A N Bhattacharya

Professor & Chair, Marketing Leadership Program,

School of Inspired Leadership, Gurgaon
[email protected]
Points to Ponder
Pay for 3 pieces of ‘Liril’ and get the 4th free !!!
Buy one ‘Harpic’ and get an ‘Odonil’ free !!!
Exchange your Maruti Alto for a Maruti Swift at a
Rs 40,000/= discount !!!
Buy ‘Fast Track’ watches and get 5 different colored
wrist-bands free !!!
New LG Television with unique ‘Child Lock’
feature !!!
Why are such offers given to consumers??
2
Some more examples…..
‘Dar ke aage jeet hai’ ….. Mountain Dew
‘Pappu Pass ho gaya’ ….. Cadbury’s
‘We also make steel’ …… Tata Steel
‘Filmi sitaron ka saundarya sabun’ …….. Lux
‘Jaago India Jaago’ …….. Tata Tea
‘Desh ki Dhadkan’ ……… Hero Honda
‘An Idea can change your life’ ……. Idea

How do such slogans impact consumers??

3
Consumer Behaviour……..what is
it?
All such activities done by a consumer, while
obtaining , consuming and disposing of products and
services. This includes the decision making processes
that precede and follow such actions.

4
Subject draws its concepts from:
 Psychology
 Sociology
 Anthropology
 Economics
 Marketing

5
Why study Consumer Behavior?
Consumers ‘evolve’ with time, learning, exposure
and experience. They cannot be taken for granted.
e.g. People booked their railway tickets from the station
counters, now they prefer online purchase thru website.

As a consequence, a sound understanding of

consumer behavior is a pre-requisite for sustained
success of any marketing program

6
The study of Consumer Behaviour covers:

1. Consumers in the Market Place.

2. Consumers as individuals.
3. Consumers as decision makers.
4. Consumers and subcultures.
5. Consumers and cultures.

7
 Marketing decisions
• Market Segmentation: Process of dividing the market into distinct
subsets of consumers with common needs and characteristics and
selecting one or more segments to target with distinct marketing mix.
E.g. Bathing soap, detergents, shampoos etc.
• Segment Marketing: Serving needs of a particular group; different
marketing mix for different segments. e.g. Vegetarian recipes by
Haldiram.
• Niche Marketing: Marketing to a single group, tailoring the mix to
their specific needs and attract them, allowing the firm to engage in
relationship marketing. e.g. Nutralite bread spread, Diet Coke, Sugar –
free etc.
• Differentiated Marketing: organizations sell multiple versions of a
product; each appealing to different market segment. Differentiated
strategy can produce greater sales. e.g. Pepsi in 300ml as well as 2 litres.
• Individual Marketing: tailoring market mix to suit individual
customers and create value for each individual. e.g. Designer clothes by
Ritu Kumar, Manish Malhotra. 8
 Segment Bounding
• Means by which marketers differentiate among consumers and market
segments.

Type Examples
Demographic Age, Gender, Education, Income, Occupation
Psychographic Interests, Opinions, Values, Lifestyle
Personality, Self-image, Risk involvement,
Psychological Influence
Attitude, Beliefs
Culture, Subculture, Social class, Reference
Social Influence
group, household
Recognizing needs, response to marketing &
Marketplace behavior
communication, price and product acceptance
Consumption behavior Situation, usage rate, satisfaction, loyalty

9
 Demographic Segmentation
• Age: Johnson’s Baby Soap is targeted at kids between 0-5 years. NIIT ads
target young adults in age group of 17-22 years.
• Gender: Obvious for products which are gender specific. e.g. Shaving
Creams, Fairness Creams etc. However, changing roles are seen in other
ads like detergents etc. (Ariel, Fair & Handsome etc)
• Marital Status: impact on consumption. Investments after marriage.
e.g. Elle-18 depicts freedom as a spinster.
• Household type: Type and size of household matters. Kelloggs shows
young household (couple with small kids)
• Education: Rational ads to educated, more emotional appeal to others.
• Income: Nescafe depicts sophistication, style (higher income), Bru a
middle class household. Ability to pay. Fluence car for high income
group.
• Occupation: employment data to design product positioning. Surf
excel for field jobs (journalist ad)
10
 Geographic Segmentation

