Module 2 – Consumer Behaviour

Contents
Concept and Determinants of Consumer Behavior – Buying Decision Process - Buying Motives
- Buying Roles. Market Segmentation: Concept and Need; Principles; Basis for the
Segmentation. Target Marketing and Positioning - Positioning Tools and Strategies

Contents
Consumer Behaviour – Meaning & Definition....................................................................................... 2
Determinants / Factors affecting consumer behaviour .................................................................. 2
Consumer buying process / Consumer decision making process ..................................................... 3
Buying Motives ....................................................................................................................................... 4
Types of buying motive ...................................................................................................................... 5
Buying roles ............................................................................................................................................ 6
STP .......................................................................................................................................................... 8
Segmentation ......................................................................................................................................... 9
Need / Benefits of segmentation .................................................................................................... 10
Principles / Basis of Segmentation ................................................................................................. 10
Targeting / Target marketing ................................................................................................................ 13
Strategies of target marketing ......................................................................................................... 13
Positioning ............................................................................................................................................ 14
Positioning strategies ...................................................................................................................... 14
Consumer Behaviour – Meaning & Definition
Consumer behavior is defined by the responses of individuals to a product or service.
Consumer behaviour is the study of how individual customers, groups or organizations select,
buy, use, and dispose ideas, goods, and services to satisfy their needs and wants.

Determinants / Factors affecting consumer behaviour

Economic determinants
• Personal income: Higher the income, higher the needs, Am I able to afford?
• Family income: Total income of the family plays a great deal in buying something.
• Expectation of future income: Can I do it in the future if I dispose my property?
• Liquid asset & consumer credit: Based on the free cash available. EMI facilities.
• Level of standard of living: Higher income groups will have more income to spend on
standard of living.
Personal determinants
• Age: Age determines the needs and wants. The products, services requirement will
change according to age.
• Lifecycle: Different horizons of life. From kid, adolescent, young married couple, middle
age, retirement etc., the buying decision changes.
• Occupation: Based on the occupation, the needs and wants of product or service shifts.
• Lifestyle: Based on the spending in life style. Foodie, Spend thrift, Miser etc.
 • Personality: Based on the personal concept of lifestyle and standard of living. How
buying is made based on the view of life.
Psychological determinants
• Motivation: Inner drive prompting action, guiding individuals toward satisfying needs or
achieving goals.
• Involvement: Level of personal investment or interest in a product, influencing
decision-making.
• Perception: Interpretation of stimuli, shaping how individuals perceive and make sense
of information.
• Learning: Acquisition of knowledge or skills, impacting future behaviors and decision-
making.
• Attitude: Evaluative stance toward a product or brand, influencing preferences and
purchase decisions.
Cultural & Social determinants
• Culture: Shared values, beliefs, and customs shaping collective behaviors and
preferences.
• Subculture: Distinct cultural groups within a larger society, influencing unique
consumer behaviors.
• Social Class: Hierarchical ranking in society, impacting lifestyle choices and
consumption patterns.
• Social Groups: Affiliation with specific communities, shaping attitudes and purchase
decisions collectively.
• Opinion Leaders: Influential individuals guiding others' attitudes and choices within
social networks.
• Role & Status: Position and expectations within society, influencing product
preferences and consumption.

