CONSUMER BEHAVIOUR CIE 2

A1. What is Geo-demographic clustering ? Explain.

Geo-demographic clustering is a technique used in marketing and business to understand
customer bases by segmenting them into groups based on where they live and their
characteristics. It combines geographic data (geo) with demographic information (demo) to
create a more complete picture of potential customers.
Data Collection: Demographic data like age, income, education level, and family structure is
collected for a specific region. This data can come from census reports, surveys, or commercial
providers. Geographic data includes zip codes, neighborhoods, or even specific addresses.
Clustering Analysis: Statistical techniques, like K-means clustering, are used to group areas
with similar demographics together. Imagine a scatter plot where each dot represents a
location and its position reflects its demographic makeup. Clustering algorithms find groups of
dots that are close together, suggesting similar demographics.

B1. Write a note on Psychographic segmentation

Psychographic segmentation is a market research technique that divides consumers into
groups based on their psychological characteristics. These characteristics include:
 Values
 Beliefs
 Attitudes
 Interests
 Lifestyle
 Personality
By understanding these factors, marketers can better understand what motivates consumers
to buy and tailor their messaging and products accordingly. Here are some key benefits of
using psychographic segmentation:
 More Targeted Marketing: Reach the right audience with the right message.
 Deeper Customer Understanding: Go beyond demographics to understand "why"
people buy.
 Effective Product Development: Create products that resonate with specific segments
 Improved Brand Positioning: Align your brand with the values of your target audience.

B2. Write a note on consumer analysis

Consumer analysis is the practice of understanding the behavior of consumers and their needs
in order to create or improve products or services. It is a critical element of product
development and marketing.
To be able to do consumer analysis effectively, it is important to understand the following
concepts:
1. Consumer Behavior: The way in which consumers interact with products and services.
2. Needs: The things that consumers want or need and the way they use products and services
to satisfy those needs.
3. Attitudes: The way consumers feel about products and services.
4. Behaviors: The actions that consumers take as a result of their attitudes and needs.
5. Markets: The places where products and services are sold and where consumers can find
them.
6. Consumer research: Activities that are used to collect information about consumers,
including surveys, interviews, focus groups, and observation.
B3. Explain the concept of Diffusion of innovation.
 The diffusion of innovations theory describes the pattern and speed at which new
ideas, practices, or products spread through a population.
 The main players in the theory are innovators, early adopters, early majority, late
majority, and laggards.
 In marketing, this diffusion of innovations theory is often applied to help understand
and promote the adoption of new products.
 The diffusion of innovations theory can also be used in areas such as public health to
encourage populations to adopt new, healthy behaviors.
In general, innovators and early adopters are open to the possibility of risk that comes
with trying our new innovations, technologies, or ideas. Laggards, on the other hand,
are risk-averse and set in their ways of doing things. Eventually, the integration of an
innovation into mainstream society makes it impossible for them to conduct their daily
life (and work) without it. As a result, they are forced to begin using it.

C1. Explain various stages of consumer decision making process

Generally speaking, the consumer decision-making process involves five basic steps
1. Problem recognition
The first step of the consumer decision-making process is recognizing the need for a
service or product. Need recognition, whether prompted internally or externally, results in the
same response: a want. Once consumers recognize a want, they need to gather information to
understand how they can fulfill that want, which leads to step two.
But how can you influence consumers at this stage? Since internal stimulus comes from
within and includes basic impulses like hunger or a change in lifestyle, focus your sales and
marketing efforts on external stimulus.
Example: Winter is coming. This particular customer has several light jackets, but she’ll need a
heavy-duty winter coat if she’s going to survive the snow and lower temperatures.

2. Information search
When researching their options, consumers again rely on internal and external factors,
as well as past interactions with a product or brand, both positive and negative. In the
information stage, they may browse through options at a physical location or consult online
resources, such as Google or customer reviews.
Another important strategy is word of mouth—since consumers trust each other more
than they do businesses; make sure to include consumer-generated content, like customer
reviews or video testimonials, on your website.
Example: The customer searches “women’s winter coats” on Google to see what options are out
there. When she sees someone with a cute coat, she asks them where they bought it and what they
think of that brand.

3. Alternatives evaluation
At this point in the consumer decision-making process, prospective buyers have
developed criteria for what they want in a product. Now they weigh their prospective choices
against comparable alternatives.
Alternatives may present themselves in the form of lower prices, additional product
benefits, product availability, or something as personal as color or style options. Your
marketing material should be geared towards convincing consumers that your product is
superior to other alternatives.
 Example: The customer compares a few brands that she likes. She knows that she wants a
brightly colored coat that will complement the rest of her wardrobe, and though she would rather
spend less money, she also wants to find a coat made from sustainable materials.

