Consumer Behaviour Introduction Consumer is the Basic

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Consumer Behaviour

Introduction

Consumer is the basic foundation of every business. What consumer sees,

thinks, prefers and buys is of great importance to marketers to fine tune their

marketing offers and achieve high level of consumer acceptance and

satisfaction. Rural market is a new interest among marketers to explore and

understand it.

Gaining an understanding of the rural market composition and behvaiour is

considered one of the current challenges for the following reasons:

(i) Lack of right competence: The top mgt has the commitment to

understand the rural market but the competence necessary for

interacting with rural attitude and behaviour is lacking at the lower,

field staff level.

(ii) Partial approach: Picture of rural marketing is like the story of Four blind men.

(iii) Limited knowledge and bias: Understanding rural marketing

remains superficial at best. Rural people are also like urban people

and would have the same needs, desires and aspirations. This is the

understanding of most of the marketers and advertising people.

Models of Consumer Behaviour

Model of Consumer Behaviour

MarketingOffer

Product, PlacePrice,Promotion

Environment

Socio-culturalTechnologicalEconomicPolitical

Stimuli

InternalExternal

Organism

BuyerCharacteristics

Behaviour

DecisionMakingAction

Consequence

SatisfactionCognitiveDissonance



Buying Decision Process

The buying decision process follows a logical sequence of five steps –

a. Need recognition: When a buyer recognizes a gap between his desired

state and the actual state, buying process starts. Such recognition may

be caused by stimuli either internal or external. At this stage, marketer

should help consumers identify their current and future problems and

felt or latent needs. To do this, marketers have to research on

consumer problems and needs. b. Information search: Generally, consumers try to find information

pertaining tot heir want satisfying products to make the right choices.

The amount of information required depends upon:

a. Type of the product – convenience, shopping or speciality

good.

b. Nature of the product – Complex, high tech or simple and easy

to distinguish.

c. Availability of sources – the consumer may obtain information

from one or more of the following sources.d. Personal – family, friends, neighbours

e. Commercial – advertising, sales people, displays

f. Public – TV, radio, internet and print media.

g. Experiential – handling, examining, using the product.

NeedRecognition

InformationSearch

Evaluationof alternatives

PurchaseDecision

PostPurchaseBehaviour



c. Evaluation of alternatives: The evaluation process may be done more

carefully and logically in some cases, for example, consumer

durables. In case of convenience goods, which are purchased for one-

shot consumption, the evaluation may be very less. Occasionally, it

may be impulse buying too. Evaluation requires designing and

application of suitable criteria. Evalation methods include: -

a. Expectancy value model

b. Lexicographic model

c. Conjunctive model

d. Disjunctive model

d. Purchase decision: Awareness set consists of brands which the

consumer is aware of the brands, which meet initial, buying criteria,

will be considered for further evaluation. They make up the

consideration set. Through application of final criteria, the consumer

evolves his choice set. All the brands in this set are acceptable to theconsumer. However, final choice will be made in favour of one brand.

It depends on factors influencing the mind of consumer at this final

stage.

Unanticipated situational factors: These factors could be like a vendor

closing down the shutters of his factory, or introduction of a new brand

by a competitor, which is more suitable to the requirements of the buyer.

Perceived risk is high but it ay be reduced by the consumer employing

one or more of the following tactics.

Developing purchase routines

Decision making by groups

Consulting experts or elderly people

More information gathering

Preferring reputed brands or brands with warranties or

guarantees.

e. Post purchase behaviour:

Post purchase feelings: A buyer feels satisfied when the perceived product

performance is close to his/her expectations. If it exceeds expectation, the

customer is delighted else disappointed. If he is disappointed he develops

cognitive dissonance.

Reactions: Two options – Word of mouth advertising – good and bad.

Disposal: 1. Without using it fully, they dispose it off because they didn’t

like it. Else give it to someone who likes it.



2. Using it fully, they dispose the container or refill it with other product.

3. when replacement decision is taken.

What can a marketer do to make consumers favourable to the organization?

1. They should take proper care in developing expectations of the

consumers. Product claims shouldn’t understate or overstate the

performance or characteristics of the product.

2. They may initiate one or more of following actions to increase the

level of satisfaction.

Personal letter or thank by an advertisement.

Informing customers about the size of sales and number of

satisfied customers.

Educating.

