CONSUMER BEHAVIOR

( A comparative study of Barista and Caf Coffee Day)

DESSERTATION
Submitted To
THE IIS UNIVERSITY
FOR THE DEGREE OF
MBA-INTERNATIONAL BUSINESS
(Department of HRM&IB)

SUPERVISED BY:

SUBMITTED BY:

Dr. Ankita Gangwal Jain

Prabhjot kaur

Head of Department

MBA-IB (SEM-IV)

Dept. of HRM and IB

ICG/2013/15877

2014-2015

Acknowledgement
I take this opportunity to express my profound gratitude and deep regard to my faculty DR M.K
SHARMA, DEAN FACULTY OF COMMERCE AND MANAGEMENT for his exemplary
guidance, monitoring and constant encouragement throughout the course of this thesis. The
blessing, help and guidance given by him time to time shall me a long way in the journey of life
on which I am about to embark.
I wish to express my sincere gratitude to Mam Dr. Ankita Gangwal Jain, head department of
HRM&IB of international college for girls, jaipur for providing me an opportunity to do seminar
project.
I also take this opportunity to express a deep sense ago gratitude to my tutor guardian Dr. Ankita
Gangwal jain, head department of HRM&IB for her cordial support, valuable information and
guidance which helped me in completing this task through various stages.

Preface
It is true that Experience is best teacher in todays globalize world , where cutthroat
competition is prevailing in the market, theoretical knowledge, which would help an individual
his/her career activate.
The MBA program is well structured and integrated course of business studies. The main
objective of practical training at MBA level is to develop skill in student by supplement to the
theoretical study of business management in general industrial training helps tp gain real life
knowledge about the industrial environment and buntline practices.
The MBA programmed provides student with a fundamental knowledge of business and
organizational functions and activates, as well as an exposure to strategic thinking of
management

CONTENT

Chapter-1

Introduction

Chapter-2

Research Methodology

Chapter-3

Meaning Of Research

Objective Of Study

Research Design

Scope of the study

Significance of the study

Relevance of the study

Limitations of study

Review of literature

Company Profile

Chapter-4

Data Analysis and Interpretation

Chapter-5

Findings and suggestions

Chapter-6

Conclusion

Bibliography
Annexure

PG. NO.

CHAPTER 1
INTRODUCTION

INTRODUCTION

Consumer Behavior
Consumer behaviour has been always of great interest to marketers. The knowledge of consumer
behavior helps the marketer to understand how consumers think, feel and select from alternatives
like products, brands and the like and how the consumers are influenced by their environment,
the reference groups, family, and salespersons and so on. A consumers buying behavior is
influenced by cultural, social, personal and psychological factors. Most of these factors are
uncontrollable and beyond the hands of marketers but they have to be considered while trying to
understand the complex behavior of the consumers. Consumer is the study of the processes
involved when individuals or groups select, purchase, use, or dispose of products, services, ideas,
or experiences to satisfy needs and desires . In the marketing context, the term consumer
refers not only to the act of purchase itself, but also to patterns of aggregate buying which
include pre-purchase and post-purchase activities. Pre-purchase activity might consist of the
growing awareness of a need or want, and a search for and evaluation of information about the

products and brands that might satisfy it. Post-purchase activities include the evaluation of the
purchased item in use and the reduction of any anxiety which accompanies the purchase of
expensive and infrequently-bought items. Each of these has implications for purchase and
repurchase and they are amenable in differing degrees to marketer influence . Engel, et al. define
consumer behaviour as those acts of individuals directly involved in obtaining, using, and
disposing of economic goods and services, including the decision processes that precede and
determine these acts. Simple observation provides limited insight into the complex nature of
consumer choice and researchers have increasingly sought the more sophisticated concepts and
methods of investigation provided by behavioural sciences in order to understand, predict, and
possibly control consumer behaviour more effectively.

It is the study of individuals, groups, or organizations and the processes they use to select,
secure, use, and dispose of products, services, experiences, or ideas to satisfy needs and the
impacts that these processes have on the consumer and society. It blends elements
from psychology, sociology, social anthropology, marketing and economics. It attempts to
understand the decision-making processes of buyers, both individually and in groups such as
how emotions affect buying behaviour. It studies characteristics of individual consumers such
as demographics and behavioural variables in an attempt to understand people's wants. It also
tries to assess influences on the consumer from groups such as family, friends, sports, reference
groups, and society in general.
Customer behaviour study is based on consumer buying behaviour, with the customer playing
the three distinct roles of user, payer and buyer. Research has shown that consumer behaviour is
difficult to predict, even for experts in the field. Relationship marketing is an influential asset for
customer behaviour analysis as it has a keen interest in the re-discovery of the true meaning of
marketing through the re-affirmation of the importance of the customer or buyer. A greater
importance is also placed on consumer retention, customer relationship management,
personalisation, customisation and one-to-one marketing. Social functions can be categorized
into social choice and welfare functions.
Each method for vote counting is assumed as social function but if Arrows possibility
theorem is used for a social function, social welfare function is achieved. Some specifications of
the social functions are decisiveness, neutrality, anonymity, monotonicity, unanimity,
homogeneity and weak and strong Pareto optimality. No social choice function meets these
requirements in an ordinal scale simultaneously. The most important characteristic of a social
function is identification of the interactive effect of alternatives and creating a logical relation
with the ranks. Marketing provides services in order to satisfy customers. With that in mind the

productive system is considered from its beginning at the production level, to the end of the.
cycle, the consumer.
It is a globally accepted fact that in recent times, marketers have become dynamic and the
consumer has control over the strategic decisions made by the insurance companies. Companies
are put to challenge to understand the pulses of new age policyholders and their buying pattern.
India, in this scenario is no exception. It is being a nation of diverse cultures and traditions,
understanding the consumers buying pattern become a hard task. With the advent of
globalization and the sequel changes in the country, many Multinational Insurance Corporations
have started making a foray into Indian insurance market due to its sky-scraping potential.
Business environment today is turbulent as never before and the service industry as promising as
never before. In this era of intense competition where customer is the king, success depends a lot
on the efficiency of the managers in delivering what they have promised and the responsibility
lies on the organizations to develop such a culture where business ethics are followed, value for
the services is provided and quality services are offered to achieve higher level of customer
satisfaction. For achieving customer satisfaction understanding dynamic consumer behaviour is
essential. As true believers in the marketing concept marketer should try their best to meet needs
of consumers.
Service firms should follow a proactive approach i.e. begin the service and satisfaction
management process before they even come in contact with customers and also be reactive i.e.
look forward for customers to complain, welcome them and tell them what to do. This study is an
attempt to develop a thought on how to focus on enabling and keeping promises in service firms
because how promises are kept is a clear indication of how strong and for how long shall the
customer relationship be. The service sector dominates the Indian economy today, contributing to
more than half of our National Income. Since services are intangible in nature and cannot be
checked before the purchase is actually made therefore, it is very critical to deliver what has been
promised to the target customer. Consumer behaviour studies play an important role in framing
marketing and in deciding marketing strategies.

Some selected definitions of consumer behaviour are as follows:

1. According to Engel, Blackwell, and Mansard, consumer behaviour is the actions and decision
processes of people who purchase goods and services for personal consumption.
2. According to Louden and Bitta, consumer behaviour is the decision process and physical
activity, which individuals engage in when evaluating, acquiring, using or disposing of goods
and services.
Consumers are often studied because certain discussions are significantly affected by their
behaviour or expected actions. For this reason, such consumer behaviour is said to be an applied
discipline. Such applications can exist at two level of analysis. The micro perspective involves
understanding consumers for the purpose of helping a firm or organization accomplish its
objectives. On the macro or societal perspective consumers collectively influence economic and
social conditions within an entire society,
Consumption and Customer: Consumption process is related to different types of individuals,
purchaser, shopper or customer and is generally used synonymously to indicate one who actively
engaged in buying. The consumption process involves three interrelated activities of decisions:
determine personal or groups wants, seek out and purchase products and employ products to
derive benefits.1 Customer: The term customer is typically used to refer to one who regularly
purchase from a particular store or company. The consumer more generally refers to anyone
engaging in any of the activities (evaluating, acquiring, using or disposing of goods and services)
used in the definition of consumer behaviour.2 Therefore, a customer is defined in terms of
specific firm while consumer is not. Customers are value maximiser within the bounds of search
costs, limited knowledge, mobility and income. The most commonly thought of consumer
situation is that of an individual making a purchase with little or no influence of others.
A consumer or buyer is one who determines personal wants, buys products and uses those
products. The traditional viewpoint defines consumers strictly in terms of economic goods and
services or one who consumes goods. The customer is king philosophy has become one of
those marketing fads and fashions that have continued to trail the growth and expansion of the
product economy.

The term consumer is often used to describe two different kinds of consuming entities personal
consumer and organizational consumer. Ultimate consumers are those individuals who purchases
for the purpose of individual or household consumption. Buyer is the individual who actually
makes the purchase transaction whereas user is the person most directly involved in the
consumption or use of the purchased product. A customer is also called client, buyer, shopper or
purchaser, usually used to refer to a current or potential buyer or user of the products of an
individual or organisation, called the supplier, seller, or vendor. 5 This is typically through
purchasing or renting goods or services. However, in certain contexts, the term customer also
includes by extension anyone who uses or experiences the services of another. A customer may
also be a viewer of the product or service that is being sold despite deciding to not buy them.

CONSUMER BEHAVIOUR AND BUYER BEHAVIOUR

Consumer Behaviour is seen to involve a complicated mental process as well as physical activity
(purchase decision). Consumer behaviour is a decision process and physical activity individuals
engage in when evaluating, acquiring, using or disposing of goods and services. Consumer
Behaviour reflects the totality of consumers decisions with respect to the acquisition,
consumption and disposition off goods, services, time and ideas by (human) decision making
units. 6 Buyer Behaviour particularly is the study of decision making units as they can buy for
themselves or others. Thus, buying behaviour particularly involves collective response of buyers
for selecting, evaluating, deciding and post purchase behaviour. Buyer behaviour is the study of
human response to services and the marketing of products and services. Buyer behaviour
researches continuously investigate a broad range of human responses including human
affective, cognitive and behavioural responses. The buying behavior and purchase decisions are
need to be studied thoroughly in order to understand, predict and analyze critical market
variations of a particular product or service. The field of consumer behaviour is the broad study
of individuals, groups or organisations and the process they use to select secure and dispose of
products, services, experiences or ideas to satisfy needs and the impacts that these processes have
on the consumer and society.

Consumer behaviour studies are based on the buying behavior:

The collective behaviour of consumers has a significant influence on quality and level of
standard of living. Buyer Behaviour is broadly defined by various scholars and researchers as:
1. Its the behaviour displayed by the consumers during the acquisition, use and disposition of
products/services, time and ideas by decision making units.
2. It is the body of knowledge which studies various aspects of purchase and consumption of
products and services by individuals with various social and psychological variables at play.
3. The process and activities people engage in when searching for, selecting, purchasing, using,
evaluating and disposing of products and services so as to satisfy their needs and desires. The
activities directly involved in obtaining, consuming and disposing of products and services,
including the decision processes that precede and follow these actions.

Nature of Consumer Behaviour:

The various factors that influence the consumer behaviour are as follows:

Marketing factors such as product design, price, promotion, packaging, positioning and
distribution.

Personal factors such as age, gender, education and income level.

Psychological factors such as buying motives, perception of the product and attitudes
towards the product.

Situational factors such as physical surroundings at the time of purchase, social

surroundings and time factor.

Social factors such as social status, reference groups and family.

fCultural factors, such as religion, social classcaste and sub-castes.

Undergoes a constant change:

Consumer behaviour is not static. It undergoes a change over a period of time depending on the
nature of products. For example, kids prefer colourful and fancy footwear, but as they grow up as
teenagers and young adults, they prefer trendy footwear, and as middle-aged and senior citizens
they prefer more sober footwear. The change in buying behaviour may take place due to several
other factors such as increase in income level, education level and marketing factors.

