Buyer Behaviour – Factors affecting Buyer Behaviour – Buying Decision Process – MarketSegmentation: Benefits of Market Segmentation, Basis of Segmentation, Essentials ofSegmentation- Targeting and Positioning

1. Ms. Vidhi Modi
Assistant Professor
Department of Bank Management
Ethiraj College for Women (Autonomous)
Chennai-8.

2. 
 A market is a place which allows the purchaser and the
seller to invent and gather information and carry out
exchange of various products and services.
 In other words, the meaning of market refers to a place
where the trading of goods takes place.
 A market is the aggregate of consumers of a given
product, known as Market aggregation. But consumers
differ in their characteristics and buying behaviour. So…
MARKET

3. 
Meaning:
 Markets are Heterogeneous; Segmentation divides them
into Homogeneous Sub-Units.
 Markets break up the heterogeneous market for product
into several sub units, or sub markets, each relatively
more homogeneous within itself, compared to market into
a number of sub markets/ distinct sub units of buyer,
each with relatively more homogeneous characteristics, is
known as market segmentation.
MARKET SEGMENTATION

4. 
Definition:
“Market segmentation is dividing a market into distinct
groups of buyers with different needs characteristics, or
behaviour who might require separate products or
marketing mixes.”- Philip Kotler.
“Market segmentation is the process of dividing the
total heterogeneous market for a product into several
segments, each of which tends to be homogeneous in all
significant aspects.”- William Stanton.
MARKET SEGMENTATION

5. 
 Markets, sometime, speaks of product segments and
price segments and use these expressions as
synonymous with market segments.
 This can leads to a wrong understanding of what
market segments, or the process of market
segmentation as a whole, actually connote.
 We have to be clear that in market segmentation, it is
the consumers who are segmented, not the product,
nor price. Market is about people who consume the
product, not about the product that’s gets consumed.
A CAUTION!

6. 
Titan Watches
 Nebula for the luxury
 Sonata for the money conscious
 Fastrack for youngsters
 Zoop for kids
EXAMPLES

7. 
 Facilitates right choice of target market.
 Facilitates effective tapping of the chosen market.
 Makes the marketing effort more efficient and
economic.
 Helps identify less satisfied segments and
concentrate on them.
WHY SEGMENT THE MARKET?

8. 
A market or consumer population for a product can be
segmented using several relevant bases. The major ones
include:
BASES FOR SEGMENTATION

9. 
 Segmentation of consumers based on geographical
units such as nations, states, regions, districts, cities,
rural area, and so on constitutes geographic
segmentation.
 It facilitates planning and administrative processes.
 It is convenient for the marketers to sub divide the
country into areas in a systematic way.
 Marketer, who operate globally, often segment the
market into continents/country/region in the first
instance, and then go for segmentation on other
bases.
Geographical

10. 
 Segmentation of consumer based on demographic
variables such as community, language, age, gender,
marital status, income, family size, occupation,
economic position, social status and so on constitute
demographic segmentation.
 The wants, needs and perceptions differ accordingly.
 Age: 1) Infants/Child Market 3) Youth Market 4)
Middle Aged Market 5)Elders Market
 Genders: Male market and Female market. Example,
automobile industry.
Demographic

11. 
 Culture: Culture influence consumer behaviour, deeply.
A given culture brings in its own unique pattern of social
conduct. A person usually acquires his cultural attributes
right at his childhood. Culture includes religion, caste,
traditions, language, pattern of social behaviour.
 Social Factor: Social group of varying types exert
influenced on the consumer. Social group include family,
and peer group. They adopt their common life style.
Example:
 Zee Televisions deals with variety of channels- regional
channel, sports channel, movie channel.
 McDonald has veg burger for vegetarian and non-veg
burger for non vegetarian.
Socio-cultural

12. 
 Psychographic Segmentation groups the customers
according to their life-style and buying psychology.
 Many businesses offer products based on the attitudes,
beliefs and emotions of their target market.
 The desire for status, enhanced appearance and more
money are examples of psychographic variables.
 They are the factors that influence your customers'
purchasing decision.
 In psychographic segmentation, elements like life style,
attitude, self-concept and value system, form the base.
Psychographic

