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  • 1. Consumer BehaviorBy Prof. Rajeev KumarThe behavior that consumers display insearching for, purchasing, using, evaluating, anddisposing of products and services that theyexpect will satisfy their needs.
  • 2. Personal ConsumerThe individual who buys goods and services forhis or her own use, for household use, for theuse of a family member, or for a friend.
  • 3. Organizational ConsumerA business, government agency, or otherinstitution (profit or nonprofit) that buys thegoods, services, and/or equipment necessary forthe organization to function.
  • 4. FACTORS INFLUENCING CONSUMER BUYING BEHAVIOR‡ Cultural factors: Culture Sub- Culture eg: Kellogg͛s
  • 5. SOCIAL CLASS‡ Upper Class‡ Upper Middle Class‡ Middle Class‡ Lower Class
  • 6. SOCIAL FACTORS‡ Social Groups‡ Colleagues at work‡ Consumer Action Groups‡ Reference Groups‡ Family
  • 7. PERSONAL FACTORS‡ Age and Life Cycle stage‡ Occupation and Financial status‡ Life-style
  • 8. PSYCHOLOGICAL FACTORS‡ MOTIVATION‡ PERCEPTION‡ ATTITUDE‡ LEARNING
  • 9. Needs and Motivation‡ Needs are the essence of the marketing concept.‡ Motivation is the driving force within individuals that impels them to action.Copyright 2007 by Prentice Hall
  • 10. Consumer Motivation‡ Represents the drive to satisfy both psychological and physiological needs through product purchase and consumption.‡ gives insights into why people buy certain products.‡ stems from consumer needs: industries have been built around basic human needs.
  • 11. Types of Consumer Needs‡ Physiological needs- Fundamental human needs, including food, water and shelter‡ Safety and Health needs- Threats to our safety and health motive purchases for personal security and protection.
  • 12. ‡ Safety and Health needs Protecting our personal information and computers represents new types of safety needs. Businesses provide a variety of products and services to appeal to safety and health conscious consumers.
  • 13. Safety and Health Needs
  • 14. Motivational conflicts and need priorities‡ satisfying a need often comes at the expense of another need- this causes motivational conflicts.
  • 15. Maslow͛s Hierarchy of Needs Figure 4.10weblink
  • 16. Figure 4.1 Model of the Motivation Process
  • 17. Figure 4-2aGoals Structure for Weight Control
  • 18. The Dynamic Nature of Motivation‡ Needs are never fully satisfied‡ New needs emerge as old needs are satisfied‡ People who achieve their goals set new and higher goals for themselves
  • 19. This ad reflects a need foraccomplishment with a toothpaste.
  • 20. Motivating with Money
  • 21. PERCEPTIONS‡ The process by which an individual selects, organizes and interprets stimuli into meaningful thoughts and pictures.(Customers perceive their environment through the sense of touch, smell, taste, hearing, etc.
  • 22. BELIEFS AND ATTITUDE‡ A belief is a descriptive image or thought that an individual holds about something.‡ A person͛s attitude is a set of his feelings and the way in which he reacts to a given idea or thought.
  • 23. LEARNING‡ Consumer learning is a process which evolves and changes as a result of newly acquired knowledge or experience
  • 24. Consumer Organizational Influences InfluencesObtaining Consuming Disposing Consumer Behavior
  • 25. Consumer Organizational Influences InfluencesCulture BrandEthnicity Product FeaturesPersonality AdvertisingFamily Word of MouthLife-stage PromotionsValues Retail DisplaysIncome PriceAvailable Resources QualityAttitudes ServiceOpinions Store AmbianceFeelings ConvenienceMotivations Loyalty ProgramsPast Experiences PackagingPeer Groups Product AvailabilityKnowledge
  • 26. Consumer Organizational Influences InfluencesObtaining Consuming Disposing Consumer Behavior
  • 27. CONSUMER INFLUENCES ORGANIZATIONAL INFLUENCES Culture Ethnicity Brand Product Features Personality Family Advertising Word of Mouth Life-stage Values Promotions Retail Displays Income Available Resources Price Quality Attitudes Opinions Service Store Ambiance Motivations Past Experiences Convenience Loyalty Programs Feelings Peer Groups Packaging Product Availability Knowledge OBTAINING CONSUMING DISPOSINGyHow you decide you yHow you use the product yHow you get rid ofwant yHow you store the remaining product to buy product yHow much you throwyOther products you in your home away after use consider buying yWho uses the product yIf you resell itemsyWhere you buy yHow much you consume yourselfyHow you pay for yHow product compares or through aproduct with consignmentyHow you transport expectations store product home yHow you recycle some products Consumer Behavior
  • 28. Customers?‡ Who are our existing / potential customers?‡ What are their current / future needs?‡ How can we satisfy these needs? ‡ Can we offer a product/ service that the customer would value? ‡ Can we communicate with our customers? ‡ Can we deliver a competitive product of service?‡ Why should customers buy from us?
