Amity Business School MBA Class of 2010, Semester II Consumer Behavior Mamta Mohan
Course Contents: Module I - Consumer demographics, consumer life styles. Retailing implications of consumer demographics and lifestyle. Consumer profiles. Lifestyle marketing. Environmental factors affecting consumers. Module II -Consumer as an Individual, Motivation, Needs, Goals, Personality, Self and Self Images, Perception, Imagery, Learning, Cues, Response, Reinforcement, Behavioral Learning and Cognitive Learning Theory, Brand Loyalty . Module III -Attitude, Attitude Formation and Change. Shopping attitudes and behavior, where people shop. Consumer Buying Decision Process, types of consumer decision making. Impulse purchases and customer loyalty. Module IV -Group Dynamics and Reference Groups, Family Decision Making, Social Class, Culture, Subculture Module V- Opinion Leadership Process, Diffusions of Innovations, Adoption Process. Text & References: Schiffman and Kanuk, Consumer Behavior, latest edition
The Customer: key to market success
Satisfy customer: customer culture
Adopt marketing concept
Gain legitimacy in society.
Customer behavior & customer orientation
Cost efficiencies -
Premium prices from established customers
Protection against corporate crisis
increased word of mouth
one stop shopping
new product innovations
Customer orientation creates pride in employees.
What is customer behavior?
CB is the mental and physical activities undertaken by household and business customers that result in decisions and actions to pay for, purchase , and use products and services.
Customer roles- roles specialization
Lack of customer expertise about a product or service on the part of the end user.
Lack of time so purchase is delegated
lack of buying power.
Lack of access
Lack of affordability.
When the subsidies are involved, someone else paying for the part of the purchase.
When the product is free.
Customer needs and wants
Determinants of needs and wants:
1 Three personal traits that determine needs
2 customers wants are determined by
a individual context
b environment context
Market values customer seek
All customer behavior is driven by needs and wants
Classification of market values
Universal product values
Service value-convenience value
Consumer Decision Making Model- Factors Prob Recognition Inf Search & Evaluation Pur process Post Pur Beh Motivation & Involvement Attitudes Personality & Self-Concept Learning & Memory Sub-Cultural Influences Social-Class Influences Cultural Social-Group Influences Family Influences Personal Influences External Env Internal Determinants DECISION PROCESS
CONSUMER DECISION PROCESS Steps in decision making process NEED RECOGNITION INFORMATION SEARCH EVALUATION OF ALTERNATIVES PURCHASE & CONSUMPTION POST-PURCHASE EVALUATION DIVESTMENT
My Refrigerator Has died! DECISION MAKING PROCESS NEED/PROBLEM RECOGNITION AWARENESS THAT THERE IS A DISCREPANCY BETWEEN ACTUAL STATE AND DESIRED STATE
DEFINING PROBLEM RECOGNITION
“ Problem Recognition” results when a consumer recognizes a difference of sufficient magnitude between what is perceived as the desired state and the actual state.
“ Actual State ” refers to the way in which a need is already being met.
“ Desired state ” is the way in which a person would like for the need to be satisfied
Factors affecting the
Factor affecting both
Factors affecting actual
Arousal of needs
Post purchase evaluation
Desired State Actual State Opportunity Recognition Need Recognition Consumer Problem Recognition Consumer Action No Consumer Action
COGNITIVE AND PERSONAL BIASES IN DECISION MAKING
Selective search for evidence.
Premature termination of search for evidence.
Conservatism and inertia
Wishful thinking & optimism
Source credibility bias
Incremental decision making
Ascription of causality.
