Consumer Behavior

CONSUMER BEHAVIOUR
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Consumer Behaviour- Schiffman & Kanuk
Market today.
Substantial increase in the buying power Greater variety of goods and services Information explosion Greater ease of placing and receiving orders Digital Revolution in the market place Increased attention towards customer retention
Consumer Behaviour- Schiffman & Kanuk 2
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Yeh customer maange more! Customer has become choosy and will select
the one which will give more benefits.

Delighting is the ultimate goal. Customer has changed in terms of income and exposure.
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Marketing opportunities for young and

women segment. 2001 census- 20-44 age group is the largest segment. Youth - quick adapters of change. Tendency to buy on credit
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Consumer Behavior The behavior that consumers display in

searching for, purchasing, using, evaluating, and disposing of products and services that they expect will satisfy their needs. Schiffman & Kanuk
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The Scope of Consumer Behavior

How do individuals make decisions to spend their resources (time, money, effort)? Includes: What the consumers buy? Why they buy it ? When they buy it ?
Where they buy it ?
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How often they buy it ?

How often they use it ? How they evaluate it after the purchase ? The impact of such evaluations on the future purchases And how they dispose of it ?
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What is the difference between a consumer and a customer?

Customer Person who purchases the
goods/service is customer Consumer whereas the end users who
consumes the good/service is consumer For e.g.. If a person buys a chocolate for his son, he is called customer & his son is consumer
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The term consumer behavior describes two different entities:
1. The Personal Consumer
2. The Organizational consumer
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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.
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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.
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Why Study Consumer Behavior? In order to design new products and marketing strategies that would fulfill consumer needs, we have to study consumers and their consumption behavior in depth
By studying consumer behavior we try to understand & gain insight into: Consumer decision making processes What we buy, how we buy, and why we buy
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Enables us to become better consumers and marketers

We try to gain a better understanding of consumer related behavior and understand why individuals act in the ways they do. The task of marketing is to identify consumers needs and wants accurately, then to develop products and services that will satisfy them.
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For marketing to be successful, it is not sufficient to merely discover what customers require, but to find out why it is required. Only by gaining a deep and comprehensive understanding of buyer behavior can marketings goals be realized.
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Such an understanding of buyer behavior works to the mutual advantage of the consumer and marketer Allows the marketer to become better equipped to satisfy the consumers needs efficiently Establish a loyal group of customers with positive attitudes towards the companys products.
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Why & how the field of Consumer Behavior developed
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Development of the Marketing Concept

Production Concept
Product Concept Selling Concept Marketing Concept
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Production Concept
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The Production Concept

Assumes that consumers are interested primarily in product availability at low prices Marketing objectives:
Cheap, efficient production Intensive distribution Market expansion
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Product Concept
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The Product Concept

Assumes that consumers will buy the product that offers them the highest quality, the best performance, and the most features Marketing objectives:
Quality improvement Addition of features
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Product Oriented vs Market Oriented Definitions of a Business

Product Oriented Tata Motors Colgate Xerox Liril Tata Tea LIC Deccan airways KBC
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Market Oriented More car per car Get strong teeth Office productivity Feel Fresh Refreshing tea Protect your future Simply fly
We make cars We make toothpaste We make copiers We make soap We make tea We sell insurance We are an airline
We run quiz program

Earn crores
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Selling Concept
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The Selling Concept

Assumes that consumers are unlikely to buy a product unless they are aggressively persuaded to do so Marketing objectives:
Sell, sell, sell
Lack of concern for customer needs and satisfaction

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Marketing Concept
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The Marketing Concept

Assumes that to be successful, a company must determine the needs and wants of specific target markets and deliver the desired satisfactions better than the competition Marketing objectives: Profits through customer satisfaction
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Consumer Behavior
Consumer Behavior is essentially a Marketing Concept since marketers have to know needs & wants of consumers. Study of Consumer Behavior gives us deep insight into needs & wants of Consumers Hence, the field of Consumer Behavior developed as an integral part of development of Marketing Management Philosophies
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Marketing strategy and Consumer behavior

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Market Analysis Segmentation Targeting Positioning The marketing mix

Marketing strategy and Consumer Behavior
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Customer Value, Satisfaction ,and retention
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Customer Value
It is defined as the ratio between the customers perceived benefits(economic,functional,and psychological) and the resources (monetary,time,effort,psychological) used to obtain those benefits
Developing a value proposition (unique selling proposition) is the core of successful positioning.
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E.g. Diners at an exclusive French restaurant in Washington., where a meal with beverages may cost up to $300 per person, may expect unique & delicious food, immaculate service, & beautiful dcor. Some diners may receive even more than they had expected & will leave the restaurant feeling that the experience was worth the money & other resources expended.
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Customer Satisfaction
Customer Satisfaction is the individuals perception of the performance of the product or service in relation to his or her expectations.
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Types of Customers
Loyalists: Completely satisfied customers who keep purchasing Apostles: Whose experiences exceed their expectations and who provide very positive word of mouth to others Defectors: Who feel neutral or merely satisfied and are just as likely to stop doing business with the company Terrorists: who have had negative experiences with the company and who spread negative word of mouth
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Contd.
Hostages: are unhappy customers who stay with the company because of a monopolistic environment or low prices and who are difficult and costly to deal with because of their frequent complaints
Mercenaries :are very satisfied customers who have no real loyalty to the company and may defect because of a lower price elsewhere
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Company should strive for

