segmentation, targeting and positioning +consumer behavior

1. Market Segmentation, Targeting and
Positioning
&
Consumer Behaviour
Tatwamasi
Rachel Mathew
Durgesh
Shabaz
PGDM AIMA 2013-15

2. Market segmentation
12/6/2014 2

3. Introduction
• Market segmentation – extension of marketing concept in the latter
part of 1950’s.
• All existing and potential consumers are not alike. – needs, wants,
tastes, background, income, education and experience etc.
• Heterogeneous market
• Companies divide such markets into groups of consumers or segments
it can serve effectively.
12/6/2014 3

4. Definition
• According to Philip Kotler , “ Market segmentation is sub-dividing a
market into distinct and homogeneous subgroups of customers,
where any group can conceivably be selected as a target market to
be met with distinct marketing mix.”
• Market segment is a portion of a larger market in which the
individuals, groups or organizations share one or more
characteristics that cause them to have relatively similar product
needs.
• Three decision process comprising market segmentation, target
marketing, and positioning are closely related and have strong
interdependence.
12/6/2014 4

5. HORLICKS(GSK)
JUNIOR HORLICKS
NEW HORLICKS
LITE
WOMEN’S
HORLICKS
12/6/2014 5

6. EFFECTIVE SEGMENTATION CRITERIA
5 CONDITIONS:
 A marketer must determine whether the market is heterogeneous.
 Some logical basis to identify and divide the population into relatively
distinct homogeneous groups. Difference in one market segment should
be small compared to differences across various segments.
 The total market should be divided in such a manner that comparison of
estimated sales potential, costs, and profits of each segment can be done.
 One or more segments must have enough profit potential that would
justify developing and maintaining a marketing programme.
 It must be possible to reach the target segment effectively.
12/6/2014 6

7. Niche market
• A market niche is composed of amore narrowly defined group of consumers who
have a distinct and somewhat complex set of needs.
• A niche market is smaller in size but may prove to be quite profitable if served
properly.
• Consumers in a niche are ready to pay a premium to the marketer who best
satisfies their needs.
• PC- large market segment ; Apple- Niche market.
12/6/2014 7

8. BASIS FOR SEGMENTATION
• A segmentation variable is a characteristic of individuals ,groups or
organizations that marketer use to divide and create segments of the
total market.
• Segmentation descriptors fall under 4 major categories and includes:
 geographic variables focuses on where the customers are located.
 demographic variables identify who the target customers are.
 psychographic variables refer to lifestyle and values.
 behavioristic variables identify benefits customer seek, and product
usage rates.
12/6/2014 8

9. SEGMENTATION VARIABLES
GEOGRAPHIC VARIABLES
• Region Nation
• Urban, Rural State
• City Size
Climate
• Terrain
Market density
DEMOGRAPHIC VARIABLES
• Gender Family size
• Age
Occupation
• Race Family life
cycle
• Religion Income
• Social class Education
12/6/2014 9

10. Contd.…
PSYCHOGRAPHIC VARIABLES
• Personality attributes
• Motives
• Lifestyle
BEHAVIOURISTIC VARIABLES
• Usage volume, Occasion
• End use
• Benefits sought
• Brand Loyalty
• Price sensitivity
12/6/2014 10

11. GEOGRAPHIC SEGMENTATION
 Geographic segmentation focuses on dividing markets into different
geographic units such as regions, nations, states, urban , rural etc.
 The company can operate in one or few areas.
 Grassroots marketing – concentrate on getting as close and personally
relevant to individual customers as possible.
 It is used both in consumer and organizational markets , particularly where
customers are not willing to travel far to acquire goods and services.
 It is important for designing physical distribution and logistics operations.
 For Example : Jeeps are more popular in rural areas in India than in urban
areas.
12/6/2014 11

12. DEMOGRAPHIC SEGMENTATION
• In Demographic segmentation we divide the market on variables such as age, gender,
income, education, occupation, family size etc.
• Demographic factors are often associated with consumer needs and wants.
• They are easy to measure.
• For Example:
 Toy manufacturers such as Funskool and Mattle toys segment the market on the
basis of age of the children.
 Auto manufacturers segment the market by considering income as an important
variable.
 Shaving Products for women are based on demographic value of gender.
12/6/2014 12

13. DEMOGRAPHIC SEGMENTATION
• AGE AND LIFE CYCLE STAGE –
Consumer needs and abilities change with age.
Toys, books, magazines, digital games, candies, chocolates, biscuits, fruit
juices, and packaged goods – children and younger people.
12/6/2014 13

14. DEMOGRAPHIC SEGMENTATION
• LIFE STAGE –
LIFE STAGE DEFINES A PERSON’S MAJOR CONCERN.
FURNITURE, KITCHEN APPLIANCES, SAVINGS-CUM-INSURANCE SCHEMES,
12/6/2014 14

15. DEMOGRAPHIC SEGMENTATION
• GENDER –
Men and women behave differently and have different attitudes, based
partly on genetic makeup and partly on socialization.
12/6/2014 15

