Consumer Behviour- MBA

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  • 8/11/2019 Consumer Behviour- MBA


    Thursday, August 14, 2014 Prepared by Sudhir Pasricha 1

  • 8/11/2019 Consumer Behviour- MBA


    Thursday, August 14, 2014 Prepared by Sudhir Pasricha 2

    Learning Objectives:

    To explore the core concepts and theories of shopper behavior at individual, group and organizational

    level so that learners may use these as inputs in marketing decision making.

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    Course Contents

    Module I

    Consumer demographics,

    Consumer life styles.

    Retailing implications of consumer demographics and lifestyle.

    Consumer profiles.

    Lifestyle marketing.

    Environmental factors and individual factors affecting consumers.

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    Consumer Buying Behavior

    Buying behavior of individuals and households that buy products for personal


    Consumer Market

    All individuals/households who buy products for personal consumption.

    The behavior that consumers display in searching for, purchasing, using, evaluating, and

    disposing of products and services that they expect will satisfy their needs.


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    Market segmentationis the process that companies use to divide large heterogeneous markets

    into small markets that can be reached more efficiently and effectively with products and

    services that match their unique needs

    Market Segmentation

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    Segmenting Consumer Markets

    Geographic - divides the market into different geographical units such as nations, regions, states,

    counties, or cities

    Demographic- refers to the vital & measureable stats of a population. It helps to locate a target market.

    It divides the market into groups based on variables such as age, gender, family size, family life cycle,

    income, occupation, education, religion, race, generation, and nationality.

    Is the most popular segmentation method because consumer needs, wants, and usage often vary closely

    with demographic variables and are easier to measure than other types of variables

    Age and life-cycle stage segmentation is the process of offering different products or using

    different marketing approaches for different age and life-cycle groups

    Gender segmentationdivides the market based on sex (male or female)

    Income segmentation divides the market into affluent or low-income consumers



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    7/31Copyright 2007 by Prentice Hall

    Market Segmentation



    Geographic Segmentation


    Density of area

    City Size

    Region Southwest, Mountain States, Alaska, Hawaii

    Major metropolitan areas, small cities, towns

    Urban, suburban, exurban, rural

    Temperate, hot, humid, rainy

    Demographic Segmentation


    Marital status


    Age Under 12, 12-17, 18-34, 35-49, 50-64, 65-74, 75-99, 100+

    Male, female

    Single, married, divorced, living together, widowed

    Under $25,000, $25,000-$34,999, $35,000-$49,999,$50,000-$74,999, $75,000-$99,999, $100,000 and over

    Education Some high school, high school graduate, some college,

    college graduate, postgraduate

    Professional, blue-collar, white-collar, agricultural,


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    Segmenting Consumer Markets..contd.

    Psychographic- divides buyers into different groups based on social class, lifestyle, or personality traits

    Behavioral- divides buyers into groups based on their knowledge, attitudes, uses, or responses to a product


    Benefits sought

    User status

    Usage rate

    Loyalty status

    Benefit Segmentation - The segmentation of the consumers based on what particular benefit of the

    product appeals to them. Different consumers look for different benefits and the marketer needs to

    understand each segment and accordingly develop his communication for each group. Benefit segmentation

    helps to identify each group and accordingly promote the product within that group.

    Example: one particular soap offers a variety of benefits, say fragrance (liked by older women), fairness (liked by

    younger women), freshness (liked by kids), cleanliness (like by men),longer lasting(liked by housewives), etc.

    Both Physiological & Socio Cultural Characteristics help to describe how its members think & how they feel

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    Organisational buying is a multiperson buying activity: A large number of buying situations in organisations

    (manufacturing, government, hospitals, educational institutions) would involve many persons. These persons may

    be from different functions (production, purchase, design, maintenance), may have different backgrounds

    (engineers, MBA, graduates etc.) may have different hierarchical levels within the organisation (Managing Director,

    General Manager, Material Manager).

    Persons in a buying situation, may appear to play different roles over the entire buying decision exercise. A grand

    conceptualisation of various roles of the different members is the concept of the Buying Centre. The various

    members of the buying centre may appear to play any of the following roles:

    Users like production department person

    Influencers like Managing Director, Design Engineers or Consultants

    Deciders like the committee appointed

    Buyers like the people from the purchase or materials department

    Gatekeepers like those who can control the flow of information within an organisation

    Specifiers like consultants or design or production people who may develop the specifications of the product or

    services needed

    Organisational Buying Behaviour

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    A description of a customer or set of customers that includes demographic, geographic,

    and psychographic characteristics, as well as buying patterns, creditworthiness, and purchase history.

