PIMG M.B.A.-III Semester 2012 Unit I 1Concept of Marketing and Consumer Behaviour
Based on concepts from• Psychology• Sociology• Anthropology• Marketing• Economics
Why do we need to study Consumer Behaviour?Because no longer can we take the customer/consumer for granted.
Failure rates of new products introduced• Out of 11000 new products introduced by 77 companies, only 56% are present 5 years later.• Only 8% of new product concepts offered by 112 leading companies reached the market. Out of that 83% failed to meet marketing objectives.
All managers must become astuteanalysts of consumer motivation and behaviour
Can Marketing be standardised? No. Because cross - cultural styles, habits, tastes, prevents such standardisation.
Unless Managements act The more successful a firm has beenin the past, the more likely is it to fail in the future.
Why? Because people tend to repeatbehaviour for which they have been rewarded.
Language Problems• “Please leave your values at the desk” - Paris hotel• “Drop your trousers here for best results” - Bangkok laundry• “The manager has personally passed all water served here” - Acapulco restaurant• Ladies are requested not to have children in the bar.”- Norway bar
“Come alive with Pepsi”• “Come alive out of the grave” - Germany• “Pepsi brings your ancestors back from the grave” - China
ACTIVITYA LEADING INDIAN TV COMPANY IN THE COUNTRY ISFINDING IT VERY DIFFICULT TO MAINTAIN THEIRMARKET SHARE.ITS SALES ARE GOING DOWN .THEY HAVE HIRED YOU TO SOLVE THE PROBLEM.MAKE TWO PRESENTATIONS IN NEXT 10 MINUTESWITH TWO DIFFERENT PERSPECTIVES TO SOLVETHE PROBLEM.
ACTIVITYA LEADING TOY COMPANY IN THE COUNTRY ISFINDING IT VERY DIFFICULT TO MAINTAIN THEIRMARKET SHARE.ITS SALES ARE GOING DOWN .THEY HAVE HIRED YOU TO SOLVE THE PROBLEM.MAKE TWO PRESENTATIONS IN NEXT 10 MINUTESWITH TWO DIFFERENT PERSPECTIVES TO SOLVETHE PROBLEM.
What is your wish-list ?A. On AttendanceB. On lecture delivery and Taking ControlC. On speed and clarificationsD. Level of InteractionE. PedagogyF. EvaluationG. On Group formationH. On Group presentationsI. Any other Issue ….??? E.g Mobile phone
PRODUCTS AND SERVICES NEEDS, WANTS VALUE, UTILITY AND DEMANDS SATISFACTION MARKETS QUALITY EXCHANGERELATIONSHIPS TRANSACTIONS CORE MARKETING CONCEPTS
PIMG M.B.A.-III Semester 2012 Unit I 2Defining Consumer Behaviour
CONSUMER BEHAVIOUR• THE BEHAVIOUR THAT CONSUMERS DISPLAY IN SEARCHING FOR, PURCHASING, USING, EVALUATING, AND DISPOSING OF PRODUCTS AND SERVICES THAT THEY EXPECT WILL SATISFY THEIR NEEDS.• STUDY OF HOW INDIVIDUALS MAKE DECISIONS TO SPEND THEIR AVAILABLE RESOURCES <TIME… MONEY…EFFORT> ON CONSUMPTION RELATED ITEMS.
Definition of Consumer Behavior• 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, and actions
Reasons for Studying Consumer Behavior• To stay in business by attracting and retaining customers• To benefit from understanding consumer problems• To establish competitive advantage• …because it is interesting!
The Circle of Consumption• Production• Acquisition• Consumption• Disposal
INTRODUCTION CONSUMER BEHAVIOUR• STUDY OF : * WHAT THEY BUY * WHY THEY BUY IT * WHEN THEY BUY IT * WHERE THEY BUY IT * HOW OFTEN THEY BUY IT, AND, * HOW OFTEN THEY USE IT• STUDY OF THE PROCESSES BY WHICH CONSUMERS MAKE DECISIONS. MORE SPECIFICALLY, IT IS CONCERNED WITH HOW CONSUMERS ACQUIRE ORGANIZE AND USE INFORMATION TO MAKE CONSUMPTION CHOICE.
