Consumer Behavior

Course Information Course

Title: Consumer Behavior

Course Code MGT-414

Credit Hours 3

Course Level BBA 7Th, MBA 3rd

Recommended Textbooks and Journals Text Book

Schiffman, L. & Kanuk, L. (2014) Consumer behavior : A Eurepeon outlook. New York,

United states.

Journal of Consumer Behavior and Culture, Emerald insight

Course Evaluation Criteria

Assignments, Project & presentation 10%

Quizzes 05%

Mid-term 20%

Final 60%

Total 100%

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Lecture 1
An Introduction to The Study of Consumer Behavior
Consumer Behaviour is the study of how individual customers, groups or organizations select,
buy, use, and dispose ideas, goods, and services to satisfy their needs and wants. It refers to the
actions of the consumers in the marketplace and the underlying motives for those actions. The
study of consumer Behaviour assumes that the consumers are actors in the marketplace. The
perspective of role theory assumes that consumers play various roles in the marketplace. Starting
from the information provider, from the user to the payer and to the disposer, consumers play
these roles in the decision process. Consumer Behaviour is a complex, dynamic,
Multidimensional process and all marketing decisions are based on the assumptions about
consumer Behaviour which includes communicating, Purchasing, and consuming, interacting.
Meaning and Definition:
Consumer Behaviour is the study of how individual customers, groups or organizations select,
buy, use, and dispose ideas, goods, and services to satisfy their needs and wants. It refers to the
actions of the consumers in the marketplace and the underlying motives for those actions.
In the words of Engel, Blackwell, and Mansard, “consumer Behaviour is the actions and decision
processes of people who purchase goods and services for personal consumption”.
According to Schiffman “Consumer Behaviour is defined as Behaviour that consumers display in
searching for purchasing, using evaluating and disposing of products and services that expect
will satisfy their needs”.
According to Louden and Bitta, “Consumer Behaviour is the decision process and physical
activity, which individuals engage in when evaluating, acquiring, using or disposing of goods
and services”.
Development of the marketing concept and the discipline of consumer behavior
In marketing concept the firms analyse the needs of their customers and then make decisions
to satisfy those needs, better than the competition.
To better understand the marketing concept, it is worthwhile to put it in perspective by
reviewing other concepts that once were predominant. While these alternative concepts
prevailed during different historical time frames, they are not restricted to those periods and
are still practised by some firms today.

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The Production Concept:
The term production concept was coined by Henry Ford who made the auto-mobile which was
till then only affordable for the rich people for even a common man to purchase.
*Assumes that consumers are interested primarily in product availability at low prices
Marketing objectives:
* Cheap, efficient production
* Intensive distribution
* Market expansion
The production concept was the idea that a firm should focus on those products that it could
produce most efficiently and that the creation of a supply of low-cost products would in and of
itself create the demand for the products.
The Product Concept:
Assumes that consumers will buy the product that offers them the highest quality, the best
performance, and the most features
Marketing objectives:
* Quality improvement
* Addition of features
Tendency toward Marketing Myopia
The Sales Concept:
Assumes that consumers are unlikely to buy a product unless they are aggressively persuaded to
do so
Marketing objectives:
* Sell, sell, sell
The Marketing Concept:
Assumes that to be successful, a company must determine the needs and wants of specific target
markets and deliver the desired satisfactions better than the competition
Marketing objectives:
* Make what you can sell
* Focus on buyer’s needs

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Consumer behavior as Field What presently is being done?
Consumer Behaviour is the study of how individual customers, groups or organizations select,
buy, use, and dispose ideas, goods, and services to satisfy their needs and wants. It refers to the
actions of the consumers in the marketplace and the underlying motives for those actions. The
study of consumer Behaviour assumes that the consumers are actors in the marketplace. The
perspective of role theory assumes that consumers play various roles in the marketplace. Starting
from the information provider, from the user to the payer and to the disposer, consumers play
these roles in the decision process. Consumer Behaviour is a complex, dynamic,
Multidimensional process and all marketing decisions are based on the assumptions about
consumer Behaviour which includes communicating, Purchasing, and consuming, interacting.
Importance of Consumer Behavior
Understanding consumer behavior is essential for a company to find success for its current
products as well as new product launches. Every consumer has a different thought process and
attitude towards buying a particular product. If a company fails to understand the reaction of a
consumer towards a product, there are high chances of product failure.
Due to the changing fashion, technology, trends, living style, disposable income, and similar
other factors, consumer behavior also changes. A marketer has to understand the factors that are
changing so that the marketing efforts can be aligned accordingly.
1. Consumer Differentiation:
In marketing, consumer differentiation is a way to distinguish a consumer from several other
consumers. This helps to make a target group of consumers with the same or similar behavior.
2. Retention of Consumers:
“Consumer behavior is of most importance to marketers in business studies as the main aim is to
create and retain customers” says Professor Theodore Levitt (Kumar, 2004). 
Consumer behavior is not just important to attract new customers, but it is very important to
retain existing customers as well. When a customer is happy about a particular product, he/she
will repeat the purchase. Therefore, marketing the product should be done in such a way that it
will convince customers to buy the product again and again.
3. Design Relevant Marketing Programe:
Understanding consumer behavior allows you to create effective marketing campaigns. Each
campaign can speak specifically to the separate group of consumers based on their behavior.
4. Predicting Market Trend:
Consumer behavior analysis will be the first to indicate a shift in market trend. For example,   the
recent trend of consumers is towards environment friendliness and healthy food.  This changing
market trend was observed by many brands including McDonalds.  Based on the consumer
behavior, McDonald’s brought healthy food options. 
By conducting consumer behavior study, a company saves a lot of resources that might
otherwise be allocated to produce a product that will not be sold in the market. For example, in

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summer a brand will not waste its resources for producing a product that will not sell in summer.
Based on consumer behavior the company decides on production strategy which will save on
warehouse costs and marketing costs.
5. Competition:
One of the most important reasons to study consumer behavior is to find out answers to some of
the questions:
Is the customer buying from your competitor?
Why is a consumer buying from your competitor?
What features attracts a consumer to your competitor products?
What gaps are your consumers identifying in your products when compared to your
competitors? 
Studying consumer behavior facilitates in understanding and facing competition. Based on
consumers’ expectations, your brand can offer competitive advantages. 
6. Innovate New Products:
We all know some of the big names such as New Coke, Crystal Pepsi, Colgate Kitchen Entrées,
Earring Magic Ken Doll, and Wheaties Dunk-a-Balls Cereal. Can you see the similarities in
these products? Yes, they all failed!!
The sad truth is that most new products and new ideas end up in failure. There is an estimate of
new product failures – they range from 33% to 90% based on the kind of industry.
Companies consistently strive hard to improve the success rate of their new products or new
ideas. One of the most important ways is to conduct sound and thoughtful consumer behavior
study.
7. Stay Relevant in the Market
When the world is changing as rapidly as it is happening today, the biggest challenge we all face
is staying relevant to our target market. And do you know what is the main reason behind the
rapid changes? It is the ever-changing behavior of our customers.
Today’s consumers have greater choices and opportunities, which means they can easily switch
to a company that offers better products and services.  
8. Improve Customer Service
Consumers require different levels of customer service, and understanding the differences within
your customer base will help you provide the most appropriate service for individual needs.
Consumer behavior analysis has emerged as an important tool to understand your customers. By
looking into consumer psychology and the forces behind customer buying behavior, companies
can craft new products, marketing campaigns and increase profitability. 
Leading companies such as The Coca-Cola Company and Barclays, have constantly improved its
existing products and focused on developing new products. The Coca-Cola Company aligns its

