Module 1 Final

Amity Business School

MBA Class of 2011, Semester III
Consumer Behaviour
Module-I (Introduction)
Vivek Singh Tomar

vstomar@amity.edu
1
Module I (Content)
• Consumer demographics
• Consumer life styles
• Retailing implications of consumer

demographics and lifestyle
• Consumer profiles
• Lifestyle marketing
• Environmental factors affecting consumers

Module-1 (Objectives)
• To understand consumer behavior and its core

concepts
• To understand consumer demographics,
psychographics and classification of consumer
lifestyles
• To understand the concept of consumer
profiling and its retailing implications
• To understand the environmental factors
affecting consumers
Consumer Behavior
(Core Concepts)
Consumer
• Consumer is a broad label for any individuals
or households or organization that use goods
and services generated within the economy
The consumer is the backbone of the Retail

Sales System. The consumer drives the
economy by purchasing goods and services
from vendors.
Personal Consumer
The individual who buys goods and
services for his or her own use, for
household use, for the use of a family
member, or for a friend.
Organizational Consumer
A business, government agency, or other
institution (profit or nonprofit) that buys the
goods, services, and/or equipment
necessary for the organization to function.
What Is Consumer Behavior?

Activities people undertake when
obtaining (Searching and
Purchasing), consuming (Using and
Evaluating), and disposing of
products and services
Role Theory:
Identifies consumers as actors on the marketplace stage
Consumer Behavior is a Process:
Exchange: A transaction in which two or more organizations
give and receive something of value
Some Issues That Arise During Stages in the

Consumption Process
Consumer Organizational
Influences Influences
Obtaining Consuming Disposing
Consumer Behavior
Consumer Organizational Influences

Influences
Culture Brand
Ethnicity Product Features
Personality Advertising
Family Word of Mouth
Life-stage Promotions
Values Retail Displays
Income Price
Available Resources Quality
Attitudes Service
Opinions Store Ambiance
Feelings Convenience
Motivations Loyalty Programs
Past Experiences Packaging
Peer Groups Product Availability
Knowledge
Consumer Behavior

•How you decide •How you use the •How you get rid of
you want to buy product remaining product
•Other products •How you store the •How much you

you consider product in your throw away after
buying home use
•Where you buy •Who uses the •If you resell items
product yourself or
•How you pay for through a
product •How much you consignment
consume store
•How you
transport •How product •How you recycle
product home compares with some products
expectations
CONSUMER INFLUENCES ORGANIZATIONAL INFLUENCES
Culture Ethnicity Brand Product Features
Personality Family Amity
Advertising Business
Word of Mouth School
Life-stage Values Promotions Retail Displays
Income Available Resources Price Quality
Attitudes Opinions Service Store Ambiance
Motivations Past Experiences Convenience Loyalty Programs
Feelings Peer Groups Packaging Product Availability
Knowledge
OBTAINING CONSUMING DISPOSING

•How you decide you want •How you use the product •How you get rid of
to buy •How you store the product remaining product
•Other products you in your home •How much you throw
consider buying •Who uses the product away after use
•Where you buy •How much you consume •If you resell items yourself
•How you pay for product •How product compares with or through a consignment
•How you transport expectations store
product home •How you recycle some
products
Consumer Behavior
What Is Consumer Behavior?

Activities people undertake when
obtaining, consuming, and disposing
of products and services
A field of study that focuses on
consumer activities
Scope goes beyond just why and how
people buy to include consumption
analysis
Consumption Analysis
Why and how people use products in
addition to why and how they buy
Why Study Consumer Behavior?

Consumer Behavior Determines the
Economic Health of a Nation
Success of Marketing Programs

Marketing can be used to
influence brand choice and
purchase, while Demarketing
can influence people to stop
harmful consumption
“The Customer is King”

Organization influenced by
consumer needs and wants

Organizations that are Customer-centric
use a total marketing approach to focus
their resources on satisfying customers
Marketing
Process of transforming or changing an
organization to have what people will buy
Why Study Consumer Behavior?

