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  1. Consumer Behavior copyright© DR. ANUPAMAA S. CHAVAN S T U D E N T S A R E S T R I C T L Y W A R N E D N O T T O S H A R E / U P L O A D T H I S P P T O N A N Y W E B S I T E .
  2. Learning Objectives: What is Consumer Behavior Factors influencing Buyer’s Behavior Buying Habits/Shopping Behavior Buying Process
  3. Consumer Behavior Consumer behavior 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.
  4. Consumer Behaviour Marketers need to know: What one buys for cleaning teeth?.......... Toothpaste; brand is preferred:- Colgate/Dantkanti/Close-up/Dabur Why he buy’s?.......for sparkling white teeth/strong teeth/ fresh breath When he buy’s? ……Weekly/Monthly Where he buys from/……..Supermarket/Retail store/Online How much he buys?........200gm/400gm Why When Where How What Buy
  5. Factors influencing Consumer Behavior Cultural • Culture • Subculture • Social class Social • Reference groups • Family • Role & Status Personal • Age & Stages in Life • Occupation & Eco. Circumstances • Personality & Self Concept • Life Style &Values Psychological • Motivation • Perception • Learning • Emotions • Memory • Attitudes & Beliefs •Buyer
  6. What Influences Consumer Behavior? Cultural factors ◦ Culture ◦ Subcultures ◦ Social classes
  7. Cultural factors Cultural factors comprise of set of values, beliefs and ideologies of a particular community or group of individuals. It is the culture of an individual which decides the way he/she behaves. It is a learned behavior which is acquired from the surroundings in which one lives. Every individual has different sets of habits, beliefs and principles which he/she develops from his family status and background. What they see from their childhood becomes their culture.
  8. Cultural factors Eg: Youth in US may value Freedom, Independence, Success, Achievement as against an Indian youth who values Respect, Care, Honesty, Hardwork, Sacrifice People living in northern hemisphere and those living in southern hemisphere have different lifestyles, and may require/consume different products
  9. Subcultures Each culture further comprises of various subcultures such as nationalities, religion, racial groups, geographical regions. Sub culture provides more detailed identification of their members. Consumer preferences are influenced by their subculture Eg: Gujarati can be a Vaishnav or a Jain believer For some white colour is auspicious for some it is inauspicious. For Hindus eating beef is considered to be a sin whereas Muslims and Christians absolutely relish the same.
  10. Social Classes The division of members of a society into a hierarchy of distinct classes, so that members of each class share similar values, interests, and behavior Social class depend on variables such as Income, Wealth, Occupation and Education The social class in US is classified in seven ascending levels: 1. Lower lowers 2. Upper lowers 3. Working class 4. Middle class 5. Upper middles 6. Lower uppers 7. Upper uppers
  11. Social Factors Social factors such as 1. Reference groups 2. Cliques 3. Family 4. Social roles and status affect buying behavior……
  12. What Influences Consumer Behavior? Social factors Reference groups Cliques Family Roles and status
  13. Reference Groups Reference groups are all the groups which directly or indirectly influence the attitude and behavior. Reference groups influence members in three ways: 1. Exposure to new behaviors and lifestyle 2. Attitudes and Self Concept 3. Creates pressure for conformity
  14. Reference Groups Reference groups having direct influence are membership groups such as: ◦ Primary groups – Family members, friends, peers, neighbours, and coworkers ◦ Secondary Groups – Religious/Professional/Trade-Union groups People are also influenced by groups which they do not belong to: ◦ Aspirational Groups ◦ Dissociative Groups ◦ You also have Opinion Leaders who offers informal advice or information about a specific product or product category.
  15. Reference Groups Reference Groups influence individuals in 2 ways: 1.Normative influence: when consumers perform their actions that confirm to the norms set by the society. Products that are used in public have normative influence 2.Informational influence: when consumer is provided information from reliable source which helps him to make a purchase decision. Exercise: Enlist the goods/services you have purchased under the influence of various reference groups
  16. Cliques Cliques are small groups whose members interact frequently.
  17. Family Family of orientation vs. family of procreation
  18. Family Family is a group of individuals who are residing together and are related to each other by birth, marriage or adoption Family can be distinguished between two types 1. Family of Orientation: Parents and Siblings – influence a persons orientation towards religion, politics, economics, ambition 2. Family of Procreation: Spouse and Children – direct influence on everyday buying behavior of the consumers
  19. Role and Status Individual belong to many groups- family, clubs, organisation. Role refers to activities individual is required to perform as a part of that group. Each role has an impact of status which the individual has on the society. CEO of an organisation has to play two roles: -in organisation -in his family
  20. Buyer’s Roles Initiator: A person who first suggests the idea of buying the particular product or service. Influencer: A person whose view or advice influences the decision. Decider: A person who decides on any component of a buying decision; whether to buy, what to buy, how to buy, or where to buy . Buyer: The person who makes the actual purchase. User: A person who consumes or uses the product or service. State the Buyer’s role for your admission in ASMSOC
  21. Exercise: 1. Initiator- Influencer- Decider- Buyer- User- 2. Health Insurance – Unsought product; Selling Concept – Push strategy
  22. Exercise:
  23. Personal Factors Age & Life Cycle stage As an individual grows his taste and preferences change. Occupation and Economic situations influences the consumption pattern- accordingly the products are designed. - e.g. Software Co. makes different software required for - Lawyers, Engineers, Physicians, Managers etc.