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corporate strategy of ‘refreshing everyone who is touched by our business’, by conducting
market research to identify consumer behavior. Similarly, Barclays conducted consumer
behavior study to better understand the needs of this target market.
The marketing mix, customer value, satisfaction and retention
A marketing mix includes multiple areas of focus as part of a comprehensive  marketing plan.
The term often refers to a common classification that began as the four Ps: product, price,
placement, and promotion.
Effective marketing touches on a broad range of areas as opposed to fixating on one message.
Doing so helps reach a wider audience, and by keeping the four Ps in mind, marketing
professionals are better able to maintain focus on the things that really matter. Focusing on a
marketing mix helps organizations make strategic decisions when launching new products or
revising existing products.
The seven Ps of marketing includes product, price, promotion, place, people, process, and
physical evidence.
Here’s how the 7 Ps of marketing can be applied to everything in your marketing mix:
1. PRODUCT
It goes without saying that the service or product you’re selling should be at the centre of every
element of the marketing mix.
Fundamentally, it allows you to address the questions key to sales conversion: what problem or
issue does the product solve for customers? Why is your product the best one to solve it?
The digital marketing mix is perfect for showcasing your products, through SEO, blogs
or articles, paid advertising, influencer marketing, and viral video campaigns, for example.
2. PRICE
The strategy behind the pricing of your product needs to be based on what your customers are
prepared to pay, costs such as retail mark-up and manufacturing, as well as other considerations.
Your marketing mix can include subscription and membership discounting programs, or email
marketing of promotions and sales.
3. PROMOTION
Successful marketing strategies include all the promotional activities across the marketing mix,
including advertising, direct marketing, and in-store promotional activities.
The possibilities of digital promotion are limited only by your imagination and can include
online events, chats, social media groups, and livestreams.
4. PLACE
Where and how your product is displayed and sold should be directly informed by your
customers.

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A deep understanding of their purchasing patterns – and targeting them at the right stage in their
buying cycle – will make it clear where you should promote and sell your products and how that
fits into your online and real-world marketing mix.
5. PEOPLE
Excellent customer service not only converts to sales, but can increase your customer base by
referrals. Acquiring these referrals by people who love your brand can also be a great example
of how your marketing efforts can support your sales process.
It’s important that everyone who represents your brand or deals with customers – including the
non-human chat bot variety! – are fully trained sales professionals with an intimate knowledge of
your product and how it will improve the lives or solve the problems of your customers.
6. PROCESS
The process of delivering your product to the consumer should be designed for maximum
efficiency and reliability, but may also include features that are in line with your brand, such as
being environmentally or sustainably focused.
With the rise in online shopping, digital partnerships and logistics have become an essential part
of the marketing mix.
7. PHYSICAL EVIDENCE
Physical evidence incorporates aspects that proves your brand exists and that a purchase took
place.
Examples of proof that your brand exists can include things like a physical store or office for
your business, a website if your business operates solely online, and printed business cards that
you exchange when meeting people. Examples of proof of purchases can include physical or
digital receipts, invoices, or follow-up email newsletters that you send to customers as a retention
exercise.
The impact of digital technologies on marketing strategies
Technology has transformed marketing by making campaigns more personalized and immersive
for people and creating ecosystems that are more integrated and targeted for marketers. And it’s
not just the interface between brands and people that have been transformed. New technology in
marketing has permeated the infrastructure and systems on which companies are built, delivering
value to procurement and adding to the bottom line.
Artificial Intelligence
In simple terms, artificial intelligence is nothing but the development and efficiency of machines
to perform human tasks and that too with little room for errors. The use of artificial intelligence
is visible in almost every industry. Businesses are now leveraging its power to make AI driven
processes more efficient.
When it comes to marketing, artificial intelligence is helping companies gather more insight into
their audience by offering recommendation engines, predictive search, Chatbots, etc. Use of

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these technologies and tools are helping companies offer a better experience to their users and
also market themselves better. AI is beneficial for both businesses and their users.

Virtual Reality
How interactive would it be for potential customers to experience a product or service before
they made a purchase? Brand and businesses have taken it to the next level by offering virtual
reality experiences to their users.
Big brands like Audi have already started using this technology to give their users a better
experience. In Norway, they’re offering their users to drive a new Audi Q5 in a giant virtual
sandbox that gives them a real-time experience of driving the car. This made their marketing
strategy seem more innovative, effective and remarkable!
Cloud Computing
As the statistics reveal, the revenue from the cloud computing sector is expected to cross $411
billion by 2020. This figure is a great indicator of the growth of cloud computing and how
businesses are leveraging it.
The ability for members of a team to share, access and manage data that is lying on a common
cloud has enabled them to communicate and collaborate with ease.
Big Data
How important is data to a business? A lot! If the statistics are to be believed 44% marketers use
big data to improve their effectiveness. Businesses use the insights from the data to know what
the users are more inclined to, what they like the most and what is it that does not interest the
users at all. This can help businesses preplan their marketing campaign that succeeds well.
Now, with the advancement in technology, it has become easier than ever to get the tiniest detail
of a data even that helps in knowing your customers more closely. This means the scope of your
marketing campaigns becoming successful is quite high.
Internet of Things
If you’re well versed with the happenings around the world, we’re sure you’ve heard of IoT – the
Internet of Things.
According to a recent report by Cisco, IOT will generate $14.4 trillion in value covering all
industries. Business owners are looking forward to the IOT as a great opportunity to get deeper
insights into consumer psychology and the process of buying.
What is future of CB?
As the business world evolves, so do consumer habits and tastes. Customer behavior is the most
vital component to crafting a great marketing campaign. However, customers are only human,
and their behavior can be erratic and unpredictable. What might look like a great marketing
approach in a meeting room can therefore be far less effective in practice.

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Knowing the trends in consumer behavior before they become apparent can give a business an
unprecedented advantage over its competitors.
1. Increased Demand for Transparency
There is an increasing customer demand around transparency. Big corporations have abused the
trust of the customer for a long time. 
2. Accelerated Online Buying
Customers will accelerate buying online and using home delivery. This was already happening,
but the pandemic revealed to skeptics that it’s easy, it works and it makes their life easier. 
3. Increased Focus On What's Truly Important
I think that Covid has taught us all how to better value and prioritize what's important in our
lives. This will change the products and services we decide to purchase, the types of products
and services we buy and how we actually affect that purchase.
4. Growing Importance Of Content Marketing
As conferences and trade shows put their events on hold in 2021, more businesses will search for
alternative ways to sell their products and services
5. Increased Focus On Green Products
Clean energy has already been a trend but this year it will grow exponentially because we've
evidently seen the damage we have brought to the planet. As consumers demand more green
products, suppliers will produce more, pushing the demand further.
6. More Socially Conscious Shopping
Higher degrees of socially conscious shopping is a behavioral trend to watch for in 2021. Love it
or hate it, cancel culture as a phenomenon is not new to the world of commerce.
7. Customers Preferring Vetted Vendors
Customers are going to be more cautious in how they join with vendors for a number of reasons.
With continued data breaches, more customers will want to make sure they are working with
vetted vendors. 
Why study customers Consumer behavior process
Consumer Behaviour is the study of how individual customers, groups or organizations select,
buy, use, and dispose ideas, goods, and services to satisfy their needs and wants. It refers to the
actions of the consumers in the marketplace and the underlying motives for those actions. The
study of consumer Behaviour assumes that the consumers are actors in the marketplace. The
perspective of role theory assumes that consumers play various roles in the marketplace. Starting
from the information provider, from the user to the payer and to the disposer, consumers play
these roles in the decision process.
Customer:

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A Customer is an individual who buys products or services for personal use and not for
manufacture or resale. A Customer may be a person or group of people such as a household and
similar needs, not directly related to entrepreneurial or business activities who are the final users
of products or services. Customers are the basic economic entities of an economy. All the
customers consume goods and services directly and indirectly to maximise satisfaction and
utility.
Types of Consumers:
Personal Consumer/ Individual consumer: Buy the Product and services for his family and own
or family.
(ii) Organizational Consumers/Commercial consumers: Buy the product or services for
manufacturing or reselling.
Importance of Studying Consumer Behaviour:
1. Modern Philosophy:
It concerns with modern marketing philosophy – identify consumers’ needs and satisfy them
more effectively than competitors. It makes marketing consumer-oriented. It is the key to
succeed.
2. Achievement of Goals:
The key to a company’s survival, profitability, and growth in a highly competitive marketing
environment is its ability to identify and satisfy unfulfilled consumer needs better and sooner
than the competitors. Thus, consumer Behaviour helps in achieving marketing goals.
3. Useful for Dealers and Salesmen:
The study of consumer Behaviour is not useful for the company alone. Knowledge of consumer
Behaviour is equally useful for middlemen and salesmen to perform their tasks effectively in
meeting consumers needs and wants successfully. Consumer Behaviour, thus, improves
performance of the entire distribution system.
4. More Relevant Marketing Programme:
Marketing programme, consisting of product, price, promotion, and distribution decisions, can be
prepared more objectively. The programme can be more relevant if it is based on the study of
consumer Behaviour. Meaningful marketing programme is instrumental in realizing marketing
goals.
5. Adjusting Marketing Programme over Time:
Consumer Behaviour studies the consumer response pattern on a continuous basis. So, a
marketer can easily come to know the changes taking place in the market. Based on the current
market trend, the marketer can make necessary changes in marketing programme to adjust with
the market.
6. Predicting Market Trend:

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Consumer Behaviour can also aid in projecting the future market trends. Marketer finds enough
time to prepare for exploiting the emerging opportunities, and/or facing challenges and threats.
7. Consumer Differentiation:
Market exhibits considerable differentiations. Each segment needs and wants different products.
For every segment, a separate marketing programme is needed. Knowledge of consumer
differentiation is a key to fit marking offers with different groups of buyers. Consumer
Behaviour study supplies the details about consumer differentiations.

8. Creation and Retention of Consumers:

Marketers who base their offerings on a recognition of consumer needs find a ready market for
their products. Company finds it easy to sell its products.
Lecture 2
Consumer Behavior and Marketing Strategy
Marketing strategies and tactics are normally based on explicit and implicit beliefs about
consumer behavior. Decisions based on explicit assumptions and sound theory and research are
more likely to be successful than the decisions based solely on implicit intuition.
Knowledge of consumer behavior can be an important competitive advantage while formulating
marketing strategies. It can greatly reduce the odds of bad decisions and market failures.
Market Analysis Components
Before getting too far down the road with your business planning process, you will need to
complete a thorough market analysis based on the research you did in deciding to launch your
business.
Your market analysis not only provides an overview of your industry, but also the conclusions
you were able to draw from your market research findings. While there is no absolute method for
including a market analysis, under most circumstances you are going to want to include most or
all of the following points as you create this valuable section of your plan:
1. Industry description and outlook. Regardless of how you decide to proceed with your
market analysis, you will almost certainly want to start this section of your business plan with a
description of your company’s industry. Research your industry’s growth and note its current
scope. Then, discuss some of the business characteristics of your industry, such as its projected
growth rate. Include the major customer segments.
2. Introduce your target market. Once you have described the overall industry and
marketplace, next indicate how you have narrowed down your target market to a workable size.
One of the biggest errors new business owners make is in keeping their target market too broad,
which leaves them in the impossible position of trying to meet the needs of too many diverse
customer groups. This obviously runs the risk of stretching limited resources too thin.
3. Distinguish target customer characteristics. Next, describe the critical needs of your
targeted customer base and to what extent–and by whom–these needs are currently being met.

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This is also the place to detail the demographics of your customer group. If there are cyclical
purchasing trends, including seasonal buying, this is the place to note them as well.
4. Target market size and growth. You will also want to include additional details about the
size of your targeted market. Conduct sufficient research to provide data on total annual
purchases within your targeted marketplace. In addition, do sufficient research to create a
reasonable forecast of market growth.
5. Market share percentage. Once you have described the size and potential growth for your
targeted market, next identify the market share percentage and number of customers you believe
you will be able to gain within a defined demographic area. Include justification for the numbers
you come up with.
6. Pricing and gross margin targets. Explain your pricing strategy, gross margin levels and any
special pricing schemes you plan to use, such as discounts.
7. Competitive analysis. Finally, identify your competitors and their targeted markets. Also,
make note of any indirect or secondary competitors impacting your target markets. Include
information on their current market share as well as what you perceive as their strengths and
weaknesses.
8.  Barriers and regulatory restrictions. Discuss any barriers to entering the market that you
have identified. These might include technology changes, unusually high investment costs, lack
of qualified personnel, and other hurdles. In some cases, there may be regulatory restrictions
impacting your business.
Market Segmentation
At its core, market segmentation is the practice of dividing your target market into approachable
groups. Market segmentation creates subsets of a market based on demographics, needs,
priorities, common interests, and other psychographic or behavioral criteria used to better
understand the target audience.
By understanding your market segments, you can leverage this targeting in product, sales, and
marketing strategies. Market segments can power your product development cycles by informing
how you create product offerings for different segments like men vs. women or high income vs.
low income.
The benefits of market segmentation
Companies who properly segment their market enjoy significant advantages. According to a
study by Bain & Company, 81% of executives found that segmentation was crucial for growing
profits. Bain also found that organizations with great market segmentation strategies enjoyed a
10% higher profit than companies whose segmentation wasn’t as effective over a 5-year period.
Other benefits include:
Stronger marketing messages: You no longer have to be generic and vague – you can speak
directly to a specific group of people in ways they can relate to, because you understand their
characteristics, wants, and needs.

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Targeted digital advertising: Market segmentation helps you understand and define your
audience’s characteristics, so you can direct your marketing efforts to specific ages, locations,
buying habits, interests etc.
Developing effective marketing strategies: Knowing your target audience gives you a head
start about what methods, tactics and solutions they will be most responsive to.
Better response rates and lower acquisition costs: These will result from creating your
marketing communications both in ad messaging and advanced targeting on digital platforms
like Facebook and Google using your segmentation.
Attracting the right customers: Market segmentation helps you create targeted, clear and direct
messaging that attracts the people you want to buy from you.
Increasing brand loyalty: when customers feel understood, uniquely well served and trusting,
they are more likely to stick with your brand.
Differentiating your brand from the competition: More specific, personal messaging makes
your brand stand out.
Identifying niche markets: segmentation can uncover not only underserved markets, but also
new ways of serving existing markets – opportunities which can be used to grow your brand.
Staying on message: As segmentation is so linear, it’s easy to stay on track with your marketing
strategies, and not get distracted into less effective areas.
Driving growth: You can encourage customers to buy from you again, or trade up from a lower-
priced product or service.
Enhanced profits: Different customers have different disposable incomes; prices can be
set according to how much they are willing to spend. Knowing this can ensure you don’t over (or
under) sell yourself.
Product development: You’ll be able to design with the needs of your customers top of mind,
and develop different products that cater to your different customer base areas.
Companies like American Express, Mercedes Benz, and Best Buy have all used segmentation
strategies to increase sales, build better products, and engage better with their prospects and
customers.
The basics of segmentation
Understanding segmentation starts with learning about the various ways you can segment your
market. There are four primary categories of segmentation, illustrated below.
Demographic Firmographic Psychographic Behavioral
(B2C) (B2B) (B2B/B2C) (B2B/B2C)

Definition Classification based Classification based Classification based Classification based

on individual on company or on attitudes, on behaviors like
attributes organization aspirations, values, product usage,
attributes and other criteria technology laggards,

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 etc.

