AMITY GLOBAL

BUSINESS SCHOOL Chandigarh

Consumer Behavior
An Introduction
AMITY GLOBAL
BUSINESS SCHOOL Chandigarh

What is
Consumer Behavior?
•The behavior that consumers display in searching for,
purchasing, using, evaluating & disposing of products &
services that ,they expect, will satisfy their needs.

•Focuses on how individuals make decisions to spend their available

resources (time, money & effort) on consumption related items.

•Decisions related to what they buy, why they buy it, when they
buy it, where they buy it, how often they buy it, how often they use
it, how they evaluate it after the purchase and the impact of such
evaluations on future purchases and how they dispose off.
AMITY GLOBAL
BUSINESS SCHOOL Chandigarh
AMITY GLOBAL
BUSINESS SCHOOL Chandigarh

This study draws on concepts

from various other disciplines
• Psychology
• Sociology
• Anthropology
• Economics
• Marketing
AMITY GLOBAL
BUSINESS SCHOOL Chandigarh

Need to study ?
‘You cannot take the consumer for
granted any more’
Therefore a sound understanding of
consumer behavior is essential for the
long run success of any marketing
program
AMITY GLOBAL
BUSINESS SCHOOL Chandigarh

Perspectives

1. Understanding and predicting consumer

behavior
2. Cause and effect relationships that
govern persuasion and/or education
AMITY GLOBAL
BUSINESS SCHOOL Chandigarh

Why is this important?

• Out of 11000 products launched by 77

companies, only 56% are present five
years later
• Only 8% of new product concepts offered
by 112 leading companies reached the
market. Out of this 83% failed to reach
marketing objectives
AMITY GLOBAL
BUSINESS SCHOOL Chandigarh

A new product must satisfy

consumer needs, not the needs
and expectations of management.

Understanding and adapting to

consumer motivation and
behaviour is not an option – it
becomes a necessity for
competitive survival
AMITY GLOBAL
BUSINESS SCHOOL Chandigarh

Dominant forces shaping

Consumer Research

• Factors that move an economy from

Production-driven to Market-driven
• Level of sophistication with which human
behaviour is understood in psychology and
other behavioural sciences
AMITY GLOBAL
BUSINESS SCHOOL Chandigarh

Environmental factors that affect

the marketing challenge
• Extent to which the supply of valid products and
services exceed consumer demand
• Ability to communicate with customers quickly
and accurately
• Existence of multiple avenues of distribution
quickly and economically
• Extent to which marketers can influence to
induce distributors to comply with overall
marketing strategy
• Economic growth, both nationally and globally
AMITY GLOBAL
BUSINESS SCHOOL Chandigarh

All managers must become astute

analysts of Consumer motivation
and Behavior

Three foundations for marketing decisions

• Experience
• Intuition
• Research
AMITY GLOBAL
BUSINESS SCHOOL Chandigarh

Enhancing Consumer Value-added

Marketers have to constantly innovate

after understanding their consumers to
strip out costs permanently by focusing
on what adds value for the customer
and eliminating what doesn’t.
AMITY GLOBAL
BUSINESS SCHOOL Chandigarh

Variables involved in understanding

consumer behavior

• Stimulus – ads, products,

• Response – physical/mental reaction to the
stimulus
• Intervening variables – mood, knowledge,
attitude, values, situations, etc.
AMITY GLOBAL
BUSINESS SCHOOL Chandigarh

Self
Actualization
(Self-development)

Esteem Needs
(self-esteem, status)
Social Needs
(sense of belonging, love)

Safety Needs
(security, protection)

Physiological Needs
(hunger, thirst)

Maslow’s
Maslow’s Hierarchy
Hierarchy of
of Needs
Needs
AMITY GLOBAL
BUSINESS SCHOOL Chandigarh

Indian Consumer:
Prominent Characteristics
• Rationale
• Price sensitive
• Brand conscious
• Variety seeker
• Conspicuous
• Looks for value for money
• Quality Conscious
• Impacted by Western culture
AMITY GLOBAL
BUSINESS SCHOOL Chandigarh

Market Segmentation
• Process of defining and sub-dividing a large
homogenous market into clearly identifiable segments
having similar needs, wants, or demand characteristics.
Its objective is to design a marketing mix that precisely
matches the expectations of customers in the targeted
segment..

• A marketing technique that targets a group of customers

with specific characteristics.
AMITY GLOBAL
BUSINESS SCHOOL Chandigarh

Need for Market Segmentation

• Better understanding of customer

requirements
• Handling competition effectively
• Focusing customization
• Quality Enhancement
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BUSINESS SCHOOL Chandigarh

Basis for Segmenting

Consumer Markets
• Geographic
• Demographic
• Psychographic
• Behavioralistic
AMITY GLOBAL
BUSINESS SCHOOL Chandigarh

1. Geographic Segmentation
• Region: by continent, country, state, or even
neighborhood.
• Size of metropolitan area: segmented
according to size of population
• Population density: often classified as urban,
suburban, or rural
• Climate: according to weather patterns common
to certain geographic regions
AMITY GLOBAL
BUSINESS SCHOOL Chandigarh

2. Demographic Segmentation
• Age
• Gender
• Family size
• Family lifecycle
• Income
• Occupation
• Education
• Nationality
• Religion
• Social class
AMITY GLOBAL
BUSINESS SCHOOL Chandigarh

3. Psychographic Segmentation
• Activities
• Interests
• Opinions
• Attitudes
• Values
AMITY GLOBAL
BUSINESS SCHOOL Chandigarh

4. Behavioralistic Segmentation

• Benefits sought
• Usage rate
• Brand loyalty
• User status: potential, first-time, regular, etc.
• Readiness to buy
• Occasions: holidays and events that stimulate
purchases