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UNIT I
INTRODUCTION
CHAPTER 1:
THE STUDY OF CONSUMER BEHAVIOUR
LESSON 1:
INTRODUCTION TO CONSUMER
BEHAVI OUR
Int roduct ion
As a consumer we are all unique and this uniqueness is reflected
in the consumption pattern and process of purchase. The study
of consumer behaviour provides us with reasons why consum-
ers differ from one another in buying using products and
services. We receive stimuli from the environment and the
specifics of the marketing strategies of different products and
services, and responds to these stimuli in terms of either
buying or not buying product. In between the stage of receiving
the stimuli and responding to it, the consumer goes through
the process of making his decision.
Object ives
After reading this lesson you should be able to:
Understand the development of the marketing concept.
Define customer value, satisfaction, and retention.
Exploring the link between marketing and Customer
orientation
Definition, role and importance of consumer behavior for
a marketer
Identify the major factors that influence a consumers
purchase decision and behavior
A simplified model of the consumer decision-making
framework
Define consumer behavior.
Describe the societal marketing concept.
1. Market ing and Cust omer Orient at ion
To introduce you to the concept of consumer behaviour, let us
first understand about the discipline of consumer behaviour in
relation to marketing.
1.1 What is Marketing?
Marketing on the one hand is a business philosophy and on the
other an action oriented process. The philosophy - also termed
as marketing concept - has its roots in market economy. There
are four critical ideas that form the foundation of such an
economy:
Individuals pursue their self-interest to seek rewarding
experience
Their choices determine as to what would constitute such
experience, the choices themselves being shaped by
personal (taste) and external (cultural) influences.
Consumers enjoy the freedom to choose; they are
sovereign.
This freedom ensures free and competitive exchange
between buyers and sellers.
Marketing in turn is based on these four principles.
Thus Marketing can be defined as a
Process that aims at satisfying individual and organiza-
tional needs by creating, offering and exchanging
competitively made products that provide value to the
buyers
Today our focus is on customer. Objectives like revenue, profit,
market share, etc. Re important, but they will flowonly by
acquiring customer competence. In our country particularly the
customer, even as late as in 1980s, was bereft of alternatives; he
would uncomplainingly buy whatever the seller dished out. Not
any more. Todays choice empowered customer, supported by a
competitive environment, global quality, and neweconomic
realities, decides the fate of the marketer.
So lets define Marketing once more: It is a total business
philosophy aimed at identifying the needs of each customer
group, then designing and producing product / service package
so as to serve the groups more effectively than the competi-
tors.
This definition reveals three key dimensions of marketing:
It seeks to identify customer needs: Many manufacturers
would knowall there is to knowabout relevant production
technology, but nothing about their customers wants.
They may design products with fancy features without
considering the perceived value of such features to their
buyers. Then they wonder why their sales staff fails to
push the product in the market.
Marketing attempts to select customer groups for
which it can develop a competitive edge: Companies
taking a shotgun approach - meaning all things to all
people - inevitably end up with sackful of unsold product
inventories. Those companies which concentrate their
limited resources on meeting specific needs of the
customer have better chances of succeeding.
It designs and produces the right product packages:
when a company attempts to sell a Mercedes while the
customer is demanding a Zen sized car, failure will greet it
with open arms.
1.2 Major Concepts in Marketing
A course in Consumer Behaviour uses certain terms repeatedly.
It would be desirable therefore that you learn their meaning
from the beginning itself.
Needs and Want s
The satisfaction of buyers needs is at the heart of a market
economy, and is the core theme of Marketing. To put it more
simply, a need is a feeling of being deprived of something
desirable.
You may be in a state in which you are not feeling satisfied (say
you are feeling hungry). So you visualizea more desirable (but
unattained, yet) state, that of having a full stomach. Hence there
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is a gap between your current state (hunger) and desirable state
(satiated palate). This gap leads to a need being felt.
To take another example, if you had been happy with your
already attained qualifications, you would not have enrolled for
this course!
Wants are somewhat different. While needs are basic to human
beings, (since nobody ever needs to tell us that we need to feel
hungry, thirsty, etc.) wants are not. Later in our life when we
become part of various informal and formal groups (family,
friends, school, club, workplace, etc) we develop the concepts of
friendship social approval, beauty, and so on. These are our
acquired needs. The product concept that adequately satisfies
our biogenic or acquired needs becomes successful. Infact the
job of the marketer is to identify unfulfilled / inadequately
fulfilled / partially fulfilled need. But then today a need can be
met in a number of alternative ways. A variety of products can
satisfy the same need. Wants exist for those objects that can
potentially satisfy a need. A visually impaired person can either
wear spectacles, contact lenses, or nowhe can go in for corrective
surgery.