13. 
 A person’s pattern of interests, opinions, and
activities combine to represent his or her lifestyle.
 Knowledge of lifestyle can provide a very rich and
meaningful picture of a person.
 It can indicate whether the person is interested in
outdoor sports, shopping, culture, or reading.
 It can include information concerning attitudes and
personality traits.
 Lifestyle also can be used to define a segment
empirically; this is often called psychographic (as
opposed to demographic) segmentation.
Psychographic

14. 
 On the basis of their knowledge, attitude, use, or response
to a product. Such behavioural variables are discussed
below
 Occasions : (Marriages, festivals)
 Benefits sought : (Colgate- White teeth stops bad breath,
Vicco Vajradanthi gives Ayurvedic benefit)
 User Status: (Ex-users, first users, regular users, Potential
users)
 Loyalty status: (Hard core loyalist, Split Loyalist (Two or
Three brands), Shifting Loyalist (Shift from one brand to
another), Switchers (No loyalty to any brand))
 Attitude: Customers are divided into five groups
(Enthusiastic, Positive, Indifferent, Negative and Hostile)
Behavioural Segmentation

15. 
 Helps distinguish one customer group from another
within a given market.
 Facilitates proper choice of target market.
 Facilitates effective tapping of the market.
 Helps crystallize the needs of the target buyers
 Makes the marketing effort more efficient and economic
 Helps spot the less satisfied segments and succeed by
satisfying such segments.
 Makes the marketing effort more efficient and economic.
 Helps spot the less satisfied segments and succeed by
satisfying such segments.
 Brings benefits not only to the marketer but also to the
customer as well.
Advantages of Segmentation

16. 
 Measurability (In terms of size and purchasing
power)
 Accessibility (Reached and served through suitable
means of distribution of promotion)
 Substantiality (Large and profitable)
 Differentiability (Clearly distinguishable)
 Actionable (to be effective makers of segmentation
should be compatible with the manpower, financial
and managerial resources)
Effective Market Segmentation

17. 
 Homogeneous preferences
 Diffused preferences
 Clustered preferences
 Homogeneous preferences occur when customers have
roughly the same preference. Example: dove soap
advertisement for being the most gentlest soap.
 Diffused preferences occur when consumer preferences
are scattered.
 Clustered preferences occur when customers are
clustered in groups. These are natural market segments.
Patterns of Market Segmentation

18. 
 The first firm which enters the market has three
options to position its product.
 The firm may position its brand in the centre so that
it can appeal to all groups. This is known as
undifferentiated marketing.
 It may position its brand in the largest market
segment. This is called concentrated marketing.
 The firm may have several brands, each positioned
in a different segment. This strategy is called
differentiated marketing.
Clustered Preferences

19. 
 Market segmentation reveals the firm’s market segment
opportunities. The firm now has to evaluate the various
segments and decide how many and which segments it
can serve best.
 In evaluating the segments, the firm must look at three
factors: segment size and growth, segment structural
attractiveness, and company objectives and resources.
 After evaluating, the company must decide which and
how many segments it will target.
Market Targeting

20. 
 A set of buyers sharing common needs or characteristics
that the company decides to serve.
 Market targeting refers to picking a specific group or
small set of groups to which a business will advertise.
 Market targeting can be carried out at several levels.
Companies can target very broadly (undifferentiated
marketing), to very narrowly (micromarketing), or
somewhere in between (differentiated or concentrated
marketing).
Target Market

21. 
1. Undifferentiating (Mass) Marketing: Aims at a
broad consumer market through one basic plan. The
producer approaches the entire market with mass
production, distribution and promotion of one
product for all buyers. This leads to lower costs. It
creates a largest potential market. Examples: Maruti
800, Ambassador Car.
2. Differentiated (Segmented) Marketing: Identifies
groups within a market with similar wants, buying
attitudes, purchasing power, etc. The marketing mix
is tailor made to the target market segment.
Market Targeting Strategies

22. 
3. Concentrated (Niche) Marketing: A small or minor
segment within a market segment. Niches are identified
by dividing a segment into sub segments. Niche
customers are willing to pay premium to the firm that
best satisfies their needs. Example: Reebok- Tennis
shoes, jogging shoes, Cricket shoes, and so on.
4. Local Marketing: This addresses the needs of local
customers. It considers national advertising wasteful.
Example: PNB provides different mixes of banking
services depending upon the locality.
Market Targeting Strategies

