Consumer Behavior

1. Consumer Behavior -Bhavna Narang

2. Defining Consumer Behavior • Consumer Behavior can be defined as the behavior that consumers display in searching for, purchasing, evaluating, and disposing of products and services that they expect will satisfy their needs. • It focuses on how individual consumers and families or households make decisions to spend their available resources (time , money and effort) on consumption-related items.

3. Consumer Behavior and the Marketing Concept • The task of a marketer is out find out the unsatisfied and unrecognized needs of consumers. • For this it is important to continuously conduct market research to monitor consumers’ needs and preferences • The marketer must also be aware of the consumers’ psychological and social needs.

4. Importance of Consumer Behavior • Segmentation, Targeting and Positioning decisions • To determine an effective Marketing Mix • To make Branding decisions • Providing customers with Value • Ensuring Customer Satisfaction • Building customer Trust • Securing Customer Retention

5. Consumer Research

6. The Consumer Research Process • The six major steps in the consumer research process are: • defining the objectives of the research • collecting and evaluating secondary data • designing a primary research study • collecting primary data • analyzing the data • preparing a report on the findings

7. The Consumer Research Process Develop Objectives Collect Secondary Data • Design Qualitative Research • Method • Screener questionnaire • Discussion guide • Design Quantitative Research • Method • Sample design • Data collection instrument Conduct Research (Using highly trained interviewers) Collect Primary Data (Usually by field staff) Exploratory Study Analyze Data (Subjective) Analyze Data (Objective) Prepare Report Prepare report

8. Developing Research Objectives • Defining purposes and objectives helps ensure an appropriate research design. • A statement of objectives helps to define the type and level of information needed.

9. Collecting Secondary Data • Secondary information is any data originally generated for some purpose other than the present research objectives. • Provides clues and direction for the design of primary research.

10. Designing Primary Research • Quantitative studies more likely for collecting descriptive information. • Qualitative studies may be used to get new ideas.

11. Data Collection Methods Observation Experimentation Surveys

12. Observational Research • Helps marketers gain an in-depth understanding of the relationship between people and products by watching them buying and using products.

13. Experimentation • Can be used to test the relative sales appeal of many types of variables. • Only one variable is manipulated at a time, keeping other elements constant. • Can be conducted in laboratories or in the field.

14. Surveys Personal Interview Mail Telephone Online

15. Comparative Advantages of Mail, Telephone, and Personal Interview Surveys MAIL TELEPHONE PERSONAL INTERVIEW ON-LINE Cost Low Moderate High Low Speed Slow Immediate Slow Fast Response rate Low Moderate High Self-selection Geographic flexibility Excellent Good Difficult Excellent Interviewer bias N/A Moderate Problematic N/A Interviewer supervision N/A Easy Difficult N/A Quality of response Limited Limited Excellent Good

16. Data Collection Instruments Questionnaires Personal Inventories Attitude Scales Discussion Guides

17. Questionnaires • Used primarily for quantitative research. • Can be sent in the mail, or administered by interviewers in person or by telephone. • Can be disguised or undisguised as to its true purpose. • Questions can be open-ended or closed-ended.

18. Personal Inventories • Presents a series of statements to which respondents indicate their degree of agreement or disagreement. • An inventory presents a list of statements, while a questionnaire asks a series of questions.

19. Attitude Scales • The three most frequently used scales are: • Likert scales: easy for researchers to prepare and interpret, and simple for consumers to answer. • Semantic differential scales: relatively easy to construct and administer. • Rank-order scales: subjects rank items in order of preference in terms of some criteria.

20. Example of a Likert Scale Please place the number that best indicates how strongly you agree or disagree with each of the following statements about shopping on-line in the space to the left of the statement. 1 = Agree Strongly 2 = Agree 3 = Neither Agree or Disagree 4 = Disagree 5 = Disagree Strongly _____ a. It is fun to shop online. _____ b. Products often cost more on-line than they are worth. _____ c. It is a good way to find out about new products. _____ d. I’m afraid to give out my credit card number on-line. _____ e. I can shop whenever I want--even at 2 o’clock in the morning. _____ f. Some Web sites really encourage you to browse. _____ g. It’s easy to compare different makes and models of products on-line.

21. : : : : : : : : : : : : : : : : : : : : : : : : SEMANTIC-DIFFERENTIAL SCALE HLCPE has.. Extremely Neither Extremely Good placements Poor placements Bright students Dull students Good infrastructure Poor infrastructure Premier Image Worst Image

22. : : : : : : : : : : : : : : : : : : : : : : : : SEMANTIC-DIFFERENTIAL SCALE Gujarat Samachar… Extremely Neither Extremely Not Trustworthy Trustworthy Well Written Poorly Written Relevant Irrelevant Fun to Read Boring to Read

23. Rank-Order Scales A. Please rank the following ISPs by placing a 1 in front of the service you think is best, a 2 alongside the second best, and continuing until you have ranked all six service providers. _____ Satyam _____ VSNL _____ Icenet _____ Dishnet _____ Caltiger _____ Wilnet

24. Qualitative Data Collection Methods Depth Interviews Focus Groups Projective Techniques Metaphor Analysis

25. Depth Interviews • A lengthy non structured interview between a respondent and a highly trained interviewer. • Interviewer minimizes his or her own participation after establishing the general subject matter. • Can provide marketers with valuable ideas about product design and provide insights for positioning or repositioning the product.

