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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) Lack of right competence: The 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) Partial approach: Picture of rural marketing is like the story of
Four blind men.
(iii) Limited knowledge and bias: Understanding rural marketing
remains superficial at best. Rural people are also like urban people
and would have the same needs, desires and aspirations. This is the
understanding of most of the marketers and advertising people.

Models of Consumer Behaviour

Marketing
Offer
Product, Place
Consequenc
Price, Stimuli Organism Behaviour
e
Promotion
Buyer Decision Satisfaction
Internal
Environment Characteristi Making Cognitive
External
cs Action Dissonance
Socio-cultural
Technological
Economic
Political

Model of Consumer Behaviour


Buying Decision Process
The buying decision process follows a logical sequence of five steps –

Need Informatio Evaluation Purchas Post


Recognitio n of e Purchase
n Search alternative Decision Behaviour
s

a. Need recognition: When a buyer recognizes a gap between his desired


state and the actual state, buying process starts. Such recognition may
be caused by stimuli either internal or external. At this stage, marketer
should help consumers identify their current and future problems and
felt or latent needs. To do this, marketers have to research on
consumer problems and needs.
b. Information search: Generally, consumers try to find information
pertaining tot heir want satisfying products to make the right choices.
The amount of information required depends upon:
a. Type of the product – convenience, shopping or speciality
good.
b. Nature of the product – Complex, high tech or simple and easy
to distinguish.
c. Availability of sources – the consumer may obtain information
from one or more of the following sources.
d. Personal – family, friends, neighbours
e. Commercial – advertising, sales people, displays
f. Public – TV, radio, internet and print media.
g. Experiential – handling, examining, using the product.
c. Evaluation of alternatives: The evaluation process may be done more
carefully and logically in some cases, for example, consumer
durables. In case of convenience goods, which are purchased for one-
shot consumption, the evaluation may be very less. Occasionally, it
may be impulse buying too. Evaluation requires designing and
application of suitable criteria. Evalation methods include: -
a. Expectancy value model
b. Lexicographic model
c. Conjunctive model
d. Disjunctive model
d. Purchase decision: Awareness set consists of brands which the
consumer is aware of the brands, which meet initial, buying criteria,
will be considered for further evaluation. They make up the
consideration set. Through application of final criteria, the consumer
evolves his choice set. All the brands in this set are acceptable to the
consumer. However, final choice will be made in favour of one brand.
It depends on factors influencing the mind of consumer at this final
stage.
Unanticipated situational factors: These 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 requirements of the buyer.
Perceived risk is high but it ay be reduced by the consumer employing
one or more of the following tactics.
 Developing purchase routines
 Decision making by groups
 Consulting experts or elderly people
 More information gathering
 Preferring reputed brands or brands with warranties or
guarantees.

e. Post purchase behaviour:

Post purchase feelings: A buyer feels satisfied when the perceived product
performance is close to his/her expectations. If it exceeds expectation, the
customer is delighted else disappointed. If he is disappointed he develops
cognitive dissonance.
Reactions: Two options – Word of mouth advertising – good and bad.
Disposal: 1. Without using it fully, they dispose it off because they didn’t
like it. Else give it to someone who likes it.
2. Using it fully, they dispose the container or refill it with other product.
3. when replacement decision is taken.

What can a marketer do to make consumers favourable to the organization?


1. They should take proper care in developing expectations of the
consumers. Product claims shouldn’t understate or overstate the
performance or characteristics of the product.
2. They may initiate one or more of following actions to increase the
level of satisfaction.
 Personal letter or thank by an advertisement.
 Informing customers about the size of sales and number of
satisfied customers.
 Educating.
 Setting up customer grievances cell for speedy redressal of
customer grievances.
 Timely servicing of products.

Buyer Behaviour Patterns


Classification is of 2 types –
a. Degree of Involvement: Different patterns of behaviour on purchasing
different types of products and services. They buy from nearby shops
and not deliberate much on the characteristics of products. Individual
decisions are made. In 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? Its because of perceived risk (higher
the perceived risk higher the involvement) and vice versa.

According to Assael, there are 4 types of behaviour based on 2 parameters.


