lengthy content tends to work for B2B since a brand or business has to prove its
expertise and give its target audience a reason to buy in. Consumers tend to prefer
something short and snappy, especially for lower-priced B2C products.

6. A B2C consumer following your brand isn’t necessarily looking to build a close
relationship with it. Inversely, the B2B crowd wants information and the ability to build
a close relationship with brands.

7. B2B marketers have a much longer chain of command to deal with since
procurement, accounting and their superiors often need to approve purchases. On the
other hand, an individual typically makes their own speedy B2C purchase choices —
possibly with the slight influence of others via recommendations or suggestions.

8. The B2B buying cycle is often much longer than the B2C decision process. Therefore,
it requires much more nurturing and close attention. B2C buys tend to satisfy immediate
needs, while B2B decisions are meant to complete long-term goals.

9. A contract for a B2B purchase tends to last months or even years, making it a much
more significant decision. On the contrary, the total B2C cycle can be as short as a few
minutes depending on the product.

10. The two types of marketers have distinctive problems. Often, the largest problem that
B2B marketers have is a lack of content and time to create it. This differs from B2C
marketers who would rather have a bigger advertising budget and other ways to spread
the word about their products. Naturally, this has a significant effect on tactical
executions.
INTRODUCTION

Concept of Market Segmentation

In older days, many business firms viewed all their consumer population as a single market with
uniform characteristics and requirements. Hence the developed a single brand and a common
marketing programme to satisfy all their consumer population. However, in the recent years with
the increase in the competition this old approach of firms does not yield the desired results.
Hence the modern firms subdivide their target market into different groups and subgroups of
consumer population on the basis of their identifiable distinct and homogeneous characteristics.
Each of these groups is called a market segment. Further the firms use distinct marketing mix for
each of these market segments, in order to increase consumer satisfaction and profits of the
business. Thus market segmentation is a recent idea that helps the firms in framing their
marketing strategy

Markets consist of buyers who differ in one or more respects. They may differ in their wants,
resources, geographical locations, attitudes and buying practices. It is therefore necessary for a
marketer to segment his/her market.
Market segmentation is a marketing concept which divides the complete market set up into
smaller subsets comprising of consumers with a similar taste, demand and preference. A market
segment is a small unit within a large market comprising of likeminded market segment is totally
distinct from the other segment. A market segment comprises of individuals who think on the
same lines and have similar interests. The individuals from the same segment respond in a
similar way to the fluctuations in the market

Market segmentation is the process of dividing a total market into market groups consisting of
people who have relatively similar product needs, there are clusters of needs.

Segmentation refers to a process of bifurcating or dividing a large unit into various small units
which have more or less similar or related characteristics

Segmentation refers to the process of creating small segments within a broad market to select the
right target market for various brands. Market segmentation helps the marketers to devise and
implement relevant strategies to promote their products amongst the target market.

A market segment consists of individuals who have similar choices, interests and preferences.
They generally think on the same lines and are inclined towards similar products. Once the
organizations decide on their target market, they can easily formulate strategies and plans to
make their brands popular amongst the consumers.

The process of grouping customers in markets with some heterogeneity into smaller, more
similar or homogeneous segments. The identification of target customers groups in which
customer groups in which customers are aggregated into groups with similar requirements and
buying characteristics.

Market segment – A group of individuals, groups or organizations sharing one or more similar
characteristics that cause them to have relatively similar product needs and buying
characteristics.
Definitions

(1) Marketing segmentation is a process of dividing a market into distinct groups of buyers on
the basis of needs, characteristics or behaviour who might require separate products or marketing
mixes”.- Philip Kotler- The American Marketing Association

(2) Market segmentation consists of taking the total heterogeneous market for a product and
dividing it into served sub markets or segments each of which tends to be homogeneous in all
significant aspects. - William A. Stanton

Examples:

Nokia offers wide range of handsets for both males as well as females.

The handset for females would be sleeker and more colourful as compared to sturdy handsets for
males. Males generally do not prefer stylish handsets.

The organizations can’t have similar products for all individuals.

Perfumes and deodorants for females have a sweet fragrance whereas perfumes for males have a
strong fragrance.

A marketer can’t have similar strategies for all consumers.

The process of creating small segments comprising of likeminded individuals within a broad
market refers to market segmentation. Market segmentation helps in the division of market into
small segments including individuals who show inclination towards identical brands and have
similar interests, attitudes and perception.

Features

On careful analysis of the above definitions, we may obtain the following characteristic features
of market segmentation.