Consumer buying process / Consumer decision making process

 • #Step 1 - Recognition of need:
• First is to recognizing the need for a service or product. Need recognition,
whether prompted internally or externally, results in the same response: a want.
Could be due to various factors of buying motive.
• #Step 2 - Information search:
• A consumer can search for information by researching different options, talking
to friends or family members, or reading reviews online. This stage allows the
individual to make a more informed decision about the next stage.
• #Step 3 - Evaluation of alternatives:
• This is normally done by evaluating it against alternatives based on quality,
price, popularity, and reviews. This is made before finalizing the decision to
purchase.
• #Step 4 - Purchase decision:
• This is when the consumer decides which product or service to buy.
Specifically, the factors that affect the purchasing stage include:
• Need for the product – Why do you need, What problem it solves?
• Perceived benefits of the product – What do you think are its
advantages?
• Perceived risks of the product – If you buy / use, is there any risk?
• Ability to pay for the product – Do I have money?
• Any social influences that may affect the consumer’s decision – Social
thoughts
• #Step 5 - Post purchase behaviour:
• After purchasing the product, the customer weighs up their purchase and
compares it to their overall expectations. This either leads to satisfaction or
dissatisfaction.

Buying Motives
Buyer motives are the emotional and intellectual factors influencing a consumer's decision
to buy a product or service.
These factors include:
❑ Emotional value
❑ Societal pressure
❑ Cost
 ❑ Accessibility
❑ Quality

Types of buying motive

• Emotional product motive: emotional motives are all about desires, aspirations, and
personal satisfaction. They are driven by their feelings and emotions rather than practical
considerations.
• Pride / Prestige
• Emulation / Imitation
• Affection
• Desire for comfort
• Ambition
• Distinctiveness
• Attraction
• Rationale product motive: 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.
• Safety / Security
• Economical
• Suitability
• Utility
• Durability
• Convenience
• Emotional patronage motive: 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.
• Appearance of shop
• Display of items
• Recommendation of others
• Prestige
• Habit
• Rationale patronage motive: 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.
• Convenience
• Low price charged
• Credit facilities
• Services offered
• Wide choice
• Treatment

Buying roles
Buying roles are the roles played by single / multiple entities who are some how related to
purchase.

1. Initiator
• Meaning: The Initiator is the individual who first suggests the idea of making a
purchase.
• This person identifies a need or desire for a product or service and sparks the buying
process.
• The Initiator could be anyone within the buying unit, such as a family member, friend,
or coworker, who recognizes a problem or opportunity that can be addressed through a
purchase.
• Implications for marketing:
❑ To target the Initiator, businesses should focus on creating awareness and
positioning their products or services as solutions to the identified need.
2. Influencer
 • Meaning: The Influencer is the person whose opinions, recommendations, or advice
significantly impact the buying decision.
• Who can be? Influencers can be family members, friends, colleagues, or even online
personalities who possess credibility, expertise, or persuasive power in the eyes of the
buyer.
• What do they do? They can provide information, guidance, or reassurance that
influences the buyer’s perception and preference for a particular product or brand.
• Implications for marketing:
❑ Businesses should focus on:
❑ Building relationships
❑ Providing relevant information
❑ Leveraging social proof through testimonials, reviews, and
endorsements.
3. Decider
• Meaning: The Decider is the individual who has the final say in the buying decision.
• They are responsible for choosing what to buy and how to buy it. In some cases, the
Decider may be the same person as the buyer or user.
• However, in more complex buying situations, such as organizational purchases or high-
value consumer goods, the Decider may hold a distinct role.
• Implications for marketing:
❑ To influence the Decider, businesses should:
❑ Emphasize the unique value proposition of their products or services
❑ Highlighting key features, benefits, and competitive advantages.

