Bangalore

Introduction to
Consumer Behaviour
SUNRISE ACADEMY

What, Why & How

Consumer Behaviour
Module 01 & 02
1
 Consumer vs Customer
• Consumer is the generic term to
Bangalore
ACADEMY Bangalore

indicate the user of a particular type of

product
• Customer is the consumer who uses
SUNRISE ACADEMY

the product of a company

– In practice, both these terms are
used interchangeably
SUNRISE

– Our objective here is to study how

and why consumers purchase
products of certain nature

2
 The Purpose of Business
• There is only one valid definition of
Bangalore
ACADEMY Bangalore

business purpose ; To create Customers

• What the business thinks it produces is
not of importance
SUNRISE ACADEMY

• What the customer thinks he is buying,

what he considers as Value, is Decisive
• It determines what a business is, what it
SUNRISE

produces and whether it will prosper

Peter Drucker

3
 Concepts of Creating Customers
• Production Concept
Bangalore
ACADEMY Bangalore

• Product Concept
• Selling Concept
SUNRISE ACADEMY

• Marketing Concept
SUNRISE

4
 Production Concept
• The production concept is characterized as the
concept used by Henry Ford in the early 1900s.
Ford produced a car for $850 in an era when only
Bangalore
ACADEMY Bangalore

the wealthy could afford a car. The assembly line

concept allowed him to reduce the price to $360.
• Because of Ford’s products, Americans developed
the nation’s extensive highway system and,
SUNRISE ACADEMY

eventually, suburbs and their adjacent shopping

malls.
– The production concept assumes that consumers
are mostly interested in product availability at low
prices.
SUNRISE

– Implicit marketing objectives are cheap, efficient

production, and intensive distribution systems.
– This concept makes sense when consumers are
more interested in obtaining the product than
they are in specific features.

5
 product concept
• The product concept assumes that consumers will
buy the product that offers them the highest quality,
Bangalore
ACADEMY Bangalore

the best performance, and the most features.

• A product orientation leads the company to strive
constantly to improve the quality of its product and to
SUNRISE ACADEMY

add new features that are technically feasible without

finding out first whether or not consumers really want
these features.
• This concept leads to “marketing myopia,” that is, a
SUNRISE

focus on the product rather than on the consumer

needs it presumes to satisfy.
–
– Railroads
Railroads are
are often
often used
used as
as an
an example
example of
of marketing
marketing
myopia.
myopia.
–
–AA more
more modern
modern example
example of
of marketing
marketing myopia
myopia might
might
be
be the
the PDS.
PDS.
6
 Selling Concept
• The selling concept is a natural extension of the
production and product concepts. In this concept,
Bangalore
ACADEMY Bangalore

marketing’s primary focus is selling the product(s)

that it has unilaterally decided to produce.
• A hard sell approach is often used to persuade
SUNRISE ACADEMY

consumers to buy something (even if they do not

really want it).
• A negative of this concept is that consumers may not
return for repeat sales because they may not have
SUNRISE

wanted the product to begin with.

• This approach is typically used by the marketers of
unsought goods (such as life insurance).

7
 Marketing Concept
•• The
The field
field of
of consumer
consumer behavior
behavior is
is rooted
rooted inin aa marketing
marketing strategy
strategy
that
that evolved
evolved in in the
the late
late 1950s
1950s
•• Instead
Instead of
of trying
trying to
to persuade
persuade customers
customers to to buy
buy what
what the
the firmfirm had
had
already
already produced,
produced, marketing-oriented
marketing-oriented firms
firms found
found that
that itit was
was aa
Bangalore
ACADEMY Bangalore

lot
lot easier
easier to
to produce
produce onlyonly products
products they
they had
had first
first confirmed,
confirmed,
through
through research,
research, that
that consumers
consumers wanted.
wanted.
–
– This
This consumer-oriented
consumer-oriented concept
concept came
came to
to be
be known
known as
as the
the
marketing
marketing concept.
concept.
SUNRISE ACADEMY

