Consumer Behaviour and Market Selection

1. Learning Outcomes:
After reading this lesson, you should be able to:

 understand why consumers buy a particular product,

 identify factors that influence their choices,
 appreciate the causes of changing tastes and preferences of the consumers,
 understand that buyer’s needs and preferences differ and similar buyers can be
grouped together(segmentation),
 realize that marketers select one or more segments that are more profitable than
others(targeting),
 know how and why marketers design and communicate different benefits of
company’s offerings for each targeted segment.

2. Introduction
Marketers need to connect fully with the customers, understand their daily lives and
changes in their buying patterns that take place to provide them with right product in
the right way. They have the responsibility of creating awareness about the unique
selling features and points of their products to their consumers. They cannot have
similar promotion strategies for all products or services and individuals as every product
or service is unique collection of features and each individual has different expectations
and requirements to be fulfilled. Thus, the marketers apply the idea of STP
(Segmentation, Targeting and Positioning) for providing satisfaction to their esteemed
customers. But for this, they need to understand the consumer’s psychology, behaviour,
aspirations, tastes and preferences etc.

3. Consumer Behaviour
Consumers respond differently to the products or services. Some like to have a liking for
particular features, while the others may not like to have the same. Everybody has
different choices and likings and wishes to act in his/her own way. This peculiar response
is, in fact, the behaviour, which explains why the particular buyer likes design A with
bright colours, a stylish packing or a stylish look of the product; while the others may
like sober colours, packing and feature of comfort with design B of a product. So it
entirely depends on the difference in the potential buyers/ consumers. The marketers or
producers aspire to know well in advance the reactions and likings of the consumers.
That is how they will be able to design their products, design the effective marketing
plan, and adopt suitable promotional strategies to sell the best to get the profits and
enough market shares.

3.1. Concept of Consumer Behaviour

Consumer behaviour refers to the behaviour that consumers display when they search
for, evaluate, purchase, use and dispose of products and services. The study of
consumer buying behaviour focuses on how individuals take decisions to spend their
available resources (time, money, effort) on consumption-related items. It includes what
they buy, why they buy, when they buy, from where they buy, how often they buy, how
often they use that product, how they evaluate their decision to buy that product after
the purchase, the impact of such evaluations on future purchases, and how they dispose
of the product. It is the process of deciding as to what to purchase and the physical
activity of making the purchase. To satisfy the customers, a firm needs to study the
preferences of consumers in relation to products, place, promotion and time of purchase.
To design effective marketing strategies, marketers should be able to predict the
behaviour of consumers. For example, manufacturers of fairness creams need to identify

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 Consumer Behaviour and Market Selection

specific requirements and preferences of men and women segments and design product,
advertisements, packaging accordingly.

3.2. Stages in the Consumer Buying Process

The consumer buying process can be studied in six stages with actual buying being only
one stage in the process. The first stage in the buying process is recognition of the need
for a product, the second stage is searching information about available alternatives, the
third stage involves evaluating these alternatives, the fourth stage entails deciding which
product should be purchased followed by actual purchase in the fifth stage and analysis
of behaviour of buyer after the purchase as the sixth stage. Usually, consumers go
through all the stages only for complex decisions. For routine products that involve less
cash outlay, the buying process is not elaborate.

Figure 1: Stages in Consumer Buying Process

The six stages are:

1. Need Recognition:
The consumer identifies an unfulfilled need. It might exist or be stimulated by the
marketer through advertising. For example, you go for shopping with your friends
and as you come across the food joints, you feel like eating something. That
suggests that you and your friends did not have any urge to eat, but on looking at
the dishes of food, the need was immediately recognised. Only on recognising the
need at first, the effort for procuring the product or service would be made.
2. Searching for Information:
On recognition of the need, the consumer starts searching for information about
various available alternatives. He may use his past information or ask friends,
relatives, watch advertisements more carefully, compare different products being
used by people around him etc. A successful information search gives a buyer all
possible alternatives in terms of price, quality, durability etc. that can be compared.
3. Evaluation of Alternatives:
To evaluate the alternatives, an evaluation criteria needs to be established. The
buyer has to evaluate the different products on the basis of the features that are
required and that are desirable.