At this point we must also note that a consumers behaviour is
conditioned by the perception about a marketers offering. This
perception may or may not match reality. For example, in India
a common perception is that ready to eat food items lack that
home touch; they are cold and clinical. Home
made foods in contrast are warm and live unless
this perception is changed, acceptance of such
products is likely to be limited.
Product / Service
If we use marketing parlance a product is anything
that can satisfy our needs and wants. That is, it could
be a physical object, or a service, or an idea which
can be offered to a potential user for adoption /
practice / consumption. By studying consumer
buying behaviour companies can identify needs
that can be met by offering a suitable product.
Incidentally, a customized product is one, which
is made according to individual customers
specifications.
Exchange
A marketer makes an offer because he hopes that
the buyer will accept it. And in turn the buyer will
give something of value to the marketer. Whether or not an
exchange will take place would therefore depend on a match/
mismatch between the gain (the satisfaction receivable) and the
sacrifice (the price payable) in customer perception.
1.3. Customer Focus
In India marketing as a discipline has evolved at a leisurely place,
dictated of course by circumstantial factors. Most markets being
sellers markets (i.e. where seller dominates over the customer)
until recently, marketing philosophy was an alien concept for an
Indian seller. In a broad sense all the markets can be divided
into two categories: sellers market and buyers market. A buyers
market is one where due to prevailing intense competition
among the sellers, and consequent excess of supply over
existing demand, the buyer rules over the seller. On the other
hand, in a sellers market competition is restricted for any
number of reasons. So the buyer is at the mercy of the seller.
Pause For Thought #
Can you say why people brush their teeth? Answer seems
simple. But nowcheck against the following: Those who are
hypochondriacs are concerned about germs and are swayed by a
decay prevention appeal. Another group, mostly extroverts,
brushes teeth to give them brightness and shine. But a majority
just want a tingling, fresh sensation as a part of their ritual of
starting a day fresh. Such research makes the marketers better
prepared to meet the needs of various categories of customers.
1.4. Consumer Focused Marketing
Once a marketer identifies an unfulfilled need, or partially
fulfilled one, he has an opportunity to exploit. To this end he
has to determine the appropriate marketing mix. According to
Stanton: Marketing Mix is the term used to describe the
combination of the four inputs that constitute the core of a
companys marketing system: the product, the price structure
the promotional activities, and the placement system. The
marketer has to track the consumer behaviour constantly and
adjudge an optimal combination of these marketing mix
PRODUCT PRICE PROMOTION PLACEMENT
Basic product
and its features.
Design, quality,
model, style,
appearance, size
Packaging and
labeling
Branding and
trademark
Service: Pre,
during, post sale.
Basic
price,
discounts,
rebates.
Payment
terms,
installmen
t facilities
Price
fixation;
free or
administer
ed price
Personal
selling; sales
force
characteristics
Advertising,
media, and
message
choices
Sale
promotion,
displays,
contests, etc.
Publicity and
public
relations.
Channels of
distribution:
types of
intermediaries.
Physical
distribution,
warehousing,
etc.
factors so that best sales are generated. Any mistake or delay can
cost a marketer dear.
Figure 1.1: marketing mix variable
Product
We as customers viewa product as a bundle of satisfaction
and not merely the physical object. We gives importance to both
the tangible and intangible attributes of a product. Intangibles
provide psychological and social benefits for the buyer. If
product attributes dont benefit a customer, they have no
significance for him. That is why during 2000-2001 midsize cars
had a better sales growth rate than smaller cars; Maruti-800 sales
actuallydeclined.
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Branding
A firm brands its product to provide it a distinct identity. A
brand carries brand equity, i.e., reputation. Losing brand equity
means losing sales. For example, this happened to Limca at the
time of the BVO controversy.
Packaging
For the customer packaging is both a protective and a promo-
tional device: Package is the message, as it is called. Packaging
facilitates brand identification and may even motivate a person
to buy a product (like perfume). It serves as a critical reminder at
that critical moment when the customer is choosing from
among several competing brands. Infact whenever a customer
visualizes about a product, its packaging is the first thing that he
sees in his mental eyes.
As a test, just think about Pepsi or Coke right now. The first
thing you will do is visualizing the distinctive shape of the
bottle!
Product Life Cycle
Like us human beings, products also take birth through
introduction, develop (grow), age (mature), and eventually
decline (die). In the first phase, a newly developed product is
introduced in the market, which finds relatively fewcustomers.
