Consumer Behaviour

December 2023 Examination

Q1. A study in 2021 by People Research on India’s Consumer Economy (PRICE) in

partnership with the National Payments Corporation of India on Digital Payments has
estimated that around 61% of Indian households will be doing digital payments by 2025 if
the enabling environment for that is created. The break-up of the households across 3 broad
income groups viz. Rich, Middle Class and Poor for digital payments is as under:

No. of Households in

Class Millions expected to do

% Share

Digital Payments by 2025

Rich 36.0 23.6%

Middle Class 61.0 40.2%

Poor 55.0 36.2%

Total 152.0 100.0%

It is obvious that the Poor Class is going to be much bigger in Digital Payments compared to
the Rich and almost similar in share compared to the Middle Class, though their average
ticket size is going to be smaller. It is also clear that in order the realise the potential
number of 55 million Households the poor will need the highest support and hand-holding

From a consumer buying perspective what are the things think the Government Authorities
along with banks and financial institutions do to enable a faster adoption of Digital
Payments across the poorer and economically backward sections of the society. (10 Marks)
Ans 1.

Introduction

The digital economy, electronic commerce and electronic banking are now being leveraged within and
across new technologies and wider global networks, especially the Internet. Increasing use of internet,
electronic devices and government initiatives like Digital India with a view to transform India into a
digital society through cashless transactions. After demonetization in India, digital payment system
emerged tremendously. In recent times, there have been many changes in the payment system such as
digital wallet, UPI, AEPS, QR code and BHIM app for the seamless shift towards digital payments. This
study examines customer perception towards digital payments. Structured questionnaire was used as a
research instrument to understand consumer perception about digital payments.

Digital India is a flagship program of the Government of India which aims to transform India into a
digitally empowered country. "Faceless, Paperless, Cashless" is one of the stated tasks of Digital India, as
part of government reforms Prime Minister Shri Narendra Modi demonetized the high value currency of
Rupee. 500 and 1000 in November 2016 and also launched the Digital India initiative in 2015. These
initiatives have given a massive boost to the digital payment system in the country. The government's
other initiatives like BHIM and UPI are helping drive rapid adoption of digital payments. Electronics
consumer transactions made at point of sale (POS) for services and products through internet banking or
mobile banking using smart phones or card payments are called digital payments.

Concept & Application

From a consumer purchasing perspective, the following are some of the things that banks and
financial institutions as well as government officials can do to enable faster adoption of digital
payments among the poor and economically backward sections of the society:

Financial literacy and education: Implement comprehensive financial literacy programs especially
targeted at poorer sections. These programs should educate individuals about the benefits and uses of
digital payment methods, as well as address any misconceptions or concerns.

Accessible Infrastructure: Ensure availability of affordable smartphones and other necessary devices for
digital transactions. Collaborate with technology providers to offer budget-friendly devices or provide
subsidies to make them more accessible to the economically disadvantaged.
Simplified digital solutions: Simplifying onboarding processes for digital payment platforms to make it
easier for individuals from economically backward classes to register and start using these services. This
includes reducing documentation requirements and ensuring user-friendly interfaces.

Incentives and subsidies: Launch incentive programs and cashback schemes specifically designed for
individuals from economically backward backgrounds. These incentives can act as a motivation for them
to adopt digital payment methods and experience the benefits first-hand

Localized Language Support: Provide digital payment platforms with support for local languages to cater
to the diverse linguistic landscape in economically backward areas. This ensures that users feel
comfortable and confident while navigating through the digital payment interface.

Support for digital identity: Implement strong digital identity systems like Aadhaar in India to enable
easy access to digital financial services and ensure security and privacy of personal information in these
systems.

Microfinance and microloans: Collaborate with microfinance institutions to provide small loans for
smartphone purchases and digital literacy training. Provide micro loans to entrepreneurs and small
business owners in underserved communities to boost digital payment acceptance.

Agent Banking and Mobile Wallets: Establish a strong network of banking agents in rural and
economically backward areas. These agents can help individuals understand and use digital payment
services. Mobile banking vans and rural outreach programs can also play an important role in this
regard.

Financial Inclusion Initiative: Implement government-led financial inclusion programs such as the
Pradhan Mantri Jan Dhan Yojana in India, which provide access to basic banking services for all citizens.
Link social welfare benefits and government subsidies to digital payment platforms.

Collaboration and Partnership: Collaborate with non-governmental organizations (NGOs) and local
community bodies to conduct awareness campaigns and training sessions on digital payments. These
organizations often have a deep understanding of local needs and can effectively communicate the
benefits of digital transactions.