23. 
5. Individual/Micro Marketing:
It is the extreme of mass marketing. Customers are
served individually. Example: a cobbler designs shoes
for the individual. It is one-to-one marketing or
customised marketing.
In customised marketing, the customer participates
actively in the design of the product.
Market Targeting Strategies

24. 
[Buyer Behaviour – Factors affecting Buyer Behaviour –
Buying Decision Process – Market
Segmentation: Benefits of Market Segmentation, Basis
of Segmentation, Essentials of
Segmentation- Targeting and Positioning]
We have completed so far…

25. 
 Buyer:
 An ultimate buyer is called consumer.
 A buyer or consumer is a person who purchases goods and
services for his own personal needs.
 Behaviour:
 Behaviour can be defined as the way in which an
individual behaves or acts.
BUYER BEHAVIOR

26. 
 Buyer Behaviour:
 Behaviour can be defined as those acts of 'individuals' which
are directly involved in making decisions to spend their
available resources (time, money, energy) in obtaining and
using goods and services.
 It is the consumer on whose decision, demand of any product
or service is dependent.
 Definition:
“The field consumer behavior studies how individuals, groups,
and organizations select, buy, use and dispose of goods, services
or ideas or experiences to satisfy their needs and desires.”- Philip
Kotler.
BUYER BEHAVIOR

27. 
 Why study buyer/consumer behavior?
- Enable the marketer to understand the psychology of
consumers.
- Help to segment the market usefully.
- Aid in development of an effective marketing mix.
BUYER BEHAVIOR

28. 
 The consumer is the king and his behaviour can be influenced.
 An important part of the marketing process is to understand why
a buyer makes a purchase.
 Without such an understanding, businesses find it hard to
respond to the customer’s needs and wants.
 Marketing theory traditionally splits analysis of buyer or
customer behaviour into two broad groups:
(a) Consumer buyer and (b) Industrial buyer.
 Consumer buyers are those who purchase items for their personal
consumption.
 Industrial buyers are those who purchase items on behalf of their
business or organization.
Characteristics of Buyer
Behaviour

29. 
 Businesses now spend considerable sums trying to
learn about what makes the “customers tick”.
The questions they try to understand are:
 Who buys?
 How do they buy?
 When do they buy?
 Where do they buy?
 Why do they buy?
Characteristics of Buyer
Behaviour

30. 
CULTURAL FACTORS:
 Culture is a complex mixture of symbols (attitudes, beliefs, values,
language, etc.) created by a society and handed down from
generation to generation.
 There is a diffusion of culture across countries since we live in a
global village.
- Culture shapes behaviour
- Culture is a social phenomenon
- Culture is adopted
- Culture sets values
Factors influencing Consumer Decision-making
Process

31. 
 Example: American culture stresses upon achievement,
success, efficiency, progress, material comfort, whereas
Indian culture emphasizes peace, harmony, truth,
forgiveness, service, etc.
 Within a general culture there are smaller sub-cultures
distinguished by the specific identification and
socialization of their members, with their distinctive
behavioural patterns.
 For example, within the general Indian culture there exist
specific sub-cultures like Punjabi, Malayali, Bengali ,
Tamilian, etc. which have their own distinctive
characteristics.
Cultural Factors (Contd.)

32. 
 Reference groups: Groups of people who interact formally or
informally influencing (direct or indirect) each others’ attitudes
and behaviour.
 Family: Consumers' family members are the most influencing
reference groups, which shapes an individual’s buying
behaviour.
 Roles & Status: The buying behaviour of an individual
depends on the type of role s/he is expected to play while
purchasing. E.g., an Individual plays the role of a father while
buying birthday gifts for his son. Each role carries a status.
E.g., the individual mentioned above could be the Managing
Director of an MNC or a teacher in a primary school.
Social Factors

33. 
 The buyer's own characteristics such as:
 age,
 stages in life cycle,
 occupation,
 lifestyle, and
 personality, etc.,
are determinants of the individual’s buying behaviour.
Personal Factors

34. 
 Motivation: The force gives direction to behaviour
and underlies the tendency to persist is called
Motivation.
 Learning: An individual learns and gains experience
over time. Learning involves changes in an
individual's behaviour arising from experience.
Psychological Factors