• Clues on likely purchase behavior. Identifies segments based on

geographical boundaries. People in a same area share similar needs.
Regional differences are accounted for by climate, culture, religion,
concentration etc. e.g. Coastal cities with heavy rainfall for K C Pal
Umbrellas,
• Difference in needs among rural, urban and suburban areas. e.g.
Eveready Torch for rural areas, emergency lights for sub-urban areas, CFL
for Urban metros.
• Indian zones- viz. North, South, East and West greatly differs in their
culture, food habits, TV viewing patterns, social customs etc; hence
affecting their purchasing patterns. e.g. Regional TV Channels with
regional programmes.
• Feasible for marketer to concentrate efforts and resources and fully
utilize the available services.
11
 Psychographic/ Psychological Segmentation

Refers to inner/ intrinsic qualities of an individual.

• Motivation: Understand ‘why’ of consumer’s buying pattern. e.g. Why did
ready to eat food items fail in India?
• Desired Benefits: need and benefits various segments seek from the product.
e.g. SX 4 - S1: for convenience & comfort , S2: status symbol
• Attitude: attitude towards brands give rise to distinct segments. (negatives,
functionalists, fun lovers etc. e.g. the ‘my can’ pack of Pepsi, Mountain Dew etc.
• Lifestyle: predict buyer behavior on the basis of attitude, interests and opinions
(VALS 2)… Colgate for trust and traditions.
• Personality: one’s personality determines the kind of product and the image
thus associated. UCB- young and easy attitude, Reid & Tailor- corporate image.
• Brand Loyalty: measure of customer attachment to a particular brand. They
prefer a particular product irrespective of thick and thin.
• Behavior: emotional and cognitive process going on inside a consumer’s head,
lead to many problems. Segmenting the market based on specific behavior
patterns and product use. E.g. while travelling in a train most people buy
magazines who otherwise do not buy.

12
 Socio-Cultural Segmentation
• Family Life Cycle: All families pass through phases of formation,
growth and dissolution. At each stage, requirements vary and hence
becomes an important segment to be captured. (Maruti 800 ads in year
2000-01)

• Social Class: relative status and social standing is important to

consumers. It is a function of income, education and occupation.
Knowledge of buying patterns, behavior etc. is important to appeal to
different segments. (Raymond)

• Culture, Cross Culture & Sub culture: segmenting the domestic and
international markets on the basis of cultural heritage as members of
the same culture share same values, beliefs and customs. Within the
larger culture distinct subgroups and subcultures are united by certain
experiences, values or beliefs and make effective segments. Culturally
different segments. (Health conscious Indian urban upper middle class-
LG)
13
 Purchase Segmentation

• Usage rate: segmenting based on the rate of product usage. Division of

market into heavy, moderate and light users and planning the
marketing mix differently for each. e.g. ‘Frequent Flyer’ scheme of
airlines

• Loyalty status: consistency with which consumers continue to buy

same brand of a particular product and show their commitment. e.g.
‘Loyality Cards’ offered by retail stores.

• User status: whether consumers have used the product in past, use it
currently or are likely to use the same in future. Different mix could be
needed for each category. e.g. Upgrade your Godrej Refrigerator, return
the old one and buy a frost-free one.

14
Pavlov’s Classical Conditioning Theory:
•Whenever you hear the ‘Intel’ jingle, you recall ‘Intel’
•Whenever you see the name ‘McDonald’, you are
reminded of Burgers.
•Whenever you see the Amul ‘Butter Girl’ you are
reminded of ‘Amul Butter’.
 Model of Consumer Behavior
•Product •Economic
Marketing
Marketingand
and
Other
OtherStimuli
Stimuli •Technological
•Price
•Place •Political
•Promotion •Cultural

Buyer’s Black Box Characteristics

Buyer’s Decision affecting consumer
Process behavior

•Product Choice • Purchase

Buyer’s
Buyer’s Response
Response Timing
•Brand Choice
• Purchase
•Dealer Choice Amount
16
Viewpoints on Studying Consumer
Behavior
Logical Positivism
 Understanding consumer behavior & and
predicting
 Cause and effect relationships that govern
persuasion and/or education

Modern
 Understand consumption behavior without any
attempt to influence it.

