Consumer Behaviour-Ramanuj Majumdar

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Consumer Behaviour: Insights from Indian Market—Ramanuj Majumdar 1

UNDERSTANDINGCONSUMER BEHAVIOUR

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Consumer behaviour entails the totality of consumer’s decision involved in acquiring, consuming and disposing of goods and services, as well as making use of experiences and ideas.

CONSUMER BEHAVIOUR

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Consumer Behaviour is a Complex Dynamic Process

Consumer’s Perspective Marketer’s Perspective

Post‐purchase issues

Pre‐purchase issues

Purchase issues

Each stage poses varied issues and offers subsequent challenges for the marketer.

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Pre‐purchase Challenges for the Marketer

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How are consumers’ attitudes towards products formed and/or changed?

Psychological Factors‐ Consumer involvement‐ Consumer motivation‐ Consumer’s perceptionPersonal Factors ‐ Personality and lifestyle‐ Family lifecycleSocial Factors‐ Reference groups‐ Family

Consumer age, sex, social classSubcultures

Cultural influences on consumer behaviourThe creation and diffusion of consumer culture

Changing consumer demographicsAccess to more choice of brands/ products

It is essential for the marketer to understand how each of these factors influences consumer’s buying decision. He can then formulate strategies in line with customer needs and demands.

Consumer behaviour

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How do psychological factors affect the consumer’s purchase decision?

Changing consumer perception Learning‐Superior after‐sale‐service

Motivation—the secret of energy

Belief—TATA signifies trust

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Gender—Targeting the maleAge—Targeting the youth

Self Concept—“Definitely male”

How do personal factors affect the consumer’s purchase decision? (Contd.)

Lifestyle

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How do social factors affect the consumer’s purchase decision?

Status Symbol

Reference Group—I‐bankers Phone

Influence of Family

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How do cultural factors affect the consumer’s purchase decision?

Subculture: Targeting the ‘Full of Life’Targeting on the basis of Culture

Social Class

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What cues/inferences do consumer’s use to choose and infer which brand/product is superior to others ?

The extent of information search depends on:Motivation, ability and opportunity.How extensive the search is for high involvement, high risk products.Consumer demography and product type.

The marketer needs to select the right source for information to reach the target consumer.

Consumer Behaviour: Insights from Indian Market—Ramanuj Majumdar11

Various Sources of Information the Marketer can Tap

Newspapers

Sport

Magazines

Word‐of‐Mouth Posters Direct mailers

TV

Podcasts

SMS

Transport

Utilities

Internet

Events

Radio

Outdoor

Gaming

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Purchase Time Challenges for the Marketer

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Three Possibilities in Consumer Purchase

DecisionWhere to purchase

When to purchase

How to purchase

How do situational factors affect consumer’s purchase decision?

Influencing Factors:Store atmosphere—Display, music, fragranceTime pressure—Peak or off‐seasonPleasantness of shopping experienceSchemes

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Post‐purchase Challenges for the Marketer

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What determines whether a consumer will be satisfied with a brand choice and whether he will buy it again?

After buying a product, the consumer compares it with hisexpectations and is either satisfied or dissatisfied. Satisfaction or dissatisfaction affects: ‐ Consumer value perceptions‐ Consumer communications‐ Repeat‐purchase behaviour

Marketers use various strategies to positively influence consumer’s Post‐purchase behaviour

Post‐purchase Service

Feedback from Consumer

Loyalty Programmes

Advertisements

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Thank You ☺

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Consumer Behaviour: Insights from Indian Market—Ramanuj Majumdar

Consumer Motivation

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What is Motivation?Motivation refers to an activated state of needs within a person that leads to goal-directed behaviour.

Types of NeedsInnate or learnedExpressive (emotional)Utilitarian (practical and functional)Hedonistic

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MaslowMaslow’’ss Hierarchy of Needs Hierarchy of Needs

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Characteristics of NeedsCharacteristics of Needs

Needs:

• Are dynamic.

• Have hierarchy.

• Can be internally and externally aroused.

• Can conflict.

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Motivational Conflict and Motivational Conflict and Need PrioritiesNeed Priorities

Satisfying a particular need often comes at the expense of another need.

These trade-offs cause motivational conflict.

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Types of Motivational ConflictTypes of Motivational ConflictApproach-approach: deciding between two desirable options

Avoidance-avoidance: deciding between two undesirable options

Approach-avoidance: behaviour has both positive and negative consequences.

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Consumer MotivationConsumer Motivation• Represents the drive to satisfy both physiological

and psychological needs through product purchase and consumption.

