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Consumer Behaviour

Consumer Behaviour

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Consumer Behaviour

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  1. Consumer Behaviour Faculty : Prof . Ashok Kumar Not for circulation : for internal use only

  2. Syllabus : As prescribed in the curriculum Core text books : 1 Consumer behaqviour K.K Srivatsava & Sujata K. 2 Consumer behaqviour Leon G Schiffman & L.L Kanuk 3 Consumer Behaviour & market Research Suja R Nair 4 Consumer behaqviour Dr S.L Gupta & Sumitra Pal Not for circulation : for internal use only

  3. Consumer Power & Shifting trend in business • Consumer to TRANSUMER, PROSUMER • Create MASSCLUSIVITY - Create exclusivity from the mass. • Ten Hard facts of Business : • Consumers have more options in the market to choose. • Market transformed from a sellers market to buyer’s market long ago. • Premium & niche brands are fighting for their growth in the market • Consumer loyalty has vanished in thin air. • Business community likes to call Consumers , a transumer . Not for circulation : for internal use only

  4. The center of all business a “Consumer” has been transforming rapidly & have become more opaque . Consumer consistently demand value from the products & services . The marketer believes that brand is most important to a consumer . A consumer is exposed to 600 market communication a day approximately. ( Research results ) A consumer looks beyond the basic functionality of products & services which he does not articulate. Not for circulation : for internal use only

  5. Why to study consumer behaviour by an organization Build / Create Dominating or self expressive brands. Integrated Market Communication Plans & strategies Consumer Behaviour & Research CP=BP = Ever lasting brands Not for circulation : for internal use only

  6. Customer Value & Purchase Involvement Value drives satisfaction Satisfaction is a necessary condition for customer loyalty, but not a sufficient to create loyal customers, customer excellence & delight Delivering value to the customers is a key to achieving organizational goals by being more effective than its competitors in creating , delivering & communicating customer value to the identified set of consumers in the market What is value? Value = Benefits ( Functional Benefit + Emotional Benefit) Cost ( Monetary +Time+ Energy+ Psychic Cost) What is customer delivered value ( CDV) ? It is a difference between Total Customer Value( TCV) & Customer’s Total Cost ( CTC) Not for circulation : for internal use only

  7. Determinants of CDV Monitory cost Time Cost Psychic cost Energy Cost CTC CDV Product value Service Value Emotional Value Image Value TCV CDV builds customer delight It is a difference between the perceived performance ( Out come ) & expectation. If the performance falls short of expectation, it leads to dissatisfaction. On the other hand if it matches the expectation it leads to satisfaction. When it exceeds expectation, it becomes Customer delight . Not for circulation : for internal use only

  8. Conclusion : • Add value to your customer. • Drive the customer up the value chain continuously • Customer understandsvalue for money better than any thing. • Need of a consumer is never ending . Identify the unstated needs residing deep into the minds of the consumer , translate it in to a value proposition , communicate & deliver before your competition does it. • In the media cluttered market , it is critical for every marketer to perform the mind set segmentation of their consumer to understand , how his brand is linked to his consumer. • Media research Co. Not for circulation : for internal use only

  9. Consumer behavior study help to probe the deep recesses of the consumer mind where the needs are still not articulated. It helps to get deeper in to the minds to get more insight & angles. It subliminally make the consumer like the product & services & creates a desire to buy the same. . It helps to build a life time customer value for the organization, which is an intangible asset Life time Customer = Profit X Frequency X Retention period Value of Purchase Not for circulation : for internal use only

  10. Consumer Types Personal consumer Organizational Consumer Buys for individual Consumption. Buying decisions are influenced by Cognitive, Personal, cultural ,social Influence, Situational factors Buying fororganizational consumption Buying decisions are influenced by Quality , service , attitude of the suppliers Financial considerations etc . Besides this , Environmental , organizational, interpersonal Factors influence the decisions. The buying decision involves four decision Makers. End User, Influencer, Decision makers ( management ) & commercial Buyer. Satisfaction of all our groups is essential Not for circulation : for internal use only

  11. Consumer types according to loyalty Personal consumer & Business Consumer SolusUsers Dual users Flirts Degree of commitment towards product or service brands. High Medium Low Not for circulation : for internal use only

  12. Influencing buying decision in a consumer Feedback Cognitive factor Individual factor CONSUMER Decision making Response Personal characteristics Environmental factor Culture Social class Influence group Situational variable Not for circulation : for internal use only