INTRODUCTIONCB : A SYNTHETIC FIELD OF STUDYSOCIALPSYCHOLOGY PSYCHOLOGY CONSUMER BEHAVIOURANTHROPOLOGY SOCIOLOGY ECONOMICS
INTRODUCTION STUDY OF CB• PROVIDES INSIGHTS WHY CONSUMERS BUY GOODS AND SERVICES• HOW THEIR PURCHASE DECISIONS ARE MADE, AND,• FACTORS THAT INFLUENCE THEIR DECISION-MAKING PROCESSES
INSIGHTS Where to look for insights ?• Consumers buy benefits not brands• You need to examine the target consumer’s reasons not to buy the brand vs. its competition – Current purchase barriers • The functional reasons not to buy the brands vs. competition - today • The rational reasons not to buy the brand vs. competition today • The emotional reasons not to buy the brand vs. competition - today
INSIGHTS4 benefits-barriers which are usually quoted and form the basis of consumer insights• I don’t know• I don’t want• I don’t believe• I have already got benefits
STUDY OF CBTO MARKETERS : KNOWLEDGE OFWHY AND HOW INDIVIDUALS MAKETHEIR CONUMPTION DECISIONS HELP THEM IN MAKING BETTER STRATEGIC MARKETING DECISIONS AND IN PREDICTING HOW CONSUMERS ARE LIKEY TO REACT TO VARIOUS INFORMATIONAL AND ENVIRONMENTAL CUES.
Impact of Emerging Digital technologies• Consumers have more power than ever before.• Consumers have access to more information than ever before.• Marketers can and must offer more services and products than ever before.• The exchange between marketers and customers is increasingly interactive and instantaneous.• Marketers can gather more information about consumers more quickly and easily. “Narrowcasting’• Impact reaches beyond the pc based connection to the web.
Challenges marketers face• Technology and Innovation may throw any product out of market• Mobile v/s Camera• Ipod v/s Blu ray disc• Flash drive v/s hard disk• LCD V/s plasma v/s CRT
Linkage between Marketing concepts and CB• Production concept : Ford• Product concept : (saving on time and efforts- Debit/ Credit Cards, Launderettes, Tablet PC’s etc.)• Selling concept : Insurance, Encyclopedia• Marketing : Sustainable , Societal, Ethical TESCO, TATA, Microsoft Delivering desired satisfaction better than the competition.• Societal Marketing : Eco-friendly, energy saving products eg. Panasonic-Ideas for life, etc. (Green Marketing) “To fulfill the needs of the target audience in ways that improve society as a whole, while fulfilling the objectives of the organizations.”
PIMG M.B.A.-III Semester 2012 Unit I 3Consumer Research
Consumer ResearchThe systematic and objective process of gathering, recording, and analyzing data for aid in understanding and predicting consumer thoughts, feelings, and behaviors.In a global environment, research has become truly international.
Important Factors in Consumer Research• Speed• The Internet• Globalization• Data Overload
Types of Consumer Research• Basic Research – To expand knowledge about consumers in general• Applied Research – When a decision must be made about a real-life problem
The Consumer Research Process• Defining the Problem and Project Scope• The Research Approach• The Research Design• Data Collection• Data Analysis and Interpretation• Report
Consumer Research Methods• Methods of consumer research• Primary research methods• Advantages and disadvantages of each method
Two Research Methods • Secondary: use of existing research already done – Government – Consulting firms – Newspaper and magazine articles • Primary: creation of specific studies to answer specific questions
Computer/Online surveys• Getting people to follow instructions• Opportunities for branching (contingent questions)• Sampling frame and response• Possible emerging opportunities – Correlating data on which not all respondents have answered the same questions
Experimentation• Real world relevance vs. control (internal vs. external validity)• “Treatments” and factorial designs• Sample sizes and inferences
Focus Groups • Groups of 8-12 consumers assembled • Start out talking generally about context of product • Gradually focus in on actual product
In-depth interviews • Structured vs. unstructured interviews • Generalizing to other consumers • Biases
Projective Techniques (Creative Research)• Measurement of attitudes consumers are unwilling to express• Consumer discusses what other consumer might think, feel, or do
Observation • Consumer is observed-- preferably unobtrusively-- while: – Examining products prior to making a purchase – Using a product – Engaging in behavior where the product may be useful
Physiological Measures• Devices attached to the consumer to measure – Arousal – Eye movement• Consumer feedback – Lever pulled to positive or negative positions – Squeeze on ball
Projection• Psychological technique to get answers without asking a direct question• Participants project their unconscious beliefs into other people or objects• Reduces threat of personal vulnerability• Consists of a stimulus and a response
AssociationsUncovers a brand’s identity or product attributes• Word association for a product/brand• Draw brands as people
ConstructionProcess allows participant to construct meaning• Participant constructs a story or picture from a concept• Collages are developed on a topic• Bubble drawings or cartoon tests ask participant to construct a dialog
CompletionFor insight into participant’s need-value system.• Sentences, stories or conversations are completed• Eg. “When I think of beer…..”
