Introduction To Consumer Behaviour

activated. This process and the experiences and acquisitions it produces in turn influence theconsumers’ self-concept and lifestyle by affecting their internal and external characteristics Interdisciplinary concepts from psychology, sociology, anthropology, micro-economicsand organizational buying behaviourConsumer behaviour was a relatively new field of study in the mid- to late 1960s. Because it had nohistory or body of research of its own, marketing theorists borrowed heavily from concepts developed inother scientific disciplines, such as psychology (the study of the individual), sociology (the study ofgroups), social psychology (the study of how an individual operates in a group), anthropology (theinfluence of society on the individual) and economics, to form the basis of this new marketing discipline.Many early theories concerning consumer behaviour were based on economic theory, on the notionthat individuals act rationally to maximise their benefits (satisfactions) in the purchase of goods andservices. Later research discovered that consumers are just as likely to purchase impulsively and to beinfluenced not only by family and friends, by advertisers and role models, but also by mood, situationand emotion. All of these factors combine to form a comprehensive model of consumer behaviour thatreflects both the cognitive and emotional aspects of consumer decision-making.The process of consumer decision-making can be viewed as three distinct:1) The input stage influences the consumer’s recognition of a product need and consists of two majorsources of information: the firm’s marketing efforts (the product itself, its price, its promotion andwhere it is sold) and the external sociological influences on the consumer (family, friends, neighbours,other informal and non-commercial sources, social class and cultural and subcultural memberships). Thecumulative impact of each fi rm’s marketing efforts, the influence of family, friends and neighbours, andsociety’s existing code of behaviour, are all inputs that are likely to affect what consumers purchase andhow they use what they buy.2) The process stage of the model focuses on how consumers make decisions. The psychological factorsinherent in each individual (motivation, perception, learning, personality and attitudes) affect how theexternal inputs from the input stage influence the consumer’s recognition of a need, pre-purchasesearch for information and evaluation of alternatives. The experience gained through evaluation ofalternatives, in turn, affects the consumer’s existing psychological attributes.3) The output stage of the consumer decision-making model consists of two closely related postdecision activities: purchase behaviour and post-purchase evaluation. Purchase behaviour for a lowcost, non-durable product (e.g. a new shampoo) may be influenced by a manufacturer’s extensive salespromotion (e.g. price cuts) and may actually be a trial purchase; if the consumer is satisfied, he or shemay repeat the purchase. The trial is the exploratory phase of purchase behaviour in which theconsumer evaluates the product through direct use. A repeat purchase usually signifies productadoption.

Applications of Consumer Behaviour1) Marketing Strategy:Marketing decisions based on explicit consumer behaviour theory, assumptions, and research are morelikely to be successful than those based on hunches or intuition, and thus create a competitiveadvantage. An accurate understanding of consumer behaviour can greatly reduce the odds of failuressuch as:S.C. Johnson pulled the plug on its Ziploc TableTops, a line of semi-disposable plates. Table- Tops was oneof the company’s most expensive launches with 65 million spent on marketing. A number of factorsappear to have contributed to the failure including relatively high prices (which made consumers lesslikely to throw them away) and the fact that the products really weren’t all that disposable. As oneretailer explained, “There are no repeat purchases. The things last forever.

2) Regulatory PolicyVarious regulatory bodies exist to develop, interpret, and/or implement policies designed to protect andaid consumers. For example, the Food and Drug Administration (FDA) administers the Nutrition Labelingand Education Act (NLEA). Among other things, NLEA requires that packaged foods prominently displaynutrition information in the form of the Nutrition Facts panel.3) Social MarketingSocial marketing is the application of marketing strategies and tactics to alter or create behaviours thathave a positive effect on the targeted individuals or society as a whole.Social marketing has been used in attempts to reduce smoking, to increase the percentage of childrenreceiving their vaccinations in a timely manner, to encourage environmentally sound behaviours such asrecycling, etc.Just as for commercial marketing strategy, successful social marketing strategy requires a soundunderstanding of consumer behaviour.