Varies from consumer to consumer:

All consumers do not behave in the same manner. Different consumers behave differently. The
differences in consumer behaviour are due to individual factors such as the nature of the
consumers, lifestyle and culture. For example, some consumers are technoholics. They go on a
shopping and spend beyond their means.
They borrow money from friends, relatives, banks, and at times even adopt unethical means to
spend on shopping of advance technologies. But there are other consumers who, despite having
surplus money, do not go even for the regular purchases and avoid use and purchase of advance
technologies.
Varies from region to region and country to county:
The consumer behaviour varies across states, regions and countries. For example, the behaviour
of the urban consumers is different from that of the rural consumers. A good number of rural
consumers are conservative in their buying behaviours.
The rich rural consumers may think twice to spend on luxuries despite having sufficient funds,
whereas the urban consumers may even take bank loans to buy luxury items such as cars and
household appliances. The consumer behaviour may also varies across the states, regions and
countries. It may differ depending on the upbringing, lifestyles and level of development.
Information on consumer behaviour is important to the marketers:
Marketers need to have a good knowledge of the consumer behaviour. They need to study the
various factors that influence the consumer behaviour of their target customers.

The knowledge of consumer behaviour enables them to take appropriate marketing

decisions in respect of the following factors.

Product design/model

Pricing of the product

Promotion of the product

Packaging

Positioning

Place of distribution

. Leads to purchase decision:

A positive consumer behaviour leads to a purchase decision. A consumer may take the decision
of buying a product on the basis of different buying motives. The purchase decision leads to
higher demand, and the sales of the marketers increase. Therefore, marketers need to influence
consumer behaviour to increase their purchases.
Varies from product to product:
Consumer behaviour is different for different products. There are some consumers who may buy
more quantity of certain items and very low or no quantity of other items. For example, teenagers
may spend heavily on products such as cell phones and branded wears for snob appeal, but may
not spend on general and academic reading. A middle- aged person may spend less on clothing,
but may invest money in savings, insurance schemes, pension schemes, and so on.

Improves standard of living:

The buying behaviour of the consumers may lead to higher standard of living. The more a person
buys the goods and services, the higher is the standard of living. But if a person spends less on
goods and services, despite having a good income, they deprives themselves of higher standard
of living.
Reflects status:
The consumer behaviour is not only influenced by the status of a consumer, but it also reflects it.
The consumers who own luxury cars, watches and other items are considered belonging to a
higher status. The luxury items also give a sense of pride to the owners.
Consumer Behaviour is a branch which deals with the various stages a consumer goes
through before purchasing products or services for his end use.
Why do you think an individual buys a product ?

Need

Social Status

Gifting Purpose

Why do you think an individual does not buy a product ?

No requirement

Income/Budget/Financial constraints

Taste

When do you think consumers purchase products ?

Festive season

Birthday

Anniversary

Marriage or other special occasions

There are infact several factors which influence buying decision of a consumer ranging from
psychological, social, economic and so on.
The study of consumer behaviour explains as to:

Why and why not a consumer buys a product ?

When a consumer buys a product ?

How a consumer buys a product ?

During Christmas, the buying tendencies of consumers increase as compared to other months. In
the same way during Valentines week, individuals are often seen purchasing gifts for their
partners. Fluctuations in the financial markets and recession decrease the buying capacity of
individuals.
In a laymans language consumer behaviour deals with the buying behaviour of individuals.
The main catalyst which triggers the buying decision of an individual is need for a particular
product/service. Consumers purchase products and services as and when need arises.
According to Belch and Belch, whenever need arises; a consumer searches for several
information which would help him in his purchase.
Following are the sources of information:

Personal Sources

Commercial Sources

Public Sources

Personal Experience

Perception also plays an important role in influencing the buying decision of consumers.
Buying decisions of consumers also depend on the following factors:

Messages, advertisements, promotional materials, a consumer goes through also

called selective exposure.

Not all promotional materials and advertisements excite a consumer. A consumer does
not pay attention to everything he sees. He is interested in only what he wants to see.
Such behaviour is called selective attention.

Consumer interpretation refers to how an individual perceives a particular message.

A consumer would certainly buy something which appeals him the most. He would
remember the most relevant and meaningful message also calleD as selective retention.
He would obviously not remember something which has nothing to do with his need.

Importance of consumer behaviour:

The modern marketing management tries to solve the basic problems of consumers in the area of
consumption. To survive in the market, a firm has to be constantly innovating and understand the
latest consumer needs and tastes. It will be extremely useful in exploiting marketing
opportunities and in meeting the challenges that the Indian market offers. It is important for the
marketers to understand the buyer behaviour due to the following reasons.

The study of consumer behaviour for any product is of vital importance to marketers in
shaping the fortunes of their organizations.

It is significant for regulating consumption of goods and thereby maintaining economic

stability.

It is useful in developing ways for the more efficient utilization of resources of marketing. It
also helps in solving marketing management problems in more effective manner.

Today consumers give more importance on environment friendly products. They are
concerned about health, hygiene and fitness. They prefer natural products. Hence detailed
study on upcoming groups of consumers is essential for any firm.

The growth of consumer protection movement has created an urgent need to understand
how consumers make their consumption and buying decision.

Consumers tastes and preferences are ever changing. Study of consumer behaviour gives
information regarding colour, design, size etc. which consumers want. In short, consumer
behaviour helps in formulating of production policy.

For effective market segmentation and target marketing, it is essential to have an

understanding of consumers and behaviour.

Factors influencing consumer behavior:

There are 4 main types of factors influencing consumer behavior: cultural factors, social factors,
personal factors and psychological factors.
I. Cultural factors

Cultural factors are coming from the different components related to culture or cultural
environment from which the consumer belongs.
Culture and societal environment:
. As these will play a role in the perception, habits, behavior or expectations of consumers.
For example, in the West, it is common to invite colleagues or friends at home for a drink or
dinner. In Japan, on the contrary, invite someone home does not usually fit into the local
customs. It is preferable to do that this kind of outing with friends or colleagues in restaurant.
A significant specificity to take into
account for the brands in markets such as savory snacking or sodas and alcoholic beverages.
Usage and consumption moments are not the same in all regions of the world.
While if a Japanese offer you a gift, the Culture is crucial when it comes to understanding the
needs and behaviors of an individual.
Throughout his existence, an individual will be influenced by his family, his friends, his cultural
environment or society that will teach him values, preferences as well as common behaviors to
their own culture.
For a brand, it is important to understand and take into account the cultural factors inherent to
each market or to courtesy is to offer him an equivalent gift in return.
McDonalds is a brilliant example of adaptation to the specificities of each culture and each
market. Well aware of the importance to have an offer with specific products to meet the needs
and tastes of consumers from different cultures, the fast-food giant has for example: a
McBaguette in France with french baguette and Dijon mustard, a Chicken Maharaja Mac and a
Masala Grill Chicken in India (with Indian spices) as well as a Mega Teriyaki Burger with
teriyaki sauce or Gurakoro with macaroni gratin and croquett )in Japan.
While all the ingredients used by McDonalds in arabic and muslim countries are certified halal.
The fast food chain not offering, of course, any product with bacon or pork.
Sub-cultures :
A society is composed of several sub-cultures in which people can identify. Subcultures are
groups of people who share the same values based on a common experience or a similar lifestyle
in general.

Subcultures are the nationalities, religions, ethnic groups, age groups, gender of the individual,
etc..
The subcultures are often considered by the brands for the segmentation of a market in order to
adapt a product or a communication strategy to the values or the specific needs of this segment.
For example in recent years, the segment of ethnic cosmetics has greatly expanded. These are
products more suited to non-Caucasian populations and to types of skin pigmentation for african,
arab or indian populations for example.
Its a real brand positioning with a well-defined target in a sector that only offered makeup
products to a caucasian target until now (with the exception of niche brands) and was then
receiving critics from consumers of different origin.
Brands often communicate in different ways, sometimes even create specific products
(sometimes without significant intrinsic difference) for the same type of product in order to
specifically target an age group, a gender or a specific sub-culture.
Consumers are usually more receptive to products and marketing strategies that specifically
target them.

Social classes:
Social classes are defined as groups more or less homogenous and ranked against each other
according to a form of social hierarchy. Even if its very large groups, we usually find similar
values, lifestyles, interests and behaviors in individuals belonging to the same social class.
We often assume three general categories among social classes : lower class, middle class and
upper class.
People from different social classes tend to have different desires and consumption patterns.
Disparities resulting from the difference in their purchasing power, but not only. According to
some researchers, behavior and buying habits would also be a way of identification and
belonging to its social class.

Beyond a common foundation to the whole population and taking into account that many
counterexample naturally exist, they usually do not always buy the same products, do not choose
the same kind of vacation, do not always watch the same TV shows, do not always read the same
magazines, do not have the same hobbies and do not always go in the same types of retailers and
stores.
For example, consumers from the middle class and upper class generally consume more balanced
and healthy food products than those from the lower class.
They dont go in the same stores either. If some retailers are, of course, patronized by everyone,
some are more specifically targeted to upper classes such as The Fresh Market, Whole Foods
Market, Barneys New York or Nordstrom. While others, such as discount supermarkets, attract
more consumers from the lower class.
Some studies have also suggested that the social perception of a brand or a retailer is playing a
role in the behavior and purchasing decisions of consumers.
In addition, the consumer buying behavior may also change according to social class. A
consumer from the lower class will be more focused on price. While a shopper from the upper
class will be more attracted to elements such as quality, innovation, features, or even the social
benefit that he can obtain from the product.
Cultural trends:
Cultural trends or Bandwagon effect are defined as trends widely followed by people and
which are amplified by their mere popularity and by conformity or compliance with social
pressure. The more people follow a trend, the more others will want to follow it.
They affect behavior and shopping habits of consumers and may be related to the release of new
products or become a source of innovation for brands.
By social pressure, desire to conformity or belonging to a group, desire to follow fashion
trends or simply due to the high visibility provided by media, consumers will be influenced,
consciously or unconsciously, by these trends.
For example, Facebook has become a cultural trend. The social network has widely grew to the
point of becoming a must have, especially among young people.

It is the same with the growth of the tablet market. Tablets such as iPad or Galaxy Tab have
become a global cultural trend leading many consumers to buy one. Even if they had never
specially felt the need before.
For a brand, create a new cultural trend from scratch is not easy. Apple did it with the tablets
with its iPad. But this is an exception. However, brands must remain attentive to the new trends
and bandwagon effects. Whether to accompany it (create a page on Facebook) or to take part
in the newly created market (create its own tablet).
II. Social factors
Social factors are among the factors influencing consumer behavior significantly. They fall into
three groups, family and social roles and status.
Reference groups and membership groups :
The membership groups of an individual are social groups to which he belongs and which will
influence him. The membership groups are usually related to its social origin, age, place of
residence, work, hobbies, leisure, etc..
The influence level may vary depending on individuals and groups. But is generally observed
common consumption trends among the members of a same group.
The understanding of the specific features (mindset, values, lifestyle, etc..) of each group allows
brands to better target their advertising message.
More generally, reference groups are defined as those that provide to the individual some points
of comparison more or less direct about his behavior, lifestyle, desires or consumer habits. They
influence the image that the individual has of himself as well as his behavior. Whether it is a
membership group or a non-membership group.
Because the individual can also be influenced by a group to which he doesnt belong yet but
wishes to be part of. This is called an aspirational group. This group will have a direct influence
on the consumer who, wishing to belong to this group and look like its members, will try to buy
the same products.
For example, even if he doesnt need it yet, a surfing beginner may want to buy advanced
brands or products used by experienced surfers (aspirational group) in order to get closer to this
group. While a teen may want the shoe model or smartphone used by the group of popular
guys from his high school (aspirational group) in order to be accepted by this group.

Some brands have understood this very well and communicate, implicitly or not, on the social
benefit provided by their products.
Within a reference group that influence the consumer buying behavior, several roles have been
identified:

The initiator: the person who suggests buying a product or service

The influencer: the person whose point of view or advice will influence the buying
decision. It may be a person outside the group (singer, athlete, actor, etc..) but on which
group members rely on.

The decision-maker: the person who will choose which product to buy. In general, its
the consumer but in some cases it may be another person. For example, the leader of a
soccer supporters group (membership group) that will define, for the whole group, which
supporters scarf buy and bear during the next game.