  24. Personal factors Personality and Self Concepts ◦ Personality signifies the inner psychological characteristics that reflect how a person reacts to his environment. ◦ Personality is often described in terms of traits such as self confidence, dominance, autonomy, deference, sociability, defensiveness, and adaptability. ◦ Brands also have personality and consumers are likely to choose brands whose personalities match their own.
  25. Brand Personality Stanford’s Jennifer Aakar researched and identified following traits in a Brand Personality : DR. ANUPAMAA CHAVAN 25
  26. Brand Personality Sincerity: Family oriented, down to earth, cheerful, honest Excitement: Spirited, up-to-date, imaginative Competence: Successful, influential, competent, reliable Sophistication: Pretentious, wealthy, upper-class, charming Ruggedness: Athletic and outdoorsy, tough DR. ANUPAMAA CHAVAN 26
  27. Brand Personality Give five examples of goods/services belonging to each trait of brand personality. DR. ANUPAMAA CHAVAN 27
  28. Brand Personality Volvo Disney world Armani Ford Tata Levi’s Land rover Volkswagen Godrej Rolex Cartier Sophistication/Competence Excitement Sophistication Excitement Sincerity Excitement Ruggedness Competence Sincerity Sophistication Sophistication DR. ANUPAMAA CHAVAN 28
  29. Personal Factors Lifestyle & Values : It is a way how person lives. It is individual’s pattern of living in the world as expressed in activities, interests, and opinions. People from same subculture, social status and occupation may adopt quite different lifestyles Lifestyles are shaped partly by whether consumers are money constrained or time constrained Eg:- Walmart (Retail)- largest company in the world follows ‘ everyday day low prices’ – for price minded consumers Food processor for time constrained consumers. Individuals having healthy lifestyles consume healthy products.
  30. Psychological Factors……… The Psychological factors are the factors that talk about the psychology of an individual that drive his actions to seek satisfaction. It includes: ◦ Motivation ◦ Perception ◦ Learning ◦ Emotions ◦ Memory
  31. Motivation A motive is a need that is sufficiently pressing to direct the person to seek satisfaction. Needs can be classified as : biogenic and psychogenic Biogenic needs - physiological Psychogenic needs - psychological
  32. Motivation Buying Motives are the inner urges, impulses, desires, which makes an individual buy. Buying motives can be further classified as: ◦ Primary Buying Motives ◦ Secondary Buying Motives: ◦ Rational Buying Motives ◦ Emotional Buying Motives ◦ Patronage Buying Motives
  33. Buying Motives Primary Buying Motives Secondary Buying Motives Basic Needs: Food Clothing Shelter Rational/Financial Buying Motives Emotional/Non Financial Buying Motives Patronage Buying Motives Economy/Gain Profit/Income Property Investments Utility Financial instruments Love & Affection Pride & Possession Fashion Gifts Hobbies Recreation Education Suitable Location Prompt Service Quality Product Value Preposition Personnel ability
  34. Maslow’s Theory of Motivation
  35. Herzberg’s Theory Frederick Herzberg developed a two factor theory that distinguishes: ◦ Dissatisfiers – (factors that cause dissatisfaction) from ◦ Satisfiers – ( factors that cause satisfaction) ◦ The absence of dissatisfiers is not enough to motivate a purchase; satisfiers must be present. ◦ For e.g. No Warranty is a dissatisfier but it may not be the satisfier either, Ease of use is a satisfier.
  36.  This theory talks about the Unconscious, Subconscious and the Conscious mind:  ID (Instinctive Drives)  Ego  Super Ego
  37. Perception Perception is the process by which people select, organize, and interpret information to form a meaningful picture of the world from three perceptual processes: ◦ Selective attention ◦ Selective distortion ◦ Selective retention
  38. Perception Selective attention is the tendency for people to screen out most of the information to which they are exposed. Selective distortion is the tendency for people to interpret information in a way that will support what they already believe. Selective retention is the tendency to remember good points made about a brand they favor and to forget good points about competing brands.
