Consumer Behviour - MBA

Thursday, August 14, 2014 Prepared by Sudhir Pasricha 1

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.
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.
Consumer Buying Behavior
Buying behavior of individuals and households that buy products for personal
consumption.

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.

Definitions
Market segmentation is 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
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 segmentation divides the market based on sex (male or female)
Income segmentation divides the market into affluent or low-income consumers
Education
Occupation
Copyright 2007 by Prentice Hall
Market Segmentation
Occupation
SEGMENTATION BASE SELECTED SEGMENTATION VARIABLES
Geographic Segmentation
Climate
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
Income
Marital status
Sex
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,
military
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

Occasion
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
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
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 who your best customers are and apply geographic analysis
techniques to discover where to find more of them.
Customer Profiles
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
Behavioral
Importance of target markets
Once target markets are identified correctly, specific marketing programs are directed to identified
group, or target market.
Example of Customer Profile
Head Fones

Customer Profile:

Geographic segmentation:
any area, any climate

Demographic segmentation:
age 12-26
Males
Professional musician

Psychographic segmentation:
Likes to listen to music
Athletic/exercises
Trendy
Extreme Sports

Behavioral
Listens to personal media device
Buys mobile music media
Brand conscience

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

Consumer Lifestyle and Values
A lifestyle is a persons pattern/style of living in the world as expressed in AIO - Activities, Interests and
Opinions.
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

Thursday, August 14, 2014
Prepared by Sudhir Pasricha 15
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
VALS (Values & Lifestyle) Framework

Stanford Research Institute (SRI) developed a popular
Approach to psychographics segmentation called VALS
(Values & Lifestyle) puts less emphasis on Activities & Interest and more
on Psychological drivers to consumer behavior.

VALS has two dimensions :
Primary Motivations Types 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
Need

Resources Reflects 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.
Self Orientation of People :

Ideals (principle)- Individuals are guided in their choices by their
beliefs & 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.
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, and
are 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.
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
needs.
Achievers (Motivated by Achievement; High Resources) are successful career and work-oriented people who like to-and
generally 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.
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 and
patterns 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.
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 of
government 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
equipment).
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 of information; search and
evaluation and finally result in the purchase
process.
What Makes Retail Shoppers Tick ?
Retail
Shoppers
Life-Styles
Demographics
Environmental
Factors
Retailer Actions
Shopping Attitudes
and Behavior
Needs and
Desires
Retail Implications
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-styles consumers are less predictable
Such as cleaning, shopping, babysitting
Consumer sophistication and confidence more knowledgeable shoppers who are more
cosmopolitan (more aware of trends)
Poverty of time people are time-pressed because of work, commuting, family responsibilities
and etc
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."
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
lifestyles.
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
market.
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 for Pantaloons 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
patterns.

Lifestyle, analysis leads to more comprehensive and penetrating profiles of how consumers think and act than
may be available from other approaches.
CHARACTERISTICS OF LIFESTYLE
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
Hierarchy of Influences on Lifestyle
ENVIORNMENTAL & INDIVIDUAL FACTORS AFFECTING CONSUMER INFLUENCES ON LIFESTYLE
APPROACHES TO STUDY LIFESTYLE
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
END OF MODULE - 1

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