The buyer: The person who will buy the product. Generally, this will be the final consumer
.Many brands look to target opinion leaders (initiator or influencer) to spread the use and
purchase of their product in a social group. Either through an internal person of the group when
it comes to a small social group. Or through a sponsorship or a partnership with a reference
leader (celebrity, actor, musician, athlete, etc..) for larger groups.
Family: The family is maybe the most influencing factor for an individual. It forms an
environment of socialization in which an individual will evolve, shape his personality, acquire
values. But also develop attitudes and opinions on various subjects such as politics, society,
social relations or himself and his desires.
But also on his consumer habits, his perception of brands and the products he buys.
We all kept, for many of us and for some products and brands, the same buying habits and
consumption patterns that the ones we had known in our family. Perceptions and family habits
generally have a strong influence on the consumer buying behavior. People will tend to keep the
same as those acquired with their families.For example, if you have never drunk Coke during
your childhood and your parents have described it as a product full of sugar and not good for
health. There is far less chance that you are going to buy it when you will grow up that someone
who drinks Coke since childhood.

For brands especially for Fast-Moving Consumer Goods (FMCG) or Consumer Packaged
Goods (CPG) successfully integrate the family is both a real challenge and an opportunity to
develop a strong consumer loyalty among all the family members.
Thats why its important for brands to be seen as a family brand in order to become a consumer
habit for parents and children when they will become adults.
Social roles and status:
The position of an individual within his family, his work, his country club, his group of friends,
etc. All this can be defined in terms of role and social status.
A social role is a set of attitudes and activities that an individual is supposed to have and do
according to his profession and his position at work, his position in the family, his gender, etc..
and expectations of the people around him.
Social status meanwhile reflects the rank and the importance of this role in society or in social
groups. Some are more valued than others.
The social role and status profoundly influences the consumer behavior and his purchasing
decisions. Especially for all the visible products from other people.
For example, a consumer may buy a Ferrari or a Porsche for the quality of the car but also for the
external signs of social success that this kind of cars represents. Moreover, it is likely that a CEO
driving a small car like a Ford Fiesta or a Volkswagen Golf would be taken less seriously by its
customers and business partners than if he is driving a german luxury car.
And this kind of behaviors and influences can be found at every level and for every role and
social status.
Again, many brands have understood it by creating an image associated with their products
reflecting an important social role or status.
III. Personal factors:
Decisions and buying behavior are obviously also influenced by the characteristics of each
consumer.
Age and way of life:

A consumer does not buy the same products or services at 20 or 70 years. His lifestyle, values,
environment, activities, hobbies and consumer habits evolve throughout his life.
For example, during his life, a consumer could change his diet from unhealthy products (fast
food, ready meals, etc..) to a healthier diet, during mid-life with family before needing to follow
a little later a low cholesterol diet to avoid health problems.
The factors influencing the buying decision process may also change. For example, the social
value of a brand generally play a more important role in the decision for a consumer at 25 than
at 65 years.
The family life cycle of the individual will also have an influence on his values, lifestyles and
buying behavior depending whether hes single, in a relationship, in a relationship with kids, etc..
As well as the region of the country and the kind of city where he lives (large city, small town,
countryside, etc..
For a brand or a retailer, it may be interesting to identify, understand, measure and analyze what
are the criteria and personal factors that influence the shopping behavior of their customers in
order to adapt.
For example, it is more than possible that consumers living in New York do not have the same
behavior and purchasing habits than the ones in Nebraska. For a retailer, have a deep
understanding and adapt to these differences will be a real asset to increase sales.
Purchasing power and revenue:
The purchasing power of an individual will have, of course, a decisive influence on his behavior
and purchasing decisions based on his income and his capital.
This obviously affects what he can afford, his perspective on money and the level of importance
of price in his purchasing decisions. But it also plays a role in the kind of retailers where he goes
or the kind of brands he buys.
As for social status, some consumers may also look for the social value of products they buy in
order to show external indications of their incomes and their level of purchasing power.
Lifestyle:
The lifestyle of an individual includes all of its activities, interests, values and opinions.

The lifestyle of a consumer will influence on his behavior and purchasing decisions. For
example, a consumer with a healthy and balanced lifestyle will prefer to eat organic products and
go to specific grocery stores, will do some jogging regularly (and therefore will buy shoes,
clothes and specific products), etc..
Personality and self-concept:
Personality is the set of traits and specific characteristics of each individual. It is the product of
the interaction of psychological and physiological characteristics of the individual and results in
constant behaviors.
It materializes into some traits such as confidence, sociability, autonomy, charisma, ambition,
openness to others, shyness, curiosity, adaptability, etc..
While the self-concept is the image that the individual has or would like to have of him and
he conveys to his entourage. These two concepts greatly influence the individual in his choices
and his way of being in everyday life. And therefore also his shopping behavior and purchasing
habits as consumer.
In order to attract more customers, many brands are trying to develop an image and a personality
that conveys the traits and values - real or desired of consumers they are targeting.
For example, since its launch, Apple cultivates an image of innovation, creativity, boldness and
singularity which is able to attract consumers who identify to these values and who feel valued
in their self-concept by buying a product from Apple.
Because consumers do not just buy products based on their needs or for their intrinsic features
but they are also looking for products that are consistent and reinforce the image they have of
themselves or they would like to have.
The more a product or brand can convey a positive and favorable self-image to the consumer, the
more it will be appreciated and regularly purchased.
IV. Psychological factors
Among the factors factors influencing consumer behavior, psychological factors can be divided
into 4 categories: motivation, perception, learning as well as beliefs and attitudes

.
Motivation:
Motivation is what will drive consumers to develop a purchasing behavior. It is the expression of
a need is which became pressing enough to lead the consumer to want to satisfy it. It is usually
working at a subconscious level and is often difficult to measure.
Motivation is directly related to the need and is expressed in the same type of classification as
defined in the stages of the consumer buying decision process.
To increase sales and encourage consumers to purchase, brands should try to create, make
conscious or reinforce a need in the consumers mind so that he develops a purchase motivation.
He will be much more interested in considering and buy their products.
They must also, according to research, the type of product they sell and the consumers they
target, pick out the motivation and the need to which their product respond in order to make them
appear as the solution to the consumers need.
Perception:
Perception is the process through which an individual selects, organizes and interprets the
information he receives in order to do something that makes sense. The perception of a situation
at a given time may decide if and how the person will act.
Depending to his experiences, beliefs and personal characteristics, an individual will have a
different perception from another.
Each person faces every day tens of thousands of sensory stimuli (visual, auditory, kinesthetic,
olfactory and gustatory). It would be impossible for the brain to process all consciously. That is
why it focuses only on some of them.

The perception mechanism of an individual is organized around three processes:

Selective Attention: The individual focuses only on a few details or stimulus to which he
is subjected. The type of information or stimuli to which an individual is more sensitive
depends on the person.

For brands and advertisers successfully capture and retain the attention of consumers is
increasingly difficult. For example, many users no longer pay any attention, unconsciously, to
banner ads on the Internet. This kind of process is called Banner Blindness.
The attention level also varies depending on the activity of the individual and the number of
other stimuli in the environment. For example, an individual who is bored during a subway trip
will be much more attentive to a new ad displayed in the tube. It is a new stimuli that breaks the
trip routine for him.
Consumers will also be much more attentive to stimuli related to a need. For example, a
consumer who wishes to buy a new car will pay more attention to car manufacturers ads. While
neglecting those for computers.
Lastly, people are more likely to be attentive to stimuli that are new or out of the ordinary. For
example, an innovative advertising or a marketing message (Unique Value Proposition) widely
different from its competitors is more likely to be remembered by consumers.

Selective Distortion: In many situations, two people are not going to interpret an
information or a stimulus in the same way. Each individual will have a different perception
based on his experience, state of mind, beliefs and attitudes. Selective distortion leads people
to interpret situations in order to make them consistent with their beliefs and values.

For brands, it means that the message they communicate will never be perceived exactly in the
same way by consumers. And that everyone may have a different perception of it. Thats why its
important to regularly ask consumers in order to know their actual brand perception.
Selective distortion often benefits to strong and popular brands. Studies have shown that the
perception and brand image plays a key role in the way consumers perceived and judged the
product.
Several experiments have shown that even if we give them the same product, consumers find that
the product is or tastes better when theyve been told that its from a brand they like than when
theyve been told its a generic brand. While it is exactly the same product!

Similarly, consumers will tend to appreciate even less a product if it comes from a brand for
which they have a negative perception.

Selective Retention: People do not retain all the information and stimuli they have been
exposed to. Selective retention means what the individual will store and retain from a given
situation or a particular stimulus. As for selective distortion, individuals tend to memorize
information that will fit with their existing beliefs and perceptions.

For example, consumers will remember especially the benefits of a brand or product they like
and will forget the drawbacks or competing products advantages.
Selective retention is also what explains why brands and advertisers use so much repetition in
their advertising campaigns and why they are so broadcasted. So that the selective retention can
help the brand to become a top of mind brand in the consumers mind.
Learning:
Learning is through action. When we act, we learn. It implies a change in the behavior resulting
from the experience. The learning changes the behavior of an individual as he acquires
information and experience.
For example, if you are sick after drinking milk, you had a negative experience, you associate the
milk with this state of discomfort and you learn that you should not drink milk. Therefore, you
dont buy milk anymore.
Rather, if you had a good experience with the product, you will have much more desire to buy it
again next time.
The learning theories can be used in marketing by brands. As the theory of operant conditioning
which states that you can build a good image and high demand for a product by associating it
with a positive reinforcement (or rather a bad image with a negative reinforcement)
Beliefs and attitudes:
A belief is a conviction that an individual has on something. Through the experience he acquires,
his learning and his external influences (family, friends, etc..), he will develop beliefs that will
influence his buying behavior.

While an attitude can be defined as a feeling, an assessment of an object or idea and the
predisposition to act in a certain way toward that object. Attitudes allow the individual to develop
a coherent behavior against a class of similar objects or ideas.
Beliefs as well as attitudes are generally well-anchored in the individuals mind and are difficult
to change. For many people, their beliefs and attitudes are part of their personality and of who
they are.
However, it is important to understand, identify and analyze the positive attitudes and beliefs but
also the negative ones that consumers can have on a brand or product. To change the brands
marketing message or adjust its positioning in order to get consumers to change their brand
perception.
Consumer behavior involves the psychological processes that consumers go through in
recognizing needs, finding ways to solve these needs, making purchase decisions (e.g., whether
or not to purchase a product and, if so, which brand and where), interpret information, make
plans, and implement these plans (e.g., by engaging in comparison shopping or actually
purchasing a product).

Theory of consumer behavior

Our analysis of demand permits us to determine the underlying factors affecting the level of
consumer demand of a given commodity. An increase in the price of a commodity, we expect
consumers to react by decreasing the quantity they want to buy. Our discussion of elasticity of
demand further develop our understanding of demand by showing to us the extent of how
consumers

react

to

adjustment

in

price.

In this chapter, we further explain the behavior of demand by analyzing consumer behavior. The
theory of consumer behavior describes how consumers buy different goods and services.
Furthermore, consumer behavior also explains how a consumer allocates its income in relation to

the purchase of different commodities and how price affects his or her decision. There are two
theories that seek to explain consumer behavior. These are the utility theory and the indifference
preference theory.
Consumer behavior assumptions:
1. Rational consumer
2. Consumer Preferences

Application of Consumer Behaviour

The study of consumer behaviour deals with basic questions related to buying such as: what we
buy, why we buy and how we buy. The study of consumer behaviour makes us aware of the
subtle influences that persuade us to use the product or services of our choices we do. For
understanding consumer behaviour, implementation of consumer behaviour theories and
verification of applications of such theories is necessary. Consumer behaviour is simple a large
subset of larger field of human behaviour and an extended field of marketing attracting
researchers and marketers from past few decades. Four main applications of consumer behavior
The most obvious application of consumer behaviour is for deriving marketing strategy. New
products initially adopted by a few consumers and spread gradually to the rest of the population
later. The companies that introduce new products must be well financed so that they can stay

afloat until their products become a commercial success. It is also important to please initial
customers, since they will in turn influence many subsequent customers brand choices.