  39. The Power of Sensory Marketing Sensory Marketing has been defined as ‘marketing that engages the consumer’s senses and affects their perception, judgement and behavior.’ All five senses are engaged in sensory marketing: ◦ Touch (Haptic) ◦ Smell ◦ Sound(audition) ◦ Taste ◦ Vision
  40. Learning Learning is the changes in an individual’s behavior arising from experience and occurs through interplay of: ◦ Drives ◦ Stimuli ◦ Cues ◦ Responses ◦ Reinforcement
  41. Learning Learning theory teaches marketers that they can build demand for a product by associating it with strong drives, using motivating cues, and providing positives reinforcement. Marketers to also note about Hedonic Bias Hedonic bias occurs when people have a general tendency to attribute success to themselves and failure to external causes.
  42. Learning In classical conditioning, the advertiser attempts to get consumers to associate their product with a particular feeling or response, in the hope that the consumer will then buy the product. ... Consumers may then associate good feelings and having fun with the product and may be more likely to buy the product. In classical conditioning, the goal is to get consumers to associate brands with a particular feeling or response. ... Coca-Cola, for example, has successfully associated their brand with happiness and satisfaction
  43. Learning Instrumental or Operant conditioning views consumers as an active participant for learning. It is referred to as instrumental conditioning because the individual's response is instrumental in getting a positive reinforcement (reward) or avoiding negative reinforcement (punishment). Instrumental/Operant conditioning might be something like an offer or a reward, such as “buy one, get one”.
  44. Emotions Emotions are changes in the body state that impact psychological processes thereby resulting in expression of feelings and observable behavioral reactions. Brands like Hallmark, McDonald’s, Coca-Cola have made an emotional connection with loyal customers for years
  45. Memory Memory is total accumulation of prior learning experiences Memory ranges in duration on a continuum from extremely short to very long term Memory encoding Memory retrieval
  46. Beliefs & Attitude Belief is a descriptive thought that a person holds about something. Attitude is a person’s enduring favorable (positive) or unfavorable (negative) evaluations, emotional feeling, and action tendencies towards some object or idea.
  47. Case Study – Domino’s Pizza American restaurant chain ◦ Founded in 1960 ◦ Opened first international pizza store in Canada ◦ 12,500 stores in more than 86 countries ◦ Delivers more than 1 million pizzas per day worldwide Domino’s Pizza faced criticism from its consumers in 2009. Lets see how this was tackled by Domino’s……
  48. Case Study: Award-Winning Marketing Campaign Marketers need to understand how consumers think, feel and act and accordingly offer clear value to each and every target customer. Domino’s Pizza faced criticism from its consumers in 2009. This is how Domino’s decided to deal with negative consumer attitudes about its pizza. From the end of 2009, when Domino’s announced its plans, until the end of 2011, the stock gained 233%, compared with 37% for its key rival, Papa John’s. The sales have been further spurred by marketing innovations such as mobile-optimised website for online ordering, new audible formats for the chain’s popular Pizza tracker, smart-phone and table apps for ordering, and the Pizza Hero game for the iPad.
  49. Case Study - Joie de Vivre Hotels Joie de Vivre is a French phrase often used in English to express a cheerful enjoyment of life Joie de Vivre Hospitality is a hotel and restaurant company based in San Francisco, California as well as Arizona, Illinios, and Hawaii, and the second-largest operator of boutique hotels in the United States.
  50. Buying/Shopping Habits
  51. Buying Process
  52. Need /Problem Recognition Internal stimuli External stimuli
  53. Information Gathering/Search Information sources: ◦ Personal: Family, Friends, Neighbors, Acquaintances ◦ Commercials: Advertising, Websites, E-mails, Sales Person, Dealers, Packaging, Displays  Public: Mass Media, Social Media, Consumer-rating organisations  Experiential: Handling, Examining, Using the Product
  54. Search Dynamics Total Set Apple, Dell, Lenovo, HP, Acer, Toshiba, Sony, Samsung, Asus, Huawei, Microsoft, Hewlett Packard Awareness Set Apple, Dell, Lenovo, HP, Acer, Hewlett Packard Consideration Set Apple, Dell, Lenovo Choice Set Apple ,Dell Decision ?
  55. Evaluation of Alternatives The attributes of interest to buyers may vary by products: ◦ Hotels: Location, Cleanliness, Atmosphere, Price ◦ Mouthwash: Color, Effectiveness, Germ Killing capacity, Taste/flavor, Price ◦ Tires: Safety, Tread life, Ride, Quality, Price ◦ Beliefs and Attitude: Belief is a descriptive thought that a person holds about something. Attitude is a person’s enduring favorable (positive) or unfavorable (negative) evaluations, emotional feeling, and action tendencies towards some object or idea.