26. Focus Group A qualitative research method in which about eight to ten persons participate in an unstructured group interview about a product or service concept.

27. Focus Groups • Consists of 8 to 10 respondents who meet with a moderator-analyst for a focused group discussion. • Respondents encouraged to discuss their interests, attitudes, reactions, motives, lifestyles, feelings about the product or product category, usage experience, etc. • Respondents recruited on the basis of consumer profiles, based on specifications defined by marketing management.

28. Selected Portions of a Discussion Guide 1. Why did you decide to use your current cellular company? (Probe) 2. How long have you used you current cellular company? (Probe) 3. Have you ever switched services? When? What caused the change? (Probe) 4. What do you think of the overall quality of your current service? (Probe) 5. What are the important criteria in selecting a cellular service? (Probe) Examples of Probe questions: a. Tell me more about that... b. Share your thinking on this… c. Does anyone see it differently...

29. Projective Techniques Research procedures designed to identify consumers’ subconscious feelings and motivations. These tests often require consumers to interpret ambiguous stimuli such as incomplete sentences, cartoons, or inkblots.

30. Projective Techniques • Consist of a variety of disguised “tests” that contain ambiguous stimuli. • Sometimes administered as part of a focus group, but usually used with depth interviews.

31. Word Association • Which cigarette brand comes to your mind when you hear the following words? Mild----- Strong----

32. Sentence completion A person who shops at Pantaloons is…. Coca-cola is most liked by _________________________ When I think of shopping in a department store, I ________

33. Picture Test Big Bazaar Let’s see if we can pick up some house wares at Big Bazaar

34. Sampling Plan Decisions Whom to survey? How many? How to select them?

35. Probability and Non-probability Sampling Designs PROBABILITY SAMPLES Simple random sample Every member of the population has a known and equal chance of being selected. Systematic random sample A member of the population is selected at random and then every “nth” person is selected. Stratified random sample The population is divided into mutually exclusive groups (such as age groups), and random samples are drawn from each group. Cluster (area) sample The population is divided into mutually exclusive groups (such as blocks), and the researcher draws a sample of the groups to interview.

36. Sampling (continued..) NONPROBABILITY SAMPLES Convenience sample The researcher selects the most accessible population members from whom to obtain information (e.g., students in a classroom) Judgment sample The researcher uses his or her judgment to select population members who are good sources for accurate information (e.g., experts in the relevant field of study). Quota sample The researcher interviews a prescribed number of people in each of several categories (e.g., 50 men and 5 women).

37. Analysis • Qualitative Research: Moderator or test administrator usually analyzes responses. • Quantitative Research: Researcher supervises the analysis. • Open-ended responses are coded and quantified • Responses are tabulated and analyzed

38. Market Segmentation and Targeting

39. Market Segmentation The process of dividing a potential market into distinct subsets of consumers and selecting one or more segments as a target market to be reached with a distinct marketing mix.

40. Bases for Segmentation • Geographic Segmentation • Demographic Segmentation • Psychological Segmentation • Psychographic Segmentation • Socio-cultural Segmentation • Use-Related Segmentation • Usage-Situation Segmentation • Benefit Segmentation • Hybrid Segmentation Approaches

41. Geographic Segmentation The division of a total potential market into smaller subgroups on the basis of geographic variables (e.g., region, state, or city).

42. Demographic Segmentation • Age • Gender • Marital Status • Income, Education, and Occupation

43. Psychological Segmentation • Motivations • Personality • Perceptions • Learning • Attitudes

44. Benefit Segmentation • Segmenting on the basis of the most important and meaningful benefit • Prudential - financial security • Dabur Chyawanprash - good health • Close up- fresh breath

45. ACTUALIZERS/ INNOVATORS High Resources Principle Oriented Status Oriented Action Oriented THINKERS ACHIEVERS EXPERIENCERS BELIEVERS STRIVERS MAKERS STRUGGLERS/ SURVIVORS Low Resources VALS : Psychographic Segmentation

46. Criteria for Effective Targeting A segment should be- • Identifiable • Sizeable • Stable • Accessible • Congruent with the Company’s objectives and resources

47. Consumer Perception

48. What is Perception? • The process by which an individual selects, organizes, and interprets stimuli into a meaningful and coherent picture of the world • How we see the world around us

49. Sensation • Sensation is the immediate and direct response of the sensory organs to stimuli. • A stimulus is any unit of input to the senses

50. Absolute threshold • Lowest level at which a person can experience a sensation • As exposure to a stimulus increases, it results into sensory adaptation. • Some marketers try to increase sensory input • Some try to decrease sensory input • Some use unusual or technological media • In other words, absolute threshold is the difference between ‘something’ and ‘nothing’