Consumerism & Consumer Behaviour in the contemporary environmentConsumerism is the organized form of efforts from different individuals, groups, governments andvarious related organizations which helps to protect the consumer from unfair practices and tosafeguard their rights. This movement has led to many organizations improving their services to thecustomer in order to drive customer satisfaction and build long lasting relationships with them. In short,Consumerism refers to protection of consumer rights.In this age, consumers are well-informed. Key functions of consumerism are: Protection of Rights : protects their rights from unfair practices. Prevention of Malpractices : prevents unfair practices within the business community, such ashoarding, adulteration, black marketing, profiteering, etc. Unity among Consumers : creates knowledge and harmony among consumers and to takegroup measures on issues like consumer laws, supply of information about marketingmalpractices, misleading and restrictive trade practices. Enforcing Consumer Rights: Right to Safety, Right to be Informed, Right to Choose, and Right toRedress.Government policies (Liberalisation, Privatisation and Globalisation) have affected the way consumersbehave. These have given consumers exposure to global and private brands. Media exposure too haveinfluenced their knowledge and perceptions of brands thus shaping their behaviour.Technology and Advertising are key drivers of change in consumer behaviour. Due to advancetechnology and advertising, there are 3 disruptive trends that have changed consumer behavingpattern: Real time informationConsumers have access to real time information and are well-informed. Consumer reviewsConsumers have a platform to share their experiences and thereby influence others. Reviewsalso allow consumers to seek information/ feedback on products. CustomisationTechnology allows customization of products and services as per the requirements of theconsumer.The below changes too have had an impact on consumer behaviour: Traditional to Digital Marketing

Offline to online retailingMobile appCompanies are now more socially responsible. They work towards procuring and disposing off sensibly,be environment friendly. CSR initiatives by companies demonstrates good corporate citizenship whichhelp in gaining trust of the consumers. Such companies focus on ensuring long run best interest of itsconsumers.Successful brand relationships are result of a satisfying brand experience. Experience is consideredsatisfying when there is high value created in the minds of the consumer. Customer trust is key tocustomer retention. The basis of this relationship and trust is the experience. This experience stronglyinfluences consumer behaviour.To sum up ‘Consumer is the King’ and understanding what makes him/her tick is key.Consumers as IndividualsNot all consumers are alike – the marketplace is composed of many different peoples with differentbackgrounds, countries of origin, interests, needs and wants, and perceptions. Needs of consumers aredifferent. Diversity in the marketplace calls for classification or segmentation of the market. Marketsegmentation is an attractive, viable, and potentially highly profitable strategy for marketers.Market segmentation is the process of dividing a market into distinct subsets of consumers withcommon needs or characteristics and selecting one or more segments to target with a distinct marketingmix. In the past, companies would mass market their product i.e. offer the same product and marketing

mix to all consumers. With the widespread acceptance of market segmentation, companies now havespecific products for identified segments e.g. Colgate Max white, Colgate VedshaktiMarket segmentation requires a large enough population with sufficient money to spend (generalaffluence) and sufficient diversity to lend itself to partitioning the market into sizeable segments on thebasis of demographic, psychological or other strategic variables. Media choice is dependent on thesegments targeted by the company. Product range optimization can be executed based on thesegmentation. This also helps create a unique and differentiated proposition for key segments.If all consumers were alike – if they all had the same needs, wants and desires, and the samebackground, education and experience – mass (undifferentiated) marketing would be a logical strategy.Its primary advantage is that it costs less: only one advertising campaign is needed, only one marketingstrategy is developed, and usually only one standardised product is offered. When trying to sell thesame product to every prospective customer with a single proposition/ communication, the marketerends up portraying its product as a means for satisfying a common or generic need. As a result, theproduct often ends up appealing to no one.Different customers have different needs. By segmenting the market and choosing target markets,companies can differentiate their products to provide the benefits that the segments desire. Once amarketer has identified their segment, they can choose media that is targeted to that segment for theiradvertising.Segmentation strategy allows marketers to avoid head-on competition in the marketplace bydifferentiating their offerings, not only on the basis of price but also through styling, packaging,promotional appeal, method of distribution and superior service.Market segmentation is just the first step in a three-phase marketing strategy. After segmenting themarket into homogeneous clusters, the marketer then must select one or more segments to target. Thethird step is positioning the product so that it is perceived by the consumers in each target segment assatisfying their needs better than other competitive offerings.