4. Purchase Decision:

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The buyer selects the best alternative in terms of price, product features, style and
brand, availability, ease of purchase quality, after sale service, guarantee and
warrantee etc.
5. Purchase:
Time gap between decision to purchase and the actual purchase depends on the
nature of the product. For products that involve a big financial outlay, there may be a
time gap between purchase decision and actual purchase. Product availability also
plays an important role. For e.g. a consumer who wishes to buy a car in pink might
wait for some time if that colour is presently out of stock.
6. Post-Purchase Evaluation:
After purchasing the product and using it for some time, the buyer evaluates if the
decision to buy the product was appropriate. If he is satisfied, he will be loyal, make
repeated purchases, recommend the product to others in his family and friends etc.
However, if he is not satisfied, he will neither purchase it again himself nor
recommend it others.
The study of consumer buying process in these stages helps the marketer in
formulating strategies according to the stage of the buyer.

3.3. Types of Consumer Buying Behaviour

Consumer buying behaviour can be studied as a continuum of four broad categories from
impulse buying, routine/everyday decision-making, and limited decision-making to
extensive decision-making. As we move along the continuum, the time taken for
decision-making increases, the expense involved increases and accordingly the risk
increases as the expenses that involve greater expenditure are irreversible. High
involvement purchases include high priced goods like car, home and products or the
goods that are visible to others like dress and jewellery for a family function. These
buying behaviours are discussed below:

Figure 2: Types of Consumer Buying Behaviour

Impulse
Buying

Types of
Extensive Consumer Routine
Decision Decision
Making Buying Making
Behavior

Limited
Decision
Making

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 Impulse Buying: In this situation, there is no conscious planning and the decision is
spontaneous. The consumer just looks at a product or a service, is attracted towards
it wishes to acquire and possess so he purchases it.
 Routine/Everyday Decision-Making: This category comprises products which are
frequently purchased with very little search effort. These are the necessities of life.
Examples include items of daily consumption like bread, soft drinks, toothpaste,
vegetables and fruits etc.
 Limited Decision-Making: The consumer takes little more time to assess and
decide for the purchase, if a product is bought occasionally, and the buyer is familiar
with the product category but needs further or more information about new brands,
designs and trends. This kind of behaviour is known as 'limited decision-making' and
requires a little amount of time for information gathering and taking a decision.
Examples include clothes, shoes where the product class is known but decision
relating to brand, colour, design has to be taken.
 Extensive Decision-Making: This is done for complex, expensive and infrequently
bought products like cars, mobile phones, homes, computers, motor cycle etc.
Buyers spend a lot of time and effort in seeking information and deciding as the
product is visible to others, expensive, to be used for long term and the decision
reversal cost is very high. Buyers collect information from the website of company,
advertisements, friends and relatives, sales personnel at the point of sale etc.
The purchase of the same product may bring forth different buying behaviour in
different situations and accordingly the product may shift from one category to the
next according to the situation. For example, going out for dinner may be extensive
decision making in case of an occasion of birthday or anniversary of a family
member, but limited decision making in case the food could not be cooked due to
some engagements. This buying behaviour differs also from consumer to consumer
because of their basic nature, attitudes, perception, income class etc.

Value Addition 1: Activity

Types of Buying Behaviour
Classify all the purchases inclusive of all kinds of items that you purchased during the
period of last three months under the following heads:
 Impulsive
 Routine
 Limited Decision-Making
 Extensive Decision-Making

3.4. Factors Influencing Consumer Buying Decision

Factors influencing Consumer’s purchase decision can be classified in four broad
categories:

Figure 3: Factors Influencing the Purchase Decision of Consumers

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1. Culture and Sub-culture:

Culture is sum total of knowledge, beliefs, art, traditions, morals, customs, laws, set of
ideas and attitudes and all habits that a person shows as a part of being a member of
the society. Each society has its own culture. Our behaviours and actions derive their
roots from our culture. Within each culture there are sub cultures. Different societies
have different cultural values. Cultural factors may be classified into following
categories:
 Religions:
People belonging to different religions have different buying behaviours. For
example, Hindus buy new things and give gifts to friends and relatives during
Diwali whereas Christians do that on Christmas.
 Nationalities:
Culture varies from one country to another. For example all Indians have almost
similar culture, family values, looking after children when they are young and
children looking after parents when they are old, culture of marriage, education
etc varies in different countries.
 Geographic Regions:
The food habits, dressing, ways of performing worship of north Indians vary
significantly from those of South Indians. For example, South Indian females
wear white for pooja while white is considered inauspicious in North India.