• It gives insights into why people buy certain products. Stems from consumer needs: industries have been built around basic human needs.

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Motivated PurchaseMotivated Purchase……• Conspicuous consumption: Purchases motivated

to some extent by the desire to show other people how successful they are.

• Companies reinforce the consumer motivations notion that products enable users to communicate their social status.

• In general, marketers try to create an image or personality for their brands.

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Motivation

Motivation signifies the processes that cause consumers to behave as they do, involving needs, goals and drives.

Consumer Behaviour

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Model of the Motivation ProcessPrevious learning

Unfulfilled need, want and desire

Tension Drive BehaviourGoal/Need fulfillment

Cognitive processes

Tension reduction

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Needs/WantsNeeds/Wants BeliefsBeliefs

A Model of Consumer Motivation A Model of Consumer Motivation

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Emotional Needs• Years for success in his career• Feels he deserves better

quality products.• Tries to upgrade his lifestyle.

Receptivity • Online needs are high• Low towards mass media

vehicles

Emerging Trend• Skin care is increasingly

becoming more important to men

Key Influencers• Celebrity endorsers• Sportsmen (cricketers),

prominent businessmen• WOM, friends

Likes• Just bought his first new bike

(TVS Apache) and a new mobile (Nokia N Series).

• Shops for clothes, shoes, etc. often in malls and shopping complexes.

• Often eats out (with friends).• Likes to visit pubs and discos.

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What are His Needs/Motivations?

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Physiological

Security and Safety

Social

Self-Esteem

Self-Actualization

Food, clothing, shelter, healthFood, clothing, shelter, health

Protection from crimes; sense of living in fair and just society

Protection from crimes; sense of living in fair and just society

Ability to give and receive love; feeling of belonging to a group

Ability to give and receive love; feeling of belonging to a group

Self-respect and ability to earn respect of others & contribute to society

Self-respect and ability to earn respect of others & contribute to society

Ability to develop skills and fulfil one’s potential

Ability to develop skills and fulfil one’s potential

Access to computer and Internet

Access to computer and Internet

Protection from hacking; ability to maintain varying levels of privacyProtection from hacking; ability to maintain varying levels of privacy

Belonging to the community as a whole and to sub-groups within the communityBelonging to the community as a whole and to sub-groups within the community

Ability to contribute to the community and be recognized for those contributions

Ability to contribute to the community and be recognized for those contributions

Ability to take on a community role that develops skills and opens up new opportunities

Ability to take on a community role that develops skills and opens up new opportunities

OnlineOnline

SOURCE: Amy Jo Kim’s Community Building on the Web (Peachpit, 2000)

Maslow’s Hierarchy of NeedsMaslow’s Hierarchy of Needs

OfflineOffline

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Motivational IntensityMotivational IntensityDepends on: How strongly consumers are motivated to satisfy a particular need.

Importance of

Involvement: Degree to which an object or behaviouris personally relevant.

Motivational intensity and involvement determine the amount of effort consumers exert in satisfying needs.

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The Challenge of Understanding The Challenge of Understanding Consumer MotivationConsumer Motivation

Reasons underlying consumer motivation are not always obvious.

Research is necessary to discover real motivations behind behaviours.

Consumers at times do not always want to disclose real reasons for their particular choice or actions.

Consumers do not always know why they do what they do:unconscious motivation.

Motivations change over time.

Let us take an example of car buying and its underlying motivations.

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Why Automobile?

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Automotive Sector

Classification of the Automotive Industry

• Commercial vehicles (Trucks and Buses)

• Passenger Cars and Multi‐utility vehicles

• Two‐wheelers

• Three‐wheelers

• Tractors

Classification of the Automotive Industry

• Commercial vehicles (Trucks and Buses)

• Passenger Cars and Multi‐utility vehicles

• Two‐wheelers

• Three‐wheelers

• Tractors

For explaining motivations , we will concentrate on passenger cars and multi‐utility vehicles.

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Automotive Sector–Demand Drivers

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Means‐end Chains Structure • Attributes: Descriptive features that characterize a

product.

• Benefits: Personal beliefs and meanings attached or derived from various product attributes.

• Values: Stable and enduring personal goals.

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Issues a typical consumer considers when he chooses a car

• Reliability/Durability

• Interior design and comfort

• Manufacturer’s reputation,

Brand name and its value

• Exterior appearance and

aesthetics

• Petrol vs. Diesel model

• Reliability/Durability

• Interior design and comfort

• Manufacturer’s reputation,

Brand name and its value

• Exterior appearance and

aesthetics

• Petrol vs. Diesel model

• Fuel Efficiency or Mileage

• Recommendation of peer group, Word

of Mouth (WOM) and dealers opinion

about servicing and overall

performance.