There are five criteria for effective targeting. A market segment should be:1. identifiable: marketer must be able to see or find the characteristic they have chosen forsegmentation2. sufficient (in terms of size): It must be large enough to be profitable to the marketer3. stable or growing: the consumers are not “fickle” and likely to change very quickly4. accessible (reachable) in terms of both media and cost, and5. congruent with the firm’s objectives and resources.Bases for Consumer SegmentationThis two-by-two matrix is important for understanding types of segmentation schemes. It is possible tobreak segmentation into two broad groups – those that are based on the consumers themselves andthose that are based on the consumers’ interaction or potential interaction with the product and aretherefore consumption based. Within each of these two larger types of schemes, segmentationvariables can be considered to be based on facts or what is absolutely known and measurable about theconsumer versus cognitions, which are abstract and can be determined only through more complexquestioning.

A) Consumer rooted segmentationDemographics are the core of almost all segmentation because they are easy and logical. Inaddition, they are a cost-effective way to reach segments and demographic shifts are easier toidentify than other types of shifts. When researching segmentation and media exposure, aconsumer researcher will learn that media exposure is often directly related to demographics.Age segmentation includes segments such as the baby boomers and generations X and Y.Family life-cycle is based on the premise that many families pass through similar phases intheir lives and share major life events such as moving, marriage, birth of a child, andretirement. Income, education, and occupation tend to tie together and lead to segmentationbased on social class.Geodemographic segmentation is a popular use of geography in targeting. People who liveclose to one another are likely to be similar in tastes, incomes, lifestyles and consumption.They might eat similar foods, like the same movies, and take the same types of vacations.Personality traits help us identify what segments are valuable to marketers. People often do notidentify these traits because they are guarded or not consciously recognized.For instance, if an innovator also classifies themselves high on an “exhibition” personalitytrait, it means they want to be the centre of a group and might be important as these are thetype of innovators to spread word-of-mouth messages regarding new products and services. Consumer innovatorsInnovator is a personality trait where the consumer is open- minded i.e. open to trying newproducts. This person perceives less risk in trying new things. DogmatismDogmatism is a personality trait that measures the degree of rigidity (versus openness) thatindividuals display towards the unfamiliar and towards information that is contrary to theirown established beliefs.Lifestyles or psychographics are based on consumer values. These includes activities,interests, and opinions. Lifestyle explains buyer’s purchase decisions and choices. Whiledemographics tell us the consumer’s ability to buy them and this works for segmentation ofbasic products, but psychographics or lifestyles are based on consumer’s values. Theseshared values, interests, activities, opinions, and interests are an effective way to explainbuyers’ purchase decisions.

VALSVALS is the most popular segmentation system that combines lifestyles and values. You cansee how it is related to Maslow’s hierarchy of needs and the concept of social character. Thesystem looks at three primary motivations and then the resources that individuals might haveto draw upon. The lower resource consumer is at the bottom and labeled survivors while thehighest resource consumer is often the innovator.Socio-cultural values and beliefsSociological refers to the study of groups while Social psychological is the study of how anindividual operates in a group. Anthropological refers to cultural, the influence of society onthe individual. Sociological (group) and anthropological (cultural) variables – that is,sociocultural variables –provide further bases for market segmentation. For example, consumer markets have beensuccessfully subdivided into segments on the basis of stage in the family life cycle, socialclass, core

