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Analysing Consumer Behaviour

Consumer Behaviour

Consumer Behaviour is the study of how individuals, groups & organizations select, buy, use and
dispose off goods, services, ideas or experiences to satisfy their needs and wants.

What influences consumer behaviour

 Cultural Factors: Culture is the fundamental determinant of a person’s wants and behaviour.
Each culture consists of smaller subcultures which further consists of social classes.
 Social Factors
 Reference groups: These are all those groups that have a direct or indirect influence
on the attitudes and behaviour of members
 Family: Most important consumer buying organization in the society. Further divided
into- Family of orientation (parents & siblings) and Family of procreation (person’s
spouse & children)
 Roles and Status: A role consists of activities a person is expected to perform. Each role in
turn connotes a status
 Personal Factors
 Age and stage in life cycle: Our tastes and preferences changes with change in our
age and family’s life cycle.
 Occupation: Both product and brand choice are greatly affected by economic
circumstances.
 Personality: People are likely to choose brands whose personality match their own.

Key Psychological Processes

 Motivation: Our needs become a motive when it is aroused to a sufficient level of intensity to
drive us to act.
 Perception: Perception is the process by which we select, organize and interpret information.
 Learning: Learning is produced through the interplay of drives, stimuli, cues, responses and
reinforcement.
 Memory: Marketer need to create right brand knowledge structures and ensure that it is
maintained in consumers memory.

Buying Process

 Problem Recognition: Burying process starts when the buyer recognizes a problem or need is
triggered by internal or external stimuli.
 Information Search: As per surveys, consumer often search for only limited information.
Marketers must understand what type of information consumers seek.
 Evaluation of alternatives: There is no single process which is used by all consumers for
evaluation of alternatives. Consumers form judgements largely on a conscious and rational
basis.
 Purchase decision: During executing a purchase intention, the consumer may take as many as
five sub decisions- brand, dealer, quantity, timing and payment method.
 Post purchase behaviour: Post purchase, the consumer might experience dissonance.
Therefore, marketing communications should supply beliefs and evaluations that reinforce
the consumer choice.
The marketer’s job is to understand behaviour at each stage. Consumers will not necessarily follow
the specified process and might skip or reverse stages. Hence, marketer need to be flexible with these
stages.

Tapping Into Global Markets


Global competition is intensifying in more product categories as new firms make their mark on the
international stage. Competition from developing-market firms is also heating up. Global firms plan,
operate, and coordinate their activities on a worldwide basis.
Opportunities

 Better profit opportunities than domestic market


 Larger customer base to achieve economies of scale
 Reduce dependence on any one market
 Counterattacks global competitors in home markets
 Customers going abroad require international service
Risks

 Foreign preferences, failing to offer competitively attractive product


 Foreign country’s culture
 Underestimate foreign regulations and incur unexpected costs
Lack managers with international experience
 Change in commercial laws, devalue currency, or expropriate foreign property
Internationalization Process

Export via Establishment of


Establishment of
No export activities independent Production facilities
sales subsidiaries
representatives abroad

Deciding Which Markets to Enter


Typical entry strategies:
 Waterfall Approach
 Sprinkler Approach
 Born Global
Modes of Foreign Market Entry
Each succeeding strategy entails more commitment, risk, control, and profit potential.
1. Indirect exporting - Working through independent intermediaries

Domestic-based
Domestic-based
export
export agents
merchants

Export-
Cooperative
management
organizations
companies

2. Direct exporting - Handling one’s own exports


Domestic-based
Overseas sales
export
branch
department

Traveling export
Foreign-based
sales
distributors
representatives

3. Licensing - Licensor issues a license to a foreign company to use a manufacturing process,


trademark, patent, trade secret, or other item of value for a fee or royalty
4. Joint ventures - Foreign investors have often joined local investors in a joint venture company
in which they share ownership and control
5. Direct Investment - The foreign company can buy part or full interest in a local company or
build its own manufacturing or service facilities
6. Acquisition - Acquiring local brands for their brand portfolio
Globally Standardized Marketing Pros and Cons

Advantages Disadvantages
Economies of scale Differences in consumer needs, wants,
Lower marketing costs usage patterns
Power and scope Differences in consumer response to
marketing programs
Consistency in brand image
Differences in brand development process
Ability to leverage good ideas
Differences in legal environment
Uniformity of marketing practices

Deciding on the Marketing Program


1. Global similarities and differences – Cultural dimensions that differentiates countries:
 Individualism versus collectivism
 High versus low power distance
 Masculine versus feminine
 Weak vs. strong uncertainty avoidance
2. Marketing Adaptation – Most products require at least some differentiation based on the
market
3. Global product strategies – Requires knowing what types of product or services are easily
standardized and what are appropriate adaptation strategies
4. Global Pricing Strategies - Companies have three choices for setting prices in different
countries:
 Set a uniform price everywhere
 Set a market-based price in each country
 Set a cost-based price in each country
5. Global Distribution Strategies
6. Country-of-Origin Effects - Mental associations and beliefs triggered by a country