17
Few findings which motivated
study of Consumer Behavior
Of all the products launched every year, only 55%
survive five years later.
e.g. FIAT launched Uno, Palio, Sienna etc but the could
not survive profitably.
Of the various new product concepts offerred by
over 100 leading companies, only 8% reached the
market and out of this 8% only 17% achieved the
marketing objectives.
e.g. HUL launched pre-cooked ready-to-eat rice, in line
with Nestle’s Maggi, but failed miserably.
18
Satisfying the consumer’s need is more
important than the expectations of the
management.

For survival, there is not option before the

companies but to understand and adapt
to consumer motivation and behavior.

19
Effective Marketing can positively influence
the consumer, provided the product/service
offered satisfies his/her needs and
expectations

The right marketing program can activate a

latent demand and lead to successful sales.

20
Consumer Research: The Dominant Forces
 Economy moving from – ‘production/product-
centric’ to ‘market/customer-centric’.
e.g. Hindustan Motors (Ambassador) followed product
centric approach and lost its market share to Maruti which
followed the customer centric approach.

 Better understanding of human behavior through

improved tools of psychology and other behavioral
sciences.

21
The Marketing Challenge: Environmental
factors
Extent of gap between the supply and demand of the valid
products/services. e.g. LPG cylinders are often sold at a ‘premium’
due to demand-supply gap.
Speed and accuracy of communication with/from customers. e.g.
Most PSU Banks lost their market share to Private Banks because of
speed & accuracy of communication.
Efficient and multiple distribution channels. e.g. sales of telephone
connections increased after mobile service providers started
appointing dealers, contrary to MTNL & BSNL.
Marketers power to influence and induce channel partners to
comply with overall marketing strategy. e.g. certain Dish Antenna
companies offer certain channels free.
National & Global Economic growth.

22
What is Motivational Research?
Study to explore the factors that motivate consumers in
making choices. The techniques delve into the
conscious, subconscious and the unconscious state of
the consumer.

‘Bata sells lovely feet, and not foot-ware’.

‘Women don’t buy Ponds, they buy hope.’
‘While buying a Rolex, people don’t buy a time-keeping
machine, rather style’.
23
Characteristics Affecting …………..
…………….Consumer Behavior

24
 Factors Affecting Consumer Behavior: Culture
• Values – Honesty e.g. Tata is an ‘honest brand’
• Perceptions – e.g. ‘fair & lovely’ will make you fairer.
• Subculture - Groups of people with shared value systems
based on common life experiences.
Example: Hispanic Consumers, African American Consumers,
Asian American Consumers, Mature Consumers
• Social Class - People within a social class tend to exhibit
similar buying behavior.
Example: Occupation, Income, Education, Wealth

25
 Factors Affecting Consumer Behavior: Social
• Groups
• Membership
• Reference

• Family
• Husband, wife, kids
• Influencer, buyer, user Social
Social Factors
Factors

Roles
Rolesand
and Status
Status
26
Factors Affecting Consumer Behavior:
Personal

Personal Influences
•Age and Family Life Cycle Stage
•Occupation
•Economic Situation
•Personality & Self-Concept

Lifestyle Identification
•Activities
•Interests
•Opinions

27
 Lifestyle Dimension

Activities Interests Opinions Demographics

Work Family Themselves Age
Hobbies Home Social issues Education
Social events Job Politics Income
Vacation Community Business Occupation
Entertainment Recreation Economics Family size
Club
Fashion Education Dwelling
membership
Community Food Products Geography
Shopping Media Future City size
Stages in life
sports Achievements Culture
cycle

Joseph T. Plummer, “The concept and application of lifestyle segmentation, “Journal of Marketing, 38) 28
28
VALS 2 Status Oriented High on Resources
High on Innovation
Actualizers
Actualizers
Principle Oriented Action Oriented

Fulfilleds
Fulfilleds Achievers
Achievers Experiencers
Experiencers

Believers
Believers Strivers
Strivers Makers
Makers

Strugglers
Strugglers
Low on Resources
Low on Innovation
29
 Factors Affecting Consumer Behavior:
Psychological

Motivation
Motivation

Beliefs
Beliefsand
and Psychological Perception
Perception
Attitudes
Attitudes Factors

Learning
Learning
30
 What is Motivation?

