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Hand Out By: M Rafeeq


“There never was in the world two opinions alike, no more than two hairs or two grains,
the most universal quality is diversity”.

“You never really understand a person until you consider things from his point of view”.
- Harper Lee.

I. Introduction: -
“The customer is the business ‘and’ the purpose of a business is to create a
customer”. Consumer is described by two different kinds of consuming entities.

1. Personal Consumer: - (End users (or) Ultimate consumers)

Personal Consumers buys goods (or) Services.
1. For his own use eg: - Shampoo, Shaving Cream.
2. For the use of household eg: - Television, Refrigerator.
3. As a gift for his friend eg: - Pen, Watch, book.
2. Organizational Consumer: -
It includes profit & Non-profit businesses, Government Agencies and
institutions buy products, equipments & services to run their organizations.
Eg: - Purchasing Raw Material.
The marketing of goods & services is:
1) To Individuals: Consumer Behavior (Unit 1 to 5)
2) To Organization: Buyer Behaviour (Unit 6 and 7)

II. What is Consumer Behaviour: -

Def: - Consumer Behaviour is a body of knowledge emphasizes on the study of both
physical activities and decision-making processes that occur in the process of search,
acquiring, use and disposal of products.

Def: - The decision process and physical activity or individuals engage in when
evaluating, acquiring, using, or disposing of goods and services.

The term CB refers to the behavior that consumers display in searching for
purchasing, using, evaluating and disposing of products services and ideas that they
expect will satisfy their needs.

The study of CB is the study or how individuals make decisions to spend their
available resources (time, money, effort) on consumption-related items. It includes
the study of what they buy, why they buy it, when they buy it, where they buy it, how
often they buy it and how often they use it.
E.g.: - Toothpaste.
- What types of toothpaste do consumers buy (Gel, regular, striped, in a tube)?
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- What brand (national brand, private brand, generic)?

- Why do they buy it (to prevent cavities, to remove stains, to brighten or whiten
teeth, as a mouthwash, to attract romance)?
- Where do they buy it (supermarket, drugstore, convenience store)?
- How often do they use it (when they wake up, after each meal, when they go to
bed, or any combination thereof)?
- How often do they buy it (weekly, biweekly, monthly)?

III. Inter relationship of Consumer Behavior with other discipline: -

It is said to be multidisciplinary in nature.
1. Psychology: - It is the study of individual’s behavior and mental processes.
2. Sociology: - It is the study of the collective behavior of people in groups.
3. Social Psychology: - It is the study of how individuals influence and are
influenced by the groups.
4. Economics: - It is the study of people’s production, exchange and consumption
of goods and services.
5. Anthropology: - It is the study of people in relation to their culture.

IV. Approaches to CB: -

Consumer research is the methodology used to study Consumer Behavior.
There are two approaches to study consumer and this dual approach to consumer
research enables marketers to make better strategic decisions.
1. Positivism: - Consumer research designed to Predict Consumer Behavior is
called positivism and the persons undergoing this study are known as
2. Interpretivism: - (Post modernism) (experientialism).
The consumer research designed to understand consumption behavior is
called interpretivism and the persons undergoing this study are known as

V. Consumer Behaviour roles: -

A purchase happens when someone perceives a need, has the ability to buy and
finds a product that meets or exceeds their expectations. The 4 roles involved in
every purchase decision are:
1.Initiator: - The one who first says “I want” or “In need”
2.Influencer: - The one who discovers ways to satisfy the want or need
i.e., person intentionally or unintentionally influences the purchase decision or
uses the product or service.
3.Buyers: - The one who engages in the purchase transaction.
4.User: - The one who directly involved in consumption or uses the product.