  13. Buyer’s characteristics are influenced by Cognitive Personal cultural social Influence Situational factors factors factor factor groups variables Perception Demographics Values Social Reference point of & class groups purchase Attitudes Life style Belief & Structure Family Market communication Motives Personality Cross Societal Opinion leaders Display & Need traits cultural belonging Innovation Store Influences & trend Patronage Self conceptSub cultural setters Price influences All above factors influence a consumer’s buying decision. Not for circulation : for internal use only

  14. Consumer’s behavior is studied from the point of view of : 1.Consumer as an individual :Consumer behavior study as in individual involves motivational drive ,its measurement , needs & wants & types of need . Self concept, attitude , perception, consumer imagery 2Consumer in his social & cultural setting : It involves cultural influence, sub culture , cross culture , ( nationality, religion , etc ) psychographic [ life style ] , Social group, reference group , geo demographic clustering etc. Not for circulation : for internal use only

  15. Socio -Cultural trend. A set of beliefs & standards followed by a group of people . It is a sum of conscious & un conscious values , ideas, attitudes & symbols that shape the human behavior which transits from one generation to the next. It is a common heritage & way of life. Cognitive ( beliefs, customs) Internal mental culture Normative ( Ethics, Moral values) Socio culture External material ( Habits & Behavior) culture Not for circulation : for internal use only

  16. Buying Decision process Input Stimuli Motivation Attitudes, Personality, Perception Need recognition Information search Evaluation Of alternatives Purchase Decision Post purchase Behvaiour Output Behaviour Not for circulation : for internal use only

  17. Behavior of a consumer is determined by his strong desire & need. Hierarchy of need : Abraham Maslow Sense of achievement & competence Owning Power & Prestige Similar belief, status class etc Assurance , Protection Self Actualization Esteem (Recognition) Social(Affiliation) Safety (Security) Physiological ( Basic) Needs which are important to consumer Not for circulation : for internal use only

  18. Manifestation of culture Symbols represent the most superficial manifestation of the culture. It could be words in the language ,dressing style, hairstyle which can be easily copied .Eg A conservative middle class woman having moved to up-country , colors her hair using L’Oreal & echoing its tag line I am worth it. Symbols Heroes Rituals Practice Value Not for circulation : for internal use only

  19. Values :Values are formed at much early in age ,at home or school & are the deep rooted . While all values have its own negatives & positives, it can rarely be changed . Ritual & heroes fall between the deepest & superficial manifestation . Heroes are people ,alive or dead or imaginary serving as a role models of the behavior. Rituals are ways of socially greeting, social & religious ceremonies . A traditional marriage ceremony, being followed with out questioning it. Culture strongly influence the decision making behavior of a consumer. Manifestation of culture for the following consumer segment 1 Middle class middle age consumer ( 30-39) 2 High net worth ( HNI) class middle age consumer ( 30-39) 3 DINK (25-32 age ) salaried class Objective : understand the buying behaviour while buying /investing in House properties . Not for circulation : for internal use only

  20. Influence of life style factor. • Family plays an important role as a social group influencing consumer’s behaviour. The influence is either as face to face ( primary group or as reference group ( values, norms, living standard etc) • Understanding of family Life cycle ( FLC) • FLC: A composite variable created by systematically combining commonly used demographic variables like : size of the family, martial status age earning members , disposable income etc. • FLC is studied from the view point of : • Bachelor hood status • Married couple • Parent hood • Post parent hood • Dissolution Parent hood is further classified in to Full nest 1 , 2 & 3 stage . Post parent hood is classified in to Empty nest 1 & 2 Not for circulation : for internal use only

  21. Cultural & societal variables establish the outer boundaries of life style specific to culture . The interaction of the group & individual expectations & values create a systematic pattern of behaviour. This life style pattern determines the purchase decision. Life style refers to the way in which people live & spend money . Consumer psychographic profiles are derived by measuring different aspects of the consumer such as : Activities , Interests & opinion referred as AIO inventory It helps to look at wide variety of variables & measures the major dimension as follows: Feldman & Theibar explains life style by the following characteristics: 1 Life style is a group phenomenon . It is influenced by his/her participation in social groups & individual personality ( attitude , emotional status driven by beliefs & values ) 2 Life style implies a central life interest . The central life implies interest factors like family, work , leisure , religion , politics , sexual exploits 3 The rate of social change in a society has a great influence on the life style. Age , gender , religion ethnicity & social class . E.g. Dual income class , nuclear family High earning potential in early age & late working hours . Not for circulation : for internal use only