16. DEMOGRAPHIC SEGMENTATION
• INCOME-
Income determines the ability of consumers to participate in the market
exchange.
Income does not always predict the best consumers for a given product.
12/6/2014 16

17. DEMOGRAPHIC SEGMENTATION
• SOCIO-ECONOMIC CLASSIFICATION – to classify urban households in
India.
Based on – education level and occupation of head of household.
Developed under the initiative of MRSI- Market Research Society of India
12/6/2014 17

18. Illiterat
e
School up to 4
years School 5–9 years SSC/HSC Some college but
not graduate
Graduate/Postgrad
uate general
Graduate/Post
Graduate
professional
Unskilled E2 E2 E1 D D D D
Skilled Workers E2 E1 D C C B2 B2
Petty traders E2 D D C C B2 B2
Shop Owners D D C B2 B1 A2 A2
Businessmen with No
employees D C B2 B1 A2 A2 A1
Businessmen with 1-9
employees C B2 B2 B1 A2 A1 A1
Businessmen with 10+
employees B1 B1 A2 A2 A1 A1 A1
Self Employed professional D D D B2 B1 A2 A1
Clerical/Salesman D D D C B2 B1 B1
Supervisory Level D D C C B2 B1 A2
Officers/Executives-Junior C C C B2 B1 A2 A2
Officers/Exe1cu2/t6iv/2e0s1-M4 id/Senior B1 B1 B1 B1 A2 A1 A1 18

19. DEMOGRAPHIC SEGMENTATION
• GENERATION –
Each generation is profoundly influenced by the times in which it grows up.
The younger generation plays an important role not only as consumers but
also as initiators and influencers of buying decisions.
12/6/2014 19

20. Geo – demographic segmentation
• Both geographic and demographic descriptors.
• Based on the premise that people who live close to one another are likely to have
similar economic status, tastes, preferences, lifestyle and consumption behaviour.
• For example – retailers who propose to open new stores are interested in
knowing something about the people who live within a defined area whom they
aim to target.
12/6/2014 20

21. PSYCHOGRAPHICS SEGMENTATION
• When segmentation is based on personality , lifestyle or values
characteristic is called psychographic segmentation.
• For Example :
 Some motorcycle manufacturers segment the market on the basis of
personality variables such as macho image , independent, and
impulsive.
 Some producers of liquor, cigarettes, apparel, etc. segment the
market on the basis of personality and self-image.
12/6/2014 21

22. Lifestyle
• It is the indicator of how people live and spend their time
and money. What people do in their spare time is often a good
indicator of their lifestyle.
• Consumers in different countries have different lifestyles.
• In a study by Rebecca Piirto of fashion consumers found 6
major groups: yesteryears(older customers), power
purchasers(married households with college degrees), fashion
foregoers, social strivers, dutifuls (highly practical) and
progressive patrons(high income/quality buyers).
For Example:
 Indian women are home focused, less likely to visit
restaurants , more price sensitive , spend time preparing
meals, fond of movies. 12/6/2014 22

23. Lifestyle
• Psychographics or lifestyle studies generally include the following:
Attitudes include evaluative statements about people, products,
ideas, places, etc.
Values refer to widely held beliefs about what is
right/acceptable/desirable, etc.
Activities and interests cover behaviours with respect to activities
other than occupation to which consumers devote time and effort.
Demographics cover gender, age, education, occupation. Income,
family size. Etc
Media preferences describe which specific media the consumer
prefer and use.
Usage rate focuses on measurements of consumption level within a
12/6/2014 23

24. 12/6/2014 24

25. • General lifestyle studies can be used to spot new product
opportunities while product specific lifestyle analysis may
help repositioning decisions regarding existing brands.
12/6/2014 25

26. VALS (Values and lifestyle)
• Stanford Research Institute (SRI) developed a popular approach to
psychographics segmentation called VALS.
• Researchers faced some problems with this method and SRI
developed the VALS 2 programme in 1978.
• VALS 2 puts emphasis on psychological base to tap relatively enduring
attitudes and values.
• 42 statements are given with which they are required to state a
degree of agreement or disagreement.
• VALS2 has two dimensions. They are-
1. Self orientation – determines the type of goals and behaviours that
individuals will pursue and refers to pattern of attitudes and
activities which helps individuals reinforce, sustain, or modify their
social self image.
12/6/2014 26

27. 2. Resources - reflects the ability of individual to pursue their
dominant self –orientation that include the full range of physical ,
psychological , demographic and material means such as self-confidence
, interpersonal skills , intelligence, eagerness to buy etc.
• SRI has identified 3 basic self-orientation:
• Principle oriented individuals are guided in their choice by their beliefs
and principles and not by feelings, desires and events.
• Status-oriented individuals are heavily influenced by actions, approval
and opinions of others.
• Action-oriented individuals desire physical and social activity, variety
and risk taking.
 VALS2 divides the consumers into 8 groups.
 It suggests that a consumers purchases certain products and
services because the individual is a specific type of person
12/6/2014 27