    Solving almost any sales and marketing challenge starts with knowing who your customer is.

    Mapping Analytics can help you find out whoyour best customers are and apply geographic analysis

    techniques to discover whereto find more of them.

    Customer Profiles

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    Customer Profile

    A customer profile uses marketing segmentation to identify key factors and using them to break down the pool

    of customers to who would likely purchase the product or service.

    This shows a company where to spend their advertising resources to get the most return on investment.

    Target Market Segmentation

    Geographic segmentation

    Demographic segmentation

    Psychographic segmentation


    Importance of target markets

    Once target markets are identified correctly,specific marketing programs are directed to identified

    group, or target market.

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    Example of Customer Profile

    Head Fones

    Customer Profile:

    Geographic segmentation:

    any area, any climate

    Demographic segmentation:



    Professional musician

    Psychographic segmentation:

    Likes to listen to music



    Extreme Sports


    Listens to personal media device

    Buys mobile music media

    Brand conscience

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    Consumer Lifestyle and Values

    It is an indicator as to how people live & spend their time & money. What people do in their spare time is

    often s good indicator of their lifestyle

    Lifestyles are shaped partly by whether consumers are money-constrained or time-constrained.

    Consumers in different countries & cultures may have characteristic lifestyles. Eg Indian women are home

    focused. Less likely to visit restaurants . More Price Sensitive

    Lifestyle segmentation is particularly useful in case of product categories where the user sself image is

    considered as an important factor , such as perfumes , beer, jewelery & other ego-senstive products.

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    Consumer Lifestyle and Values

    A lifestyleis a persons pattern/style of living in the world as expressed in AIO - Activities, Interests and


    Lifestyle Analysis provides broad view of consumers as it segments market s on the basis of AIO Analysis:

    Activities - How they spend their time

    Interests - Importance of things in their surroundings

    Opinions Their Beliefs on broad issues & themselves

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    AIO Inventories

    Consumer Behavior and AIO studies envisage a wide variety of variables and measures the major dimensions of

    Lifestyle Marketing shown below :

    Activities Interests Opinions Demographics

    Work Family Themselves Age

    Hobbies Home Social Education

    Social events Job Politics Income

    Vacation Community Business Occupation

    Entertainment Recreation Economics Family size

    Club member Fashion Education Geography

    Community Food Products City size

    Shopping Media Future Lifecycle

    Sports Achievements Culture Dwelling

    Source : Joseph T. Plummer--The Concept and Application of Lifestyle Dimensions, Journal of Marketing

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    VALS (Values & Lifestyle) Framework

    Stanford Research Institute (SRI) developed a popular

    Approach topsychographics segmentation called VALS

    (Values & Lifestyle) puts less emphasis on Activities & Interest and more

    on Psychological drivers to consumer behavior.

    VALS has two dimensions :

    Primary MotivationsTypes of goals the individual will pursue &

    Pattern of attitudes & activities that help individuals reinforce ,

    Sustain or modify their social image. This is a fundamental human


    ResourcesReflects the ability of individuals to pursue their

    dominant motivations that include the full range of physical,

    Psychological, demographic & material means such as self confidence,

    Interpersonal skill, intelligence, eagerness to buy, money , position &

    education, etc.

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    Self Orientation of People :

    Ideals (principle)- Individuals are guided in their choices by theirbeliefs & principles & not by feelings, desires & events.

    Achievement Individuals are heavily influenced by actions,

    Approvals & opinion of others

    Self expression (action) Individuals desire physical & social Activity,

    variety & risk taking.

    Based on the concepts of basic motivations & resources, the

    Typology breaks consumers into eight groups. The eight sub-divisions

    that these major self orientations have been divided into also differ in

    terms of their resources.

    Resources - physical, psychological, and demographical factors that

    become enabling variables in consumer's choice making behavior.

    The VALS 2 typology draws heavily on Maslow's

    need hierarchy and tries to explain the lifestyle

    orientation of the various segments based on

    the values sought by each of them in their life.

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    Innovators are successful, sophisticated, active, "take-charge"people

    with high self-esteem and abundant resources. Are interested in

    growth and seek to develop, explore, and express themselves in a

    variety of ways to have an effect to make a change.