Motivation refers to an activated state within a person that

leads to goal-directed behavior.

It consists of the drives, urges, wishes, or desires that

initiate the sequence of events leading to a behavior.

e.g. A banner announcing “50% off” on Lewis Jeans –

leading to youth discussing plans to visit the store.

A combo pack of “Harpic & Odonil” - leading housewives

shifting their favorite store.

31
Motivation begins a stimulus that leads to the
recognition of a need. E.g. the free Odonil with Harpic was a
stimulus for the housewife.
Need recognition occurs when a perceived discrepancy
exists between an actual and a desired state of being
• Needs can be either innate or learned.
• Needs are never fully satisfied.
• Feelings and emotions accompany needs
Expressive needs involve desires by consumers to fulfill
social and/or aesthetic requirements. E.g. buying of a M F
Hussain Painting
Utilitarian needs involve desires by consumers to solve
basic problems . E.g. filling a car’s gas tank.

32
 The Types of Emotions

The Ten Emotions People Experience:

Disgust Interest
Joy Surprise
Sadness Anger
Fear Contempt
Shame Guilt

33
 Some General Theories of Motivation

Maslow’s Need Hierarchy

McClelland’s Theory of Learned Needs
 Achievement motivation is seeking to get ahead, to strive for
success, and to take responsibility for solving problems.
 Need for affiliation motivates people to make friends, to
become members of groups, and to associate with others.
 Need for power refers to the desire to obtain and exercise
control over others.
 Need for uniqueness refers to desires to perceive ourselves as
original and different.

34
Maslow’s Hierarchy of Needs
Self
Actualization
(Self-development)

Esteem Needs
(self-esteem, status)

Social Needs
(sense of belonging, love)

Safety Needs
(security, protection)

Physiological Needs
(hunger, thirst)

35
 Learning

Kotler’s Definition : Learning involves changes in an individual’s

behaviour arising out of experience. Most of the human behaviour is
learned over time out of experience.

Schiffman and Kanuk’s Definition : Learning is a process by which

individuals acquire the purchase and consumption knowledge and
experience that they apply to future related behaviour.

Loudon and Della Bitta’s Definition : Learning can be viewed as a

relatively permanent change in behaviour occurring as a result of
experience.

36
The salient features of Learning :
1.Consumer learning is a process, and thus it continuously changes and
evolves as a result of newly acquired knowledge.
2.This knowledge can be obtained from reading, discussing, observing,
thinking, etc. Or from actual experience.
3.Both the newly acquired knowledge and personal experience serve as
a feedback.
4.This also serve as a future behaviour in similar situations.
5.Not all learning is deliberate. Learning can be :
• Intentional : acquired as a result of careful search for information with
effort.
• Incidental : acquired as a result of accident or by the way, without
much effort.
6.The term “Learning” generally covers all ranges of learning from
simple reflexive responses to abstract concepts or complex problem
solving capability.

37
 ELEMENTS OF LEARNING
1. Motives, motivation or drive is very important for learning. E.g.
showing adsfor winter goods just before winter and summer
products just before summer.
2. Cues - Motives stimulate learning, whereas “Cues” are the stimuli
that give direction to these motives. E.g. in the market place, price,
styling, packaging, store display all serve as cues to help consumer
to decide a particular product from a group.
3. Response - Response is how the consumers react to the motives or
a cue, and how they behave. Response can be overt (open,
physical or visible) or covert (hidden or mental).
4. Reinforcement - Reinforcement is an important element which
increases the probability (tendency or likelihood) of a particular
response to occur in future as a result of a given set of motives and
cues.

38
 Classical Conditioning

 E.g. ‘Zoo Zoo’ paired with Airtel means mobile service provider.
 E.g. whenever we see ‘Kingfisher’ we are reminded of the airlines
company

We can say……
A neutral stimulus, such as a brand name, is
paired with a stimulus that elicits a response.
Through a repetition of the pairing, the neutral
stimulus takes on the ability to elicit the
response.