28. 12/6/2014 28

29. • ACTUALISERS-
established or getting
established leaders.
Sophisticated and active with
high self esteem.
Image is important.
Interested in growth and seek
to develop, explore, express.
Open to social change
Guided by principles and desire.
Fond of reading but not of TV
Skeptical of advertising
• PRINCIPLE – ORIENTED –
• EXHIBIT BEHAVIOUR ACCORDING
TO THE VIEWS OF HOW THE
WORLD IS OR SHOULD BE.
FULFILLEDS –
 Mature in their outlook.
Well-educated, reflective people. Value
knowledge , order and responsibility.
 Like their home and family.
 satisfied with their careers and enjoy their leisure
activities.
 nearly 50 % fulfilleds are in their 50’s.
 Open-minded
 As consumers- conservative and practitcal
 Purchase products for durability , functionality
and value.
12/6/2014 29

30. BELIEVERS –
largest segment
Not well-educated.
Moral code of conduct deeply
rooted in their psyche and is
inflexible.
Routines are established and
largely influenced by home, family,
religion and social organization.
As consumers- predictable and
conservative.
Income is modest.
Fond of TV and less reading.
• STATUS ORIENTED-
• VALUE A SECURE PLACE IN THE
SOCIETY.
ACHIEVERS –
Choices based on desire to
enhance their position or facilitate
their move to another group’s
membership for which they aspire.
 more resourceful and active.
Seek recognition and self-identity
High economic and social status.
12/6/2014 30

31. STRIVERS –
Dependent on others to indicate
what they should be and do.
Blue-collar workers.
Self definition is based on approval
and opinion of others.
Impulsive, get bored easily, unsure of
themselves
Low on economic, social and
psychological resources
Attempt to appear stylish.
Read less; prefer TV
• ACTION ORIENTED –
EXPERIENCERS
young ; full of vitality; enthusiastic;
impulsive ; rebellious.
college educated
most of income is disposable
disregard for conformity and
authority
amazed at and impressed with others
wealth, prestige and power.
seek excitement and variety ; risk
taking
Values and behaviour is under
process.
 fond of outdoor recreation , sports
and social activities.
Heavily spend on clothing, music and
fast food.
12/6/2014 31

32. • STRUGGLERS –
Second largest group
Includes households with low
income
Narrow interest
Low level of resources
Ill-educated ; strong special bonds;
low skilled ; chronically poor and
concerned of declining health
Feel powerless and unable to
make an impact
Strongest brand loyalties ;
cautious ; represent only a modest
market
A lot of TV
Women’s magazines and tabloids.
12/6/2014 32

33. Behaviouristic Segmentation
• Dividing the market on the basis of such variables as use occasion,
benefits sought, user status, usage rate, loyalty status, buyer
readiness stage and attitude is termed as behaviouristic segmentation.
• Buyers can be identified according to the use occasion when they
develop a need and purchase or use a product.
• User status, brand loyalty, level of product awareness and attitude.
For Example:
Archies greeting cards are used on many different occasion.
12/6/2014 33

34. BENEFIT segmentation
• Identifying consumer groups looking for specific benefits from the
use of a product or service is known as benefit segmentation.
• Benefit segmentation has the potential to divide markets according to
why consumers buy a product.
• Benefits sought by consumers are more likely to determine purchase
behaviour than are descriptive characteristics.
12/6/2014 34

35. Principal Benefit Sought Psychographic
Characteristics
Behavioural
Characteristics
Demographic
Characteristics
Brands Much
Favoured
Brightness of teeth(cosmic) Outgoing, active
fun –loving, high
sociability
Smokers Teenagers,
youngsters
Close-up,
Promise,
Aquafresh
Decay prevention(medicinal) Health conscious Heavy users Large families Pepsodent,
Colgate Total
Taste(good taste, flavour) Self –indulgent ,
hedonistic
Mint lovers Children Aquafresh,
Colgate
Low Price(economy) Price-conscious,
independent
Heavy users, deal
prone
Men, traditional Neem, Babool,
Vicco
Vajradanti
Benefit Segmentation of Toothpaste Market
12/6/2014 35

36. Demographic-psychographics segmentation
(hybrid approach)
• Combined characteristics reveal very important information about
target markets.
• Useful in creating consumer profiles and audience profiles.
• Reveal important information for segmenting mass markets; type of
promotional appeal; right kind of advertising media.
12/6/2014 36

37. Segmentation variable for organizational
markets
• Geographic location – customers location
• Customer size – based on number of production facilities, sales volume, no. of
sales offices, no. of employees.
• Product use – on the basis of type of use.
• Type of organization – segment market based on industry
• Buying behavior and situation – degree to which buying activity is centralized.
12/6/2014 37

38. Targeting Market Segments
• Establish criteria to measure market attractiveness and business
strength position.
• Evaluate market attractiveness and business strength factors to
ascertain their relative importance.
• Assess the current position of each potential segment on each factor
• Project the future position of each segment based on expected
environmental, customer, and competitive trends
• Evaluate Segment Profitability.
• Evaluate implications of possible future changes with respect to
strategies and requirement of resources.
12/6/2014 38