If it is an innovative product (say a perfumed fabric) then the
marketer stimulates primary demand by educating the cus-
tomer. In the growth stage, more and more customers start
buying. But newbrands also enter the market. Hence the
marketer has to talk about differentiating features of his brand.
In maturity the brand competes with other successful brands
for selling in a stagnant market. So price cuts, exchange offers or
add-ons are used to woo the customers.
Communication is image based attempting to perfect and
reinforce the brand loyalty. Finally, many products face a phase
of obsolescence. Some products may of course have a cyclical
demand pattern. They bounce back after a gap. For example, in
2001 larger frame sunglasses have comeback. The marketer may
even reformulate/reposition a product to begin a newlife like
Dabur Honey or Milkmaid. On the other hand some products
have a stillborn fate or may die an infantile death, like Real
Value Vacuumizer.
Pricing
Price has to be fixed in such a manner as on one hand it is lower
or equal to the value delivered by the product, and on the other
hand it should cover at least all manufacturing and post
manufacturing (transportation, warehousing, promotional)
costs plus the targeted level of profit margin. Actual price fixing
of course depends on the functional features of the product
and the image of the brand. Then there is the degree of
competition that dictates the price of a brand vis--vis its
competing brands-. That is why you would find Pepsi and
Coke priced at same level.
Price can also act as a communication tool. For example price
package may give the message of affordability, exclusiveness, etc.
Cartier watches, for example.
Placement
Physical distribution is the third dimension of marketing
activity. Place convenience is needed to make purchase. A
marketer has to decide about two things: Keeping in mind
customers requirements, first, what will be the channel of
distribution; and, second, howwill the goods be actually
distributed.
Physical distribution activities are related to the movement of
products from the production site to purchase point. While the
buyer must get it in right shape and at right time, the sender
should be able to ensure availability at minimum cost to him.
The marketer can either sell directly to the customers or through
middlemen. A typical distribution chain could include move-
ment of product from manufacturer to wholesaler to retailer to
customer.
Promotion
Promotion is also called marketing communication. It aims at
informing and persuading the customer to buy whatever the
marketer is offering. Since a customer can be reached through a
number of channels, companies undertake integrated commu-
nication, which is a combination of personal selling,
advertising, public relations, and sales promotion.
1.5. Emerging Imperatives
Customer of today is the arbiter of corporate destiny. He is
unrelenting, demanding, and finicky. He wishes to fulfil his
needs in the most cost effective manner. Consumer spendings
are rising rapidly, while savings rate in India is falling. Alyque
Padamsee says: This is the land of Karma, where everything is
worked out for you, your destiny your kismet. But the Genera-
tion Nowfeels The hell with waiting for reincarnation! They
are breaking the Karma handcuffs. They are deciding that what
they want is a better life now. If they have money they want to
spend it now. But they are spending, intelligently, not indis-
criminately. What are the todays realities?
Todays customer is exposed to international quality,
thanks to the entry of more players - from within India
and abroad - in the market in post liberalized India.
So he dictates specifications, quality standards, and even
chargeable price.
He wants everything here and now.
Both budget shoppers and high spenders are demanding
better return for the money they spend.
This in turn has several lessons for the marketers:
A marketer has to act like a long-term investor.
He has to be prepared to accept wafer thin profit margins.
Hence all the planning processes and the people of the
organization have to be configured around the central
character, viz., and the customer.
Marketing effort has to be directed at meeting customer
needs, and not earning profits, or building markets. The
latter will of course be a fall out of the customer focus.
In the competitive world, the marketer has to strategize to
deliver customer value greater than that provided by his
competitors.
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In brief there has to be a paradigm shift. The corporation has to exist for the customer; the company has to customerize itself. Such
an organization will have to establish a link between itself and the customers in the following manner:
Customer needs assessment
VALUE ADDED PRODUCT
Develop Manufacture Market Deliver
Keep customer needs in
focus.
Reduce development
cycle time
Develop customer-
oriented products.
Redesign the factory to
meet customer needs.
Reduce manufacturing
cycle time
Produce at the lowest
cost, but no quality
compromise.
Identify and target the
customers.
Process the demand in
double quick time.
Market customized
products.
Deliver to the
targeted customers.
Reduce delivery
cycle time.
Deliver more
value for same
money products
2. Diversit y in Market Place
We as consumers differ in age, gender, education, occupation,
marital status, activities & interests, preferences, opinions, foods
they eat and products we buy.
There is diversity among marketers; not only among producers
but also sellers. Traditional retailers, mass merchandisers,
discount stores, and off-price stores. But there has been a shift
from mass marketing to niche marketing to direct marketing,
from custom catalogs to television shopping to cyber shopping.