CONSUMER BEHAVIOUR: AN EMERGING FIELD OF STUDY

In the highly

specialised study of business management, business administration or just management

today, marketing management function plays a very critical role in business activities. This is
because this functional area of management (1) earns the revenue and (2) works in the close
proximity with the public or persons outside the organisation. Controlling these two attributes to
have the desired benefits are the most difficult part of the management, because none of these
two are within the direct control of the marketers. This does not mean that the other functional
areas are not useful, but they are not directly involved in the activities mentioned above.
Marketing consists of an interaction between buyer and seller for the purpose of exchanging
something valuable to the mutual benefit of both the parties to the transaction. One cannot
appreciate this marketing process by observing only the seller, knowledge about consumer is a
sound basis for marketing strategies and decisions. Markets are selected on the basis of consumer
wants, location, characteristics and expenditure patterns. To ignore the customer can lead to
disaster in a modern economy. Consumer behaviour has become an integral part of strategic
market planning. It is also the basis of the approach to the concept of Holistic Marketing . The
belief that ethics and corporate social responsibility should also be integral components of every
marketing decision is embodied in a revised marketing concept the societal marketing concept
which calls on marketers to fulfil the needs of their target markets in ways that improve society
as a whole. Consumer or the Customer play a very critical role as these are the people who
finally buy the goods and services of the organization and the firm is always on the move to
make them buy so as to earn revenue. Its crucial from both the points of view as given below:
From the customers point of view.

Today, in the highly developed and technologically advanced society, the customers have a great
deal of choices and options (often very close and competing) to decide on or compare;
(a) they have the products of an extreme range of products attributes .
(b) they have a wide range of cost and payment choices .
(c) they can order them to be supplied to their door step or anywhere else (the 3rd P - Place)

(d) finally they are bombarded with more communications from more channels of information
than ever before with the invent of information technology (the 4th P - Promotion). From the
marketers point of view: The purpose of marketing is to sell more stuff to more people more
often for more money in order to make more profit. This is the basic principle of requirement
for the marketers in earlier days where aggressive selling was the primary aim. It cannot be
achieved by force, aggression or plain alluring. Customer today are more informed, more
knowledgeable, more demanding, more discerning and above all there is no dearth of marketers
to buy from. The marketers have to earn them or win them over. The global marketplace is a
study of diversity among consumers, producers, marketers, retailers, advertising media, cultures,
customs and of course the individual or psychological behaviour. However, despite prevailing
diversities, there also are many similarities. Consumer market is highly sensitive and driven by
widely diversified culture in many countries. The study of consumer behaviour is also very
important to the marketers because it enables them to understand and predict buying behaviour
of consumers in the marketplace. It is concerned not only with what consumers buy, but also
with why they buy it, when, where, how they buy it, how often they buy it and also how they
enjoy the services. Consumer research is the methodology used to study consumer behaviour; it
takes place at every phase of the buying process: before the purchase, during the purchase and
after the purchase. Researches shows that two different buyers buying the same product may
have done it for different reasons, paid different prices, used in different ways, have different
emotional attachments towards the things and so on. The market strategies are reframed to
achieve organisational objectives depending upon knowing, serving and influencing consumers.
This suggests that the knowledge and information about consumers is critical for developing
successful marketing strategies.
The relationship between consumers and marketers, consumer behaviour and marketing strategy
is instable to attain organisational objectives. Consumer behaviour is interdisciplinary approach
based on concepts and theories about people that have been developed by behavioural scientists,
philosophers and researchers in diverse disciplines such as psychology, sociology, social
psychology, cultural anthropology and economics. The study of consumer behaviour also helps
management to understand consumers needs so as to recognise the potential for the trend of
development of change in consumer requirements and new technology and also to articulate the
new thing in terms of the consumers needs so that it will be universally accepted in the market
well. The following are few examples of the benefits of the study of consumer behaviour derived
by the different categories of people: (a) a marketing manager should know about consumer
behaviour as it will Chapter 2: Consumer Behaviour help him to design better marketing plans

to get those plans accepted within the company. (b) in insurance company the marketing
department would like to know the policyholders need and (c) researchers want to analyse the
consumers decision process and ingredients of customer satisfaction.
DIFFERENT VIEWS ON CUSTOMER :Marketing scientists had noted that consumer does not
always act or react as suggested by economic theory.
Therefore customer is further analysed from different angle. Sometime consumers buy because
of emotions involved in a purchase decision or several other reasons.
(1) Economic and Passive Customer: Economic view explains the consumer as an economic
man who buys rationally to maximize the utility (benefits) derived from a product or service. The
passive view explains the consumer basically submissive to the self-serving interest and
promotional efforts of marketers.
(2) Cognitive Versus Emotional Customer: According to cognitive view consumer is defined as
a thinker and problem solver. Emotional man is a reality of each of us because of deeply rooted
feeling and emotions.
(3) Potential and Realised Customer: There are three possibilities to identify the state of
consumer; (1) non consumers (2) potential consumers and (3) realized consumers. A non
consumer is an individual who has no need for a given product/service and is not likely to have
need in the foreseeable future. An individual not currently purchasing may influenced to buy at
some future point of time is referred to as a potential consumer. Realized consumers generally
conform to our earlier definition of purchaser or shopper, since they are engaged in buying.
(4) Personal Consumer Versus Organisational Consumer: The term consumer is often used to
describe two different kinds of consuming entities; the personal consumer and the organisational
consumer. The personal consumer buys goods and services for his own, for the use of the
household, for just one
: Consumer Behaviour 104 member or as a gift for a friend. In these context the goods are
bought or finally use by individuals who are referred to as end users or ultimate consumers.
Whereas organizational consumers buy for altering, modifying or reselling the products/services.
(5) Final Consumer: Any person engaged in the consumption process is a consumer but these
buyers can be identified by the type of market to which they belong. Two major types of market
to which they belong are final consumer and industrial buyer. The final consumer market consists
of individuals who buy for personal consumption or to meet the collective needs of family or

household unit. (6) Rural Consumer: The rural market is one such segment that caught the fancy
of certain Indian marketers in a big war. Marketer considers catering to the rural market as an
opportunity, an antidote to the slow growth they faced in urban India. Rural consumers as a
segment have several distinctive characteristics and the values aspirations and needs of this vast
heterogeneous culture of rural consumers are quite different from the urban consumers. (7)
Women as a Consumer and Decision Maker: Gender is considered as an important characteristic
for consumer behaviour studies by marketers from past several years. They treat women as an
exception rather than as normal average is a retrograde gap. Large number of experts felt that it
is a fact of life that women consumer exhibit special traits and behaviour. 2.7 BUYING ROLES
For making strategic decisions the marketers have to identify the buyers who make the final
buying decisions. It is truly a big task before the marketers to identify the target buyers of the
particular service. (1) Influencer: Several people may be involved in a particular purchase
decision, but all of them are not consumers. A person who has influence, whose views or advice
is given wheightage while taking the final decision. Chapter 2: Consumer Behaviour 105 (2)
Gatekeepers: Family members who control the flow of information about a product or service
into the family. (3) Initiator: The person who is the first to suggest or think of the idea of
purchasing a product or service. (4) Decider: The person who finally takes the decisions of
whether to buy, what to buy, how to buy and from where to buy. (5) Buyer: The person who
actually buy the product/service after making PAYMENTS.

CONCEPTS AND DIMENSIONS OF CONSUMER BEHAVIOUR

Consumer behaviour is an interdisciplinary science and relatively emerged as a new field of
study in the mid to late 1060s. This new discipline is borrowed heavily from concepts developed
in other scientific disciplines such as applied psychology, social psychology, cultural
anthropology, economics and econometrics. Therefore, it is crucial to discuss various dimensions
of consumer behaviour in the context of Indian consumer
. (a) Consumer Needs and Motivation: Consumer needs are the basis of all modern marketing.
The key to a companys survival, profitability and growth in a highly competitive environment is
its ability to identify and satisfy unfulfilled consumer needs Marketers do not create needs
though in some instances they may make consumer more keenly aware of unfelt need.
Motivation can be described as the deriving force within individuals that impels them to action.
The deriving force is produced by a state of tension exists as the result of an unfilled need.

Motivation is a need-induced tension which exerts a push on the individual to engage in

behaviour that he expects, will gratify needs and thus reduce tension. Individuals strive both
consciously and subconsciously to reduce this tension through behaviour that they anticipate will
fulfill their needs. Consumer motivation is dynamic in nature because their wants are frequently
changing.
(b) Consumer Psychographics: Marketing practitioner and consumer researchers refer
Psychographics as lifestyle analysis or AIO (activity, interest and opinions) research. Consumer
specific psychographics researches are related to consumer personality, buying motives,
interests, attitudes, beliefs and values. Services specific psychographics researches are related to
product attributes such as consumer responses about products, brands or a specific consumption
situation. Consumer perception: Perception is defined as the process by which an individual
organises and interprets stimuli into a meaningful and coherent manner. Stimuli are sensory
inputs include services, packages, brand names, advertisements and commercials. Sensory
receptors are the human organs that receive sensory inputs. Sensation is the immediate and direct
response of the sensory organs to simple stimuli. Learning and consumer involvement:
Consumer learning is the process of acquiring the knowledge related to purchase and
consumption information. Consumer attitudes: Attitudes are expression of inner feelings that
reflects whether a person is favorably or unfavorably predisposed to some object, person or
event. As an outcome of psychological process attitudes are not directly observable but must be
inferred from what people say or do.
(c) Demographic Factors: Demographics describe a population in terms of its size, distribution
and structure. Demographics influence buying behaviour both directly and indirectly by affecting
other attributes of individuals such as their personal values and decision styles. There are
contradictory conclusions about the effect of age, income and gender for a particular service.
Age, age-groups, education level, income, occupation etc. serves as various dimensions of
demographics. In India additional factors such as religion, social denominations, caste, age,
family background, regional disparities in Chapter 2: Consumer Behaviour 107 states, linguistic
difference, regional perception of class factor and the degree of impact of these factors in
affecting the social status, all play crucial role in determining the social status of an individual.
(d) Economic Factors: Wealth, home ownership, number of earning members in a family,
household income, expenditure, rate of interest, inflation, economic conditions and investment
pattern are some of the economic factors have strong influence on consumer purchase decision.

(e) Communication and Consumer Behaviour: FLC is a strategic tool for marketers to
segment families in terms of a series of stages spanning the life course of a family unit.
Traditional family life cycle stages are bachelorhood, honeymooners, parenthood, post
parenthood and dissolution. Consumer and their social classes: Social class is defined as the
division of members of a society into a hierarchy of distinct status classes so that members of
each class have relatively the same status and members of all other classes have either more or
less status. Social class is measured in terms of social status of its members and comparison of
members of each social Chapter 2: Consumer Behaviour 108 class with other social
Communication is the transmission of messages from a sender to a receiver by means of signals
of some sort sent through a channel. There are four basic components of all communications: a
source, a destination, a medium and a message. There are two types of communication to which
a consumer is exposed interpersonal communication and impersonal (or mass) communication.
(f) Socio-cultural Factors: Consumer in a group and consumer reference groups: A group may be
defined as two or more people who interact to accomplish similar goals. Consumer relevant
groups are family, friends, formal social groups, shopping groups, consumer action groups, work
groups, references groups etc. Four basic functions provided by the family are relevant to
consumer behaviour these include; economic well-being, emotionalsupport, suitable family
lifestyles and family-member socialization. Sociologists and researchers have strongly favoured
the concept of Family Life Cycle (FLC) - a way to classify family units into significant groups.
classes. Some of the variables of the social class are occupation, income, educational level and
property ownership etc. Culture and consumer behaviour: Culture is a sum total of learned
beliefs, values and customs that serves to direct the consumer behaviour of a particular society.
Subculture can be thought as a distinct cultural group that exists as an identifiable segment
within a larger and more complex society. (g) Consumer and Consumerism:

BUYING PROCESS OR CONSUMER DECISION MAKING : Decision is the selection of

an action from two or more alternatives. In other words, in order to make a decision, there must
be a choice of alternatives available. If a person has a choice between making a purchase and not
making a purchase, or a choice between brands, we can say that this person is in a position to
make a decision. A no-choice decision is commonly referred to as a Hobson s choice. Buyer
decision making is an attempt to solve consumer problems. A problem refers to a discrepancy
between a desired state and an ideal state which is sufficient to arouse and activate a decision
process. Thus problem can be major or minor and the broader and more ambiguous a problem is,

the more potential solutions are generally available. The study of buyer behaviour is the most
dynamic marketing activities as the buyer rapidly change their preferences and are affected by
multiple factors at a given point of time, are difficult to analyze. Therefore, it is necessary that
continuous study of buying behaviour must be conducted and extended. This monitoring will
make an understanding of marketing management to take effective decisions regarding service
price, distribution and promotion. A marketer understands how buyer will respond to different
service features, prices, advertising appeals and so on will have an enormous Chapter 2:
Consumer Behaviour 109 advantage over his adversaries. When a buyer takes a decision to buy
there is no rigid rule to bind them. Sometimes the decisions are taken on spot or after evaluating
various alternatives available and reassuring himself with the opinion of those who have already
purchased the service. Four views of buyer decision making: Before presenting a simple model
how consumers make decisions. For depicting consumer decision making its important to
consider several models of man. The term model of man refers to a general perspective held by a
significant number of people concerning how (and why) individuals behave as they do.
Following are the consumer-related models of man:- (1) Economic man (Traditional view):
Economics reflects a world of perfect competition and the consumer is often characterised as an
economic man. The economic theory of consumer behaviour was synthesized by Alfred Marshall
from the ideas of Classical Economists and the proponents of theory of Marginal Utility.
Economic view explains the consumer as an economic man who buys rationally to maximize the
utility (benefits) derived from a service. To behave rationally in the economic sense a consumer
would have tobe aware of all available service alternatives. The consumer would have to be
capable of correctly ranking each alternative in terms of its benefits and disadvantages.
According to leading social scientists this view is unrealistic because of three reasons (a) people
are limited by their existing skills, habits and reflexes (b) people are limited by their existing
values and goals (c) people are limited by the extent of their knowledge. However, consumers
rarely have enough information, sufficient or sufficiently information, or even an adequate
degree of involvement or motivation to make perfect decision. Consumers are living in an
imperfect world where they do not maximise their decisions in terms of economic considerations
such as price- quantity relationships, marginal utility or indifference curves. Indeed the
consumers are often unwilling to engage in extensive decision making activities and will instead
settle for a satisfactory decision, one that is good enough. For this reason, the economic
model is often rejected as too idealistic and simplistic. Chapter 2: Consumer Behaviour 110 The
economists described man as a rational buyer and viewed the market as a collection of
homogenous buyers.

(2) Passive man: This model is quite opposite to the economic model of man. The passive view
depicts the consumer basically submissive to the self-serving interest and promotional efforts of
marketers. Consumers are perceived as impulsive and irrational purchasers, ready to yield to the
arms and aims of marketers. At least to some degree the passive model of the consumer was
subscribed by the hard deriving salesman who is trained to manipulate customer. The passive
man view fails to recognize that the consumer plays an equal (if not dominant) role in many
buying situations by seeking information about service alternatives and selecting the service that
appears to offer greatest satisfaction.
(3) Cognitive man: According to this view consumer is defined as a thinking problem solver.
Within this framework consumers are frequently depicted as either receptive to or actively
seeking services that fulfill their needs and enrich their lives. The cognitive man focuses on the
process by which consumers seek and evaluate information about the services. There are six
types of consumer perceived risks (functional risk, economic risk, physical risk, social risk,
psychological risk and time risk) which a consumer use to handle such as collecting information
about alternatives, patronizing specific agents, brand loyalty etc. These risks are key components
of cognitive view and consumers are viewed as information-processing systems. Consumer may
use a preference formation strategy that is
CONSUMERS CHOICES (OPTIONS/ATTRIBUTES:: Personality strongly impacts
decisions of buyer. Consumers choice involves selection of one service/brand from a set of
possibilities and on variety, reception of stimulators and excitement of trying from new stores.
Sometimes choices are based upon judgments like consumer will purchase the services if they
have a favorable attitude towards a product consumer choice involves selecting one service from
a set of possibilities. (1) Consideration Set: Consideration set is the range of services that a
consumers can recall on the basis of past experience before any new purchase. (2) Price-List
Cuing: Consumers consideration sets are likely to vary over the time, depending on how many
and which particular brands happen to be salient, vivid or accessible from memory at the time
the purchase decision is rendered. This dynamic set of consideration set formation raises some
interesting issues for marketing strategy.
BUYING/PURCHASE BEHAVIOUR The output of the consumer decision making concerns
two important issues associated to post decision activities purchase behaviour and post purchase
evaluation. The objective of studying these activities is to increase the consumer satisfaction with
his purchase. Consumers make two types of purchases; trial purchase and repeat purchases. If a
consumer purchases a service or brand for the first time and buys a smaller quantity than usual

such purchase would termed as trial purchase. Thus a trial is the exploratory phase of purchase
behaviour in which consumers attempt to evaluate a service through direct use. If a trial brand is
found more satisfactory and better than other established brands/service, the consumers are likely
to repeat the purchase. Repeat purchase behaviour is closely related to the concept of brand
loyalty. Trial is not feasible in many cases due to certain reasons like highly priced product and
budgetary constraints.

CHAPTER 2
RESEARCH

METHODOLOGY

RESEARCH METHODOLOGY

Research methodology
The process used to collect information and data for the purpose of making business decisions.
The methodology may include publication research, interviews, surveys and other
research techniques, and could include both present and historical information. It is the way to
systematically solve the research problem. It may be understood as a science of studying how
research is done scientifically. In it we study the various steps that are adopted by the researcher.
It is essential for the researcher to know not only the research method technique but also the
methodology.
By the research, we get the knowledge that how much the company contributes to the society.
And by research, we indentify that there are very many problems like inordinate delay in the
transfer of shared certificate. This is important because by this we get to know about the profit
gaining and investment of the company.

OBJECTIVES OF STUDY

To compare and study Barista and Caf Coffee Day, identify areas of excellence and
areas needing improvement, and provide suggestions for such improvement.
To compare two prominent service sector companies on a common platform, analyze
their working and performance and highlight what they are doing well, while providing
suggestions and recommendations for improvement.
To understand consumer Behaviour
To understand market performance of barista and caf coffee day.

REVIEW OF LITERATURE
Acc to Hirschman 1986, calder and tybout 1987: In contrast to the traditional perspectives,
the interpretive and postmodern perspectives of consumer behaviour attribute consumers with
the capacity to proactively assign meaning to and represent their environments rather than just
passively respond to them.
Acc to Holbroo k 1995: The interpretive perspective for example suggests, that behaviour is
channeled by the content and structure of consumers subjective meaning systems .
Acc to OShaughnessy and Holbrook (1988, 206) -:From an interpretivist point of view,
actions like buying are not simply matters of rational calculation with consumers computing up
the pros and cons of objective facts, but rather are matters involving felt expectations as to how
the consumption episode will be personally experienced.
Acc to (Buttle 1989; Firat 1992; Hirschman 1985 Thus consumers behave and make decisions
by reference to the internal (psycho) logic of their subjective meaning systems. The focus of
inquiry of the interpretive and postmodern perspectives therefore becomes, consumers
subjective meanings and language or discourses7.
Acc to Brown (1995b, 295): Asserts however, that the interpretive perspective is different from
the postmodern perspective in marketing because the former presupposes an autonomous
human subject, the free-thinking, self conscious individual. For example, humanistic and
phenomenological perspectives conceive the individual consumer as a unified, coherent and
rational agent who is the author of his or her own experience and meaning; therefore, analogous
to the traditional conjecture, the interpretive paradigm also assumes that there is some pre-given
natural essence of consumer .
Acc to Slife and Williams 1995): In addition, whilst the interpretive paradigm stresses the
experiential side of consumer behaviour such as fantasies, feelings and fun .
Acc to (Holbrook and Hirschman 1982), it suggests that consumers construct coherent and
consistent representations, or subjective maps, of the world in order to make it more meaningful
and predictable (

Acc to brown 1995a :In contrast, the postmodern perspective argues that there is no fixed or pregiven essences residing inside consumers that make them behave the way they do
Acc to foster 1983: Rather, self-identity and subjectivity are assumed to be constituted by
particular forms of language, or discourses, which in turn are mediated by the consumers social
interactions .
Acc to burr 1995: Thus, identity is said to be constantly in flux and changing depending upon
with whom the consumer is consuming, in what circumstances they are consuming, and for what
purposes
. The postmodern perspective of consumer behaviour firmly points to the fragmentary and fluid
nature of consumers self-identity.
Acc to Firat et al. (1995, 44) contend, that consumers frequently change their self-concepts,
character, values and often subscribe to multiple and often highly contradictory value systems,
lifestyles, etc., without feeling inconsistent or improper. Thus, the postmodern perspective
places great emphasis on the creativity, autonomy, and power of consumers to define and change
themselves and the world in which they live through different patterns of consumption and
lifestyles s.
Acc to Hawkins, Best, Coney and Mokherjee: The authors of the book discussed various
factors affecting consumer behaviour for buying such as demographic and social influences
(family and household), group influence, impact of advertising and internal influences (learning,
perception, attitude etc.). The book elucidated the topics such as types of consumer decisions,
purchase involvement and product involvement. The book also emphasized on information
search process and various ways for providing relevant information to the consumers are
recommended in this study. The book also emphasized on individual judgment and proposed that
the ability of an individual to distinguish between similar stimuli is called sensory discrimination
which could involve many variables related to individual preferences. 1
Acc to Leslie Lazar and Schiffman: The authors suggested consumer behaviour as individual
differs as from group. The family decision for a purchase decision is entirely different from
individual decision making. The authors discussed various variables that affect consumer
purchase decision. The book focused on family life cycle and various needs of consumer during
different life stages. The family decision making process as a group decision making is
elaborated and it is recommended to segment the market according to family need hierarchy.
Acc to Bitta and Della: The authors proposed that consumer behaviour studies play an
important role in deciding marketing segments and marketing strategies. The authors
recommended that consumer is often studied because certain discussions are significantly
affected by their behaviour or expected Chapter 3: Consumer Behaviour In Life Insurance 164
actions. For this reason such consumer behaviour is said to be an applied discipline. Such
applications can exist at two levels of analysis. Market segmentation, consumer decision making
and buying behaviour is considered as core marketing activities in designing effective marketing
strategies.

The micro perspective involves understanding consumers for the purpose of helping a firm or
organisation to accomplish its objectives. On the other hand macro or societal perspective
consumers collectively influence economic and social conditions within an entire society. The
authors discussed
factors affecting consumer behaviour at micro and macro level for making a purchase decision.
Acc to Karunik and Schiffman: The book highlights dynamic business environment is
turbulent as never before and the service industry as promising as never before. In this era of
intense competition companies understand the customer is the king in the market and success
depends a lot on the efficiency of the managers in delivering the promised product or services.
The responsibility lies on the organisations to develop a culture, ethics, responsibility, value and
quality services should be offered to achieve higher level of customer satisfaction. Dynamic
consumer behaviour is required to analyse various factors affecting consumer purchase decision
directly or indirectly.
Acc to Batra, S, K & Kazmi,: The book has described consumer decision making process,
buyers black box and importance of consumer behaviour studies for marketers in order to
understand what satisfy the ultimate consumer. The book described vital characteristics of Indian
consumer and competitive advantages in Indian context for the marketers. The consumer
decision process, buying roles and consumer black box are discussed in detail. The various steps
evolving consumer decision making are linked with the life stages. Young buyers, women and
children considered as uprising consumers groups as a part of competitive market situations.
Acc to Philip Kotler: The customer is always considered as a core of business activity. Author
discussed in this book that marketing is only one factor in attracting and keeping customers.
Peter F. Drucker observed that a companys first task is to create customers. Customer
estimate will deliver the most Chapter 3: Consumer Behaviour In Life Insurance 165 value. The
book highlighted consumer decisions making process and buying roles. The book considered
customers as value maximiser within the bounds of search costs, limited knowledge, mobility
and income.
Acc to Mar C. Lovelock and J. Writz: The book emphasised on services marketing as a broad
area and places marketing issues within a broader general management context while offering a
balanced focused on close ties that link marketing, operations and human resource marketing. It
also relates the understanding of consumer behaviour function to develop appropriate marketing
strategy. Service triangle, feature of services and service marketing strategies are discussed in
this book with detailed explanation of service quality model.
Acc to Lovelock: The book is emphasised on advancements and challenges in services
marketing. The book discussed role of consumer in designing services, delivering and
performing quality service to the consumers for deriving customer satisfaction. The book focused
on complexity of designing service marketing strategies and establishing service standards.
Various threats and challenges in designing service marketing strategies have been discussed
with required solutions in turbulent marketing situations.