39. Segment attractiveness and business strength
factors
• Attractiveness evaluated on the company’s current strength and
market potential assessment.
• Determining the segment attractiveness requires the degree of
unmet or partially met customer needs.
• It also involves the marketer estimate of the segment size, growth
rate, and the influence of various macro environmental factors that
influence the demand in the market segment.
12/6/2014 39

40. Continued…
• Assess Each Factor to identify Segment Attractiveness - Each of the
factors should be assigned a numerical weight to denote the
factor’s relative importance in overall assessment.
• Rate market segments on each factor – requires quantitative and
qualitative data; detailed analysis of major competitors ; evidence
of success
• Assess segment profitability – enter a smaller segment if the
customers are prepared to pay a price premium for a product or
service.
• Plot future position for each segment – 3 to 5 yrs.
• Choose target segments and allocate resources – segment is
atleast strongly positive on one of the two dimensions of market
12/6/2014 attractiveness. 40

41. Targeting Strategies
• Undifferentiated Mass Marketing- ignoring any differences among
consumers and offer one product or service to the entire market
• Focuses on what is common in the needs of the consumers.
• Provides cost economies ; appropriate for uniform products
• Coco – cola ; Rooh afza
• Differentiated multiple segment marketing - enter several market
segments and develops separate offers for each.
• Expect higher sales and stronger market position ; increases cost
• Products vary in design
• Maruti ; pepsi ; coco-cola
• Single segment specialization or Niche marketing – appeals to firms
with limited resources.
• Small market – large share
• More than normal risks ; meet specialized, unique and somewhat complex sets
of need
• Recycled paper producers ; Oshkosh Truck
12/6/2014 41

42. Why product positioning?
• Numerous options in almost all product categories.
• Numerous marketing related messages
• Create a distinct and persuasive product or service image
• Guides marketing strategy by
• Clarifying brand’s essence
• Identifying the goals
• Showing how it achieves these goals
12/6/2014 42

43. Product positioning
• According to Smith and Lusch, product position refers to the objective
attributes in relation to other products.
• Brand positioning and product positioning usually mean the same
thing.
• Brand position refers to subjective attributes in relation to competing
brands and this perceived image of the brand does not belong to the
product but is the property of the consumers’ perceptions of the brand.
• Decision reached by a marketer to try to achieve a defined brand image
relative to competition within a market segment.
• Strategic decisions and have long term impact. – customer focused
value proposition
• The perception is governed by the individual’s need, values, beliefs,
experience and environment.
12/6/2014 43

44. Examples of Value Proposition
Brand, company,
product
Target customers Benefits Value proposition
Mahindra Scorpio(SUV) Consumers interested in
lifestyle products
Ruggedness, luxury and
comfort
A vehicle that provides
the luxury and comfort
of a car and the
adventure and thrill of
an SUV
Hidesign( Leather nags
and other fashion
accessories)
Fashion-conscious
consumers
Durability, style and
aesthetic appeal
Fashion accessories that
communicate luxury and
style
Domino’s (pizza) Convenience-minded
pizza lovers
Delivery speed and good
quality
A good hot pizza
delivered to your door
within 30 minutes of
odering
12/6/2014 44

45. Product positioning
• Positioning is the perception of a brand or product in terms of its
functional and non-functional benefits as judged by the consumer.
• HLL’s soap, Lux, is hypothetically positioned as “beauty soap” of
female film stars.
• Right positioning more important than a product’s actual
attributes.
• Concept of ‘distance’ and ‘dissimilarity’ in the ‘perceptual space’
of the consumers.
12/6/2014 45

46. Bases used for positioning
• According to C.Merle Crawford:
• Features refer to objective or performance characteristics and are
often used to differentiate products. This positioning is more
common with industrial products.
• Benefits are directly related to the product.
• Usage includes end use, demographic, psychographic or
behavioral segments for whom the product is meant. It also
includes product popularity.
• Parentage means the lineage denoting who makes the product.
• Manufacturing process.
• Ingredients are highlighted.
12/6/2014 46

47. Bases used for positioning
• Endorsements are made either by experts or a common person
with whom the target customers are likely to identify.
• Comparison with a competitor’s product.
• Pro-environment approach aims to show that the company is a
good citizen.
• Product class .
• Country or geographic area.
12/6/2014 47

48. Difference will be stronger
• According to Kotler, a difference will be stronger if it measures up
to the following criteria:
• Important
• Distinctive
• Superior
• Pre-emptive
• Affordable
• Profitable
12/6/2014 48

49. Process of Determining the Positioning Strategy
• Difficult and complex
• Points-of-parity – Those associations that are not necessarily
unique to the brand in some way but may in fact be shared with
other brands. These may be of 2 types:
• Category points-of parity – those associations that the consumer consider
as being necessary within a certain product or category to make it
legitimate and credible offering. (bank)
• Competitive points-of- parity – Those associations that attempt to discard
or weaken competitor’s points-of-difference associations, or other such
type of benefit.
12/6/2014 49

