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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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DEVELOPMENT OF THE DISCIPLINE
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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DEVELOPMENT OF THE DISCIPLINE
OF CONSUMER BEHAVIOUR (cont.)
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DEVELOPMENT OF THE DISCIPLINE
OF CONSUMER BEHAVIOUR (cont.)
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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DRIVERS OF SUCCESSFUL
RELATIONSHIP BETWEEN
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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DRIVERS OF SUCCESSFUL
RELATIONSHIP BETWEEN
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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DRIVERS OF SUCCESSFUL
RELATIONSHIP BETWEEN
MARKETERS AND CUSTOMERS (cont.)
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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DRIVERS OF SUCCESSFUL
RELATIONSHIP BETWEEN
MARKETERS AND CUSTOMERS (cont.)
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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DRIVERS OF SUCCESSFUL
RELATIONSHIP BETWEEN
MARKETERS AND CUSTOMERS (cont.)
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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CONSUMER BEHAVIOUR MODELS contd….
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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CONSUMER BEHAVIOUR MODELS contd….
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