VI. Why to Study Consumer Behavior: -

1. Significance in daily lives: -
The goods we purchase and the manner in which we use them significantly
influence ho we like our daily lives.
Much of our time is spent directly in the marketing place, shopping or
engaging other activities. A large amount of additional time is spent thinking about
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products and services, talking to friends about them, and seeing or hearing
advertisements about them.
2.Application to Decision Making: -
Consumers are often studied, because certain decisions are significantly affected
by their behavior or expected actions. For this reason, CB is said to be an applied
discipline and can exist at two different levels of analysis.
a) Micro Perspective: -
The micro perspective seeks application of this knowledge to problems
faced by the individual firm or organization
The Micro perspective involves in understanding consumers for the
purpose of helping a firm or organization to accomplish its objectives.
Advertising managers, product designers, and many others in profit-oriented
businesses are interested in understanding consumers in order to be more effective
at their tasks.
Managers of various non-profit organizations have benefited from the
same knowledge. For e.g.: - Red Cross has been effective in applying an
understanding of consumer behavior concepts to their activities.
b) Societal Perspective: -
The societal perspective applies knowledge of Consumers to aggregate-
level problems faced by large groups or by society as a whole.
In this consumers collectively influence economic and social conditions
with in an entire society. Market system is based on individual choice, consumers
strong influence what will be produced, for whom it will be produced, and what
resources will be used to produce it.
Vast amounts of resources have been used to produce cars, highway
systems, and petroleum products used in their operation. It has also strongly
influenced where many of us live (e.g.: - rural, suburbs) and how we run our daily
lives (e.g.: - what we eat, where we shop, and how we are entertained).

VII. Under standing Consumer Behavior: -

There are 3 classes of variables involved in understanding Consumer Behavior.
1. Stimulus variables.
2. Response variables.
3. Intervening variables.
1. Stimulus variables: -
These are sensory inputs to consumers Eg: - Advertisements, Products.
2. Response variables: -
These are the resulting mental and/or physical reactions of individuals who
are influenced by stimulus variables.
E.g.: - Purchasing a product, forming attitudes about the product.
(Captain cook --- Free flowing salt)
3. Intervening variables: -
These variables intervene between the stimulus and response variables.
E.g.: - Using Celebrities in advertising.
Coke – Hirthik, Aishwarya
Pepsi – Kajol, Sharukh.

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Intervening variables are internal to the individual and can include values,
mood, knowledge, etc.
The study of Consumer Behavior is complex, because it is involved with
many variables to interact and influence each other, which are grouped into three
major sections.
1. External environmental variables influencing behavior. (Unit-2)
2. Individual determinants of behavior (Unit-3)
3. Consumer decision process (Unit-4)

Fig: - Decision process framework for studying Consumer Behavior

Bases for Segmentation: -
The heart of modern strategic marketing can be described as STP marketing i.e.,
Segmenting, Targeting and Positioning.
Target marketing has three major steps:
1. Market segmentation – Identifying and profiling distinct groups of
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2. Market Targeting – Selecting one or more market segments to enter.

3. Market Positioning – Establishing and communicating the products
distinctive benefits in the market.
1. Market Segmentation: -
Market consists of different buyers having different needs and wants,
purchasing power, geographical locations, buying attitudes and buying practices.
Using any of these variables market can be segmented.
Def: - Market segmentation is the process of dividing a large market into smaller
subsets of consumer or organizations that are similar in characteristics, behavior,
wants or needs.
Heterogeneous Market: -
A market in which people or organization has differing characteristics.
Homogeneous Market: -
A market in which people or organization has similar characteristics.

Market segmentation, is the way marketers respond to the fact that different
groups of customers have different wants and needs. A large homogeneous market
is divided into segments that share certain characteristics.
1. Identify segmentation variables and segment the market.
2. Develop profiles of resulting segments.
Market consists of buyers, and buyers differ in one or more respects. They
may differ in their wants, purchasing power, geographical locations, buying attitudes,
and buying practices.

Different Segmentations of a Market (General approach to segment a market):

fig:1 fig:2 fig:3 fig:4 fig:5

Fig:1 :- No Market Segmentation.
2: - Complete Segmentation.
3: - Market Segmentation by income classes 1,2, and 3.
4: - Market Segmentation by age classes A and B.
5: - Market Segmentation by income-age class.