Examples Geography Gender Industry Location Lifestyle Personality Usage Rate Benefit
Education Level Number of Traits Values Types Occasion
Income Level Employees Revenue Opinions Purchase Decision

Decision You are a smaller You are a smaller You want to target You want to target
Criteria business or you are business or you are customers based on customers based on
running your first running your first values or lifestyle purchase behaviors
project project

Difficulty Simpler Simpler More advanced More advanced

Marketing Strategy
Marketing strategy is used by different companies to collaborate with their consumers. It is also
employed to aware the customers about the features, specifications and benefits of company’s
products. It is basically focused on encouraging target population to buy those specific products
and services. The marketing strategies might be totally innovative or they can be previously tried
or tested strategies.
Effective marketing strategies help to get ahead in the competition.
There are different types of marketing strategies available. You have to pick one as per your
business requirement. Before choosing the right marketing strategy for your business, consider
following points.
1. Define the target population
Defining target population is main and necessary step in choosing your marketing strategy. It
gives the proper demographics which help in selecting the most appropriate marketing plan for
your business.
2. Test your audience
Create a hypothetical process of buying to test your audience. Once you know the buying
behavior of your target audience, you can select more appropriate marketing strategy.
3. Consider marketing strategies
Once you know the demographics; their knowledge, attitudes and behaviors. You can select
more appropriate marketing strategy.
4. Evaluate those strategies
Once you have considered the marketing strategies and found the applicable ones. Asses them,
apply them and evaluate them. This process must be for testing purposes and the most suitable
and productive strategy must be applied.
Types of marketing strategies

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There are different types of marketing strategies available. Picking up a marketing strategy
includes analyzing the needs of your business, your target audience and specifications of your
products.
The two main types of marketing strategy are:
1. Business to business (B2B) marketing
2. Business to consumer (B2C) marketing
The most common form of marketing is business to consumer (B2C) marketing. Let’s explore a
bit more.
Following are the different types of marketing strategies available.
1. Paid advertising
This includes multiple approaches for marketing. It includes traditional approaches like TVCs
and print media advertising. Also, one of the most well-known marketing approach is internet
marketing. It includes various methods like PPC (Pay per click) and paid advertising.
2. Cause marketing
Cause marketing links the services and products of a company to a social cause or issue. It is also
well known as cause related marketing.
3. Relationship marketing
This type of marketing is basically focused on customer building. Enhancing existing
relationships with customers and improving customer loyalty.
4. Undercover marketing
This type of marketing strategy focuses on marketing the product while customers remain
unaware of the marketing strategy. It is also known as stealth marketing.
5. Word of mouth
It totally relies on what impression you leave on people. It is traditionally the most important
type of marketing strategy. Being heard is important in business world. When you give quality
services to customers, it is likely that they’d promote you.
6. Internet marketing
It is also known as cloud marketing. It usually happens over the internet. All the marketing items
are shared on the internet and promoted on various platforms via multiple approaches.
7. Transactional marketing
Sales is particularly the most challenging work. Even for the largest retailers, selling is always
tough especially when there are high volume targets. However with the new marketing
strategies, selling isn’t as difficult as it was. In transactional marketing the retailers encourage
customers to buy with shopping coupons, discounts and huge events. It enhances the chances of
sales and motivates the target audience to buy the promoted products.

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8. Diversity marketing
It caters diverse audience by customizing and integrating different marketing strategies. It covers
different aspects like cultural, beliefs, attitudes, views and other specific needs.
Criteria for effective targeting of segments
In marketing, market segmentation is the process of dividing a broad consumer or
business market, normally consisting of existing and potential customers, into sub-groups
of consumers (known as segments) based on some type of shared characteristics.
CRITERIA FOR EFFECTIVE TARGETING
To be an effective target, a market segment should be: identifiable, sizeable, stable or growing,
accessible, and congruent with the marketer’s objectives and resources.
Identifiable
1. To divide the market into separate segments on the basis of common or shared needs or
characteristics that are relevant to the product or service, a marketer must be able to identify
these characteristics.
2. Some segmentation variables such as demographics are easy to identify, while others such as
benefits sought, more difficult.
Sizeable
1. In order to be a viable market, a segment must consist of enough consumers to make targeting
it profitable.
Stable
Most marketers prefer to target consumer segments that are relatively stable in terms of lifestyles
and consumption patters and avoid “fickle” segments that are unpredictable.
Accessible
1. To be targeted, a segment must be accessible, which means that marketers must be able to
reach that market segment in an economical way.
Bases for segmentation
Everything you need to know about the bases of market segmentation. Market segmentation is
based on the assumption that all the potential customers are not identical and that the firm should
address their needs with appropriate product Land other marketing strategies or else should
concentrate on only one single segment and tailor the strategy accordingly. Marketers establish
the basis to segment the market.
BASES FOR SEGMENTATION
1. A segmentation strategy begins by selected the base(s) representing the core attribute(s) of a
group of existing or potential customers.

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2. Depicts a four-way classification of the characteristics used to segment the buyers of
consumer goods.
3. A single characteristic is never used alone.
4. virtually all segmentation plans are in the forms of hybrid segmentation that includes attributes
from two or more of the four quadrants.
5. The four groups stem from dividing consumers’ characteristics along two criteria:(1) facts,
which can be determined from direct questioning and categorized by a single objective measure,
versus, cognitions, which are abstract, can be determined only through more complex
questioning, and where most of the constructs measured have no single, universal definitions;
and (2) consumer-rooted features stemming from the consumer’s physical, social, and
psychological characteristics versus consumption-and product-specific usage behaviors or
attitudes and preferences toward specific products or buying situations.
Segmentation types in CB
Market segmentation depends on two levels − the strategic level and the tactical level. At a
strategic level, it has a direct link with the decisions on positioning. At a tactical level, it relates
with the decision of which consumer groups are to be targeted. We will discuss here the
parameters based on which a market can be segmented.

Geographic Segmentation
Prospective customers are in local, state, regional or national marketplace segment. If a firm is
selling a product such as a farm equipment, the geographic location will remain a major factor in
segmenting the target markets because their customers are located in specific rural areas.
In case of retail stores, geographic location of the store is one of the most important
considerations. Here, urban areas are preferred.
Segmentation of customers based on geographic factors are −
Region − Segmentation by continent / country / state / district / city.

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Size − Segmentation on the basis of size of an urban area as per the population size.
Population Density − Segmentation on the basis of population density such as urban / sub-urban /
rural etc.
Demographic Segmentation
Market segmentation can be done based on demographic factors such as Age. For example, Rico
watches have segmented their product portfolio according to different age groups of people.
Psychographic Segmentation
Psychographic Segmentation focuses on group customers according to their life-style and
purchasing psychology. Many businesses offer products based on the attitudes, beliefs and
emotions, ideas, and perceptions of the target market. Psychographic segmentation includes
variables such as Activities, Interests, Opinions, Attitudes, and Values.
Behavioralistic Segmentation
Markets can be segmented on the basis of buyer behavior. It is because the buying behavior of
consumers differ based on the geographic, demographic and psychographic factors. Marketers
often find practical benefits in using buying behavior as a separate segmentation basis in addition
to factors like geographic, demographics, and psychographics.

Lecture 3
Consumer Research
Consumer research is a part of market research in which inclination, motivation and purchase
behavior of the targeted customers are identified. Consumer research helps businesses or
organizations understand customer psychology and create detailed purchasing behavior profiles.
It uses research techniques to provide systematic information about what customers need. Using
this information brands can make changes in their products and services, making them more
customer-centric thereby increasing customer satisfaction. This will in turn help to boost
business.
An organization that has an in-depth understanding about the customer decision-making process,
is most likely to design a product, put a certain price tag to it, establish distribution centers and
promote a product based on consumer research insights such that it produces increased consumer
interest and purchases.
Consumer Research Model
According to a study conducted, till a decade ago, researchers thought differently about the
consumer psychology, where little or no emphasis was put on emotions, mood or the situation
that could influence a customer’s buying decision.
Many believed marketing was applied economics. Consumers always took decisions based on
statistics and math and evaluated goods and services rationally and then selected items from
those brands that gave them the highest customer satisfaction at the lowest cost.