    Image is important to Innovators, not as evidence of status or power,

    but as an expression of taste, independence, and character. Innovators

    are among the established and emerging leaders in business and

    government, yet they continue to seek challenges.

    Have a wide range of interests, are concerned with social issues, andare open to change. Lives are characterized by richness and diversity.

    Possessions and recreation reflect a cultivated taste for the finer things

    in life.

    Lives are characterized by richness and diversity. Possessions and

    recreation reflect a cultivated taste for the finer things in life.

    Thinkers (Motivated By Ideals : High Resources)are mature, satisfied, comfortable, reflective people who value order,knowledge. and responsibility. Most are well educated, and in (or recently retired from) professional occupations.

    Are well-informed about world and national events and are alert to opportunities to broaden their knowledge.

    Content with their careers. families. and station in life, their leisure activities tend to center on their Home.

    Although their incomes allow them many choices, thinkers & are conservative, practical consumers: are concerned

    about functionality, value, and durability in the products they buy.

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    Believers(motivated by ideals : low resources) are conservative,

    conventional people with concrete beliefs and strong attachments to

    traditional institutions: family, church, community, and the nation.

    Many Believers possess moral codes that are deeply rooted and

    literally interpreted.

    Follow established routines, organized in large part around their

    families and the social or religious organizations to which they belong.

    As consumers, they are conservative and predictable, favoring American

    products and established brands.

    Education, income and energy are modest but sufficient to meet their


    Achievers (Motivated by Achievement; High Resources) are successful career and work-oriented people who like to-andgenerally keep control of their lives. Value structure. predictability, and stability of over risk, intimacy, and self-discovery.

    They are deeply committed to their work and their families. Work provides them with a sense of duty, material rewards,

    and prestige.

    Social lives reflect this focus and are structured around family, church, and business. Achievers live conventional lives,

    are politically conservative, and respect authority and the status quo. Image is important to them. As consumers, they

    favor established products and services that demonstrate their success to their peers.

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    Strivers (motivated by achievement ; low resources) seek motivation,

    self-definition, and approval from the world around them. Striving to find

    a secure place in life. Unsure of themselves and low on economic, social,

    and psychological resources.

    Strivers are deeply concerned about the opinions and approval of others.

    Money defines success for Strivers, who don't hate enough of it and often

    feel that life has given them a raw deal.

    Strivers arc easily bored and impulsive Many of them seek to be stylish.

    They emulate those who have more impresses e possessions, but what

    they wish to obtain is generally beyond their reach

    Experiencers (Motivated by self expression: high resources) are young, vital, enthusiastic, impulsive, and rebellious. Seek

    variety and excitement, savoring the new, the offbeat, and the risky. Still in the process of formulating life values andpatterns of behavior, they quickly become enthusiastic about new possibilities but are equally quick to cool.

    Are politically uncommitted, uninformed, and highly ambivalent about what they believe. Experiencers combine an

    abstract disdain for conformity and authority with an outsiders awe of others' wealth, prestige, and power.

    Their energy finds an outlet in exercise, sports, outdoor recreation, and social activities. Experiencers are avid consumers

    and spend much of their income on clothing, fast food, music, movies, and video.

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    Survivors lives are constricted. Chronically poor, ill-educated. Ion-skilled, without strong social bonds, aging, and

    concerned about their health they arc often despairing and passive. Because they are so limited, they show no

    evidence of a strong self orientation, but are focused on meeting the urgent needs of the present moment.

    Chief concerns are for security and safety. Strugglers are cautious consumers. They represent a very modest market

    for most, products and services but are loyal to favorite brands

    Makers (motivated by self expression: low resources) are practical

    people who have constructive skills and value self-sufficiency.

    Live in a traditional context of family, practical work, and physical

    recreation, and have little interest in what lies outside that context.

    Experience the work by working on it-building a house, raising

    children, fixing a car, or canning vegetables-and have sufficient skill,

    income, and energy to carry out their projects successfully.

    Are politically conservative, suspicious of new ideas, respectful

    of government authority and organized labor. but resentful ofgovernment intrusion on individual rights.

    Are unimpressed by material possessions other than those with a

    practical or functional purpose (e.g. tools, pickup trucks, or fishing


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    Decision Making Process

    The first step is when the consumer becomes

    aware of the fact that he has a problem.

    The problem maybe that he has run out of

    toothpaste or that he needs new sofa for the

    drawing room or that he needs to engage the

    services of an accountant to help him with his

    tax planning.

    Problem recognition thus occurs when the

    consumer recognizes that he has an

    unfulfilled need.