There is a great diversity in advertising media. In addition to the
traditional broadcast and print media, we have ethnic media
within a great variety of alternative media.
Recognizing the high degree of diversity among us, consumer
research seeks to identify the constants that exist among the
people of the world.
Figure 1.3 belowshows us howconsumers have changed over
three decades. In fact, you can see in your own family, if you
take your parents as buyers and yourself as a buyer and then see
the difference in your behaviour.
Fig 1.2 essence of customer orientation.
1980s 1990s 2003
Conspicuous
consumer
Frugal consumer,
becoming more
well-off
Suspicious but
generallywell-of
consumer
Image-driven Value- and
quality-driven
Highly eclectic
Trusting Skeptical and
cynical
A prove it
attitude
Brand loyal Does not exhibit
loyalty
Believe that there is
always something
better
Emotional buyer Informed buyer Highly informed
and specialized
buyer
Dreamers Escapists Focused on
personal needs
Overindulgent Health- and
wellness-
conscious
Health, wellness,
and some
overindulgence,
without expectation
of costs or
consequences
Overworked Burned out,
stressed out, and
placing
tremendous
values on
convenience and
time
Reliant on
technologyand
telecommunications
to save time in
making purchasing
decisions
Industrious baby
boomers
Responsible baby
boomer
Unconvinced
generation Xer

Changes in Consumer Behaviour
Fig 1.3 Changes in consumer Behaviour;
Source: Adopted from Principles of Marketing, Kotler,
Adam, Brown and Armstrong
The commonality of need constitute a market segment,
enabling the marketer to design specific products or promo-
tional appeals to satisfy the needs of that segment
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To match the varying consumer tastes and behaviour, marketers
have also adopted strategies like stressing on value pricing i.e.,
high quality at a reasonable lower price and relationship
marketing which in simple words would mean servicing to add
to customer delight which can in the long run result in brand or
store loyalty).
They have also taken steps by moving away from the traditional
distribution channels, to customized designed channels and
nowto direct marketing or to selling directly to the customers.
Some changes in the major segments of life we can identify
are as follows:
Primary needs- health, hygiene, basic foods and clothing.
Living styles- expressed in products such as jeans, fun
foods, CDs.
Imitation of the affluent and ego based life styles
expressed in expensive watches, luxury cars.
High technology to match global competitiveness-
faxes, e-mail, Internet, photocopying machines along with
CAD, CAM and imaging.
The challenge before the marketer is to determine the
appropriate marketing channels and consumer
psychographics to have a better understanding of the
behavour aspects of target market.
In spite of being surrounded by diverse goods and
services, and the freedom to choose the desired
product or service, there are also many similarities
found among consumers.
Caselet #1
During 1996-1999 Ford Escort sold only 13,000 units since
customers perceived in it real and imaginary problems. It
earned the ill reputation of being a stogy car. Through it was
a failed model, and has been withdrawn now, the company
used it as a learning experience for developing a car exclu-
sively for the Indian market, the IKON. First of all it
decided to understand the customer, abandoning the
conventional demographic route and decided to focus on
psychographics. It asked the all-important question about
Indian attitude towards life and role of car in it. It identified
six distinctive customer clusters out of which it decided to
address two: the affluent puppy (young upwardly mobile
professional Punjabi), and the full of life. The former and
the latter perhaps own a popular car already, are party
animals, and enjoy fast and flashy lifestyle. Further, this
company decided to focus more on second i.e., full of life
segment since this category partly subsumes the first one.
The car was named the josh machine. It turned out to be a
great success. So we learn the lesson.
If we look at consumer Behaviour as a discipline, we can
say that:
We as consumers did not always act or react as marketing
theory suggested they would.
Accelerated rate of newproduct development
The consumer movement
Public policy concerns
Environmental concerns
The opening of national markets throughout the world.
Let us now look at the scope of Consumer Behavior. The
scope covers:
What they buy
Why they buy
When they buy
Where they buy it
Howoften they buy it
Howdo they buy it
Act ivit y 1
Given the geographical characteristics of Indian consumer
market, analyse five important implications that will be faced by
an all-India distribution company dealing in consumer durables
such as refrigerators, televisions and music systems:
A well-developed and tested model of buyer behaviour is
known as the stimulus-response model, which is summarised
in the diagram below:
Fig 1.4 The Stimulus response model of Buying
behaviour
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In the above model (fig 1.4), marketing and other stimuli enter
the customers black box and produce certain responses.
We must try to work out what goes on the in the mind of the
customer or the black box.
The Buyers characteristics influence howhe or she perceives the
stimuli; the decision-making process determines what buying
behaviour is undertaken.
