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CONSUMER BEHAVIOUR

RESEARCH
Consumer behavior research helps markety er
to predict how consumer will react to
promotional massages and to understand why
they make particular purchase decision.
It helps in:
Formulating marketing strategies.
Analyzing the marketing mix.
Understanding factors which influence the
decision making forms the basis for the
development of new product and service
concept to meet target consumer needs.


INTRODUCTION TO
RESEARCH
RESEARCH- Systematic and objective
investigation of problem in order to discover
relevant information and principles.
Two broad categories of Research:-
= BASIC RESEARCH
=APPLIED RESEARCH
O Consumer analysts use to observe, record,
and analyze consumer reactions, behaviors,
and trends.

1. Formulate Consumer Research Problems.
2. List out research objectives.
3. Determine Research Design.
4. Data collection methods and forms.
5. Analyse and interpret the data.
6. Prepare the research report.
Contd
1. Formulation of Research Problem: Critical
problem should be carefully and precisely
defined so that research could be designed
to provide required and applicable
information.
Be Specific
Watch for symptoms

2. List Out Research Objectives- considering
probable future marketing decision.
Measurable
Attainable
Specific
3. Research Design- Series of advance
decisions comprises master plan for the
conduct of research investigation.
i. Exploratory RD- When researcher does not
know how and why certain phenomenon
occurs. To know the unknown.

ii. Descriptive Research- To describe a
phenomenon or market characteristic to
understand buyer behaviour & characteristic
of target market.
iii. Causative Research- Cause and effect
relationship. Ex: Influence of income and life
style on purchase decision.

Data Collection Methods &
Forms
There are three major Methodological
approaches:-
1. OBSERVATION- Observing consumer
behaviour in different situations.
- Natural settings
- Behaviour in Formatted conditions- reactions
to colors, packaging, displays,
advertisements, etc.
2. INTERVIEWS & SURVEYS-
- Information from large sample of consumers.
Contd
- Focus Groups -Moderator persuasion
- Longitudinal Studies -Repeated measures of
consumer activities over time. Consumption
styles of key market segments.
3. EXPERIMENTATION- Understanding cause
and effect relationships by manipulating
independent variables (number of
advertisements, package design, methods of
communication) to determine how these
changes affect dependent variables (purchase
intent and behaviour).

Secondary Data- Information collected earlier by
someone else. Ex: Published reports, news items,
Industry and trade statistics, internal database,
Internet, etc.
Primary Data- Data collected directly from market
place, i.e., customer, traders and suppliers.
Types of primary data-
i. Census- Collecting data from the entire population.

i. Sample- refers to a small part or representative of
the population
Types of Sampling Method-
a. Random Sampling- Numbers of
respondents are drawn randomly.
Eliminate biasness.
b. Purposive and Judgmental Sampling-
Prior assessment of value of
information by the respondents in terms
target market.
Raw data should be analyzed using proper
statistical tools.
It must show proper ratios, percentages,
deviation, correlation in terms of marketing
objectives.

A research report should contain:
-Introduction to the problem, objectives,
sample size, sampling procedure,
sources of data and data analysis tools.
-Research findings.
-Interpretation of research findings.
-Policy implication.
Social and Cultural Environment of
Consumer:
1. Economic Environment-
- Available Purchasing Power
- Saving patterns (U.S. & Japan)
- Debt to income ratio
- Credit availability

2. Demographic Factors:
- Population Growth
- Population Age Mix
- Ethnic Markets
- Educational Groups
- Household Patterns
- Geographical Shift in population.
Cultural effects are found in every sphere of life.
Background for all other factors.
Culture is broadly classified into two broad
categories:
i. Internal mental culture-
- Cognitive- Knowledge one acquires as he grows
in life. Such as: Inner life & God
- Normative- Values, codes of conduct and norms
controlling the behaviour of people.
ii. External Culture- Outward life i.e., Clothing,
Eating, aesthetics, etc.

1. Learned Response-
+ Transmitted solutions to recurring problems.
+ Core values of individual (early years of life).
+ Widely held beliefs
+ Two types of Cultural values-
i. Instrumental Values: Modes of conduct.
ii. Terminal Values: End state of existence.
TERMINAL VALUES
(end-state of existence)
INSTRUMENTAL VALUES
(modes of conduct)
A comfortable life Ambitious
An exciting life Broadminded
A sense of
accomplishment
Capable
Social recognition Polite
True friendship Responsible
Wisdom Self-controlled
Contd
2. Culture is Shared- Large group
phenomenon. Mostly learned from
family. Ex: Food, dressing style,
language, dialect, etc.