  • 29. Becoming a Winner : A Three Dimensional Approach Efficiency Ladder Ability to Focus ( Specialization Ladder ) Ability ToAchieve Lower cost Ability to Delight Customers ( Market Orientation - Learning Ladder )
  • 30. Successful RelationshipsCustomer Customer Value Retention Customer Satisfaction
  • 31. Successful RelationshipsValue, Satisfaction, andRetention ‡ Defined as the ratio between the‡ Customer Value customer͛s perceived benefits‡ Customer and the resources used to obtain Satisfaction those benefits‡ Customer ‡ Perceived value is relative and subjective Retention ‡ Developing a value proposition is critical
  • 32. Successful RelationshipsValue, Satisfaction, andRetention‡ Customer ‡ The individuals perception of the performance of the product or service Value in relation to his or her expectations.‡ Customer ‡ Customers identified based on loyalty Satisfaction include loyalists, apostles, defectors,‡ Customer terrorists, hostages, and mercenaries Retention
  • 33. Successful RelationshipsValue, Satisfaction, andRetention ‡ The objective of providing value is to‡ Customer Value retain highly satisfied customers.‡ Customer ‡ Loyal customers are key Satisfaction ± They buy more products‡ Customer ± They are less price sensitive Retention ± They pay less attention to competitors͛ advertising ± Servicing them is cheaper ± They spread positive word of mouth
  • 34. Customer Profitability-Focused Marketing‡ Tracks costs and revenues of individual consumers‡ Categorizes them into tiers based on consumption behavior‡ A customer pyramid groups customers into four tiers
  • 35. Customer Profitability-Focused Marketing Tier 1: Platinum Tier 2: Gold Tier 3: Iron Tier 4: Lead
  • 36. Traditional Marketing Concept Vs. Value and Retention Focused Marketing Table 1-2 Traditional Marketing Value and Retention Concept Focused MarketingMake only what you can sell instead Use technology that enablesof trying to sell what you make customers to customize what you makeDo not focus on the product; focus on Focus on the product¶sthe need that it satisfies perceived value, as well as the need that it satisfiesMarket products and services that Utilize an understanding ofmatch customers¶ needs better than customer needs to developcompetitors¶ offerings offerings that customers perceive as more valuable than competitors¶ offerings
  • 37. Why Study Consumer Behavior?"All marketing decisions are based onassumptions and knowledge ofconsumer behaviour," (Hawkins andMothersbaugh, 2007). Researchingconsumer behaviour is a complexprocess, but understanding consumerbehaviour is critical to marketers-theycan use it to:
  • 38. Provide value and customer satisfaction. Effectively target customers. Enhance the value of the company. Improve products and services. Create a competitive advantageUnderstand how customers view their products versus their competitors products.Expand the knowledge base in the field of marketing,Apply marketing strategies toward a positive effect on society (encourage people to support charities, promote healthy habits, reduce drug use etc.)
  • 39. EducatingConsumersAboutCrises
  • 40. Educating Consumers About HealthUnderstanding consumers¶ issues or problems anddeveloping methods to reach and educateconsumers
  • 41. Educating Consumers About HealthUnderstanding consumers¶ issues orproblems and developing methods to reachand educate consumers
  • 42. Evolution of ConsumerBehavior Consumers¶ Increasing Influence Wholesaler Manufacturer Retailer Consumer Manufacturing Selling Marketing Consumer Orientation Orientation Orientation OrientationU.S. 1750-1850 1850-WWII 1970-2000 2000+Europe 1750-1850 1760-WWII 1970-2000 2000+
  • 43. Consumer Behavior Is Interdisciplinary‡ Psychology‡ Sociology‡ Social psychology‡ Anthropology‡ Economics
  • 44. A Simplified Model of Consumer Decision Making ʹ Figure 1-1
  • 45. The Underlying Principles ofConsumer BehaviorThe Consumer Is SovereignThe Consumer Is GlobalConsumers Are Different; Consumers AreAlike