Acc to Zeithaml and Bitner: The book emphasised on various ingredients of services marketing
such as consumer behaviour in services, services designs and standards, delivering and
performing service and managing service promises. The book focused on various challenges and
issues of service marketing, the GAPS model of service quality and customer defined service
standards. The book discussed service quality models and service preference models in detail.
The book also recommended uniformity in quality standards should be implemented. Indian
Insurance A Profile by Narayanan, H.: The book highlighted features of Indian insurance
markets, development of insurance sector in India, major players in insurance sector and
insurance products offered to Indian policyholders. The book also provided detail of growth of
life insurance and general insurance in India with appropriate statistics. Various phases of growth
and development of insurance sector are presented in an efficient manner. The comparison of life
insurance and life insurance is also provided in Indian and global context. The detail of LIC and
private players is given in this book related to number of life insurance policies, growth in life
insurance premium, life insurance density and number of agents in life insurance etc.
Acc to. M. Bhole and Jitendra Mahakud, Fifth ed.: The book focused on Financial
Institutions and Markets: Structure, Growth and Innovations, the book elucidated IRDA policy
reforms, Indian Financial System since 2002 and insurance sector reforms. The aggregate view
of Indian insurance is presented is three developmental phases since 1818. Policy development,
structure and various types of insurance plans are defined with evaluation process. The growth of
financial services, financial sector reforms and role of regulators in financial reforms has been
discussed in this book.

Hypothesis of the study: It is a tool of quantitative study. It is a tentative and formal prediction
about the relationship between two or more variables in the population being studied, and the
hypothesis translates the research question into a prediction of expected outcomes. There is
difference between the consumer behavior of barista and caf coffee day customers.
It is of two types:
Null hypothesis: It always predicts the absence relationship between two variables. For ex: there
is no relationship between education and income.
Alternative hypothesis: It states an actual expectation, such as higher level of education
increase the likelihood of earning a higher income.

SIGNIFICANCE OF THE STUDY

The project undertaken by me on consumer behavior proves very significant element to know
the consumer behaviour of the customers of barista and caf coffee day. So the study helps me
out:

To compare and study barista and caf coffee day, identifying areas of excellence, areas
needing improvement .

To understand market performance of barista and caf coffee day.

Consumers tastes and preferences are ever changing. Study of consumer behaviour gives
information regarding colour, design, size etc. which consumers want. In short, consumer
behaviour helps in formulating of production policy

Besides, the primary data collected with the help of the questionnaire, I have also collected
the relevant secondary data from various sources like magazines, books and internet and
newspapers.
Based on relevant primary and secondary data, a comparative analysis has been done so as to
find out the areas of excellence and areas of improvement of both organizations.
Statistical tools:

Through the questionnaire

The programming used will be SPSS and The word.
Pie charts
Bar graphs

Limitations of study
The scope of study is limited to the respondents as they
are selected from in and around Jaipur.
Measurement of customer satisfaction is difficult
However, barista and caf coffee day are located in other
places. Only opinion of respondents of Jaipur was considered
for finding out the opinion of respondents.
Most of the customers were not satisfied with taste and
quality of eatables of barista and caf coffee day.

CHAPTER 3
COMPANY

PROFILE

BARISTA
Barista coffee was establishes in 1999 with the aim of identifying growth opportunities in the
coffee business. Increasing disposable incomes and global trends in coffee indicate immense
growth potential in one particular segment.
More significantly, they believe they have been quick to spot a latent need waiting to be
trapped.Coffee lovers seek a complete experience. One that combines intelligent positioning
with the right product and carefully designed cafes. In other words, with the right customers seek
an experiential lifestyle brand.
The Barista Caf Logo
As of today, Barista exists in over 22 cities, and operates over 140 outlets nationally. In the last 2
years, Barista has opened over 100 outlets in the country and with a new outlet opening
nationally every 14 dates, Barista is currently experiencing phenomenal growth.With outlets
opening in Sri Lanka and Dubai, Barista is looking at potential growth opportunities in Asia,
making it highly competitive international brand.
Marketing Mix
Product Mix
Coffees & Teas Refreshing
Alternatives
Eatables
Coffee with Milk Smoothies Sandwiches
Cappuccino
Caffe Mocha
Caffe Latte
Guava
Mango
Grape
Paneer Tikka
Black Coffee Granitas Rolls
Espresso Italiano
EsperanoTM
Americano
Blue Curacao
Lime Ice
Dessert Coffees Milk Based Pastas
Latte Bianco
Caffe Borgia
Strawberry Freeze
Mocha Freeze

Cold Coffees Iced Tea Other Food

BrrristaTM
Brrrista FrappeTM
Brrrista BlastTM
Iced Caffe Mocha
Coffee Add-ons Other Drinks Desserts
Various Flavours
Chocolate Fudge
Whipped Cream
Barista: Product Mix Width
Some products may have been added/ removed from the product mix, due to changes since
gathering information.
Product Sources:
Barista sources its coffee beans from around the world, but a major supplier is of the TATA
Group that owns a large stake- holding in Barista. These coffee beans are then sent to venice,
Italy where they are roasted into a blend exclusively for Barista.The food and deserts at Barista is
exlusively catered to by the Taj, who ensures a high standard of quality with all its products.
Barista also sells merchandise through its store, all of which is imported. The merchandise
accounts for nearly 1/6th of Baristas overall sales.
.
The Barista coffee beans
Quality Sources:
Barista has a check on the quality of its products every 14 days. Barista also incorporate TQM at
its headquarters in Delhi. Since Delhi is the base for all its distribution, quality control measures
are adopted there to avoid any poor quality products being distributed.

Serving Size:
The serving size of a product is a measure, not only of quantity, but also of value for money. The
average serving size for Baristas main product categories is detailed in table given below:
Product Serving Size
Hot Coffee (2 kinds) 240 ml/ 300 ml
Cold Coffee 340 ml
Smoothies 300 ml
Granitas 340 ml
Merchandising:
Barista sells various kinds of merchandise through its stores. The table details the different
merchandising products.

Merchandise
Tiramisu Flavors
Coffee Mugs
Barista French Press
Barista Coffee Beans
Barista Merchandising
Pricing:
Barista has a Skim Pricing Policy. They began with a higher price, and skimmed the cream for
the market. With the sudden of growth in number of outlets, came the benefeits of economies of
scale. benefits of economies of scale. Because of this, they have been able to gradually lower
their prices, and appeal to different segments of their target market.Currently, their prices are the
lowest they have ever been, and they can competitively match their prices against Caf Coffee
Days prices. The prices are constantly changing though, and the last 1-year has seen 3 changes
(mostly reductions) in prices. This gradual price reduction meant that Barista could maintain its
profit- maximization policy until itcould earn large cost savings because of the benefits of high
volume.The main factors that affect their pricing are their cost of goods sold. The costs are
quitehigh because imports a majority of its products and product- sources.

Process:
The order and delivery process at Barista is based on self- service, where a customer goesup to
the counter to place his order, and goes back to the counter to pick his delivery onceit is
prepared.
Positioning:
Consumer Profile:
According to research, over 65% of Baristas customers are in the 15- 30 age- group.
Themajority of these are students and young urban professionals.
Brand Image:
Barista positions itself as a brand for anyone who loves coffee. Their products, servicesand
outlets are more like the traditional European cafs, where people would meet for thelove of
coffee, and for an intellectual appealing time. They position their outlets as a place where the
world meets, and they look to appeal to anyone in the 14- 60 age groupthat loves good coffee
and looks for a nice quiet time.
Products:
Baristas product mix constitutes a wide range of products that appeal primarily to
traditional coffee lovers. Their products themselves are traditional products with
traditional names. Food items like croissant, pastas, and sandwiches are
complimentary to their coffee, and project a very classic image of Barista. Their
merchandising also consists of primarily coffee related products like coffee beans,
coffee machines, etc.

Prices:
Considering that Barista is trying to target a market whose age range is between 18and 60 years,
a pricing policy appealing to this segment is difficult. Extremely low prices act as a deterrent to
some customers who might regard it as an indicator or quality, while very high prices cannot be
afforded by most of the youth. But sinceBaristas current consumer profile is quite young, their
prices are mostly inexpensive,and at par with their competitors.

People:
The people at Barista are characteristically trained to be Pleasant and polite.They ensure you
have a quiet, uninterrupted visit and provide an escape from the daily pressures of life. Their
uniforms are in sober shades of brown and orange, andcontribute to the overall laid-back feeling
of the caf.
Physical Evidence:
a) Logo, Colors, Images:
Barista, since the beginning has looked to use colors in its caf interiors, logos and images; to
project a warm, earth glow, synonymous withcoffee. Barista uses shades of Orange & Brown
to good effect to promote its laid- back atmosphere.
The Barista Interiors
The logo is a combination of Brown, Orange and Light Yellow; with the word Baristawritten
in an upward curve, and the word Coffee underneath. A simple logo thatperfectly expresses
Baristas brand image: A traditional caf for coffee lovers.
Dcor and Architecture:
Baristas internal dcor and architecture expresses the simplicity you would normally associate
with traditional cafs. The furniture is made of light shades of wood, and there are comfortable
sofas in bigger cafs. The walls are shades of orange, with various photographs of the love for
coffee spread around each outlet.
Literature:
The literature provided by Barista is indicative of its brand image. The menus,posters, pamphlets
are all traditionally designed, with a classic and simple look. One aspect of particular note is their
magazine, which is privately circulated in the cafs.The magazine encourages customers write,
draw, make etc anything creative; and the is then published in the magazine. The magazine not
only provides an avenue foradvertising, but also an opportunity for Barista to express its brand
image.
Place:

Barista looks to cater to their target market with strategically located outlets. Their outlets are
generally located at High Street/ Family Entertainment Centers.
Considering their generic appeal, there are Barista outlets in and around Malls,Cinemas,
Colleges, and Offices etc. this endorses their brand image of a caf that appeals to coffee lovers
of all ages.
Promotions:
Barista currently carries out mass promotion campaigns. This is mainly in the form ofpromotions
in the Press, TV and Radio Medias. At present, they do not rely heavily on advertising, but rely
more on aponsorships and strategic alliances with other corporations. Barista also takes part in
various sales promotion activities to help increase sales at their outlets.
a) Sponsorships:
Barista sponsors various events and festivals, which provides them valuable promotion directed
at strategic markets. The sponsorships are mainly in kind, although major events are sponsored in
cash also.
b) Collaborations:
Barista has entered into special collaborations and alliances with various partners for comarketing brands. For example, Barista entered into a deal with Leo Mattel toys to provide the
popular board game Scrabble at every Barista outlet across the country. This is an ideal alliance
for both the organizations, because it provides Leo Mattel with an important avenue for
promoting their product, and it provides Baristas customers an added attracted for spending
more time at barista outlets.
Barista has also entered into partnerships with various movies, for promotions through Barista
and recently, they tied up with star world for its Absolutely everybody compaign.
The Barista
Sales Promotion:
Barista uses a special Barista Coffee Card for its sales promotion activities. The Barista
CoffeeCard entitles you to one complimentary hot beverage when you are done sipping seven.
Location: This is a prime factor in determining the success of a retail chain. However,
Barista Coffee has adopted a top down approach, wherein they first identify the cities
and then decide on precise locations within its limits.
Selecting a city: Barista has devoted substantial management time and effort in zeroing in on the
cities where zeroing in on the cities where they are now situated. The selection of the cities
wasbased on the following criteria.Sizeable population of executives, students and families in
SEC A & Baristacategory;High disposable income with people looking for new vistas in leisure
and lifestyleoriented concepts.High level or organized retail activity;Rapid socio- economic
development;Level of commercial importance (Industrial cities, state capitals etc.)
Number of educational establishments and opportunities available for employment.On the basis
of the above criteria, they had initially targeted cities like Delhi,Mumbai, Bangalore, Chennai

and Hyderabad. Chandigarh and Ludhiana were lateradded due to tie- ups with Planet M and
Ebony to set up store-in- stores at theiroutlets.
They are also pursuing an equally aggressive international business expansion strategy. They
have over 50 overseas locations presently under their consideration.They have already done their
groundwork in terms of getting brand and nameregistrations in over 30 of these locations. To
facilitate their global expansion, they plan to work with strategic partners, who share the same
vision of expanding and promoting the brand worldwide. Currently they have opened new outlets
in Sri Lankaand Dubaias a part of their international strategy.
Distribution of Stock:
The distribution of stock at Barista begins from the coffee beans being sent abroad for roasting.
The roasting takes place in Venice, and the beans are then supplied to the main warehouse in
Delhi. Stock is then distributed to the various Regional Warehouses, and then to the local
Warehouses. The outlets get their stock from theLocal Warehouses. Barista uses a Re-Order
Level system for the distribution of their stock. Barista out sources its transportation needs from
external organizations, and currently uses trucks as the preferred means of distribution.
Human Resources
Baristas boom in growth has sparked of a greater need for more and more human resources. This
poses a challenge for Barista to ensure that their employees all across the country are well trained
and provide consistent service at every outlet.