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 Racial Groups and Castes: People of different castes differ in their buying
preferences. For e.g. most of the Hindus prefer vegetarian foods whereas Muslims
and Sikhs prefer non vegetarian food on important celebrations.

2. Social Factors:
The consumer though is an individual and has his/her own likings and preferences, yet
he/she is a social being and, therefore, is affected by the society and such factors.
Consumer desires, wants, tastes and preferences, buying motives etc. are influenced by
opinion leaders, family members, reference groups and culture of the social circle.
 Opinion leaders:
Marketers use spokespersons/ opinion leaders to market their products. Spokesperson
may be a star personality or people in the society who set standards in trends. For
example Sachin Tendulkar makes statements “Boost is the secret of my energy” in the
Boost advertisement. Such opinions of the social personalities do affect the buying
behaviour and the children use this product for the strength and energy. Similarly Milkha
Singh and Amitabh Bacchan act as spokespersons for Chyawanprash so that people buy
that brand of Chyawanprash and stay young even in their old age. The celebrities are
role models for the people and have strong influence on their thinking. That is the reason
why celebrity endorsements are used in advertising.
 Family members:
Family as a buying organisation strongly influences the purchase decisions. Family is the
most indispensable group a person belongs to. With both husband and wife as earning
members the female members exert strong influence on the decisions. Also, as the
parents have less time for children, to alleviate the guilt, they involve children also in
buying decisions. They also give their children more money to spend themselves
because of their guilt.
 Reference Groups:
Individual associates with the group and takes on many of the characteristics of the
group members. Family, friends, colleagues, neighbours may influence a person’s
attitude and behaviour positively or negatively. People have desires in accordance to the
groups they belong to. For e.g. If a person’s colleagues go for a foreign trip once a year,
he would also aspire to be a part of that group. Some groups may be such that one
would wish to be disassociated from them like, Honda tries to disassociate from the
"biker" group.

 Culture of the Social Circle:

A group of individuals who have similar occupation, education, income, wealth, race,
ethnic groups and possessions form a social class. Social class influences many aspects
of our lives. Social class determines the types, quality, and quantity of products that a
person buys or uses. For e.g. upper class people prefer luxury cars, Lower class people
prefer to buy from nearby shops and do not engage in much pre purchase information
gathering. In women apparel industry brands like Madame, Biba, Pantaloons, Westside,
Global Desi, etc each project definite class images.

Influence of opinion leaders, Family, reference groups and social classes are all social
influences on consumer buying behaviour.

3. Personal Factors:
Personal factors like gender, age, education, occupation, income, religion, family size
influence decision making. They are unique to each person and have a very direct impact
on the buying behaviour. So, it is very important for marketers to understand them.
They include:

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 Age:
Product preferences of a person change with age. For example, small children are
happy with small toys or chocolates. However as they grow, they demand
complicated toys.

 Changing Roles:
Different people buy different types of goods over their lifetime according to their
changing roles. Roles decide the expectations from the person’s position in the
group. For example a person assumes role of a husband, father, employer, employee
in different situations. Marketers must continue to update information according to
changes in roles. For e.g. a person prefers to wear a T shirt and travel by motor bike
in college days switches to a formal shirt and prefers to travel by car when starts
working.

 Critical life events:

Major events in the life of a person influence his buying behaviour. For example, a
girl purchases different types of clothes when she is a teenager, when she gets
married, when she becomes a mother and when she grows old.

 Occupation and finances:

A person’s occupation and the amount of finances available with him influence his
buying behaviour. A salaried person with limited finances may buy an economy class
model like Alto whereas a person who has more finances might buy SX4.