4. Purchase decision
This is the moment the consumer has been waiting for: the purchase. Once they have
gathered all the facts, including feedback from previous customers, consumers should arrive at
a logical conclusion on the product or service to purchase.
Example: The customer finds a pink winter coat that’s on sale for 20% off. After confirming that
the brand uses sustainable materials and asking friends for their feedback, she orders the coat
online.

5. Post-purchase evaluation
This part of the consumer decision-making process involves reflection from both the
consumer and the seller. As a seller, you should try to gauge the following:
 Did the purchase meet the need the consumer identified?
 Is the customer happy with the purchase?
 How can you continue to engage with this customer?
Remember, it’s your job to ensure your customer continues to have a positive experience with
your product. Post-purchase engagement could include follow-up emails, discount coupons,
and newsletters to entice the customer to make an additional purchase. You want to gain life-
long customers, and in an age where anyone can leave an online review, it’s more important
than ever to keep customers happy.

C2. Discuss various stages in adoption process.

Stage 1: The product awareness stage
 Becoming aware that a product exists and what it does is the first stage in the new
product adoption process.
 A familiar brand provides an advantage for new products in generating awareness
among the target audience.
 Marketing campaigns need to create awareness of the product as a solution to a well-
known problem or awareness of a less well-recognized problem and the solution
together.
Stage 2: The product interest stage
 A potential customer moves from awareness to the product interest stage when the
information about the product is of interest to them and their job to be The information
they want depends on which product adoption group they are from.
 It also depends on their intended use cases – along with details like features, price, and
customer support.
Stage 3: The product evaluation stage
 The product evaluation stage sees a sharpening of focus from the previous stage.
 The customer considers the pros and cons of giving your product and others a try.
 During this phase, your efforts should focus on communicating the best use cases,
highlighting your strongest features, and the relative advantage over competitors, and
minimizing the perceived costs of testing your product.
Stage 4: The product trial (sampling) stage
 By now the prospect has decided they’re going to try your product out.
 This might be a free trial (reducing the perceived cost mentioned above), free samples,
a product demo, or an initial purchase.
 During the product trial stage, users test your service against their specific needs.
  They see if it delivers on its value proposition; if it fits in with their tech stack; how
much effort it requires; etc.
Stage 5: The product activation stage
 The product activation stage is the step we’ve added to the typical five-stage
breakdown.
 The jump from agreeing to test a product out to committing to it long-term is too great
to treat as one step. Pushing for widespread adoption directly at this step in the
customer journey is premature. It’s only when you know that a user has activated –
experienced value for the first time – that they can be convinced to stay.
 So, you should include an activation stage, focused on making sure that your newly-
acquired customers get that benefit fast.
Stage 6: The product adoption stage
 Activated users are now primed to be convinced that the product is right for them.
 In this last stage, product teams must convince users that they’ll get enough value
regularly to justify paying for the product, learning how to use it, and foregoing
whatever the competition offers.

C3. Discuss the family life cycle in detail with a conceptual model of DSWI
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C.4. Write a note on measurement of social class.

Role of social class in consumer behavior: Social class plays a significant role in consumer
behavior as it influences individuals’ preferences, aspirations, purchasing decisions, and
brand loyalty.

Social class influence consumer purchasing decisions: Social class influences consumer
purchasing decisions by shaping individuals’ preferences, priorities, and expectations.
Different social classes have distinct needs, aspirations, and budget constraints, leading to
varying buying behaviors and brand choices.

Social class can change over time: Social class can change over time through social
mobility. Factors such as education, employment opportunities, and economic circumstances
can contribute to upward or downward mobility, allowing individuals to transition between
social classes.

Social class indicators: Social class indicators include income, wealth, occupation,
education, lifestyle choices, and social networks. These factors provide insights into an
individual’s social class position and associated consumer behavior.

Social class affects brand loyalty: Social class affects brand loyalty by influencing
individuals’ identification with certain brands that align with their social class values and
aspirations. Consumers from specific social classes may develop strong brand loyalty based
on the perceived fit between the brand’s image and their desired social identity.

To target different social classes: To target different social classes, businesses can develop
segmented marketing strategies that align with the characteristics, preferences, and
consumption patterns of each class. This includes customizing product offerings, messaging,
pricing, distribution channels, and promotional activities.