Consumer Market and Buyer Behavior


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Consumer Market and Buyer Behavior

  1. 1. Consumer MarketC onsumer M arkets A ndB uyer B ehavior GURURAJ PHATAK B.Sc, MBA, (PhD)
  2. 2. Consumer Market
  3. 3. Consumer Market Who• Who is a consumer?• Those individuals who purchase for the purpose of individual or household preferences.• Ex: FMCG product like• Consumer Market Consists of all the individuals and households who buy or acquire goods and services for personal consumption.
  4. 4. Consumer Market Who is a customer?• Refers to regularly purchases from a particular store or a company.• Ex:
  5. 5. Consumer MarketD FAMILY BUDGET:BEFORE PURCHASEE Rent,Electricity, Water.Phone,Mi Others, 1000 lk and Paper Savings, 2000 bills, 5500V Grocery Petrol charges, Expenses, 1500I 5000A FAMILY BUDGET:AFTER PURCHASET Rent,Electricity ,Water.Phone, Milk and Paper Savings, 2000I bills, 5500 Petrol charges,O Grocery 1500 Expenses, 9000N
  6. 6. Consumer MarketDeviation because arousal of new needs on account of differing desires, tasteand behavior of each one of them.Office culture Friend’s, product feature Cosmetic & dress & price Neighbor’s durables, furniture Friend’s dress Product Package & display CONSUMER BUYING BEHAVIOR
  7. 7. Consumer MarketThe aim of marketing is to meet and satisfy target customer’s needs and wants. But ‘Knowing Customers’ is never simple, consumer may state needs and wants, butact otherwise. The marketers formula should be KYC know your customer A Consumer Goes to showroom Exposed to variety of Product Attracted by Product display, Product features. Price of the product Or PeopleAnything can influence and he may change his decision. All this process takes place inhis mind which acts like a BLACK BOX.WHAT IS THIS BLACK BOX?. HOW TO FIND OUT WHATS HAPPENING INSIDE?.WHAT ARE THE USES BY STUDYING THIS? ETC…
  8. 8. Consumer MarketMODEL OF BUYER BEHAVIOR Buyer’s Buyer’s decision process Characteristic Marketing Other stimuli Cultural Problem Recognition stimuli Social Information SearchProduct Economic Personal EvaluationPrice Technological Psychological DecisionPlace Political Post purchase behaviorPromotion Cultural Buyer’s decisions Product choice BLACK BOX Brand choice Dealer choice Purchase timing Purchase amount
  10. 10. Consumer MarketCULTUTAL FACTOR:According to GEERT HOFSTEDEIt is collective mental programming of people in an environment.Culture is not a characteristic of individuals: It encompasses a number of peoplewho are conditioned by the same education and life experiences.Culture is almost like glue that keeps people of a certain community together. Set of Values Preferences Perceptions Behaviors HINDU COMMUNITY
  11. 11. Consumer MarketExample: KELLOG’S CEREALS In 1994, when global cereals maker Kelloggs waded into the Indian marketwith the uncompromising goal of changing Indian breakfast habits, few people werepredicting an instant success. How, asked the pundits, was Kelloggs going to getIndians-used to hot breakfast foods, and which more often than not varied vastly byregion and community-to switch to a cereal that is usually served with cold milk?
  12. 12. Consumer MarketMISTOOK INDIA FOR ONE ,SINGLE,HOMOGENOUS MARKET,WHEN IN REALITYIT IS AN AMALGAM OF SEVERAL REGIONAL MARKETS WITH LOCALPREFERENCES AND TASTES. Indian eating preference-Kellogg’s Eating preference flakes can stay crispy only if they are consumed with cold milk. But“In each of the other countries, Indian-Hot milk Indians are well known to be finickyfood habits were similar across its about cold milk and insteadlength and breadth. But in India, Kellogg’s-Cold milk combined it with hot milk. As athey change every 100km”. result, Kelloggs flakes turnedThe breakfast table was no soggy-just like the other cheaperdifferent-idli-dosa was the staple of variants. Tastethe south, dal and parathas in thenorth. Indian-Savory Food Habit Kellogg’s-Sweet Indian-Idli dosa For all its fortification with iron and other minerals, Kelloggs Kellogg’s corn flake cereal needed a dash of sugar to cut the blandness. But most Indians prefer a savory rather than sweet breakfast.