Value Addition 2: Activity

Factors Influencing Consumer Buying Behaviour
You go out for shopping with your parents, sister, wife and children. After some
time, everybody feels like having some refreshments. Young kids in the group opt
to have soft drinks; your parents settle for coffee, you, your wife and sister need
a fresh juice.
Can you analyse the reasons behind the differences in the buying decisions of
your family members with regard to taste, need, health consciousness, price etc?

4. Psychological Factors:

Successful businesses need to understand the psychology of the consumers when they
go for buying a product. Psychological factors include:

 Buying Motives:
A motive is an internal energizing force that orients a person's activities toward
satisfying a need or achieving a goal. A.H Maslow gave a hierarchy of needs and
classified human needs into five categories; Physiological needs, Safety needs, need
for Love and Belonging, Esteem and Self Actualization Marketers need to determine
at what level of the hierarchy the consumers are to determine what motivates their
purchases.

 Perception:
Perception refers to selecting, organising and interpreting information. Information
inputs are the vibrations received by our sense organs of vision, taste, hearing,
odour and touch. Marketers may create favourable perception in the minds of

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consumers by ensuring selective exposure, selective alteration and selective

retention of information.

Selective Exposure- Marketers may highlight a special feature of their product that
has high intensity of attracting attention or satisfying a current need e.g. a sharp
drop in the price.

Selective Alteration- The marketing information that is inconsistent with beliefs may
be changed or twisted.

Selective Retention- A buyer remembers only those information inputs that support
his viewpoint and forgets those that don't. Information is interpreted by the
consumers on the basis of already existing knowledge that is stored in the memory.
Marketing strategy to be effective should reinforce that knowledge.

 Ability, Knowledge and Learning:

Knowledge is the acquaintance with the product/ service. Learning refers to changes
in a person's behaviour caused by information and experience. While making buying
decisions, buyers process information. Inexperienced buyers usually use prices as an
indicator of quality whereas those who have knowledge and expertise of a product
evaluate other characteristics also. To develop favourable opinion about the product,
marketers need to provide them information about the product through
advertisements or experience of the product by giving free sample etc.

 Attitudes:
Individual develops attitudes by experience, observation and interaction with other
people. Consumer’s attitude towards a brand and its products influence the success
or failure of the firm's marketing strategy. If the prevailing attitude of customers
towards a product is positive, marketers try to maintain it and if it is negative they
try to make it favourable. E.g. brand loyalty is an example of favourable attitude.

 Personality:
The internal qualities and patterns of behaviour that make a person form a unique
personality. Uniqueness comes from a person's heredity and personal experience.
Work holism, ambitiousness, self confidence, friendliness, quietness, sociability,
aggressiveness, competitiveness form his personality. Personality traits affect the
way people behave and their choice of products and brands. Marketers try to match
the features of the product and ambience of their store to the personality of their
customers.

 Lifestyle:
There is growing awareness about healthy lifestyles which has resulted in increase in
number of brands and variations in muesli, corn flakes, oats, innovations in flour,
health drinks etc.

Value Addition 3: Activity

Factors Influencing Consumer Buying Behaviour
Go to a nearby shopping mall, or to any large shopping space for cloth items.

1. Notice how people make selections and what they actually purchase.
2. Identify factors that influence their choices while buying.
3. Are these choices governed by: Brand, Price, Colour, Quality, Style or Design,

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Popularity or fashion etc.?

4. Classify these factors into following: Cultural Factors, Social Factors, Personal
Factors, and Psychological Factors.

Value Addition 4: Quiz

MCQs on Consumer Behaviour
Click on the link below to take a quiz on Consumer Behaviour
Source:http://highered.mheducation.com/sites/0073530042/student_view0/chapter1/m
ultiple_choice_quiz.html

4. Market Segmentation, Targeting, and Positioning

Segmenting, targeting and positioning (STP) reveals the linkages in the market in which
the firm tries to compete. It is a process in which we first split the market into smaller
groups on the basis of similar needs or characteristics (segmenting). Then the marketers
select one or a few segments to focus their marketing efforts towards this group of
related customers (Targeting). The third step involves creating a perception of key
benefits and features of the product in the targeted segment as compared to the
products of the competitors.