Economic Health of Everyone

The individual’s decisions as a consumer
determine their economic health by
making more effective consumption
decisions while avoiding deceptive
practices harmful to them

Public policy leaders and social
commentators study consumer behavior
to alleviate overconsumption and
underconsumption by educating
consumers about problems and providing
assistance
Educating
Consumers
About Crises
Educating Consumers About Health

Understanding consumers’ issues or problems and developing
methods to reach and educate consumers
Understanding consumers’ issues or problems and

developing methods to reach and educate consumers

Consumer Behavior Helps Formulate
Public Policy
Government Protection
Understanding and Education
consumers’ needs to Int
e
rat rest
formulate public policy es
ic s
and predicting behavioral Soci Econom
al
changes that follow Welf
are ily
Fam ing
n
Plan
ng
Warni
labels m e nt
overn
G t io ns
l a
Regu
Protection from
Competitive Markets
Consumer Behavior Affects Personal

Policy
Personal policy includes how you behave
towards others and in buying situations,
your values and beliefs,
and how you live your life
A person’s economic quality of life is

determined by personal policy
The Underlying Principles of

Consumer Behavior
The Consumer Is Sovereign

Consumer Behavior
The Consumer Is Global

Consumer Behavior
Consumers Are Different; Consumers
Are Alike
Consumers appear different but respond in

similar ways to brands
Consumers appear different but respond in similar

ways to brands

Consumer Behavior
Consumers Are Different; Consumers
Are Alike
The Consumer Has Rights
Consumer Bill of Rights

The Pyramid of Consumer Behavior

Consumer Demographics
Demographics:
Statistics that measure observable aspects of
a population
Ex.: Age, Gender, Family Structure,
Social Class and Income, Race and
Ethnicity, Lifestyle, and Geography
Demographics is the size, structure, and

distribution of a population
Marketers use demographic analysis as market
segment descriptors and in trend analysis
Consumer analysts use demo-graphic trends to

predict changes in demand for and consumption
of specific products and services
Demographic analysis provides information for social
policy
Demographics used in analyzing policy questions
related to the aggregate performance of marketing
in society (macromarketing)
Industrial demand is ultimately

derived from consumer demand
Analysis of demographic trends is
important for industrial and business-
to-business marketing
In an industrial firm, you must
understand not only the customers’
minds, but also the minds of the
customers’ customers
Demographics
Changing Structure of Markets
Geographic Factors
Economic Resources
Global Markets
Changing Structure of Consumer

Markets
Market analysis requires information
about
people with needs
ability to buy
willingness to buy
authority to buy

Markets
How many people will there be?
birthrate
natural increase
fertility rate
total fertility rate
population momentum

Markets
Birthrate: number of live births per
1,000 population in a given year
Natural increase: surplus of births
over death in a given period
Fertility rate: number of live births per
1,000 women of childbearing age (15
to 44 years)

Markets
Total fertility rate: average number of
children that would be born alive to a
woman during her lifetime if she were
to pass through all of her childbearing
years conforming to age-specific
fertility rates of a given year

Markets
Population momentum: future growth
of any population will be influenced
by its present age distribution

Markets
Factors affecting birthrates:
Age distribution of population
Family structure
Social attitudes toward family/children
Technology

Markets
Factors affecting birthrates:
Age distribution of population
Family structure
Social attitudes toward family/children
Technology
Increasing life expectancy

Immigration represents about 30% of
annual growth in United States
Changing Age Distribution

Changes in age distribution affects the
types of products and services that will
be bought and consumed in the future
Cohort analysis is fundamental to
understanding changing consumer
markets
A cohort is any group of individuals
linked as a group in some way
Changing U.S. Age Distribution