35. 
Outline:
 Customer-Driven Marketing Strategy
 Market Segmentation
 Market Targeting
 Differentiation and Positioning
Customer-Driven Marketing Strategy:
Creating Value for Target Customers

36. 
 Beyond deciding which segments of the market it will target,
the company must decide on a value proposition—how it will
create differentiated value for targeted segments and what
positions it wants to occupy in those segments.
 • Product position- The way the product is defined by
consumers on important attributes—the place the product
occupies in consumers’ minds relative to competing products.
 • In planning their differentiation and positioning strategies,
marketers often prepare perceptual positioning maps that
show consumer perceptions of their brands versus competing
products on important buying dimensions.
Differentiation and
Positioning

37. 
The differentiation and positioning task consists of three
steps:
 identifying a set of differentiating competitive advantages
on which to build a position,
 choosing the right competitive advantages, and
 selecting an overall positioning strategy.
The company must then effectively communicate and
deliver the chosen position to the market.
Differentiation and Positioning
Strategy

38. 
 Identifying Possible Value Differences and
Competitive Advantages
Competitive advantage- An advantage over
competitors gained by offering greater customer
value, either by having lower prices or providing
more benefits that justify higher prices.
 Companies can differentiate along the lines of
product, services, channels, people, or image.
Differentiation and Positioning
Strategy

39. 
 A buying decision process is the process a customer goes
through when buying a product.
 A buying process is the series of steps that a consumer
will take to make a purchasing decision.
 A consumer judges whether a product will meet a
need/want well enough and decides when and where
and how to make the purchase and derive satisfaction
with the purchase.
 It can be seen as a particular form of a cost-benefit
analysis.
Consumer Buying Decision Process

40. 
Need Recognition
Search for information
Evaluation of alternatives
Purchase decision
Post purchase behaviour
Five Stages of Consumer Buying
Decision Process

41. 
 A purchase cannot take place without the
recognition of the need.
 The need may have been triggered by internal
stimuli such as hunger or thirst or external stimuli
such as advertising.
 According to Maslow’s hierarchy, only a when a
person has fulfilled the needs at a certain stage, can
he or she move to the next stage.
1. NEED RECOGNITION

42. 
 This is the buyer’s effort at searching the internal and
external business environments to identify and observe
sources of information related to the focal buying
decision.
 Internal search refers to recalling past experiences with
the product.
 External search is conducted when customer tries to seek
information from personal sources (family, friends),
commercial sources (advertisements, sales people) or
public sources (newspapers, television).
2. INFORMATION SEARCH

43. 
 At this stage, consumers evaluate different products or
brands on the basis of varying product attributes, and
whether these can deliver the benefits that the customers are
seeking. Most commonly used criteria in decision making is
price, quality, performance, life of the product, and so on.
 A factor that heavily influences this stage is the customer’s
attitude.
 Involvement is another factor that influences the evaluation
process.
3. EVALUATION OF
ALTERNATIVES

44. 
 In this stage, the consumer forms purchase intentions.
 The final purchase decision can be disrupted by two
factors:
(a) Negative feedback from other customers and
the level of motivation to comply or accept the feedback.
(b) The decision may be disrupted due to
anticipated situations.
4. PURCHASE DECISION

45. 
 At this stage, customers will compare products with
their previous expectations and will be either satisfied
or dissatisfied.
 This can greatly effect the decision process for similar
purchases from the same company in the future,
having a knock-on effect at the information search
stage and evaluation of alternatives stage.
5. POST-PURCHASE
BEHAVIOUR

46. 
A new product is a good, service or idea that is
perceived by some potential customers as new. Everett
Rogers classifies people into five categories for new
products:
1) Innovators
2) Early adopters
3) Early majority
4) Late majority
5) Laggards
Buying Decision-making
Process for ‘New Products’

47. 
 Innovators: young, high-income group; more receptive
and less brand loyal- pioneers to try. (2.5%)
 Early Adopters: Opinion leaders, carefully adopt to
new ideas. (13.5%)
 Early Majority: adopts before average person; positive
in approach, larger in numbers. (34%)
 Late Majority: adopts only after majority of people
have tried it - cautious crowd. (34%)
 Laggards: tradition-bound, resistant to change. Accept
it only when it has become a tradition itself. (16%)
Five Categories of People