2. Fact ors Inf luencing Buyer Behaviour
Whenever we buy anything our final decision, as a consumer
will definitely be affected by certain factors. Some of these major
factors are as given below:
1. Cultural
2. Social
3. Personal
4. Psychological
The first stage of understanding buyer behaviour is to focus on
the factors that determine he buyer characteristics in the black
box. These can be summarised as follows:
Fig 1.5 Factors affecting Buyer behaviour
Each of these factors is discussed in more detail in our other
revision notes on buyer behaviour.
The marketer must be aware of these factors in order to
develop an appropriate marketing mix for its target market.
Nowlets take a brief look at the various factors that we have
mentioned above.
2.1 Cultural Factors
Culture is the most fundamental determinant of a persons
want and behaviour. The growing child acquires a set of values;
perceptions, preferences and behaviour through a process of
socialization involving the family and other key institutions.
Cultural factors have a significant impact on customer
behaviour. Marketing are always trying to spot cultural shifts
which might point to new products that might be wanted by
customers or to increased demand.
For example, today there seems to be a cultural shift towards
greater concern about health and fitness and that has created
opportunities, noweven industries, servicing customers who
wish to buy products like:
Health foods
Fitness club memberships
Exercise equipment
Activity or health-related holidays etc.
Similarly our increased desire for leisure time has resulted in
increased demand for convenience products and services such as
microwave ovens, washing machines, ready-to-eat meals and
direct marketing service businesses such as telephone banking
and insurance.
Each culture contains sub-cultures groups of people,
which share values. Sub-cultures can include nationalities,
religions, racial groups, or groups of people sharing the same
geographical location. Sometimes a sub-culture will create a
substantial and distinctive market segment of its own.
For example, the youth culture or club culture has quite
distinct values and buying characteristics from the much older
grey generation
Similarly, differences in social class can create customer groups.
In fact, the social classes are widely used to profile and predict
different customer behaviour. Social class is not just determined
by income. It is measured as a combination of occupation,
income, education, wealth and other variables. Social Classes are
relatively homogeneous and enduring divisions in a society
which are hierarchically ordered and whose members have
similar values, interests and behaviour.
Social scientists have identified seven social classes shown
in Figure 1.6
Social Class Characteristics
Upper- Upper
Upper-Uppers are the social elite who live
on inherited wealth and have well-known
families. They maintain more than one
home and send their children to the best
schools. They are in the market for jewelry,
antiques, homes, and foreign vacations.
While small as group they serve as a
reference group to others to the extent that
other social classes imitate their
consumption decisions.
Lower-Uppers
Lower Uppers are persons who have earned
high income or wealth through exceptional
ability in their profession or business. They
usually come from the middle-class. They
tend to be active in social and civic affairs
and seek to buy the symbols of social status
for themselves and their children, such as
expensive cars, homes and schooling. Their
ambition is to be accepted n the upper-
upper status, a status that is more likely to
be achieved by their children than
themselves.
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Fig 1.6: Adapted from Richard P. Coleman The Significance of
Social class to Marketing. Journal of Consumer Research,
December 1983, pp 265-80
2.2 Social Factors
A customers buying behaviour is also influenced by social
factors, such as the groups to which the customer belongs and
social status. In a group, several individuals may interact to
influence the purchase decision. The typical roles in such a group
decision can be summarised as follows:
Initiator
The person who first suggests or thinks of the idea of buying a
particular product or service
Influencer
A person whose viewor advice influences the buying decision
Decider
The individual with the power and/or financial authority to
make the ultimate choice regarding which product to buy
Buyer
The person who concludes the transaction
User
The one who actually uses the product or service.
The family unit is usually considered to be the most important
buying organisation in society. It has been researched
extensively. Marketers are particularly interested in the roles and
relative influence of the husband, wife and children on the
purchase of a large variety of products and services.
There is evidence that the traditional husband-wife buying roles
are changing. Almost everywhere in the world, the wife is
traditionally the main buyer for the family, especially in the areas
of food, household products and clothing. However, with
increasing numbers of women in full-time work and many men
becoming home workers (or telecommuting) the tradi-
tional roles are reversing.
The challenge for a marketer is to understand howthis might
affect demand for products and services and howthe promo-
tional mix needs to be changed to attract male rather than
female buyers.
Consumer wants, learning, motives etc. are influenced by
opinion leaders, persons family, reference groups, social class
and culture.
2.3 Personal
Personal factors are those factors, which are unique to a
particular person including demographic factors, Sex, Race, and
Age etc.
Personal factors also include who in the family is responsible for
the decision-making.