Influences on consumer
Consumers’ Past Experiences
Consumer Characteristics –benefits sought by consumers , to some extent are conditioned by demographics , lifestyles , personalities, Income , Age , Marital Status
Consumer Motives – Motives are general drivers that direct a consumer’s behaviour towards attaining his/ her needs. Greater the disparity between current situation and desired goals , the greater the motivational drive to act to satisfy consumer needs
Environmental Influences –like social settings , family , peers
Past Marketing Stimuli - Past information about brand characteristics and price also affect consumers’ needs . Consumers obtain such information from advertisement , Television , Radio , Sales Representatives , Internet
Discover Consumer problems –
Intuition n logic (eg. Vaccum cleaner)
Survey, focus groups etc
Activity analysis – focus on particular method of activity eg. Cooking, combing
INFLUENCE A.S. – advertise concern eg. Deo, pastes, two wheelers
TIMING OF PR – purchase a solution when difficult or impossible eg. Insurance,fog light,cold medicine
SUPPRESSING PR – Mc Dowells soda, small warning prints
Respond to Consumer problems
Structure the mktg. mix
Develop new product
alter existing one
Modify channels of distribution
Change pricing policy
Revise advertising strategy
Eg. Balanced diet options
DECISION MAKING PROCESS INFORMATION SEARCH INTERNAL AND EXTERNAL SEARCH
Information Source Internal Information External Information Active Passive Active
Brand Image Storage/ Performance Style & Design Price DECISION MAKING PROCESS ALTERNATIVE EVALUATION DETERMINE CHOICE CRITERIA TO EVALUATE PRODUCT ALTERNATIVES
All Potential Alternatives Awareness Set Evoked Set Inert Set Inept Set Specific Alternatives purchased Alternatives considered but not purchased
I’ll take that one . DECISION MAKING PROCESS PURCHASE CHOOSE WHICH BRAND TO BUY OR NOT TO BUY
Why did I buy such an expensive car? DECISION MAKING PROCESS POST-PURCHASE EVALUATION PURCHASE SATISFACTION COGNITIVE DISSONANCE
CLASS EXERCISE - EXPLAIN THE CONSUMER DECISION MAKING PROCESS WITH THE ABOVE EXAMPLE
Consumer Demographics, Consumer life styles Demography – science of population. Demographic +psychographic basis of segmentation. e.g. Retail banking 334 million bank accounts 60 million house holds are really ‘banked’ Around 91 million households9 incomes between 40,000 and rs. 180,000 per annum needs to be tapped by the banking sector. if 30 million additional households are tapped by the the organized financial service providers it would expand the revenue pool--------- e.g. Mobile marketing
A trillion dollar market
The income Pyramid
-the sizable urban middle class
-fifth largest consumer
-A virtuous cycle
-Economic structure: (deprived, aspires, seekers, strivers, global Indians).
-The deprived class
-A middle class country.
-Globals will become a major spending force
-A widening distribution of income.
- Consumption growth
Towns and cities
Tier 1 : major cities
8 cities population>4 million
Income>100 billion rupees.
Tier 2 : mainstrem cities26 cities, population>1 million
Tier 3 : climbers33 cities population >500,000
Tier 4 small towns-5,094 towns
Mumbai, Calcutta, delhi chennai, hyderabad, pune , Ahmedabad Surat kanpur , nagpur,
Three ways of analyzing consumer behavior
Consumer behavior models
Model of decision making: consist of following steps
Search for information on products that could satisfy the needs of the buyer;
Decision making on buying the product;
Post purchase behaviour
Alternative models- steps in the marketing promotional process is often seen as the most generally useful; Awareness Interest understanding Attitudes Purchase. repeat purchase.
Source: National Council of Applied Economic Research (NCAER). The above presentation has been slightly modified by IndiaOneStop.Com 164.8 118.2 46.6 Total no. of households Total no. of households: 164.9 million 1.2 0.4 0.8 The rich >215,000 5.8 >106,000 32.5 15.9 16.6 Consumers 45,001-215,000 8.2 77,001-106,000 54.1 37.3 16.8 Climbers 22,001-45,000 19.7 50,001-77,000 44.0 36.9 7.1 Aspirants 16,001-22,000 50.4 25,001-50,000 33.0 27.7 5.3 Destitutes <16,000 80.7 <25,000 Total Rural Urban Number of households (in million) Classification Annual income (in Rupees) at 1994-95 prices No. of households (in million) Annual income (in Rupees) at 1994-95 prices Table II Structure of the Indian consumer market (1995-96) Table I Estimated households by annual income