Consumer Behaviour

Introduction Consumer is the basic foundation of every business. What consumer sees, thinks, prefers and buys is of great importance to marketers to fine tune their marketing offers and achieve high level of consumer acceptance and satisfaction. Rural market is a new interest among marketers to explore and understand it. Gaining an understanding of the rural market composition and behvaiour is considered one of the current challenges for the following reasons: i! "ack of right competence: #he top mgt has the commitment to understand the rural market but the competence necessary for interacting with rural attitude and behaviour is lacking at the lower, field staff level. ii! $artial approach: $icture of rural marketing is like the story of %our blind men. iii! "imited knowledge and bias: &nderstanding rural marketing remains superficial at best. Rural people are also like urban people and would have the same needs, desires and aspirations. #his is the understanding of most of the marketers and advertising people. Models of Consumer Behaviour

Marketing Offer Product, Place Price, Promotion Environment Socio-cultural Technological Economic Political

Stimuli Internal External

Organism Buyer haracteristi cs

Behaviour e !ecision Making "ction

onse#uenc Satisfaction ognitive !issonance

'odel of Consumer (ehaviour Buying Decision Process #he buying decision process follows a logical se)uence of five steps *

$eed %ecognitio n

Informatio n Search

Evaluation of alternatives

Purchas e !ecision

Post Purchase Behaviour

a. +eed recognition: When a buyer recogni,es a gap between his desired state and the actual state, buying process starts. -uch recognition may be caused by stimuli either internal or external. .t this stage, marketer

should help consumers identify their current and future problems and felt or latent needs. #o do this, marketers have to research on consumer problems and needs. b. /nformation search: Generally, consumers try to find information pertaining tot heir want satisfying products to make the right choices. #he amount of information re)uired depends upon: a. #ype of the product * convenience, shopping or speciality good. b. +ature of the product * Complex, high tech or simple and easy to distinguish. c. .vailability of sources * the consumer may obtain information from one or more of the following sources. d. $ersonal * family, friends, neighbours e. Commercial * advertising, sales people, displays f. $ublic * #0, radio, internet and print media. g. 1xperiential * handling, examining, using the product. c. 1valuation of alternatives: #he evaluation process may be done more carefully and logically in some cases, for example, consumer durables. /n case of convenience goods, which are purchased for one2 shot consumption, the evaluation may be very less. 3ccasionally, it may be impulse buying too. 1valuation re)uires designing and application of suitable criteria. 1valation methods include: 2 a. 1xpectancy value model b. "exicographic model c. Con4unctive model d. 5is4unctive model d. $urchase decision: .wareness set consists of brands which the consumer is aware of the brands, which meet initial, buying criteria, will be considered for further evaluation. #hey make up the consideration set. #hrough application of final criteria, the consumer evolves his choice set. .ll the brands in this set are acceptable to the consumer. 6owever, final choice will be made in favour of one brand. /t depends on factors influencing the mind of consumer at this final stage. &nanticipated situational factors: #hese factors could be like a vendor closing down the shutters of his factory, or introduction of a new brand by a competitor, which is more suitable to the re)uirements of the buyer. $erceived risk is high but it ay be reduced by the consumer employing one or more of the following tactics.

5eveloping purchase routines 5ecision making by groups Consulting experts or elderly people 'ore information gathering $referring reputed brands or brands with warranties or guarantees.

e. $ost purchase behaviour: $ost purchase feelings: . buyer feels satisfied when the perceived product performance is close to his7her expectations. /f it exceeds expectation, the customer is delighted else disappointed. /f he is disappointed he develops cognitive dissonance. Reactions: #wo options * Word of mouth advertising * good and bad. 5isposal: 8. Without using it fully, they dispose it off because they didn9t like it. 1lse give it to someone who likes it. :. &sing it fully, they dispose the container or refill it with other product. ;. when replacement decision is taken. What can a marketer do to make consumers favourable to the organi,ation< 8. #hey should take proper care in developing expectations of the consumers. $roduct claims shouldn9t understate or overstate the performance or characteristics of the product. :. #hey may initiate one or more of following actions to increase the level of satisfaction. $ersonal letter or thank by an advertisement. /nforming customers about the si,e of sales and number of satisfied customers. 1ducating. -etting up customer grievances cell for speedy redressal of customer grievances. #imely servicing of products. Buyer Behaviour Patterns Classification is of : types * a. 5egree of /nvolvement: 5ifferent patterns of behaviour on purchasing different types of products and services. #hey buy from nearby shops and not deliberate much on the characteristics of products. /ndividual decisions are made. /n case of durables they visit different shops and