  22. Psychographic Segmentation Psychographic profiles are drawn by measuring different aspects of consumer behaviour such as activities , interest& opinion (AIO inventory) helps to link wide variety of variables & measures the major dimension on the life style of a consumer Activities Interests Opinion Demographics Work Family Themselves Age Vacation Entertainment social occupation Not for circulation : for internal use only

  23. VAL( Value & Life style Classification ) System . ( developed by Arnold Mitchell) The system was developed to explain the dynamics of societal change in the buying behavior of a consumer . Accordingly consumer responses were collected for 35 attitudinal & 4 demographic questions. On the basis of these responses consumers were classified in eight distinctive sub groups. Each group signifies a behaviour response pattern ( life style ) & inner psychological needs ( Value ) It acts as a dynamic frame work of values & life styles which helps to explain why people have a explicit behavior Eight VAL segments are : Actulizer Experiencer Fulfilled Maker Believer Struggler Achiever Striver Not for circulation : for internal use only

  24. VAL Segments Most resourceful Enjoy the Inner thing, Receptive to new product Technologies Actualizer Status oriented Principle oriented Action oriented Attracted to premium products Follow fashion & Fad Less interested in image & prestige Expereincer Achievers Fulfilled Shop for comfort , willing try change. Slow to change , habits, look for bargains Image conscious , limited income Maker Striver Believer Need driven Struggler Not for circulation : for internal use only

  25. VAL Segments • Actulaizer • 1 Integrated : Balanced between inner & outer directed factors • 2 Achiever : Want to be a Role models , • 3 Societal conscious : High sense of social responsibility believes in • changing the system & environment. • Outer directed segment • 4. Belonger • 5. Emulator : Upwardly mobile people & status conscious . • Inner directed • 6 I am Me : Young & self engrossed driven by whims • Experiential : Want to experience what life has to offer strong • believer's in destiny • Need Driven • 8 Survivor Not for circulation : for internal use only

  26. Consumer segmentation process ( Homogeneous Group ) Concern of large organizations: : How to harness the potential of 2/3 rural population having highest degree of diversity in the rural India to the main stream of the business. Bases of segmentation are : 1 Demographic segmentation ( factors like Age , family , gender , marital status religion language ) Cosmetic, food , insurance service etc. ) 2. Economic Segmentation : Income levels Middle class , upper/ premium, class , lower middle , lower class ( LIG , MIG , HIG ) 3. Psychographic segmentation : combinations of Social group, sub group, attitude, perception, opinion , interests life style . VAL basis ( Value & life style) Actualizer , fulfilled, Believer, Achiever , Striver, Experiencer, Maker Consumer classification on the basis of soico- Economic factors SEC A+++ SECA++ SECA+ SECB++ Not for circulation : for internal use only

  27. Geographic segmentation Rural , Urban , Global , Semi rural , Semi Urban leading to life style, climate , population etc. Institutional segmentation : Large corporate segment ( Global & Domestic) , SME , SOHO , FTU Govt, PSU etc Benefit Segmentation : Convenience , social acceptance. Long lasting Economy ( High, medium, low or heavy , regular Extra large small family pack etc.) Not for circulation : for internal use only

  28. Diversity of consumer behavior . Consumer segmentation & profiling 2. Changing trends: Children hold strong buying power in key segment. ( Indian kids rank 3rd worldwide in influencing the buying decision) Segment Children Decision maker. Soft drinks 33.6 % Health drinks 31.4% Tooth paste 30.5% restaurants 28.6% Segmentation of Kid consumer : Consumer Segment: Infant, Growing kid , teenager, Youth [parameters : Age, intelligence( IQ) level , Family group belonging , societal influence , point of purchase , Personality , Self concept. There is a child in every human being which does not grow with time . Disney strategy Not for circulation : for internal use only

  29. Psychographic segmentation of Women , a potential decision maker. (Classification on the basis of the diversity in the behavior) • Miss Sophisticate • Traditionalist • Troubled home baby • Ms up to date • Ms nonsense • Conservative • Warm & hospitable • Gregarious hedonist • Youth classification in to six segments • Cultural misfit : • Style Bhai • Middle class Manju • Main Bhi NRI • Rich Brat • Nerdy Nandu Not for circulation : for internal use only