  13. 13. Consumer MarketCOMMODITISATION OF BRANDS: BRAND EVALUATIONFMCG products-tooth paste, toilet PARAMETERS WOULD CHANGE:soaps and detergents and white The millennium consumer will buy becausegoods like TV’s and refrigerators will ‘he likes it’ and will continuously ask: is itbe bought on price, accessibility and good to me physically & psychologicallypast experience rather than ‘brandvalues’. These will be ‘Habit driven’purchases rather than ‘Desire driven’. IMPLICATIONS FOR MARKETERS BRAND FOR CAUSES The millennium consumer will look at social causes as his obsessions
  14. 14. Consumer MarketCULTURE,GLOBAL CULTURE What is global for is local for all the other people in one part people who are living in those of the world places, countries or cultures. Jeans, Burgers are global (so called Western) for Indians but local for Americans This implies that cultures, just like markets, are global from outside and local from insideOne good example of this is the wide range of differences we witness in behavior andconsumption.These are functions of the cultural background of different communities.This is even reflected in media also: despite the snowballing global context, a lot of localcommunication is taking root.Ex: Regional language channels(30 in no.s) and Newspapers.
  15. 15. Consumer Market Instead of globalization, the future will see – mutual coexistence of multiple cultures Ex: Mc Aloo Tikki Burger American Indian Kind of groomingGlobal communication & global corporate cultures English medium school. American Indian Dressing Dressing Dressing Meeting Meeting Meeting Communicating Communicating Communicating Western life style Food Food FoodConsumer across markets might look international in appearance but they continue to betraditional heart.
  16. 16. Consumer MarketBrands, global brands- CulturalcontextJust like religion, a brand is also a set of meanings and beliefs. These beliefs &meanings are operational in a particular cultural context, the context that thebrand was born in. when the brand steps beyond this cultural context, it findsitself out of place as people outside the original context of the brand valuewould fail to decode the meaning that the brand harbors.Ex: Saree, Bindi, Burka, etc. brand wanting to go global needs to look as much outside as inside. WhileAlooking outside it needs to understand the consumer’s cultural context & needframe.Ex: Nike & Adidas
  17. 17. Consumer Market Three value layers Personality Learned/Inherited Special to individual Culture Learned from environment Group specific Human natureUniversal Inherited
  18. 18. Consumer Market Personality Special to individual Culture Group specific Human natureUniversal
  19. 19. Consumer Market Platforms for brands to capitalize on: Tap Universal truths: Tap Universal truths:Child-Culture neutral universal truth. Child-Culture neutral universal truth. Ex:J&J Ex: J&J BRANDS This is more in the product –related need. Here the brand needs to market Itself culture specifically. Ex: Gujarat’s Wagh Bakri tea brand has 60% market share in the state.(90% In Ahmedabad). Other local brands- Priya Gold Biscuits, Dandi salt, Arun Ice cream
  20. 20. Consumer MarketSOCIAL CLASS:Social classes are relatively homogeneous and enduring divisions in a society,which are hierarchically ordered and whose members share similar values,interests, and behavior. Upper uppers Upper uppers are the social elite who live on inherited Wealth and have well-known families. Maintain more than one home, and send their children to the finest schools. They are a market for jewelry, antiques, homes and vacations. Ex: Company Owners, Directors, MDs & CEOs, etc. Lower upper are persons who have earned high income Lower Uppers or wealth through exceptional ability in the professions or business. They usually come from the middle class. They seek To buy the symbols of status for themselves and their children such as expensive homes, automobiles.
  21. 21. Consumer Market Upper middles possess neither family status nor unusual wealth . They are primarily concerned with “career”. They have attainedUppers Middles Positions as professionals, independent businesspersons. They believe in education and want their children to develop professional or administrative shills so that they will not drop into a lower stratum The middle class are average pay white and blue collar workers. They are primarily concerned with “career” .They believe in Middle Class education and want their children to develop professional or administrative skills so that they will be in better position in society financially and socially. They are a market for computers and other necessary household items.
