UNIT I

Introduction to Consumer Behavior

CUSTOMERS V/S CONSUMERS

 Why this course is named as consumer

behavior not customer behavior
TYPES OF CONSUMERS

 Personal consumers

 Organization consumers
PERSONAL CONSUMERS

 The individual who buys goods and services

for his or her own use(cosmetics and haircut),
for household use(sugar,salt,furniture) for the
use of a family member(a pair of shoes for
the son), or for a friend(a pen set).
Organizational consumer

A business, government agency, or other

institution (profit or nonprofit) that buys the
goods, services, and/or equipment necessary for
the organization to function.

Eg: when any manufacturing firm buys raw

material to produce and sell its products
Development of the Marketing

Production
Concept

Product Concept

Selling Concept

Marketing
Concept
The Production Concept

 Assumes that consumers are interested

primarily in product availability at low prices
 Marketing objectives:
 Cheap, efficient production
 Intensive distribution
 Market expansion
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 Selling Concept

 Assumes that consumers are unlikely to buy a

product unless they are aggressively
persuaded to do so
 Marketing objectives:
 Sell, sell, sell
 Lack of concern for customer needs and
satisfaction
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
Consumer Behavior

The behavior that consumers display in

searching for, purchasing, using, evaluating, and
disposing of products and services that they
expect will satisfy their needs.
Buyer v/s User

 A father is buying a cycle for his school going

son

 A man is purchasing a tooth paste for his

family
The Marketing Concept
Implementing the
Marketing Concept
 Consumer  The process and
Research tools used to study
 Segmentation consumer behaviour
 Targeting
 Positioning
The Marketing Concept
Implementing the
Marketing Concept
 Consumer  Process of dividing
Research the market into
 Segmentation subsets of
 Targeting consumers with
 Positioning common needs or
characteristics
The Marketing Concept
Implementing the
Marketing Concept
 Consumer The selection of one or
Research more of the segments
 Segmentation to pursue
 Targeting
 Positioning
The Marketing Concept
Implementing the
Marketing Concept
 Consumer  Developing a distinct image for
the product in the mind of the
Research consumer
 Segmentation  Successful positioning includes:
 Targeting  Communicating the
 Positioning benefits of the product
 Communicating a unique
selling proposition
This product is
positioned as a
solution to facial
redness.
The Marketing Mix

 Product
 Price
 Place
 Promotion
Determinants of consumer behaviour
Successful Relationships

Customer Customer
Value Retention

Customer
Satisfaction
Successful Relationships
Value, Satisfaction, and
Retention
 Defined as the ratio between the
 Customer
customer’s perceived benefits
Value and the resources used to obtain
 Customer those benefits
 Perceived value is relative and
Satisfaction subjective
 Customer  Developing a value proposition is
Retention critical
Discussion Question

 How does McDonald’s create value for the

consumer?
 How do they communicate this value?
Successful Relationships
Value, Satisfaction, and
Retention
 The individual's perception of the
 Customer
performance of the product or
Value service in relation to his or her
 Customer expectations.
 Customers identified based on
Satisfaction loyalty include loyalists, apostles,
 Customer defectors, terrorists, hostages, and
Retention mercenaries
Successful Relationships
Value, Satisfaction, and
Retention
 The objective of providing value is to
 Customer
retain highly satisfied customers.
Value  Loyal customers are key
 Customer  They buy more products
Satisfaction  They are less price sensitive
 Customer  They pay less attention to
Retention competitors’ advertising
 Servicing them is cheaper
 They spread positive word of
mouth
Customer Profitability-Focused
Marketing
 Tracks costs and revenues of individual
consumers
 Categorizes them into tiers based on
consumption behavior
 A customer pyramid groups customers into
four tiers
Customer Profitability-Focused Marketing

Tier 1: Platinum
Tier 2: Gold
Tier 3: Iron
Tier 4: Lead
Traditional Marketing Concept Vs. Value and Retention Focused
Marketing

Traditional Marketing Value and Retention

Concept Focused Marketing
Make only what you can sell instead Use technology that enables
of trying to sell what you make customers to customize what
you make
Do not focus on the product; focus on Focus on the product’s
the need that it satisfies perceived value, as well as the
need that it satisfies
Market products and services that Utilize an understanding of
match customers’ needs better than customer needs to develop
competitors’ offerings offerings that customers
perceive as more valuable than
competitors’ offerings
Impact of Digital Technologies

 Consumers have more power and access to

information
 Marketers can gather more information about
consumers
 The exchange between marketer and customers is
interactive and instantaneous and goes beyond the
PC.
 Marketers must offer more products and services
Societal Marketing Concept

Marketers adhere to principles of social

responsibility in the marketing of their goods
and services; that is, they must endeavor to
satisfy the needs and wants of their target
markets in ways that preserve and enhance
the well-being of consumers and society as a
whole.
Digital Revolution in the Marketplace

Allows customization of products, services, and

promotional messages like never before
Enhances relationships with customers more
effectively and efficiently
Has increased the power of customers and
given them access to more information
Cont.

 Changes in segmentation strategies

 Re-evaluation of promotional budgets
 reduced impact of television?
 More internet-based promotion?
 Integrated marketing becomes critical
 Using off-line promotions to drive
consumers to company’s website (and vice-
a-versa)
Cont.

 Revamping distribution systems

 Direct distribution becomes more of an option
 Pricing methods may need to be re-
evaluated
 Comparison shopping made easier
 Consumer research methods may
change
 How do you measure web-based promotions?
Why consumer Behaviour -sumup

 Understanding consumer behaviour will

help you become better marketers as it
is the foundation for
 Segmenting markets
 Positioning products
 Developing an appropriate marketing
Cont.

 Knowledge of consumer behaviour is

essential for non-profit organizations
 Non profits have different customers to
please
 Donors, users, volunteers, general public,
government
conclusion
Business Leaders Who Understood
Consumer Behaviour
Thank You