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However, this is no longer the situation. Consumers are very well aware of brands and their
competitors. A loyal customer is the one who would not only return to repeatedly purchase from
a brand but also, recommend his/her family and friends to buy from the same brand even if the
prices are slightly higher but provides an exceptional customer service for products purchased or
services offered.
Here is where the Net Promoter Score (NPS) helps brands identify brand loyalty and customer
satisfaction with their consumers. Net Promoter Score survey uses a single question that is sent
to customers to identify their brand loyalty and level of customer satisfaction. Response to this
question is measured on a scale between 0-10 and based on this consumers can be identified as:
Detractors: Who have given a score between 0-6.
Passives: Who have given a score between 7-8.
Promoters: Who have given a score between 9-10.

Consumer market research is based on two types of research method:

1. Qualitative Consumer Research
Qualitative research is descriptive in nature, It’s a method that uses open-ended questions, to
gain meaningful insights from respondents and heavily relies on the following market research
methods:
Focus Groups: Focus groups as the name suggests is a small group of highly validated subject
experts who come together to analyze a product or service. Focus group comprises of 6-10
respondents. A moderator is assigned to the focus group, who helps facilitate discussions among
the members to draw meaningful insights
One-to-one Interview: This is a more conversational method, where the researcher asks open-
ended questions to collect data from the respondents. This method heavily depends on the
expertise of the researcher. How much the researcher is able to probe with relevant questions to
get maximum insights. This is a time-consuming method and can take more than one attempt to
gain the desired insights.
Content/ Text Analysis: Text analysis is a qualitative research method where researchers
analyze social life by decoding words and images from the documents available. Researchers
analyze the context in which the images are used and draw conclusions from them. Social media
is an example of text analysis. In the last decade or so, inferences are drawn based on consumer
behavior on social media.
2.Quantitative Consumer Research
In the age of technology and information, meaningful data is more precious than platinum.
Billion dollar companies have risen and fallen on how well they have been able to collect and
analyze data, to draw validated insights.
Quantitative research is all about numbers and statistics. An evolved consumer who
purchases regularly can vouch for how customer-centric businesses have become today. It’s all
about customer satisfaction, to gain loyal customers. With just one questions companies are able

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to collect data, that has the power to make or break a company. Net Promoter Score question,
“On a scale from 0-10 how likely are you to recommend our brand to your family or friends?”
How organic word-of-mouth is influencing consumer behavior and how they need to spend less
on advertising and invest their time and resources to make sure they provide exceptional
customer service.
Online surveys, questionnaires, and polls are the preferred data collection tools. Data that is
obtained from consumers is then statistically, mathematically and numerically evaluated to
understand consumer preference.
Consumer Research Process
The process of consumer research started as an extension of the process of market research. As
the findings of market research is used to improve the decision-making capacity of an
organization or business, similar is with consumer research.
The consumer research process can be broken down into the following steps:

Develop research objectives: The first step to the consumer research process is to clearly define
the research objective, the purpose of research, why is the research being conducted, to
understand what? A clear statement of purpose can help emphasize the purpose.
Collect Secondary data: Collect secondary data first, it helps in understanding if research has
been conducted earlier and if there are any pieces of evidence related to the subject matter that
can be used by an organization to make informed decisions regarding consumers.
Primary Research: In primary research organizations or businesses collect their own data or
employ a third party to collect data on their behalf. This research makes use of various data
collection methods (qualitative and quantitative) that helps researchers collect data first hand.

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Collect and analyze data: Data is collected and analyzed and inference is drawn to understand
consumer behavior and purchase pattern.
Prepare report: Finally, a report is prepared for all the findings by analyzing data collected so
that organizations are able to make informed decisions and think of all probabilities related to
consumer behavior. By putting the study into practice, organizations can become customer-
centric and manufacture products or render services that will help them achieve excellent
customer satisfaction.

Lecture 4
Motivation is based on needs and goals.
Motivation is the driving force within individuals that impels them to action. This driving force
is produced by a state of uncomfortable tension, which exists as the result of an unfulfilled need.
We all have needs, wants and desires. The drive to reduce need-inducted tension results in
behaviour that we anticipate will satisfy needs and thus bring a more comfortable state.
All behaviour is goal-orientated. Goals are the sought-after results of motivated behaviour. The
form of direction that behaviour takes – the goal that is selected – is a result of thinking process
and previous learning. There are two types of goals: generic and product-specific. A generic goal
is a general category of goal that may fulfill a certain need; a product-specific goal is a
specifically branded or labelled product that the individual sees as a way to fulfill a need.
Innate needs – those we a born with – are primarily physiological; they include all the factors
required to sustain physical life (e.g. food, water, clothing, shelter, sex).
Acquired needs – those we develop after birth – are primarily psychological; they include
esteem, fear, love and acceptance. For any given need, there are many different appropriate
goals. The specific goal selected depends on the individual’s experiences and physical capacity,
prevailing cultural norms and values, and the goal’s accessibility in the physical and social
environment.
Needs and goals are interdependent and change in response to our physical condition,
environment, interaction with other people and experiences. As needs become satisfied, new,
higher-order needs emerge that must be fulfilled.
What Affects Motivation?
Motivation is the reason, conscious or nonconscious, for behaving a particular way in a certain
situation. Brands are constantly in search of new ways to motivate consumers to engage with,
promote, and ultimately buy their products and services. The decision-making science behind
motivation is an essential element to building brand equity and a loyal customer base.
What factors influence consumer motivation?

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Three main factors work together to predict consumer behavior: emotions, situation, and
personality:
Emotions – Humans use feelings as information about objects, tasks, products, and people.
These emotions are flexible and context-specific. For example, a consumer can feel either
relaxed at a spa or excited at a basketball game. Both are positive emotions but are very different
on an arousal levels. Relaxation may motivate someone to linger and let their minds wander,
while excitement may motivate them to cheer loudly, buy a beer, or a team jersey.
Situation – Situational cues may make certain ideas more salient or top of mind, causing people
to act in ways they otherwise might not. The next time you’re in a grocery store, pay attention to
how many “free” samples you eat along your shopping journey. Research shows that people tend
to taste more samples when they see others sampling them as well.
Personality – People vary in the relative importance they place on different human needs. For
some individuals, the need to belong (i.e., being able to build and maintain strong connections
with family and friends) is of great importance, while others are driven by their need to explore
is a major driving force (i.e., to discover and create new things). Differences in the predominance
of these needs influence consumers’ reactions to ads, preferences, and shopping strategies. For
instance, a person who is high in “belonging” is more likely to spend his hard-earned money on a
family trip to Disney over a personal shopping spree.
Consumer Motivation
Consumer motivation is an internal state that drives people to identify and buy products or
services that fulfill conscious and unconscious needs or desires. The fulfillment of those needs
can then motivate them to make a repeat purchase or to find different goods and services to
better fulfill those needs.
Hierarchy of Needs
Consumer motivation is linked to Maslow's "hierarchy of needs.” According to this model,
motivational drivers have different levels of importance. The most common needs are
physiological and concern basic survival--the need for food, shelter and safety. Higher-level
needs include social ones (for relationships and love), esteem needs (recognition and status)
and self-actualization needs (fulfillment of self). According to Maslow, an individual must
meet lower-level needs before being motivated to fulfill higher-level needs.
Motivational Levels
Depending on how important a purchase is to an individual, his motivational levels may vary
from low to high. Influences include familiarity with the purchase, status factors and overall
expense and value. Where fulfillment rewards are low, as with groceries, motivation levels are
also relatively low and involve little decision-making behavior. Conversely, with a complex,
risky and emotionally-charged process such as buying a new house, the drive to achieve the
“right” result is high.
Motivational Behavior
The behavioral aspect of consumer motivation concerns the actions someone takes before
purchasing and consuming goods or services. A person might do a lot of research--evaluating

