Consumer

Behaviour
By Suzanne Dsouza
 Agenda for today – 12th 2

Nov- Session 1
 Definition
 Why is Consumer Behaviour Important for companies?
 Factors affecting consumer behaviour
 The Digital Revolution – 2.0
 Recent Trends
 Effect on Market Research
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Definition
Consumer behavior can be defined as the study of psychological,
physical and social actions when individuals buy, use and dispose of
products, services, ideas, and practices.

"The behavior that consumers display in searching for,

purchasing, using, evaluating, and disposing of products
and services that they expect will satisfy their needs
(Leon G. Schiffman and Leslie Lazar Kanuk, "Consumer
Behaviour" 2007)

In other words, consumer behavior is the study of how

consumers will make their buying decision and what are the
factors that support or influence these decisions.
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Why is knowledge of
consumer behaviour
important?
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Why is Knowledge of consumer behaviour

important?
1. Consumer Differentiation
2. Retention of consumers
3. Design Relevant Marketing Programmes
4. Predicting market trends
5. Understanding competitors
6. To innovate
7. To stay relevant
8. Improve consumer service
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 behaviour.
Though you have a targeted customer demographic in your business, you can still have variations between
individual customers. Each group of consumers are different and their needs and wants differ from other groups. 
When a marketer is knowledgeable about differentiation of each group of consumers, he can

design separate marketing programmes.

Consumer differentiation will help to tailor your strategies to the needs of varying customer groups. When
consumer differentiation is done, you can expand the width and breadth of your services. You will
be able to effectively serve a wider group of people.
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.
Thus, it is very evident that creating customer and retaining them is very important. This can be done only by

understanding and paying attention towards the consumer’s buying behavior .

3. Design Relevant Marketing Programmes

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.

For example, while targeting kids market, you may have to look out for venues such as TV ads, school programes
and blogs targeting young mothers. You will need to take different messaging approaches for different consumer
groups. 
A study of consumer behavior enables the marketers to understand what motives consumers to make purchases.

Furthermore, the same  motive can be utilized in advertising media to stir the desire to make a purchase.
Moreover, marketers should take decisions regarding the brand logo, coupons, packing and gifts on the basis of
consumer behavior. 
4. Predicting market trends

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 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. Understanding competitors

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. To innovate

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. 
With the help of consumer behavior analysis, Nike realized that most of its target audience is not
professional athletes, but many of them were striving to be more like them . So at the 2012
Olympics in London, Nike introduced a campaign to encourage athletics called  ‘Find Your Greatness’. It aimed to
promote the aspirations of being an athlete, not just with high-performing athletes, but wanted to include all
people regardless of their physical capability. The campaign was well planned and was data-driven, of course,
carefully analyzed before taking any action. This message inspired many consumers and had enormous appeal
for target consumers.  
7. To stay relevant

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.  
Losing relevance will only cost the company its market share. Haven’t we seen Sony Walkman failing to stay
relevant in the digital music era, and the taxi industry doom with no preparedness to battle the UBER uprise!!
8. Improve consumer 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.

For example, if you own an electronics store, high school or college students who buy a new laptop are more
likely to understand the features they’re looking for than a person buying his first computer. With the first
demographic, your service goal will be to provide information about the latest trends in technology, while with
the second demographic, you’ll need to spend more time educating the customer, finding out what his specific
needs are, and even teaching him how to use the features of his new electronic device.
 Recap
Differentiation Designing Competitor Staying relevant
Marketing understanding
1 3 Programmes
5 7

2 4 6 8
Retention Predicting Innovation Improving
market trends customer
service
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FACTORS THAT
AFFECT CONSUMER
BEHAVIOUR
Factors affecting Consumer Behavior

1. Cultural Factors
• Consumer behavior is influenced by cultural factors like social class, buyer’s culture, and subculture. There are
three types of cultural factors include social class, culture, and subculture. Culture can be different by region,
different groups and even countries.
• Cultural shifts are always important for marketers whether marketing new products or existing products with
new features and attributes. For examples nowadays cultural shift towards health and fitness has created a
huge demand for exercise equipment, low calories and organic food and other fitness services. This cultural
shift greatly influenced the consumer behavior throughout the world i.e. America, England and Europe and
many parts of the world. People go to Gym and love organic and healthy food.
• Culture is the combination of subcultures. If you are a Muslim, Hindu or Christian, your buying behavior will be
influenced by different subcultures. It will affect your choice and preferences like your food, clothing, career
goals and recreational activities.
• Another cultural factor is the social class that can affect the consumer buying behavior in different parts of the
world. For example, in the western world, both the lower class and upper might show the same buying
behavior. But in other countries like India upper class have a tendency to buy luxury cars, gadgets, and
personal care products. But people from the lower class are unable to spend money on these purchases.
Factors affecting Consumer Behavior

