Professional Documents
Culture Documents
Consumer Behavior
Consumer Behavior
Sabarwal
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Indian Consumer changes Middle class segment bulging Greater global exposure Larger disposable income Greater appetite & demand for global products Differentiated product & service requirements
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FMCG space dynamics Explosion of products Explosion of markets (Kirana & Organized Retail) Rush of new players Global players bringing process and intelligence maturity Increasing competition Supply chain bottlenecks
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Marketing can not be standardized, because of Cross cultural styles. Fragmented markets.
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11,000 New products were introduced by 77 companies. only 58% are present 5 yrs later.
Only 8% of the new products offered by 112 leading companies reached the market.
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More successful a firm has been in the past, are more likely to fail. In future.
Why ????.
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Because people tend to repeat behavior for which they have been successful and rewarded
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Problem specific
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Ultimate Goal of marketing To make selling a redundant process By being focused on customer understanding clearly customer is the end and manufacturer as the means By understanding the customers implicit and explicit needs Creating a self generating pull for the market offering.
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customer
consumers
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MARKET
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The activities that people engage in when selecting, purchasing and using products and services so as to satisfy needs and desires. Such activities involve mental ,emotional processes and physical action
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Is Consumer behavior
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These seven aspects hold key to understand consume behavior. Models acronym is MAPTRIP
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customer
To understand the customer basic is to know that s/he is buying / using the products as a means to solve or address their own problem, reason and strategy and not yours and therefore unless marketer is customer specific in terms of marketing mix elements, success is usually evasive.
Customer does not buy a brand s/he buys their perception, and choose a brand which offers the best solution to their problem
Marketers only brief is to synergize the capabilities of the organization so as to address customers specific needs.
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Customer defections
customer defections
3% 1% 11% indifference product price death relocation new avenues 5%
20%
60%
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Behavior
Consumer Buying Behavior refers to the buying behavior of final consumers (individuals & households) who buy goods and services for personal consumption. Study consumer behavior to answer: How do consumers respond to marketing efforts the company might use?
Behavior
Product Price Place Promotion
Marketing and Other Stimuli
Buyers Response
Dealer Choice
Buyer
Groups of people with shared value systems based on common life experiences. Hispanic Consumers African American Consumers Asian American Consumers Mature Consumers
Social Factors
Personal Influences
Age and Family Life Cycle Stage
Economic Situation Occupation
Lifestyle Identification
Activities Opinions
Interests
VALS 2
Principle Oriented
Fulfilleds
Achievers
Experiencers
Believers
Strivers
Makers
Psychological Factors
Perception
Learning
Safety Needs
(security, protection)
Physiological Needs
(hunger, thirst)
Types of Buying
Decisions
High Involvement Significant differences between brands Few differences between brands Complex Buying Behavior DissonanceReducing Buying Behavior Low Involvement VarietySeeking Behavior Habitual Buying Behavior
Evaluation of Alternatives
Purchase Decision Postpurchase Behavior
External Stimuli
TV advertising
Magazine ad
Radio slogan
Stimuli in the environment
Public Sources
Experiential Sources
What do I believe about each available brand? Based on what Im looking for, how satisfied would I be with each product?
Evaluation Procedures
Attitudes of others
Purchase Decision
Satisfied Customer!
Dissatisfied Customer
Cognitive Dissonance
Evaluation
Trial Adoption
Adoption of Innovations
Percentage of Adopters
Late Majority
Early Adopters
13.5%
34%
34%
Laggards
16%
2.5%
Time of Adoption
Early
Late
Evoked Set
Choice set
decisiion
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Product Characteristics
Compatibility Does the innovation fit the values and experience of the target market?
and needs replacement or repair at ones own cost. A loss of time due to hours of making complaints, returning to distributors, repairs etc. when a bad purchase leads to loss of self esteem or creates general dissatisfaction A physical risk- due to consumption or use of products potentially harmful to ones health or the environment.
a psychological risk-
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information and/or the perceived risk is high (unfamiliar brand in an unfamiliar product class)
buyer confronted with a new, unfamiliar brand in a familiar product class. where existing brands do not provide an adequate level of satisfaction) Routine response behavior-is observed in the case where the consumer has accumulated enough experience and knowledge and has definite preference about one or more familiar brands (low cost, frequently purchased items)
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Ten questions
1. 2. 3. 4. 5. 6. 7. Will the product Will the product Will the product Will the product Will the product Will the product Will the product better liked. 8. Will the product 9. Will the product health? 10.Is this purchase
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make me feel more important? make me happier? make me more comfortable? make me more prosperous make my work easier? give me more security? make me more attractive? Or give me more distinction? improve, protect, or maintain my a bargain for me ?
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Customer Satisfaction
Customer Satisfaction Results When a Companys Performance Has Fulfilled a Buyers Expectations.
Buyers Expectations Are Based On: Customers Past Buying Experiences Opinions of Friends & Associates Marketer/ Competitor Information & Promises
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They are less price sensitive, They remain customers longer, They talk favorably about the company and products to others.
Delighted customers have emotional and rational preferences for products, and this creates high customer loyalty. Therefore, the purpose of Marketing is to generate customer value profitably.
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Financial Benefits
Buying behavior
Buying behavior covers all activity preceding, and following purchase decisions The purchasing behavior is seen as a process of problem solving and can be grouped into five stages 1. Problem recognition 2. Information search 3. Evaluation of alternatives 4. Purchase decision 5. Post-purchase behavior
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3:Evaluation of alternatives In deciding which product to buy we have to weigh up which product best suits our needs We construct criteria upon which to base our choice We already may have a list of criteria or we may form one during the information search Compensatory vs. non compensatory evaluation 4: Product choice Having weighed up the pros and cons between alternatives eventually we have to make a choice Could be as a result of the outcome of our evaluation process against important criteria best fit. Choice could be affected by availability, payment options etc. Implications? Make it easy!
