IBSAR INSTITUTE OF MANAGEMENT STUDIES, KARJAT (2010-2012)

SUBJECT

CONSUMER BUYING BEHAVIOUR

SUBMITTED TO:
PROF. AMIT RAUT

SUBMITTED BY:
SACHIN WARUNGASE MMS-III SEMESTER ROLL NO. 34 DATE: 22/10/2011

1) Is there any diversity in consumer behaviour. If yes then in what way we can study the consumer behaviour & studying the consumer behaviour it is really going to help for marketing dept. of any company and describes it all with recent innovating example. Answer: Consumer behavior can be define as "The study of individuals, groups, or organizations and the processes they use to select, secure, use, and dispose of products, services, experiences, or ideas to satisfy needs and the impacts that these processes have on the consumer and society." Yes there is diversity in consumer behaviour. The study of Consumer Behaviour is quite complex, because of many variables involved and their tendency to interact with & influence each other. These variables are divided into three major sections that have been identified as the most important general influences on Consumer Behaviour. Imagine three concentric circles, one at the outer most, one in the middle & one at the inner most, and they represent the following: 1. External Environmental Variables Influencing Behaviour : These are the factors controlled by external environments like the following form the basis of external influences over the mind of a customer (outer circle) : 1. Culture, and Sub-culture, 2. Social Class, and Social Group, 3. Family, and Inter-Personal Influences, 4. Other Influences (which are not categorised by any of the above six, like geographical, political, economical, religious environment, etc.). 2. Individual Determinants of Behaviour: Major individual determinants of Consumer Behaviour are portrayed in the middle ring. These are the human mind and its attributes. These variables are personal in nature and they are influenced by the above set of external factors and in turn influence the way consumers proceed thro a decision making process regarding products & services. They are : 1. Personality & Self-concept, 2. Motivation & Involvement, 3. Perception & Information Processing,

4. Attitudes. 3. The Consumer Decision Making Process: The buying decision comes as a product of the complex interaction of the external factors and the personal attributes. The inner most circle denotes the consumer decision making process regarding products & services, whose major steps are : 1. Problem Recognition, 2. Information Search, 3. Purchase Decision, 4. Post-Purchase Behaviour. Marketers are frequently uncertain about the variables that are at play influencing & affecting consumers. Sometimes this occurs because they dont clearly understand the extent of variables that might be having an influence. The details of all external, internal, environmental, economical etc. are discussed above. Sometimes some variables are not directly observable. Other times variables are known to the marketers but their exact nature & relative strength of influence is not apparent. In these circumstances, it is useful to understand the above mentioned concepts and how the consumers behave, so that their decision making process can be predicted to a reasonable extent. The human mind being as complex as it is, the understanding of the buying behaviour of the consumers becomes a continuous activity of application of various theories & concepts by the marketers. We take a example of Mc Donalds for diversity in consumer behavior:

There's No Beef or Pork in Any McDonald's in India... While India is one of the biggest markets in the World, it is also the only Country in the World, where McDonald's doesn't serve any beef or pork in any form, in ANY of their 123 outlets (and counting) across the country!

Instead of ground beef and pork patties, the McDonald's Menu in India features Indian burgers that are 100 percent vegetarian - burger look-a-likes of potatoes, peas, and carrots, with a little Indian spice thrown in. So what most Indian kids grow up to know as a hamburger, isn't really a hamburger.

Diets in India have been impacted by the many different religions in India for centuries now. Hindus don't eat beef. Hindu believers consider the cow scared and holy, so harming a cow...let alone eating its meat is considered a grave sin. Since a majority of the population are followers of Hinduism, there is no beef on the McDonalds' menu in India. Hindu's and Muslims (also a prominent religion in India), don't eat pork, so the McDonalds Corporation in India is quick to point out on their website (mcdonaldsinindia.com) that not only is there no beef, there is no pork or pork byproducts in any McDonalds restaurant in India.

That's not to say that McDonald's doesn't serve any non-vegetarian products in their Indian restaurants. They do serve chicken burgers and still have the one Fish Burger...but if you're a meat eater then you'll be outnumbered with their vegetarian options. What You Can Order at McDonald's in India... The international menus of McDonald's offer some interesting and varied menu items, not found in the United States or any other countries with the food chain. With almost most half the menu, if not most of it vegetarian at McDonald's in India, it makes a good choice for diners who want some healthy options - whether or not you are vegetarian!