2.4 Psychological Factors
Psychological factors include:
MotivesA motive is an internal energizing force that
orients a persons activities toward satisfying a need or
achieving a goal.
Actions are effected by a set of motives, not just one. If
marketers can identify motives then they can better develop
a marketing mix.
MASLOW hierarchy of needs is the theory, which explains
concept of motivation through unfulfilled needs which
could be any of the following:
Physiological
Safety
Love and Belonging
Esteem
Self Actualization
Need to determine what level of the hierarchy the
consumers are at to determine what motivates their
purchases.
Social Class Characteristics
Upper -Middles
Upper Middles possess neither family status
nor unusual wealth. The primarily
concerned with career. They have attained
positions as professionals, independent
businesspersons, and corporate managers.
They believe in education and want their
children to develop professional or
administrative skills so that they will not
drop into the lower stratum. They are civic
minded and are a quality market for good
clothes, homes, furniture and appliances.
Middle Class
The middle class is average paid white and
blue-collar workers who try to do the proper
things. Often they will buy products to
keep up with the trends. The middle class
believes in spending more money on
worth-while experiences for their children
and aiming them towards professional
colleges.
Working Class
Working class consists of average pay blue
collar workers and those who lead a
working class life-style, whatever income,
school or job they have. The working class
depends heavily on relatives for economic
and emotional support, for tips on job
opportunities, advice on purchase, and for
assistance in times of trouble. The working
class maintains a sharp sex-role division and
stereotyping. They are found to have larger
families than the higher classes.
Upper Lowers
Upper Lowers are working, though their
living standard is just above the poverty line.
They perform unskilled work and are poorly
paid. Often they are educationally deficient.
Although they fall near the poverty line, they
manage to maintain some level of
cleanliness.
Lower Lowers
Lower Lowers are visibly poverty-stricken
and usually out of work. Some are not
interested in finding permanent jobs and
most are dependent in charity for income.
Their homes and possessions are dirty,
ragged, and broken-down.
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Caselet #1 Nutrament
Nutrament, a product marketed by Bristol-Myers Squibb
originally was targeted at consumers that needed to receive
additional energy from their drinks after exercise etc., a fitness
drink. It was therefore targeted at consumers whose needs
were for either love and Belongingor esteem. The product was
not selling well, and was almost terminated. Upon extensive
research it was determined that the product did sell well in
inner-city convenience stores. It was determined that the
consumers for the product were actually drug addicts who
couldnt digest a regular meal. They would purchase
Nutrament as a substitute for a meal. Their motivation to
purchase was completely different to the motivation that B-
MS had originally thought. These consumers were at the
Physiological level of the hierarchy. BM-S therefore had to
redesign its marketing mix to better meet the needs of this
target market.
Motives often operate at a subconscious level therefore are
difficult to measure.
Perception
What do you see??
Perception is the process of selecting, organizing and interpret-
ing information inputs to produce meaning. This means we
chose what info we pay attention to, organize it and interpret it.
Information inputs are the sensations received through sight,
taste, hearing, smell and touch.
Selective Exposure- This means we tend to select inputs to be
exposed to our awareness. This is more likely if it is linked to
an event, and/or satisfies current needs.
Selective Distortion- This happens when we change or twist
current received information, which is inconsistent with our
beliefs.
Selective Retention- In this case we remember only those inputs
that support our beliefs, and forget those that dont.
For instance, an average supermarket shopper is exposed to
17,000 products in a shopping visit lasting 30 minutes-60% of
purchases are unplanned and is also exposed to 1,500 advertise-
ment per day. Hence they cannot be expected to be aware of all
these inputs, and certainly will not retain many.
Interpreting information is based on what is already familiar, on
knowledge that is stored in the memory.
Ability and Knowledge
Learning can be said to be changes in a persons behavior caused
by information and experience. Therefore to change consumers
behavior about your product, you need to give them new
information regarding the product like free sample etc.
When making buying decisions, buyers must process informa-
tion. Knowledge is the familiarity with the product and expertise.
Inexperience buyers often use prices as an indicator of quality
more than those who have knowledge of a product.
Non-alcoholic Beer example: consumers chose the most
expensive six-pack, because they assume that the greater price
indicates greater quality.
Learningis the process through which a relatively permanent
change in behavior results from the consequences of past
behavior.
Attitudes
we can say that attitudes are knowledge and positive and
negative feelings about an object or activity. It maybe tangible or
intangible, and living or non- living. Generally it seen that
attitudes drive perceptions
We learn attitudes through experience and interaction with other
people. Consumer attitudes toward a firm and its products
greatly influence the success or failure of the firms marketing
strategy.