The key to cohort analysis is examining
the influences that are shared by most
people in a specific group
Ultimately, these influences affect
consumer decision processes and the
types of products, brands, and retailers
consumers prefer when responding to
a firm’s marketing strategy
Children As Consumers
Projected increase in number of
young children between 2000 and
2010
Projected increase in number of
young children between 2000 and
2010
The importance of children as

consumers increases even more,
with the higher proportion of first-
order babies generating higher
demand for quality products and
services
Most parents do most of the buying
Children often involved in family
purchasing decisions
Children often have their own ability to
buy
Generation Y
Born in the 1980s and early 1990s with
72 million members
Greater need for peer acceptance,
which often guides product and brand
choice
More likely to switch brands quicker
than other segments
Teens like the social aspects of
shopping with friends
Appealing to Generation Y
Generation X (Young Adults)

Segment of 25-to-34 year olds is
declining but will have a slight increase
with the inclusion of older Gen Y
consumers
Need to buy products to set up
households and for young children
With many needs and greater financial
restraints, they often shop at value-
oriented retailers
Baby Boomers or Muppies

This group (45 to 64 years) is projected to
grow by 19 million by 2010
Good market for luxury travel, spas, health
clubs, cosmetics, salons, diet plans foods,
and health foods
Group represents the greatest share of the
workforce, the greatest share of income, and
the greatest share of voting power, and
political influence
Young Again Market

Also referred to as mature market,
seniors, and elderly
These segments are expected to grow
substantially
Despite advanced chronologic age,
many in this segment feel, think, and
buy young
Young Again Market

Cognitive age: the age one perceives
one’s self to be
Cognitive age is measured in terms of
how people feel and act, express
interests, and perceive their looks
Can be used with chronologic age to
better target segments, create more
effective content, and select the most
efficient media channels
Young Again Market

Important segmentation variables for
this group include health, activity level,
discretionary time, engagement in
society, and gender
Communicating with this segment
often requires alteration of traditional
messages and materials
- larger type and bright colors
- newspapers and AM radio
- sensitive to revealing their age
Macromarketing to an Aging
Population
The aging populations of the United
States, Japan, Canada, and Europe will
have enormous effects on
macromarketing and social policy
Younger consumers may have
considerably less financial resources
at their disposal due to future
contributions to Social Security and
Medicare
Macromarketing to an Aging Population
One solution to this problem includes

increasing the age at which benefits begin,
thus changing the age at which people and
organizations expect to retire
Quasi-retirement is another option where
more experienced workers fill in for younger
workers during vacations, sabbaticals,
training, or maternity leaves
Demographic Analysis to Predict

Consumer Behavior
Demographics
Age Structure of Markets
Geographic Factors
Economic Resources
Global Markets
Changing Geography of Demand

Geodemography, refers to where
people live, how they earn and spend
their money, and other socioeconomic
factors
The study of demand related to geographic
areas assumes that people who live in
proximity to one another also share similar
consumption patterns and preferences
Cities are the most important unit of
analysis in most marketing plans

Metropolitan statistical area (MSA): a free-
standing metropolitan area surrounded by
non-metropolitan counties and not closely
related to other metropolitan areas
Primary MSA (PMSA): metropolitan area
closely related to another city
Consolidated MSA (CMSA): a grouping of
closely related PMSAs

The greatest gains in population are expected in
California, Texas and Florida
These states are considered prime candidates for
new stores compared to other states where
populations may be declining
Growth rate may be deceptive unless the size of the
population is also taken into account
Geographic variables affect many components of a
firm’s marketing strategy

Consumer Behavior
Demographics
Geographic Factors
Economic Resources
Global Markets
Economic Resources
The ability to buy, typically measured by
income and wealth
Economic Resources
Income: money from wages and salaries
as well as interest and welfare payments
Economic Resources
What consumers think will happen in the
future (consumer confidence) heavily
influences consumption
Influences whether consumers will
increase their debt or defer spending to
pay off debt
Measures of consumer confidence are
important in making decisions about
inventory levels, staffing, or promotional
budgets
Economic Resources
Income: money from wages and salaries
as well as interest and welfare payments
Wealth: a measure of a family’s net
worth or assets in things such as bank
accounts, stocks, and a home, minus its
liabilities such as home mortgage and
credit card balances
Economic Resources
Net worth influences willingness to
spend but not necessarily ability to
spend, because much wealth is not
liquid and cannot be spent easily
How much people accumulate over the
years is more a function of how much
they save rather than how much they
earn
Targeting the Up Market