Patterns of Market Segmentation:

-Consider any two product attributes by asking buyers.
For e.g.: - say sweetness and creaminess in the case of ice cream
-This is to identify different preference segments. Three different patterns can

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Sweetness Sweetness Sweetness

(a) Homogeneous (b) Diffused (c) Clustered
Preferences Preferences Preferences

Market Segmentation procedure:

1.Survey stage: - Researcher conducts Exploratory Interviews i.e.. Formal
interview on attribute ratings, brand ratings, brand awareness, product usage
patterns, demographics & media graphics, etc,.
2.Analysis stage: - Researcher applies following analysis:
a) Factor analysis: To remove highly correlated variables.
b) Cluster analysis: To create maximally different segments.
3.Profiling stage: - Now each cluster is distinguished according to attitudes,
behavior, demographic and consumption habits.
This Market Segmentation procedure must be reapplied periodically, because
market segments change.


Mass Segment Niche Micro
Marketing Marketing Marketing Marketing
No segmentation Complete Segmentation
Fig: - Levels of marketing segmentation

1. Mass marketing: - Mass-producing, mass distributing and mass promoting

about the same product in about the same way to all consumers.
E.g.: - Coca-Cola
2. Segment marketing: - adapting markets by recognizing buyer needs,
perceptions and buying behaviors.
E.g.: - General motors designed cars for different income & age
3. Niche marketing: - Marketers using a very narrow segment is niche (sub
segments) marketing. [A strategy in which goods and services are tailored to
meet the needs of small market segment).
E.g.: - Sport vehicles, Minto after smoke, Vicco sugar free paste
4. Micro marketing: - The practice of tailoring products and marketing
programs to suit the tastes of specific individuals and locations includes local
marketing and individual marketing.

Bases for market segmentation: -

There are different variables to segment consumer markets and they fall into
two broad groups.
a) Consumer characteristics (Geographic, Demographic, & psychographic).
b) Consumer responses (quality, price ---- differ in Geographic, demographic
and psychographic).
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Eight major categories of consumer characteristics provide the most popular

bases for marketing. The major Segmentation variables are:

1. Geographic segmentation: -
Dividing market into several geographical units such as nations, regions,
etc. The company pays attention to local variations in geographical needs &
The geographical variables are:
Country ------- India, China, Canada, etc.
Region ------- NEWS, Pacific, Atlantic, etc.
Size ----------- under 5,000; 10,000 to 20,000; ---- etc,.
Density ------- Urban, Suburban, Rural
Climate ------- tropic, subtropics, temperate.
Description: -
Divided by location:
People in same area have similar needs & wants, and that these needs &
wants differ from those of people living in other areas. E.g.: - Food Products.
Some can be accounted by climate. The Sunset regions of south and west
prefer bathing suits and refrigerators, air coolers and in Snow Belt regions of the
North and East prefer more for room heaters.
Coffee is sold nationally but flavored regionally. Its coffee is flavored
stronger in the west than the east.
Maruthi – Axile is made stronger in India, due bad condition of roads.
Geographic Segmentation can be easily reached through local media,
including newspapers, TV and Radio, and through regional editions of magazines.

2. Demographic segmentation:
This is the most popular bases for distinguishing customer groups, because
consumer wants, p It refers to vital and measurable statistics of a population.
It helps to locate target marketing.
Demographic variables are easier to measure than other segmentation
variables. references, and usage rates.
It is the study of human population statistics.
It is often said Market = People x Purchasing power x willingness to buy.
The demographic variables are:
Age ------------------ under1; 1-2; 2-5; --- >60.
Gender -------------- male, female.
Family size --------- 1-2; 2-3; so on.
Family life cycle ---- young, single; -young, married, no children;
-young, married, youngest child under 6;
- young, married, youngest child 6 or over;
-older, single; -older, married, no children; etc.
Income ------------- 3,000 - 5,000; 5,000 - 10,000; > 10,000.
Occupation -------- professional, technical, managers, students
Education --------- none, elementary education, primary education,
secondary education, under graduate, post graduate.
Description: -
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Age: - Consumer wants and capacities change with age.