–
– Consumer
Consumer needs
needs and
and wants
wants became
became the
the firm’s
firm’s primary
primary
focus.
focus.
•• The
The key
key assumption:
assumption: To To be
be successful,
successful, aa company
company must must
determine
determine the
the needs
needs and and wants
wants ofof specific
specific target
target markets
markets and
and
deliver
deliver the
the desired
desired satisfactions
satisfactions better
better than
than the
the competition.
competition.
SUNRISE

•• The
The marketing
marketing concept
concept is is based
based on on the
the premise
premise that
that aa marketer
marketer
should
should make
make what
what itit can
can sell,
sell, instead
instead of
of trying
trying to
to sell
sell what
what itit has
has
made.
made.
–
– The
The older
older selling
selling concept
concept focused
focused on
on the
the needs
needs of
of the
the
seller.
seller.
–
– The
The marketing
marketing concept
concept focuses
focuses on
on the
the needs
needs of
of the
the buyer.
buyer.

8
 Implementing
Marketing Concept
• Marketing is the process via which a
Bangalore
ACADEMY Bangalore

firm creates Value for its chosen

customers
• Value is created by meeting customer
SUNRISE ACADEMY

needs
• To remain a viable concern, the firm
must sustain this process of creating
and capturing Value over time
SUNRISE

• The plan by which the value is

created on a sustained basis is the
firm’s Marketing Strategy

9
 Marketing Process
• Analyse
Bangalore
ACADEMY Bangalore

– Customer, Company, Competitors,

collaborators, Context – SWOT,
Market Research etc
• Strategise
SUNRISE ACADEMY

– Segmentation, Targeting, Positioning

• Penetrate
– Product, Promotion, Place, Pricing –
SUNRISE

Marketing Mix
• Consolidate
– Customer acquisition, Customer
Retention – Brand Equity

10
 Consumer Research
• The set of actions that make up
an individual's consideration,
• Consumer purchase and use of products
Bangalore
ACADEMY Bangalore

behavior and services.

• Includes the purchase as well as
consumption of the products and
SUNRISE ACADEMY

services.

• You, the • What is motivating the customer

SUNRISE

to buy.
seller
• This enables you to convert
must be features into benefits for that
able to particular individual
determine • In which step of the purchase
decision process is the buyer.
11
 Purchasing Decision Process
Problem Recognition
(motive arousal)
Bangalore
ACADEMY Bangalore

Internal Search Search for External Search

•Habitual Information •Extended
SUNRISE ACADEMY

•Routine •Limited

Evaluation of Alternatives
SUNRISE

The Purchase Decision

Post Purchase Behaviour

12
 Problem Recognition
• May occur when the consumer receives
Bangalore
ACADEMY Bangalore

information from advertising or from conversation

with friends that causes awareness of a need.
• In consultative selling sometimes hinges on the
seller's ability to uncover a need.
SUNRISE ACADEMY

• May occur when the consumer re-evaluates the

current situation and perceives an area of void or
dissatisfaction.
SUNRISE

• No matter what kind of need exists some

prospects do not consciously recognize it until the
seller brings it out into the open.

13
 Search for Information
• Limited by
Bangalore
ACADEMY Bangalore

–Time and cost.

–Experience and urgency.
SUNRISE ACADEMY

–Value of purchase.
–Risk involved in the purchase
SUNRISE

14
 Internal Influences
Bangalore
ACADEMY Bangalore

• Needs and motives

• Personality
SUNRISE ACADEMY

• Perception
• Consumer learning & knowledge
SUNRISE

• Attitudes

15
 External Influences
Bangalore
ACADEMY Bangalore

• Culture
SUNRISE ACADEMY

• Subculture
• Family Life Cycle
• Social Class
SUNRISE

16
 Information Search
• Family, friends,
Bangalore
ACADEMY Bangalore

Personal Sources neighbors

• Advertising,
salespeople
SUNRISE ACADEMY

Commercial Sources

• Mass Media,
Consumer-rating
Public Sources groups
SUNRISE

Experiential Sources • Handling the product

• Examining the product
• Using the product

17
 Evaluation of Alternatives
Bangalore
ACADEMY Bangalore

– Evoked Set is the list of

alternatives
– Salient attributes are used to
SUNRISE ACADEMY

evaluate products.
– Determinate attributes are motives
used to make a decision.
SUNRISE

18
 Purchasing Decision
Bangalore
ACADEMY Bangalore

• Several alternatives may seem equally

acceptable;
• Can be made easier by a professional seller
SUNRISE ACADEMY

• Involves a set of related decisions.