• Servicing and ‘the deal’ offered

• Passenger and Luggage carrying capacity

• Size, length, machine capacity

• Price and Re‐sale Value of old car model

and Terms of Payment

• Fuel Efficiency or Mileage

• Recommendation of peer group, Word

of Mouth (WOM) and dealers opinion

about servicing and overall

performance.

• Servicing and ‘the deal’ offered

• Passenger and Luggage carrying capacity

• Size, length, machine capacity

• Price and Re‐sale Value of old car model

and Terms of Payment

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Automobile Purchase: Demographic Factors

Family life cycle

Family life cycle

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Bachelor Committed/ recently married

Married with children

Impact of family life cycle on consumer need/preference

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Family Life Cycle

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Things do not change,

we change.HENRY DAVID THOREAU

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Let us unlock some key trends

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How the needs of the same consumer change as he moves along the family life cycle…Bachelorhood Married Married with

children Non‐dependent children

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Information GatheringTalking to dealers

Talking to friends/Colleagues/Relatives

Inspecting the car

Car ads

Talking to mechanics

Car brochures/Articles/Programmes

Internet

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Study the various sources of information, gather and find the reliability of various

information sources.

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Major Motivators/Triggers

Increasing family’s need

Need to travel long distance

Problem with old car

Status/Prestige

Promotion

Peer pressure

Rational Factors

Emotional Factors

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Integrative Choice: Purchase decision is influenced by a mix of rational and

emotional factors.

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Social Influences

Certain norms and values are created by social influences. So it is essential to find out how these social influences (occupation, education and income etc.) affect the

consumer motivation in the purchase of an automobile.

Certain norms and values are created by social influences. So it is essential to find out how these social influences (occupation, education and income etc.) affect the

consumer motivation in the purchase of an automobile.

Combined effects of Occupation, Education and Income levels

Conspicuous and compensatory consumption trends

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Sex

Men and women possess unique personality traits, interests, knowledge and judgment capabilities. Find out how the motivating factors differ based on the gender of the consumer.

Men and women possess unique personality traits, interests, knowledge and judgment capabilities. Find out how the motivating factors differ based on the gender of the consumer.

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Thank You.

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Consumer PerceptionConsumerPerception

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Perception is RealityLOUIS CHESKIN

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PerceptionProcess by which sensations are selected, organized, and interpretedAdding meaning to raw sensations

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Elements of Perception

SensationAbsolute thresholdDifferential thresholdSubliminal threshold

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Sensation

Immediate response of our sensory receptors…

…eyes, ears, nose, mouth, fingers…

…to basic stimuli……such as light, colour, sound, odour, and texture…advertisements, brand names, commercials, and packages

…depends on the sensitivity of the individual

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The Absolute Threshold

The lowest level at which an individual can experience a sensation.The point which differentiates between “something” and “nothing”.Example: Absolute threshold of driver driving on highway to notice billboard.Adaptation: Getting ‘used to’ certain sensation.

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AttentionThe extent to which processing activity is devoted to a particular stimulus

Competition for our attention3,500 ad info pieces per dayMultitasking

Marketers need to break through the clutter

Microsoft’s butterfly decals on sidewalks3D logos on cricket grounds

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The Differential ThresholdThe minimal detectable difference between two similar stimuli (just noticeable difference).It’s not at all the absolute difference.It’s an amount relative to the intensity of the first stimulus.The stronger the initial stimulus, the greater the additional intensity needed for second stimulus to be perceived as differentiated.

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Marketing Applications of the JND

Need to determine the relevant JND for the products so that

negative changes are not readily discernible to the public.product improvements are quite visible to consumers.

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Gradual Changes in Brand Name

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Subliminal Subliminal PerceptionPerception

Perception of very weak or rapid stimuli received below

the level of conscious awareness

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Perceptual Selection Stimulus Selection Factors

Weber’s LawDifferences in size, colour, position, and novelty

Interpretation: assigned meaning to stimuliSchema leads to stimulus evaluation

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WeberWeber’’s Laws Law

A theory concerning the perceived differentiation between similar stimuli of varying intensities (i.e. the stronger the initial stimulus, the greater the additional intensity needed for the second stimulus to be perceived as different).

