Principles_Of_Marketing_Unit_2_Consumer_Behaviour_and_market_selection.pdf

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Principles Of Marketing
Unit 2 : Consumer Behaviour and
Market Selection
(Part 1 : Consumer Behaviour)
Introduction :
Consumer behaviour is the study of how different consumers, groups, or
organisations choose, purchase, utilise, and dispose of concepts, products,
and services to meet their needs and desires.
All marketing decisions are founded on presumptions about customer
behaviour, which includes communicating, purchasing, and consuming.
“consumer behaviour is the actions and decision processes of people who
purchase goods and services for personal consumption.”
“Consumer behaviour is the process whereby individuals decide what,
when, where, how and from whom to purchase goods and services.”
Customer :- A customer is someone who consistently purchases goods and
services from a supplier and pays for it to meet their requirements.
Consumers are those who buy products for their own needs and use them.
Although a consumer cannot resell the commodity or service, but can
consume it. The final user of the products or services is referred to as a
consumer.

Nature of Consumer behavior :
1. Dynamic in nature: Consumer behaviour changes throughout
life. Depending on the nature of the products, it changes gradually
over time.
2. Varies from customer to customer: Not all consumers act in
the same way. Distinct shoppers exhibit different behaviours.
Individual characteristics including consumer nature, lifestyle,
and culture are to blame for the variations in consumer
behaviour.
3. Leads to purchase decision: A choice to buy is influenced by
favourable consumer behaviour. A consumer’s decision to
purchase a product may be influenced by a variety of factors
4. Varies from product to product: Different products possess
different consumer behaviour. Some customers might purchase
larger quantities of some products while purchasing little to no
amounts of others.
5. Complex in nature: Because everyone has different
requirements and goals, consumer behaviour is complex. Each
person behaves differently in the market since they each have
specific wants.
Need for Studying Consumer Behaviour :
1. To satisfy customer needs: Consumers respond favourably while
examining the products that best suit their demands. . It involves
examining what people purchase, when they do so, where they do it,
and how frequently they utilise it. Therefore, understanding
consumer behaviour will be crucial to the marketer’s ability to meet
customers’ requirements.

2. Helps to understand consumer psychology: Marketing
professionals can better grasp consumer psychology by studying
consumer behaviour. Based on his knowledge, attitude, intention,
and motive, consumer psychology is used.
3. Helps to understand consumer motives: To comprehend a
consumer’s motivations for making purchases, consumer behaviour
must be studied. A Consumer has several motives, It’s possible that
not all of these reasons/ motives for buying are equally strong.
4. Helps to understand consumer choices and preferences:
Understanding how consumers make decisions is crucial for the
marketer. Most of the time, people are pretty rational. Before
making a purchase, individuals systematically use the information
available in the market.
5. Consumer Differentiation: There are significant differentiations
in the market. Different products are needed and desired by different
groups.
6. Creation and retention of customers: A ready market is
available for the products of marketers who build their offerings on
an understanding of customer wants.
7. Development of new products: New products are created with
the target market’s demands and preferences in mind.

Factors Influencing Consumer Buying Decisions :
1. Psychological Factors : Consumer preferences, likes and dislikes
for a given product and set of services are heavily impacted by
human psychology. Psychological factors include motivation,
perception, Attitudes and beliefs and learning.
 Motivation: It is the positive force that influences an individual to
perform a certain action.. A consumer’s motivation to purchase
goods and services can be influenced by their physiological
(necessities) and security needs.
 Perception: Perception means gathering information about
something and then forming one’s own views on a particular
domain. If a consumer forms a positive perception about a brand,
it will surely influence his buying decision.
 Learning: A person gains greater knowledge about a product when
they purchase it. Learning is dependent on a consumer’s abilities
and knowledge.
 Attitudes and Beliefs: If a consumer has a positive attitude
towards certain brands or manufacturers there is a very high
chance that he will buy things from them. Therefore, attitudes
play a very significant role in influencing a purchase decision.
2. Social Factors : Due to their social nature, humans are constantly
surrounded by people who can affect their purchasing decisions. The
purchase decisions of humans are influenced by people around them
in many ways, these ways are regarded as social elements. Several
societal factors include:
 Family: Family and its members are the most influential group of
people who motivate our purchase decision.
 Reference groups: A person’s “reference group” is a collection of
persons associates himself. The reference group’s members