2) What is perception? Can we change person's perception? If yes for that what the company's are doing with their product to change the perception of the consumer. If company believes we can change the customer's perception through learning process & information processing system how much it is useful or helpful? Perception can be define as It is our sensory experience of the world around us and involves both the recognition of environmental stimuli and actions in response to these stimuli.Through the perceptual process, we gain information about properties and elements of the environment that are critical to our survival. Perception not only creates our experience of the world around us; it allows us to act within our environment. Perception includes the five senses; touch, sight, taste smell and taste. Yes, we can change the persons perception. Because people perceive of you what you give to them. Following are some of the tried and tested ways of changing perception about the product of a company for the consumers.

1. Good packaging can change consumer perception: Good packaging can change consumer perception. Smaller manufacturing companies, that include private labels, have taken to innovative packaging to hit their target consumers. Lets take some examples from Indian market, Dadimas Magic mango pickle, ITS fruit tomato ketchup, Mehek Dehradoon Basmati, 24 Letter Mantra and Bread & More are some of the products available in shops with good packaging motifs. Most of these companies have an advertising budget of Rs 2-5 crore, of which a good amount is invested in packaging the product. If I am asked to do only packaging and the rest of the communication is outsourced, Id say give me the entire kitty. Jokes apart, its prudent to assign 5-7% for packaging alone, said Tarun Das of Oxygen. Agrees Rajshekhar Reddy of Sresta Bio Products: Most companies end up spending more in packaging than the product itself as packaging is an important aspect nowadays. Unless the goods stand out from the clutter, it is not sold out. We tend to review our packaging every two years. The company has launched an organic food store chain brand called 24 Letter Mantra based out of Hyderabad. We are doubling revenues on a Y-o-Y basis and I think a significant part can be attributed to good packaging, adds Mr Reddy. This was not so a few years back as packaging was not given much emphasis by the smaller companies. Technology upgradation, awareness and increased competition has helped smaller brands

establish themselves in a little time. This, backed by innovative communication ideas, promotions and packaging, has helped these companies grow. Sresta created innovative packaging for the kids meal segment with a tiffin box. Packaging has changed in the last few years with innovative technology chipping in. The standards of packing has changed as there are no restrictions in terms of use of colour, shape and even material, adds Mr Das of Oxygen that looks after the entire communication of the company. The retail boom has also helped these companies as they get a platform to showcase their products in multi-brand outlets. The consumer buying behaviour is very impulsive and it is the pricing, colour scheme, offers and packaging that attract them to buy a product if that is not an important item, adds Mr Das. Agrees Asheesh Sethi of Noshe Oceanic: A well-packaged product gives an edge over other products because the consumer might find it attractive if there is not much of a difference in the quality of the product. Groversons Paris Beauty, a lingerie brand, is a good example of packaging. Bread & More from the Kwality Group is another example of good packaging. The recent trend is to constantly evolve the packaging. No one continues with the same look for too long. Most brands that have identified the importance of packaging constantly evolve to cater to the evolving needs of the consumer, says Creativeland Asia MD Sajan Rajkurup. For Aureole Inspecs new eyewear brand Mayhem, Innocean has developed key brand visuals and packaging formats to illustrate the brands cool attitude and appeal. Sometime, even additions like a branded carry-bag help in enlarging the brand idea, says Innocean Worldwide India joint MD Vivek Srivastava. 2. The Power of a Name A brand's name is perhaps the most important factor affecting perceptions of it. In the past, before there was a wide range of brands available, a company could name a product just about anything. These days, however, it is necessary to have a memorable name that conjures up images that help to position the product. Ries and Trout favor descriptive names rather than coined ones like Kodak or Xerox. Names like DieHard for a battery, Head & Shoulders for a shampoo, Close-Up for a toothpaste, People for a gossip magazine. While it is more difficult to protect a generic name under trademark law, Ries and Trout believe that in the long run it is worth the effort and risk. In their opinion, coined names may be appropriate for new products in which a company is first to market with a sought-after product, in which case the name is not so important. Margarine is a name that does not very well position the product it is describing. The problem is that it sounds artificial and hides the true origin of the product. Ries and Trout propose that "soy butter"