1. Degree of buyer involvement (High/Low)
2. Degree of differences among brands.

High Involvement Low Involvement


Significant differences Complex buying Variety seeking buying
among brands behaviour behaviour
Few differences among Dissonance reducing Habitual buying
brands behaviour behaviour

Complex buying behaviour – Seen in the case of purchasing Computers,


refrigerators, automobiles etc. Marketers should –
 Help consumers learn about the product, attributes, uses and
benefits etc.
 Make comparative analysis of features and benefits of products
in print media.
 Train and motivate sales personnel.
 Generate WOM Advertising.

Dissonance reducing behaviour – Products like carpets and furniture are


expensive but have few differences. Customers go for appearances and
performance of these products.
Markets should be intelligent in knowing probable arguments in favour and
of against the product. On what grounds product may be appreciated or
discounted, the marketers must know.

Habitual buying behaviour: Products like salt, wheat, cigarettes, paan masala
are low involvement items and low cost and are frequently purchased. Brand
is not bothered about. Customers don’t postpone the purchase. Marketers
need to make consumers brand conscious. Differentiated marketing helps.
Rational and Emotional attacks –
Rational – make rational appeal and raise consciousness levels.
Ex: Horlicks with calcium, Pepsodent 2-in-1 action, Medimix ayurvedic
beauty soap with all ingredients.
Emotional – Associate with individual emotions like love, fear, jealousy and
wisdom.
Ex: Saffola – husband’s health, Wills – Made for each other.

Variety seeking behaviour – Therea re a good number of brands with


different attributes and benefits. Purchasing is less expensive and frequent.
Ex: Confectionery items, ice creams etc. Buys different items of same brand
or different to experience different sight, smell, sound, touch, and taste.
Brand switching occurs to try a good variety of products not because of
dissatisfaction.
Marketers to take care of 3 things –
1. Availability – Avoid stockouts.
2. Attraction – create point of purchase promotions, incentives,
advertising.
3. Variety – provide a range of variety on a competitive basis. Ex:
Quality and Vadilal ice creams come in different sizes and flavours.

b. Amount of Time spent: Purchase behaviour classified into –


Nature of purchase action
 Planned buying
 Emergency buying
 Impulse buying

Planned – Purchase is budgeted and scheduled in advance, well thought out


and predetermined. Ex: Computers, camera etc.
Emergency – Purchase made in a hurry to avoid stockouts. Ex: Buying
provisions that are out of stock, buying electrical bulb at night when it fuses
etc.
Impulse – Purchase made spontaneously, amused or bewitched by a product
item (attractiveness) Ex: Handicrafts, ice creams, fairness creams, textiles
and garment etc.

Buying Evaluation Procedures


Buyers process the information they have gathered about product/brands and
evaluate them with help of their attributes. Almost same evaluation
procedure is adopted for rural areas as of urban areas.

Expectancy Value model –


1. Consumer identifies the attributes of the product/brands interested in.
2. Assigns weightages to attributes.
3. Identifies his consideration set of brands.
4. Employs a rating scale.
5. Obtains a comparative picture for further analysis.
6. Weighted scores are computed by multiplying the points with
respective weights. High score item is selected.

Lexicographic Model – Describes procedure of consumer who is more


interested in selecting a brand which excels in one of the attributes arranged
in order of priority.
1. Prepares a list of attributes.
2. Prioritizes the attributes.
3. Compares brands on attributes. One has it then goes to next.
4. If one brand is better than others he selects it.
5. Else proceeds to next attribute.

Conjunctive Model – Selects a product that satisfies few attributes which he


considers important.
Procedure – 1. Identifying the important attributes.
2. Determining the minimum attribute levels brands should possess.
3. Evaluate the available brands.
4. Selecting one with minimum attribute levels.

Disjunctive Model – Consumer is keen on one variable. A brand having


satisfying levels of attribute will be chosen.

Brand Loyalty
Brand cynics are growing in urban areas while brands are being looked upon
as reliable and trusted in rural markets.

Natural tendency of humans to explore and experiment when there is an


opportunity is confirmed. Earlier brand loyalty was mainly because of brand
non-availability, and other factors like lack of exposure and lack of
purchasing power.