39
 Classical Conditioning Relations

Unconditioned/Secondary Stimulus Unconditioned Response

Lotus
Emotions
Pairing

BJP
candidate Emotions

Conditioned Stimulus Conditioned Response

40
 Classical Conditioning: Applications
Applications: communications--advertising, public
relations, personal selling.
Goal: identify powerful positive stimulus and associate
brand with it.
Examples of powerful, emotion causing stimuli:
 beautiful, sexy people

 patriotic themes, religious symbols

 Music, beautiful scenes

 Also, negative stimuli can be associated with competitors.

 Credit card insignia may elicit spending responses

41
 Operant Conditioning :
The process in which the frequency of occurrence of a
bit of behavior is modified by the consequences of the
behavior.

If positively reinforced, the likelihood of the

behavior being repeated increases. E.g. buy one shirt, get
another shirt at 50% discount. Buy two shirts, get the third at
75% discount.

If punished, the likelihood of the behavior being

repeated decreases. E.g. the more electricity you use, the
rate per unit increases.

42
 Reinforcement & Influencing Behavior

A reinforcer is anything that occurs after a behavior and

changes the likelihood that it will be emitted again.

Positive reinforcers are positive rewards that follow

immediately after a behavior occurs.
Negative reinforcers are the removal of an aversive
stimulus.

43
 Secondary reinforcers . . .

. . . are a previously neutral stimulus that acquires

reinforcing properties through its association with a
primary reinforcer.
Over a period of time, previously neutral stimuli can
become secondary reinforcers.
In marketing, most reinforcers are secondary (e.g. a
product performing well, a reduction in price)

44
A Punisher . . .

. . . is any stimulus whose presence after a behavior

decreases the likelihood of the behavior reoccurring.
e.g. anti-smoking ads.

45
 Extinction & Eliminating Behaviors

Once an operant Extinction is the

response is conditioned, disappearance of a
it will persist as long as it response due to lack of
is periodically reinforced. reinforcement.

46
 Perception

Selecting, organizing and interpreting information in a

way to produce a meaningful experience of the world is
called perception.

47
 Three different perceptual processes

Selective
Selective Consumer
Consumerpays
paysattention
attentionto
tocertain
certainstimuli
stimuliand
and
Exposure
Exposure ignores
ignoresothers
others

Selective
Selective Consumer
Consumerinterprets
interpretsinfo
infoso
sothat
thatis
isis
isconsistent
consistent
Comprehension
Comprehension with
with his
hisbeliefs
beliefs

Selective
Selective Average
Averageconsumer
consumeronly
onlyremembers
remembers
Retention
Retention 30%
30%of
of information
informationheard
heard

48
 Perceived risk
Perceived risk represents the anxieties felt because
the consumer cannot anticipate the outcomes of a
purchase but believes that there may be negative
consequences.

Perceived risk is a consumer’s perception of the overall

negativity of a course of action based upon as
assessment of the possible negative outcomes and of the
likelihood that these outcomes will occur.

Perceived risk consists of two major concepts - the

negative outcomes of a decision and the probability
these outcomes will occur.
49
 7 Types of Consumer Risks.

Financial/Economic
Performance
Physical/Personal
Psychological
Social
Time
Opportunity Loss

50
 Factors Influencing Risk Perception

 Characteristics of the person—e.g., need for

stimulation
 Nature of the task
 Voluntary risks are perceived as less risky than involuntary
tasks.

 Characteristics of the product—price

 Salience of negative outcomes

51
 Six risk-reduction strategies

Be brand loyal and Seek out information in

consistently purchase the order to make a well
same brand. informed decision.
Buy through brand image Buy the most expensive

and purchase a quality brand, which is likely to

have high quality.
national brand.
Buy the least expensive
Buy through store image
brand in order to reduce
from a retailer that you financial risk.
trust.

52
 Beliefs & Attitudes

Belief
•A descriptive thought about a brand or service
•May be based on real knowledge, opinion or faith

Attitude
•Describes a person’s evaluations, feelings and
tendencies towards an object or idea
•They are difficult to change

53
 Types of Buying Decisions

High Low
Involvement Involvement
Complex Variety-
Significant Buying Seeking
Differences Behavior Behavior
between brands

Dissonance- Habitual
Few differences Reducing Buying Buying
Between brands Behavior Behavior

54
 Involvement and Problem-Solving Variations

Routine
Routine Limited
Limited Extensive
Extensive
Response
Response Decision
Decision Decision
Decision
Behavior
Behavior Making
Making Making
Making