    The desire to fulfill this need triggers off

    the other steps ofinformation; search and

    evaluation and finallyresult in the purchase


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    What Makes Retail Shoppers Tick ?







    Retailer Actions

    Shopping Attitudes

    and Behavior

    Needs and


    Retail Implications

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    Retail Implications of Consumer Demographics

    Because of changing life-styles, more husband and wives shop together. More men are doing non

    traditional work around the house

    Component life-stylesconsumers are less predictable

    Such as cleaning, shopping, babysitting

    Consumer sophistication and confidencemore knowledgeable shoppers who are more

    cosmopolitan (more aware of trends)

    Poverty of timepeople are time-pressed because of work, commuting, family responsibilities

    and etc

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    Lifestyle Marketing

    Lifestyle marketing is a process of establishing relationships between products offered in the

    market and targeted lifestyle groups.

    It involves segmenting the market on the basis of lifestyle dimensions, positioning the product in

    a way that appeals to the activities, interests and opinions of the targeted market and

    undertaking specific promotional campaigns which exploit lifestyle appeals to enhance the

    market value of the offered product.

    A consumer's lifestyle is seen as the sum of his interactions with his environment. Lifestyle studies

    are a component of the broader behavioral concept called psychographics."

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    Lifestyle Marketing

    Demographics, Psychographics and Lifestyle

    Demographic variables help marketers "locate" their target market and psychographic variables provide the

    marketer with more insight about the segment.

    Psychographics is, in common parlance for lifestyle analysis.

    In its most widely practiced form, a psychographic study consists of list of statements designed to capture

    relevant aspects of a consumer, like personality, hinting motives, interests, attitudes, beliefs and values. The demographic and psychographic lifestyle approaches are highly complimentary and work best

    together. People hailing from the same sub-culture, social class and even occupation follow quite different


    The lifestyle analysis adds a great amount of understanding to a typical demographic description.

    E.g., A person buying a new designer shirt may be 34 years old, married and living in a 3 bedroom house and

    having 2 children. The lifestyle analysis would help marketers to paint a more human portrait to their target


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    Lifestyle Marketing - Examples

    For instance the "young, upwardly mobile" lifestyle group cutting across sub-cultures, social class, occupation

    etc. is now being increasingly used by Indian marketers as their market group.

    This finds its expression in advertising appeals "He loves the feel of the city... The skyscrapers... The crowds...

    The pretty faces... And the heady feeling of being successful... Above all the freedom of being himself." So

    says the advertisement forPantaloons cotton trousers from Manz Wear.

    Another advertisements for men's innerwear from Bhilwara loudly announces "for the man who plays many

    roles-here comes the very best in wear unders via the grand fashion avenues of Paris...Champs Elise". The

    behavioral differences between prospects that do not show up in demographic figures come alive in lifestyle


    Lifestyle, analysis leads to more comprehensive and penetrating profiles of how consumers think and act than

    may be available from other approaches.


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    Feldman and Theilbar describe lifestyle by the following characteristics:

    1 Lifestyle is a group phenomenon

    A person's lifestyle bears the influence of his/her participation in social groups and of his/her relationships with

    others. Two clerks in the same office may exhibit different lifestyles.

    2 Lifestyle pervades various aspects of life

    An individual's lifestyle may result in certain consistency of behaviour. Knowing a person's conduct in one aspect of

    life may enable us to predict how he/she may behave in other areas.

    3 Lifestyle implies a central life interest

    For every individual there are many central life interests like family, work, leisure, sexual exploits, religion, politics etc.

    that may fashion his interaction with the environment.

    4 Lifestyles vary according to sociologically relevant variables

    The rate of social change in a society has a great deal to do with variations in lifestyles. So do age, sex, religion,

    ethnicity and social class. The increase in the number of double income families and that of working women have

    resulted in completely different lifestyles in the 1980's in India

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    Hierarchy of Influences on Lifestyle


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    The study of lifestyle is interdisciplinary. It draws on a variety of disciplines such as anthropology,

    psychology, sociology and economics. Marketing uses this free approach for segmenting, targeting

    and positioning which forms the core of marketing strategy.

    Because lifestyle refers to the way in which people live and spend money , consumers psychographic

    profiles are derived by measuring different aspects of consumer behaviour such as:

    1 Products and services consumed

    2 Activities, interests and opinions

    3 Value systems

    4 Personality traits and self-conception

    5 Attitude towards various product classes

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