50. Process of Determining the Positioning Strategy
• Points- of-Difference – refer to strong, favorable and unique
associations for a brand in consumers’ perceptions. These may be
related to virtually any type of attributes and benefits with a
brand, positively evaluate, and have a firm belief that they could
not find these to the same extent in other competing brands.
Design
Ease-of-use
Irreverent attitude
Performance
Innovative technology
Winning
12/6/2014 50

51. Process of Determining the Positioning Strategy
• Seven Steps:
• Identify Competitors
• Assessment of Consumers’ Perceptions of Competition – Kelly repertory
grid
• Determining competitor’s position – marketing research – two-dimensional
and multidimensional scaling techniques
• Analyzing the consumers’ preferences.
• Making the positioning decision
• Writing a positioning statement or a value proposition
• Monitoring the position
12/6/2014 51

52. Unique Selling Proposition
• Rosser Reeves
• A brand attribute, not being used by competitors, and tout it as
“number one” on that attribute.
• Outstanding advantage and the best strategy to create a product’s
position, provided it is not only persuasive for the consumers but
also sustainable.
• Emotional Selling Proposition (ESP)/ Unique emotional
proposition (UEP)
"You get fresh, hot pizza
delivered to your door in 30
minutes or less—or it's
free."
"You get rid
of dandruff"
12/6/2014 52

53. 12/6/2014 53

54. Positioning Errors
• Suggested by Philip Kotler:
• Under positioning – This refers to a state of buyers having only a vague idea of
the brand and considering it just another “me too” brand in a crowded product
category. The brand is not seen to have any distinctive advantage.
• Over positioning – In this situation, buyers have too narrow an image of the
brand. Thus, buyers might think that Apple makes only very expensive
computers when, in fact, Apple offers several models at affordable prices.
• Confused positioning – Sometimes attempts to create too many associations or
to frequently reposition the brand only serves to confuse buyers.
• Doubtful positioning – This situation may rise when customers find brand claims
unbelievable keeping in view the product features, price or the manufacturer
12/6/2014 54

55. Positioning approaches
• Positioning by corporate identity –
• Tried and trusted household names – TaTa, Sony, Godrej and Seiko – line
extensions or brand extensions
• Positioning by brand endorsement –
• Names of company’s powerful brands for line extensions or while
entering another product category – Lux, Surf, Titan and Dettol.
• Merle Crawford refers to this positioning as ‘parentage’ – Brand ,
Company & Person
• Positioning by Product Attributes and/or Benefits -
• Most common ; involves setting the brand apart from the competitiors
based on specific brand attributes or the benefits offered.
• Tata Indica – More car per car ( economy, safety or reliability)
• Single (Promise – gum care) ; Dual (Close-up – fresh breath and cosmetic
benefit) ; Triple (fresh breath, decay prevention and taste) positioning.
• Benefit Positioning ; UEV(Unique Emotional Value ) – ego – intensive or
feel – category products
12/6/2014 55

56. Positioning approaches
• Positioning by Use Occasion and Time –
• To find an occasion or time of use and sit on it – Vicks Vapo Rub (Child’s
cold at night); Iodex (sprains and muscle pains)
• Positioning by Price- Quality -
• Nirma vs. Surf - Quality product and the price was nearly one – third that
of Surf.
• Timex in USA
• High price – high quality – Rolex, Rolls-Royce, Chanel No.5
• Positioning by Product Category –
• Used so that the brand is perceived as belonging to another product
category.; existing product category is crowded.
• Dan Sarel – ‘inter-set positioning’ or ‘macro-positioning’
• Maruti Omni ; 7-up ; Dove ;
12/6/2014 56

57. Positioning approaches
• Positioning by Product User –
• Determine a target segment for which the product will be positioned.
• Dabur’s Chyavanprash ; Zandu Special Chyavanprash
• Positioned according to psychographics ( beauty 7 fashion, soft drinks) or
behavioural aspects( Jhonson & jhonson – baby shampoo)
• Positioning by Competitor
• Avis (USA)
• offensive positioning strategy; cases of comparative advertising.
12/6/2014 57

58. 12/6/2014 58

59. Repositioning
• In response to new opportunities or threats.
• Product may be provided with some new features or it may be
associated with some new uses and offered to the existing or new
markets.
• Nestle’s Milkmaid – convenient form of milk – sweets and deserts.
12/6/2014 59

60. Consumer Behavior-Personal
& Organizational

61. Contents:
• Introduction to Consumer Behavior
• Factors Influencing Consumer Behavior
Social Factors
Psychological Factors
Personal Factors
Demographic Factors
Situational Factors
• Consumer Decision Making Process
• Organizational Consumer
Characteristics, Decision Approach & Purchase patterns
Types of Decision Situations
Organizational Buyer Decision Process
12/6/2014 61

62. Consumer Behavior
• “Consumer behavior refers to the mental and emotional processes
and the observable behavior of consumers during searching,
purchasing and post consumption of a product or service.”
-Satish K Batra & S H H Kazmi
• Kotler – 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.
• It has two aspects:
The Final Purchase activity
The detailed or Short decision process
12/6/2014 62