‘Its tough to enter the market, but its definitely tougher to win over rural
customer for a lifetime.

Innovation Adoption
When a New product comes into market, there are different degrees of
readiness to adopt that particular product.

According to Rogers, 5 Adopter groups are –

Time Lag in Groups Percentage Probable


adoption consumer
No Innovator 2.5 A farmer, better
educated and
more efficient.
Very less Early adopter 13.5 An educated and
efficiency
conscious farmer
with adequate
resources.
Less Early majority 34 A hesitant but
adaptive farmer
with moderate
resources.
Large Late majority 34 A traditional and
less efficient
farmer with
moderate
resources.
Very large Laggard 16 A traditional and
less efficient
farmer with
meager
resources.

In 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).
It depends on adaptability of the product also.

Characteristics Description
Relative advantage The degree to which the new product
is superior to the existing one.
Compatibility The degree to which the new product
matches with values and
expectations.
Simplicity The degree to which the new product
is relatively easy to use.
Communicability The degree to which the benefits can
be made known to consumers.
Divisibility The degree to which it can be tried
on a limited basis.
Affordability The degree of economy in initial
outlay and maintenance costs.
Social approval The degree of economy will gain
social or community acceptance.
Marketing Information System
Concepts
Marketing environment is changing with globalization and emerging rural
markets. Information has become the key source. The main challenge is
designing and managing appropriate information system.

Marketing Information System (MKIS) defined –


“An assembly of interrelated information subsystems receiving, processing
and disseminating information on a continuous basis to help make marketing
decisions.

Subsystems of MKIS –

Subsystem Information
Internal Reporting System Internal reports like orders, sales etc.
It is data on events occurred and
results obtained.
Marketing Intelligence System Information about relevant
events/developments external to the
firm. Sources are newspapers,
magazines, journals etc.
Marketing Research System Systematic investigation of
information about a phenomenon
specific to marketing situation.
Desk/field research.
Decision Support System A coordinated set of models and
procedures with supporting computer
software and hardware.

Significance
Opined by Bloom, Adler and Milne (1994)

To improve new market knowledge –


To improve response capabilities
To improve persuasive communications
To improve strategy making.

- Support to MKIS to marketing decision/ level wise


 Support to MKIS to marketing mix.

MR – The rural Way


Differences between Urban and Rural Research and implications to
marketing researchers are –
a. Respondents – Urbanities are educated, have good
communication and presentation skills. Marketing savvy and
exposed to marketing offers. Aware about wide range of
brands. Difficult to get individual responses.
Where as in rural areas, people are semi-literate or illiterate. They
cannot understand urban tools and terms, cannot verbalize their
responses, less exposed to brand offers and less awareness. Cannot
be interviewed individually.
b. Time: Urban life is time bound mainly in metros and cities.
They maintain diaries, attend time management training
programs etc.
(Where are in rural areas it is opposite)
c. Accessibility – Easy to access when people geographically and
psychologically. Familiar with different inquiries of market
research agencies with the help of questionnaires.
(rural areas different)
d. Secondary data sources – Large 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. Primary data sources –
f. Sampling –
g. Data collection –

Urban V Rural Marketing Research

Table as above

Rural research business


Rural Market Research is still at fledgling stage. Indian market research is
worth Rs. 4000 crores., from which rural research forms 10-15% of total.

Main players in rural research are –


1. NCAER
2. ORG- MARG
3. NFO – MBL 15 crore research firm with American parentage.
4. Smapark – promoted video on wheels, Hyderabad
5. MART (lead by Pradeep Kashyap) New Delhi
6. ORCN(Ogilvy Rural Communication Network) New Delhi
7. Research Communication and Marketing (RC & M) New Delhi
8. Initiative Media
9. Anurag-Madison, Chennai

Big firms V Small firms – Small firms are good in this business as big firms
are not interested.
 Size of rural market research is small.
 Big agencies feel more comfortable dealing with men in suit
who speak management jargons.
 Small marketers more interested in qualitative data than
numbers.
But in recent times even big firms are getting interested in rural research.

Selecting and Attracting Markets


Segmentation
It is the process of dividing a heterogeneous market into homogeneous sub
units. It is based on different people and different preferences.