For instance, Honda says, You meet the nicest people on a
Honda, dispelling the unsavory image of a motorbike rider, in
the late 1950s. Changing market of the 1990s, baby boomers
aging, and Hondas market returning to hard core. To change
this they have a newslogan Come ride with us.
Attitudes and attitude change are influenced by consumers
personality and lifestyle.
Again, we tend to screen information that conflicts with their
attitudes and distort information to make it consistent and
selectively retain information that reinforces our attitudes. But,
bear in mind that there is a difference between attitude and
intention to buy i.e., ability to buy.
Personality
One way of explaining personality is all those internal traits and
behaviors that make a person unique, keeping in mind the fact
that uniqueness arrives from a persons heredity and personal
experience. Examples include:
Workaholism
Compulsiveness
Self confidence
Friendliness
Adaptability
Ambitiousness
Dogmatism
Authoritarianism
Introversion
Extroversion
Aggressiveness
Competitiveness.
Traits affect the way people behave. Marketers try to match the
store image to the perceived image of their customers.
Lifestyles
You may have observed that recently trends in lifestyles are
shifting towards personal independence and individualism and
a preference for a healthy, natural lifestyle.
Lifestyles are the consistent patterns people followin their lives.
For Example you buy healthy foods to maintain a healthy
lifestyle.
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Opinion Leaders
Opinion leaders basically play the role of spokesperson etc.
Marketers try to attract opinion leaders...they actually use (pay)
spokespeople to market their products. Say, for example Sachin
Tendulkar (Pepsi, Visa , Biscuit, Adidas etc.)
Roles and Family Influences
Roles are things you should do based on the expectations of
you from your position within a group.
People have many roles.
Husband, father, employer/ee. Individuals role are continuing
to change therefore marketers must continue to update
information.
Family is the most basic group a person belongs to. Marketers
must understand:
that many family decisions are made by the family unit
consumer behavior starts in the family unit
family roles and preferences are the model for childrens
future family (can reject/alter/etc)
family buying decisions are a mixture of family interactions
and individual decision making
family acts an interpreter of social and cultural values for
the individual.
The Family life cycle: families go through stages, each stage
creates different consumer demands:
bachelor stage
newly married, young, no children...me
full nest I, youngest child under 6
full nest II, youngest child 6 or over
full nest III, older married couples with dependant
children
empty nest I, older married couples with no children living
with them, head in labor force
empty nest II, older married couples, no children living at
home, head retired
solitary survivor, in labor force
solitary survivor, retired
Modernized life cycle includes divorced and no children.
Two Income Marriages Are Now the Norm
Because 2 income families are becoming more common, the
decision maker within the family unit is changing...also,
family has less time for children, and therefore tends to let
them influence purchase decisions in order to alleviate some
of the guilt. Children also have more money to spend
themselves.
Reference Groups
Individual identifies with the group to the extent that he takes
on many of the values, attitudes or behaviors of the group
members.
Families, friends, sororities, civic and professional organiza-
tions.
Any group that has a positive or negative influence on a
persons attitude and behavior.
Membership groups (belong to)
Affinity marketing is focused on the desires of consumers that
belong to reference groups. Marketers get the groups to approve
the product and communicate that approval to its members.
Credit Cards etc.!!
Aspiration groups (want to belong to)
Disassociate groups (do not want to belong to)
Honda, tries to disassociate from the biker group.
The degree to which a reference group will affect a purchase
decision depends on an individuals susceptibility to reference
group influence and the strength of his/her involvement with
the group.
Social Class
An open group of individuals who have similar social rank. US
is not a classless society. US criteria; occupation, education,
income, wealth, race, ethnic groups and possessions. Social class
determines to some extent, the types, quality, quantity of
products that a person buys or uses.
Lower class people tend to stay close to home when shopping,
do not engage in much prepurchase information gathering.
Stores project definite class images.
Family, reference groups and social classes are all social influences
on consumer behavior. All operate within a larger culture.
Culture and Sub-culture
Culture refers to the set of values, ideas, and attitudes that are
accepted by a homogenous group of people and transmitted to
the next generation.
Culture also determines what is acceptable with product
advertising. Culture determines what people wear, eat, reside
and travel. Cultural values in India are good health, education,
individualism and freedom. In todays culture time scarcity is a
growing problem. So as a result there is a change in meals.
Different society, different levels of needs, different cultural
values.
Culture can be divided into subcultures:
Geographic regions
Human characteristics such as age and ethnic background.
Culture effects what people buy, howthey buy and when they
buy.