The superaffluent represent the top quintile of
consumers in terms of income
Households often consists of two income
earners who place a high value on time
They value extra services provided by some
retailers
Saving money is as important as spending it
for many individuals in this group
Targeting the Up Market

Shop discount stores, use coupons, and
wait for sales
More print oriented in communications
Simple ads that promote image
Credibility of source selling product
Product reviews influence this group
Targeting the Down Market

Throughout the world, the majority of
consumers are low income
Retailers such as Wal*Mart have found
success by providing good products at
reasonable prices
Closeout stores offer brand name products
at deep discounts to at all income-level
consumers
Dollar stores are one of the fastest growing
retail categories
Targeting the Down Market

Provide good products at reasonable
prices
Maintaining attractive stores
Offering stylish and up-to-date products
Have friendly employees that treat
customers with respect

Consumer Behavior
Demographics
Geographic Factors
Economic Resources
Global Markets
Global Market Analysis

The most attractive markets are
countries that are growing both in
population and in economic resources

Which countries will grow the most in
the future?

Which countries will grow the most in
the future?
Which countries
have the highest
per capita income?

Low income countries offer an
advantage to firms looking to buy
products from the lowest-cost source
There are pockets of
consumers who are
able to buy products,
even in the poorest
countries
Emerging Markets
Marketing programs should focus on
creating brand awareness (because
competitors will follow) and stimulating
product trial
Marketers may have to teach
consumers about products taken for
granted (deodorant)
Products may have to be adapted to
local values
Consumer Behavior in
the Pacific Rim
the Pacific Rim
South Asia
India
China
Australia
Japan
Latin America
Latin America
Some of the most attractive markets
include Brazil, Venezuela, Colombia,
Argentina, and Chile
Most countries have high population
growth rates, moderately high incomes
close proximity
Intermarket segmentation provides a
basis to identify segments that can
afford certain items
Eastern Europe
Eastern Europe
The attractiveness of Eastern European
markets lies in their similar preferences to
Western consumers
Hungary and Poland have received much
attention from global marketers
Marketers have launched a myriad of
successful brands
Consumer Behavior in The EU


The EU is a market larger than the United
States
Extremely low population growth makes
customer retention extremely important for
marketers
Products and people move across borders
easily
Efficiencies include logistics, financial
arrangements, and marketing economies of
scale

Efficiencies include logistics, financial
arrangements, and marketing
economies of scale
Marketers can approach Europe as a
single market, but national identity still
exists among consumers
A Lesson Learned
• Nike was forced to pull
this advertisement for a
running shoe after
disabilities rights groups
claimed the ads were
offensive.
• How could Nike have
done a better job of
getting its message
across without offending
a powerful demographic?
Psychographics & Lifestyle

Psychographic analysis is . . .
. . . the attempt
to measure the
life-styles of
consumers.
Life-Style and Psychographic

Analysis
• Life-style refers to how people live, how they
spend their money, and how they allocate their
time
• Life-style and personality are different, yet are

closely related
The distinction between personality

and life-style:
– Personality refers to the internally based
dispositions of the person. In contrast, life-
style refers to the external manifestations of
how a person lives.
• Psychographics is the quantitative
investigation of consumers’ life-styles,
personality, and demographic
characteristics.
Lifestyle and consumption process
AIO statements identify consumer

activities, interests, and opinions
– Activity questions ask consumers to indicate what
they do, what they buy, and how they spend their
time.
– Interest questions focus on what the consumers’
preferences and priorities are.
– Opinion questions ask for consumers’ views and
feelings on such things as world, local, moral,
economic, and social affairs.
Excerpts from AIO Inventory