typically have similar purchasing habits and have mutually
beneficial effects.
3. Cultural Factors : A collection of individuals is connected to a
certain community’s beliefs and ideologies. A person’s behaviour is
greatly influenced by the culture associated with the community
from which they originally belong.
4. Personal Factors : Consumers’ personal circumstances have an
impact on what they buy. These individual characteristics vary from
person to person, resulting in various views and purchasing patterns.
 Age: Age affects the purchase preferences of individuals.
 Income: A person’s purchasing behaviour may be influenced by
their income. Individuals with high disposable income spend more
on goods and services as compared to individuals with lower
incomes.
 Occupation: A consumers purchase decision also depends on his or
her occupation.
 Lifestyle: A person’s lifestyle is their attitude and how they
interact with others in society. The lifestyle of a consumer has a
significant impact on their purchasing habits.
5. Economic factors : The consumer buying habits and decisions
mainly depend on the economic status of a country or a market.
When a country is rich, its economy is powerful, which results in
more money available on the market and better consumer
purchasing power.
 Personal Income: A person’s purchasing power rises parallel with
their level of disposable income. The money that is left over after

meeting a person’s fundamental necessities is referred to as
disposable income
 Family income: The income of all the family members when
combined together forms family income. It is therefore said that
when a family has more bread earners they will spend more on
daily and extra goods whereas a family with low income will
spend less on these.
 Savings: It is that amount from the income that is set aside for a
purpose or future uncertainties. It holds a specific place in
purchase decision of a customer. When a consumer makes his
mind to do more saving his purchases decline whereas when he is
wishing to save less, his purchases increase
 Consumer Credit: Easy credit options for consumers who want to
buy items encourage greater expenditure. Consumers tend to buy
more luxuries and comforts when credit is more readily available
Consumer Buying Decision Process :
Understanding the purchase decision process enables marketers to build
marketing campaigns that are distinctive and identifiable by customers,
allowing them to recall the product in times of need.
Five Steps in the Purchasing Decision Process :
The purchase process consists of five steps. It begins with pre-purchase
and concludes with post-purchase. The following steps comprise the buyer
choice process:
1. Need recognition
2. Information search
3. Evaluation of options
4. Purchase decision

5. Post-purchase evaluation
1. Stage of Recognition: The initial step in the buyer decision process
is need recognition. The buyer detects a need or learns that a product
or service they require is absent at this step.
Marketers must use campaigns to raise brand recognition and
guarantee that customers remember the brand when they are in
need. The brand must be distinctive and trustworthy in the eyes of
the target audience.
2. Stage of Information Gathering: When a consumer is prompted
by an internal or external stimulus, they begin gathering information
about potential solutions from numerous sources.
A brand must successfully give all of the information that its clients
require. Customers should be able to communicate with a brand
3. Stage of Alternative Evaluation: Customers analyse their
options in this step; different companies offer ways to satisfy their
needs. Marketers must persuade customers that their product is
better than competitors’.
This decision may be influenced by pricing, additional features, or
other aspects of the product or service.
4. Stage of Purchase Decision: Once the customer gets all of the
information, they will choose one of the possibilities. This decision is
influenced by two major components: attitudes and unanticipated
situational factors.

5. Stage of Post-Purchase Behaviour: It is incorrect to believe that
a marketer’s duty is complete after a customer makes a purchase. It
is also critical to know whether the buyer was satisfied or
dissatisfied with the purchase.
It is critical to ensure that the customer is satisfied with the
performance of the product because this is the key to establishing
trust and a loyal customer base for the brand.
Part 2 : Market Selection
Introduction :
Market segmentation, is the process of breaking down a large,
heterogeneous market into smaller and more manageable groups. These
bases may range from geographical to demographic, cultural,
psychographic, etc.
Segmentation Criteria :
(a) Identity: The marketing manager interested in segmentation must
have, first of all, sonic means of identifying members of the segment
– some basis for classifying an individual as being or not being a
member of the segment.
(b) Accessibility: Once a segment has been identified, the next
question is: Can we communicate with them? The organisation must
be able to focus its marketing efforts on the chosen segment.