Creating apostles Raise the satisfaction of defectors and turn them into loyalists Avoid having terrorists or hostages ,and reduce the number of mercenaries
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Customer retention
The maintenance of the patronage of people who have purchased a company's goods or services once and the gaining of repeat purchases. Customer retention occurs when a customer is loyal to a company, brand, or to a specific product or service, expressing long-term commitment and refusing to purchase from competitors
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Customer pyramid
Customers are grouped into four tiers
The Platinum tier :heavy users who are not price sensitive and who are willing to try new offerings
The Gold tier: consists of customers who are heavy users but not as profitable because they are more price sensitive than those in the higher tier, ask for more discounts ,and are likely to buy from several providers
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The iron tier :consists of customers whose spending volume and profitability do not merit special treatment from the company. The lead tier :includes customers who actually cost the company money because they claim more attention than is merited by their spending, and spread negative word of mouth
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The Traditional Marketing concept Versus Value -and Retention Focused Marketing
The Traditional Marketing concept
1. Make only what you can sell instead of trying to sell what you make Do not focus on the product; focus on the need it satisfies
Value -and Retention Focused Marketing

1. Use technology that enables
customers to customise what you make 2. Focus on the products perceived value ,as well as the need it satisfies
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Market products and services that match customers needs better than competitors offerings
3. Utilize an understanding of customer needs to develop offerings that customers perceive as more valuable than competitors offerings
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4. Research Consumer needs and characteristics
4. Research the levels of profit associated with various consumer needs and characteristics
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Understand the purchase behaviour process and the influences on consumer behaviour Realise that each customer transaction is a discrete sale
5. Understand consumer behaviour in relation to the companys product
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6. Make each customer transaction part of an ongoing relationship with the customer
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7.. Segment the market based on customers geographic, demographic,psychological,socio cultural ,lifestyle, & productusage related characteristics
Target large groups of customers that share common characteristics with messages transmitted through mass media Use one way promotions whose effectiveness is measured through sales data or marketing surveys
7. Use hybrid segmentation that

combines the traditional segmentation bases with data on the customers purchase levels and patterns of use of the companys products
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8. Invest in technologies that enables you to send one-to-one promotional messages via digital channels
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9. `Use interactive communications in which messages to customers are tailored according to their responses to previous communications
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Contd
10. Create loyalty programs based on the volume purchased 10. Create customer tiers based on both volume and consumption patterns
11. Encourage customers to stay with the company and buy more
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Make it very unattractive for your customers to switch to a competitor and encourage them to purchase better in a manner that will raise the companys profitability levels Base your marketing budget on the 'lifetime value of typical customers in each of the targeted segments compared with the resources needed to acquire them as customers
12. Determine marketing budgets on the basis of the numbers of customers you are trying to reach
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Contd
13. Conduct customer satisfaction surveys and present the results to management 13. Conduct customer satisfaction surveys that include a component that studies the customers word of mouth about the company, and use the results immediately to enhance customer relationships 14. Create customer intimacy and bonds with completely satisfied, 'delighted customers
14. Create customer trust and loyalty to the company and high levels of customer satisfaction
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Disciplines involved in the Study of Consumer Behaviour

Psychology( the study of an individual) Sociology( the study of groups) Social Psychology (the study of how an individual operates in a group) Anthropology(the influence of society on the individual) Economics (individuals act rationally to maximise their satisfaction)
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Ethics in Marketing
Ethics has been experiencing a growth in interest due to: Business scandals leading to a study of ethics in business schools Exploitation of consumers leading to the growth of the consumer movement Ethics being seen as a corporate strategic tool by many organizations Organizations promoting products to children in unethical ways The growth of the societal marketing concept
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Ethics and Marketers

Do Marketers Manipulate Consumers? Do Marketers Create Artificial Needs? Do Marketers promise miracles?
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Unethical Marketing Behavior

PRODUCT Safety Shoddy goods Inadequate warranties Environmental pollution PACKAGING Deceptive quantities Deceptive quality PRICE Excessive markups Price differentiation Price discrimination Cartels PROMOTION Exaggerated claims Tasteless advertising Surrogate Advertising Deceptive advertising Social exploitation
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Unethical Consumer Practices