Public Awareness Campaign: Launch public awareness campaigns to inform individuals about the
benefits of digital payments, focusing on issues such as safety, security and convenience. Use local
community leaders and influencers to promote digital payment adoption.

Secure and transparent transactions: Emphasize security and transparency of digital transactions.
Building trust is important for individuals who may be sceptical or unfamiliar with digital payment
methods. Assurance of secure transactions can reduce concerns and encourage adoption.

Here are some specific examples of initiatives that could be implemented:

• The government may provide subsidies to mobile operators to offer free or low-cost mobile data plans
to people below a certain income threshold. This will make it more affordable for people from poorer
sections of the society to access the internet and use digital payment services.

• Banks and financial institutions may offer free or low-cost basic bank accounts to people below a
certain income threshold. This will give them access to digital payment services without paying high
fees.

• Government and banks can work together to set up digital payment collection points in rural and
deprived communities. These collection points will allow people to make digital payments without
having to travel long distances to a bank branch or ATM.

• The government may provide tax exemptions or other incentives to merchants accepting digital
payments. This will encourage more merchants to accept digital payments, making it easier for people
from the poorer sections of the society to use it.

• Banks and financial institutions can develop innovative digital payment solutions that are tailored to
the needs of the poor. For example, they could develop a mobile app that allows people to make digital
payments using a simple feature phone.

By taking these steps, government officials, banks and financial institutions can help in faster adoption
of digital payments among the poor and economically backward sections of the society.

Conclusion
By implementing these measures, government authorities, banks and financial institutions can promote
financial inclusion and accelerate the adoption of digital payments among the disadvantaged sections of
the society, which will ultimately boost economic growth and reduce dependence on cash transactions.
Will happen. It is important to address these challenges to enable rapid adoption of digital payments
among the poor and economically backward sections of the society. By doing this we can help create a
more inclusive and equitable society.

Q2. Age has 2 broad categories – chronological age and Subjective Age which is different
from chronological age. Subjective Age has 4 dimensions. Analyse how the 4 dimensions of
Age will impact the purchase choices for consumers buying cosmetics and ready-to-wear
clothes. (10 marks)

Ans 2.

Introduction

Consumer buying behavior studies how and why individuals purchase goods or services. Understanding
consumer behavior is important for businesses to create effective marketing strategies that attract
potential customers and increase sales.
Consumer behavior is influenced by many factors including psychological, cultural, social and economic.
These factors vary greatly depending on the individual, background, and circumstances. Additionally,
you can segment these consumers based on their behavior, known as Behavioral segmentation, to
further personalize each customer touch point. As a business owner or marketer, it is essential to
understand the psychology behind consumer purchasing behavior. By understanding how and why
people make purchasing decisions, you can tailor your marketing strategies and improve your chances
of success.

Concept & Application

The effect of aging on consumer behavior has been the subject of much research in recent
years. Studies have shown that aging significantly affects consumer behavior, including
changes in consumer preferences, attitudes, and decision-making processes. An important
aspect of consumer behavior affected by aging is how individuals process information. As
people age, their cognitive processing abilities decline, affecting their decision-making abilities
when purchasing products and services. Another area of consumer behavior that is affected by
aging is product preferences. Older consumers have different product preferences than
younger consumers.
 The 4 dimensions of age - cognitive age, physical age, social age, and psychological age - can
significantly impact the purchase choices of consumers when it comes to cosmetics and ready-to-wear
clothes. Let's analyze how each dimension influences these choices:

1. Cognitive Age: This refers to the intellectual capacity of a person and their ability to learn and
understand new things. Consumers with higher cognitive ages may be more interested in trying new
cosmetic products and clothing trends. They may also be more likely to research products before making
a purchase.

2. Physical age: It refers to the physical appearance and health of a person. Consumers who are more
concerned about their physical appearance are more likely to purchase cosmetics and clothing that
make them look and feel younger. They may also be more willing to spend money on premium
products. They may prefer clothes that are more fitted, stylish and in line with current fashion trends. In
contrast, older consumers may prefer products that address specific skin concerns, such as wrinkles or
age spots. They can choose clothes that are more comfortable, practical and suitable for their body
shape.

3. Social Age: It refers to a person's social status and their role in society. Consumers of higher social age
may be more likely to purchase cosmetics and clothing that are associated with success and prestige.
They may also be more likely to follow fashion trends.

4. Psychological age: This refers to a person's self-perception and how they feel about themselves.
Consumers with higher psychological age are more likely to purchase cosmetics and clothing that make
them feel confident and comfortable. They may be more likely to choose products that reflect their
personal style.

Example

• Consumers with higher cognitive ages and a keen interest in fashion may be more likely to purchase
cosmetics and clothing from emerging designers.