  30. Discovering new identity in Urban woman The quint essentional self sacrificing Gharelu married Indian urban woman consumer is increasingly morphing in to independent minded assertive entrepreneurial class. ( Research study conducted by Lowe Asia – Pacific ) Psycho graphically charted consumer segmentation Modern ( willing to embrace new values) Mrs Hasmukh 27% (Role model Didi ) Mrs India Mrs Meri Awaz Suno (Attention seekers) 31% Stability seekers Change seekers Mrs Pataka Cool Mrs Gharelu 18% ( Home pride) Mrs Hey Bhagvan Moaner Traditional ( Be contended /compromise with old system) Not for circulation : for internal use only

  31. Mrs Garelu is just 18% of the total sample size. Who are they ? Home pride . A perfect home maker . Behaviour : Uses parachute oil for kids & self , Fair & lovely being a part of her make up kit. She is proud of her washing machine & water filter.She is likely to buy a microwave owen or expensive home appliances. But she prefer to use branded sanitary napkins. Her husband relies heavily on her. Social : She hate wasting money on outing , eating entertainment. Entertainment is all around Jassi & K series . Belief : Strong believer of good education to her kids. Choosing any unknown New career by the family member is not acceptable. Attitude : Family is more important & believes that star determine her fate. Value : Respect can never be compromised. High level of tolerence . Never address the husband by name .( “Munne ke papa, Suno ji” type ) . Do not question the roots of tradition, rituals. They are always for good. Just adapt it. She is Quintessentional sacrificing Maa Not for circulation : for internal use only

  32. Fast moving trend is seen from Mrs Gharelu to Mrs Has mukh Who is Mrs Hasmukh ? Attitude: A lively cheerful & positive personality. She treats her life like a must win contest . A friendly nature . Talking to a stranger of opposite sex & accepting him as a friend is normal . A perfect wife, mother , daughter in law , friend , independent minded , divides her time between husband , kids , family herself, & her friends. Not self sacrificing Belief : While she is religious , she does go to beauty parlour with equal vigour. Usage : She likes to buy things which make her household chore more convenient . Microwave Owen, Dishwasher, Vacuum cleaner , Oriflame conditioner, foot cream, Nourishing night cream products . Social gathering , party with friends , family etc. She encourages her kid to be more independent, explore & peruse their career where you can deliver your best result, like she herself would like to do. She likes to be seen as trendy . She is a role model Didi for many women Not for circulation : for internal use only

  33. Mrs Pataka: Characterised by the style quotient , acts cool & talks about doing what other women don’t. Take pride in sending their kids to the best school in town. Style matters in terms of regular visit to palour, PTA , Social meet , week end party & dining , need varieties of perfume for different occasion. She expects her husband to consult her in all decisions & upholds her individualism. Attention seekers: Stifled by the various restrictions & norms imposed on her craves for attention, likes when others empathise with her .Her husband does not necessarily take her opinion in all home related issues. Saving is not her forte. Will use fairness cream , oil her hair on daily basis. She hopes high expectation on her son& daughter. She does not mind using unbranded or lesser known brands still feel good about herself. She feels miserable about her inability to send her kids to expensive schools, lavih spending .She believes that fate is determined by her stars. She wants to come out of middle class dudgery. More of self sacrificing type & wants to move away from joint family class. Not for circulation : for internal use only

  34. Perceptual constructs Stimulus Perceptual bias Perception ambiguity Stimulus ambiguity : All information available is not crystal clear to the consumer in its meaning leading to a mental process to make decision based on the selective preference. Perceptual bias : Attending to the selective information as a result of one’s own frame of reference. Perception is a process of selecting, organizing & interpreting or attaining the meaning of what is happening in the environment. Not for circulation : for internal use only

  35. Individual behavior has a general tendency to get carried by the perception & not by the facts & reality while making decision. Perceptions are formed as a result of the surrounding knowledge as perceived by the consumer .The individual behavioral action ( buying process ) emotion , feeling etc are based on the perception. Perceived reality varies from person to person . 1 How is sensation different from perception ? 2 Is the consumer driven by sensation or perception ? Not for circulation : for internal use only

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  38. 1 How is sensation different from perception ? 2 Is the consumer driven by sensation or perception ? Not for circulation : for internal use only

  39. Sensation is an immediate response of a physical sensory organ due to internal or external stimuli .The response will vary depending up on the intensity of the stimuli or sensitivity of the person to the stimuli (ie the individual’s sensory receptor. ) Sensation is related to basic physiological behavior . Perception co-relates , integrates & comprehends the various sensations & information received . It is formed by both physiological & psychological factors. Not for circulation : for internal use only

  40. External Factors Intensity&Size Position Contrast Novelty Repetition Movement Internal Factors Selective attention Selective Exposure Selective reception, comprehension & retention, Perceptual vigilance or defense Expectation Subliminal perception PERCEPTION Not for circulation : for internal use only