Case on Customer Behavior
Modernizing Sales Out let s
Mr. Harish Panjwani was a refugee when he started his small
grocery business about 40 years back. Initially, he hawked his
good door to door and soon developed a sizeable number of
steady customers. This was largely due to his sober tempera-
ment, reliable dealings and his amiable nature. His extrovert
nature helped him develop many friends and well-wishers.
Over a period of time, Mr Panjwani became a socially promi-
nent person with good acquaintances from many walks of life.
He expanded the range of his business activities and he now
own several shops dealing in consumer durables, dairy products
and also has a general store besides a large medical shop. Being
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of a conservative frame of mind, he feels emotionally attached
to his original grocery business and continues to operate it with
enthusiasm. His business place has even come to be associated
with a meeting venue for people of his generation to meet.
His children are grown up and the eldest one, Rajesh, has just
returned from abroad after completing his management
education there. Ambitious by nature, Rajesh would like to
expand his business fast. He feels that he needs to be profes-
sional in his approach. In his option, his fathers way of
dealing with people is outdated. Many a times, he feels irritated
when his fathers old friends drop in at the shops and spend
time talking with him. Rajesh feels that this type of casual come
together is a waste of time. He would prefer to be more
business like. He would to deal with them as customers only,
serving them with precision and in a methodical manner. He
expects that his customer should appreciate this modern way
of doing business. He has, however, broached his inner feelings
only in an indirect way to his father, and he found that this
father believes in maintaining close personal links with his
customers. Some of the customers have, anyhow, started
noticing the change in the way in which Rajesh deals with them.
They feel that the old warmth of their relationship with the
senior Panjwani is somehowmissing and they are nowless
welcome at the shops.
Quest ions
1. What do you think is the contribution of personal
relationship in such a business?
2. Do you agree with the approach adopted by Rajesh? Do
you have any suggestion to make?
Taken from the fourth semester examination question paper of
Pune University.
Key Terms
Customer needs
Customer focus
Needs and wants
Consumer focused marketing
Customer needs assessment
Primary needs
Stimulus-response model
Black box
Cultural
Social
Personal
Psychological
Sub-cultures
Social Class
Aspiration groups
Disassociate groups
Membership groups
Reference Groups
The Familylife cycle
Opinion leaders
Lifestyles
Personality
Attitudes
Learning
Ability and Knowledge
Selective Exposure
Selective Distortion
Selective Retention
Perception
Motives
Decider
Buyer
User
Initiator
Influencer
Point s t o Ponder
Objectives of One-to-One
Marketing
nTo attain customers
nSell them more products
nMake a profit
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Changes in the Business Environment
n Increased
consumer power
n Access to
information
n More products and
services
n Interactive and
instant exchanges
n Access to customer
patterns and
preferences
n Evolution to other -
Web connection
PDAs
HDTV
Mobile phones
The behavior that consumers
display in searching for,
purchasing, using, evaluating, and
disposing of products and services
that they expect will satisfy their
needs.
Consumer Behavior
Personal Consumer
The individual who buys goods and
services for his or her own use, for
household use, for the use of a
family member, or for a friend.
Organizational Consumer
A business, government agency, or
other institution (profit or nonprofit)
that buys the goods, services,
and/or equipment necessary for the
organization to function.
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Development of the Marketing
Concept
Production
Concept
Selling Concept
Product Concept
Marketing
Concept
The Selling Concept
n Assumes that consumers are unlikely to
buy a product unless they are
aggressively persuaded to do so
n Marketing objectives:
Sell, sell, sell
n Lack of concern for customer needs and
satisfaction
The Marketing Concept
n Assumes that to be successful, a
company must determine the needs and
wants of specific target markets and
deliver the desired satisfactions better
than the competition
n Marketing objectives:
Profits through customer satisfaction
The Marketing Concept
A consumer-oriented philosophy
that suggests that satisfaction of
consumer needs provides the focus
for product development and
marketing strategy to enable the
firm to meet its own organizational
goals.
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Implementing the Marketing
Concept
n Consumer Research
n Segmentation
n Targeting
n Positioning
The Marketing Mix
n Product
n Price
n Place
n Promotion
Successful Relationships
Customer
Value
Customer
Satisfaction
Customer
Retention
Societal Marketing Concept
A revision of the traditional marketing concept
that suggests that marketers adhere to
principles of social responsibility in the
marketing of their goods and services; that is,
they must endeavor to satisfy the needs and
wants of their target markets in ways that
preserve and enhance the well-being of
consumers and society as a whole.
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The Societal Marketing Concept
n All companies prosper when society
prospers.
n Companies, as well as individuals,
would be better off if social
responsibility was an integral
component of every marketing decision.
n Requires all marketers adhere to
principles of social responsibility.
Characteristics that affect customer behaviour
Not es