  22. 22. Consumer Market The lower Middle class are low paid employees like clerks and small business people like-pan shop. They are primarilyLower Middle Concerned with lively hood. They prefer status oriented product at economy price like music system, TV, etc. they are market for non branded products. The lower class is the one consisting of daily wages workers.Lower class They strive to satisfy their basic need. They are market for cheapest, non branded with small in size products.
  23. 23. Consumer MarketSOCIAL FACTORSREFERENCE GROUPS:A person’s reference groups consist of all the groups that have a direct(face to face) or indirect influence on the person’s attitudes or behavior.
  24. 24. Consumer MarketWho are the persons, who influence your buying behavior?Two broad categories:•Membership groups•Aspirational groupsMembership groups: These are groups to which the personbelongs and interacts. Primary groups: Such as family, friends, neighbors, and coworkers with which the person interacts fairly continuously. Secondary groups: Such as religious, professional and trade unions.
  25. 25. Consumer Market Aspirational groups: People are also influenced by groups in which they are not members. Groups to which a person would like to belong. Reference group influences in 3 ways NEW BEHAVIOR & CONFORMITYLIFE STYLE “FIT IN” Create pressures forReference group expose an Person’s attitude and s conformity that may affectIndividual to new behaviors and elf concept. the person’s actualLifestyles. Ex: Britannia Tiger product & Brand choices.Ex: HONDA City Biscuits. Ex: Bret lee-Timex
  26. 26. Consumer MarketFAMILY:The family is the most important consumer buying organization in society, andfamily members constitute the most influential primary reference group. The family of orientation consists of parents and siblings. From parents a personacquires an orientation toward religion, politics, and a sense of personal ambition,self-worth, and love. All the purchases is done by the head of the family in joint family. Buyer no longer interacts with his or her parents, their influence can be substantial.
  27. 27. Consumer MarketA more direct influence on everyday buying behavior is the family of procreation-namely, one’s spouse and children. The role of women in major family decisions, such as the purchase of automobile, house and durables, or joint decision making. Influence of teenage children particularly in technology products like cell phones, home computers, and music systems.
  28. 28. Consumer MarketROLES AND STATUSES: The person’s position in each group can be defined in terms of role andSTATUS. A ROLE consists of the activities a person expected to perform. Each rolecarries a status. People choose products that reflect and communicate their role and actual ordesired status in society. Company presidents often drive Mercedes, wear expensive suits, and drinkexpensive wines.
  29. 29. Consumer MarketPERSONAL FACTORSAGE AND STAGE IN THE LIFE CYCLE: People buy different goods and services over a lifetime. Taste infood, clothes, furniture, and recreation is often age related. Consumption isshaped by the family life cycle. Trends like delayed marriages, children migrating to distant cities oraboard for work leaving parents behind, tendency of professionals/workingcouple to acquire assets such as a house or an automobile in the earlystages of career, has resulted in different opportunities for marketers atdifferent stages in the consumer life cycle.
  30. 30. Consumer MarketOCCUPATION AND ECONOMIC CIRCUMSTANCES:Occupation also influences consumption patterns.Blue-Collar=work clothes, work shoes, and lunch boxes.Company President: Dress suits, air travel, and country clubmemberships.Marketers try to identify the occupational groups that have above-averageinterest in their products and services. A company can even tailor itsproducts for certain occupational groups.Ex: Design different products for brand managers, engineers, lawyers andphysicians.
  31. 31. Consumer MarketProduct choice is gently affected by economic circumstances: spendableincome ,savings, assets ,debts, borrowing power, and attitudes towardspending and saving.Luxury-goods makers such as Gucci, Prada, and Burberry can be vulnerableto an economic downturn.If economic indicators point to a recession, marketers can take steps toredesign, reposition, and reprice their products or introduce or increase theemphasis on discount brands so that they continue to offer value to targetcustomers.