63. B: Cultural Factor
• Culture
• Sub-culture
• Social Culture
A: Social Factors
• Reference
Group
• Family
• Role & status
D: Personal Factors
• Age & life cycle
• Occupation &
lifestyle
• Personality & self
Concept
E: Psychological
Factors
• Motivation
• Perception
• Learning
• Attitude
12/6/2014 63

64. B: Cultural Factor
• Culture
• Sub-culture
• Social Culture
Social
Values
• Nationality Group
• Religious group
• Racial group
• Beliefs & Morals
• Faith & tradition
12/6/2014 64

65. • Culture is the fundamental determinant of a person’s want’s and
behaviors.
• The impact is automatic and invisible.
• Culture operates primarily by setting somewhat loose boundaries for
individual behavior within a society and by influencing the functioning
of different institutions such as family and mass media.
• Culture reflects consumer behavior.
• Marketing strategies are unlikely to change cultural values, but
marketing does influence culture.
• For eg – advertising agencies, fashion design houses, music companies.
• Culture has broad influence on their buying behavior of products and
services and the extent of their satisfaction with them – eating
behaviour – wash clothes with hands
• Culture change rapidly or slowly in different societies. – role of women.
B: Cultural Factor
• Culture
• Sub-culture
• Social Culture
12/6/2014 65

66. • Sub cultures – exists within a given dominant culture and gives
more specific identification and socialization for their members.
• Nationalities , religions, racial groups and geographic regions.
• Only some sub-cultures in India are important from the marketer’s
point of view.
• McD – policy of adopting uniformity across global markets. Now
adopted products appropriate for particular cultures.
• Big Mac -> Big Maharaja
• Vegetable burgers
• Climatic conditions, natural environment and available resources,
language and significant social and cultural events. -> food , dress
• Age sub-culture - > unique set of shared values and behaviors in a
given society.
B: Cultural Factor
• Culture
• Sub-culture
• Social Culture
12/6/2014 66

67. • Social Class – relatively homogeneous and enduring divisions in
a society, hierarchically ordered and with members who share similar
values, interests and behavior.
• Societal rank, which is one’s position relative to others on one or
more dimensions valued by society.
• SEC
B: Cultural Factor
• Culture
• Sub-culture
• Social Culture
Socio-economic factors
Education
Occupation
Income Level
Ownership
Heritage
Social Class
Upper class
Middle class
Lower-middle
class
Lower class
Unique behaviors
Preferences
Purchases
Consumption
Social Class Results from Socio-economic factors. 12/6/2014 67

68. A: Social Factors
• Reference
Group
• Family
• Role & status
• Aspirational
Group
• Dissociative
Group
• Love
• Respect
• Personal
ambition
12/6/2014 68

69. • Roles & Family –
• A role refers to a set of functions and activities that an individual in a particular position is supposed
to perform, based on one’s own and other’s expectations
• An individual may have several roles and set of expectations placed on his/her behavior.
Initiator (Need
Recognition)
Gatekeeper
(Information
Search)
Influence
(Evaluation of
alternatives)
Decision-Maker
(decision to
buy)
Buyer
(Purchase)
User
(Consumption)
& Evaluation
Joint Decision-Making Process
• A Person’s changing roles in family lifestyle very significantly influence types of purchases and buying
behavior.
12/6/2014 69

70. • Reference Groups- A person’s reference groups are all the groups that have a direct or
indirect influence on their attitudes or behavior.
• Groups having a direct influence are called membership groups
• Primary groups – person interacts fairly continuously and informally -> family, friends, neighbors
and co-workers
• Secondary group – religious, professional ,trade union groups – tend to be more formal and
require less continuous interaction.
• Reference groups influence in 3 ways –
• Exposure to new behaviors and lifestyle
• Influence attitudes and self-concept
• Create pressure for conformity that may affect product and brand choices.
• Influenced by groups to which they don’t belong – Associative groups-person hopes to be a part
of.; dissociative groups - whose values or behavior an individual rejects.
12/6/2014 70

71. • When reference group influence is strong -> marketer reaches to the opinion leader
• Opinion leader – person who offers informal advice or information about a specific product ot
product category.
• Highly confident; socially active; frequent users of the category
12/6/2014 71

72. Psychological Factors:
• Motivation
• Perception
• Learning
• Attitudes
• Personality
12/6/2014 72

73. Motivation
• Refers to driving forces within an individual produced by a state of tension caused
by unfulfilled needs, wants, and desires.
• Influenced by a set of motives than just one.
• Motives can be – utilitarian or hedonic.
• Utilitarian – focuses on some practical benefits and are identified with product
attributes that define product performance such as economy or durability
• Hedonic – relate to achieving pleasure from the consumption of a product or
service and are often associated with emotions or fantasies.
12/6/2014 73

74. Motivation Process
Unfulfilled
needs,
Wants &
Desires
Felt
Tension
Drive
Appropriate
Behavior
Goals or
Needs
Fulfillme
nt
Learning
Cognitive Process
Tension Reduction
12/6/2014 74