Shoplifting Returning clothing that has been worn Abusing products and returning them as damaged goods Returning products bought at sale and demanding the full-price refund Stealing belts from store clothing Returning partially used products for full store credit Abusing warranty or unconditional guarantee privileges Damaging merchandise in a store Duplicating copyrighted materials without permission
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The Right to Safety - to be protected against the marketing of goods which are hazardous to health or life. The Right to Choose - to be assured, wherever possible, access to a variety of products and services at competitive prices: and in those industries where competition is not workable and Government regulation is substituted, an assurance of satisfactory quality and service at fair prices. The Right to Information - to be protected against fraudulent, deceitful or grossly misleading information, advertising, labeling, or other practices, and to be given the facts s/he needs to make an informed choice. The Right to be Heard - to be assured that consumer interests will receive full and sympathetic consideration in the formulation of Government policy, and fair and expeditious treatment in its administrative tribunals
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The Consumer Movement In India

Consumer Protection Act
Philip Kotler-It is an organised movement of citizens and government to enhance the rights and power of buyers in relation to sellers. BIRTH OF COPRA
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Consumer Protection Act (COPRA)1986 is unique in the world

Exclusive courts for consumer disputes in all districts, state and national capitals. 6 consumer rights specified. Consumer Protection Councils from national to state and district levels. Covers private, public, cooperative sectors.
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Consumer's Rights under Section 6 of Consumer Protection Act 1986

1. 2. Right to SAFETY against hazardous goods and services. Right to be INFORMED about quality, quantity, purity, standard, price. Right to CHOOSE from a variety at competitive prices. Right to BE HEARD. Right to seek REDRESSAL. Right to CONSUMER EDUCATION.
3. 4. 5. 6.
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Responsibility
Responsibility towards safe waste disposal
Most often we consume without sparing any thought for what's going to be left behind as waste. More and more percentage of waste generated in urban areas today consists of non-biodegradable waste.
. Urban consumers are making use of plastic, paper and cardboard packaging, disposables batteries, plastic throw-away pens, use and throw nappies ,empty cans etc are becoming a common feature of an urban dustbin Consumers need to become accountable for their consumption patterns and their serious environmental and economic implications.
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Responsibility to endorse safer products

Ecolabelling Eco-mark' is one way of knowing which products conform to
environmental standards and are more envrionment-friendly than others. set by the Ministry of Environment and Forests. Ecolabelling is a methodology practised by many countries in the world, including India. The Indian government has formulated a scheme whereby some categories of products are awarded the Ecomark' if they conform to certain standards set by the Ministry of Environment and Forests. Unfortunately, in India, the scheme has not taken off due to consumer apathy and lack of response. The market has manipulated this situation to lobby with the government to make ecolabelling a voluntary scheme, which will allow manufacturers to disclose and cover information at will.
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Ecomark Logo
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Consumer Bonding The consumer movement needs active participation of consumers to lobby with the government, pressure the market to deliver better quality, and to support consumer rights campaigns.
Young Consumers and Consumer Responsibility Young consumers should consume in moderation and buy a product on the basis of its quality and merit and not because of the brand image
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Societal Marketing Concept

A revision of the traditional marketing concept that suggests that marketers adhere to principles of social responsibility in the marketing of their goods and services; that is, they must endeavor to satisfy the needs and wants of their target markets in ways that preserve and enhance the well-being of consumers and society as a whole. All companies prosper when society prospers. Companies, as well as individuals, will improve if social responsibility was an integral component of every marketing decision. Requires all marketers adhere to principles of social responsibility.
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Societal marketing is the business driven, profit orientated way of changing the world as a means of developing revenue based product. Societal is about the direct benefits for the organisation (profit) and secondary benefit for the community
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Social marketing is about the social gain, target markets gain, and the flow of benefits where profit may not actual exist, or if it does, then its just an incidental secondary benefit for the campaign.
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Benefits of Consumerism
Consumer education
Liaison with the government and the producer
Product Research and inform the Consumers

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Consumer Behaviour Applications in Marketing

Analysing market opportunity Selecting target market Marketing mix decisions(Product,Price,Promotion, distribution) Use in social and non-profits marketing
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Use in social and non-profits marketing

Make use of consumer behaviour to sell their services and products and also try to motivate people to support this institutions The programme organised by NGO include family planning, awareness about AIDS, crime against women etc.
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CONCLUSION
Customer is a King in the Market Customer Delight is the need of the day. It is a greatest challenge for any company to retain the existing customer & maintain a long term relationship with the customer in order to retain a competitive position in the market place.
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Consumer Behavior

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CONSUMER BEHAVIOUR

Consumer Behaviour- Schiffman & Kanuk

the one which will give more benefits.

Consumer Behaviour- Schiffman & Kanuk

Marketing opportunities for young and