Understanding

Consumer Behaviour
 Learning Objectives
1. To understand what consumer behavior is and
the different types of consumers.
2. To understand the relationship between
consumer behavior and the marketing concept,
the societal marketing concept
3. To understand the factors influencing consumers
4. To understand how new technologies are
enabling marketers to better satisfy the needs
and wants of consumers.
5. Understanding concept of co-creation
What is Consumer Behavior……?
• Consumer behavior is the study of consumers’
choices during searching, evaluating,
purchasing, and using products and services
that they believe would satisfy their needs.
• It is not just individuals, but households,
families, and groups that influence the
decisions we make.
• Consumer research takes place at every phase
of the consumption process; i.e. before the
purchase, during the purchase, and after the
purchase.
 Covid-19 and Consumer behaviour
• Change in consumers ‘preferences’ and attitude
• low demand for non-essential goods and services
• High demand for OTT, Online education providers,
online gaming etc.
• Acceleration in "buy local" trend.
• Boost in digital commerce
• focus on health
• rise in conscious consumption
Brands Respond to COVID-19
 Why Study Consumer Behaviour?

• Differences among consumers

• Consumers change with time
• Limited success with new product launches
• Better understanding of how we think
• Rapid environmental changes

Marketers must become astute analysts

of consumer motivation and behaviour
Consumer Behavior Is Interdisciplinary
• The Marketing Concept The premise that marketing consists
of satisfying consumers’ needs, creating value, and retaining customers,
and that companies must produce only those goods that they have
already determined would satisfy consumer needs and meet
organizational goals.

• Societal Marketing Concept

• -While being customer-centric, the marketer should act in a manner that
enhances social and ethical well-being and preserves environmental concerns.

• Consumers consider issues like carbon footprint, raw-materials sourcing

practices, treatment of employees, contributions to the communities and so on..

New graffiti ink made from pollution hits the

streets of Hong Kong
The Wheel of Consumer Behavior
 Some Issues That Arise During Stages in
the Consumption Process

There are many different theories and models used to explain why consumers act as
they do. Are consumers fundamentally active or passive? Rational or emotional? How
do they make buying decisions?
The Stimulus-Response Model or
Black box model
 Understanding Consumers’ brain
• Two systems in the Brain: System 1 (Reptilian +
Middle brain) and System 2 (NeoCortex)
(source:Daniel Kahneman, recipient of the 2002
Nobel prize, Thinking Fast and Slow)
• Outer brain: responsible for processing the written
language, complex thinking, calculating, and
rationalizing your decision.
• Middle brain processes emotional responses
• reptilian brain is responsible for instinct and
survival. Its main focus is to avoid pain.
How To Reach The Reptilian Brain With
Your Value Proposition
Marketers use specific techniques to captivate
consumers:
• appeal to their innate selfishness,
• demonstrate importance through contrast,
• emphasize value tangibility,
• focus on beginning and end,
• use a visual metaphor,
• strike an emotional chord.
Strategy: 1. DIAGNOSE THE PAIN
2. DIFFERENTIATE YOUR CLAIMS
3. DEMONSTRATE THE GAIN
4. DELIVER TO THE REPTILIAN BRAIN
Technology Driven Consumer Behavior

How does technology affect the Marketing Mix?

Provide examples
• Interactive and novel communication channels
• Customizing products and promotional messages
• Better prices and distribution

• https://www.youtube.com/watch?time_continue=195&v=R
8RIqJLUYSE&feature=emb_logo
 Value Exchange
• Technologies create a value exchange
• Technology makes it easier to shop and access information,
entertainment, and customized products
• Consumers pay for content with information about
themselves.
• Provide two examples where brands used technology
to engage consumers/enhance customer relationships.
• Provide two examples where technology was used to
add value to the consumer.
Adidas:
https://www.youtube.com/watch?time_continue=78&v=oSNP
FYTBpBo&feature=emb_logo
https://www.youtube.com/watch?time_continue=46&v=fFL2D
k2HYro&feature=emb_logo
Technology and Customer Relationships
Technologies often enhance customer relationships and
retention by engaging consumers with brands.
• a. Emotional Bonds
– Personal commitment and attachment; Social media
attempts to get consumers to engage emotionally with
products and brands
• Transactional Bonds
– Mechanics and structures that facilitate exchanges
between consumers and sellers; Factors like
assortment and transaction ease could shape the
relationship
 More Precise Targeting

• Cookies
• Global Positioning Systems (GPS)
• Selfies
• Interactive communications

Cross-Screen Marketing
A promotional strategy that consists of tracking and targeting users across their
computers, mobile phones, and tablets, and sending them personalized ads based
on their interests, as observed by marketers.

Refer article: What Do Consumers Want? Look at Their Selfies

 Co-creation in Marketing
“Co-creation is an active, creative and social process, based on collaboration between
producers and users, that is initiated by the firm to generate value for customers.“
ITC’s customer interaction Centre, Godrej Hair Care Institute, L’Oreal research and
innovation Centre, Immersion programmes
Presumers: push, fund, and promote products and services before they are realized
Custowners: Funding in the brands they buy from
User generated content: advt, product innovation, feedback, test marketing
Threadless.com- online T-shirt seller, crowdsourcing model designs and community
voting (source: “Local Motors: Designed by the Crowd, Built by the Customer);
Camisteria (crowd sourcing clothing design), Wacoal
Challenge-Companies run the risk of diluting the cohesion of their brand message
and/or the coherence of their product lines; how to maintain sufficient control

Nike giving customers online tools

to design their own sneakers

Reference Book- The Power of Co-Creation: Build it with them to boost growth,
productivity and profits. University of Michigan professor Venkat Ramaswamy
(who coined the term co-creation with CK Prahalad) and consultant Francis
Gouillart
 Ethics and Consumer Behaviour
• Societal Marketing Concept
• Marketing Ethics-Moral principles designed to guide marketers’ behavior
-Privacy Issues (Using Wi-Fi signals from smartphones to track consumers in stores; Smartphone location data;
Smart TVs; Facebook)
Should stores be allowed to track your emotions and behavior using your smartphone? Why or why not?
- Consumer Socialization (Perceptual stage (3-7 years old); Analytical stage (7-11 years old); Reflective
stage (11-16 years old)

At what point is it ethical for marketers to communicate with children? Does it depend on other factors
besides age (e.g. socioeconomic status; product category)?
- Encouraging Overeating
- (Short, wide glasses; Clear candy jars; Transparent sandwich wrap; Visible, aromatic food; Organized food
presentation; Not tracking consumption; Large inventories; Bundling small packages)

Think of an advertising or social media campaign that you have seen recently that you would consider
potentially offensive to you or to other consumers.

• Encouraging Overspending
• Nutritional Labeling
• Camouflaged Advertising
 Dark Side of Consumer Behaviour
• Deceptive advertising
• Advertising to children
• Telemarketing frauds
• Negligent consumer behaviour (product
misuse, consumption of hazardous products)
• Drivers of compulsive consumption
• Corporate social responsibility
• Corporate rumours