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Cb

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Cb

  1. 1. Amity Business School MBA Class of 2010, Semester II Consumer Behavior Mamta Mohan
  2. 2. Course Contents: Module I - Consumer demographics, consumer life styles. Retailing implications of consumer demographics and lifestyle. Consumer profiles. Lifestyle marketing. Environmental factors affecting consumers. Module II -Consumer as an Individual, Motivation, Needs, Goals, Personality, Self and Self Images, Perception, Imagery, Learning, Cues, Response, Reinforcement, Behavioral Learning and Cognitive Learning Theory, Brand Loyalty . Module III -Attitude, Attitude Formation and Change. Shopping attitudes and behavior, where people shop. Consumer Buying Decision Process, types of consumer decision making. Impulse purchases and customer loyalty. Module IV -Group Dynamics and Reference Groups, Family Decision Making, Social Class, Culture, Subculture Module V- Opinion Leadership Process, Diffusions of Innovations, Adoption Process. Text & References: Schiffman and Kanuk, Consumer Behavior, latest edition
  3. 3. <ul><li>The Customer: key to market success </li></ul><ul><li>Satisfy customer: customer culture </li></ul><ul><li>Adopt marketing concept </li></ul><ul><li>Gain legitimacy in society. </li></ul>
  4. 4. <ul><li>Customer behavior & customer orientation </li></ul><ul><li>Cost efficiencies - </li></ul><ul><li>Premium prices from established customers </li></ul><ul><li>Protection against corporate crisis </li></ul><ul><li>increased word of mouth </li></ul><ul><li>one stop shopping </li></ul><ul><li>new product innovations </li></ul><ul><li>Customer orientation creates pride in employees. </li></ul>
  5. 5. <ul><li>What is customer behavior? </li></ul><ul><li>CB is the mental and physical activities undertaken by household and business customers that result in decisions and actions to pay for, purchase , and use products and services. </li></ul>
  6. 6. <ul><li>Customer roles- roles specialization </li></ul><ul><li>Buyer </li></ul><ul><li>Payer </li></ul><ul><li>User/consumer </li></ul><ul><li>Why ? </li></ul><ul><li>Lack of customer expertise about a product or service on the part of the end user. </li></ul><ul><li>Lack of time so purchase is delegated </li></ul><ul><li>lack of buying power. </li></ul><ul><li>Lack of access </li></ul><ul><li>Lack of affordability. </li></ul><ul><li>When the subsidies are involved, someone else paying for the part of the purchase. </li></ul><ul><li>When the product is free. </li></ul>
  7. 7. Customer needs and wants <ul><li>Determinants of needs and wants: </li></ul><ul><li>1 Three personal traits that determine needs </li></ul><ul><li>a genetics </li></ul><ul><li>b biogenic </li></ul><ul><li>c psychogenic </li></ul><ul><li>2 customers wants are determined by </li></ul><ul><li>a individual context </li></ul><ul><li>b environment context </li></ul>
  8. 8. Market values customer seek <ul><li>All customer behavior is driven by needs and wants </li></ul><ul><li>Marketing myopia </li></ul><ul><li>Market value </li></ul><ul><li>Classification of market values </li></ul><ul><li>Universal product values </li></ul><ul><li>Personal values </li></ul><ul><li>Social values </li></ul><ul><li>Emotional values </li></ul><ul><li>credit value </li></ul><ul><li>Financing value </li></ul><ul><li>Service value-convenience value </li></ul><ul><li>Personalization value </li></ul>
  9. 9. <ul><li>CB Model </li></ul>
  10. 10. Consumer Decision Making Model- Factors Prob Recognition Inf Search & Evaluation Pur process Post Pur Beh Motivation & Involvement Attitudes Personality & Self-Concept Learning & Memory Sub-Cultural Influences Social-Class Influences Cultural Social-Group Influences Family Influences Personal Influences External Env Internal Determinants DECISION PROCESS
  11. 11. CONSUMER DECISION PROCESS Steps in decision making process NEED RECOGNITION INFORMATION SEARCH EVALUATION OF ALTERNATIVES PURCHASE & CONSUMPTION POST-PURCHASE EVALUATION DIVESTMENT
  12. 12. My Refrigerator Has died! DECISION MAKING PROCESS NEED/PROBLEM RECOGNITION AWARENESS THAT THERE IS A DISCREPANCY BETWEEN ACTUAL STATE AND DESIRED STATE
  13. 14. DEFINING PROBLEM RECOGNITION <ul><li>“ Problem Recognition” results when a consumer recognizes a difference of sufficient magnitude between what is perceived as the desired state and the actual state. </li></ul><ul><li>“ Actual State ” refers to the way in which a need is already being met. </li></ul><ul><li>“ Desired state ” is the way in which a person would like for the need to be satisfied </li></ul>