Setting up customer grievances cell for speedy redressal of

customer grievances.

Timely servicing of products.

Buyer Behaviour Patterns

Classification is of 2 types –

a. Degree of Involvement: Different patterns of behaviour on purchasingdifferent types of products and services. They buy from nearby shops

and not deliberate much on the characteristics of products. Individual

decisions are made. In case of durables they visit different shops and

opinions of others and evaluate product characteristics and benefits,

their financial position, payment scheme and then decide.

Why different patterns of behaviour? Its because of perceived risk (higher

the perceived risk higher the involvement) and vice versa.

According to Assael, there are 4 types of behaviour based on 2 parameters.

1. Degree of buyer involvement (High/Low)

2. Degree of differences among brands.

High Involvement Low Involvement

Significant differences

among brands

Complex buying

behaviour

Variety seeking buying

behaviour



Few differences among

brands

Dissonance reducing

behaviour

Habitual buying

behaviour

Complex buying behaviour – Seen in the case of purchasing Computers,

refrigerators, automobiles etc. Marketers should – Help consumers learn about the product, attributes, uses and

benefits etc.

Make comparative analysis of features and benefits of products

in print media.

Train and motivate sales personnel.

Generate WOM Advertising.

Dissonance reducing behaviour – Products like carpets and furniture are

expensive but have few differences. Customers go for appearances and

performance of these products.

Markets should be intelligent in knowing probable arguments in favour and

of against the product. On what grounds product may be appreciated or

discounted, the marketers must know.

Habitual buying behaviour: Products like salt, wheat, cigarettes, paan masala

are low involvement items and low cost and are frequently purchased. Brand

is not bothered about. Customers don’t postpone the purchase. Marketers

need to make consumers brand conscious. Differentiated marketing helps.

Rational and Emotional attacks – Rational – make rational appeal and raise consciousness levels.

Ex: Horlicks with calcium, Pepsodent 2-in-1 action, Medimix ayurvedic

beauty soap with all ingredients.

Emotional – Associate with individual emotions like love, fear, jealousy and

wisdom.

Ex: Saffola – husband’s health, Wills – Made for each other.

Variety seeking behaviour – Therea re a good number of brands with

different attributes and benefits. Purchasing is less expensive and frequent.

Ex: Confectionery items, ice creams etc. Buys different items of same brand

or different to experience different sight, smell, sound, touch, and taste.

Brand switching occurs to try a good variety of products not because of

dissatisfaction.

Marketers to take care of 3 things –

1. Availability – Avoid stockouts.



2. Attraction – create point of purchase promotions, incentives,

advertising.

3. Variety – provide a range of variety on a competitive basis. Ex:

Quality and Vadilal ice creams come in different sizes and flavours.

b. Amount of Time spent: Purchase behaviour classified into –

Nature of purchase action

Planned buying

Emergency buying

Impulse buying

Planned – Purchase is budgeted and scheduled in advance, well thought out

and predetermined. Ex: Computers, camera etc.

Emergency – Purchase made in a hurry to avoid stockouts. Ex: Buying

provisions that are out of stock, buying electrical bulb at night when it fusesetc.

Impulse – Purchase made spontaneously, amused or bewitched by a product

item (attractiveness) Ex: Handicrafts, ice creams, fairness creams, textiles

and garment etc.

Buying Evaluation Procedures

Buyers process the information they have gathered about product/brands and

evaluate them with help of their attributes. Almost same evaluation

procedure is adopted for rural areas as of urban areas.

Expectancy Value model –

1. Consumer identifies the attributes of the product/brands interested in.

2. Assigns weightages to attributes.

3. Identifies his consideration set of brands.

4. Employs a rating scale.

5. Obtains a comparative picture for further analysis.

6. Weighted scores are computed by multiplying the points with

respective weights. High score item is selected.

Lexicographic Model – Describes procedure of consumer who is more

interested in selecting a brand which excels in one of the attributes arranged

in order of priority.

1. Prepares a list of attributes.

2. Prioritizes the attributes.

3. Compares brands on attributes. One has it then goes to next.



4. If one brand is better than others he selects it.

5. Else proceeds to next attribute.

Conjunctive Model – Selects a product that satisfies few attributes which he

considers important.

Procedure – 1. Identifying the important attributes.