(c)Responsiveness: If the segment can be identified and
communicated with the next criterion to consider is whether or not
the segment will respond to marketing effort.
(d) Significance: The last and the most crucial question form
marketing management’s point of view is : Is it really significant? The
segment must possess buying power (willingness and ability to buy)
to make a worthwhile contribution to the organisation & objective.
Benefits of Segmentation :
1. Facilitates Proper Choice of Target Marketing: Segmentation
helps the marketers to distinguish one customer group from another
within a given market and thereby enables him to decide which
segment should form his target market.
2. Higher Profits: It is often difficult to increase prices for the whole
market. Nevertheless, it is possible to develop premium segments in
which customers accept a higher price level.
3. Facilitates Tapping of the Market, Adapting the offer to the
Target: Segmentation also enables the marketer to crystallize the
needs of target buyers. It also helps him to generate an accurate
prediction of the likely responses from each segment of the target
buyer. Moreover, when buyers are handled after careful
segmentation, the responses for each segment will be homogeneous.
4. Stimulating Innovation: An undifferentiated marketing strategy
that targets at all customers in the total market necessarily reduces
customers’ preferences to the smallest common basis.

Segmentations provide information about smaller units in the total
market that share particular needs.
5. Makes the Marketing Effort more Efficient and Economic:
Segmentation ensures that the marketing effort is concentrated on
well-defined and carefully chosen segments. After all, the resources
of any firm are limited and no firm can normally afford to attack and
tap the entire market without any delimitation whatsoever
Bases for Segmenting Markets :
(1) Geographic Segmentation: In this form of segmentation, sellers
distinguish carefully among the regions in which they can operate
and choose those in which they can enjoy a comparative advantage.
(2) Demographic Segmentation: In this form of segmentation,
sellers attempt to distinguish different groups on the basis of
demographic variables such as age, sex, family, size income,
occupation, education, family life cycle, region, nationality, or social
class.
(3) Psychographic Segmentation: In this form of
segmentation, the basic idea is that buyer’s needs may be more
differentiated along lifestyle or personality lines than along straight
– forward demographic lines.
(4) Benefit Segmentation: In this form of segmentation, buyers
are subdivided in relation the various benefits which they expect

from a particular product. A sample of consumers are interviewed for
this purpose
(5) Volume Segmentation: In this form of segmentation, seller
distinguishes the heavy, medium, light and non-users of his product.
Then he accepts to determine whether these groups differ in
demographic or psychographic ways.
(6) Marketing-factor Segmentation: In this form of segmentation,
the seller attempts to subdivide the market into groups responsive
to different marketing factors, such as price and price deals, product
quality, retail advertising, and so on
(7) Product Space Segmentation: In this form of segmentation,
buyers are asked to compare existing brands according to their
perceived similarity and in relation to their ideal brands.
Targeting :
Market targeting is the name of this technique. A target market is a
group of customers with whom a business chooses to do business and
who have similar wants or traits.
“a target market as a well-defined set of customers whose needs the
organization plans to satisfy.” He further suggests that the target
market may be the total focus of the organization or it may be viewed
as only a starting point for later expansion to other market segments

Factors Considered before Selecting a Target Market :
1. Size of the market or segment: The market should be large
enough to make sales and earnings from the same. Small segments
generally have less consumers and it is not easy to derive profits
from the same.
2. Accessibility: The segment that is chosen by the marketing
department should be within the reach of the firm and should be
easy to accessible.
3. Growth: The chosen segment should also have growth prospects, in
absence of these opportunities the profit will be limited to a
particular time period.
4. Measurable: The results of the targeted segment should be
measurable so, analysing results become an easy process
Positioning :
Product positioning refers to how consumers describe a product based on
key characteristics and the position it holds in comparison to rival items in
their minds. Therefore, a product’s ranking indicates significant qualities
that customers assign to it.
Bases of Positioning :
1. Top of the range: This is the product that consumers consider to be
“the best” or “the most expensive” one. It is usually considered
premium when compared to other products available in the market.

2. Value for money: The extent to which the benefits of the product
are a fair trade-off for the price being requested.
3. Reliability and quality: Products are frequently advertised as
being more (or less) reliable and trustworthy than those of their
rivals.
4. Country of origin: Some nations are known for creating the top
products in particular product categories.
5. Brand name: Branding is a crucial component of positioning since it
serves to identify the product and project an image of its quality.

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