4.1. Market Segmentation

The process of dividing complete market into many small units which have similar
characteristics is called market segmentation. Each segment is unique. It comprises of
like minded individuals who have similar interests and thinking. The same segment
individuals respond in a similar way to the fluctuations in the market. The classification
of prospective customers on the basis of common characteristics and needs, which
distinguish them from other members of a population, is essential to develop different
promotion, distribution and product positioning strategies for each segment.
Some examples of market segmentation: Shampoo brands offer separate shampoo for
people with dry hair, damaged hair, oily hair and normal hair. Pantaloons, a women
apparel brand has a separate section for very healthy people named ALL (A Little
Larger). Health drinks like Horlicks, come in different flavors and variants like Horlicks
for women, for children etc.
Figure 4: Market Segmentation

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4.1.2. Essential Requirements for Effective Market Segmentation

Segmentation of markets should be effective as it involves cost, time and effort of the
organisation. It guides the production department as to what products with what
features and in what quantities need to be produced. Market segmentation to be
effective should meet the following criteria:
 Substantial:
The demand from each segment should be large enough in terms of number of
customers and profit potential to justify the costs involved in developing a separate
marketing mix for it. For example, there are sufficient number of women who may buy
Calcium Sandoz for women so that they may treat it as a separate segment and
manufacture a variant of calcium Sandoz especially for women.
 Measurable:
It should be possible to quantify the size, expectations, purchasing power of the
customers in the segment. For example, it should be possible to quantify the expected
demand from women who are above 35 years of age and who will be targeted for
calcium Sandoz for women
 Divisible:
The segments should be created on the basis of some meaningful basis and each
segment should have differences in characteristics and needs of buyers. For example
the marketer can create differences in dosage and tastes in calcium Sandoz for children
and women.
 Accessible:
It should be possible to reach the segment and provide service to it using existing
distribution network, advertisements and sales force. The marketer can advertise for

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both its variants at different timings on TV. Also the posters at point of sale i.e. the
chemist shops can be designed differently showing a healthy woman in calcium Sandoz
for women and a healthy child in calcium Sandoz for children.
 Difference in Response:
Each segment should respond differently to changes in a marketing strategy. For
increasing the demand among children a new taste may be developed whereas to
increase its consumption among women, price may be decreased or a quantity discount
may be offered.
 Actionable:
It should be possible to develop and implement a separate strategy for each segment.
There exists a possibility of creating differences in a product. For example, the marketers
may add some other vitamins also in addition to calcium in calcium Sandoz for children
and for women after doing some research that besides calcium what other deficiencies
are there among children and among women.

Figure 5: Essential Requirements for Effective Market Segmentation

4.1.3. Basis of Market Segmentation

The objective of segmentation is to adjust the marketing program according to the
differences in consumers. There are many such differences that can be clubbed in
different categories and then cater to the needs of the consumers. Markets may be
segmented in any of the following ways:

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4.1.3.1. Demographic Segmentation:

The consumers are grouped into homogenous groups on the basis of demographic
features, like gender, age, income, ethnicity, religion, marital status, education and
occupation. The impact of these variables is measurable and substantial.
 Gender
Men and women differ in terms of interests and preferences. This segmentation is
important in cosmetics, clothes, footwear, and jewellery. Organizations need
different marketing strategies for males and females. Fair & Lovely has separate
advertisements for its fairness cream for men and women.
 Age Group
Segments may be created on the basis of age group of the target audience. The
products and marketing strategies for kids will be different from that required for
teenagers, office goers.