  32. 32. Consumer Market Households (millions) Income Groups Urban Rural Total(Annual HouseholdIncome Rupees)Up to 40,000 8.2 56.0 64.2(low) (16.0) (44.7) (36.3)40,001-80,000 16.7 43.7 60.4(lower middle) (32.5) (34.8) (34.2)80,001-1,20,000 15.5 27.3(middle) 11.8 (12.3) (15.5) (23.0)1,20,001-1,60,000 5.6 12.5(upper middle) 6.9 (4.5) (7.1) (13.5)Above 1,60,000 7.7 4.5 12.2(high) (15.0) (3.7) (6.9) Total 51.3 125.3 176.6
  33. 33. Consumer MarketPERSONALITY AND SELF-CONCEPT:Personality mean set of distinguishing human psychological traits that lead torelatively consistent and enduring responses to environmental stimuli. Personality can be useful variable in analyzing consumer brand choices. Theidea is that brands also have personalities , and consumers are likely choosebrands whose personalities match their own.Brand personality as the specific mix of human traits that may be attributed toa particular brand.Brand personalities has five traits:1.Sincerity (down-to-earth, honest, wholesome, and cheerful)2.Excitement (daring, spirited, imaginative, and up-to date)3.Competence (reliable, intelligent, and successful)4.Sophistication (upper-class and charming)5.Ruggedness (Outdoorsy and tough)
  34. 34. Consumer MarketA Levi’s ad expresses the brand personality:youthful, rebellious.
  35. 35. Consumer Market Consumers often choose and use brands that have a brandpersonality consistent with their own actual self-concept (how one viewsoneself), although in some cases the match may be based on theconsumer’s ideal self concept (how one would like to view oneself) oreven other’s self-concept (how one thinks others see one) rather thanactual self image. Consumers who are high “self-monitors”-that is, sensitive to howothers see them –are more likely to choose brands whose personalitiesfie the consumption situation.
  36. 36. Consumer MarketLIFE STYLE AND VALUES: A lifestyle is a person’s pattern of living in the world as expressed inactivities, interests, and opinions. Lifestyle portrays the “whole person”interacting with his or her environment. Marketers search for relationshipsbetween their products and lifestyle groups. Computer buyers are achievement-oriented.
  37. 37. Consumer MarketLifestyles are shaped partly by whether consumers are money-constrained or time constrained .Money constrained: Wal-mart has become the largest company in theworld with “everyday low prices”.Time constrained: Texas Instruments recently launched “WANDA”(Wireless Any Network Digital Assistant”).
  38. 38. Consumer MarketPSYCHOLOGICAL PROCESSES:MOTIVATION:Some needs are biogenic they arise because of hunger, thirst, ordiscomfort. Other needs are psychogenic they arise as the need foerecognition, esteem, or belonging. A MOTIVE is a need that is sufficiently pressing to drive the personto act. Three of the best-known theories of human motivation-those ofSigmund freud, Abraham maslow, and Frederick Herzberg-carry implicationsfor consumer analysis and marketing strategy.
  39. 39. Consumer MarketFREUD’S THEORY: Sigmund Freud assumed that the psychological forces shapingpeople’s behavior are largely unconscious, and that a person cannot fullyunderstand his or own motivations. When a person examines specificbrands , he or she will react not only to their stated capabilities , but also toother, less conscious cues. Shape ,size, weight, material, color, and brandname can all trigger certain associations and emotions.
  40. 40. Consumer MarketMASLOW’S THEORY: Maslow’s theory helps marketers understand how various products fit into 5 the plans, goals, and lives of Self- actualization consumers. Needs Esteem Needs (Self- 4 esteem, recognition, status) Social Needs (Sense of 3 belonging, love) 2 Safety Needs (Security, protection) Physiological Needs 1 (food, water, Shelter)
  41. 41. M arketingHERZBERG’S THEORY: Management Developed a two-factor theory that distinguishes dissatisfiers (factorsthat cause dissatisfaction) and satisfiers (factors that cause satisfaction).The absence of dissatisfiers is not enough; satisfiers must be present tomotivate a purchase. Herzberg’s theory has two implications:1.Sellers should do their best to avoid dissatisfiers.2.The sellers should identify the major satisfiers or motivators of purchase inthe market and supply them. These satisfiers will make the major difference as to which brand thecustomer buys.
  42. 42. Consumer MarketPERCEPTION Perception is the process by which individuals selects, organizes,and interprets information inputs to create meaningful picture of the world. Perception depends not only on the physical stimuli , but also onthe stimuli’s relation to the surrounding field and on conditions within theindividual. Perceptions of the same object because of three perceptualprocesses: selective attention, selective distortion, and selective retention.