opinions of others and evaluate product characteristics and benefits, their financial position, payment scheme and then decide. Why different patterns of behaviour< /ts because of perceived risk higher the perceived risk higher the involvement! and vice versa. .ccording to .ssael, there are = types of behaviour based on : parameters. 8. 5egree of buyer involvement 6igh7"ow! :. 5egree of differences among brands. -ignificant differences among brands %ew differences among brands 6igh /nvolvement Complex buying behaviour 5issonance reducing behaviour "ow /nvolvement 0ariety seeking buying behaviour 6abitual buying behaviour

Complex buying behaviour * -een in the case of purchasing Computers, refrigerators, automobiles etc. 'arketers should * 6elp consumers learn about the product, attributes, uses and benefits etc. 'ake comparative analysis of features and benefits of products in print media. #rain and motivate sales personnel. Generate W3' .dvertising. 5issonance reducing behaviour * $roducts like carpets and furniture are expensive but have few differences. Customers go for appearances and performance of these products. 'arkets should be intelligent in knowing probable arguments in favour and of against the product. 3n what grounds product may be appreciated or discounted, the marketers must know. 6abitual buying behaviour: $roducts like salt, wheat, cigarettes, paan masala are low involvement items and low cost and are fre)uently purchased. (rand is not bothered about. Customers don9t postpone the purchase. 'arketers need to make consumers brand conscious. 5ifferentiated marketing helps. Rational and 1motional attacks * Rational * make rational appeal and raise consciousness levels.

1x: 6orlicks with calcium, $epsodent :2in28 action, 'edimix ayurvedic beauty soap with all ingredients. 1motional * .ssociate with individual emotions like love, fear, 4ealousy and wisdom. 1x: -affola * husband9s health, Wills * 'ade for each other. 0ariety seeking behaviour * #herea re a good number of brands with different attributes and benefits. $urchasing is less expensive and fre)uent. 1x: Confectionery items, ice creams etc. (uys different items of same brand or different to experience different sight, smell, sound, touch, and taste. (rand switching occurs to try a good variety of products not because of dissatisfaction. 'arketers to take care of ; things * 8. .vailability * .void stockouts. :. .ttraction * create point of purchase promotions, incentives, advertising. ;. 0ariety * provide a range of variety on a competitive basis. 1x: >uality and 0adilal ice creams come in different si,es and flavours. b. .mount of #ime spent: $urchase behaviour classified into * +ature of purchase action $lanned buying 1mergency buying /mpulse buying $lanned * $urchase is budgeted and scheduled in advance, well thought out and predetermined. 1x: Computers, camera etc. 1mergency * $urchase made in a hurry to avoid stockouts. 1x: (uying provisions that are out of stock, buying electrical bulb at night when it fuses etc. /mpulse * $urchase made spontaneously, amused or bewitched by a product item attractiveness! 1x: 6andicrafts, ice creams, fairness creams, textiles and garment etc. Buying Evaluation Procedures (uyers process the information they have gathered about product7brands and evaluate them with help of their attributes. .lmost same evaluation procedure is adopted for rural areas as of urban areas. 1xpectancy 0alue model *

8. :. ;. =. ?. @.

Consumer identifies the attributes of the product7brands interested in. .ssigns weightages to attributes. /dentifies his consideration set of brands. 1mploys a rating scale. 3btains a comparative picture for further analysis. Weighted scores are computed by multiplying the points with respective weights. 6igh score item is selected.

"exicographic 'odel * 5escribes procedure of consumer who is more interested in selecting a brand which excels in one of the attributes arranged in order of priority. 8. $repares a list of attributes. :. $rioriti,es the attributes. ;. Compares brands on attributes. 3ne has it then goes to next. =. /f one brand is better than others he selects it. ?. 1lse proceeds to next attribute. Con4unctive 'odel * -elects a product that satisfies few attributes which he considers important. $rocedure * 8. /dentifying the important attributes. :. 5etermining the minimum attribute levels brands should possess. ;. 1valuate the available brands. =. -electing one with minimum attribute levels. 5is4unctive 'odel * Consumer is keen on one variable. . brand having satisfying levels of attribute will be chosen. Brand Loyalty (rand cynics are growing in urban areas while brands are being looked upon as reliable and trusted in rural markets. +atural tendency of humans to explore and experiment when there is an opportunity is confirmed. 1arlier brand loyalty was mainly because of brand non2availability, and other factors like lack of exposure and lack of purchasing power. A/ts tough to enter the market, but its definitely tougher to win over rural customer for a lifetime. Innovation Adoption