75. Abraham Maslow’s Hierarchy of Needs Theory
of Human Motivation:
Self-actualization
needs
Self-development and
realization
Esteem needs
Self-esteem, recognition, status
Social needs
Sense of belonging, love
Safety needs
Security, protection
Physiological needs
Hunger, thirst
12/6/2014 75

76. Motivation research
• Psychoanalytic theory – consumer’s motivation for purchasing products or services is often
complex, and is often undecipherable not only to the casual observers but also the consumers
themselves.
• Ernest ditcher & Vicary
• Some of the techniques include:
• In-depth interviews
• Projective techniques
• Association test
• Focus group
• Arousal of any particular set of needs at any particular set of needs given point in time gets
triggered by an individuals physiological condition, emotional or thinking processes or to
situational factors.
12/6/2014 76

77. • Physiological arousal – involuntary; arouse related needs
• Emotional arousal – latent needs are stimulated because a person keep thinking
or daydreaming of it.
• Cognitive arousal – random thoughts
• Situational arousal – situation confronting a consumer.
12/6/2014 77

78. • Perception
• Process by which an individual selects, organizes, and interprets stimuli into a meaningful
and coherent picture of the world.
Selective perception, selective comprehension, selective retention.
Includes three distinct processes:
Sensation
• Immediate,
direct response
of the sense
organs to a
stimulus
Information
Selection
• Paying
attention to
particular
stimuli
Interpreting the
Information
• Requires
people to
organize,
categorize, and
interpret the
information
registered by
the senses.
12/6/2014 78

79. Subliminal perception
• Marketers embed covert, subliminal messages in ads or packaging.
• Not consciously aware but affect behavior.
• Not enough to change moderately held or strongly held beliefs.
12/6/2014 79

80. • Learning:
• incidental
• Interplay of Drives, stimuli, cues, responses, and reinforcement
• Classical conditioning and operant conditioning
• Drive is strong internal stimulus impelling action
• Cues are minor stimuli that determine when, where and how a person responds
• HP
• Generalize response to similar stimuli.
• Discrimination- to recognize the difference in sets of similar stimuli and can adjust
our responses accordingly.
• Need produce motivation, which leads to goal directed behavior resulting in need
satisfaction.
• Marketers can build up demand for a product by associating it with strong drives,
using motivating cues, and providing positive reinforcement.
• Attitudes:
• “A learned predisposition to behave in a consistently favorable or unfavorable way
with respect to a given object.”
• Relevant to products, brands, companies, celebrities, advertisements etc.
• Attitude important -> object evaluation process, products or companies; favourable
or unfavourable feelings
12/6/2014 80

81. Personality
• Describes growth and development of an individual’s whole physiological
system, which looks at some aggregate whole that is greater than the sum
of the parts.
• A set of distinguishing human psychological traits that lead to relatively
consistent and enduring responses to environmental stimuli.
• Self-confidence, dominance, autonomy, deference, sociability,
defensiveness and adaptability.
• Brand’s personality=consumer’s personality.
• Brand personality – specific mix of human traits that we can attribute to a
particular brand.
12/6/2014 81

82. • Stanford’s Jennifer Aaker researched brand personalities and
identified the following traits:
• Sincerity
• Excitement
• Competence
• Sophistication
• Ruggedness
12/6/2014 82

83. Four main theories of personality
• Self-concept theory – focuses on how the self-image or self-concept of
individuals influences their purchase behavior.
• Individuals develop and alter their self-concept based on interaction of
psychological and social dimensions.
• Psychoanlaytic theory –personality is the result of childhood conflicts
between 3 fundamental components of personality – ID, Ego and
Superego;Freud
• Id – ‘pleasure principle’; ego – reality principle; superego – ideal than real.
• Social-cultural theory – social and cultural variables are more important
than biological drives in the development of individual personality; Carl
Jung
• Trait Theory – personality is composed of a set of traits that are relatively
stable and describe a general pattern of behavior.
• Single-trait personality tests
12/6/2014 83

84. Personal Factors
Demographic Factors
• Consumers with common demographic characteristics behave in relatively similar manner.
Lifestyle
• Strong effect on many aspects of consumer purchase decisions, including product needs,
brand preference, media habits & how and what type of shopping outlets they choose.
Situational Factors
• The situation in which the product is brought or used can generate emotional involvement.
Involvement Level
• Explains how consumers process the information & how this information influence their
purchase or consumption related behavior.
12/6/2014 84

85. Situational factors
• Consumption situation – basis for developing ad positioning new
products for specific consumer segments. Timex- Ironman Triathlon.
• Purchase situation – affect consumer decision about product
selection -> in-store environment; store atmosphere; service
atmosphere
• Gift-giving situation – whether the product is purchased for personal
consumption or for giving a gift also influences purchases.
• Unanticipated purchase situations – which are not anticipated.
• Usage or consumption situation-refers to the occasion of consumers’
product use.
12/6/2014 85

86. Involvement level
• Explain how consumers process the information might influence their
purchase or consumption related behavior.
• Judith L. Zaichokowsky – there is no single precise definition of
involvement; an underlying theme focusing on personal relevance.
• Involvement variables – precede involvement and influence its nature and
extent
• Stimulus/object variables – products/stimuli that consumer perceives to be
closely related to his/her values, experience and interests and will
stimulate higher degree of involvement.
• Involvement intensity – severity of involvement as experienced by the
consumer. High or Low.
12/6/2014 86

