cb unit-i (consumer in market place)

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By :

Prof. Amit Kumar

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Course: Consumer Behavior

Unit-1 Consumer in the Marketplace

Unit-2 Models of Consumer Behavior

Unit-3 Cultural Influences on Consumer Decision making

Unit-4 Sociological Influences on Consumer Decision making

Unit-5 Personal / Individual Influences on Decision making

Unit-6 Psychological Influences on Decision making

Unit-7 Consumer Decision Making Process

Unit-8 Consumer Influence & Diffusion of Innovation

Consumer Behavior

IILM-Graduate School of Management

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Consumer Behavior Consumer in Marketplace


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Contents

• What is Consumer Behavior?• Why Should Marketers Study Consumer Behavior?• Types of Buyer Behavior• Consumer Decision making process• Consumer Benefits, Total Product Concept• Consumer Segmentation, Targeting & Positioning• Organisational Buyer Behaviour• Case-Study: ‘M/s Duleath Ltds- Durcom Shoes’



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“Why do consumers do what they do in the marketplace when they do it? This is the underlying question in the study of consumer behavior. You can’t attempt to answer this question without first defining who ’consumers’ are and what is meant by the ‘marketplace', especially as we leap into the nonstore electronic and ‘dotcom’ world. Further, how do marketers find consumer? How do consumers find products and services to meet their needs?”


Introduction


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Consumer Behavior Self Analysis • What kind of product did you buy? Brand name?• Why did you buy the product? What triggered the desire

to make the purchase?• What other brands did you consider purchasing?• What information sources were consulted before making

the purchase?• What information sources were most influential and

why?• Why did you choose the brand you purchased (what

criteria did you base your decision on)?



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Analyzing Consumer Behavior

“Marketing is an organizational function and a set of processes for creating, communicating, and delivering value to customers and for managing customer relationships in ways that benefit the organization and its stakeholders.”

- AMA


The aim of marketing is to meet and satisfy target customers’ needs and wants better than competitors.


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The marketers are always looking for emerging trends that suggest new marketing

opportunities. The metro sexual is one.


Metrosexuals - a combination of the words metropolitan and heterosexual, especially one livingin a post-industrial, capitalist culture - has a strong concern for his appearance or a lifestyle…


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In the summer of 2003, some marketing pundits proclaimed the existence of a new male market-the “metrosexual”- which was defined as straight urban men who enjoy such things as shopping and using grooming products and services. English Soccer star David Beckham has been touted as the metrosexual icon. He is not afraid to wear nail polish or sarongs (off the field).


One researcher estimated that 30 to 35 percent of young American men exhibit metrosexual tendencies, as evidenced in part by their

purchase of products such as skin care cream and fragrances.


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Emergence of this market has been a boon for men’s grooming products, fueling the success of brands such as Unilever’s Axe, a fragrant all over body spray, The Body Shop’s “For Men” line, and U.K drugstore chain Boots’ newly opened Men’s Zones.



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Gaining a through, in-depth consumer understanding helpsto ensure that right products are marketed to the right

consumer in the right way.


Successful marketing requires that companies fully connect with their customers. Adopting a holistic marketing orientationmeans understanding consumers-gaining a 360-degree view

of both their daily lives and the changes that occur during their lifetimes.


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What is Consumer Behavior ?

• Consumer behavior is the study of how individuals, groups, and organizations select, buy, use and dispose of goods, services, ideas or experiences to satisfy their needs and wants.

• Studying consumer behavior provides clues for improving or introducing products or services, setting prices & developing other marketing strategies.



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Needs, Wants & Demands

• Needs are basic human requirements.

– Stated needs, the customer wants an expensive car

– Real needs, customer wants a car whose operating cost is low

– Unstated needs, customer expects good service from the dealer

– Delight needs, customer would like the dealer to include onboard navigation system

– Secret needs, customer wants to be seen by friends as a savvy consumer

• Needs become wants when they are directed to specific objects that might satisfy the need.

• Demands are wants for specific products backed by an ability to pay.