When a +ew product comes into market, there are different degrees of readiness to adopt that particular product. .ccording to Rogers, ? .dopter groups are * Time Lag in adoption +o 0ery less Groups /nnovator 1arly adopter Percentage :.? 8;.? Pro a le consumer . farmer, better educated and more efficient. .n educated and efficiency conscious farmer with ade)uate resources. . hesitant but adaptive farmer with moderate resources. . traditional and less efficient farmer with moderate resources. . traditional and less efficient farmer with meager resources.

"ess

1arly ma4ority

;=

"arge

"ate ma4ority

;=

0ery large

"aggard

8@

/n rural areas the youth are exposed to urban life, the students, the white collar employees and few of efficient persons in different occupations form the innovative groups influence personally on others!. /t depends on adaptability of the product also. Characteristics Relative advantage Compatibility Description #he degree to which the new product is superior to the existing one. #he degree to which the new product

-implicity Communicability 5ivisibility .ffordability -ocial approval

matches with values and expectations. #he degree to which the new product is relatively easy to use. #he degree to which the benefits can be made known to consumers. #he degree to which it can be tried on a limited basis. #he degree of economy in initial outlay and maintenance costs. #he degree of economy will gain social or community acceptance. Mar!eting Information "ystem

Concepts 'arketing environment is changing with globali,ation and emerging rural markets. /nformation has become the key source. #he main challenge is designing and managing appropriate information system. 'arketing /nformation -ystem 'B/-! defined * C.n assembly of interrelated information subsystems receiving, processing and disseminating information on a continuous basis to help make marketing decisions. -ubsystems of 'B/- * "u system /nternal Reporting -ystem 'arketing /ntelligence -ystem Information /nternal reports like orders, sales etc. /t is data on events occurred and results obtained. /nformation about relevant events7developments external to the firm. -ources are newspapers, maga,ines, 4ournals etc. -ystematic investigation of information about a phenomenon specific to marketing situation. 5esk7field research.

'arketing Research -ystem

5ecision -upport -ystem

. coordinated set of models and procedures with supporting computer software and hardware.

"ignificance 3pined by (loom, .dler and 'ilne 8DD=! #o improve new market knowledge * #o improve response capabilities #o improve persuasive communications #o improve strategy making. 2 -upport to 'B/- to marketing decision7 level wise -upport to 'B/- to marketing mix. M# $ The rural %ay 5ifferences between &rban and Rural Research and implications to marketing researchers are * a. Respondents * &rbanities are educated, have good communication and presentation skills. 'arketing savvy and exposed to marketing offers. .ware about wide range of brands. 5ifficult to get individual responses. Where as in rural areas, people are semi2literate or illiterate. #hey cannot understand urban tools and terms, cannot verbali,e their responses, less exposed to brand offers and less awareness. Cannot be interviewed individually. b. #ime: &rban life is time bound mainly in metros and cities. #hey maintain diaries, attend time management training programs etc. Where are in rural areas it is opposite! c. .ccessibility * 1asy to access when people geographically and psychologically. %amiliar with different in)uiries of market research agencies with the help of )uestionnaires. rural areas different! d. -econdary data sources * "arge volume of secondary data is available from multiple sources. Companies which exist since long time advertise and are on the advantageous side. rural areas * most companies are recent entratnts! e. $rimary data sources *

f. -ampling * g. 5ata collection * &r an ' #ural Mar!eting #esearch #able as above #ural research usiness Rural 'arket Research is still at fledgling stage. /ndian market research is worth Rs. =EEE crores., from which rural research forms 8E28?F of total. 'ain players in rural research are * 8. +C.1R :. 3RG2 '.RG ;. +%3 * '(" 8? crore research firm with .merican parentage. =. -mapark * promoted video on wheels, 6yderabad ?. '.R# lead by $radeep Bashyap! +ew 5elhi @. 3RC+ 3gilvy Rural Communication +etwork! +ew 5elhi G. Research Communication and 'arketing RC H '! +ew 5elhi I. /nitiative 'edia D. .nurag2'adison, Chennai (ig firms 0 -mall firms * -mall firms are good in this business as big firms are not interested. -i,e of rural market research is small. (ig agencies feel more comfortable dealing with men in suit who speak management 4argons. -mall marketers more interested in )ualitative data than numbers. (ut in recent times even big firms are getting interested in rural research. "electing and Attracting Mar!ets "egmentation /t is the process of dividing a heterogeneous market into homogeneous sub units. /t is based on different people and different preferences. (asic market preference patterns are * 8. 6omogeneous preferences where consumers have roughly same preferences.