  56. Dr. Anupamaa Chavan 56 All Brands Known Brands Unknown Brands Evoked Set (Acceptable Brands) Inept Set (Unacceptable brands) Inert Set (Indifferent Brands) Purchased Brands Not purchased Brands
  57. Evaluation of Alternatives Expectancy Value Model/Multi Attribute Attitude Model ◦ Expectancy Value model is the consumer attitude theory which proposes that customers rank products based on product characteristics. ◦ Exercise on Purchase decision to buy mobile and consumer durable product according to Expectancy Value model/ Multi Attribute Attitude Theory ◦ Marketers to apply following strategies to stimulate greater interest: ◦ Redesign the mobile (Real Repositioning) ◦ Alter beliefs about the brand (Psychological Repositioning) ◦ Alter beliefs about competitors brand (Competitive Depositioning) ◦ Alter the importance to weights ◦ Call attention to neglected attributes ◦ Shift the buyers ideals
  58. Multi Attribute Attitude Model: Particulars/ Weights Samsung Apple One Plus Oppo Price Camera Battery RAM Storage Processor Screen Total DR. ANUPAMAA CHAVAN 58
  59. Multi Attribute Attitude Model: DR. ANUPAMAA CHAVAN 59 Particulars&Weights Samsung Apple One Plus Readmi Price - Camera Battery RAM Storage Processor Screen Total 6 9 8 8 9 7 10 5 9 7 8 8 10 10 8 7 8 8 9 9 8 9 4 9 4 9 6 6 9 10 5 6 8 7 4 X 9 = 54
  60. Multi Attribute Attitude Model: 6 x 9=54 5x9=45 8x9-72 9x9=81 9 x10=90 9x10=90 7x10=70 4x10=40 8x5=40 7x5=35 8x5=40 9x5=45 8x6=48 8x6=48 8x6=48 4x6=24 9x8=72 8x8=64 9x8=72 9x8=72 7x49=49 10x7=70 9x7=63 6x7=42 10x4=40 10x4=40 8x4=32 6x4=24 390 392 397 328 DR. ANUPAMAA CHAVAN 60 Particulars&Weights Samsung Apple One Plus Readmi Price - 9 Camera - 10 Battery - 5 RAM - 6 Storage- 8 Processor - 7 Screen - 4 Total Highest Score = 397 One Plus
  61. Purchase Decision After evaluation the customer may make as many as 5 sub decisions : ◦ Brand ◦ Dealer ◦ Quantity/Size ◦ Timing ◦ Payment Method
  62. Compensatory Processes Multi Attribute Attitude Model:
  63. Non-Compensatory Processes 1. Conjunctive heuristics: 2. Disjunctive heuristics: 3. Lexicographic heuristics: 4. Elimination-by-aspects heuristics
  64. Non-Compensatory Processes But consumers often take mental shortcuts called ‘heuristics’ or thumb rule in decision process. Choice heuristics : (Non-Compensatory Processes) ◦ Conjunctive heuristics: minimum acceptable cut off level for each attribute ◦ Disjunctive heuristics: must meet minimum score on any Key attribute ◦ Lexicographic heuristics: to select a brand on the basis of important attribute ◦ Elimination-by-aspects heuristics: to compare brands on an attributes selected probabilistically ◦ ◦ Marketers to apply following strategies to stimulate greater interest: ◦ Redesign the mobile (Real Repositioning) ◦ Alter beliefs about the brand (Psychological Repositioning) ◦ Alter beliefs about competitors brand (Competitive Depositioning) ◦ Alter the importance to weights ◦ Call attention to neglected attributes ◦ Shift the buyers ideals DR. ANUPAMAA CHAVAN 64
  65. Purchase Decision After evaluation the customer may make as many as 5 sub decisions : ◦ Brand ◦ Dealer ◦ Quantity/Size ◦ Timing ◦ Payment Method
  66. Purchase Decision The Purchase takes place, but…. The final purchase decision can be disrupted by two factors: ◦ Negative feedback from other customers and the level of motivation to comply or accept the feedback. ◦ The decision may be disrupted due to one or more types of perceived risks: ◦ Functional Risk: does not perform to expectation ◦ Physical Risk: threat to physical well being ◦ Financial risk: not worth the price ◦ Social Risk: Embarrassment in front of others ◦ Psychological risk: affects the mental health ◦ Time Risk: failure of product results in an opportunity cost of finding out other product
  67. Post Purchase Behavior Marketers must monitor : ◦ Post purchase Satisfaction ◦ Post purchase Actions ◦ Post purchase Uses and Disposal
  68. Post Purchase Behavior: How consumer uses or disposes off the product
  69. Model Of Consumer Behavior (stimulus response model)
  70. Value creation…. EXERCISE: Describe the buying process in case of any five products bought by you or your family which has gone through all the steps in buying. Mention the names of individuals playing various buying roles. Also enumerate if you have encountered dissonance if any, how was it tackled?
  71. THANK YOU….