CAF COFFEE DAY

Corporate Profile
It was in the golden soil of Chikmagalur that a traditional family owned a few acres of coffee
estates, which yielded rich coffee beans. Soon Amalgamated Bean Coffee Trading Company
Limited, popularly known as Coffee Day was formed. With a rich coffeegrowing tradition since
1875 behind it coupled with the opportunity that arose with the deregulation of the coffee board
in the early nineties, Coffee Day began exporting coffeeto the connoisseurs across USA, Europe
& Japan. In the calendar year 2000,Coffee Day exported more than 27000 tonnes of coffee
valued at US$ 60 m to these countries and,for the second time in its short career of 7 years
retained the position as the largest coffee exporter of India.
Coffee Day has a wide and professional network in the major coffee growing areas of the
country comprising over 48 agents and 50 collecting depots. Coffee Day's two curing works at
Chikmagalur and Hassan cure over 70,000 tonnes of coffee per annum,the largest in the country.
Coffee Day has a well-equipped roasting unit catering to the specific requirement of
theconsumers. The process is carried out under the control of experienced personnel to

meethighest quality standards. The most modern technology available is used to

maintainconsistency and roast the coffee beans to the demanding specifications of the
discerningcoffee consumers.
Coffee Day Comprises of the following Sub Brands
Coffee Day Vending
Coffee Day - Xpress
Coffee Day Exports
Coffee Day - Perfect
Caf Coffee Day currently owns and operates 213 cafes in all major cities in India. It is apart of
India's largest coffee conglomerate named Coffee Day, Rs. 200 crore ISO 9002certified
company. Coffee Day's most unique aspect is that it grows the coffee it serves.

Key Features

Pioneers of the Caf Concept in India with the its first Caf at Brigade Road,
Bangalore in 1996.
This Caf was opened as a Cyber Caf (first of its kind) but
later, with the burst of cyber cafes it reverted to its core competency.
Essentially a youth oriented brand with majority of its customers falling in the 1529 year age bracket
Each caf, depending upon its size attracts between 400 and 800 customers daily.
It is a place where customers come to rejuvenate themselves and be themselves.
USP of the Brand:
Affordable Price
Coffee Winner of Platinum, Gold, Silver and Bronze medals at the India
Barista Championship 2002

Product Sources:
Coffee Day's most unique aspect is that it grows the coffee it serves in its cafes. Coffee Day has a
well-equipped roasting unit catering to the specific requirement of the consumers. The process is
carried out under the control of experienced personnel to meet highest quality standards. The
most modern technology available is used to maintain consistency and roast the coffee beans to
the demanding specifications of the discerning coffee consumers. The coffee beans are supplied
to all the cafs from Chikmagalur. The eatables at caf coffee dayare catered by different
vendors: example: ice creamsCaf Coffee Day also sells merchandise through its stores. 5 per
cent of the revenuecomes from sale of merchandise.
Quality standards: Caf Coffee Day has a check on quality all the time and in several aspects.
The operational in-charge will go around checking business, record keeping, service and

check the feedback forms. The food in-charge will look at the way food is being stored,
coffee is being made, what is the time take to extract the coffee and so on. Marketing
person will go about checking displays, how the merchandise are displayed.
Process:
The order process at Caf Coffee Day is based on self-service, where the customer goes to the
counter to place his order. Whereas they have a flexible delivery process, where they wait for
some time for the customer to pick up the order but if the customer takes to long then the order is
delivered on his table
Positioning:
Consumer Profile:
Research shows that 37% of the customers are between 20 and 24years. 27% of thecustomers are
between the age group of 25-29 years. 60% of the customers who visit thecaf are male and 40%
are female. 52% of customers who visit the cafes are students.18% of the customers visit the
cafes daily while another 44% visit weekly. Each caf,depending upon its size attracts between
500 and 800 customers daily, mainly between4pm and 7 pm. Customers describe Caf Coffee
Day as the place they frequent most after home and workplace/college. It is a place where they
meet friends and colleagues, ingroups of 3 or more. The prices here are perceived to be
reasonable and it is a placewhere customers come to rejuvenate themselves and be themselves
rather than aplace tobe seen at vis a vis other cafes.
Brand Image
Caf Coffee Day is a regular meeting place for 15 to 29 years old, both male and female, who are
waited on by friendly and informed staff, and are offered the best
made coffee, hot or cold, beverages and food in an invigorating ambience. It is urban
youngsters favorite hangout. Its customers are mostly young college students and
young professionals. It is for those who are young or young at heart.
Products:
Caf Coffee Day product mix constitutes a wide range of products that appeal primarily
to Indian coffee and snack lovers. products have a decided Indian taste to it - be it food or coffee.
Most of the eatables have been adopted to meet the Indian taste buds like samosa,biryani, masala
sandwich, tikka sandwich etc. Thus they have been trying to capture theIndian taste along with
classic coffee.
The best selling item in summer is frappe, which is coffee and ice cream blended
together. The young people favor it. In winter it is cappuccino. Their merchandisingincludes
funky stuff like t-shirts, caps etc.
Prices:
Considering that Caf Coffee Day knows its major customer lies in the bracket of 15- 29,it has
tried to derive a policy whereby it can satisfy all its customers. The price for a cupof coffee
ranges from Rs.17 to Rs.54. From the time it first started its operations, there has been only
minor changes in the pricing policy of Caf Coffee Day. People at Caf Coffee Day believe that
People are hired for what they know but firedfor how they behave. Motivation and personal
skill are laid emphasize upon.
Physical Evidence:
a) Logo, Colors, Images:

Caf Coffee Day has used bright red and green colors in its logo. RED stands for leadership and
vitality. It also stands for passion ( for coffee). The GREEN stroke harks back to their coffee
growing heritage and the coffee plantations that they own. Caf is noticeably larger than the rest
of the text inside the logo box. This denotes that Caf Coffee Day pioneered the caf concept in
India way back in 1996. Caf Coffee Day would like to own the wordcaf in the minds of its
customers..
The Caf Coffee Day Logo
When one thinks of a caf its got to be Caf Coffee Day. The font used for Caf is called
slurry. The font looks as though the letters have congealed out of a liquid.
It gives the impression that the word is still forming itself and evolving into
something new and something better constantly. This is the characteristic of Caf
Coffee Days customers and this is the characteristic that the brand too wants to
adopt. The upward SWIRL inside the logo box stands for the invigorating and
uplifting nature of coffee and the ambience at Caf Coffee Day.

Dcor & Architecture:

Caf Coffee Day had gone in for image change and revamping of interiors in the last quarter of
2001. Caf interiors have been given a whole, new look. In a change fromthe largely wood and
granite based interiors, there is more of steel and lots more colour now. The young colours of
today, lime, green, yellow, orange and purple, predominate.
.
The Caf Coffee Day Decor
Literature:
The literature provided by Caf Coffee Day is indicative of its youthful image. The
menus, posters, pamphlets are all designed to attract young and young at heart. They also have
their magazine called as Caf Beat, which is published monthly at their Bangalore head office
and distributed throughout the branches.
Locations:
Caf Coffee Day looks to cater to their target market with strategically located outlets. Their
outlets are generally located in High Street/ Family Entertainment Centers.Considering their
generic appeal, there are Barista outlets located in and around Malls,Cinemas, Colleges, Offices,
etc.
Promotion:
Caf Coffee Day does not believe in mass media promotions. But they are involved in all the
areas of serious consumer passion.
Through television:
Caf Coffee Day held a contest around a very popular programme on Zee English called
FRIENDS. All the six lead characters are shown often visiting a coffee shop and a lot ofyouth

like watching the pogramme. That is why they had a contest running where customers could win
Friends' merchandise. The linkage was that it is a youth based programme and it had a coffee
house.They have tied up with Channel Get Gorgeous contest. The reason being that a lotof their
young consumers are interested in careers. Modeling is a career that a lot of
youngsters are interested in and this was an excellent platform. They have also donepromotion
for History Channel, where they have run promotion for Hollywood Heroes.They had asked a
few question and a lucky winner won a trip to Hollywood.
Ticket sales:
Caf Coffee Day is involved in ticket sales in quite a few events, Enrique being one of them.
They were involved in WWE, Elton John, and Bryan Adams ticket sales. Theseacts are very
much appreciated by their consumers.
It helps both the organizers as well as Caf Coffee Day. Organizers need to tell peoplewhere the
tickets are available and single Caf Coffee Day logo says it all. From Caf Coffee Days point
of view, they always ask for a certain amount of tickets around which they have a contest.
Couples can win ticket for free. This in turn raises the awareness level as cafe staff approaches
the consumers to inform them about the contest. There is not a better publicity mechanism then
the person who is serving you telling youabout thesame.
Tie-ups:
Besides that Caf Coffee Day also tie up lot of the youth brands. Their promise to the customer is
that a lot can happen over a coffee. So every time they try to ensure
something good happens to their customer. So they have a contest going on with Levis,another
one with Scooty, Liril, latest one with Airtel Friends.
Another placement area they have is with HDFC. HDFC wanted to promote their debit card and
they choose Caf Coffee Day. So 21 cafes have debit card machines.
Association with movies:
Caf Coffee Day also decided to stick with the next big thing i.e. Bollywood. Earlier afew
movies, whose target audience matched that of the consumers at Cafe Coffee Day,started
shooting a few scenes in the cafe. So they had a Hindi movie Bas Yun Hi and acouple of Telugu
and Tamil films with prominent Cafe Coffee Day brand placement.Later they took a conscious
decision of being seen in certain movies like Khakee andMain Hoon Na.
As part of this effort, the brand was placed smartly in two Bollywood ventures,
the Amitabh Bachchan, Aishwarya Rai, Vivek Oberoi starrer Kyun Ho Gaya Na,
Sajid Nadiadwala's Salman Khan, Priyanka Chopra starrer Mujhse Shaadi
Karoge, forthcoming movies like Salman Khan starrer Lucky and Socha Na Tha.
A lot of serials are shot in Cafe Coffee Day. Recently, Kahaani Ghar Ghar Kii
was shot.
Sales Promotion:
Caf Coffee Day uses special Caf Citizen Card for rewarding Caf Coffee Days
customers. It is a loyalty program to gain new customers and retain the existing ones.The Caf
Citizens Card entitles members to a 10% discount on all food and beverage bills.
The members also receive surprise gifts, along with special offers and invitations from Caf
Coffee Day from time to time.