3. Culture is Adaptive- Continuously
changing and adjusting with changing
time. It is evolutionary rather than
revolutionary.
Culture is changing and can be changed
therefore marketer can play a significant role
in influencing the culture and mould
consumer buying behaviour accordingly.
Culture reacts to all kind of changes in
society, such as, technical, demographic,
climatic, political, etc.
RELEVANCE OF SCALE CULTURE
ON CONSUMER BEHAVIOUR
Sub-cultural Identity (subculture segments
and or distinct groups).
Sub-culture basis- geographic region,
religion, age, gender, social class, economic
status and so on.
Identification of sub-cultural factors.
Important sub-cultures Effective Marketing
strategies.



IMPORTANT SUB-CULTURES
1. AGE SUB-CULTURE:- Youth market, the
elderly market, besides various stages of
family life-cycle. Frequent purchase activities
and consumption patterns of different
stages.
Elderly market- large segment, values and
stability. Logical and less emotional.
Youth market- Peripheral route of
persuasion.

Contd
2. Gender Sub-culture:- Gender base products,
particularly women, and needs of women in
changing economic and social scenario.
Women vary from men in their views,
attitude, motivation and other factors
influencing consumer behaviour. So
marketers are looking women for certain
products and areas as a completely different
segment.


2. Religious Sub-culture:- Multiplicity of religion has its
own effect on consumer behaviour on occasions
such as birth, marriage, festivals, etc regardless of
urbanization, modernization and cosmopolitan
nature of present society.
3. Geographical Sub-culture:- This sub-cultural
behaviour depends on the region from which the
consumer belongs. And the MARKETER takes into
consideration the following factors-
- Food habits
- Clothing and dressing habits
- Special festivals celebrated
- Essential character traits in terms of spending
- Kinds of gifts appreciated
- Home decoration, etc.


CROSS CULTURAL BEHAVIOUR
Coke, Pepsi, Microsoft, Sony, Mc Donalds-
Household names.
Transnational companies- major source of
cross-cultural behaviour, through aggressive
advertisement and with the help of modern
technologies are able to change behaviour of
foreign consumers.
Favoured by- Investment opportunities,
markets, production cost, government role, etc.
Pushed by- Saturation, Administrative hassles.
Marketer should always keep in mind CORE
VALUES of the consumers in targeted country.



JAPANESE CULTURE
- Japanese language
- Homogenous
- Group is important
- Ambiguous
- General
- Unspoken Agreement
- Hold back emotions in public
- Process oriented
- Fun oriented
- Make long story short
- Nonverbal communication

- Interested in who is speaking
AMERICAN CULTURE
- English
- Diverse
- Individualistic
- Clear-cut
- Specific
- Get the facts straight
- Display emotions in public
- Result oriented
- Humour oriented
- Make short story long
- Verbal communication is
important
- Interested in what is spoken


MARKETING STRATEGIES FOR
CROSS CULTURE BUSINESS
Global Marketers should develop Strategies
keeping in mind:-
^ Local Language- meaning and usage.
^ Consumption Pattern
^ Inter-Market Segmentation- Standardization
(focus on similar consumer behaviour).
^ Localization Based on Differences.
^ Decision Making Process

Contd
^Global Advertising Effectiveness- Although TV is
major source of advertisement (61%) in most of the
countries, still other ad media has different shares in
different countries.
Radio- US(4%); UK (3%)
Newspaper & Magazines- North America (17%);
and Europe (14%).
Internet- Japan (13%); China (14%)
Billboard & Posters- France (11%); Russia (7%)
Inserts- Germany (27%); Canada (12%)

SOCIAL CLASS AND
CONSUMER BEHAVIOUR
SOCIAL CLASS: Relatively
permanent and homogenous
divisions of people within a culture.

Status Hierarchy- Broad groups in
Social Spectrum.
1. Occupation:- Affects life-styles and
consumption patterns. Ex- Blue-collar worker
Vs Manager.
Social class is not determined by income.
2. Personal Performance:- Persons success
relative to others influences his or her
status. This may include educational or
occupational achievements. Income may
serve as a gauge here.
3. INTERACTIONS:- Primary determinant of
persons social class.
Interaction variables- personal prestige,
association and socialization.
4. POSSESSIONS:- Number of possessions
and nature of choice are symbols of class
membership.
5. VALUE ORIENTATIONS:- Values indicate
the social class to which one belongs.
When a group of people share a common
set of abstract convictions that organize
and relate many specific attributes and
degree of possessed values set an
individual in a social class.
6. CLASS CONSCIOUSNESS:- The degree to which
people in a social class are aware of themselves as
a distinctive group with shared political and
economic interests.
7. SOCIAL STRATIFICATION:- refers to the
perceived hierarchies in which consumer rate
others as higher or lower in social status.
- Achieved Status
- Ascribed Status.
- Status inconsistency
UPPER
UPPER MIDDLE
MIDDLE
LOWER MIDDLE
LOWER
SOCIAL MOBILITY- refers to the process
of passing from one class to another.
[Upward & Downward Mobility]

PARODY DISPLAY- Other class
behaviour.