Less More
Involvement Involvement

55
Comparison of problem-solving variations

56
 Consumer Decision-Making
Process
Need
NeedRecognition
Recognition

Information
InformationSearch
Search
Cultural,
Cultural,Social,
Social,
Individual
Individualand
and
Psychological Evaluation
Evaluation
Psychological of
Factors
Factors ofAlternatives
Alternatives
affect
affect
all
allsteps
steps
Purchase
Purchase

Postpurchase
Postpurchase
Behavior
Behavior
57
 Complete model of consumer behavior
Start

Need
recognition
Internal
search Influences
Search
• culture
Exposure
• social class
• family
Stimuli Attention • situation
Alternative
(marketer evaluation
dominated, Memory
Comprehension
other) Individual
differences
Acceptance Purchase
• resources
• motivation &
Retention involvement
Outcomes • knowledge
• attitudes
• personality,
values, lifestyle
External
search
Dissatisfaction Satisfaction

58
• How do we know when to shop or buy a product/service?

• What are the triggers that initiate an awareness & search?

• What are the internal & external sources of such triggers?

59
60
• When the current product/service is not
satisfying the need

• When the consumer is running out of an

product/service

• When another product/service seems

superior to the one currently being used

61
 DESIRED ACTUAL
STATE STATE

DEGREE OF
DISCREPANCY
BELOW AT OR ABOVE
THRESHOLD THRESHOLD

NO NEED NEED
RECOGNITION RECOGNITION

62
Internal search involves the scanning of one's memory to recall
previous experiences or knowledge concerning solutions to the
problem/satisfying need.
Generally done for frequently purchased products/low
involvement products/services .

External search may be necessary when past experience or

knowledge is insufficient, the risk of making a wrong purchase
decision is high, and/or the cost of gathering information is low.

Generally done for high involvement products

63
 •Family, friends, neighbors
Personal Sources •Most influential source of
information

•Advertising, salespeople
Commercial Sources •Receives most information
from these sources

•Mass Media
Public Sources •Consumer-rating groups

•Handling the product

•Examining the product
Experiential Sources •Using the product

64
YOUNG YOUNG EMPTY NEST
SINGLE COUPLE I/II

FULL NEST
I/II/III
SINGLE OLDER
PARENT SINGLE

BLENDED

65
 Product Attributes
Evaluation of Quality, Price, & Features

Degree of Importance
Which attributes matter most to me?

Brand Beliefs
What do I believe about each available brand?
Total Product Satisfaction
Based on what I’m looking for, how satisfied
would I be with each product?
Evaluation Procedures
Choosing a product (and brand) based on one
or more attributes.

66
 Choosing a Brand on the basis of degree of importance
of the determinant attributes
Degree of LG SAMSUNG VIDEOCON SONY
Importance

5 Brand Name 4 4 2 5

Picture
4 4 4 2 5
Quality

3 Looks/Design 5 5 3 4

2 Price 3 4 5 2

After Sales
1 5 5 3 2
Service

LG 4x5 + 4x4 + 5x3 + 3x2 + 5x1 = 62

SAMSUNG 4x5 + 4x4 + 5x3 + 4x2 + 5x1 = 64
VIDEOCON 2x5 + 2x4 + 3x3 + 5x2 + 3x1 = 40
SONY 5x5 + 5x4 + 4x3 + 2x2 + 2x1 = 63
67
 Purchase Intention
Desire to buy the most preferred brand

Attitudes of Unexpected
others situational
factors

Purchase Decision

68
 Consumer’s Expectations of
Product’s Performance

Product’s Perceived
Performance

Satisfied
Dissatisfied Customer
Customer!

Cognitive Dissonance
69
• Consumer Behavior, 10/e,
Pearson Education,
Leon G. Schiffman, Leslie Lazar Kanuk, S Ramesh Kumar

• Consumer Behavior: Building Marketing Strategy

McGraw Hill education
Del Hawkins, David Mothersbaugh, Amit Mookherjee

• Consumer Behavior: Concepts and Applications

David L. Loudon and Albert J. Della Bitta

70
 Thank you

For further queries please email to -

A N Bhattacharya
Professor & Chair, Marketing Leadership Program,
School of Inspired Leadership, Gurgaon
[email protected] 71