Mod - 1 Introduction CB

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C O N S U M E R

B E H A V I O U R



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INTRODUCTION

TO

C O N S U M E R B E H A V I O U R



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PREVIEW

Definition of CB Focus of CB

Scope of CB Development of CB Field CB and Marketing Strategy Understanding CB

Consumer Lifestyles and CBFactors determining CBConsumer Decision Making ProcessOverall Model of CB



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CONSUMER DEFINITIONby Mahatma Gandhi

“A Customer is the most important visitor on our premisesHe is not dependent on us

We are dependent on him

He is not an interruption on our workHe is the purpose of it

He is not an outsider on our businesses

He is part of it

We are not doing him a favour by serving him

He is doing us a favour by giving us an opportunity to doso”



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DEFINITIONS OF

CONSUMER BEHAVIOUR

The dynamic interaction of cognition, behaviourand environmental events by which human

beings conduct the exchange aspects of their

lives. American marketing association

Those behaviours performed by decision-making units in the purchase, usage and disposalof goods and services ( Kotler & Levy)



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DEFINITIONS OF

CONSUMER BEHAVIOUR (cont.)

The decision process and physical activityindividuals engage in when evaluating,acquiring, using or disposing of goods andservices (London & Delli Bitta).

Those actions directly involved in obtaining,consuming, and disposing of products andservices, including the decision processes that

precede and follow these actions (Engel,Blackwell & Miniard)The behaviour that consumer display insearching for, purchasing, using, evaluating, anddisposing of products, services, ideas.



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CONSUMER BEHAVIOUR

FOCUSSES ATTENTION ON How individual s make decisions to spend theirvaluable resources (time, money, effort) onconsumption related items,

What they buy ?

Why they buy it ?When they buy it ?Where they buy it ?How often they buy it ?

How often they use it ?How they evaluate it after they purchase and theimpact of such evaluations on future purchases,how they dispose of it.



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SCOPE OF

CONSUMER BEHAVIOUR

CB describes TWO different kinds of consumingentities:

I. Personal Consumer, and

II. Organisational Consumer

We focus on the Individual Consumer, who purchases for his or her own personal use or forhousehold use.



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DEVELOPMENT OF THE DISCIPLINE

OF CONSUMER BEHAVIOUR

Field of CB is rooted in the Marketing concept when business orientation evolved in the 1950sthrough several alternative approaches

(Production concept, product concept, sellingconcept) toward doing business.Production Concept Producing productwithout considering the customer need, that lead

to “marketing myopia” .Product Concept Producing product withhigh quality, the best performance and the mostwanted features. (Eg. Railroad, PDA)_



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OF CONSUMER BEHAVIOUR (cont.)

Selling Concept Marketers’ primary focus isselling the products that it has ultimately decidedto produce, “Hard Sell” .

Implementing the Marketing ConceptThe strategic tools used to implement themarketing concept include:

Segmentation,

Targeting,Positioning, andMarketing mix.



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Role Marketing Research Two theoretical perspectives that guide thedevelopment of consumer research

methodology:The positivist approach tend to be objectiveand empirical, to seek causes of behaviour and toconduct research studies based on large

population.Interpretivist approach tends to be

qualitative and based on small samples.



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DRIVERS OF SUCCESSFUL

RELATIONSHIP BETWEEN

MARKETERS AND CUSTOMERS

Customer Value,High level of Customer satisfaction, andCustomer retention.CUSTOMER VALUE as the ratio between thecustomer’s perceived benefits ( economic,

functional, and psychological ) and the resources

(monetary, time, effort, psychological ) use toobtain those benefits.Developing a value proportion ( USP ) is the coreof successful positioning.



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MARKETERS AND CUSTOMERS (cont.)

CUSTOMER SATISFACTION is theindividual perception of the performance of the

product or service in relation to his / herexpectations.Completely satisfied customers & keep purchasing(Loyalists )Highly satisfied customers & extend +ve WoM(Apostles )Merely satisfied customers & stop buying from theCoy. ( Defectors )



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MARKETERS AND CUSTOMERS (cont.) Not satisfied “negative experiences” & spread – veWoM, and buy other company’s products ( Terrorists )

Not satisfied “negative experiences” & spread – veWom, and buy same product doe to monopoly(Hostages )Completely satisfied customers, no loyalty to thecompany, due low price of the same type of productelsewhere ( Mercenaries )

Companies should strive to create apostles, raise thesatisfaction of defectors , and turn then intoloyalists, avoid having terrorists , or hostages, andreduce the number of mercenaries.