• Consumers wishing to maintain greater physical longevity and a youthful appearance may be more
likely to purchase anti-aging cosmetics and clothing that reflect their best attributes.

• Consumers with higher social age and corporate careers may be more likely to purchase expensive,
tailored clothing from well-known brands.

• Consumers with high psychological age and self-confidence are more likely to purchase cosmetics and
clothing that are unique and reflect their individual personality.

The Importance of Marketing Strategies for Aging Consumers

Marketing strategies play an important role in reaching and connecting with aging consumers. As the
population ages, it becomes increasingly important for businesses to understand and effectively
target this demographic. Here are several reasons that highlight the importance of marketing
strategies for older consumers in consumer behavior:

1. Growing older population: Many countries are seeing an increase in the proportion of older adults
due to longer life expectancy and declining birth rates. This demographic change means there is a
growing market of aging consumers who have unique needs and preferences.

2. Increased purchasing power: older consumers have often acquired wealth and financial stability over
their lifetime. This demographic has high disposable income, making them an attractive market for a
variety of products and services.

3. Diverse needs and preferences: Aging consumers have diverse needs and preferences. Tailoring
marketing strategies to address these specific needs, such as health-related products, retirement
planning services, and leisure activities, can increase the effectiveness of campaigns.

4. Health and Wellness Focus: With increasing age, health becomes a primary concern. Marketing
strategies that emphasize health and wellness, including products and services related to medical care,
nutrition, fitness and overall well-being, are likely to resonate with aging consumers.

5. Embracing technology: Contrary to stereotypes, many older people are embracing technology.
Marketing strategies should consider digital channels and platforms to reach older consumers who are
active online. This includes e-commerce, social media and mobile apps designed keeping their needs in
mind.

6. Building trust and loyalty: older consumers often value trust and brand loyalty. Establishing a
trustworthy brand image and maintaining consistency in product quality and customer service can build
long-term relationships with aging consumers.

7. Family influence: Marketing strategies should acknowledge the influence of family in purchasing
decisions for aging consumers. Products and services that meet the needs of both older individuals and
their families may be particularly successful.

8. Educational content: older consumers may appreciate educational content that helps them make
informed decisions. Marketing strategies may include informational materials, guides, and resources
that address their concerns and provide solutions.

9. Adapt to changing capabilities: Marketing must take into account the changing physical and
cognitive capabilities of aging consumers. Products and services designed with accessibility and ease of
use in mind may be particularly attractive.
 10. Community engagement: Building a sense of community and belonging can be a powerful
marketing strategy for aging consumers. Campaigns that emphasize shared values, experiences, and
social connections may resonate well with this demographic.

Conclusion

In conclusion, the 4 dimensions of age – cognitive age, physical age, social age and psychological age –
play an important role in shaping consumers' purchasing choices for cosmetics and ready-to-wear
clothing. Marketers and retailers need to consider these dimensions while developing and promoting
their products to effectively target different age groups and meet their specific preferences and needs.

Q3. Answer the following

a) A company in USA has developed a Gluten Meter which is device that measure the gluten
content in the food a consumer wants to consume. Gluten is a group of proteins found in
wheat, barley, rye, and their derivatives. It’s what gives dough its elasticity and helps baked
goods maintain their shape. While gluten is responsible for the desirable texture of many
baked products, it can aggravate diabetes and obesity. Since India has the highest number of
diabetics in the world this American wants to understand the attitude of people towards
Gluten and Gluten Meters. How will they be able to understand the attitude of the consumer
to this. (5 Marks)

Ans 3a.

Introduction

With global health dynamics changing rapidly, diabetes is becoming a paramount concern,
especially in countries like India, which is home to the world's largest diabetic population.
Amidst this backdrop, a new gluten meter has emerged from the United States, which aims to
measure the gluten content in foods. Gluten, although necessary for the elasticity of dough,
has been linked to serious conditions such as diabetes and obesity. For a US company planning
to launch this product in the Indian market, it is important to understand the attitude of Indian
consumers towards gluten and gluten meters.