Table 1: Segmentation on the basis of Age

 Income
Income influences the desires and ability to pay. Individuals may be classified as
belonging to high, middle or low income group segments as per their monthly
income. Stores meant for the higher income group have different range of
products and strategies as compared to stores which target the middle/ lower
income group. Pantaloon, Shopper’s stop, Madame, Arrow target the high income
group whereas Vishal Mega Mart, Reliance stores, Easy Day or Big Bazaar cater to
the individuals belonging to the lower income segments.
 Marital Status and presence, number and age of children
Married people purchase more of domestic appliances, groceries. People with small
kids buy baby products, toys, bicycles,etc. Travel agencies would have different
holiday packages for bachelors and married couples.
 Occupation
Office goers have different needs as compared to school / college students.
Students would prefer a beach house shirt or a funky T Shirt whereas office goers
would prefer collared shirts in soft shades for a professional look.

Value Addition 5: Activity

Market Segmentation
In your college analyse the reasons behind differences in the hair style and dress
up among the students and teachers. It can be due to cultural differences,
difference in attitude, age, friends circle (group) etc. Make a note of implications
of these differences for garment manufacturers.

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4.1.3.2. Psychographic Segmentation:

This segmentation is based on the differences in psychology and demographics
including differences in personality and lifestyle of the individuals. People within the
same demographic profile show different psychological preferences. The commonly
used psychographic variables to segment markets are:
 Personality Characteristics
They are useful when the product is similar to competing products and consumer’s
needs are not affected by other segmentation variables. Marketers select personality
characteristics that many people view positively.

 Motives
Market may be divided according to reasons for which consumer makes a purchase
like want satisfying power of the product, its appearance, brand, status, safety, and
health. Motives influence the nature and quality of product purchased and the choice
of stores from which they are purchased.

 Lifestyle Segmentation
Individuals are grouped according to their activities, interests, and opinions, how
they spend their time, importance of things in their surroundings, beliefs about
themselves and broad social issues.

Value Addition 6: Activity

Market Segmentation
For personal four wheelers available in Indian market (refer list of car sellers in India
from carewale.com, zigwheels.com etc.) Identify the different segments. List the sellers
under different segments you identify. Mention all segments under which Maruti Suzuki
positions its products.

4.1.3.3. Geographic Segmentation:

The classification of market according to various geographical variables like weather,

topography, city size, population density, and urban/rural areas is known as
geographical segmentation. Geographic variables cause differences in customers from
one region to another. Some marketers concentrate their efforts on cities of a certain
size and ignore small cities. Marketers are finding Delhi and its surrounding National
Capital Region (NCR) appealing because of growth in population, setting up of greater
number of IT and other companies. This is depicted in growth in number of malls and
multiplexes in these areas. A marketer needs different strategies for individuals living at
different places. For example, McDonald’s outlets in India specifically mention that they
do not sell beef products as it is against the religious beliefs of the people, whereas
McDonald’s in US, China, Dubai etc sell and promote beef products.

Value Addition 7: Activity

Market Segmentation
Identify products that are positioned differently across geographical boundaries. Enlist
what all characteristics vary across the geography and why.

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4.1.3.4. Behavioural Segmentation:

Firms can divide a market according to consumer’s attitude towards a product,

commonly involving some aspect of product use. How consumers use the product may
determine segmentation.

 Occasions
When is a product consumed or purchased. For example, corn flakes have
conventionally been marketed as a breakfast-related product and Kellogg’s has
advertised its cereals as breakfast cereals to be taken on the "occasion" of morning.
Recently, they are trying to expand the consumption by promoting their products as
ideal, anytime snack food.

 Rate of usage
Buyers may be classified as heavy, medium or light users depending on the
frequency of purchase.

 Benefit
Market may be divided on the basis of benefits that consumers want from the
product. Benefit segmentation is effective if the benefits can be identified, marketers
are able to segregate people into identifiable segments and the resulting segments
are accessible to the firm. E.g. different brands and variants of shampoos are
available. Consumers seek different benefits like shining hair, anti dandruff, hair fall
control, strength etc from the shampoo and accordingly they can be classified.

 Readiness
Potential buyers may be unaware of the product or aware but not interested or
interested and willing to buy. Nescafe encouraged consumers to buy its product by
setting up kiosks in leading markets.