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CUSTOMER RETENTION providing valueto customers continuously so they will stay withthe company rather than switch to another firm. Itincreases firm’s profits:- Loyal customers buy more products,

- Loyal customers are less price sensitive and pay

less attention to competitors’ advertising,- Servicing existing customers is cheaper, and

- Loyal customers spread positive WoM.



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Customer profitability-focused marketing(Categorise customers into FOUR tiers)

1. The platinum tier includes heavy users who arenot price sensitive and who are willing to try newofferings,

2. The Gold tier consist of customers who are heavy

users but not as profitable, because they are more price sensitive than the platinum tier category,and ask for more discounts and are likely to buyfrom several producers,



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Customer profitability-focused marketing(Categorise customers into FOUR tiers)

3. The iron tier consists of customers whosespending volume and profitability do not meritspecial treatment from the company, and

4. The lead tier consist of customers who actually

cost the company money because they claimmore attention than is merited by their spending,tie up company resources, and spread negativeWoM.



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CONSUMER BEHAVIOUR AND

MARKETING STRATEGY

Positioning strategyMarket segmentation

New products New market applicationsGlobal marketing

Marketing mixConsumerism and non-profit marketing



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UNDERSTANDINGCONSUMER BEHAVIOUR



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CONSUMER LIFESTYLE ANDCONSUMER DECISIONS



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FACTORS THAT DETERMINE AND

INFLUENCE CONSUMER

LIFESTYLES



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CONSUMER DECISION PROCESS



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CONSUMER BEHAIOUR AND DECISION

MAKING ARE INTERDISCIPLINARY

. Firm’s Marketing Efforts Product, Price, Promotion,Channels of distribution

Socio-cultural EnvironmentFamily, Informal sources,Social class, Culture, andsubculture, other noncommercialsources

External Influences

Input

Consumer Decision Making

Process

Need RecognitionPrepurchase search

Evaluation of Alternatives

Psychological FieldMotivation, Perception,Learning, Personality, Attitudes

Experience

Post decision BehaviourPurchaseTrial, Repeat purchase

Post purchase Evaluation

Output



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OVERALL MODEL OF CONSUMER

BEHAVIOUR



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CONSUMER BEHAVIOUR MODELS

Economic Model (Marshallian model) -It is based on:- Price Effect- Substitution Effect- Income Effect

Sociological Model - It is concerned with societyEg. Joining with Political party

Having a club membership



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CONSUMER BEHAVIOUR MODELS contd….

Psychological Model - It is based on Maslow’s hierarchy of needs theory of motivation .

Self Actualization

Self FulfillmentEgo Needs

Status, Success, vvSocial Needs

Affection, Friendship, Belongingness

Safety and Security Needs Protection, Security

Physiological Needs Air, Water, Food, Cloth, Shelter

Park Avenue

Insurance Policy

Cadbury Perk

Employee Treatment



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Pavlovian Learning Model (Russian Physiologist)

- Drives or Cues (that suggest a specific way to satisfy asalient motive)

- Cues are TWO typesa. Triggering Cues: Activate the decision process

b. Non-triggering Cues: Do not activate the decision process, they are:

- Product Cues: Coler, Package, Weight, Style -- Informational Cues: Adds, Sales Promotion tools, Sales

personnel

c. Reinforcement



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Howard Sheth Model.It basically serves two purposes1. It indicates how complex the whole consumer

behaviour process really is, and2. It provides the framework for including various

concepts like learning, perception, attitudes, etcwhich play a role in influencing consumer

behavior.The model is divided into FOUR major stages of

process. They are Input, Perceptual constructs,Learning constructs, and output stage.

d h h d l



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Howard Sheth ModelInput Perceptual Constructs Learning Constructs Output

SignificativeStimuli

-Quality-Price-Distinctiveness-Service-Availability

SymbolicStimuli-Quality-Price-Distinctiveness-Service

-AvailabilitySymbolicStimuli-Family-Reference groups-Social class

Overtsearch

StimulusAmbiguity

AttentionPerceptual

Bias

Conf-idence

Intention

Satisfaction

Brand

Compre-hensionMoti-ves

ChoiceCriteria

Attitude

A t t e n t i o n B r a n

d

C o m p r e h e n s i o n

A t t i t u d e

I n t e n t i o n

P u r c h a s e



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QUIZ TIME

Documents

Mod - 1 Introduction CB