  14. 15. <ul><li>Factors affecting the </li></ul><ul><li>Desired State </li></ul><ul><li>Reference Groups </li></ul><ul><li>Thinking </li></ul><ul><li>Factor affecting both </li></ul><ul><li>Financial Considerations </li></ul><ul><li>Previous Decisions </li></ul><ul><li>Family Characteristics </li></ul><ul><li>Culture </li></ul><ul><li>Individual Development </li></ul><ul><li>Factors affecting actual </li></ul><ul><li>State </li></ul><ul><li>Arousal of needs </li></ul><ul><li>Post purchase evaluation </li></ul>Desired State Actual State Opportunity Recognition Need Recognition Consumer Problem Recognition Consumer Action No Consumer Action
  15. 18. <ul><li>COGNITIVE AND PERSONAL BIASES IN DECISION MAKING </li></ul><ul><li>Selective search for evidence. </li></ul><ul><li>Premature termination of search for evidence. </li></ul><ul><li>Conservatism and inertia </li></ul><ul><li>Experiential limitation </li></ul><ul><li>Selective perception </li></ul><ul><li>Wishful thinking & optimism </li></ul><ul><li>Recency </li></ul><ul><li>Repetition bias. </li></ul><ul><li>Anchoring </li></ul><ul><li>Group think. </li></ul><ul><li>Source credibility bias </li></ul><ul><li>Incremental decision making </li></ul><ul><li>Inconsistency </li></ul><ul><li>Faulty generalizations. </li></ul><ul><li>Ascription of causality. </li></ul>
  16. 19. Influences on consumer <ul><li>Consumers’ Past Experiences </li></ul><ul><li>Consumer Characteristics –benefits sought by consumers , to some extent are conditioned by demographics , lifestyles , personalities, Income , Age , Marital Status </li></ul><ul><li>Consumer Motives – Motives are general drivers that direct a consumer’s behaviour towards attaining his/ her needs. Greater the disparity between current situation and desired goals , the greater the motivational drive to act to satisfy consumer needs </li></ul><ul><li>Environmental Influences –like social settings , family , peers </li></ul><ul><li>Past Marketing Stimuli - Past information about brand characteristics and price also affect consumers’ needs . Consumers obtain such information from advertisement , Television , Radio , Sales Representatives , Internet </li></ul>
  17. 20. <ul><li>Discover Consumer problems – </li></ul><ul><ul><li>Intuition n logic (eg. Vaccum cleaner) </li></ul></ul><ul><ul><li>Survey, focus groups etc </li></ul></ul><ul><ul><li>Activity analysis – focus on particular method of activity eg. Cooking, combing </li></ul></ul><ul><ul><li>Product analysis – examine purchase/use of particular product eg. Clothing, laptops </li></ul></ul><ul><ul><li>Problem Analysis – with list of problems respondents indicate activities, products or brands associated with those problems. Eg. ------------------- packages are hard to open </li></ul></ul><ul><ul><li>------------packages are hard to reseal/don’t fit the shelf/ don’t pour well/ wastage </li></ul></ul><ul><ul><li>Human Factors Research – determines human capabilities…flexibility, response time, strength, vision, fatigue </li></ul></ul><ul><ul><li>Emotion Research – emotion associated with certain product or products associated with reducing or arousing emotions </li></ul></ul>
  18. 21. <ul><li>Help Consumers Recognize problems </li></ul><ul><li>Generic PR discrepancy that a variety of brands within a pdt. category can reduce </li></ul><ul><li>Problem is latent or low importance </li></ul><ul><li>Product in early PLC </li></ul><ul><li>Firm has high market % </li></ul><ul><li>External search after PR limited </li></ul><ul><li>Industry wide cooperative efforts </li></ul>
  19. 22. <ul><li>Selective PR discrepancy only one brand can solve </li></ul><ul><li>Firm to gain or maintain market share </li></ul><ul><li>Expand total market </li></ul><ul><li>INFLUENCE D.S. – advertise desired pdt benefits eg. Happydent, scholls, baind-aid shapes </li></ul><ul><li>INFLUENCE A.S. – advertise concern eg. Deo, pastes, two wheelers </li></ul><ul><li>TIMING OF PR – purchase a solution when difficult or impossible eg. Insurance,fog light,cold medicine </li></ul><ul><li>SUPPRESSING PR – Mc Dowells soda, small warning prints </li></ul>