4. Buyer
• Meaning: The Buyer is the person who makes the actual purchase.
• They are responsible for executing the transaction and selecting the specific product
or service from the options available.
• The Buyer may or may not be the same individual as the Decider or User.
• In many cases, the Buyer’s primary considerations revolve around price, availability,
convenience, and customer service.
• Implications for marketing:
 ❑ To target the Buyer, businesses should focus on:
❑ Providing a seamless purchasing experience
❑ Clear pricing information
❑ Convenient payment options
❑ Streamlined online platforms
❑ Accessible customer support
5. User
• Meaning: The User is the individual who consumes or uses the purchased product or
service.
• Their satisfaction and experience with the product directly impact future purchases
and brand loyalty.
• The User’s feedback and recommendations can also influence others in the buying
unit or serve as testimonials for potential customers.
• Implications for marketing:
❑ To target the User, businesses should:
❑ Prioritize delivering high-quality products
❑ Exceptional customer service
❑ Personalized experiences.
6. Gatekeeper
• Meaning: Gatekeeper could refer to someone who controls or filters the information
and options that reach the decision-maker or the buyer within a consumer household.
• This role is often performed by a family member or trusted advisor who screens and
influences the choices presented to the decision-maker.
• The gatekeeper may be responsible for conducting initial research, narrowing down
options, and providing recommendations to the decision-maker based on their
understanding of the decision-maker’s preferences and needs.
• They act as a filter, ensuring that only relevant and suitable choices are considered by
the decision-maker.
• Example: A child crying for a toy and father not allowing to purchase that !!

STP
Segmentation, Targeting and Positioning are the three key elements which are required to
created specified marketing strategies and marketing mix campaigns to effectively improve the
sales and customer satisfaction.
 ------------- Segmentation

-------------- Targeting

-------------- Positioning

Segmentation
What is it?
Segmentation is the process of dividing a larger market into smaller groups of consumers
who share similar characteristics or needs.
Major Goal: To identify groups of consumers that are most likely to respond positively to a
company’s marketing efforts.
Need / Benefits / Advantages / importance of segmentation
❑ Targeted marketing: By dividing a larger market into smaller, more defined segments,
businesses can create more personalized marketing messages and target their
desired audience more effectively.
❑ Design appropriate marketing strategies: 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.
❑ Improved customer satisfaction: Businesses can tailor their products and services to
better meet customer expectations and ultimately improve customer satisfaction.
❑ Increased profitability: By targeting the right customers with the right marketing
strategies, businesses can improve their conversion rates, increase customer loyalty,
and ultimately increase their profitability.
❑ Guidance: Market segmentation also gives the customers a clear view of what to buy
and what not to buy.

Principles / Basis of Segmentation

Geographic Segmentation
• Region – Based on the need of customers in different regions
• Country size – Based on the number of people living in each place
• Population density – The density of population in each locality
• Climate – Based on the topography; Warm or cold

Demographic Segmentation
• Age: Based on the age of population, markets can be divided.
• Gender: It includes male, female, transgender
• Family size: Nuclear family, joint family, number of members in the house etc.
• Family life cycle: Division of market based on the stage of family like unmarried, newly
married etc.
• Occupation: Based on the job, formal or informal
 • Education: Primary, higher secondary, UG, PG etc.
• Income: Based on personal and family income.
Psychographic Segmentation
• Social class: Upper class, middle class, Lower class etc.
• Lifestyle: Based on the standard of living of the people
• Personality: Based on attitude and personality to use / consume a product
Behavioral Segmentation
• Purchase occasion: Buyers can be divided based on occasions when they get the idea
to buy, actually make their purchase, or use the purchased item.
• Benefits sought: Benefit segmentation calls for finding the major benefits people seek
in the product class, the kinds of people who look for each benefit.
• User status: According to user statuses such as nonusers, ex-users, potential users,
first-time users, and regular users of a product.
• Usage rate: Usages such as light, medium, and heavy user groups. Although heavy
users are often a small percentage of the market, they account for a high percentage of
total buying.
• Loyalty status: Some consumers are somewhat loyal, and they are loyal to two or three
brands of a given product or favor one brand and may sometimes buy others.
Examples
Demographic segmentation (Income / Lifestyle)

Demographic segmentation (Age / Gender)

Targeting / Target marketing
What is it?
Targeting refers to the process of evaluating the attractiveness of each market segment and
selecting one or more segments to enter.
Target marketing refers to aligning the marketing mix according to the target segments which
is selected by the organization.
Major Goal: To reach the targeted customers directly instead of satisfying every one’s need.
Importance