Basic market preference patterns are –


1. Homogeneous preferences where consumers have roughly same
preferences.
2. Diffused preferences, where consumers are scattered throughout the
market by their preferences.
3. Clustered preference – Consumers found in distinct preference
groups.

Degrees of Segmentation

Degrees of Zero Complete


Segmentation
Type Mass Segment Niche Micro
Marketing Marketing Marketing Marketing
Approach Consider all Identifies Serves Focuses on
people as a people as selectively individuals or
bunch different one or very very small
groups few groups groups
of people

(i) Mass Marketing: Its an early 20th century practice. As economies


evolved and society civilized consumer choice and requirements
came into focus.
(ii) Segmentation Marketing: Principle of segmentation marketing is
that buyers differ in their needs, wants, demands and behaviour.
Benefits – companies can service more effectively and efficiently,
company gains as creative and innovative organization, company
may gain monopoly by virtue of its unique marketing offer.
(iii) Niche Marketing: A small group with distinctive set of traits who
seek a special combination of benefits. It identifies special sub-
groups within larger segments and offers different products and
services.
(iv) Micro Marketing: Tailoring products to suit the tastes of specific
locations and individuals, this includes –
a. Local Marketing: It is on geographical basis.
Advantages:
1. It is effective
2. Supports retailers who customize to their locality.
Disadvantages:
1. May create logistical problems.
2. May reduce economies of scale
3. May effect overall image of a brand

(v) Individual Marketing: It is also known as customized marketing or


one-to-one marketing. Es: Tailors, Hotels, Tourist operators,
Doctors etc.

Guide to Effective Segmentation


(i) Measurable: Segments are formed with help of certain variables.
These should be distinct, clear and measurable.
(ii) Accessible: Reach is important for segmentation.
(iii) Differentiable: Distinguishing features
(iv) Substantial: Segments are attractive only if they are profitable.
a. Homogeneous – Segmenting people with similar perceptions,
learning, preferences, attitudes and action. Covering them will
be easy then.
b. Large – Should comprise of either large number of light users
or small number of heavy users.

Bases of segmentation
There is no just one way to segment the market.
(i) Geographic Segmentation – Variables can be zones/regions, states,
districts, cities/towns/villages which can be by size, density,
climate and culture.
(ii) Demographic Segmentation – Here the division is by age, life
cycle, gender, family size, income, occupation, education, religion
and nationality.
Ex: Age – Infants, children, Teens, Young Adults, Elders and seniors.
(iii) Psychological Segmentation – True dynamics of purchase can be
assessed and marketing offer can be designed only on basis of
psychographics of people.
a. Social class
Upper-Upper Social elite, wealth inherited
Lower-Upper Social elite, wealth earned
Upper-Middle Career oriented
Lower-Middle Average pay
Upper-Lower Above Poverty Line
Lower-Lower Below Poverty Line

b. Life style
Trend setters
Traditionalists
Chameleons
(Women especially)
Home makers
Career Women
Free Spirit
c. Personality
Psychological characteristics
Physical characteristics

(iv) Behavioural Segmentation –


When do people buy? - Occasions
Why do people buy? – Benefits sought
Do they buy? Once? More? – User status
How much do they buy? – Usage rate
Do they repeat the buy? – Loyalty status
Where do the buy? – Place (retail outlet)
What do they buy? – Products possessed

(v) Multi-variable Segmentation –


a. Thompson Rural Market Index
b. Lin: Quest
c. MICA Rating

Targeting
After segmentation, we have targeting
Targeting involves evaluating the various segments and selecting how many
and which ones to target. It has 3 aspects –
1. Evaluation of Segments
a. Profitability: Sales volume, distribution costs, promotion costs,
sales revenue, profit margins
b. Attractiveness
c. Growth rate
d. Company objectives
e. Limitations
2. Selection of Segments
Segmentation is ranked on scores for selections. High score then it is
accepted.
3. Coverage of Segments
Zero Mass Undifferentiated
Substantial Segments Differentiated
Selective Niche Concentrated

Undifferentiated – Focuses on what is common.


