PRINCIPLES OF CONSUMER BEHAVIOUR

Module 1
Introduction

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Who is a Consumer?
• According to the Ministry of Foreign Affairs, Commerce and Trade
Commerce & Trade -Consumer Affairs:-

– A person who has indicated his or her willingness to obtain goods

and/or services from a supplier with the intention of paying for
them.
– Someone who has purchased goods and/or services for personal
consumption
Consumer Buying Behavior
• It is a process, rather than a singular act or buying
• It is also an orderly process
• It’s a complex process since the same person may play all
the three roles, or there may be more than one person
playing different roles and depending upon the role being
played, the behavior and decision making process may
change.
 Consumer Behavior Roles

• Initiator – the individual who determines / reveal that some need

or want is not being met and authorizes a purchase to rectify the
situation.
• Influencer – a person who by some intentional or unintentional
word or action influences the purchase decision, the actual
purchase, and/or the use of the product or service.
• Buyer – the individual who actually makes the purchase
transaction.
• User – the person most directly involved in the consumption or
use of the purchase.

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Definition of Consumer Behavior

• Consumer Behavior is “the decision process and

physical activity individuals engage in when evaluating,
acquiring, using, or disposing of goods and services.”
- Loudon and Della Bitta
• Consumer Behavior includes all the decisions a
consumer makes when spending their time and
money.
• The what, why, when, where, and how of consumer
purchases are examined in consumer behavior.
• It is not just individuals, but households, families,
and groups that influence the decisions we make.

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• What is a Customer Profile?

A customer profile is a generalized description of your

ideal customer. It includes their demographics,
likes/dislikes, preferred media channels (i.e. Facebook,
email, TV), and more.

Writing profiles allows you to find products and

services that are better suited for your customers and
market them to them more effectively.

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 Two Consuming Entities /
Broad Categories of Consumers:-

- Personal Consumers
- Are those individuals and households who themselves
consume goods or services (End Users or Ultimate
Consumers)

- Institutional or Organizational Consumers

- Are businesses, organizations and groups that buy and
consume good and services during the course of their
operation
 The Changing Roles………

Earlier Roles Current Roles

Producer Consumer

Trader Marketer

Consumer Producer

Both in an Organization & in Economy

Four Main Applications of Consumer Behavior

1. Marketing Strategy
2. Regulatory (Public) Policy
3. Social Marketing
4. Personal Consumer Skills
 Profile of Indian Consumers
• One of the key reasons for the increased consumption is the
impressive growth of the middle class. Around 70 per cent of
the total households in India reside in the rural areas. The total
number of rural household is expected to rise from 135 million
in 2001-02 to 153 million in 2009-10. This presents the largest
potential market in the world.
• According to the study conducted by NCEAR, the number of
`lower middle income' group in rural areas is almost double as
compared to the urban areas, having a large consuming class
with 41% of the Indian middle class and 58% of the total
disposable income.
• i.e. Indian middle class consist of 41% of consuming class and
58% of total disposable income.

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• The Indian rural market has been growing at 3-4%
per annum, adding more than 1 million new
consumers every year and now accounts for close to
50% of the volume consumption of fast-moving
consumer goods (FMCG) in India.
• The market size of the fast moving consumer goods
sector is projected to be more than double to US$
23.25 billion by 2010 from the present US$ 11.16
billion. As a result, it is becoming an important
market place for fast moving consumer goods as well
as consumer durables.

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• There were nearly 70 mn (33%) households
(33% of the total) with an income of more than
US$3,000 in 2006. These "well-off"
households already own relatively expensive
consumer durables, such as air conditioners
and refrigerators.

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Consumer Research

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Research enables marketers to
• predict how consumers will react
– in the marketplace
– to promotional messages
• to understand why they make the purchase decisions they
make
 THE CONSUMER RESEARCH PROCESS

1. Developing Research Objectives

◦ May conduct exploratory study

2. Collecting Secondary Data

◦ Data originally generated for some other purpose
◦ Provides clues and direction for design of primary research
◦ Internal data, publications, commercial data
 THE CONSUMER RESEARCH PROCESS – contd.

3. Designing Primary Research

Quantitative
 Observational, experimentation, survey
 Questionnaires, attitude scales
Qualitative
 Depth interviews, focus groups, projective techniques
 Customer satisfaction measurement
 Surveys: semantic differential scales
 Mystery shoppers

4. Analyzing The Data

 Finding solutions

5. Reporting Research Findings

 Applications
 QUALITATIVE RESEARCH
Depth interviews, focus groups, projective
techniques findings somewhat subjective not
generalized to large populations highly trained
interviewer – analyst obtain new ideas for
promotion campaigns tested more thoroughly
in larger studies used primarily to provide new
ideas and insights for development of
positioning strategies more concerned with
understanding the act of consuming than
buying
Qualitative Data Collection Methods

Depth Focus
Interviews Groups

Projective Metaphor
Techniques Analysis
 Sources of Qualitative Data
• Although qualitative data is much more general than quantitative, there
are still a number of common techniques for gathering it. These include:
• Interviews, which may be structured, semi-structured or unstructured;
• Focus groups, which involve multiple participants discussing an issue;
• ‘Postcards’, or small-scale written questionnaires that ask, for example,
three or four focused questions of participants but allow them space to
write in their own words;
• Secondary data, including diaries, written accounts of past events, and
company reports; and
• Observations, which may be on site, or under ‘laboratory conditions’, for
example, where participants are asked to role-play a situation to show
what they might do.
Quantitative Research
• Quantitative Research is used to quantify the problem by way
of generating numerical data or data that can be transformed
into useable statistics. It is used to quantify attitudes,
opinions, behaviors, and other defined variables – and
generalize results from a larger sample population.

• Quantitative data collection methods include various forms of

surveys – online surveys, paper surveys, mobile surveys and
kiosk surveys, face-to-face interviews, telephone interviews,
longitudinal studies, website interceptors, online polls, and
systematic observations.
 MARKETING RESEARCH
• data collection only
• request/payment
• involvement low
• sufficient contacts to achieve statistical
validity
• data collected anonymously
• problems identified
• follow-up considered unethical
 Survey Data Collection Methods

Personal Interview

Mail

Telephone

Online