cultural values, subcultural memberships and cross-cultural affiliation.Marketers need to include segments based on:Cultural values e.g. India – religion, US – fitness and healthSub-cultural membership e.g. Hindu/ Muslim, Asian/ HispanicCross-cultural affiliations e.g. born in one country and live in another, cross culturalinfluenceAn American might identify with common American cultural values, such as fitness andhealth but also with sub-cultural values if they are Hispanic or Asian Americans. In thisglobal world, marketers must often think cross-culturally, including many countries and moreglobal marketing segmentation. A consumer may be cross-cultural if they were born in onecountry and are now living in another.Family life-cycle segmentation is based on the premise that many families pass throughsimilar phases in their formation, growth and final dissolution. At each phase, the family unitneeds different products and services.Social class (or relative status in the community) can be used as a base for marketsegmentationand is usually measured by a weighted index of several demographic variables, such aseducation,occupation and incomeB) Consumption specific segmentationConsumption-specific bases include facts about actual consumption behavior and cognitionsconsumers have about products and services in the form of attitudes and preferences. It is anextremely popular and effective form of segmentation. It categorises consumers in terms ofproduct, service or brand usage characteristics, such as level of usage, level of awareness anddegree of brand loyaltyUsage rate is often based on whether a group of consumers are heavy, medium, light, or nonusersof a product. Many marketers target the heavy consumers since they are often the most loyal andaccount for the largest portion of sales. A company with a strong growth objective might target theother usage segments to fuel their growth in the marketplace. Furthermore, a marketer mighttarget those who are unaware of their product in order to start the process that could lead topurchase.Usage situation based on occasion or situation which often determines what consumers willpurchase or consume e.g. chocolates : Celebration pack vs. Dairy Milk. Usage rate or amount isimportant to some marketers, but it might also be worth considering WHEN a given product is used.This is the basis for a usage-situation segmentation opportunity. People might consume certainproducts for special events, certain days of the week, or certain times during the year. Think of therise of sales in chocolate and flowers for Valentine’s Day.

Benefit segmentation: In many ways, segmentation is tied to the benefits that a group desires fromyour product or service. Knowing these benefits is important for positioning your product in theminds of the consumer. Consumers are constantly weighing the benefits of different types of mediaand noticing that digital media might be preferred in immediacy and accessibility, but thattraditional media often provides more depth and details.Benefit segmentation can be used to position various brands within the same product category e.g.toothpaste, if consumers are socially active, they want a toothpaste that can deliver white teeth andfresh breath; if they smoke, they want a toothpaste to fight stains; if disease prevention is theirmajor focus, then they want a toothpaste that will fight germs; and if they have children, they wantto lower their dental bills.Brand loyalty includes the behavior to the brand – how often somebody purchases the brand, inaddition to the attitude or feeling the consumer has to a brand. Many companies have frequencyaward or loyalty programs where loyal customers receive rewards and benefits for purchasing often.Customer relationships are very complex and differ based on commitment by the customers, theirsense of loyalty, their expectations of specialty treatment, their confidence in the company, andhow they are treated by staff and employees from the company. Brand loyalty includes: Behaviour (frequency of purchase) Attitude (disposition/ affiliation to the brand)Frequency award programs are popular e.g loyalty cards. Customer relationships can be activeor passiveMicro-targeted began in 2004 and is growing field within marketing. It is growing due to themarketer’s ability to use complex databases and personalized media including email and mobilephones. Micro-targeting focuses on delivering a personalized advertising message to the userwhether they are at work, at home, or on-the-go.The premise behind market segmentation is that each targeted segment receives a speciallydesigned marketing mix, that is, a specially tailored product, price, distribution network, and/orpromotional campaign. Concentrated marketing usually involves only one segment, whereas adifferentiated marketing strategy is targeting several segments with individual marketing mixes.Differentiated marketing is usually us

The term consumer behaviour is defined as the behaviour that consumers display in searching for, purchasing, using, evaluating and disposing of products and services that they expect will satisfy their needs. Consumer behaviour focuses on how individuals make decisions to spend their available