  43. 43. Consumer MarketSELECTIVE ATTENTION: Average person may be exposed to over 50 to100 ads or brandcommunications a day. Because a person cannot possibly attend to allof these, most stimuli will be screened out- a process called selectiveattention.Selective selection means that marketers have to work hard to attractconsumers notice.SELECTIVE DISTORTION: Selective distortion is the tendency to interpret information in a waythat will fit our preconceptions .Consumers will often distort information to beconsistent with prior brand and product beliefs.
  44. 44. Consumer MarketSELECTIVE RETENTION: People will fail to register much information to which they areexposed in memory, but will tend to retain information that supports theirattitudes and beliefs. Because of selective retention, we are likely toremember good points about a product we like and forget good pointsabout competing products.SUBLIMINAL PERCEPTION: The selective perception mechanisms require activeengagements and thoughts by consumers. A topic that has fascinatedarmchair marketers-embed covert, subliminal messages in ads andpackages.Consumers are not consciously aware of these messages, but yet theyaffect their behavior.
  45. 45. Consumer MarketLEARNING Learning involves changes in an individual’s behavior arising fromexperience. Most human behavior learned. Learning theorists believe thatlearning is produced through interplay of drives, cues, responses , andreinforcement.A drive is a strong internal impelling responds.Cues are minor stimuli that determine when, where, and how a personresponds.
  46. 46. Consumer Market The Buying Decision process: The Five-Stage Model Evaluation Problem Information PurchaseRecognition Of Search decision alternatives Post purchase behavior
  47. 47. Consumer Market Problem Recognition The Buying process starts when the buyer recognizes a problem orneed. The need can be aroused by an external or internal stimuli. Marketers need to identify the circumstances that trigger aparticular need by gathering information from a number of consumers.Ex: The Buyer need is to purchase a CAR .
  48. 48. Consumer Market Information Search Marketers are the major information sources to which the consumerwill turn and the relative influence each will have on the subsequent purchasedecision. For purchasing the CAR information sources are: Personal Friends, neighbors, family Advertising, Websites, salespersons ,dealers, Commercial packaging, displays. Public Mass media, consumer-rating organizations Experimental Handling, examining, using the product
  49. 49. Consumer MarketTotal Set Awareness Set Consideration Set Choice set Decision ?
  50. 50. Consumer Market Evaluation Of alternatives Consumer sees each product as a bundle of attributes with varyingabilities foe delivering the benefits sought to satisfy this need. The attributesof interest to buyers vary by product. Cars Attributes Mileage Price Speed Color 8 7 8 7 7 8 6 6 9 10 9 8 6 5 7 9
  51. 51. Consumer Market Purchase decision In executing a purchase intention, the consumer may make up to fivesub-decisions: Brand, Dealer, Quantity, Timing and Payment method.Purchases of everyday products involve fewer decisions and lessdeliberation.Ex: Sugar In some cases, consumers may decide not to formally evaluate eachand every brand; in other cases, intervening factors may affect the finaldecision.
  52. 52. Consumer Market Post purchase behavior The marketer’s job therefore does not end with the purchase. Marketers must monitor post purchase satisfaction, post purchase actions, and post purchase product uses..
  53. 53. Consumer MarketPost Purchase Satisfaction: Satisfaction is a function of the closeness between expectationsand the product’s perceived performance Level Expectations Customers Short Dissatisfied &disappointed Performance Matches Satisfied Exceeds Highly Satisfied/Delighted. These feelings make a difference in whether the customer buys the product again and talks favorably or unfavorably about it to others. The importance of post purchase satisfaction suggests that product claims must truthfully represent the product’s likely performance.
  54. 54. Consumer MarketPost Purchase Use and Disposal: Marketers should also monitor how buyers use and dispose of theproduct. A key driver of sales frequency is product consumption rate-themore quickly buyers consume a product, the sooner they may be back inthe market to repurchase it. One strategy to speed up replacement is to tie the act of replacingthe product to a certain holiday, event, or time of year.Ex: Toothbrushes have color indicators on their bristles indicate when theyare too worn; and so on.