E.g.: - Toy manufacturers, for babies, stages from 3 months to 1 year. This
segmentation strategy means that parents and gift buyers can more easily find the
appropriate toy by baby’s age.
Gender: - Applied in clothing, hairdressing, cosmetics and magazines. (Sex role
have indistinct. E.g.: - Cigarette marketing – by men and women alike.
Automobile Industry – manufacturing are designing cars to appeal women,
advertising explicitly as women’s cars.
Marital Status: - Marketers are interacted in the number and kinds of households
that own and/or buy certain products. They are also interested in determining the
demographic and media profiles of household decision makers to develop
appropriate marketing strategies.
Income-Education-Occupation: - Determine purchasing power, but blue-collar
workers were among the first purchasers of color TV Sets.
Education, occupation, and income tend to be closely correlated in almost
a cause-and-effect relationship. High-level occupations more that produce high
incomes-usually require advanced educational training.
Income is classified in to three types: -
1) Personal Income: From wages, salaries, rent, interest, business, farming, etc.
2) Disposable Personal income: Amount available after deducting taxes, for
personal consumption expenditures and saving.
3) Discretionary income: Income available for spending after deducting
expenditures for necessities such as food, clothing, shelter, transportation &
The combination of geographic and demographic information is known as
Geodemographics and is an important segmenting tool.

3. Psychographic segmentation: -
People within same demographic group can exhibit different
psychographic profiles.
The psychographic variables are:
Needs-motivations - Shelter, safety, security, affection, sense of self worth
Personality ---------------- aggressive, gregarious, ambitious.
Perception ------- Low risk, Moderate risk, High risk
Learning involvement---------- Low involvement, High involvement.
Attitudes---------- Positive, Negative attitude.
Social class ---------------- Lower lowers, Upper lowers, Middle class,
Upper middles, Lower uppers, Upper uppers.
E.g.: car, clothing, furnishing
Life style ------------------ Achievers, strivers, strugglers

Description: -
Psychological characteristics: - It refers to the inner or intrinsic qualities of the
individual consumer. Consumer Segmentation strategies are often based on
specific psychological variables.
Personality: - Endow their products with brand personalities that correspond to
consumer personalities like, is using personality of certain athletes.
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E.g.: Adidas --------------- Personality of Tendulkar

Coca-Cola------------- Hirthik Roshan
Psycho graphic (Life style analysis): - Psycho graphic studies employ a battery
of statements designed to identify relevant aspects of a consumers personality,
buying motives, interests, attitudes, beliefs and values. It also focuses on the
amount of time spent by an individual (or family) on various activities and
The Pattern of living (lifestyle) is expressed in:
Activities Interest Opinions

Shopping Media Politics 4. Socio

Sports Fashion Business cultural
Entertainment Job Products segmentation: -
Achievements The
variables are:
Culture -------------------- American, Italian, Chinese, Mexican
Religion ------------ Catholic, Hindu, Muslim etc.
Race/Ethnicity ----- African – American
Social class --------------- Lower lowers, Upper lowers, Working class, Middle
class, Upper middles, Lower uppers, upper uppers
Family lifestyle ----------- Bachelors, Young married, Empty nesters.

Description: -
Culture: - Members of same culture tend to share the same values, beliefs and
customs. The cultural segmentation is particularly successful in international
Subculture: - With in large culture, distinct sub groups often are united by certain
experiences, values or beliefs that make effective market segments based on race,
religion, ethnicity
E.g.: - Advertisement – in different Languages.
Social Class: -The concept of social class implies a hierarchy in which
individuals in the same class generally have the same degree of status, while
members of other classes have either higher or lower status/different social
classes vary in terms of values, product preferences and buying habits.
Family Life cycle: - It passes through similar phrases in their formation, growth
and final dissolution. At each phase, the family unit needs different products and
product styles.
5. Use-related segmentation: -
The use-related segment variables are:
Usage rate ------------- Heavy users, Medium users, Light users, Non users
Awareness status ----- Unaware, aware, interested, enthusiastic
Brand loyalty ------- -- None, same, strong

Description: -

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Usage Rate: - Segmentation to light, medium, heavy user groups of the product.
Heavy users are often a small % of the marketing but account for a high % of
total consumption.
(Product %Users) Heavy half Light half
Soaps (94%) 75% 25%
Cola (67%) 83% 17%
Beer (41%) 87% 13%
Shampoo (94%) 79% 21%
Fig: - Heavy and light users of common consumers products.