87. • Response factors – how a consumer behaves under involvement
conditions of different intensity.
• Purchase involvement – level of concern for, or interest in, the
purchase process stimulated by the need to consider a certain
purchase. -> cognitive; emotional
• Types of Involvement->
• Product involvement-consumer’s level of interest in a product.
• Advertising involvement – consumer’s interest in processing the ad messages.
• Purchase situation involvement – while buying same item in different
contexts.
12/6/2014 87

88. Consumer decision process
• Consumer facing recognized problem – evaluating attributes – deliberately and
rationally choosing – maximum satisfaction + lowest cost
• Constructive processing – consumers adjust their degree of cognitive “effort” to the
task at hand.
• Types of Consumer decision process
• Nominal decision-making -> nominal problem solving/habitual decision-making/
routine problem solving. Low-involvement with most low-priced and
frequently purchased products which are consumed on an ongoing basis ; outcome
of continued satisfaction with a brand.
• Limited decision-making -> internal and limited external search, consideration of just
few alternatives, simple decision rules on a few attributes and little post purchase
evaluation. Emotional factors may influence limited decision-making.
• Extended decision-making -> extensive external and internal information search –
rigorous evaluation of several alternatives ( no particular information)
12/6/2014 88

89. Low-involvement purchase High-involvement purchase
Normal Decision-making
Problem
recognition(selective)
Information search
(Ltd external,
internal)
Product choice
&purchase
Post purchase action, no
dissonance, very ltd
12/6/2014 89
evaluation
Ltd DM
Problem
recognition(generic)
Information search
(Ltd, internal)
evaluation of
alternatives
Product choice
&purchase
Post purchase action, no
dissonance, ltd evaluation
Extended DM
Problem
recognition(generic)
Information search
(external, internal)
evaluation of
alternatives
Product choice
&purchase
Post purchase action,
dissonance, complex
evaluation
Involvem
-ent level
and
types of
Decision-making

90. Involvement Level
LEVEL OF INVOLVEMENT
Involvement level and types of Decision
Making
Nominal Limited Extended
TYPES OF DECISION MAKING
H
i
g
h
L
o
w
12/6/2014 90

91. Need
Recognition
Information
Search
Alternatives’
Evaluation
Store
Selection
And
Purchase
Post
Purchase
Action
Consumer Decision Making
Process:
12/6/2014 91

92. ORGANIZATIONAL CONSUMER
• Organizational Buyer Characteristics:
Group-based Decision-Making
Involve a group a personnel from engineering, production, finance,
purchasing & even top management in making a purchase decision.
Technical Knowledge
Professional buyers
Rational Motives Dominate
Directed by rational motivations because of the technical nature of
purchases involved.
12/6/2014 92

93. Types of Decision Situations:
• Straight Rebuy
Occurs when the purchase is of minor importance and is not
complex—no consideration is given to strategic issues.
• Modified Rebuy
Used when the purchase is moderately important to the firm
and/or the choice is more complex. Strategic issues begin to
play a role.
• New Task
Tends to occur when the buying decision is very important and the
choice is quite complex. Strategic issues will be of prime
importance.
12/6/2014 93

94. Organizational Buyer Decision Process
• Problem Recognition
• Product Specification
• Product and Vendor Search
• Product and Vendor Evaluation
• Product and Vendor Selection
• Performance Evaluation
12/6/2014 94

95. Organizational Purchase Process
Problem Recognition:
• Group Involvement in High-Tech Organizations
12/6/2014 95

96. Organizational Purchase Process
Product Specification:
The formal information
search process can include
- site visits to evaluate a
potential vendor
- lab tests of a new product
or prototype, and
- investigation of possible
product specification
The informal information
search process can include
- discuss with sales
representatives
- attend trade shows
- read industry-specific
journals
12/6/2014 96

97. Organizational Purchase Process
Evaluation and Selection:
• The evaluation of possible vendors and selection of a given vendor often
follow a two-stage decision process as follows:
1. Creating an approved vendor list
• Using conjunctive decision rule
2. Selecting the vendor(s)
• Using disjunctive, lexicographic, compensatory, or
elimination-by-aspects decision rules
12/6/2014 97

98. Organizational Purchase Process
Evaluation and Selection:
• Evaluative Criteria as a Function of Organizational Role
12/6/2014 98

99. Organizational Purchase Process
Performance Evaluation:
• Once the decision to buy from a particular organization has been made,
the method of purchase must be determined.
• The terms and conditions--the payment, warranties, delivery dates ,etc.--
are both complex and critical in business-to-business markets.
• After-purchase evaluations of products are typically more formal for
organizational purchases than are household evaluations of purchases.
• A major component of post purchase evaluation is the service the seller
provides during and after the sale.
• Relationship marketing is at least as important in industrial marketing as it
is in consumer marketing.
12/6/2014 99

100. THANK YOU!
12/6/2014 100