Consumer behavior

1. Consumer Behavior
IMBA 6th Semester
UNIT 1
By: Nashmeel Gowhar
Department of Management Studies
University of Kashmir

2. Course overview
´ We all as individuals are confronted with numerous Consumer Behavior
decisions everyday.
´ The study of consumer behavior will help you understand that why
customers differ from one another in buying and using goods and services.
´ Its study will also help you understand about various internal and external
factors and stimulus that have impact on the consumer buying and
decision making.

3. Marketing:
´ Marketing is the activity, set of institutions, and processes for creating,
communicating, delivering, and exchanging offerings that have value for customers,
clients, partners, and society.
MARKETING MIX/4 P’S
1. Product or service: The features, designs, brands, and packaging offered, along with
post-purchase benefits such as warranties and return policies.
2. Price: The list price, including discounts, allowances, and payment methods.
3. Place: The distribution of the product or service through stores and other outlets.
4. Promotion: The advertising, sales promotion, public relations, and sales efforts designed
to build awareness of and demand for the product or service.

4. Consumer Behavior
´The behavior that consumers
display in searching for,
purchasing, using, evaluating,
and disposing of products and
services that they expect will
satisfy their needs.

5. ´ The study of consumer behaviour describes what
products and brands consumers buy, why they buy
them, when they buy them, where they buy them, how
often they buy them, how often they use them, how
they evaluate them after the purchase, and whether or
not they buy them repeatedly.

6. Two Consumer Entities
Personal Consumer
• The individual who buys goods
and services for his or her own
use, for household use, for the
use of a family member, or for
a friend.
Organizational Consumer
• A business, government
agency, or other institution
(profit or nonprofit) that buys
the goods, services, and/or
equipment necessary for the
organization to function.

8. Development of Marketing Concept
Production
concept
Product
concept
Selling
concept
Marketing
concept
Societal
marketing
concept

9. 2.Product concept assumes that consumers will buy the product that
offers them the highest quality, the best performance, and the most
features. A product orientation often leads to marketing myopia, that is, a
focus on the product rather than on the needs it presumes to satisfy.
1.Production concept maintains that consumers are mostly interested in
product availability at low prices; its implicit marketing objectives are
cheap, efficient production and intensive distribution. Consumers obtain
whatever is available rather than wait for what they really want.

10. 4.Marketing concept A consumer-oriented philosophy that suggests that
satisfaction of consumer needs provides the focus for product
development and marketing strategy to enable the firm to meet its own
organizational goals.
3.Selling concept maintains that marketers’ primary focus is selling the
products that they have decided to produce. The assumption of the
selling concept is that consumers are unlikely to buy the product unless
they are aggressively persuaded to do so. Hard sell approach is used.

11. ´ The marketing concept assumes that in order to be successful a company
must determine the needs and wants of specific target markets and deliver
the desired satisfactions better than the competition.
´ Both marketing and consumer behavior stem from marketing concept.
´ The marketing concept evolved from several prior business orientations
over a period of time focused on production, the product itself, and selling.
Marketing Concept

12. ´ The societal marketing concept holds that the “organization’s task is to
determine the needs, wants, and interests of target markets and to deliver
the desired satisfactions more effectively and efficiently than competitors,
in a way that preserves or enhances the consumer’s and the society’s well-
being”. (Phillip Kotler)
´ Thus, Societal Marketing Concept tends to balance between its Consumer
desires and Societal benefits.
Societal Marketing Concept

13. Inside the Marketing Concept
´ 1950s to current - Focus on the customer!
´ Determine the needs and wants of specific target markets.
´ Deliver satisfaction better than competition.
´ It further includes the following points:
Consumer
Research
Segmentation
Market
Targeting
Positioning

14. v Consumer research refers to the process and tools used to study consumer
behaviour.
Consumer research is a form of market research.
v Segmentation is a process of dividing the market into subsets of consumers
with common needs or characteristics.
v Targeting means selecting the segments that the company views as
prospective customers and pursuing them.
v Positioning is the process by which a company creates a distinct image
and identity for its products, services, and brands in consumers’ minds. The
image must differentiate the company’s offering from competing ones and
communicate to the target audience that the particular product or service
fulfils their needs better than competing offerings do.

15. Basis for successful Consumer Relationships.
Customer value.
High level of
customer satisfaction.
Strong sense of
customer trust.
Customer retention.

16. Nature of Consumer Behaviour
´ Consumer Behavior is a systematic process.
´ It is influenced by various factors.
´ Different for different customers.
´ Different for different products.
´ It varies across regions.
´ Significant for marketers.
´ Reflects status.
´ Results in spread effect.
´ Keeps on changing

17. Scope of Consumer Behavior
´ Consumer behaviour and marketing management.
´ Consumer behaviour and non profit and social marketing.
´ Consumer behaviour and government decision making- (Government
services and consumer protection)
´ Consumer behaviour and demarketing.
´ Consumer behaviour and consumer education.

18. Importance of Consumer Behavior
´ Production Policies.
´ Price Policies.
´ Decision regarding Channels of Distribution.
´ Exploiting Market Opportunities.
´ Highly Diversified consumer preferences.
´ Rapid introduction of new products.
´ Implementing Marketing Concept.
´ Designing Marketing Mix strategies and STP strategies.