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alternatives, testing and sampling--before making a selection. She might decide to buy
something based on which goods or services most closely meet and satisfy motivational wants
and needs. Marketers aim to gain the most impact and eventual sales by linking their products
and services to clearly defined consumer needs and by understanding what motivates people to
buy.
Motivational Influences
Motivational levels differ greatly between individuals and are influenced by many external
variables. These include the social value of making the “right” decision, beliefs about brands
and alignment of brand values and personal values. If other people are involved in the decision,
their motivation also affects the behavior of the primary consumer.
Accessing Motivation
Companies and marketers use a number of different tools to help them understand consumer
motivation in relation to their products and services. This may help them orient their markets
according to different buyer motivation. Marketers use pre-purchase and post-purchase focus
groups, one-to-one interviews and online or postal surveys to develop their understanding of
consumers’ motivational drivers.
Motivation Theory and Marketing Strategy
Marketing in the 21st century is part art and part science, and both sides place a crucial role in
successful marketing. Creative expression develops marketing campaigns that catch the eye and
capture the imagination, but behind every marketing strategy are theories grounded solidly in
psychology, economics, and studies in human behavior. The scientific insights help marketers
design campaigns that speak to the fundamental concerns and desires of their audience, greatly
deepening the impact of the marketing materials.
Theory of Reasoned Action
Created by Martin Fishbein and Icek Ajzen in the late 1960s, the Theory of Reasoned Action
centers its analysis on the importance of pre-existing attitudes in the decision-making process.
The core of the theory posits that consumers act on behavior based on their intention to create or
receive a particular outcome. In this analysis, consumers are rational actors who choose to act in
their best interests.
Engel, Kollet, Blackwell (EKB) Model
The EKB Model expands on the Theory of Reasoned Action, and lays out a five-step process
that consumers use when making a purchase. The first step, input, is where consumers absorb
most of the marketing materials they see on television, newspapers or online. Once the consumer
collects the data, he or she moves into information processing, where the consumer compares the
input to past experiences and expectations.
Consumers move to the decision-making stage after a period of thought, choosing to make a
purchase based on rational insight. Consumers are affected in the decision-making phase by
process variables and external influences, including how the consumer envisions his or herself
after making the purchase.
Motivation-Need Theory
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Abraham Maslow put forward his hierarchy of needs in 1943, sending ripple effects through the
entire psychological community. Under his theory, people act to fulfill their needs based on a
five-part priority system. The needs include, in order of importance: physiological (survival),
safety, love, esteem, and self-actualization.
Hawkins Stern Impulse Buying
While many of the theories of consumer behavior focus on rational action, Hawkins Stern
believed heavily in the idea of impulse behavior. Stern argued that sudden buying impulses fit
alongside rational purchasing decisions to paint a complete picture of the average consumer.
Impulse purchases are driven largely by external stimuli and have almost no relationship to
traditional decision-making.
Stern established four categories of impulse buying. First are the pure impulse purchases, like a
candy bar at the checkout line of a grocery store. Second, consumers make reminded impulse
buys, like placing a display of hot dog buns next to a meat cooler. Third are suggested impulse
purchases, such as a warranty for an electronic device. Finally, consumers make planned impulse
decisions, where they know they want to buy a product, but are unsure about the specifics.

Lecture 5
What is Consumer Learning?
Learning is defined as a relatively permanent change in the behavior that occurs as a result of
experience of self or others. There occurs an enhancement of knowledge, skills and expertise
which are relatively permanent.
Consumer learning is defined as a process by which people gather and interpret information
about products and services and use this information/knowledge in buying patterns and
consumption behavior. As Schiffman has put it “consumer learning can be thought of as the
process by which individuals acquire the purchase and consumption knowledge and experience
that they apply to future related behavior”. Consumer learning may be intentional, where
learning is an outcome of a careful search for information; learning can also be incidental, where
learning occurs as a matter of chance, by accident or without much effort.
BASIC ELEMENTS, NATURE AND CHARACTERISTICS OF CONSUMER
LEARNING:
Elements of Learning:
The learning process comprises certain elements/ components, viz., motivation, cues, response
and reinforcement.
a) Motivation:
As has been explained in the earlier session, consumer motives lie at the very heart of consumer
behavior. When a consumer is faced with a need/want situation, there occurs an urge within him
to act towards fulfillment of the need/want through the problem solving/decision making
process. So he is motivated to search for information, either internally from his memory or

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externally through commercial, non commercial and public sources or through experience of self
and others.
b) Cues:
A cue may be defined as a weak stimulus that gives strength and direction to the motives; All the
4Ps could act as cues and give direction to motives; eg. the packaging of the product (colorful
design; easy to carry; reusable containers), price (discounts, sales), place (store display, store
layout, window dressing) and promotion (advertisement).
c) Response:
The behavior of a person constitutes the response; i.e. how a person reacts to a drive or a
stimulus, reflects a response. This response could take various forms: - It may be overt and lead
to an action; the consumer may decide to purchase the product/brand.

d) Reinforcement:
An action always has a reaction; based on the reaction, the behavior gets reinforced. In other
words, if the action (behavior) is followed by a reaction that is positive or pleasant or rewarding,
the action (behavior) gets positively reinforced; the likelihood of repetition of that action
(behavior) increases.
Importance of Consumer Learning
It is a study of the actions of the consumers that drive them to buy and use certain products.
Study of consumer buying behavior is most important for marketers as they can understand the
expectation of the consumers. It helps to understand what makes a consumer to buy a product.
Learning theories and consumer learning
Consumer Learning is the process by which individuals acquire the purchase and consumption
knowledge and experience they apply to future related behaviour.
Most of the learning is incidental. Some of it is intentional. Basic elements that contribute to an
understanding of learning are: 
 Motivation
 Cues
 Response
 Reinforcement
There are 2 theories on how Individuals learn: 
 Behavioural Theory
 Cognitive Theory
Both contribute to an understanding of consumer behaviour.

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Behavioural Theorists view learning as observable responses to stimuli, whereas Cognitive
Theorists believe that learning is a function of mental processing.
3 Major Behavioural Learning Theories are:
Classical Conditioning: Includes Repetition, Stimulus generalization and Stimulus
discrimination.                                          
Instrumental Conditioning: Instrumental Learning theorists believe that learning occurs
through a trial and error process in which the positive outcomes in the form of results or desired
outcomes lead to repeat behaviour like Repeat Purchase or Repeat Positive Word of Mouth.                                  
Both positive and negative reinforcement can be used to encourage the desired behaviour. The
timing of repetitions influences how long the learned material is retained. Learning usually
persists longer with distributed re-inforcement schedule, while mass repetitions produce more
initial learnings.                                             

Consumer Learning Under High and Low Involvement

Consumer involvement is defined as a state of mind that motivates consumers to identify with
product/service offerings, their consumption patterns and consumption behavior. ... It is the
amount of physical and mental effort that a consumer puts into a purchase decision.
High-involvement decisions are those that are important to the buyer. These decisions are
closely tied to the consumer’s ego and self-image. They also involve some risk to the consumer.
This may include financial risk (highly priced items), social risk (products that are important to
the peer group), or psychological risk (the wrong decision may cause the consumer some
concern and anxiety). In making these decisions, consumers generally feel it is worth the time
and energy needed to do research and consider solution alternatives carefully. The full, six-stage,
complex process of consumer decision making is more likely to happen with high-involvement
product purchases. In these cases, a buyer gathers extensive information from multiple sources,
evaluates many alternatives, and invests substantial effort in making the best decision.
Low-involvement decisions are more straightforward, require little risk, are repetitive, and often
lead to a habit. In effect, these purchases are not very important to the consumer. Financial,
social, and psychological risks are not nearly as great. In these cases, it may not be worth the
consumer’s time and effort to search for exhaustive information about different brands or to
consider a wide range of alternatives. A low-involvement purchase usually involves an abridged
decision-making process. In these situations, the buyer typically does little if any information
gathering, and any evaluation of alternatives is relatively simple and straightforward. Consumers
are diligent enough to get a product they want, but they generally spend no more time or effort
than is needed.