MARKET SEGMENTATION
Market Segmentation can be defined as the
process of dividing a market into distinct
subsets of consumers with common needs or
characteristics and selecting one or more
segments to target with a distinct marketing
mix.
MASS MARKET (Prevailing prior to market
segmentation)
Here marketer will advertise its product for
satisfying generic or common needs of the
customer & ends up in appealing to no one.
Social class can used to segment market which
includes the following steps-
- Identification of social class usage of products.
-Comparison of social class variables for
segmentation with other variables.
-Description of social class characteristics
identified in target market.
-Development of Marketing program based on
consistency with social class attributes to
maximize its effectiveness.
WHY MARKET SEGMENTATION?
Avoiding head-on competition
Shorter production runs
Differentiated promotional campaign resulting in
higher sales.
Marketing mix as per decided market segment.
Provides base for PSITIONING the product.
Bases of Market Segmentation

1. Geographic Segmentation- market is divided
by location. People who live in same area
share some similar needs and wants.
2. Demographic Segmentation- refers to vital
and measurable statistics of a population,
such as, age, sex, marital status, income,
occupation and education.
Demographics help to locate target market.
Demographics variables reveal ongoing
trends that signals business opportunities,
such as shifts in age, gender, and income
distribution.
a) AGE:- Products needs and interest often vary
with the age of consumers. There are two
types of effects concerning age:
i. AGE EFFECT- Occurrences due to
chronological age. Ex- Younger investors(30s
& 40s) tend to seek long term gains. Over 50
yrs of age tend to be more cautious and place
more importance on the intermediate gain and
current income of a potential investment.
ii. COHORT EFFECTS- Occurrences due to
growing up during a specific time period.
People hold onto the interests they grew up to
appreciate.

b) SEX:- In present day gender is no longer an
accurate way to distinguish consumers in
some product categories. Basic reason is
increasing number of dual-income
households.
c) MARITAL STATUS:- Traditionally marketers
focus the family, as households continues to
be the relevant consuming unit.
d) INCOME, EDUCATION, & OCCUPATION:-
Since the very beginning income has been an
important variable for distinguishing market
segments. Education, Occupation and Income
are closely related in cause-and-effect
relationship.
3. Psychological Segmentation:-
Psychological characteristics refer to the
intrinsic qualities of the individual consumer.
Consumer segmentation strategies are based
on specific psychological variables, such as,
motivations, personality, perceptions, learning
and attitudes.
4. Psychographic Segmentation:- Also
referred as Life-style analysis helps in
identifying responsive consumer segments.
- Psychographic profile segments-consumer
measured AIOs.
- Help in communicating product attributes in a
better way.
6. Sociocultural Segmentation:- it includes
following variables-
a) FAMILY LIFE CYCLE- At each phase, the
family unit needs different products and
services. It reflects relative age, income and
employment status.
b) SOCIAL CLASS- It is measured by a
weighted index of several demographic
variables, such as education, occupation and
income. Consumers in different social classes
vary in terms of values, product preferences,
and buying habits.

c) CULTURE AND SUBCULTURE- Culturally
distinct segments can be prospects for the
same product but often are targeted more
efficiently with different promotional appeals.
7) Cross-Cultural or Global Marketing
Segmentation:- Some global market
segments, such as teenagers, appear to want
same type of products, regardless of which
nation they call home- products that are
trendy, entertaining, and image oriented.
8) Use-Related Segmentation:- This
segmentation categorizes consumers in terms
of product, service, and brand usage
characteristics, such as level of usage, level of
awareness, and degree of brand loyalty.