Concept & Application

To understand the attitude of consumers towards gluten and gluten meters in India, the American
company can employ several research methods:
1. Surveys and Questionnaires: Develop structured surveys or questionnaires to gather
quantitative data on consumers' attitudes toward gluten and their awareness of gluten meter. Include
questions about dietary preferences, awareness of gluten-related issues, and perceived importance of
gluten testing.
2. Focus groups: Conduct focus group discussions with small groups of consumers to find out
their attitudes, perceptions, and experiences toward gluten. Gain qualitative insight into the factors
influencing consumer decisions and preferences.
3. In-depth Interviews: Conduct one-on-one interviews with consumers to gain an in-depth
understanding of their personal attitudes, experiences, and attitudes toward gluten and gluten meters.
Gain detailed qualitative data on specific consumer concerns and preferences.
4. Observational research: Observe consumer behavior in natural settings such as grocery
stores or restaurants to understand actual choices and reactions related to gluten-free products and
gluten meters.
5. Retail audits: Conduct audits in retail stores to assess the availability, visibility, and
popularity of gluten-free products and gluten meters. Get information about consumer preferences
based on products available in the market.
6. Cultural sensitivity research: Consider cultural nuances and regional variations in attitudes
toward gluten. India is a diverse country with diverse dietary habits and preferences.
7. Collaborate with local experts: Collaborate with local nutritionists, dieticians or food
experts to gain information about traditional dietary practices and attitudes towards gluten in different
regions of India.
8. Taste testing and product testing: Conduct taste testing or product testing for gluten-free
options or gluten meter to understand consumer preferences and acceptance.

9. Online Surveys and Panels: Use online survey platforms or consumer panels to reach a broader
audience and gather insights from a diverse group of participants.

10. Social media analysis: Analyze social media platforms to monitor conversations, comments, and
trends related to the gluten-free diet and gluten meter. Understand popular opinions, concerns and
experiences shared by consumers online.

Conclusion

By combining both quantitative and qualitative research methods, the US company can gain a
comprehensive understanding of Indian consumers' attitudes and preferences towards gluten and
gluten meters. This information can guide product development, marketing strategies and overall
business decisions in the Indian market
b) How will you use hemispheric laterization to influence consumers to buy a particular
brand of a lifestyle home theatre system like Bose.

Ans 3b.

Introduction

Hemispheric lateralization refers to the fact that the two hemispheres of the brain have
different specializations. The left hemisphere is generally associated with language, logic, and
analytical thinking, while the right hemisphere is associated with creativity, emotion, and
holistic thinking.

Marketers can use hemispheric lateralization to influence consumers to purchase a particular

brand of lifestyle home theatre system, such as Bose, by appealing to both the left and right
hemispheres of the brain. While it is important to approach marketing and advertising ethically and
responsibly, certain neuromarketing principles can be applied to influence consumer choices, including
the purchase of lifestyle home theatre systems like Bose.

Concept & Application

Here are some strategies, inspired by brain lateralization concepts, to consider:

Taking advantage of hemispheric lateralization in marketing a lifestyle home theatre system like Bose
involves engaging both the analytical and emotional aspects of consumers. Here's how you can get in
touch with it:

1. Left Brain Appeal (Analytical):

• Technical Specifications: Highlight the exact technical specifications of the home theatre system.
Provide detailed information about sound quality, frequency response and advanced features to attract
left-brained consumers who value facts and data.

• Comparative Analysis: Present side-by-side comparisons with competitors, showing why Bose offers
better technical performance. Use charts and graphs to make information easily digestible for the
analytical mind.

2. Right brain appeal (emotional):

• Immersive Experience Imagery: Use visually appealing images and videos that convey the immersive
experience of using a home theatre system. Display scenes of people enjoying movies, music or sports in
a home environment, creating an emotional connection with the product.
• Storytelling: Create compelling stories about how the Bose home theatre system enhances the
emotional entertainment experience. Use testimonials and narratives that focus on the emotional
impact of the product on users' lives.

3. Creative Branding:

• Aesthetic design: Emphasize the aesthetic design of the home theatre system. Showcase your sleek
and sophisticated look through engaging campaigns. Highlight how it can seamlessly integrate into
different home decor styles.

• Brand Personality: Develop a brand personality that resonates emotionally with consumers. Use
language and visuals that evoke feelings of luxury, relaxation and enjoyment.

4. User Friendly Features:

• Left Brain (Functionality): Clearly communicate the ease of use and functionality of the home theatre
system. Provide detailed instructions and user manuals to attract those who prioritize practicality and
efficiency.

• Right brain (experience): Emphasize user experience by focusing on features that increase
convenience and enjoyment. Highlight features like wireless connectivity, voice control, and intuitive
interfaces that contribute to a smooth and enjoyable experience.

5. Social Proof and Community:

• Left Brain (Statistics): Display statistics and data on customer satisfaction, reliability and product
longevity. Use reviews and ratings to build trust through solid evidence.

• Right Brain (Community Connection): Highlight user stories and experiences to create a sense of
community among Bose users. Encourage customers to share their emotional connections with the
product on social media, fostering a positive and supportive community.

Conclusion

By balancing analytical and emotional aspects in marketing, brands can appeal to a wide range of
consumers while addressing both the technical considerations and emotional desires associated with
lifestyle home theatre systems like Bose.