Instructions: Please read each statement and place an “x” in the box that best indicates
how strongly you “agree” or “disagree” with the statement.
Agree Disagree
Completely Completely
I feel that my life is moving faster and faster,
sometimes just too fast. [1] [2] [3] [4] [5] [6] [7]
If I could consider the “pluses” and “minuses,”

[1] [2] [3] [4] [5] [6] [7]
technology has been good for me.
[1] [2] [3] [4] [5] [6] [7]
I find that I have to pull myself away from e-mail.
Given my lifestyle, I have more of a shortage of [1] [2] [3] [4] [5] [6] [7]
time than money.
I like the benefits of the Internet, but I often don’t [1] [2] [3] [4] [5] [6] [7]
have the time to take advantage of them.
SRI developed two psychographic

inventories: VALS and VALS 2
• VALS is based upon motivational and
developmental psychological theories
particularly Maslow’s hierarchy of needs
theory.
• VALS 2 was developed specifically to
measure consumer buying patterns.
ACTUALIZERS
High Resources
VALS 2 Principle Oriented Status Oriented Action Oriented
FULFILLEDS ACHIEVERS EXPERIENCERS
BELIEVERS STRIVERS MAKERS
Low Resources
STRUGGLERS
VALS 2 Segments and Participation in
Selected Sports
Percent of adults in each VALS 2 type who participated in selected sports in 1995.
Actualizers
Experiencers
Achievers
Makers
Fulfilleds
Strivers
Believers
Strugglers
0 2 4 6 8 10 12 14
Mountain/rock climbing Jet skiing/wave running/water biking Inline skating

Size of VALS Segment as Percent of U.S.

Population
PERCENT OF
VALSTM SEGMENT
POPULATION
Actualizer 11.7%
Fulfilled 10.5
Believer 17.0
Achiever 14.7
Striver 11.8
Experiencer 12.9
Maker 12.0
Struggler 9.5
The VALS 2 Inventory

• Goal of VALS 2 is to identify specific relationships between
consumer attitudes and purchase behavior.
• Three self-identify orientations: principle oriented people,
status oriented people, and action oriented people.
• Three resource orientations: financial, psychological, and
material. Based upon total number of resources, people could
be categorized based upon their level of resources.
• VALS 2 used by corporations to understand the basis for
consumer lifestyles, which is useful for developing promotional
strategy and even where to place retail stores such as The
Sharper Image.
The List of Values (LOV) Scale

• The list of values (LOV) scale was developed
to correct some of the problems of VALS.
• Goal is to assess the dominant values of a
person (i.e., it does not use AIO statements).
Nine values are assessed by the

LOV scale:
• Sense of belonging • Self-fulfillment
• Being well-respected • Excitement
• Security • Sense of accomplishment
• Fun and enjoyment • Self-respect
• Warm relationships
with others
Yankelovich’s Monitor Mindbase
• Based on values, lifestyles, and motivation

• Position on core set of values with lifecycle
stage
• 32 target segments, 8 segments
Yankelovich’s Monitor Mindbase

– Up & Comers (16%)
– Aspiring Achievers (8%)
– Realists (12%)
– New Traditionalists (14%)
– Family centered (14%)
– Individualistic (6%)
– Renaissance Masters (13%)
– Maintainers (17%)
Geo-Demographic Analysis
• PRIZM
• 62 lifestyle clusters, 12 broad social groups
– Fur & Station Wagoners
– Pools & Patios
– Young Suburbia
– Blue Chip Blues
– Blue Collar Nursery
– Middle America
– Emergent Minorities
– Shotguns & Pickups
International Lifestyles
• Global Scan
– 14 countries
• Strivers (26%)
• Achievers (22%)
• Pressured (13%)
• Adapters (18%)
• Traditionals ( 16%)
A Warning
• Psychographic inventories often result in
clever descriptions of a target market that can
result in stereotypes.
• It can result in managers disparaging the
target group.
• It can cause managers to view the target
market as more homogeneous than it really is.
Managerial Implications
• Position and differentiate product based upon the dominant personality or
psychographic characteristic of the target market.
• Scan the environment to identify the dominant cultural values of the target
market.
• Use market research to identify the personality, self-concept, and
psychographic characteristics that distinguish the target market.
• Develop promotions to be consistent with the dominant personality
characteristics of target market. Create products that fulfill the motivational
needs of target—e.g., low risk products for the low need for arousal group.
• Use personality and psycholographics to identify segments of consumers to
target, such as one-price auto dealers for low bargain prone.
Consumer Profiles
A Hypothetical Psychographic Profile of the