Do marketers create needs ? How consumer evaluates the wants? (Concept of value proposition)

If V.P for Coke is high then consumer wants Coke



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Maslow’s Hierarchy of Needs

• Maslow sought to explain why people are driven by particular needs at particular times.• Why does one person spend considerable time & energy on personal safety and other..• Human needs are arranged in a hierarchy, from the most pressing to the least pressing.• Theory helps marketer understand how product fit into the plans and lives of consumers.• A motive is a need that is sufficiently pressing to drive the person to act.



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Value and Satisfaction• Value proposition: a set of benefits they offer to customers to satisfy

their needs.

• Value can be seen as a combination of qsp.

• Value = Benefits/ Costs = (Functional Benefits +Emotional Benefits)

(Monetary Costs + Time Costs+Energy Costs+ Psychic Costs)• Value of customer offering can be increased by:

• Raise benefits• Reduce costs• Raise benefits AND reduce costs• Raise benefits by MORE THAN the raise in costs• Lower benefits by LESS THAN the decrease in costs



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Why Should Marketers Study Consumer Behavior?

• To better understand the customer• To develop better marketing mix (Product, Price, Place,

Promotion, People, Process, Physical Evidence) strategies



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Participants in Buying Behavior

• Initiator: the person who first suggests or thinks of the idea of buying a particular product or service.

• Influencer: a person whose views or advice carry weight in making the final buying decision

• Decider: the person who ultimately makes the final buying decision or any part of it

• Buyer: the person who makes the actual purchase

• User: the person who consumes the product or service

Other people often influence a consumers purchase decision. The marketer needs to know which people are involved in the buying decision and what role each person plays, so that marketing strategies can also be aimed at these people.

Think about your past purchase– who was in which role?



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Types of Buyer Behaviour

1. Complex buyer behaviour e.g. Intel Pentium Processor

2. Dissonance-reducing behaviour (brand reduces after-sales discomfort)

3. Habitual buying behaviour e.g. salt - little difference

4. Variety seeking behaviour - significant brand differences e.g soap powder

Fairly large in amount or quantity, likely to have a major effect



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Stages in Consumer Decision Making Process• Problem Recognition - recognizes a need for something

(discrepancy between actual and desired state)• Information Search – searches for alternatives to satisfy the need

(internal and external sources)• Alternative Evaluation – evaluates alternatives

(evaluative criteria)• Purchase Decision – selects alternative which bests meets

evaluative criteria• Postpurchase Evaluation – reevaluates product as he/she uses it

(cognitive dissonance)



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What New Car Buyers Consider Important



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• People do not buy products & services ,they buy benefits. That is ,we make purchases not for the products themselves, but for the problems they solve or the opportunities they offer.

• We each seek different benefits. The athlete who buys a brand-name sports watch that keeps perfect time and works under water is looking for very different from the person who receives an inscribed watch as an anniversary gift. In practical, the two watches serve an identical purpose-they both tell the time-but other benefits they offer differ widely.

Consumer Benefits

lines forming a design


A business executive who takes his cloths to a laundry service

is buying not just clean shirts but a sharp professional image.


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• Consumer Benefits are those positive factors that the consumer obtains as a result of the possession and/or use of a product or service. (Tangible & Intangible benefits)

• Consumers seek bundles of types of benefits:– Tangible benefits: e.g., a watch keeps good time; has leather

band– Intangible benefits: e.g., the “reliability” reputation of the watch

manufacturer; the image of the watch wearer

Consumer Benefits




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In fact, people do not really buy ‘goods’ and ‘services’; they buy ‘benefits’ that these goods and services provide.

Thus, when consumers buy toothpaste, they are really buying healthy teeth and gums, or fewer trips to the dentist, or fresh breath, or a bright, happy smile.

Consumer Benefits




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From a buyer’s point of view, each marketing tool is designedto deliver a customer benefit.

Seven Ps Seven Cs

1. Product Customer Solution/Choice2. Price Customer Cost3. Place Convenience4. Promotion Communication5. People Consideration6. Process Consistency7. Physical Evidence Confirmation

Consumer Benefits



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• Every product has four components: a basic core of functional benefits, an accessory ring of added-value benefits, a psychological ring of benefits tied to consumer feelings, and the benefits of the time saved or taken by the product.

Total Product Concept

Basic Core

Accessory Ring

Psychological Ring



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• Basic core of a laptop computer is design, features, memory, speed, operating system, installed software, warranty etc. offered by the seller.