  20. 23. <ul><li>Respond to Consumer problems </li></ul><ul><li>Structure the mktg. mix </li></ul><ul><li>Develop new product </li></ul><ul><li>alter existing one </li></ul><ul><li>Modify channels of distribution </li></ul><ul><li>Change pricing policy </li></ul><ul><li>Revise advertising strategy </li></ul><ul><li>Eg. Balanced diet options </li></ul>
  21. 25. DECISION MAKING PROCESS INFORMATION SEARCH INTERNAL AND EXTERNAL SEARCH
  22. 27. Information Source Internal Information External Information Active Passive Active <ul><li>Past Searches </li></ul><ul><li>Personal Experience </li></ul><ul><li>Low-involvement learning </li></ul><ul><li>Independent Groups </li></ul><ul><li>Personal contacts </li></ul><ul><li>Marketer Info </li></ul><ul><li>Experiential </li></ul>
  23. 28. Brand Image Storage/ Performance Style & Design Price DECISION MAKING PROCESS ALTERNATIVE EVALUATION DETERMINE CHOICE CRITERIA TO EVALUATE PRODUCT ALTERNATIVES
  24. 30. All Potential Alternatives Awareness Set Evoked Set Inert Set Inept Set Specific Alternatives purchased Alternatives considered but not purchased
  25. 31. I’ll take that one . DECISION MAKING PROCESS PURCHASE CHOOSE WHICH BRAND TO BUY OR NOT TO BUY
  26. 33. Why did I buy such an expensive car? DECISION MAKING PROCESS POST-PURCHASE EVALUATION PURCHASE SATISFACTION COGNITIVE DISSONANCE
  27. 35. CLASS EXERCISE - EXPLAIN THE CONSUMER DECISION MAKING PROCESS WITH THE ABOVE EXAMPLE
  28. 36. Consumer Demographics, Consumer life styles Demography – science of population. Demographic +psychographic basis of segmentation. e.g. Retail banking 334 million bank accounts 60 million house holds are really ‘banked’ Around 91 million households9 incomes between 40,000 and rs. 180,000 per annum needs to be tapped by the banking sector. if 30 million additional households are tapped by the the organized financial service providers it would expand the revenue pool--------- e.g. Mobile marketing
  29. 37. Consumer demographics <ul><li>A trillion dollar market </li></ul><ul><li>The income Pyramid </li></ul><ul><li>-Rising incomes </li></ul><ul><li>-the sizable urban middle class </li></ul><ul><li>-fifth largest consumer </li></ul><ul><li>-A virtuous cycle </li></ul><ul><li>-Economic structure: (deprived, aspires, seekers, strivers, global Indians). </li></ul><ul><li>-The deprived class </li></ul><ul><li>-A middle class country. </li></ul><ul><li>-Globals will become a major spending force </li></ul><ul><li>-A widening distribution of income. </li></ul><ul><li>- Consumption growth </li></ul>
  30. 38. Consumer demographics <ul><li>Towns and cities </li></ul><ul><li>Tier 1 : major cities </li></ul><ul><li>8 cities population>4 million </li></ul><ul><li>Income>100 billion rupees. </li></ul><ul><li>Tier 2 : mainstrem cities26 cities, population>1 million </li></ul><ul><li>Tier 3 : climbers33 cities population >500,000 </li></ul><ul><li>Tier 4 small towns-5,094 towns </li></ul>
  31. 39. Mumbai, Calcutta, delhi chennai, hyderabad, pune , Ahmedabad Surat kanpur , nagpur,
  32. 40. Three ways of analyzing consumer behavior <ul><li>Economic models </li></ul><ul><li>Psychological models </li></ul><ul><li>Consumer behavior models </li></ul>
  33. 41. <ul><li>Model of decision making: consist of following steps </li></ul><ul><li>Need recognition; </li></ul><ul><li>Search for information on products that could satisfy the needs of the buyer; </li></ul><ul><li>Alternative selection </li></ul><ul><li>Decision making on buying the product; </li></ul><ul><li>Post purchase behaviour </li></ul>
  34. 42. Alternative models- steps in the marketing promotional process is often seen as the most generally useful; Awareness Interest understanding Attitudes Purchase. repeat purchase.
  35. 43. Source: National Council of Applied Economic Research (NCAER). The above presentation has been slightly modified by IndiaOneStop.Com 164.8 118.2 46.6 Total no. of households Total no. of households: 164.9 million 1.2 0.4 0.8 The rich >215,000 5.8 >106,000 32.5 15.9 16.6 Consumers 45,001-215,000 8.2 77,001-106,000 54.1 37.3 16.8 Climbers 22,001-45,000 19.7 50,001-77,000 44.0 36.9 7.1 Aspirants 16,001-22,000 50.4 25,001-50,000 33.0 27.7 5.3 Destitutes <16,000 80.7 <25,000 Total Rural Urban Number of households (in million) Classification Annual income (in Rupees) at 1994-95 prices No. of households (in million) Annual income (in Rupees) at 1994-95 prices Table II Structure of the Indian consumer market (1995-96) Table I Estimated households by annual income

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