:. 5iffused preferences, where consumers are scattered throughout the market by their preferences. ;. Clustered preference * Consumers found in distinct preference groups. Degrees of "egmentation Degrees of "egmentation Type Approach (ero 'ass 'arketing Consider all people as a bunch -egment 'arketing /dentifies people as different groups +iche 'arketing -erves selectively one or very few groups of people Complete 'icro 'arketing %ocuses on individuals or very small groups

i! ii!

iii!

iv!

'ass 'arketing: /ts an early :Eth century practice. .s economies evolved and society civili,ed consumer choice and re)uirements came into focus. -egmentation 'arketing: $rinciple of segmentation marketing is that buyers differ in their needs, wants, demands and behaviour. (enefits * companies can service more effectively and efficiently, company gains as creative and innovative organi,ation, company may gain monopoly by virtue of its uni)ue marketing offer. +iche 'arketing: . small group with distinctive set of traits who seek a special combination of benefits. /t identifies special sub2 groups within larger segments and offers different products and services. 'icro 'arketing: #ailoring products to suit the tastes of specific locations and individuals, this includes * a. "ocal 'arketing: /t is on geographical basis. .dvantages: 8. /t is effective :. -upports retailers who customi,e to their locality. 5isadvantages: 8. 'ay create logistical problems. :. 'ay reduce economies of scale ;. 'ay effect overall image of a brand

v!

/ndividual 'arketing: /t is also known as customi,ed marketing or one2to2one marketing. 1s: #ailors, 6otels, #ourist operators, 5octors etc.

Guide to Effective "egmentation i! 'easurable: -egments are formed with help of certain variables. #hese should be distinct, clear and measurable. ii! .ccessible: Reach is important for segmentation. iii! 5ifferentiable: 5istinguishing features iv! -ubstantial: -egments are attractive only if they are profitable. a. 6omogeneous * -egmenting people with similar perceptions, learning, preferences, attitudes and action. Covering them will be easy then. b. "arge * -hould comprise of either large number of light users or small number of heavy users. Bases of segmentation #here is no 4ust one way to segment the market. i! Geographic -egmentation * 0ariables can be ,ones7regions, states, districts, cities7towns7villages which can be by si,e, density, climate and culture. ii! 5emographic -egmentation * 6ere the division is by age, life cycle, gender, family si,e, income, occupation, education, religion and nationality. 1x: .ge * /nfants, children, #eens, Joung .dults, 1lders and seniors. iii! $sychological -egmentation * #rue dynamics of purchase can be assessed and marketing offer can be designed only on basis of psychographics of people. a. -ocial class &pper2&pper -ocial elite, wealth inherited "ower2&pper -ocial elite, wealth earned &pper2'iddle Career oriented "ower2'iddle .verage pay &pper2"ower .bove $overty "ine "ower2"ower (elow $overty "ine b. "ife style #rend setters #raditionalists Chameleons

Women especially! 6ome makers Career Women %ree -pirit c. $ersonality $sychological characteristics $hysical characteristics iv! (ehavioural -egmentation * When do people buy< 2 3ccasions Why do people buy< * (enefits sought 5o they buy< 3nce< 'ore< * &ser status 6ow much do they buy< * &sage rate 5o they repeat the buy< * "oyalty status Where do the buy< * $lace retail outlet! What do they buy< * $roducts possessed v! 'ulti2variable -egmentation * a. #hompson Rural 'arket /ndex b. "in: >uest c. '/C. Rating

Targeting .fter segmentation, we have targeting #argeting involves evaluating the various segments and selecting how many and which ones to target. /t has ; aspects * 8. 1valuation of -egments a. $rofitability: -ales volume, distribution costs, promotion costs, sales revenue, profit margins b. .ttractiveness c. Growth rate d. Company ob4ectives e. "imitations :. -election of -egments -egmentation is ranked on scores for selections. 6igh score then it is accepted. ;. Coverage of -egments Kero 'ass &ndifferentiated -ubstantial -egments 5ifferentiated -elective +iche Concentrated