Techno-Road-Warrior
•Sends and/or receives 15 or more e-mail messages a
week
•Regularly visits Web sites to gather information
and/or to comparison shop
•Often buys personal items via 800 numbers and/or
over the Internet
•May trade stocks and/or make travel reservations over
the Internet
•Earns $100,000 or more a year
Demographic-Psychographic Profile
of Newsweek
% Index
• Total adult readers 19,593,000 100.0 100
• Men 55.9 117
• Professionals/ Managers 35.3 174
• Age 35-49 36.5 114
• Household income >$100,000 25.1 172
• Married 62.4 109
• Own laptop PC 12.0 150
• Spent $3000+ on vacation last year 12.3 164
Demographic-Psychographic Internet
Shopping Styles
• E-bivalent Newbies
• Time-Sensitive Materialists
• Clicks & Mortar
• Hooked, Online, & Single
• Hunter-Gatherers
• Brand Loyalists
Lifestyle Marketing
• Adbusters Quarterly is
a Canadian magazine
devoted to culture
jamming. This mock
ad skewers Benetton.

Module 1 Final

Caricato da

Informazioni sul documento

Descrizione originale:

Copyright

Formati disponibili

Condividi questo documento

Condividi o incorpora il documento

Opzioni di condivisione

Hai trovato utile questo documento?

Questo contenuto è inappropriato?

Copyright:

Formati disponibili

Module 1 Final

Caricato da

Copyright:

Formati disponibili

Amity Business School

Amity Business School

Vivek Singh Tomar

• Consumer life styles

• Retailing implications of consumer

• Environmental factors affecting consumers

• To understand consumer behavior and its core

The consumer is the backbone of the Retail

What Is Consumer Behavior?

Some Issues That Arise During Stages in the

Obtaining Consuming Disposing

Consumer Organizational Influences

Obtaining Consuming Disposing

Obtaining Consuming Disposing

Obtaining Consuming Disposing

•Other products •How you store the •How much you

OBTAINING CONSUMING DISPOSING

What Is Consumer Behavior?

Why Study Consumer Behavior?

Consumer Behavior Determines the

“The Customer is King”

Consumer Behavior Determines the

Why Study Consumer Behavior?

Consumer Behavior Determines the

Consumer Behavior Determines the

Educating Consumers About Health

Understanding consumers’ issues or problems and

Consumer Behavior Determines the

Consumer Behavior Affects Personal

A person’s economic quality of life is

The Underlying Principles of

The Underlying Principles of

The Underlying Principles of

Consumers appear different but respond in

Consumers appear different but respond in similar

The Underlying Principles of

Consumer Bill of Rights

The Pyramid of Consumer Behavior

Demographics is the size, structure, and

Consumer analysts use demo-graphic trends to

Industrial demand is ultimately

Changing Structure of Consumer

Changing Structure of Consumer

Changing Structure of Consumer

Changing Structure of Consumer

Changing Structure of Consumer

Changing Structure of Consumer

Changing Structure of Consumer

Increasing life expectancy

Changing Age Distribution

Changing U.S. Age Distribution

The importance of children as

Generation X (Young Adults)

Baby Boomers or Muppies

Young Again Market

Young Again Market

Young Again Market

Macromarketing to an Aging Population

One solution to this problem includes

Demographic Analysis to Predict

Changing Geography of Demand

Changing Geography of Demand

Changing Geography of Demand