2. Determining the minimum attribute levels brands should possess.

3. Evaluate the available brands.

4. Selecting one with minimum attribute levels.

Disjunctive Model – Consumer is keen on one variable. A brand having

satisfying levels of attribute will be chosen.

Brand Loyalty

Brand cynics are growing in urban areas while brands are being looked uponas reliable and trusted in rural markets.

Natural tendency of humans to explore and experiment when there is an

opportunity is confirmed. Earlier brand loyalty was mainly because of brand

non-availability, and other factors like lack of exposure and lack of

purchasing power.

‘Its tough to enter the market, but its definitely tougher to win over rural

customer for a lifetime.

Innovation Adoption

When a New product comes into market, there are different degrees of

readiness to adopt that particular product.

According to Rogers, 5 Adopter groups are –

Time Lag in

adoption

Groups Percentage Probable

consumer

No Innovator 2.5 A farmer, better educated and

more efficient.

Very less Early adopter 13.5 An educated and

efficiency

conscious farmer

with adequate



resources.

Less Early majority 34 A hesitant but

adaptive farmer

with moderate

resources.Large Late majority 34 A traditional and

less efficient

farmer with

moderate

resources.

Very large Laggard 16 A traditional and

less efficient

farmer with

meager

resources.

In rural areas the youth are exposed to urban life, the students, the white

collar employees and few of efficient persons in different occupations form

the innovative groups (influence personally on others).

It depends on adaptability of the product also.

Characteristics Description

Relative advantage The degree to which the new product

is superior to the existing one.Compatibility The degree to which the new product

matches with values and

expectations.

Simplicity The degree to which the new product

is relatively easy to use.

Communicability The degree to which the benefits can

be made known to consumers.

Divisibility The degree to which it can be tried

on a limited basis.

Affordability The degree of economy in initial

outlay and maintenance costs.

Social approval The degree of economy will gain

social or community acceptance.



Marketing Information System

Concepts

Marketing environment is changing with globalization and emerging rural

markets. Information has become the key source. The main challenge is

designing and managing appropriate information system.

Marketing Information System (MKIS) defined –

“An assembly of interrelated information subsystems receiving, processing

and disseminating information on a continuous basis to help make marketing

decisions.

Subsystems of MKIS –

Subsystem Information

Internal Reporting System Internal reports like orders, sales etc.It is data on events occurred and

results obtained.

Marketing Intelligence System Information about relevant

events/developments external to the

firm. Sources are newspapers,

magazines, journals etc.

Marketing Research System Systematic investigation of

information about a phenomenon

specific to marketing situation.Desk/field research.

Decision Support System A coordinated set of models and

procedures with supporting computer

software and hardware.

Significance

Opined by Bloom, Adler and Milne (1994)

To improve new market knowledge – To improve response capabilities

To improve persuasive communications

To improve strategy making.

- Support to MKIS to marketing decision/ level wise



Support to MKIS to marketing mix.

MR – The rural Way

Differences between Urban and Rural Research and implications to

marketing researchers are – a. Respondents – Urbanities are educated, have good

communication and presentation skills. Marketing savvy and

exposed to marketing offers. Aware about wide range of

brands. Difficult to get individual responses.

Where as in rural areas, people are semi-literate or illiterate. They

cannot understand urban tools and terms, cannot verbalize their

responses, less exposed to brand offers and less awareness. Cannot

be interviewed individually.

b. Time: Urban life is time bound mainly in metros and cities.

They maintain diaries, attend time management training programs etc.

(Where are in rural areas it is opposite)

c. Accessibility – Easy to access when people geographically and

psychologically. Familiar with different inquiries of market

research agencies with the help of questionnaires.

(rural areas different)

d. Secondary data sources – Large volume of secondary data is

available from multiple sources. Companies which exist since

long time advertise and are on the advantageous side. (ruralareas – most companies are recent entratnts)

e. Primary data sources –

f. Sampling –

g. Data collection –

Urban V Rural Marketing Research

Table as above

Rural research businessRural Market Research is still at fledgling stage. Indian market research is

worth Rs. 4000 crores., from which rural research forms 10-15% of total.