  55. 55. Consumer MarketAdoption Process The stages through which an individual consumer passes in arriving at a decision to try (or not to try), to continue using (or discontinue using) a new product.
  56. 56. Consumer Market A sequence of categories that describes how Adopter early (or late) aCategories consumer adopts a new product in relation to other adopters.
  57. 57. Consumer Market Adopter Categories Early Laggards Adopters 13.5% Early Late 16% Majority MajorityInnovators 34% 34% 2.5% Percentage of Adopters by Category Sequence
  58. 58. Consumer Market Innovators: Description• 2.5% of population• Venturesome• Very eager to try new ideas• Acceptable if risk is daring• More cosmopolite social relationships• Communicates with other innovators
  59. 59. Consumer Market Early Adopters: Description• 13.5% of population• Respected• More integrated into the local social system• The persons to check with before adopting a new idea• Category contains greatest number of opinion leaders• Are role models
  60. 60. Consumer Market Early Majority: Description• 34% of population• Deliberate• Adopt new ideas just prior to the average time• Seldom hold leadership positions• Deliberate for some time before adopting
  61. 61. Consumer Market Late Majority: Description• 34% of population• Skeptical• Adopt new ideas just after the average time• Adopting may be both an economic necessity and a reaction to peer pressures• Innovations approached cautiously
  62. 62. Consumer Market Laggards: Description• 16% of population• Traditional• The last people to adopt an innovation• Most “localite” in outlook• Oriented to the past• Suspicious of the new
  63. 63. Consumer Market T Stages in Adoption Process WHAT HAPPENSNAME OF EXAMPLE DURING THIS STAGESTAGE Consumer is first Ambar sees an ad for a new MP3Awareness exposed to the product player in the magazine she is reading. innovation. Consumer is interested Ambar reads about the MP3 player on the in the product and manufacturer’s Web site and then goes toInterest searches for additional an electronics store near her apartment and has a salesperson show her a unit. information. Consumer decides After talking to a knowledgeable friend, whether or not to Ambar decides that this MP3 player will believe that this allow her to easily download the MP3 filesEvaluation that she has on her computer. She also feels product or service will that the unit’s size is small enough to easily satisfy the need--a kind fit into her belt pack. of “mental trial.”
  64. 64. Consumer Market Stages in Adoption Process WHAT HAPPENSNAME OF DURING THIS STAGE EXAMPLESTAGE Consumer uses the Since an MP3 player cannot be “tried” product on a limited like a small tube of toothpaste, AmbarTrial basis buys the MP3 player online from, which offers a 30-day full refund policy. If trial is favorable, Ambar finds that the MP3 player is consumer decides to easy to use and that the sound quality use the product on a is excellent. She keeps the MP3Adoption full, rather than a player.(Rejection limited basis--if) unfavorable, the consumer decides to reject it.
  65. 65. Consumer Market An Enhanced Adoption Process ModelPre-existing Adoptionproblem or Awareness Interest Evaluation Trial or Need Rejection Adoption or Rejection Post adoption or Post purchase Evaluation Discontinuation
  66. 66. Consumer Market Four Types of Buying Behavior High Involvement Low InvolvementSignificant Differences Complex buying Variety-seekingbetween Brands behavior buying behaviorFew Differences between Dissonance-reducing Habitual buyingBrands buying behavior behavior
  67. 67. Consumer Market  Complex Buying Behavior When consumers are highly involved in the purchase and where there is a significantdifference in brands, consumer shows this type of buying behavior. Example: Product is expensive, risky, highly self expressive.
  68. 68. Consumer Market • Dissonance-Reducing Buyer Behavior Customer is highly involved because product isexpensive & risky. There is few difference between brands, so customer collects information.After the purchase he might develop dissonancebecause of dissatisfying features of the product.
  69. 69. Consumer Market  Habitual Buying Behavior It is shown where the involvement ofcustomer is low and there is a absence of brand difference. Marketing practice: Price promotion, sales promotion
  70. 70. Consumer MarketVariety-Seeking Buying BehaviorIn this type, customer shows low involvement because product is inexpensive, purchased frequently. He has some beliefs & chooses brand without much evaluation.