ExpressiveFor situations when participants cannot describe their actions but can demonstrate them.• Participants role play or act out a story• Themes are developed based on participants’ personal interpretations of pictures• House where brand lives (Bud vs Guiness)
Choice OrderingUseful for rank ordering characteristics associated with a brand, product or service• Participants lists benefits from most to least important• Used with probing techniques to gather insight into consumer benefit choices
Data AnalysisQuantify by classifying content into categories that are given numerical valuesQualify what is meant by the projections• Participants elaborate on meanings• Multiple tests allow patterns to emergeTriangulation of multiple methods brings authenticity to data analysis
Creative Development Research• Elicits consumer response to advertising ideas• Requires creatives to understand response• Creatives must seek ways to improve response of future viewers• Utilizes groups for comments that stimulate other comments• Requires experienced moderator / planner
Assignment dPick a brand: Pepsi, Tata Docomo, HDFC, LIC, Samsung Galaxy, Nokia Lumia, Geetanjali, BSNL, Aircel, ICICI, Nestle, Bajaj Motors, Maggi, Sony Bravia, Sona Chandi Chwanprash.• Cut images from a magazine/newspaper that best describe your feelings about the brand• Paste the images together into a collage• Explain what these images mean to you and why they apply to the brand• Compare your responses with those of another with the same brand
Assignment c, ePick a brand: Maruti Suzuki, Coca Cola, Vodafone, SBI, LG, Sony, Panasonic, Tanishq, Airtel, Idea, ICICI, Cadbury, Hyundai, M & M, Hero Motocorp, Lenovo.• Cut images from a magazine/newspaper that best describe your feelings about the brand• Past the images together into a collage• Explain what these images mean to you and why they apply to the brand• Compare your responses with those of another with the same brand
PIMG (M.B.A.-III Semester 2011) Consumer Behaviour Unit I 4Consumers’ Impact on Marketing Strategy
Consumer Behavior Involves Many Different Actors• Consumer: – A person who identifies a need or desire, makes a purchase, and then disposes of the product • Many people may be involved in this sequence of events. – Purchaser / User / Influencer • Consumers may take the form of organizations or groups.
Consumers’ Impact on Marketing Strategy• Market Segmentation: – Identifies groups of consumers who are similar to one another in one or more ways and then devises marketing strategies that appeal to one or more groups• Demographics: – Statistics that measure observable aspects of a population • Ex.: Age, Gender, Family Structure, Social Class and Income, Race and Ethnicity, Lifestyle, and Geography
A Lesson Learned• Nike was forced to pull this advertisement for a running shoe after disabilities rights groups claimed the ads were offensive.• How could Nike have done a better job of getting its message across without offending a powerful demographic?
Market Segmentation Finely-tuned marketing segmentation strategies allow marketers to reach only those consumers likely to be interested in buying their products.
Consumers’ Impact on Marketing Strategy (cont.)• Relationship Marketing: Building Bonds with Consumers – Relationship marketing: • The strategic perspective that stresses the long-term, human side of buyer-seller interactions – Database marketing: • Tracking consumers’ buying habits very closely, and then crafting products and messages tailored precisely to people’s wants and needs based on this information
Marketing’s Impact on Consumers• Marketing and Culture: – Popular Culture: • Music, movies, sports, books, celebrities, and other forms of entertainment consumed by the mass market. – Marketers play a significant role in our view of the world and how we live in it.
Popular CultureCompanies often create product icons to develop anidentity for their products. Many made-up creatures andpersonalities, such as Mr. Clean, the Michelin tire man andthe Pillsbury Doughboy, are widely recognized figures inpopular culture.
Marketing’s Impact on Consumers: The Meaning of Consumption• The Meaning of Consumption: – People often buy products not for what they do, but for what they mean. – Types of relationships a person may have with a product: • Self-concept attachment • Nostalgic attachment • Interdependence • Love
Marketing’s Impact on Consumers: The Meaning of Consumption (cont.)• Consumption includes intangible experiences, ideas and services in addition to tangible objects.• Four types of Consumption Activities: – Consuming as experience – Consuming as integration – Consuming as classification – Consuming as play
Four types of Consumption Activities An Emotional or Aesthetic Consuming as Experience Reaction to Consumption Objects Consuming as Integration Express Aspects of Self or SocietyConsuming as Classification Communicate Their Association With Objects, Both to Self/ Others Consuming as Play Participate in a Mutual Experience and Merge Self With Group
Marketing’s Impact on Consumers: The Global Consumer• By 2015, the majority of people on earth will live in urban centers.• Sophisticated marketing strategies contribute to a global consumer culture.• Even smaller companies look to expand overseas.• Globalization has resulted in varied perceptions of Consumers (both positive and negative).