• Decision criteria
–
– Tangible
Tangible features
features ofof the
the product.
product.
–
– Financial
Financial considerations
considerations such
such asas price,
price,
SUNRISE

discounts,
discounts, credit
credit policies,
policies, etc.
etc.
–
– Intangible
Intangible factors:
factors: reputation,
reputation, past
past
performance
performance of of the
the seller,
seller, possible
possible delivery
delivery
dates,
dates, etc.
etc.

19
 Levels of Consumer Decision Making
Bangalore
ACADEMY Bangalore

• Complex Decision Making or

SUNRISE ACADEMY

Extensive Problem Solving Model

• Low Involvement Decision Making or
Limited Problem Solving Model
SUNRISE

• Routinised Response Behaviour

20
 Four views of consumer
decision making
Bangalore
ACADEMY Bangalore

• Economic
• Passive
SUNRISE ACADEMY

• Cognitive
• Emotional
SUNRISE

21
 Post−
Post−purchase Evaluation
• Cognitive Dissonance aka "Buyers Remorse“
- post-purchase anxiety
Bangalore
ACADEMY Bangalore

– Depends upon the importance of the

decision and the attractiveness of rejected
alternatives.
• Minimize this anxiety
SUNRISE ACADEMY

– By selling products that meet needs,

– By reinforcing the buyer's belief that the
right decision was made
SUNRISE

– By demonstrating the capabilities and

quality of the product,
– By post purchase follow-up to be sure that
deliveries are prompt, quantities are
correct, and the product is functioning as
expected.
22
 Model of Consumer Behavior

Marketing & Other Stimuli

Bangalore
ACADEMY Bangalore
SUNRISE ACADEMY

Buyer’s Black Box

SUNRISE

Buyer’s Response
Product Choice Purchase Timing
Brand Choice Purchase Amount
Dealer Choice

23
 Business Value Chain
VALUE
VALUE STAGES
STAGES

Marketing
Marketing Customer
Customer Market
Market Shareholder
Shareholder
Program
Program Mindset
Mindset Performance
Performance Value
Value
Bangalore
ACADEMY Bangalore

Investment
Investment

-- Price
Price premiums
premiums
-- Product
Product -- Awareness
Awareness -- Stock
Stock price
price
-- Price
Price elasticity
elasticity
-- Communications
Communications -- Associations
Associations -- P/E ratio
P/E ratio
-- Market
Market share
share
-- Trade -- Attitudes -- Market
Market capitalization
SUNRISE ACADEMY

Trade Attitudes -- Expansion capitalization

-- Employee -- Attachment Expansion success
success
Employee Attachment -- Cost
-- Other -- Activity Cost structure
structure
Other Activity -- Profitability
Profitability

FILTERS
FILTERS Program
Program Consumer
Consumer Market
Market
SUNRISE

Multiplier
Multiplier Multiplier
Multiplier Multiplier
Multiplier

-- Clarity
Clarity -- Channel
Channel support
support -- Market
Market dynamics
dynamics
-- Relevance
Relevance -- Consumer
Consumer size
size and profile -- Growth
and profile Growth potential
potential
-- Distinctiveness
Distinctiveness -- Competitive
Competitive reactions
reactions -- Risk
Risk profile
profile
-- Consistency
Consistency -- Brand
Brand contribution
contribution