Lecture 6
What is Personality

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To understand a buyer needs and convert them into customers is the main purpose of the
consumer behavior study. To understand the buyer habits and his priorities, it is required to
understand and know the personality of the buyer.
Personality signifies the inner psychological characteristics that reflect how a person reacts to his
environment. Personality shows the individual choices for various products and brands. It helps
the marketers in deciding when and how to promote the product. Personality can be categorized
on the basis of individual traits, likes, dislikes etc.
Theories of Personality
Personality has many meanings. In consumer studies, personality is defined as consistent
responses to environmental stimuli or we can also say patterns of behaviour that are consistent
and enduring. An individual’s personality helps marketers to describe consumer segments as it
provides for orderly and coherently related experiences and behaviour.
Personality characteristics may be a basis for product positioning. For example, one segment of
the market may die because they want to stick to the group norms and therefore uses diet
product. In contest another segment is on diet because of internal need.
Personality Theories:
Marketers have used three personality theories to describe consumers:
(1) Psychoanalytic theory or Freud’s theory –
(2) Sociopsychological theory.
(3) Trait theory.
(1) Freud’s Theory:
This theory was given by Sigmund Freud. Freud’s psychoanalytical theory stresses the uncon-
scious nature of personality as a result of childhood conflicts. According to this theory, the
human personality system consists of the id, ego, and superego and conflicts are derived from
these three components.
(2) Socio – Psychological Theory:
According to this theory, the individual and society are interlinked. This theory disagrees with
Freud’s contention that personality is primarily instinctual and sexual in nature. It is also known
as the Neo – Freudian Personality Theory, researchers believe that social relationships are
fundamental to the formation and development of personality.
Alfred Adler was the foremost proponent of this social orientation. He emphasized that
individual’s strive for superiority in a social context. This he called as style of life. He also
emphasized on the individual’s efforts to overcome feelings of inferiority (i.e., they strive for
superiority)
(3) Trait Theory:

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Trait theory has been used most widely for measuring personality because it is a quantitative
approach. This theory states that an individual’s personality is composed of definite pre-
dispositionsal attributes called traits. A trait can be defined as any distinguishable, relatively
enduring way in which one individual differs from another. For example sociability relaxed
style, amount of internal control.
Trait theorists construct personality inventories and ask respondents to respond to many items by
agreeing or disagreeing with certain statements or expressing likes or dislikes for certain
situations or types of people. These items then are statistically analysed and reduced to a few
personality dimensions. This method is not like psychoanalytic and social theories and also do
not determine personality traits.
Single – trait personality tests which measure just one trait, such as self confidence are
increasingly being developed specifically for use in consumer behaviour studies. These
personality tests can be designed according to the need to measure traits such as consumer
innovativeness, consumer susceptibility to interpersonal influence (like SUSCEP helps in
knowing how consumers respond to social influence), consumer materialism (means try to assess
degree of consumer’s attachment to “world” possessions), and consumer ethnocentrism (like
CETSCALE – identifies consumer’s likelihood to accept or reject foreign – made products).
Personality traits
When we observe people around us, one of the first things that strikes us is how different people
are from one another. Some people are very talkative while others are very quiet. Some exhibit
active behaviour whereas others may live a more sedentary lifestyle. Some worry a lot, others
almost never seem anxious. Each time we use one of these words, words like “talkative,”
“quiet,” “active,” or “anxious,” to describe those around us, we are talking about a person’s
personality — the characteristic ways that people differ from one another. Personality
psychologists try to describe and understand these differences.
There are three criteria that are characterize personality traits: (1) consistency, (2) stability, and
(3) individual differences.
To have a personality trait, individuals must be somewhat consistent across situations in their
behaviours related to the trait. For example, if they are talkative at home, they tend also to be
talkative at work.
Individuals with a trait are also somewhat stable over time in behaviours related to the trait. If
they are talkative, for example, at age 30, they will also tend to be talkative at age 40.
People differ from one another on behaviours related to the trait. Sleeping is not a personality
trait and neither is consuming food — virtually all individuals do these activities, and there are
almost no individual differences.
The Five Factor Model
The fundamental work on trait dimensions conducted by Allport, Cattell, Eysenck, and many
others has led to contemporary trait models, the most important and well validated of which is

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the Five-Factor (Big Five) Model of Personality. According to this model, there are five
fundamental underlying trait dimensions that are stable across time, cross-culturally shared, and
explain a substantial proportion of behaviour

Personality and Marketing Strategy

Personality-based marketing is a strategy that has gained popularity in recent years and is
currently shaping the marketing industry. By gaining a deeper understanding of the ways specific
personality traits influence purchasing decisions, businesses can design and launch more
effective campaigns and establish stronger connections with prospective and current customers.
What is personality in marketing?
Personality in marketing is the combination of personality and behavioral science with marketing
strategies. 
What is personality science?
Personality science, or personality psychology, is a discipline within psychology that seeks to
understand the psychological patterns that are responsible for shaping and developing a person's
personality. Personalities encompass many phases of the human character, including:

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  Motivations
 Behavioral patterns
 Thinking patterns
 Emotions
 Attitude
 Intellect
 Temperament
 Skill
Through scientific research and empirical studies, personality science examines how these
patterns are expressed in a person's life.
Why should you use personality-based marketing?
Integrating data-driven insight on personality traits and how they impact consumer behavior in
your marketing strategies can help to build and grow your business. This approach helps to
create stronger connections with existing and prospective customers by allowing businesses to
create effective marketing campaigns that deliver content more likely to resonate with their
target audience.
How to test consumers for their personality profile?
Beyond understanding the concept of personality science, there are a few simple steps you
should consider when applying it to real consumers, such as:
1. Use the Big Five personality model
The Big Five personality model is a five-factor model that encompasses five key characteristics
of a person's personality. It ranks people high or low on these five personality traits:
2. Use web analytics
Web analytics is the measurement and analysis of data on the behavior of visitors to a website.
This data provides key information, including where a person lives, their age, interests and
overall consumer behavior.
3. Analyze digital footprint
Digital footprint refers to the available information about a person as a result of their online
activity. A person's digital footprint includes:
 Browsing history
 Purchasing history
 Preferred social media platforms
4. Use market segmentation

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Market segmentation aims to divide an entire consumer base into smaller groups, or segments,
based on different criteria. Some criteria researchers use are demographics, geography,
psychology and behavior.

5. Conduct surveys
Conducting surveys is one way to get to know your customers better. It's important to formulate
targeted questions that will provide you with information that corresponds to your marketing
needs.
How to use personality science in marketing
Businesses and marketers can analyze and draw conclusions about their target audience by
applying personality science frameworks and theories to their data collections and research. The
detailed information derived from their data can be used to inform marketing strategies and drive
action accordingly. Here are ways you can integrate personality science into your marketing
efforts:
1. Create customer profiles
A customer or consumer profile is a comprehensive document that provides a detailed and
unique description of a company's ideal customer based on gathered and analyzed data. It's
typically presented as an in-depth description of an actual person and goes into detail about
various aspects of a potential customer's lifestyle, including:
 Education level
 Occupation
 Values
 Goals
2. Deliver targeted communication
Understanding a person's psychological patterns can reveal the preferred style and mode of your
consumers. Traditionally, business-to-consumer communication delivered one generalized
message that didn't take personality traits and their corresponding communication preferences
into consideration.
3. Customize visual content
Leverage the information derived from your data to deliver compelling visual content most likely
to resonate with your target audience. Certain personality traits can reveal preferences with
visual components such as font styles, color schemes and the overall layout of content.
4. Launch targeted campaigns
Targeted campaigns that are representative of your consumer base can dictate every phase of
their buying journey. A detailed look into your target audience is essential in understanding the

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complete buying process, starting from initial brand awareness to their decision to purchase your
product or service.