would have been a much better name for positioning the product as an alternative to the more common type of butter that is made from milk. While some people might see soy in a negative light, a promotional campaign could be developed to emphasize a sort of "pride of origin" for soy butter. Another everyday is example is that of corn syrup, which is viewed by consumers as an inferior alternative to sugar. To improve the perceptions of corn syrup, one supplier began calling it "corn sugar", positioning it as an alternative to cane sugar or beet sugar. Ries and Trout 1 propose that selecting the right name is important for positioning just about anything, not just products. For example, the Clean Air Act has a name that is difficult to oppose, as do "fair trade" laws. Even a person's name impacts his or her success in life. One study showed that on average, schoolteachers grade essays written by children with names like David and Michael a full letter grade higher than those written by children with names like Hubert and Elmer. Eastern Airlines was an example of a company limited by its name. Air travel passengers always viewed it as a regional airline that served the eastern U.S., even though it served a much wider area, including the west coast. Airlines such as American and United did not have such a perception problem. (Eastern Airlines ceased operations in 1991.) Another problem that some companies face is confusion with another company that has a similar name. Consumers frequently confused the tire manufacturer B.F. Goodrich with Goodyear. The Goodyear blimp had made Goodyear tires well-known, and Goodyear frequently received credit by consumers for tire products that B.F. Goodrich has pioneered. (B.F. Goodrich eventually sold its tire business to Uniroyal.) Other companies have changed their names to something more general, and as a result create confusion with other similar-sounding companies. Take for instance The Continental Group, Inc. and The Continental Corporation. Few people confidently can say which makes cans and which sells insurance. 3. Marketing products as green can significantly change the perception Now more than ever, companies of all types looking to make a profit are investing in marketing and PR campaigns created especially to sell their green products. And the reasoning behind a companys

green strategy can be simplified to that old chestnut: a desire to appeal to more consumers and gain a larger market. But green marketing campaigns are becoming increasingly substantial as companies realise the impact their business is having on the environment, and consumers become more conscious of their buying habits.Treat green benefits as added value to a good product and you will be left with something that is appealing to the customer as well as environmentally friendly. Ottman highlights Energy Star, a labelling initiative sponsored by the US Environmental Protection Agency and the Department of Energy, which has also recently targeted the EU. Another example could be of electronics maker Panasonic Corp. is working out a go-to-schools interactive campaign to spread awareness among students on global warming and other environmental issues, to begin with. Later on, its planning a media campaign to target adults. For the first time this year, we have decided to earmark 2% of our total revenues in India for CSR (corporate social responsibility) activities, which include these upcoming campaigns. In the long term, we have a plan to go to (the) rural markets, says Sabiha Kidwai, marketing manager, Panasonic India Pvt. Ltd. Nokia India Pvt. Ltd has launched a campaign to recycle electronic waste. Consumers are encouraged to dump old mobile phones and accessories, irrespective of brand, at any of the 1,300 green recycling bins at Nokia priority dealers and Nokia care centres. According to the company, the initiative is part of Nokia Oyjs global programme, which covers 85 countries worldwide. During the campaign period of one and a half months, we have collected around 3 tonnes of ewaste, which includes a combined total of over 60,000 handsets, chargers, batteries and other accessories. We will now be extending the take-back awareness campaign across the country in the coming months, says Ambrish Bakaya, director, corporate affairs, Nokia India. 4. Changing Attitudes, Changing Brands The veil metaphor also highlights why attaining so-called attitude shift can be such a difficult undertaking. A brand owner who wishes to achieve attitudinal change will need to change the veil through which the product is seen, rather than merely change the appearance of the product itself. A major undertaking, sure, but one that can be a powerful step in advancing the brand if successful. While changing attitudes is hard, changing brands can be even more difficult. The close two-way relationship between brands and perception goes some way toward explaining why many brand

owners feel intuitively that their brands become stronger as they become embedded in the minds of more people. We know that the influence of brands on the epistemic veil means that people often filter out mistakes made by brands that they favor. But while this demonstrates just how powerful a strong brand can be as a business tool, it also shows us something else: Brands have a kind of in-built inertia. Once they become good, the resulting positive perceptions tend to stick around. Conversely, once brands become sullied, they have a tendency to stay that way too. Those involved in repositioning programs will be familiar with this phenomenon, and often describe how (despite their best efforts at re-branding), audience perceptions remain unchanged. In a commonly-cited example of brands resisting change, the poor reputation of Czech carmaker Skoda continued long after new owner Volkswagen had invested heavily in the design and build quality of the vehicles. Fortunately for the brand owner in this case, perceptions are now beginning to catch up with reality, with Skoda gaining a degree of prestige among budget car brands. (Indeed, without the presence of a highly respected brand like Volkswagen, it is doubtful that millions of veils would have ever been receptive to information coming from a small Czech carmaker, however good the news was.) While the influence exerted by a powerful brand can enable a brand-owner to hide substandard products, it can also backfire. The UKs West Coast rail service witnessed a massive and immediate rise in complaints when it changed its name to Virgin Trains. Clearly Virgin (which had bought a substantial shareholding in the business) brought with it an expectation of higher quality service and the poor standards of the train fleet became harder to ignore when associated with a new brand 5. Advertising as a tool for changing perception A significant objective of advertising is attitude change. A consumers attitude toward a product refers to his or her beliefs about, feeling toward, and purchase intentions for the product. Beliefs can be both positive (e.g., for McDonalds food: tastes good, is convenient) and negative (is high in fat). In general, it is usually very difficult to change deeply held beliefs. Thus, in most cases, the advertiser may better off trying to add a belief (e.g., beef is convenient) rather than trying to change one (beef is really not very fatty). Consumer receptivity to messages aimed at altering their beliefs will tend to vary a great deal depending on the nature of the product. For unimportant products such as soft drinks, research suggests that consumers are often persuaded by having a large number of arguments with little merit presented (e.g., the soda comes in a neat bottle, the bottle contains five percent more soda than