19. Consumer Behavior is Interdisciplinary

20. Consumer behavior as a field of study emerged in late 1960’s
Consumer behavior stems from several disciplines.
´ Psychology is the study of the human mind and the mental factors that affect
behavior (i.e., needs, personality traits, perception, learned experiences, and
attitudes).
´ Sociology is the study of the development, structure, functioning, and problems
of human society (the most prominent social groups are family, peers, and
social class).
´ Given huge economic shifts in the world economy beginning in 2008, it is
important to realize the effect of economic changes on the behavior of
consumers.
´ Anthropology compares human societies’ culture and development (e.g.,
cultural values, caste system and subcultures).
´ Communication is the process of imparting or exchanging information
personally or through media channels and using persuasive strategies.

21. Model of
Consumer
Decision Making.

22. Consumer Research
Qualitative research
Research dealing with phenomena that are difficult or impossible to
quantify mathematically, such as beliefs, meanings, attributes, and symbols.
Qualitative researchers aim to gather an in-depth understanding of human
behaviour and the reasons that govern such behaviour.
The qualitative method investigates the why and how of decision making,
not just what, where, when.
The interviewer is highly trained in such research methods.
Common methods used are individual interviews, focused groups.

23. Quantitative research
It refers to the systematic empirical investigation of
any phenomena via statistical, mathematical or
computational techniques.
The objective of quantitative research is to develop
and employ mathematical models, theories and/or
hypotheses pertaining to phenomena.
Common methods used are questionnaires and
surveys.

24. QUALITATIVE RESEARCH QUANTITATIVE RESEARCH
Concerned with understanding human
behavior from the informants
perspective.
Assumes a dynamic and negotiated
reality.
Concerned with discovering facts about
a social phenomena.
Assumes a fixed and measurable reality.
Data are collected through participant
observation and interviews.
Data are collected through measuring
things.
Data are analyzed by themes from
descriptions by informants.
Data are analyzed through numerical
comparisons and statistical inferences.
Data are reported in the language of
the informant.
Data are reported through statistical
analyses.
CONCEPTUAL
METHODOLOGI-
CAL

25. Importance of Consumer Research
Process.
Marketers must understand customers to design effective:
´ Products
´ Promotional messages
´ Branding
´ Target
´ Segmentation
´ Price
´ Channels
´ Marketing Strategies

26. Consumer Research Process

27. 1. Developing research objectives.
2. Collecting secondary data.
´ I
´ Internal vs External secondary data
´ Internal secondary data are used to compute customer lifetime value
profiles of various segments. Also acquisition and retention costs are
computed.
´ External Secondary Data
´ Government secondary data
´ Periodicals and Articles Available from Online Search Services E.g. Census
bureau, newspapers, periodicals, Nexis, Wall Street Journal, Business Week,
Forbes, Fortune, Harvard Business Review, Journal of Marketing, Journal of
Consumer Research etc.
´ Syndicated Commercial Marketing and Media research services E.g.
Nielsen’s research MyBestSegment provides demographic and lifestyle
profiles of the consumers residing in each U.S. Zip Code
´ Consumer Panel
1. Developing research objectives
2. Collecting secondary data

28. 3a. Qualitative research data collection
methods
• Depth Interviews
• Focus Groups
• Projective Techniques (incomplete sentences, untitled
pictures, cartoons, word-association)
3. Designing Primary Research

30. PROJECTIVE TECHNIQUES

31. 3b.Quantitative research designs
•Observation research
•Mechanical observation
•Physiological observation (eye movements)
•Experimentation (controlled experiment, test marketing)
•Surveys
•Personal interview survey
•Telephone survey
•Mail Survey
•Online survey
Quantitative research data collection instruments
•Reliability and validity –split half test.
•Questionnaire (Open ended questions, Closed ended questions)
•Attitude scales
•Likert scale
•Semantic differential scale
•Behaviour intention scale
•Rank order scale

34. 4.Sampling and Data Collection
4a.Probability Sampling 4b. Non probability sampling
• Simple Random Sampling 1.Convenience sampling
• Systematic Random Sampling 2.Judgement sampling
• Stratified Random Sampling 3.Quota sampling
• Cluster Sampling 4.Snowball sampling
5.Data Analysis and Reporting Research
Findings

36. Marketing ethics and social responsibility.
´ Marketing ethics are moral principles that govern marketer’s behavior. On
the personal level, these principles express the differences between right
and wrong behavior and the goodness or badness of human character.
´ Ethics tends to focus on the individual or marketing group decision, while
social responsibility takes into consideration the total effect of marketing
practices on society.
´ In order to foster an ethical and socially responsible behavior pattern among
marketers, special care must be taken to monitor trends and shifts in
society’s values and beliefs.

37. Unethical forms of marketing
´ EXPLIOTIVE MARKETING
Targeting children and encouraging overeating and irresponsible buying.
Manipulative and uninformative nutritional labeling.
Direct to consumer pharmaceutical advertising.
´ COVERT MARKETING (MASKED OR STEALTH MARKETING) consists of marketing
messages and promotional materials that appear to come from independent
parties when, in fact, they are sent by marketers.
´ ADVERTISING EMBEDDED WITHIN ENTERTAINMENT
´ FALSE OR MISLEADING ADVERTISING
´ ABUSING CONSUMER PRIVACY

38. Characteristics of Socially responsible
marketing.
´ Safety
´ Honesty
´ Transparency
´ Ethical Pricing
´ Respecting Customer Privacy