Main players in rural research are –

1. NCAER

2. ORG- MARG



3. NFO – MBL 15 crore research firm with American parentage.

4. Smapark – promoted video on wheels, Hyderabad

5. MART (lead by Pradeep Kashyap) New Delhi

6. ORCN(Ogilvy Rural Communication Network) New Delhi

7. Research Communication and Marketing (RC & M) New Delhi

8. Initiative Media

9. Anurag-Madison, Chennai

Big firms V Small firms – Small firms are good in this business as big firms

are not interested.

Size of rural market research is small.

Big agencies feel more comfortable dealing with men in suit

who speak management jargons.

Small marketers more interested in qualitative data than

numbers.But in recent times even big firms are getting interested in rural research.

Selecting and Attracting Markets

Segmentation

It is the process of dividing a heterogeneous market into homogeneous sub

units. It is based on different people and different preferences.

Basic market preference patterns are – 1. Homogeneous preferences where consumers have roughly same

preferences.

2. Diffused preferences, where consumers are scattered throughout the

market by their preferences.

3. Clustered preference – Consumers found in distinct preference

groups.

Degrees of Segmentation

Degrees of

Segmentation

Zero Complete

Type Mass

Marketing

Segment

Marketing

Niche

Marketing

Micro

Marketing

Approach Consider all

people as a

Identifies

people as

Serves

selectively

Focuses on

individuals or



bunch different

groups

one or very

few groups

of people

very small

groups

(i) Mass Marketing: Its an early 20

th

century practice. As economiesevolved and society civilized consumer choice and requirements

came into focus.

(ii) Segmentation Marketing: Principle of segmentation marketing is

that buyers differ in their needs, wants, demands and behaviour.

Benefits – companies can service more effectively and efficiently,

company gains as creative and innovative organization, company

may gain monopoly by virtue of its unique marketing offer.

(iii) Niche Marketing: A small group with distinctive set of traits who

seek a special combination of benefits. It identifies special sub-

groups within larger segments and offers different products andservices.

(iv) Micro Marketing: Tailoring products to suit the tastes of specific

locations and individuals, this includes –

a. Local Marketing: It is on geographical basis.

Advantages:

1. It is effective

2. Supports retailers who customize to their locality.

Disadvantages:

1. May create logistical problems.2. May reduce economies of scale

3. May effect overall image of a brand

(v) Individual Marketing: It is also known as customized marketing or

one-to-one marketing. Es: Tailors, Hotels, Tourist operators,

Doctors etc.

Guide to Effective Segmentation

(i) Measurable: Segments are formed with help of certain variables.

These should be distinct, clear and measurable.(ii) Accessible: Reach is important for segmentation.

(iii) Differentiable: Distinguishing features

(iv) Substantial: Segments are attractive only if they are profitable.

a. Homogeneous – Segmenting people with similar perceptions,

learning, preferences, attitudes and action. Covering them will

be easy then.



b. Large – Should comprise of either large number of light users

or small number of heavy users.

Bases of segmentation

There is no just one way to segment the market.

(i) Geographic Segmentation – Variables can be zones/regions, states,

districts, cities/towns/villages which can be by size, density,

climate and culture.

(ii) Demographic Segmentation – Here the division is by age, life

cycle, gender, family size, income, occupation, education, religion

and nationality.

Ex: Age – Infants, children, Teens, Young Adults, Elders and seniors.

(iii) Psychological Segmentation – True dynamics of purchase can be

assessed and marketing offer can be designed only on basis of

psychographics of people.a. Social class

Upper-Upper Social elite, wealth inherited

Lower-Upper Social elite, wealth earned

Upper-Middle Career oriented

Lower-Middle Average pay

Upper-Lower Above Poverty Line

Lower-Lower Below Poverty Line

b. Life styleTrend setters

Traditionalists

Chameleons

(Women especially)

Home makers

Career Women

Free Spirit

c. Personality

Psychological characteristics

Physical characteristics

(iv) Behavioural Segmentation –

When do people buy? - Occasions

Why do people buy? – Benefits sought

Do they buy? Once? More? – User status

How much do they buy? – Usage rate



Do they repeat the buy? – Loyalty status

Where do the buy? – Place (retail outlet)

What do they buy? – Products possessed

(v) Multi-variable Segmentation –

a. Thompson Rural Market Index

b. Lin: Quest

c. MICA Rating

Targeting

After segmentation, we have targeting

Targeting involves evaluating the various segments and selecting how many

and which ones to target. It has 3 aspects –

1. Evaluation of Segments

a. Profitability: Sales volume, distribution costs, promotion costs,sales revenue, profit margins

b. Attractiveness

c. Growth rate

d. Company objectives

e. Limitations

2. Selection of Segments

Segmentation is ranked on scores for selections. High score then it is

accepted.