The Global ConsumerAmerican products like Levi jeans are indemand around the world.
Marketing’s Impact on Consumers: Virtual Consumption• The Digital Revolution is one of the most significant influences on consumer behavior.• Electronic marketing increases convenience by breaking down the barriers of time and location.• U-commerce: – The use of ubiquitous networks that will slowly but surely become part of us (i.e., wearable computers, customized advertisements beamed to cell phones, etc.)• Cyberspace has created a revolution in C2C (consumer-to-consumer) activity.
Blurred Boundaries Marketing and Reality• Marketers and consumers coexist in a complicated two-way relationship.• It’s increasingly difficult for consumers to discern the boundary between the fabricated world and reality.• Marketing influences both popular culture and consumer perceptions of reality.
Blurred BoundariesMarketing managersoften borrow imageryfrom other forms ofpopular culture toconnect with anaudience. This line ofsyrups adapts the “look”of a pulp detectivenovel.
Marketing Ethics and Public Policy• Business Ethics: – Rules of conduct that guide actions in the marketplace – The standards against which most people in the culture judge what is right and what is wrong, good or bad• Notions of right and wrong differ among people, organizations, and cultures.
Needs and Wants: Do Marketers Manipulate Consumers?• Consumerspace• Do marketers create artificial needs? – Need: A basic biological motive – Want: One way that society has taught us that need can be satisfied• Are advertising and marketing necessary? – Economics of information perspective: Advertising is an important source of consumer information.• Do marketers promise miracles? – Advertisers simply don’t know enough to manipulate people.
Discussion Question• This ad was created by the American Association of Advertising Agencies to counter charges that ads create artificial needs.• Do you agree with the premise of the ad? Why or why not?
Public Policy and Consumerism• Consumer efforts in the U.S. have contributed to the establishment of federal agencies to oversee consumer-related activities. – Department of Agriculture – Federal Trade Commission – Food and Drug Administration – Securities and Exchange Commission – Environmental Protection Agency• Culture Jamming: – A strategy to disrupt efforts by the corporate world to dominate our cultural landscape
Culture Jamming • Adbusters Quarterly is a Canadian magazine devoted to culture jamming. This mock ad skewers Benetton.
Consumerism and Consumer Research• Kennedy’s “Declaration of Consumer Rights” (1962)• Green Marketing: – When a firm chooses to protect or enhance the natural environment as it goes about its activities • Reducing wasteful packaging • Donations to charity• Social Marketing: – Using marketing techniques to encourage positive activities (e.g. literacy) and to discourage negative activities (e.g. drunk driving)
Consumer Related Issues• UNICEF sponsored this advertising campaign against child labor. The field of consumer behavior plays a role in addressing important consumer issues such as child exploitation.
The Dark Side of Consumer Behavior• Consumer Terrorism: – An example: Susceptibility of the nation’s food supply to bioterrorism• Addictive Consumption: – Consumer addiction: • A physiological and/or psychological dependency on products or services• Compulsive Consumption: – Repetitive shopping as an antidote to tension, anxiety, depression, or boredom
The Dark Side of Consumer Behavior (cont.)• Consumed Consumers: – People who are used or exploited, willingly or not, for commercial gain in the marketplace• Illegal Activities: – Consumer Theft: • Shrinkage: The industry term for inventory and cash losses from shoplifting and employee theft – Anticonsumption: • Events in which products and services are deliberately defaced or mutilated
Consumer Behavior As a Field of Study• Consumer behavior only recently a formal field of study• Interdisciplinary influences on the study of consumer behavior – Consumer behavior studied by researchers from diverse backgrounds – Consumer phenomena can be studied in different ways and on different levels
Consumer Behavior Disciplines• The Issue of Strategic Focus – Should CB have a strategic focus or be studied as a pure social science?• The Issue of Two Perspectives on Consumer Research – Positivism (modernism): • Paradigm that emphasizes the supremacy of human reason and the objective search for truth through science – Interpretivism (postmodernism): • Paradigm that emphasizes the importance of symbolic, subjective experience and meaning is in the mind of the person
Positivist vs. Interpretivist Approaches to CB