(1) Process: Market segmentation is a process of subdividing the target market for firm’s goods
and services into subgroups of consumer population.
(2) Segments: Consumers of products of services of a firm differ in their wants, resources,
geographical location, buying attitudes, buying practices, etc. Hence, they are divided into
homogeneous groups and subgroups having distinct features. Each of these subgroups are called
segments. Thus, a marketing segment is a meaningful consumer group having distinct feature
and similar want.
(3) Object: The object of doing market segmentation is to enable the business firm to focus
properly on the specific consumer needs of each segment and to maximize the consumer
satisfaction and profits of business. Market segmentation also helps small business firms to
identify the most attractive segments that they can serve effectively instead of running after all
varieties of consumer’s indifferent segments without giving proper justice to any of them.
(4) Special market mix: By doing market segmentation firms attempt to fulfill the needs of
different consumer groups through proper marketing mix consisting of products, price,
promotion and distribution.
(5) Use of bases: For segmenting the firm’s market various bases are used, such as region, age,
sex income levels, occupation, religion, consumption level, culture, etc. of consumers.

(6) Target marketing: Market segmentation helps a firm to do target marketing. A firm can
identify the most attractive market segments that can be effectively served through appropriate
products, prices, promotion, and price and distribution channel. Thus the firms, instead of
scattering their marketing efforts, are focusing on consumers, who have greater interest in the
values they create best.
(7) Flexible: The segmentation of markets in flexible in nature as it goes on changing with the
change in business environment and market conditions.
(8) Strategy: Market segmentation is a consumer oriented strategy, whereby a business firm
devices a special market mix as per the needs of consumers in each market segment in a target
market of the firm.

Need for Market Segmentation

 Market Segmentation helps the marketers to devise appropriate marketing strategies and
promotional schemes according to the tastes of the individuals of a particular market
 segment. A male model would look out of place in an advertisement promoting female
products. The marketers must be able to relate their products to the target segments.
 Market segmentation helps the marketers to understand the needs of the target audience
and adopt specific marketing plans accordingly. Organizations can adopt a more focussed
approach as a result of market segmentation.
 Market segmentation also gives the customers a clear view of what to buy and what not
to buy. A Rado or Omega watch would have no takers amongst the lower income group
as they cater to the premium segment. College students seldom go to a Zodiac or Van
Heusen store as the merchandise offered by these stores are meant mostly for the
professionals. Individuals from the lower income group never use a Blackberry. In
simpler words, the segmentation process goes a long way in influencing the buying
decision of the consumers.
 An individual with low income would obviously prefer a Nano or Alto instead of
Mercedes or BMW.
 Market segmentation helps the organizations to target the right product to the right
customers at the right time. Geographical segmentation classifies consumers according to
their locations. A grocery store in colder states of the country would stock coffee all
through the year as compared to places which have defined winter and summer seasons.
 Segmentation helps the organizations to know and understand their customers better.
Organizations can now reach a wider audience and promote their products more
effectively. It helps the organizations to concentrate their hard work on the target
audience and get suitable results

Benefits of Market Segmentation

There are a number of reasons organizations undertake segmentation

 Products are designed to be responsive to the needs of the marketplace. – segmenting

markets facilitates a better understanding of customer’s needs, wants and other
characteristics
  Increase profits – different consumer segments react in contrasting ways to prices, some
are far less price sensitive than others. Segmentation allows an organization to gain from
the best price it can in every segment, effectively raising the average price and increasing
profitability.
 Effective Resource Allocation - organizations are more capable of making products that
customers want and can afford.
 There is product differentiation – Various products are made to meet the needs of each
customer segment.
 Better matching of customer needs: Customer needs differ. Creating separate products for
each segment makes sense
 Enhanced profits for business: Customers have different disposable incomes and vary in
how sensitive they are to price. By segmenting markets, businesses can raise average
prices and subsequently enhance profits
 Better opportunities for growth: Market segmentation can build sales. For example,
customers can be encouraged to "trade-up" after being sold an introductory, lower-priced
product
 Retain more customers: By marketing products that appeal to customers at different
stages of their life ("life-cycle"), a business can retain customers who might otherwise
switch to competing products and brands.
 Target marketing communications: Businesses need to deliver their marketing message to
a relevant customer audience. By segmenting markets, the target customer can be reached
more often and at lower cost
 Gain share of the market segment : Through careful segmentation and targeting,
businesses can often achieve competitive production and marketing costs and become the
preferred choice of customers and distributors

Requirements of Good Market Segments

In addition to having different needs, for segments to be practical they should be evaluated
against the following criteria:
Identifiable -The marketer should be able to identify which consumers are members of a
particular market segment. The consumers in the segment should respond in the same way to a
particular marketing mix. There must be some common characteristics that the consumers have

Measurable - The characteristics that are common to the groups of consumers should be
measured in terms of size, purchasing power and other characteristics.

Substantial -The segment should be large enough to generate sales volume that ensures
profitability; otherwise it will not be economical to design a unique marketing mix for it. Is the
market worth the effort?

Accessible: the segments must be reachable through communication and distribution channels.

Durable: the segments should be relatively stable to minimize the cost of frequent changes.

Responsive - Market segments must be defined in their willingness to purchase a product in

response to variations in the marketing mix.