&ndifferentiated * %ocuses on what is common. 5ifferentiated * %ocuses on segmentation Concentrated * Concentrated on one segement =. Choosing a covering strategy Positioning /t has ; tasks 8. /dentifying differences of the offers vis a vis compare offers $roduct -ervices $eople /mage :. -electing differences that have great competitive advantage .ttractive 5istinctive $reemptive .ffordable Communicable ;. Communicating such advantage effectively to target audiences Product "trategy Product concept and classifications i! (ased on tangibility goods are classified into 2 a. #angible Goods referred to as products b. /ntangible goods referred to as services Characteristics #angibility -eparability 0ariability $erish2ability ii! (ased on purpose of use Consumption purpose * consumer $roduction * /ndustrial7.gricultural

iii! (ased on habits shopping! Convenience goods -hopping goods -pecialty goods iv! (ased on price and )uality 'ass product $remium product v! vi! (ased on product development a. /nnovations b. /mitations (ased on brand hierarchy level a. Global brands * $epsi, Coke, "G, $HG b. +ational brands * Godre4, #ata c. Regional brands * -un #0 Channel d. "ocal brands * -urya masale, Loy Chips e. &nbranded products * 3il, %ood grains f. Commodities * tamarind, fish, meat, eggs

Concept $roduct strategy refers to the long range competitive plan involving decisions on products, product line and product mix to make proper utili,ation of resources and achieve marketing goals. "ignificance 8. .chieves product market fit :. 1ncourages innovativeness ;. $rovides competitive edge =. 'akes better use of resources Product mi) decisions $roduct mix is a set of all product liners and items offered by the company. "ength of product line "ine stretching 5ownward &pward (oth ways "ine pruning

$roduct items cane be classified as * #raffic builders (read Winners $arasites * 'ostly it is in losses and depends on bread winners "ine moderni,ation .spects to be considered are * #imings .pproach Product item decisions /t has ; key level considerations 8. Core $roduct development /t refers to benefits specified by consumer needs. $roduct has to be seen from marketing point of view and not from manufacturing point of view. :. #angible $roduct development .ny product7service has ? characteristics b. >uality * durability, capacity, efficiency, economy, reliability c. %eatures * Consumer point of view, Competitors9 point of view and Company point of view d. -tyle75esign * -tructure, shape, style e. $ackaging * $rimary packaging bottle!, -econdary packaging card board box!, -hipping packaging corrugated box! f. (randing (rand concept * (rand is a name, term, sign, symbol, design7ordering or combination (rand $olicy * (rand or not< -ponsorship, name individual or family! (rand, #he need 2 .rguments a. /dentity helps processing b. /mage gives competitive advantage c. $ersonality convinces consumers .gainst: a. /nvestment returns doubtful b. /mage and personality an emotional nonsense. c. (rand e)uity. -ensible but not new goodwill! -ponsoring * 'anufacturing brand national brand! 5istributor brand private brand!

(rand identity * +ame what< +ame how< /ndividual names 'erits and demerits $roduct group * family name 1x: Raymond * textiles (lanket family name &sha * %ans, sewing machines, pumps +irma * detergents, toothpaste, soap Colgate * 5ental cream, tooth brushes ;. .ugmented $roduct development 6olistic view Competitive Product "trategies a. "eader $roduct innovation -trategy >uality /mprovement -trategy 'ulti2brand -trategy (rand extension strategy -uperior service strategy /mage building strategy b. Challenger Cheaper goods strategy $restige goods strategy 1conomy goods strategy Reacting or proacting in above strategies of leader on high or moderate level. c. %ollower /nnovative imitation strategy 3ther strategies of leader and challenger maintaining low profile. d. +icher

 6igh7"ow )uality strategy +arrow product line -uperior -ervice /ndifferent to other companies as none is a competitor. %or 'arketer a. /dentity strategies Commodity strategy (randing strategy b. Customer value strategy 'ass product strategy $remium product strategy c. /nnovation strategy Rural2&rban Common -pecially for rural d. >uality -trategy >uality improvement strategy -purious goods strategy e. $ackaging strategy f. (rand strategies (rand extension 'ulti2brand Co2branding (rand image7e)uity management