4. Special Studies in Marketing

BMS 2012

Reema Rijhwani

Consumer Behavior

Definition

Study of individuals or groups acquiring, using and disposing of products, services, ideas, or experiences

Includes search for information and actual purchase

Includes an understanding of consumer thoughts, feelings, actions, perceptions, brand image etc

Reasons to study Consumer Behavior

• From organizing by product units to organizing by customer segments

• Focusing on profitable transactions than focusing on customer lifetime value

• Focusing on not just the financial scorecard but also on the marketing scorecard

• From shareholders to stakeholders

• Spreading from marketing team to the entire organization for best consumer service

• From building brands via advertising to building brands through performance

• Customer acquisition to customer retention• Customer satisfaction measurement • Competition and wide choices• To gain competitive advantage• To anticipate business/consumer solutions

Organization Chart

Traditional Modern Consumers

Top Management

Middle Management

Front Line Staff

Product Levels (Consumer Expectations)

Types Of Needs/Benefits

SEEK… health, time, money, popularity, better appearance, security, praise, comfort, leisure, pride, advancement,

acceptance, enjoyment, self-confidence, prestige, status.

BE… good parents, social, hospitable, up-to-date, creative, influential, gregarious, efficient, trend setting, authorities, house-proud.

SAVE… time, money, work, discomfort, worry, doubts, risks, embarrassment.

People want to …..

DO… express their individuality, resist domination, satisfy curiosity, emulate idols, appreciate beauty, acquire/collect things, win affection/love, improve themselves.

Consumer ResearchCR is undertaken to – • Know the psychology of how consumers think, feel,

reason, and select between different alternatives (e.g., brands, products, and retailers)

• Know how the consumer is influenced by his or her

environment (e.g., culture, family, signs, media)

• Understand the behavior of consumers while shopping

• Understand limitations in consumer knowledge or information processing abilities influence decisions and marketing outcome

• Check how consumer motivation and decision strategies differ between products that differ in their level of importance or interest that they have for the consumer

• Know how marketers can adapt and improve their marketing campaigns and marketing strategies to more effectively reach the consumer.

CB Study

Overall Model of Consumer Behaviour

Self-Concept&

Learning

Decision ProcessesExternal Influences

Internal Influences

CultureSubcultureDemographics

Social statusReference groups

FamilyMarketing Activities

PerceptionLearningMemoryMotives

PersonalityEmotionsAttitudes

Problem Recognition

Information Search

Alt Eval & Selection

Purchase

Postpurchase Processes

Factors Influencing CB

1. Cultural Factors

2. Social Factors

3. Personal Factors

4. Psychological Factors

1. Cultural Factors • Culture – Family, by birth

• Sub culture – religious, racial groups etc • Social class – Sharing same values, behave

homogenous

2. Social Factors• Reference groups (Direct Contact - Membership

Group *Primary Group, *Secondary Group)• (Indirect Contact - Associative Group, Dissociate

Group, Opinion Leader)

• Family – Orientation & Procreation

• Roles & Statuses

3. Personal Factors• Age & Stage in FLC

FLC – Family Life Cycle Bachelor Stage, Newly Married Couple, Full Nest I, Full

Nest II, Full Nest III, Empty Nest I, Empty Nest II, Solitary Survivor I, Solitary Survivor II

• Occupation & Economic Circumstances

• Personality & Self Concept – Personality traits, marketers must get a matching brand personality

• Lifestyle – AIO & Psychographics (VALS)

AIO – Attitudes, Interests & Opinions

• Psychographic profile of market segment• Combine demographic characteristics with

lifestyle measurement• Asking certain statements to determine AIO –

I would prefer to stay at home than go out?Which books do you prefer?

Psychographics – VALS Model

4. Psychological Factors • Perception - Selective Attention - Selective Distortion - Selective Retention

• Learning – Drive, Cues, Discrimination

• Beliefs and Attitudes

• Motivation – Maslow’s Theory & McClelland's Theory

Maslow’s Motivational Theory

McClelland's Theory of Need

Need for Power – High on power, risk, control, goal, task oriented, effective negotiator, positive or negative in nature

Need for Achievement – Motivated, seek personal success than rewards & success, risk but in degree, seek to excel

Need for Affiliation – co-operating emotional bonds, no risk taker, organization goals more important, wants to be liked by people, sense of belonging

Consumer Decision Making Models

1. Buying Process

Problem Recognition

Post Purchase Behavior

Purchase Decision

Evaluation of Alternatives

Information Search

• Problem Recognition – Internal & External Stimuli Marketers should incite this stimulus

• Information Search – attention and active search – drawn from sources (commercial, public, personal & experience)

Marketers should cater to all relevant info points

• Evaluation of alternatives – perception, belief, attitudes, brand image etc

Marketers try brands/products to be in sync or alter them for consumer benefit

• Purchase Decision – situation and other peoples opinion

• Post purchase Behavior – Satisfaction, actions, use & disposal

Marketers use this to derive strategies, communication etc

2. Health Model

Pre-contemplation

MaintenanceAction

PreparationContemplation

3. Consumer Activity Model Pre“Deciding what to do”

During “Doing it”

Post“Keep it going”

Consumer ResearchDefinition• The systematic and objective process of gathering,

recording, and analyzing data for aid in understanding and predicting consumer thoughts, feelings, and behavior

• In global environment, research has become utmost important

• Consumer Research an important study in market research

• Domain - Primary and Secondary Research

• Types - Quantitative and Qualitative Research

• Primary Methods – Surveys, Behavioral (Focus Groups, Personal Interviews, Projective Technique, Observation, Moles, Online, Scanner), Experimental

• Secondary Research - Internal Sources, Government Publication, Periodicals & Books, Commercial Data

Buying Behavior

• Buying Roles

- Initiator - Influencer - Decider - Buyer - User

Consumer Involvement ……cont

• Complex Buying Behavior – Beliefs, attitudes for brands, products, risky and high investment. Eg. Automobiles, heavy equipments, IT services etc

• Dissonance Reduced Buying Behavior – High investment, infrequent, narrow down to various parameters – product, brand or company wise. Eg. Mobiles phones

• Variety Seeking Buying Behavior – Brand switching, probably satisfied but seek variety, shelf space & advtg & availability important to ensure sales. Eg. Creams

• Habitual Buying Behavior – Routine, passive recipient of information, brand familiarity than brand conviction FMCG categories like soaps, shampoos, juices etc.

Adoption Process / Innovation Diffusion

1. Innovator who make up 2.5% of all purchases of the product, purchase the product at the beginning of the life cycle. They are not afraid of trying new products that suit their lifestyle and will also pay a premium for that benefit.

2. Early Adopters make up 13.5% of purchases, they are usually opinion leaders and naturally adopt products after the innovators. This group of purchasers are crucial because adoption by them means the product becomes acceptable, spurring on later purchasers.

3. Early Majority make up 34% of purchases and have been spurred on by the early adopters. They wait to see if the product will be adopted by society and will purchase only when this has happened. They early majority usually have some status in society.

4. Late Majority make up another 34% of sales and usually purchase the product at the late stages of majority within the life cycle.

5. Laggards make up 16% of total sales and usually purchase the product near the end of its life. They are the ‘wait and see’ group. They wait to see if the product will get cheaper. Usually when they purchase the product a new version is already on the market. Some may call Laggards, bargain hunters!

Thank You