3. Coverage of Segments

Zero Mass Undifferentiated

Substantial Segments Differentiated

Selective Niche Concentrated

Undifferentiated – Focuses on what is common.

Differentiated – Focuses on segmentation

Concentrated – Concentrated on one segement

4. Choosing a covering strategy

Positioning

It has 3 tasks

1. Identifying differences of the offers vis a vis compare offers

Product

Services



People

Image

2. Selecting differences that have great competitive advantage

Attractive

Distinctive Preemptive

Affordable

Communicable

3. Communicating such advantage effectively to target audiences

Product Strategy

Product concept and classifications(i) Based on tangibility goods are classified into -

a. Tangible Goods referred to as products

b. Intangible goods referred to as services

Characteristics

Tangibility

Separability

Variability

Perish-ability

(ii) Based on purpose of use

Consumption purpose – consumer

Production – Industrial/Agricultural

(iii) Based on habits (shopping)

Convenience goods

Shopping goods

Specialty goods

(iv) Based on price and quality

Mass product

Premium product

(v) Based on product development

a. Innovations



b. Imitations

(vi) Based on brand hierarchy level

a. Global brands – Pepsi, Coke, LG, P&G

b. National brands – Godrej, Tata

c. Regional brands – Sun TV Channel

d. Local brands – Surya masale, Joy Chips

e. Unbranded products – Oil, Food grains

f. Commodities – tamarind, fish, meat, eggs

Concept

Product strategy refers to the long range competitive plan involving

decisions on products, product line and product mix to make proper

utilization of resources and achieve marketing goals.

Significance1. Achieves product market fit

2. Encourages innovativeness

3. Provides competitive edge

4. Makes better use of resources

Product mix decisions

Product mix is a set of all product liners and items offered by the company.

Length of product line

Line stretching

Downward

Upward

Both ways

Line pruning

Product items cane be classified as –

Traffic builders

Bread Winners

Parasites – Mostly it is in losses and depends on bread winners

Line modernization

Aspects to be considered are – Timings

Approach

Product item decisions

It has 3 key level considerations

1. Core Product development



It refers to benefits specified by consumer needs. Product has to be

seen from marketing point of view and not from manufacturing point

of view.

2. Tangible Product development

Any product/service has 5 characteristics

b. Quality – durability, capacity, efficiency, economy, reliability

c. Features – Consumer point of view, Competitors’ point of view

and Company point of view

d. Style/Design – Structure, shape, style

e. Packaging – Primary packaging (bottle), Secondary packaging

(card board box), Shipping packaging (corrugated box)

f. Branding

Brand concept – Brand is a name, term, sign, symbol, design/ordering or

combination

Brand Policy – Brand or not? Sponsorship, name (individual or family)Brand, The need -

Arguments

a. Identity helps processing

b. Image gives competitive advantage

c. Personality convinces consumers

Against:

a. Investment returns doubtful

b. Image and personality an emotional nonsense.

c. Brand equity. Sensible but not new (goodwill)

Sponsoring – Manufacturing brand (national brand)

Distributor brand (private brand)

Brand identity – Name what?

Name how?

Individual names

Merits and demerits

Product group – family name

Ex: Raymond – textiles

Blanket family name

Usha – Fans, sewing machines, pumps



Nirma – detergents, toothpaste, soap

Colgate – Dental cream, tooth brushes

3. Augmented Product development

Holistic view

Competitive Product Strategies

a. Leader

Product innovation Strategy

Quality Improvement Strategy

Multi-brand Strategy

Brand extension strategy

Superior service strategy

Image building strategy

b. Challenger

Cheaper goods strategy

Prestige goods strategy

Economy goods strategy

Reacting or proacting in above strategies of leader on high or moderate

level.

c. Follower

Innovative imitation strategy

Other strategies of leader and challenger maintaining low profile.

d. Nicher

High/Low quality strategy

Narrow product line

Superior Service

Indifferent to other companies as none is a competitor.

For Marketer

a. Identity strategies

Commodity strategy

Branding strategy

b. Customer value strategy

Consumer Behaviour Introduction Consumer is the Basic

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