CONSUMER BEHAVIOUR: AN INTRODUCTION

WHAT IS CONSUMER
BEHAVIOUR?

▪ We all ‘play consumers’ every waking moment of our lives (indeed, even
when we are asleep), don’t we?

▪ Think of all the *products (goods, services, experiences, ideas...) you consume
through a typical day.
[*A product is a potentially valuable bundle of benefits.]
 CONSUMER
BEHAVIOUR

The study of individuals, groups, or organizations and

the processes they use to select, secure, use, and dispose of

products (goods, services, etc.) to satisfy needs

and the impacts that these processes have
on the consumer and society.
 CONSUMPTION AND
VALUE

▪ Consumption is the set of activities a consumer undertakes –

before, during, and long after purchase – that transforms a
product into value.
▪ Consumers either don’t consume products that do not deliver
value to them – or if they do, they won’t repeat the ‘mistake’!
▪ What is value, then?
▪ Value = Benefits – Costs
 CONSUMPTION: THE
CONSEQUENCES

Whom/what do your actions (choices) affect, other than yourself?

▪ The fortunes of the businesses (marketers) involved, of course!

▪ The economy – and the government

▪ What about the society at large?

 SO, CB HAS IMPLICATIONS
FOR…

▪ Marketing Strategy

▪ Regulatory Policy

▪ Social Marketing

▪ Informed Individuals (Consumer Welfare)

Now, how important do you think each of these is?

Marketing Strategy
and Consumer
Behavior
 THE NATURE (CONCEPTUAL MODEL)
OF CB
CONSUMER VALUE
© 2016. Cengage Learning India Pvt. Ltd. All
rights reserved.
 TYPES OF
VALUE

▪ Utilitarian value

Derived from a product that helps the consumer solve problems and accomplish
tasks that are a part of being a consumer

▪ Hedonic value

The immediate gratification that comes from experiencing some activity

 UNCOVERING CONSUMER
VALUE

▪ Value lies in the eyes of the beholder!

▪ However, universal building blocks of value can be identified

A focus on consumer value could help marketers in:

▪ New-product development
▪ Pricing
▪ Segmentation

Almquist, E., Senior, J., & Bloch, N. (2016). The Elements of Value: Measuring – and Delivering – What Consumers
Really Want. Harvard Business Review, 94(9), 46-53.
 THE VALUE
PYRAMID

Social Impact (Level-4)

Life-changing (Level-3)

Emotional (Level-2)

Functional (Level-1)
THE
VALUE
PYRAMID
 IDENTIFYING THE ELEMENTS OF
VALUE

▪ Laddering (Consumer Benefit Ladder)

Don’t take customers at face value; probe further!

The Value of Value to Marketers:

▪ Stronger customer loyalty and advocacy

▪ Greater acceptance of new products
▪ Sustained revenue growth
 CUSTOMER LOYALTY (&
ADVOCACY)

Net Promoter Score (NPS):

“How likely are you to recommend XYZ to your friends/colleagues?”

The better the performance on key value elements, the greater the loyalty
 (SUSTAINED) REVENUE
GROWTH

Higher scores on *multiple value elements correlated with:

▪ Higher revenue
▪ Faster and sustained revenue growth

Marketers should:

▪ Improve performance on existing value elements

▪ Add relevant and feasible new (value) elements
 PRIORITISING VALUE
ELEMENTS

▪ Salience of value elements varies with industry

(“overall value perception” being constant, and preceding all other elements).

▪ Emotional (‘Level-2’) value elements can be deal-makers!

ACTIVITY
Choose an industry and comment on:
▪ The value elements that need to be strengthened and
▪ The new ones that need to be added
CONSUMER DECISION-MAKING
 THE HIERARCHY-OF-EFFECTS
MODEL

Awareness

Knowledge

Liking

Preference

Conviction

Purchas
e of Advertising Effectiveness.
Lavidge, R. J., & Steiner, G. A. (1961). A Model for Predictive Measurements
Journal of Marketing, 25(6), 59–62.
 THE TRADITIONAL (PURCHASE)
FUNNEL

The Purchase
Funnel
CONSUME
R
Active
DECISION Evaluation
JOURNEY

Initial
Moment of
Consideration Decision Purchase
Set

Post-purchase
Experience

Court, D., Elzinga, D., Mulder, S., & Vetvik, O. J. (2009). The Consumer Decision Journey. McKinsey Quarterly, 3, 1-11.
 THE PURCHASE
FUNNEL

CONSUMER
▪ Decision-making: Linear

▪ Choices narrowed down systematically

MARKETER
▪ All stages equally important*

▪ Goal: push products/information at each stage

▪ One-way communication

▪ Heavy emphasis on marketer-driven touchpoints through paid, mostly mass,

media
 CONSUMER DECISION
JOURNEY

CONSUMER
▪ Decision-making: Circular

▪ Choices narrowed down OR broadened

MARKETER
▪ Focus on the ‘right’ stage(s)

▪ Goal: pull demand for products/ information at the right stage(s)

▪ Two-way communication

▪ Emphasise the right (customer-driven) touchpoints through owned and

earned media (e.g. PoP/In-store, Content Marketing)