24
 Consumer Research Paradigms
Bangalore
ACADEMY Bangalore

• Qualitative Research Methods

• Quantitative Research Methods
SUNRISE ACADEMY

• Combining Qualitative and

Quantitative Research Findings
SUNRISE

25
 The consumer research process
• Developing research objectives
Bangalore
ACADEMY Bangalore

• Collecting secondary data

• Designing primary research
SUNRISE ACADEMY

• Data analysis and

• Reporting research findings
SUNRISE

26
 Consumer Situations
• consist of temporary environmental factors
Bangalore
ACADEMY Bangalore

that form the context within which a

consumer activity occurs at a particular
place and time.
SUNRISE ACADEMY

• include factors that:

– Involve the time and place in which a
consumer activity takes place
SUNRISE

– Explain why the action takes place

– Influence consumer behavior

27
 Situational Elements
Bangalore
ACADEMY Bangalore

• Physical surroundings
• Social surroundings
SUNRISE ACADEMY

• Time
• Task definition
SUNRISE

• Antecedent states

28
 Physical Surroundings
• . . .are the
Bangalore
ACADEMY Bangalore

concrete physical
and spatial aspects
of the environment
SUNRISE ACADEMY

that encompass a
consumer activity.
SUNRISE

29
 Effects of Music on Shoppers
• In a supermarket store study sales increased
Bangalore
ACADEMY Bangalore

daily by 38% when slower music was played.

• A restaurant study found when slow music
was played, liquor sales increased.
SUNRISE ACADEMY

–
– Playing
Playing peppy
peppy music
music while
while on
on hold
hold or
or
waiting
waiting in
in line
line doesn’t
doesn’t make
make time
time pass
pass more
more
quickly.
quickly.
SUNRISE

–
– Louder
Louder music
music increases
increases “pace
“pace ofof events”
events”
perception
perception butbut raises
raises estimates
estimates ofof time
time
durations.
durations.

30
 The Effects of Crowding
•• Density
Density -- how
how closely
closely packed
packed people
people areare (i.e.,
(i.e., the
the
Bangalore
ACADEMY Bangalore

physical
physical arrangements
arrangements of of people
people inin aa space).
space).
•• Crowding
Crowding -- the
the unpleasant
unpleasant feelings
feelings that
that people
people
experience
experience when
when they
they perceive
perceive that
that densities
densities are
are too
too
high
high and
and that
that their
their control
control of
of the
the situation
situation has
has been
SUNRISE ACADEMY

been
reduced
reduced to
to unacceptable
unacceptable levels.
levels.
•• High-density
High-density situations
situations may
may be be beneficial
beneficial --
–– More
More perceived
perceived control
control in
in bar
bar study,
study, less
less in
in bank
bank study.
study.
SUNRISE

–– In
In “fun”
“fun” situations,
situations, density
density enhances
enhances pleasure.
pleasure.
•• There
There is
is usually
usually an
an optimal
optimal level
level of
of density.
density.
•• Other
Other elements
elements (time,
(time, convenience)
convenience) as as important
important for
for
shopping
shopping behavior.
behavior.

31
 Store Location
. . . influences consumers from several
Bangalore
ACADEMY Bangalore

perspectives.
• Consumers have “cognitive maps” of a
SUNRISE ACADEMY

city’s geography that may not match the

actual locations of retail stores.
• Image transference exists: The image of
SUNRISE

anchor stores affects that of smaller stores

in the same shopping center.

32
 Store Layout
. . . is the physical organization of a store
Bangalore
ACADEMY Bangalore

that creates specific traffic patterns, assists

retailers in the presentation of
merchandise, and helps create a particular
atmosphere.
SUNRISE ACADEMY

Store Atmospheric refers to how managers

manipulate the design of the building,
interior space, layout of aisles, texture of
SUNRISE

carpets and walls, scents, colors, shapes,

and sounds experienced by customers to
achieve a certain effect.

33
 Olfactory Cues
• Shoppers perceive higher quality
Bangalore
ACADEMY Bangalore

goods in scented stores.