 Loyalty Segmentation
The differences in loyalties of the customers towards a particular brand help the
marketers to classify them into smaller groups.
For example, many retail outlets offer cards to the customers that are swiped on
every purchase and points get accumulated that can be redeemed after some time in
the form of cash discounts or some gift to ensure customer loyalty

Figure 6: Basis of Market Segmentation

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Value Addition 8: Activity

Market Segmentation
Imagine a company Healthy Foods Ltd. You have to design the marketing strategy for
its new health drink. How would you classify the target market and on what basis?
Mention the market segments you identify and characteristics that vary from one
segment to another.

A research relevant for food manufacturers wherein the customers were categorised
according to the way they consumed a candy.

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Source:http://epaper.timesofindia.com/Default/Scripting/ArticleWin.asp?From=Search&Key=CAP%
2F2013%2F08%2F17%2F47%2FAr04700%2Exml&CollName=TOI_DELHI_ARCHIVE_2009&DOCID=102
534

Value Addition 10: Quiz

MCQs on Market Segmentation
Click on the link below to take a quiz on Market Segmentation.
Source:
http://highered.mheducation.com/sites/0073529931/student_view0/chapter9/multiple_c
hoice_quiz.html

4.2. Targeting
Targeting is second stage in the process STP. After segmenting the market, the
marketer selects segment/segments and targets them. Marketer starts investing
resources and effort towards the targeted segment.

Figure 7: Targeting

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4.3. Positioning
Positioning is the practice of creating and maintaining an image of a product in the minds
of the consumers. Marketers position their product by tailoring their product such that it
stands out in the market and appears to have the most desirable features. It helps in
creating a perception of brand in the minds of target audience. Marketers try to create a
unique identity of their product with the customers. Positioning can be can be based on
specific features/ attributes of the product or on the basis of price, quality, durability,
after sale guarantee/warrantee or some other benefits provided by the product.
E.g. Dabur Chyawanprash is known for enhancing strength and immunity.

Steps in Product Positioning

 Identify the target audience
 Understand their needs and preferences i.e. what your customers expect from you.
 Identify the features and benefits of the product that can be used as your Unique
Selling Propositions (USPs).
 Communicate Unique selling Propositions of your brands
 Know about your competitor’s offerings
 Promote your brand effectively by using catchy taglines and right theme and
highlighting the benefits effectively
 Maintain the position of the brand by keeping up to the expectations and never
compromising on USP’s. e.g. A Mercedes car or a Rado watch would lose their charm
if they are ordinarily priced

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Value Addition 11: Activity

Product Positioning

Imagine yourself as the manager of an organisation whose Research and Development

team has created a new product that is expected to become a hot seller. The questions
that come to your mind will be:
 Who will buy my product?
 Will there be enough buyers to operational?
You have to find out who these people and organizations are. To study their behaviour
and expectations, categorize them. Identify what groups of buyers are similar so that the
same product or service will appeal to all of them and hence can be clubbed into one
category. Since the marketing budget is limited, you would prefer to focus only on those
people you think are truly prospective buyers and would tailor your product towards
them.

Value Addition 12: Quiz

MCQs on Market Segmentation, Targeting and Positioning
Click on the link below to take a quiz on Market Segmentation, Targeting and
Positioning.
Source: http://www.learnmarketing.net/stpquiz.htm

4.4: VALS (Values, Attitudes, and Lifestyles):

VALS was developed in 1980s by a company SRI International on the basis of a

psychographic survey wherein thousands of Americans were asked questions about their
interests, values, attitude and lifestyles. It classifies adults into eight different categories
on the basis of types of mindsets on the basis of two dimensions: consumer drivers and
consumer resources. There are three primary drivers: ideals, achievement and self
expression. Consumers driven by ideals believe in knowledge and principles. Those
driven by achievement seek products and services that exhibit their success to their
peers and those driven by self expression look for socialization, physical activity, range
and risk. Differences in availability of resources determine the degree to which the buyer
articulates or curtails his expression of primary motivation. Combinations of both the
dimensions along with key demographic variables determine his resources and his
buying preferences. There are four groups with higher resources and four with limited
resources.
Innovators
Innovators are image conscious, successful, sophisticated, high self-esteem people who
have abundant resources, cultivated tastes for upscale finer goods. They exhibit values,
attitude and lifestyle. They are the most receptive to new ideas and technologies and act
as change leaders.