.
The Caf Citizen Card
Distribution of outlets:
Every Caf Coffee Day outlet is a part of Indias largest coffee conglomerate named Coffee Day.
Since all the cafes are owned by the company, it becomes easier for themconduct feedback
surveys like dipsticks etc. Coffee days most unique aspect is that it grows the coffee it serves in
its cafes.
Pioneers of the Caf Concept in India with the its first Caf at Brigade Road, Bangalore in 1996.
This Caf was opened as a Cyber Caf (first of its kind) but later, with the burst of cyber cafes it
reverted to its core competency.
Caf Coffee Day currently operates 213 outlets all over the country. They have a marketpresence
in over 49 cities. Delhi, NCR alone has 24 outlets, and the number of outlets inthe area is
increasing at a phenomenal pace. Each caf, depending upon its size attracts between 400 and
800 customers daily.
In addition to that they are also going abroad. They will open 50 outlets overseas in
cities.
Location:
This is a prime factor in determining the success of a retail chain. Caf Coffee Day is focusing
mainly in malls and main markets.
Human Resources
With the boost in the number of their retail outlets, Caf Coffee Day had to concentrate
on the quality and quantity of their human resource in order to meet up with the set
standards. They make sure that the employees all across the country are well trained and
provide consistent services at every outlet.
Recruitment & Selection:
It is the process of differentiating between applicants in order to identify those with a greater
likelihood of success in a job. The role of selection in an organizations
effectiveness is crucial for at least two reasons; first work performance depends on
individuals and second because of the costs incurred in hiring individuals is enormous foran
organization.
The best way to improve performance is to hire the people who have the competence and the
willingness to work. Arguing from the employees viewpoint poor or inappropriate choice can be
demoralizing to the individual concerned and demotivating for the rest ofthe workforce. The cost
of searching and training individual may range from Rs.2,50,000.or more. Costs of wrong
selection are even greater.Selection is a long process commencing from the preliminary
interview of the applicantand ending with the contract of employment. The process differs
among organizationsand between two different jobs within the same organization. Selection
procedure forsenior managers is long-drawn and rigorous but on the other hand for shop floor
workersit is simple and short.

Promotion Policy:
Caf Coffee Day prefers promoting from within, rather than externally.
Through television:
Caf Coffee Day held a contest around a very popular programme on Zee English called Friends.
All the six lead characters are shown often visiting a coffee shop and a lot of youth like watching
the programme. That is why they had a contest running where customers could win Friends'
merchandise. The linkage was that it is a youth basedprogramme and it had a coffee house.
They have tied u p with Channel [V]'s Get Gorgeous contest. The reason being that a lot of their
young consumers are interested in careers. Modeling is a career that a lot of youngsters are
interested in and this was an excellent platform. They have also done promotion for History
Channel, where they have run promotion for Hollywood Heroes.They had asked a few question
and a lucky winner won a trip to Hollywood
Ticket sales:
Caf Coffee Day is involved in ticket sales in quite a few events, Enrique being one of them.
They were involved in WWE, Elton John, and Bryan Adams ticket sales. These acts are very
much appreciated by their consumers.
It helps both the organizers as well as Caf Coffee Day. Organizers need to tell people where the
tickets are available and single Caf Coffee Day logo says it all. From Caf Coffee Days point
of view, they always ask for a certain amount of tickets around which they have a contest.
Couples can win ticket for free. This in turn raises the awareness\level as cafe staff approaches
the consumers to inform them about the contest. There isnot a better publicity mechanism then
the person who is serving you telling you about the same.

Tie-ups:
Besides that Caf Coffee Day also tie up lot of the youth brands. Their promise to the customer is
that a lot can happen over a coffee. So every time they try to ensure
something good happens to their customer. So they have a contest going on with Levis,another
one with Scooty, Liril, latest one with Airtel Friends.
Another placement area they have is with HDFC. HDFC wanted to promote their debitcard and
they choose Caf Coffee Day. So 21 cafes have debit card machines.
Association with movies:
Caf Coffee Day also decided to stick with the next big thing i.e. Bollywood. Earlier a few
movies, whose target audience matched that of the consumers at Cafe Coffee Day,started
shooting a few scenes in the cafe. So they had a Hindi movie Bas Yun Hi and acouple of Telugu
and Tamil films with prominent Cafe Coffee Day brand placement.Later they took a conscious
decision of being seen in certain movies like Khakee andwas shot.
Sales Promotion:
Caf Coffee Day uses special Caf Citizen Card for rewarding Caf Coffee Days
customers. It is a loyalty program to gain new customers and retain the existing ones.The Caf
Citizens Card entitles members to a 10% discount on all food and beverage bills. The members

also receive surprise gifts, along with special offers and invitations from Caf Coffee Day from
time to time.
The Caf Citizen Card
Distribution:
Distribution of outlets:
Every Caf Coffee Day outlet is a part of Indias largest coffee conglomerate named Coffee Day.
Since all the cafes are owned by the company, it becomes easier for them conduct feedback
surveys like dipsticks etc.
Performance Appraisal:
Performance management is an integral part of a comprehensive human resource management
strategy. Its objective is to maximize individuals' performance and potential with a view to
attaining organizational goals and enhancing overall effectiveness and productivity. The
immediate superior carries out the performance appraisal at Coffee Day every 6 months.

CHAPTER 4
FINDINGS & SUGGESTIONS

SUGGESTIONS AND RECOMMENDATIONS

Barista

Barista has an extremely strong brand image, but they need to work hard on improving
their customer perception of being and expensive brand. Barista and caf coffee day have
almost identical pricing, but Barista is still perceived as the more expensive brand.

Thats why my first recommendation for Barista is, to carry out a promotion
campaign to ensure that their target market is well aware of their current low
prices. This would help change customer perception and turn Barista into an
affordable brand.

Another backlash of having such a strong traditional caf brand image is that customers
have very high expectations of the taste & quality of products. Barista needs to work
hard at this aspect, especially for coffee and eatables products.

My second recommendation is for Barista to look at its coffee beans suppliers and coffee
brewing process to ensure that it is the best it can be.

This is especially important considering the international expansion.

Barista is undertaking. Barista should also look at the Taj, their national suppliers for
eatables and deserts and either improve the taste and quality.of eatable, or look at another
supplier because as of now, they are not living up to expectations, and losing customers
to Caf Coffee Day.
,

On a smaller note: the Barista delivery process should change, so that a caf attendant
delivers the coffee to the table. This may seem insignificant, but it can go a long way in
in improving customer satisfaction.

Caf Coffee Day

Caf Coffee Day has done extremely well so far to project itself as an affordable
affordable youth- oriented brand. But there are still certain areas where their brand needs
to be much stronger.

With regard to the physical evidence associated with the brand, Caf Coffee Day need
needs to do a lot of work if they hope to catch up with Barista. My first recommendation
for Caf Coffee Day is to clean up the dcor at every outlet, wherever unnecessary
advertising is taking place.

Although it might be an important source of revenue, long-term customer

perception of the brand isnt very positive.

Caf Coffee Day would do better to provide promotional space for its
partners with the use of clever collaborations, and not printed advertisement.

My second recommendation is that Caf Coffee Day looks at its current

recruitment, selection and most importantly, its current training policies.

Customers are not happy with the behavior and service of the staff, and
Caf Coffee Day is lagging far behind Barista is this aspect.

CHAPTER 5
CONCLUSION

Barista

1. Strong Brand Image: Barista has a strong and clear brand image. Their customers can easily
identifyand relate to the Barista brand. This helps increase and maintain brand loyalty.
2. Excellent Human Resource: According to the survey, Barista received an excellent rating for
the service and behavior of their staff. This is a huge advantage, especially in a service
organization. Barista must strive to keep this advantage.
3. Ambience & Dcor:
Another significant area of excellence is the kind of ambience and dcor Barista cafs have.
Respondents to the survey, including whose who chose Caf Coffee Day as their choice of caf,
gave Barista a near perfect rating for their Ambience& Dcor.
4. Strong base for expansion & growth: Barista have worked hard on heir brand image and
human resources, and have a strong base for future expansion and growth- whether nationally or
internationally.

Caf Coffee Day:

1. Highly rated Taste & Quality of products:
Caf Coffee Day got a high rating in the market survey, for the Taste & Quality of their products.
If they work on this aspect, there is huge potential for them to attract customers, just based on the
taste and quality of products. This is also helped by the fact that they grow their own coffee
beans, and this provides an important base for future expansion and growth. Caf Coffee Day
even won theBarista Coffee- Making Championship for the Best Coffee.
2. Value for money proposition:
Caf Coffee Day is projected as an affordable brand. This strategy has workedextremely well
so far, and Caf Coffee Day got a high rating, both for their prices and for their value for money,
in the market survey.
3. Strong youth orientation:
The Caf Coffee Day brand is, and always has been, extremely youth- oriented. In a country
where over 40% of the population is under the age of 20, there is huge potential for Caf Coffee
Day to become one of the countrys largest youth brands. The untapped market share and
potential for growth is enormous.
4.Areas Needing Improvement
Both Barista and Caf Coffee Day have under performed or not lived up to potential in certain
areas. The areas are weaknesses, which need to be improved upon, as that both can eliminate any
disadvantage that may have, and improve customer satisfaction. The mail areas needing
improvement, based on the Case
Studies & Market Survey, have been identified as follows:inconvenient to go back to the counter
just to receive their order.

Caf Coffee Day

1. Weak brand image:
The Caf Coffee Day brand, although clearly a youth- oriented brand, lacks the power and
strength expected to maintain brand loyalty. The brand doesntproject a clear image to customers
about what Caf Coffee Day is all about.This could prove as a deterrent during future national
and internationalexpansion.
2. Inefficient human resources:
According to the market survey, Caf Coffee Days staff received only an average rating for their
behavior and service. Caf Coffee Day needs to work hard at this aspect, especially considering
they are a service sector organization that is looking at large expansion.

BIBLIOGRAPHY
1. Aaker, David, Building Strong Brands ,The Free Press, Printed in the United

States Of America, Year 1996

2. Aaker, David, Strategic Brand Management ,Prentice Hall, Printed in the
United States Of America, Year 1989.
3. Crainer,Stuart, The Real Power Of Brands ,PITMAN Publishing, Printed in
Great Britain, Year 1995.
4. Kothari,C.R., Research Methodology ,WISHWA PRAKASHAN Publishing,
Printed in India,Bangalore, Year 1998.
5. Kotler,Philip, Marketing Management,Ninth Edition , Prentice Hall, Printed in
India, Year 1999.
6. Toshowe, Stanley, The Marketing Review
Caf Retail, The India chapter,
Volume86,Number 336 ,Jan2005,page-36
7. www.cafecoffeeday.com - Search engines Case Study
8. www.barista.co.in- Search engines Case Study
9. www.google.com- Search engines

ANNEXURE

Name:
Age:
(1) 15-25 years
(2) 25-35 years
(3) 35-45 years

Sex:
(1 ) male
(2) female

Q1 What coffee shop do you usually go to?

1) Barista
2) Caf coffee day
3) Others

Q2 How often do you visit a coffee shop?

1)
2)
3)
4)

Almost daily
2-3 times a week
2-3 times a month
Not often

Q3 How much money do you usually spend at a coffee shop?

1) 25-75
2) 75-125
3)Over 125 rupees

Q4 How much time do you usually spend at a coffee shop?

1) less than hour
2) -1 hour

3) 1-2 hours
4) Over 2 hours

Q5 How many people do you usually go with?

1)
2)
3)
4)

alone
with 1 person
2-4 people
More than 4 people

Q6 What is the single most important factor for you to choose a coffee shop?
1)
2)
3)
4)

taste of coffee/food
people/service
value for money
ambience/experience

Q7 According to your personal choice, what do you prefer for both

coffee day?
1)
2)
3)
4)

coffee
other drinks
eatables
deserts

Q8 Rate the staff of barista?

(a)
(b)
(c)
(d)

good
bad
average
excellent

barista and caf

Q9 Rate the staff of caf coffee day?

(a)
(b)
(c)
(d)

good
bad
average
excellent

Q10 Are you satisfied with the ambience of barista?

(a)
(b)
(c)
(d)
(e)

strongly agree
agree
neutral
disagree
strongly disagree

Q11 Are you satisfied with the ambience of caf coffee day?
(a )Strongly agree
b) agree
c) neutral
d) disagree
e) strongly disagree

Q 12 Are you satisfied with the product quality of caf coffee day?
(a) yes
(b) no

Q 13 Are you satisfied with the product quality of barista?

(a) yes
(b) no

Q14 Are you satisfied with the value of money you pay at barista?

(a)
(b)
(c)
(d)
(e)

strongly agree
agree
neutral
disagree
strongly disagree

Q 15 Are you satisfied with the value of money you pay at caf coffee day?
(a) strongly agree
(b) agree
(c) neutral
(d) disagree
(e) strongly disagree