• Accessory benefits include such ‘added-value’ factors as store reputation, convenience of location etc. also friendliness of sales person, ease of parking, or quick service also fall into this category. These benefits are not paid for, yet they are part of what is received.




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• A sense of belonging derived from using the same brand of laptop as your friend is a psychological benefit. Buying a new innovative product in order to feel that you are ahead of the crowd is another example.

• The fourth element shown is time. Everything we purchase either saves time or takes time from us. Eating at a fast-food outlet rather than an elegant restaurant saves an hour or more. – However the value of saving time depends upon the perspective of

the consumer-to some people taking time shopping to find the perfect item is time well spent, whereas to others it is time wasted.




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Consumer Behavior & Market Segmentation

• Market segmentation is the process of classifying a market into distinct subsets (segments) that behave in similar ways or have similar needs.

• Dividing a market into smaller groups of buyers with distinct needs, characteristics, or behaviours, who might require separate products or marketing mixes

• If all consumers respond the same way, then there should be no need to segment a market



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Segmenting Consumer Markets

• Geographic: dividing a market into different geographical units, such as national, regional, local, city size, density of population, and climate

• Demographic: dividing the market into groups based on demographic variables such as age, sex, family size/ life cycle, income, occupation, education, religion, and ethnic origin

• Psychographic: dividing a market into different groups based on social class, lifestyle, or personality characteristics

• Behavioural: dividing a market into groups based on purchase occasion, benefits sought, user status, usage rate, loyalty status, readiness state, and attitude towards the product



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Organisational Buyer Behaviour

‘The decision-making process by which formal organisations establish the need for purchased products and services, and identify, evaluate, and choose among alternative brands and suppliers’

Kotler and Armstrong 1989



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Understanding Business/Industrial Market

Buying and selling of goods and services not only takes place between a consumer and a firm but also between two firms or businesses. A firm may buy raw material from the other firm or business to process it further or it may buy finished goods or even services to sell them to the consumers under its brand name.

For example, Britannia Industries Limited buys flour from many flour mills to make biscuits, which are finally sold in the consumer.



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Characteristics that makes Business Market unique

• Market structure and demand (In a consumer market, there are usually many buyers, i.e. individuals or households. However, these buyers buy in less quantity. But a business market contains a few but large buyers who buy in bulk)

• Nature of the buying unit (key players involved include technical experts, management and business market experts and finally well-trained sales persons.)

• Types of decisions and decision process (more complex decisions)

• Major types of buying situations (straight re-buy, modified re-buy, new task situation, systems buying )

• Participants in Business-buying process• The Business Buying process



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Organisational Buyer Situations

Some of the organizational buying situations are:

1. Straight rebuy

2. Modified rebuy

3. New task buy

4. Systems buy – Systems buying is a process in which the organization gives a

single order to a single organization for supplying a full system. The buying organization knows that no single party is producing all the units in the system. But it wants the system seller to engineer the system, procure the units from various vendors and assemble, fabricate or construct the system.



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Organisational Buyer Situations

Participants in Business Buying Process:

1. User - The persons who use the item. Say for safety gloves the operators.

2. Initiators - The safety officer may initiate the request for the purchase.

3. Influencers - Safety officer may himself define specifications or an industrial engineer

4. Buyers - Person who actually do the buying transaction

5. Gatekeepers - The receptionist, the secretaries or finance dept. etc.

6. Deciders - People who decide on product requirements and suppliers.

7. Approvers - The personal manager may have the power to approve



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Business Buying ProcessBusiness buying process is much more complex than consumer buying process. It usually consists of eight stages and take quite a bit of time before adecision is finally made. The different stages are:

1. Problem/Need recognition 2. General need description – general characteristics & quantity of required

item3. Product specification – specifies best technical product characteristics for

item 4. Supplier search – try to find best vendors.5. Proposal solicitation – buyer invites qualified suppliers to submit proposal6. Supplier selection – buyer reviews the proposals and select a supplier (s) 7. Order-routine specification – buyer decides & specifies the details of order

(Quantity, expected time of delivery, warranties, return policies etc)8. Performance review – final stage where the buyer rates his/her satisfactions

with suppliers and decides whether to continue, modify or drop them.



cb unit-i (consumer in market place)

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