competing ones). In contrast, for high involvement, more important products, consumers tend to scrutinize arguments more closely, and will tend to be persuaded more by high quality arguments. Celebrity endorsements are believed to follow a similar pattern of effectiveness. The Elaboration Likelihood Model (ELM) suggests that or trivial products, a popular endorser is likely to be at least somewhat effective regardless of his or her qualifications to endorse (e.g., Bill Cosby endorses Coca Cola and Jell-O without having particular credentials to do so). On the other hand, for more important products, consumers will often scrutinize the endorsers credentials.

For example, a basket ball player may be perceived as knowledgeable about athletic shoes, but not particularly so about life insurance. In practice, many celebrities do not appear to have a strong connection to the products they endorse. Tiger Woods might be quite knowledgeable about golf carts; it is not clear why he has any particular qualifications to endorse Cadillac automobiles. 6. Brand Recognition Will Change Customer Perception Brand recognition is one of the best ways to build your business and using this method of business building can really offer you much success in whatever venture you are pursuing. Big businesses know this and use it to their advantage. Understanding brand recognition will allow you to alter the perception of your business in the eyes of the general public.

What sort of advertising have you done until now? Do people at the very least know your name and what you have to offer? If the answer is a no then you have some work to do. People in the general are of your business need to know who you are. You don't have to push everyone into your door, but having them remember the name is an issue. Getting your name recognized is the beginning of new growth. To become recognized and remembered takes some time. You don't want to build false hype and rush through this. People will never forget the false part of the hype. That will give a bad case of

long term brand rejection. My parents had a bad experience at a chain fast food type place over 10 years ago. Even though they have probably changed the entire staff several times over they will not go back for fear of something similar happening again. It is stuck in their minds.

Brand recognition is accomplished only by people seeing your logo and business name over and over again. So therefore, if you are just beginning in business or are running a marketing campaign, then you need to make sure that you have everything imprinted with your custom logo and business name. This will create the repetition that your customers and future customers need to pick your product out of a crowd time and time again.

Advertising is tricky. It can be really expensive and then it is all done so fast, and you have to do it all over again. With promotional products you get something in hand. It gets passed onto a possible customer. It will get worn or used and then others see it. There are many inexpensive products to use. There are coolers that will advertise for you on the beach. Frisbee's that will show off your name at the park. It will work for some good brand recognition.

Company believes we can change the customer's perception through learning process & information processing system how much it is useful or helpful? The study of consumers helps firms and organizations improve their marketing strategies by understanding issues such as how The psychology of how consumers think, feel, reason, and select between different alternatives (e.g., brands, products, and retailers); The psychology of how the consumer is influenced by his or her environment (e.g., culture, family, signs, media); The behavior of consumers while shopping or making other marketing decisions; Limitations in consumer knowledge or information processing abilities influence decisions and marketing outcome; How consumer motivation and decision strategies differ between products that differ in their level of importance or interest that they entail for the consumer; and How marketers can adapt and improve their marketing campaigns and marketing strategies to more effectively reach the consumer. Behavior occurs either for the individual, or in the context of a group (e.g., friends influence what kinds of clothes a person wears) or an organization (people on the job make decisions as to which products the firm should use).

Consumer behavior involves the use and disposal of products as well as the study of how they are purchased. Product use is often of great interest to the marketer, because this may influence how a product is best positioned or how we can encourage increased consumption. Since many environmental problems result from product disposal (e.g., motor oil being sent into sewage systems to save the recycling fee, or garbage piling up at landfills) this is also an area of interest.

Consumer behavior involves services and ideas as well as tangible products. The impact of consumer behavior on society is also of relevance. For example, aggressive marketing of high fat foods, or aggressive marketing of easy credit, may have serious repercussions for the national health and economy.