Rate of Usage segmentation differentiates among
heavy users, medium users, light users, and
nonusers of specific product, service or brand. In
some products marketer found that a relatively small
group of heavy users accounts for a
disproportionately large percentage of product
usage. Similarly other marketers target the gaps in
market coverage for light and medium users.
A Framework for Segmenting a Firms Database
Segment Segment Characteristics Action
Lo Lows Low current share, low-consumption Starve
Hi Low High current share, low-consumption Tickle
Low Highs Low current share, high-consumption Chase
Hi Highs High current share, high-consumption Stroke
Market can be segmented in terms of
consumers Awareness Status. Awareness
level of the product in terms of, interest level in
the product, readiness to buy a product, or
whether consumers need to be informed about
the product.
Brand Loyalty, marketers often try to identify
the characteristics of their brand-loyal
consumers so that they can direct their
promotional efforts to people with similar
characteristics in the larger population.
9. Usage Situation Segmentation:- Particular
occasion or situation often determines what
consumer is going to buy or consume. On other
occasion, in different situation and under different
condition consumer might make different choices.
Many products are promoted for special usage
occasion. Ex: Greeting cards.
10. Benefit Segmentation:- Marketing and advertising
managers often look for most important benefit of
their product or service that will be most meaningful
to consumers. Ex: cleaner-teeth (Oral-B), Protection
of Data (Norton Antivirus), etc.
India- Dettol soap- hygiene conscious & seeking
protection from germs & contamination rather than
beauty, freshness, fragrance or economy.
Changing life-style. Ex: Microwave oven for dual-
income households.
Benefit Segmentation can be used to position
various brands within same product category.
Ex: Toothpaste
11. HYBRID SEGMENTATION :- marketers
commonly segment markets by combing
several segmentation variables rather than
relying on single segmentation base.
1. Psychographic, lifestyle, and demographic
profiles- Three question:
Whom should we target?
What should we say?
Where should we say it?
2. Geodemographic Segmentation: It is based on the
notion that people who live close to one another are
likely to have similar financial means, tastes,
preferences, lifestyles and consumption habits.
Marketers use cluster data to select retail sites and
appropriate merchandise mixes, to locate banks and
restaurants.
3. SRI consulting business intelligences and VALS
(Values and Lifestyle) system: This system works
on three primary motivations-
- Ideals Motivated- Knowledge and principals.
- Achievement Motivated- Products and services that
demonstrate success to their peers.
- Self-Expression Motivated- Represents consumer
segments which desire social or physical activity,
variety and risk.
They represent distinct attitudes, life-styles, and
decision-making styles.
INNOVATORS
THINKERS
ACHIEVERS
EXPERIENCERS
BELIVERS STRIVERS
MAKERS
SURVIVORS
High Resources
High Innovation
SRIC-BIs VALS Segments
Low Resources
Low Innovation
Self- Expression Achievement Ideals
Primary Motivation
REFERENCE GROUPS AND
FAMILY INFLUENCES
GROUP may be defined as two or more people who
interact to accomplish individual or mutual goals.
One-Sided Grouping
Membership Group
Symbolic Group

REFERENCE GROUP: It is any person or group that
serve as a point of comparison for an individual in
forming either general or specific values, attitude, or a
specific guide for behaviour.

NORMATIVE REFERENCE GROUP - that
influence general or broadly defined values
or behaviour. Helps in developing basic
code of behaviour.

COMPARATIVE REFERENCE GROUP that
serves as benchmarks for specific or
narrowly defined attitudes or behaviour. It
influences the expression of specific
consumer attitude or behaviour.


FRAMEWORK- GROUP DECISION MAKING
Search
Oriented
Decision
Routine
Decision
Active Involvement Passive Involvement
Decision Making
Complex
Specific product
category
Variety Based
Decision Making
Variety of brands &
constant changes
Loyalty
High degree of
loyalty towards
specific brands
Inertia
Repeat purchase
of a brand
(Convenience
Factor)

CHARCTERSTICS OF A GROUP:
i. Social Class (Position)
ii. Standards and Norms (Rules of
conduct)
iii. Mutual Understanding
(Communication)
iv. Group Common Activities
v. Status (Acceptable and Expectation)
vi. Socialization (Entry Rules)

FACTORS THAT AFFECT
REFERENCE GROUP INFLUENCE:-
1. INFORMATION AND EXPERIENCE- First
hand use and experience.
2. CREDIBILITY, ATTRACTIVENESS, &
POWER OF THE REFERENCE GROUP-
Induce consumer attitude and behaviour
change.
3. CONSPICUOUSNESS OF THE
PRODUCT- Stand out and status
revealing.
CONSUMER RELATED REFERNCE
GROUP:-
1. FRIENDSHIP GROUPS- Informal groups
(unstructured & lack specific authority level)
2. SHOPPING GROUP- Offshoots of family or
purchase group with social motive and reducing
purchase risk. MLM (Member to member)
3. WORK GROUPS- Formal & Informal work
group.
4. VIRTUAL GROUPS