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5: Post purchase evaluation Once we have made our purchase we decide whether its met our expectation If it does great positive brand associations and visa versa Implications? After sales service, marketing communications
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Homans Equation
The difference between the price we pay for conformity and the rewards obtained for doing so determines for each of us whether we will conform to group expectations and to what extent.
Price: Loss of freedoms Time commitment Financial commitment Etc.
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Rewards: Levels of acceptance Advancement within the group Prestige gained Etc.
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Secondary reference group: one in which interaction with other members is less frequent Formal group: one in which there is some sort of structure and/or for which there are specific membership requirements. Informal group: one that has no special membership or attendance requirements, other than common interests. tksabarwal@gmail.com 55
They set levels of aspiration They help define the actual items/services considered acceptable for displaying those aspirations.
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The influence of reference groups varies Groups tend to be more influential on product decisions than they are on either brand or outlet choices
Conspicuousness based on exclusivity -product decisions (bikers and black leather jackets) Conspicuousness associated with the individual -- brand decisions possible within product class, allowed personal tksabarwal@gmail.com 59 expression
Social Power
Power of reward praise, approval, acceptance, status, recognition, etc. Coercive power unacceptable behavior strongly discouraged Expert power informational attraction Referent power closer the match between person and group, more willingness to conform
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External
world
External world
inputs
inputs
Mind CIP
output
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STIMULI
SENSORY REGISTER
LONG TERM
MEMORY (ltm)
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CONVICTION
Competitive ads. Argumentative copy image ads Status glamour appeals Publicity -advertising campaign
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AWARENESS
Attitudes
Global evaluative judgments
Intentions
Subjective judgments by people about how they will behave in the future
Beliefs
Subjective judgments about the relationship between two or more things
Feelings
An affective state (e.g. current mood state) or reaction (e.g. emotions experienced during product consumption) tksabarwal@gmail.com 64
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Consumer beliefs
A sampling of consumer beliefs
If a deal seems to good to be true, it probably is. You cant believe what most advertising says these days. Auto repair shops take advantage of women. People need less money to live on once they retire. Its not safe to use credit cards on the Internet.
Consumer beliefs
Expectations Brand distinctiveness
Inferential beliefs
Consumer confusion
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Consumer expectations
Expectations are beliefs about the future
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Brand distinctiveness
Why should a consumer want to buy your brand instead of the competitors? The desirability of products having something unique to offer to their consumers is also known as the Unique Selling Proposition (USP)
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Inferential beliefs
Consumers use information about one thing to form beliefs about something else Beliefs are often inferred when product information is incomplete Also undertaken when consumers interpret certain product attributes as signals of product quality, e.g. price-quality inferential beliefs
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Consumer confusion
Sometimes consumers do not know what to believe due to many different reasons
May arise due to conflicting information and knowledge Mistaking one companys product for the product of another company Due to changes in a products position and image
Negative
Angry Annoyed Bad Bored Critical Defiant Disgusted Fed-up Insulted Irritated Regretful
Warm
Affectionate Calm Concerned Contemplative Emotional Hopeful Kind Peaceful Pensive Touched Warm-hearted
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Attitudes---people form attitudes toward objects on the basis of their beliefs (perception and knowledge ) about these objects, beliefs in turn acquired by processing information which is obtained by Direct experience with objects and from communications about them received from other sources Informationexperience based with objects +communication received about objects from others. Belief---perceptions and knowledge
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Ao biei
e 1
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Fishbein
Behavior as a function of intentions to behave in a certain manner+ other intervening factors Attitude attitude towards acting in that manner + subjective norms,.(others perceptions)
Subjective Norms about behavior tksabarwal@gmail.comand w2 are the weights of relative influence of W1 Ab +SN on Behavioral intention
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Continued.
To predict behavior We determine Ab & SN Each is then weighted to reflect importance (add up to 1.0)
Ab=the individual Oveeerall attitude performing specific behavior. B1=persons belief that performing that behavior results in consequence. E1 =persons evaluation of the consequences I. And n= number of relevant behavior beliefs. Where SN=the individual's subjective norms regarding the specific behavior. Bi= normative belief that reference group or person I thinks he should or should not perform the behavior. Mi= his motivation to comply with the thoughts of referent I.k= the number of relevant 76 references
Ab biei
i 1
SN
bimi
i 1
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BI model
Beliefs about Consequences of behavior Evaluation of consequences
BI
behavior
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Information Search
Evaluation of Alternatives
Purchase Post-purchase Behaviour
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Less Involvement Length of time; Cost of goods; information lacking And number of alternatives available
More Involvement
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Decisions
The buying-decision process not always straightforward, e.g. level of involvement
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Level of involvement is the amount of effort that is expended in satisfying a need. Level of involvement normally higher when Consumer lacks information
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Perceived Risk
High involvement: promotion extensive and informative. Provide information and specify benefits. Low involvement: In-store promotions and packaging important. Must be eyecatching and easily
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Influencing CB
Perception
Perception is the process of receiving, organising, and
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Influencing CB
Motivation
All behaviour start with a need Maslow Theory - Adverts play on motives
Physiological - Beer bill boards Safety - Burglar alarms, Insurance Affiliation - Hansa/Tea (part of a family)
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