Strategies of target marketing

Undifferentiated marketing / Mass marketing

❑ Marketing to the entire population with a single strategy.
❑ Focus: Reach everyone with maximum exposure to the product.
❑ Spread the message to everyone with mass media:
❑ TV
❑ Newspaper
❑ Mobile.
Differentiated marketing / Segmented marketing
❑ Differentiated targeting strategy focuses on a section of people known as the ‘target
audience’.
❑ Focus: New products entering to market with established organizations.
Concentrated marketing / Niche marketing
❑ Niche marketing yields results for small companies with limited production and sales.
❑ Luxury goods like Rolex and Armani are examples of niche marketing.
 ❑ Benefits:
❑ Generates high revenues.
❑ Loyal customer base.
❑ Competition is less.
❑ Drawbacks:
❑ The market is small.
❑ The scope for growth is less.
Micro-marketing
❑ Focus: Micromarketing focuses on a much smaller section of people than niche
marketing.
❑ Micromarketing definition is customized marketing or one-to-one marketing.

Positioning
What is it?
Positioning refers to the place that a brand occupies in the minds of the customers and how it
is distinguished from the products of the competitors.
Major Goal: To explain the value of the product / service
Importance:

Positioning strategies
• Product price
• Product quality
• Product-specific features or characteristics
• Product benefits
• Specific usage occasions
• User category
• Against another product
• Product class dissociation
Positioning based on price & quality
• Price sensitive:
• Price-sensitive people believe that paying a high price for a product is a waste of
money.
• While buying products they always focus on price, which means they ignore the
quality of the product. And they buy the product at a low price.
• Quality sensitive:
 • Quality-sensitive people believe that higher-priced products have higher quality.
• They assume product quality and price have a direct relation.
• They are ready to pay higher price for good quality products.

Positioning based on product specific features

Description based on the product’s specific features, why it is unique from others, why these
unique features matter, etc. to the target customers. Specific feature could be:
This strategy may help to build up organization’s image in the market.
Positioning of Product Benefits
Mention the significant benefits of product that can obtain any buyer when using it.
• In this strategy, many companies focus on adding various benefits to a product.
• The product benefits may be:
• This positioning strategy may create the needs in the minds of the customers for that
particular product.

Positioning on Specific Usage Occasions

Here, the marketer seeks to position his product based on the specific usage situation of the
target market.

• Position product on a birthday, this is one example of occasion positioning

• For this, he has to understand the intention, what people need to have on their special
occasions, etc.
Positioning on User Category
In this, the marketer or business firm deals with certain specialized products and focuses on
some specific users. Here, a marketer wants a product position in a specific market segment.
• E.g. a marketer focuses only on girls under 10 rather than focusing on both all
girls and boys.

Positioning Against Another Product

Marketer makes his product’s position over competitors. The marketer wants to message the
target customer that his product is more qualitative or better than others.
Positioning on Product Class Dissociation
To attract more customers, sometimes firms may offer some irrelevant or separate but useful
and beneficial message for the same product or service.

• Mudumalai National Park:

o “sightseeing for wildlife animals.”
o “recreation park” or
o “best research park for wildlife animals”.
Previous questions from question papers of 2023
2 marks
❑ Differentiate between customer and consumer
❑ What is psychographic segmentation?
❑ Define concentrated marketing
5 marks
❑ Describe strategies of target marketing
10 marks
❑ Discuss the factors influencing consumer behaviour

Previous questions from question paper of 2022

2 marks
❑ Define cognitive dissonance
❑ Comment on niche marketing
5 marks
❑ Explain different types of buying motives
10 marks
❑ Explain the methods of market segmentation

Previous questions from question paper of 2021

2 marks
❑ Define consumer behaviour
❑ What is psychographic segmentation?
5 marks
❑ Explain different types of buying motives
❑ What is market segmentation? What are its advantages?
❑ Discuss strategies of positioning
10 marks
❑ NIL