Compatible with corporate image -The market must be compatible with the firm’s objectives
and corporate image

Importance of Market Segmentation

Market segmentation strategy offers several benefits to the organization as well as to the
consumers. The important benefits enjoyed by the organization using this strategy are:

1. Improves Knowledge of Market: Market segmentation improves organization’s

understanding of the market. While doing market segmentation, the marketing manager studies
the profile of consumers, their needs, wants and preferences.
2. Identifies Market Opportunities: Marketing manager is in a better position of identify,
compare and evaluate the marketing opportunities for his organization. He examines the level of
satisfaction of different subgroups of consumers regarding the current marketing mix offered by
various firms. The subgroups indicating lower level of satisfaction with the existing goods and
services offered by various competing firms represent excellent marketing opportunities for his
firm.
3. Better Assessment of Competitors: Market segmentation strategy helps the business firm is
judging the strength and weaknesses of the competitors. If some of the market segments are
served efficiently by the competitors, the firm may give up those segments and concentrate on
other segments, which are not served properly by the competitors and take full advantage of
market opportunities.
4. Better Utilization of Firm’s Resources: By doing market segmentation the business firm,
targets only those consumer groups, which are neglected. This helps in minimizing the wastages
and making optimum utilization of firm’s resources
5. Consumer Orientation: By doing market segmentation, a business firm targets the consumer
population to be served. Then it plans a systematic and matching marketing mix and programme
to serve the needs of those consumers. This helps the firm to serve its target consumers in a
better way rather than trying to satisfy diverse needs of all varieties of consumers in market

Bases for Market Segmentation Market segmentation involves grouping and sub grouping of
consumers on the basis of similar buying characteristics. There are a number of bases on which
such segmentation or grouping of consumers can be done. These bases are as under.

(A) Consumer Characteristics -

(1) Geographic

(2) Demographic & Socio Economic

(3) Psychographic

(B) Consumer Responses -

(1) Benefits

(2) Usage

(3) Loyalty
(4) Occasion

(A) Consumer Characteristics Approach: Under this approach, person characteristics of

consumers as to where they live, who they are, how they behave, etc. are considered for making
segmentation of markets. Following is the brief explanation of these bases.

(1) Geographic Segmentation: Geographic segmentation is the most traditional basis of market
segmentation, which is used widely even today. The market is divided into different
geographical units as continents, countries, states, districts, regions and areas, etc. As the
consumers in different areas have different preferences and tastes for products, marketing
managers distinguish carefully among the regions, in which they may operate and select only
those where they have comparative advantage. Sometimes, they may even operate in all those
regions paying attention to the geographical needs and preferences of consumers in those
regions.

In geographic segmentation, markets are divided into different geographic units. These units may
include cities, regions, countries, or continents. Sometimes consumers may have different buying
habits, needs and expectations depending on where they live.

(2) Demographic and Socio-economic Segmentation: Demography means the study of

population. Demographic segmentation is based on demographic variables, such as age, sex
marital status, family size, place of residence, etc. Socio-economic segmentation is based on
socio-economic characteristics, such as income level, education, occupation, social class,
religion and culture, family life cycle, etc.

n demographic segmentation, markets are divided into segments on the basis of demographic
criteria like age, sex, family size, education, income, and social class. Consumers with similar
demographic variables tend to have similar expectations, preferences and usage habits. The
demographic variables can be compared to other segmentation variables, relatively easy to obtain
and evaluate

For example, the market for consumer goods in India is segmented into 3 segments - high
income group, middle class and lower income group. The middle class is further segmented
husband and wife working, young family with only husband working etc. Such a type of
segmentation helps in developing on demographic variables is the most popular for two reasons;
firstly consumer wants, preferences and usage rates are highly associated with these variables,
and secondly, these variables are easier to measure than most other types of variables.

(3) Psychographic Segmentation: Psychographic tries to describe the human character of

consumers that has influence on their responses to products, packings, and advertising and public
relations efforts of the firm. Psychographic characteristics include variable like - personality,
attitudes, and life-style.

(i) Personality - Personality means the individual’s consistent reaction to world around him.
Personality reflects the behaviour of people. The personality variables are - dominance,
aggressiveness, objectivity, achievement motivation, etc. These influence the buying behaviour.

According to personality study conducted by a study group in U.S.A., it was revealed that Ford
cars attracted the personalities with features like ‘independent, impulsive, masculine, alert to
change and self-confident, whereas Chevrolet cars are used by people who are conservative,
thrifty, prestige conscious, less masculine and seeking to avoid extremes. Thus, personality has
impact on buying behaviour.

(ii) Life-style - Life-style indicates the person’s living and spending of time and money. It
influences a person’s allocation of income across his needs and among different brands of
products. Thus, the customers can be grouped as Pleasure Seekers (or hedonistic), who try to
purchase the latest varieties of goods and services without caring for their prices; Status Seekers,
who try to buy the goods and services of superior quality that will reflect a high status in the
society; and Plan People, who go for economical and normal quality goods and services that do
their job quite decently.

(iii) Attitude - Attitude describes a person’s predisposition and perception towards objects,
individuals and events. It describes the positive or negative feeling of consumers towards the
market mix offered to him by a firm and the firm it. Attitudes are developed among the people
out of beliefs, knowledge and thinking.