Awareness Stage: - The readiness to buy a product the some un ware, some
aware, same all informed, some are interested some desire, some intend to buy.
E.g.: - Medical tests, products, etc
Brand Loyalty: - A market can be segmented by consumer loyalty patterns.
Consumers can be loyal to brands (Coca-cola).
For e.g.: - Assume that there are five brands: A, B, C, D & E. Buyers can
be divided into four groups:
1.Hard-core Loyals: Consumers who buy same brand all the time.
A, A, A, A, A, A, A.
2.Split Loyals: consumers who are loyal to 2 or 3 brands.
A, A, B, B, A, B.
3.Shifting Loyals: Consumers shifting from one brand to another.
A, A, A, B, B, B.
4.Switchers: Consumers who show no loyalty to any brand.
A, C, E, B, D, B

6. Use situational segment:

The Use situational segment variables are: -
Time ----------- Leisure, work, rush, morning, night
Objective ----- Personal use, gift, snack, fun, achievement
Location ------ Home, work, friends home, in-store
Person -------- Self, friends, boss, peer
Description: -
Marketers recognize that the occasions or situations often determine what
consumers will purchase or consume.

7. Benefit Segmentation: -
Benefits --------------------- Quality, speed, economy, service, convenience,
prestige, value-for-the money

Description: -
- Changing life styles plays an important role in determining the product benefits.
- Benefit segmentation can be used to position various brands with in the same
product category.
E.g.: - Close-up, with a social appeal that stresses bright teeth, targeted to
young, good-lasting encourage children to brush longer, remove tartar
(Cosmetic benefit) and plaque (health benefit).
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- Benefit Segmentation is used not only to find a niche for new products, but also
to reposition established products.

8. Hybrid segmentation:
The Hybrid segmentation variables are:
Demographic/Psychographic profiles -------- Combination of demographic and
psychographic characteristics
Geodemographics -------------------------------- Young suburban
VALS (values and Life style) ----------- Actualizer, fulfilled, believer, achiever,
striver, experiencer, struggler.

Description: -
Combining several segmentation variables rather than relying on a single
segmentation base.

Benefits and cost of Market segmentation: -

Segmentation leads to greater sales, but at higher costs.

Examples of Market Segmentation:

1. Cigarettes Types of cigarettes ----- Filter, Plain

Price ------- High-priced, Medium-priced & Low-priced
Geographical ----- North India, South India, East India and
2. Refrigerators West India
Size ------ 65, 90, 165, 286, 300, 800Litres
Nature of consumers ----- Households, Industrial, Business

Density ---- Urban, Suburban

3. Washing machine Economy --- Middle, Upper income group
Benefits ----- Automatic, Semi-automatic

Performing Market Segmentation: -

1. Define the problem or determine the use to be made of research.
2. Select a segment basis:
a) General consumer characteristics -- Demographic, Geographic,
Socioeconomic and Life style.
b) Situation – specific consumer characteristic – Product usage, usage patterns
and benefits sought in a product.
3. Choose a set of descriptors (i.e., gender, social class, etc.) that defines, characterizes
or relates to the segmentation basis.
E.g.: - Persons respond to price differs according----- to age, income & location.
4. Select a sample of consumers that is representative of the larger population of
5. Collect data on segmentation descriptors from the sample of consumers.
- Primary data collection
6. Form segments based on chosen consumer description
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Heavy-use, light-users
7. Establish profiles of segments
Low income, High education, etc.
8. Translate the results into Marketing strategy

Product Positioning: -
Positioning is essentially a battle for capturing place in the mind of the
A product can’t be every thing to every one. It has to do some thing to some one.
Hence, there is a need for positioning. So, positioning is the outcome of some unique
feature of the product, market and competition. This uniqueness is used as “plank”.
1. Positioning on Health plank. E.g.: - Complain as Health drink.
2. Positioning on Luxury plank. E.g.: - Oberoi hotel chain.
3. Positioning on Economy plank. E.g.: - Bajaj, Nirma.
4. Positioning on Fashion plank. E.g.: - Vimal.
5. Positioning on Efficiency plank. E.g.: - Hero Honda is positioned on fuel
6. Positioning on Energy plank. E.g.: - Boost.