Thinkers
Thinkers are educated, mature, contented, comfortable, and introspective people who
value order, knowledge, and responsibility. They actively seek information for taking
decisions and are open to new ideas. They are well informed about national and
international events and are observant to environmental opportunities. They
continuously broaden their knowledge but respect social decorum. They are conventional

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and practical consumers and look for durability, functionality, and value in the products
they buy.

Achievers
Achievers have intense desire for achievement and strong commitment to career and
family. Their social lives revolve around family and their place of work. They live
conventional lives and respect authority. They actively purchase time saving devices
because of their busy lifestyle. They prefer products and services that demonstrate their
prestige to their peers.

Experiencers
Exeriencers are adolescent, enthusiastic, and spontaneous consumers who explore new
possibilities. They seek risk, variety and excitement and appreciate the latest, wacky and
the “cool” stuff. They are highly energetic and enjoy sports and outdoor recreation
activities. They are passionate consumers and spend a fairly high proportion of their
income on fashion, entertainment, and socializing.

Believers
Believers are traditional people with strong beliefs. They strongly follow traditional
established codes of family, work place, religion, society, and the nation. They express
deeply rooted moral codes. They follow customary routines, organized around home,
family, community, and social or religious organizations to which they belong. They are
predictable and loyal consumer as they choose familiar products and established brands.

Strivers
Strivers are stylish and fun-loving people who are motivated by achievement and are
concerned about the opinions and approval of others. They show impulsive buying till
their pocket allows them. They have more desires than resources. They prefer stylish
products and try to be like the people with greater material wealth.

Makers
Makers are people who are very practical, have constructive skills and motivated by self-
expression. They are self-sufficient and measure their success by fulfilling basic
necessities like possessing a house, raising children, owning a car. They revolve within a
traditional context of family, work, and recreation. They are apprehensive of new ideas
and products. They feel very strongly about individual rights. They buy basic products
and are indifferent towards material possessions other than those with a practical or
functional purpose.

Survivors
Survivors have very few resources. They are cautious customers and believe that the
world is changing too quickly. They are comfortable with the familiar and are loyal to
their favourite brands and prefer to buy at a discount. They focus on meeting basic
needs rather than fulfilling desires so, they represent a very negligible market for most
products and services.
VALS help the marketers in effectively classifying the customers and putting them under
a category and enables them to predict their buying behaviour

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4.5. Difference between Segmentation, Targeting and Positioning

The process of dividing of broad market into small segments of individuals who have
similar thinking and prefer similar products and brands is called segmentation. It is the
process of grouping consumers with similar needs and interests. It can be on the basis of
age; Kids, men and females or on the basis of life stages: school students, college
students, office goers. Two segments can be clubbed according to commonly observed
buying habits e.g. mother and kids. There is a new trend of unisex saloons, deodorants,
T- shirts, etc. which both men and women can use together.

Targeting is the process of devising marketing plans and promotional schemes according
to the tastes of the individuals of particular segment e.g. Tata Motors launched Nano
targeting the lower income group.

Positioning refers to strategies aimed at creating an image of its product in the minds of
the consumers. The marketers have to create a perception of its products in the minds of
target audience. For example, Garnier offers wide range of merchandise including
moisturizers, hair colour, under eye cream, fairness cream, anti ageing or skin tightening
cream to fight wrinkles for both men, women, teenagers and older generation.

Case Study: Nestle - Processed Food Industry player

Nestle is a leading global processed food manufacturing and marketing company.

Figure 8: Nestle’s Logo

Source: http://s3files.core77.com/blog/images/2013/04/nestle.jpg accessed on 26th September, 2014

at 3.10pm

Nestle logo is designed to position Nestle brand as being associated with ‘Good Food’.
The image of bird feeding her chicks, delivers the following messages:
1. Safe food, which a mother can trust to feed her younger ones
2. Nutritious food for younger ones to grow

The Nestle has many products for Indian market. These products are targeted to
different segments of markets and positioned uniquely to evoke certain images in mind
of the customers. We look into the marketing aspects for these products.

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