Differentiated – Focuses on segmentation
Concentrated – Concentrated on one segement

4. Choosing a covering strategy

Positioning
It has 3 tasks
1. Identifying differences of the offers vis a vis compare offers
 Product
 Services
 People
 Image
2. Selecting differences that have great competitive advantage
 Attractive
 Distinctive
 Preemptive
 Affordable
 Communicable
3. Communicating such advantage effectively to target audiences

Product Strategy

Product concept and classifications


(i) Based on tangibility goods are classified into -
a. Tangible Goods referred to as products
b. Intangible goods referred to as services

Characteristics
Tangibility
Separability
Variability
Perish-ability

(ii) Based on purpose of use


Consumption purpose – consumer
Production – Industrial/Agricultural

(iii) Based on habits (shopping)


Convenience goods
Shopping goods
Specialty goods

(iv) Based on price and quality


Mass product
Premium product

(v) Based on product development


a. Innovations
b. Imitations
(vi) Based on brand hierarchy level
a. Global brands – Pepsi, Coke, LG, P&G
b. National brands – Godrej, Tata
c. Regional brands – Sun TV Channel
d. Local brands – Surya masale, Joy Chips
e. Unbranded products – Oil, Food grains
f. Commodities – tamarind, fish, meat, eggs

Concept
Product strategy refers to the long range competitive plan involving
decisions on products, product line and product mix to make proper
utilization of resources and achieve marketing goals.

Significance
1. Achieves product market fit
2. Encourages innovativeness
3. Provides competitive edge
4. Makes better use of resources

Product mix decisions


Product mix is a set of all product liners and items offered by the company.
Length of product line
Line stretching
Downward
Upward
Both ways
Line pruning
Product items cane be classified as –
Traffic builders
Bread Winners
Parasites – Mostly it is in losses and depends on bread winners
Line modernization
Aspects to be considered are –
Timings
Approach

Product item decisions


It has 3 key level considerations
1. Core Product development
It refers to benefits specified by consumer needs. Product has to be
seen from marketing point of view and not from manufacturing point
of view.
2. Tangible Product development
Any product/service has 5 characteristics
b. Quality – durability, capacity, efficiency, economy, reliability
c. Features – Consumer point of view, Competitors’ point of view
and Company point of view
d. Style/Design – Structure, shape, style
e. Packaging – Primary packaging (bottle), Secondary packaging
(card board box), Shipping packaging (corrugated box)
f. Branding
Brand concept – Brand is a name, term, sign, symbol, design/ordering or
combination
Brand Policy – Brand or not? Sponsorship, name (individual or family)
Brand, The need -
Arguments
a. Identity helps processing
b. Image gives competitive advantage
c. Personality convinces consumers

Against:
a. Investment returns doubtful
b. Image and personality an emotional nonsense.
c. Brand equity. Sensible but not new (goodwill)

Sponsoring – Manufacturing brand (national brand)


Distributor brand (private brand)

Brand identity – Name what?


Name how?

Individual names
Merits and demerits

Product group – family name


Ex: Raymond – textiles

Blanket family name


Usha – Fans, sewing machines, pumps
Nirma – detergents, toothpaste, soap
Colgate – Dental cream, tooth brushes

3. Augmented Product development


Holistic view

Competitive Product Strategies


a. Leader
 Product innovation Strategy
 Quality Improvement Strategy
 Multi-brand Strategy
 Brand extension strategy
 Superior service strategy
 Image building strategy

b. Challenger
 Cheaper goods strategy
 Prestige goods strategy
 Economy goods strategy
 Reacting or proacting in above strategies of leader on high or moderate
level.

c. Follower
 Innovative imitation strategy
 Other strategies of leader and challenger maintaining low profile.

d. Nicher
 High/Low quality strategy
 Narrow product line
 Superior Service
 Indifferent to other companies as none is a competitor.

For Marketer
a. Identity strategies
 Commodity strategy
 Branding strategy

b. Customer value strategy


 Mass product strategy
 Premium product strategy

c. Innovation strategy
 Rural-Urban Common
 Specially for rural

d. Quality Strategy
 Quality improvement strategy
 Spurious goods strategy

e. Packaging strategy
f. Brand strategies
Brand extension
 Multi-brand
 Co-branding
 Brand image/equity management