Market Positioning: -
It is the act of establishing and communicating the products key distinctive
benefits in the market. (Product positioning)
Market positioning consists of setting the competitive positioning for the
product and creating a detailed marketing plan.

E.g.: - Sony is positioned on Quality.

Tide is positioned as a powerful, all-purpose family detergent.
Toyota is positioned on economy.
Mercedes is positioned on Economy.
Volvo is positioned on Safety.

A Products position is a set of perceptions, impressions and feelings that

consumers hold for the product compared with competing products.

Steps for Positioning strategy: -

1. Identify the tools for competitive differentiation.
2. Select the right competitive differentiation
3. Communicate the company’s positioning.
1. Identify the tools for competitive differentiation: -
Product Services Personnel Image

Features Delivery Competence Symbol

Quality Installation Courtesy
Durability Customer training Credibility Atmosphere
Reliability Consulting service Reliability Events
Reparability Repair 12 Responsiveness
Style Miscellaneous Communication
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2. Select the right competitive differentiation: -

After identifying several potential competitive differences it is to build a
positioning strategy by choosing one competitive difference.
a). Differences to Promote: -
1. Importance - High valued benefit
2. Distinctive - Added value
3. Superior - Superior to obtain the benefit
4. Communicable - Difference in communicable & visible to buyers.
5. Preemptive - Cannot be easily copied by competitors.
6. Affordable - Buyers afford to pay for the difference.
7. Profitable - Company find profitable to introduce the difference.
b). Different ways to Promote: -
A company should develop a unique selling proposition (USP) to promote
benefit to the target market.
E.g.: - Volvo promotes safety
Colgate promotes anticavity protection.
Captain cook promotes free flowing salt.
The different ways to promote are: “Best quality”, “Best price”, “Best
value”’ “Most advanced technology” and “Lowest price”.
Positioning errors: -
1). Under positioning – Buyers having only a vague idea of the brand. Buyers
make no sense anything special about it.
2). Over positioning – Buyers having too narrow image of the brand.
E.g.: - TV -------- 10,000 ---- Consumer thinking
TV -------- 4,0000 ---- Company offers
3). Confused positioning – Buyers having confused image of the brand resulting
from changing too many brands positioning too frequently.
4). Doubtful positioning – Buyers find hard to believe the brand claims in view
of the products features, price or manufacturer.
Once positioning-problem is solved it will be easier for the company to
solve the marketing-mix problem. The 4P’s are essential tactical details of
positioning strategy.
Positioning strategies: -
1. Product attribute positioning - Biggest soap, smallest car.
2. Benefit positioning - Toothpaste, antidandruff.
3. Use/application positioning - Winter, shampoo (Mon, Wed, Fri, Sat)
4. User positioning - kids tooth paste (Pepsodent), Baby shampoo
5. Competitor positioning - ATM’s, Computerized.
6. Product category positioning - Sprite, Limca, Lemoneez
7. Quality/Price positioning - Highest quality/Highest price
Lowest quality/Lowest Price
3. Communicate the company’s positioning: -

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After developing a clear positioning strategy, it is must to communicate it

effectively to the target customers.
E.g.: - Captain cook-free flowing salt
Quality is communicated through physical signs, price, packaging,
distribution, advertising and promotions, which should support the brand’s image.

Positioning Analysis: -
The technique used for determining the appropriate positioning for a brand is
perceptual mapping.
Perceptual mapping is usually represented on two-dimensional scales, so that
the marketing manager can readily see where his own brand is positioned in the
mind of his prospect consumers and in relation to other brands.
Perceptual mapping technique identifies the two dimensions that differentiate
consumer perceptions of products and the positions of existing products on these