Self and Self-image

Consumer Psychology - Buyer Perceptions and Self Concept: Buyer Perception and Buyer
Self-Concepts are two closely allied marketing ideas.  People buy products and brands because it
allows them to say something positive about themselves - because they use that product or brand.
Buyer Perception in the Market - how the buyer sees him or her self in particular aspects of the
market is determined by:
- External influences
- The particular market as a whole
- How the buyer perceives him or herself in a particular segment of a market.
Buyer Self Concept - Looking at the factors affecting consumer behavior are important. The
buyer's 'self concept' is determined by:
- How the buyer feels as a person
- Who or what the buyer would like to be
- The buyer 'exposed' as he or she would like to be seen by the world
- The buyer's intentionally hidden personality.
Positive statements about a product reinforces both perceptions of a product and a
consumer’s self-concept. Self-concept is how a consumer sees and feels about him / herself, both
the actual self and the ideal self he or she would like to become.
Self-concept also relates to how consumers want others to see them. Self-concept is a self-image
or identity made up of a subjective collection of thoughts, perceptions, and feelings. It includes
personality, abilities, occupation, and the various personal and professional roles the consumer
takes on.
Consumers use products to support their self-concepts. Products and brands are an important way
consumers reflect and shape their identities.
When prospects perceive that a product reflects an aspect of their self-concept, they form an
emotional, personal connection with that product. An emotional connection with a product is the
foundation of lifetime customer relationships.
Self-concepts fall into two categories:

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Actual self – How the consumer actually is. This is less subjective than the other types of self-
concept and includes facts like occupation, age, gender, income, etc.
Ideal self – The consumer’s perception of who she would ideally like to be.
Prospects measure their actual self against their ideal self. They want to achieve the ideal self.
The gap between the actual and ideal self can create strong motivation to buy products to bring
the actual self closer to the ideal self.
 Self-concepts of the actual and ideal selves also fall into two further categories:
Private self
Who the consumer is or wants to be for him/ herself (for example: adventurous, friendly, happy),
rather than how he or she wants others to see them.
Public self
How the consumer thinks other people see him, and how he wants to be seen (for example:
intelligent, attractive, and successful).

Self Concept and Marketing Strategy

Role of Self-Concept in Marketing
Product Image and Branding
Self-concept shapes the process of creating a product image and designing a branding strategy to a
considerable extent. To be more specific, it helps make the said product or service not only desirable
but also vital for the successful functioning of the target population. Therefore, it is crucial that the
brand personality of a particular product align with the self-concept of the target audience. In a certain
way, the specified task implied dealing with a range of obstacles, mainly due to the fact that appealing
to the unique self-concept of every potential customer is barely possible.
To appeal to the target population successfully, it is crucial to realize how potential customers see
themselves, as well as what their ideal image of themselves is. Thus, the basis for creating a successful
marketing campaign that will brand the required product as an essential attribute to the specified
image will become a possibility.
Determining the Consumer Behavior
When considering the reasons for analyzing the self-concept of the target population, one must
mention that the specified process will help define the types of consumer behavior that can be
observed in the target market.
Role of Self-Concept: Shaping Buyers’ Behavior
Seeing that a self-concept implies the desirable state that people strive to achieve, it will be legitimate
to assume that, by altering the buyers’ perception of their selves, one will be able to alter their
behaviors to a considerable degree. As a result, an impressive change in the choices that they make
when purchasing specific products is likely to be observed. Once a certain company designs the brand
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image that will be viewed by the intended audiences as the essential attribute of their self-concept, a
rapid increase in sales and the following rise in the said organization’s profit margins will be expected.
Therefore, the self-concept may be incorporated into the range of strategies used by firms to build a
connection with their intended audiences to increase the demand rates for their products and fuel
customers’ enthusiasm.

Lecture 7
Consumer Perception, Process of Perception, Elements of Perception
Consumer perception is defined as a process by which consumers sense a marketing stimulus,
and organize, interpret, and provide meaning to it. The marketing stimuli may be anything
related to the product and/or brand, and any of the elements of the marketing mix.
Process of Perception
The 5 Stages Process of Perception
1. Stimulation
The occurrence of sensory stimulation basically this part of perception process involves in
contact with a particular stimulus. The world is full of stimuli that can attract our attention
through various senses. Thus, we are able to describe systematically the sights, sound, smell and
taste that populate our conscious experience. Stimulation includes selective attention and
selective exposure.
2. Organization
The capacity to identify and recognize objects and events is crucial for normal perception.
Without that capacity, people cannot effectively use their senses. Perception which organized by
rules, schemata and scripts. Organized by rules, people perceive things that are physically close
together constitute a unit.
3. Interpretation-Evaluation
In this interpretation-evaluation stage it is two processes of stimuli by individual experiences,
needs, wants, values, expectations, physical and emotional state, gender and beliefs meaning
based on by individual’s rules, schemata and scripts.
4. Memory
After undergoing the stages of stimulation, organization and interpretation-evaluation, this leads
us to another stage called memory.
5. Recall

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After some time, the memory that are stored individuals want to recall certain information.
Recall stage reconstruct what individual heard in a way that are meaningful. Recall information
that consistent with schemas.
The Absolute Threshold
The absolute threshold is the lowest point at which an individual can experience a sensation,
while the differential threshold is the minimal difference that can be detected between two
stimuli (the just noticeable difference). For a marketing stimulus to be perceived, it must be
above the absolute threshold. The differential threshold is important when marketers do not want
consumers to either notice a difference between two stimuli (e.g., a price increase) or want
consumers to notice the difference (e.g., product improvements). The chapter also considers that
consumers do appear to have some abilities to perceive things that are just outside their
conscious level of awareness (subliminal perception).
Perception and Marketing Strategy
Marketing that builds consumers’ trust will earn sales. Perception methods are used in
advertisements and promotional tools to build a brand image that consumers will perceive as
trustworthy, valuable and suited to their own needs and self-images. As a marketer, the more you
understand how your prospective customers think, the more effective your methods will be.
Perception establishes the meaning about a product or brand when a consumer makes initial
contact. At this stage all of the senses are engaged in receiving brand marketing communication
messages. In marketing there are 4 stages of perception- Exposure, Attention, Interpretation and 
Memory.
–Exposure
It must reach the consumer
Exposure describes what occurs when a person’s senses are initially exposed to the external
stimulus of a product or brand marketing. The sensory receptors of a consumer are engaged by
product or brand cues through sight, sound, smell, taste and texture. Think about walking into
Subway, and you can smell the freshly baked bread, and the colours of the store, they are
stimulating your senses.
–Attention
It must be attended to by the consumer
Attention occurs when the consumer pays attention to messages that are consistent with their
attitudes, beliefs and needs. When a consumer cannot relate to these factors, the consumer will
lose attention.
–Interpretation
It must be interpreted correctly
Interpretation occurs when a person assigns a meaning to the sensory stimulus from a product or
brand marketing. Understanding is aided by expectations and familiarity. A consumer scans his
memory to retrieve previous experiences with the brand or a similar brand.

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–Memory
It must be stored and retrievable
The conclusion of the consumer perception process is the retention stage. This is marked by the
storage of product or brand information in short-term and long-term memory. The marketer’s
goal is to stimulate the consumer’s senses and gain attention in the proceeding stages that
translate into consumers storing the information about the product or brand into long-term
memory.

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