2. Social Factors
• Social factors greatly influence the purchasing behavior of consumers. Social influencers are diverse and
include family, school or work communities, social interaction or any group with which an individual interacts. It
also includes an individual’s social class which comprises of education level, living conditions, and income.
• Social Reference. For example, Last month I was eagerly needed a laptop. I went to a nearby market and
purchased a MacBook Pro laptop. What factors affect my buying decision and why I purchased MacBook Pro.
It was because my closest friend already having the same brand and he is quite satisfied with this product.
• Family. Family plays an important role in the decision-making process. For example, if you are a married
person, you will always prefer those products that would benefit both husband and wife.
• Social Role and Status. Let us understand social role and status and how it affect consumer behavior. For
example, you are a Chief Financial Officer in a leading organization, you are someone’s son, husband and
father. your role can also affect the buying tendency of many people.
Factors affecting Consumer Behavior

3. Personal Factors
• Personal factors impact buying decisions and include age, economic situation and occupation. In considering
personal factors, buying behavior is also influenced by habits, opinions and interests along with other
personal issues.
• Human Life Cycle Stages is another example, here marketers target markets based on the human life cycle.
They will target teenagers with bright colors, loud music and fast food. A young couple will prefer to buy a
retirement plan and secure their future.
• Occupation and Economic Circumstances. A person occupation affects the consumer decision while buying
goods and services. For example, if you are a blue-color worker you will prefer to buy more work-related
clothes. On the other hand, if you are an office worker you will tend to buy smart clothes. Different types of
companies specialize in making products based on occupational group. For example, a software house will
develop different software for accountants, lawyers, retailers and engineers.
• Marketers closely observe buyer personal income, saving and interest rate. Their marketing mix decisions are
based on economic indicators.
Factors affecting Consumer Behavior
4. Psychological Factors
• Psychological factors that impact buying decision includes perception, motivation and beliefs and attitudes.
Every consumer will respond to marketing message based upon their attitudes and perceptions.
• Motivation. People have different needs at a time. Some needs are biological i.e. hunger, thirst and some are
psychological i.e. recognition, self-esteem and belonging. When a need reaches a certain level of intensity it
becomes a motive. According to Philip Kotler, a motive is a need that has the power to direct the person to
seek satisfaction.
• Maslow’s Hierarchy of Needs also known as Maslow’s theory of motivation was developed by Abraham
Maslow in 1943. This Maslow’s theory is based on human motivation. It is shaped like a pyramid and have a
bottom to top approach.  According to this hierarchy, there are five levels of human needs.
• Physiological needs consist of basic human needs like water, food and sleep.
• Safety needs consist physical safety of humans like personal, emotional, financial security
• Social Belonging and needs consist of love, friendship needs
• Self-Esteem are those needs looking for self-respect, recognition and social-status
• Self-actualization is the need for personal growth, development and realization.
• Freud Theory of Motivation. This theory tells us that the unconscious psychological forces such as emotions
and desires shape an individual behavior. These are three factors are Id, superego and ego.
Factors affecting Consumer Behavior

5. Perception
Buying decisions of consumers also depend on the following factors:
• Messages, advertisements, promotional materials, a consumer goes through also called selective exposure.
• Not all promotional materials and advertisements excite a consumer. A consumer does not pay attention to
everything he sees. He is interested in only what he wants to see. Such behaviour is called selective attention.
• Consumer interpretation refers to how an individual perceives a particular message.
• A consumer would certainly buy something which appeals him the most. He would remember the most
relevant and meaningful message also called as selective retention. He would obviously not remember
something which has nothing to do with his need.
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The digital
revolution
Recent Trends And the effect on Market Research
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THEN & NOW….

Then :Traditional : Face To Face
Now : Digital
WHAT IS IT?

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Impact on MR
A few examples…
A few digital innovations…

Measurement of TV/Video Viewing

Sizing, profiling and monetising the TV/video viewing audience
Helping media companies offering TV and/or video content to understand the size, the makeup,
and the behaviour of their audiences across different stations and platforms. These data feed into
decisions on how best to maximise the appeal of video content to an audience and how to
promote specific programmes to high potential viewers. In addition, the data is used for trading
advertising inventory between marketers, media agencies and media companies.

Online data collection includes minimal interaction with panellists, is unobtrusive, and offers
minute by minute data on the consumption habits of TV/video users in and out of home.
A few digital innovations…

Social Intelligence Analytics

Social listening is the process of tracking mentions of certain words, phrases, or even complex
queries across social media and the web, followed by an analysis of the data
 Understand their ever-changing consumer by revealing the specific language patterns
defining and driving the online conversation

 Benchmark and track the impact of online conversations against business goals and brand
performance

 Innovate their product and marketing strategies by surfacing new, emerging needs
A few digital innovations…

Brand Positioning
Optimise your brand positioning, portfolio and growth opportunities.

A tracker that reveals consumers’ latest attitudes, behaviours and future intentions in the context
of the pandemic, crisis recovery, social unrest, climate change and other challenges. Tracking-

• Consumer routines and habits

• Shopping category choices

• Emotions

• Consumer expectations, priorities and planning for the future

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Thanks!