• Odors should be consistent with store
SUNRISE ACADEMY

offerings.
• These cues are expensive to
maintain.
SUNRISE

34
 Social Surroundings
Bangalore

. . . deals with
the effects of
SUNRISE ACADEMY

other people on
a consumer in a
consumption
situation.

35
 The Task Definition
. . . the situational reasons for buying or
Bangalore
ACADEMY Bangalore

consuming a product or service at a

particular time and place.
SUNRISE ACADEMY

• Usage situations form the context in

which a product is used and influence
SUNRISE

the product characteristics sought by

a consumer.

36
 Occasion−
Occasion−Based
Marketing Opportunities
• Sometimes a product
Bangalore
ACADEMY Bangalore

is locked into one

usage situation,
limiting market
SUNRISE ACADEMY

potential.
• Consumers may
come to consider the
SUNRISE

product inappropriate
for all other situations.

37
 Time as a Situational
Variable
• How much time a consumer has available to do a
Bangalore
ACADEMY Bangalore

task influences the buying strategy used to select

and purchase the product.
• With limited time, there is less information search.
SUNRISE ACADEMY

• Time Differences Are Influenced by Culture...

–
– Linear
Linear Separable.
Separable. There
There isis aa past,
past, present,
present,
future.
future. The
The future
future isis expected
expected to to be
be better:
better: the
the
idea
idea of
of “progress”.
“progress”. Activities
Activities are
are aa means
means toto an
an
SUNRISE

end.
end.
–
– Circular
Circular Traditional.
Traditional. The
The future
future isis like
like the
the
present.
present. Do
Do today
today only
only what
what has
has toto be
be done
done
today.
today. Time
Time and
and money
money aren’t
aren’t related.
related.
–
– Procedural
Procedural Traditional.
Traditional. Task
Task Orientation.
Orientation.
Meetings
Meetings take
take as
as long
long asas necessary.
necessary.
38
 Time as a Product
Bangalore
ACADEMY Bangalore

• Many Purchases Are Made to Buy Time

– The “time-buying consumer” is a

SUNRISE ACADEMY

consumer who engages in buying

time through these products
– Time-saving qualities are a key
SUNRISE

promotional idea
– Time can act as a product attribute

39
 Gift−
Gift−Giving Motivations
Bangalore
ACADEMY Bangalore

Low High
SUNRISE ACADEMY

Voluntary Altruism Reciprocity

creation
Gift
Type
SUNRISE

Ritual Love,
Obligatory
obligation friendship

Degree of Self-Interest
40
 Gift Behavior and Gender
• Women start shopping earlier for
Bangalore
ACADEMY Bangalore

Christmas (October vs. November)

• Spend more time shopping/gift (2.4
SUNRISE ACADEMY

vs. 2.1 hours)

• Are more successful (fewer of their
gifts are exchanged)
SUNRISE

• But men spend 50% more/gift.

41
 Antecedent States
. . . are the temporary physiological and
Bangalore
ACADEMY Bangalore

mood states that a consumer brings to a

consumption situation.
SUNRISE ACADEMY

– Physiological State: Hunger.

– Mood State: Happy feelings
• Can lead to problem recognition.
SUNRISE

• Can change the “feeling” component

of hierarchy of effects
• Mood states influence behavior, e.g.
shopping to alleviate loneliness.
42
 Usage Situation, Person, and
Product Interactions
The Buying Act Results From
Bangalore
ACADEMY Bangalore

Interactions That Occur Among…

SUNRISE ACADEMY

– Consumption situations
– Characteristics of the buying
unit/person
SUNRISE

– The product or service being

offered

43
 Managerial Implications of
Situational Factors
• Positioning. Situational variables offer
Bangalore
ACADEMY Bangalore

multiple opportunities for positioning.

• Research. May indicate which situations
present opportunities for new products.
SUNRISE ACADEMY

• Marketing Mix. Firms may be able to

present time-saving attributes as a tradeoff
for a higher price.
• Segmentation. An increase in the female
SUNRISE

work force presents opportunities to

market to the segment of males doing
more of their own shopping.

44