  41. Both internal & external factors influence the perception of the buyer Blind test of Coke & Pepsi Pepsi preference population 51 % coke 44 % equal /can’t say 5% Identity revealed test Pepsi 23% coke 65% equal/can’t say 12% Conclusion : Both internal & external factors influence the way in which an individual perceives a product or brand. Not for circulation : for internal use only

  42. Decision making frame work : Perception Cultural factors Social factors External factors Internal factors Psychological factors Personal factors Not for circulation : for internal use only

  43. Internal factors 1.Selective attention : Tendency to see, hear & filter . The stimuli which fall out or below the threshold limit are screened out. 2.Selective exposure. : Tendency to avoid or come in contact with message which are contradictory to the strongly held belief and attitude . (Referred as cognitive consistency ) Consumer’s look out or seek message that they feel are pleasant or sympathetic to their causes & action .( Referred as cognitive dissonance ) E.g. : Chewing Paan or tobacco consumption of excessive alcohol Not for circulation : for internal use only

  44. Internal factor (cont..) 3.Selective reception, comprehension & retention : Tendency to accept the information which fits in to his or her existing mind set & support their preconceptions. They remember only those things which support s their belief & attitudes. 4.Perceptual vigilance or defense. Screening out or defending the information which create conflict or give rise to threatening situation. E.g. : Generation gap issues . Dating , live in relationship , Ads which might lead to embarrassing questions 5.Expectation : State of anticipation of a particular behavior of a person due to known or un known past experiences or preconditioned set. Not for circulation : for internal use only

  45. Subliminal perception : Influence the people for decision with out being aware of what they are doing . Addressing below the conscious awareness level. The subliminal perception are : 1 Visual stimuli presented in brief . 2. Speech given fast in low volume auditory message 3. Embedded or hidden or imagery words given either in print ads or on product labels. Not for circulation : for internal use only

  46. External Factors are physical properties. Like : Intensity & size : bright & vibrant Colors ,loud ,melodious , sound , size etc used for advertising leads to perception building . Position : PoP in the retail outlet , front page last cover, exclusive magazine ( Interior design- Inside out side ) Business world etc Contrast : Media planners use contrast to build perception like : Voice contrast for superiority , confidence & doubt . Loud & soft color tones. Black & white . Contrast pictures . Eg It’s your life . Novelty: Unusual shape , size , odor etc. Perfume bottles , Baby diapers Sanitary napkins , Toys , Greeting cards. Etc Not for circulation : for internal use only

  47. Repetition & movement : Multiple exposure in a limited time , to generate high recall or Dynamic billboards & hoarding or moving van carrying the products which rare demonstrated to create high usage & perception. Figure & ground: Figure is perceived to be more dominant & attention seeking , hence important stimuli to be placed as figure & other phenomenon in the back ground. Closure leading to build positive perception : Incomplete picture, broken line statements left to the audience to fill the gaps themselves to gain more meaningful information. Perceptual distortion on account of : Stereo typing , Hallo effect. Irrelevant clues. First impressions Not for circulation : for internal use only

  48. Consumer Attitude : Formation & change In consumer behavior context , attitude is a learned pre deposition to behave in a consistently favorable or unfavorable way with respect to a given stimuli. Stimuli refers to a product catogory, brand, people related to a brand or service . Learned deposition refers to source information including perception , experience , exposure to media etc which helps to build an attitude & gives momentum to the behavior . The momentum can be negative or positive. Consistency refers to the voluntary decision which makes the consumer to purchase the product/ service / brand till such time there are no intervening factors which force the consumer to change the attitude.kj Not for circulation : for internal use only

  49. Tri component Attitude model: This model comprises of three components . 1 Cognition component 2 Affective 3 Conation Cognition Conation Affect 1.The knowledge & perception acquired by the people which takes the form of belief about the attributes of the product. 2.The consumer’s feeling & emotions associated with the product. 3.The consumer’s intention or the probability to take a definite action with respect to the brand. (this is referred as an actual behavior ) Not for circulation : for internal use only

  50. Consumer ‘s retention process depends on how they perceive the product /Brand differentiation & their involvement with the product/brand. Involvement = f ( Personal , situational , Object ) High Product Involvement Low High Learning Model Cognitive Affective Conative Low involvement model Cognitive Conative Affective Perceived product/brand differentiation Dissonance Model Conative Affective Cognitive Low Not for circulation : for internal use only