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Perceptual Selection

Depends on two major factors

Consumers’ previous experience (expectations)Consumers’ motives

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Some Marketing Variables Influencing Consumer Perception

Nature of the productPhysical attributes of the productPackage designBrand nameAdvertisements and commercialsPosition of an ad

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Concepts Concerning Selective Perception

Selective exposureSelective attentionPerceptual defensePerceptual blocking

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Stimulus Organization

• Stimulus interpretation is associated with other related events, sensations, or images

• Gestalt: “The whole is greater than the sum of its parts”.

• The Closure Principle—People tend to perceive an incomplete picture as complete.

• The Principle of Similarity—Groups objects share similar characteristics.

• The Figure–Ground Principle—One part of the stimulus will dominate (the figure/background).

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Gestalt Laws of Grouping

• The primary purpose of the visual system is the recognition of objects from basic visual elements.

• The objects are seen as more than a sum of the parts, and the critical problem facing the visual system is how to group the elements to form objects.

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Demonstration of the Importance of Objects over Elements

When elements are arranged in groups that define an object,we tend to see the object and not the elements.

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Law of ProximityThings that are relatively close to one another tend to begrouped together.

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The Law of Similarity Items that look similar will be seen as parts of the same form.

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The Law of Good ContinuationThe tendency to perceive unseen parts of a pattern as continuing in a predictable and simple manner.

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The Law of Closure

Often, an object is partly occluded by other objects in our environment, and the visual system must fill in the missing information.

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A Related Phenomenon -Illusory Contours

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The Law of Common Fate

Elements of visual perception that move togetherare seen as forming a common object.

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Common Fate Example - 1

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Figuring out what the objects areThe Gestalt principles help us to understand how wefigure out what the objects are, and how to interpret them.

However, they do not explain how we figure out what an object is once we realize it is an object.

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Figure and Ground

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The Figure-Ground Principle

• This billboard for Wrangler jeans makes creative use of the figure-ground principle.

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Perceptual Positioning

Brand perceptions =functional attributes + symbolic attributesPerceptual map

Company’s own strengths and weaknesses in comparison with competitors

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Excellent product quality

Low product quality

Highvalue formoney

Lowvalue formoney

Perceptual Map

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Thank You

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Consumer PerceptionConsumer selects, organizes and interprets stimuli into a meaningful and coherent picture of the world.How we view the World around us!Consumers make decisions based on what they perceive rather than what the objective reality is.Consumers see what they want to see!

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Elements of PerceptionSensation: Stimuli and Intensity Absolute threshold (e.g. seeing an ad) Sensory adaptation (Phenomenon of getting used to), e.g. change ad campaigns, packageDifferential threshold JND (Weber’s Law); product improvement decisionsNegative changes (Price rise, size, quality reductions, etc.)

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Selective PerceptionsNature of the stimulus: What you want to see is based on what your motives are at that time.Selective exposure: Pleasant adsExpectations and previous experience

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Perceived RiskAn uncertainty arises when consumers cannot foresee the consequences of their purchase decisions.Depends on the person,the product, and the purchase situation.High risk perceivers categorized as narrow categorizers.

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Broad Categories Product category perceived risk, e.g. to buy a digital camera or not.Product specific perceived risk, e.g. which brand of camera to buy.

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Types of Perceived Risk

Functional risk: The risk that the product will not perform as expected.Will the cell phone I bought work for the given warranty period?Physical risk: The risk to self and others that the product may pose .Will the cell phone damage my health? Is it safe to use?

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Types of Perceived Risk

Financial risk: The risk that the product will not be worth its price.Will the price of mobile/laptop drop after I buy it?

Social risk: The risk that a poor product choice may result in some form of social embarrassment.Will my mobile look like an outdated model?

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Types of Perceived RiskPsychological risk: The Risk that a poor product choice will bruise the consumer’s ego.After buying this product, will my peer group members laugh that it is a wrong choice?

Time risk: The risk that the time spent in product search may be wasted if the product does not perform as expected.I have spent so much time in buying a new camera/laptop. Was it worth or a waste of time?

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How Customers Handle RiskSeek information,word of mouth, newspapersBuy known brands/become loyal,e.g. buy Annapurna Atta.Select by Company/Brand image,e.g. buy Sony TV / Nokia Cell phones.

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How Customers Handle Risk (cont.)Rely on Store image, e.g. buying from known shops.Buy the most expensive model. Seek reassurance(money‐back guarantees, pre‐purchase trial, warranty period).

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Application of the ConceptFind out the nature of risk customers perceive before purchasing new products.

Remove the nature of anxiety of customers.

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Thank You

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Consumer Beliefs

Consumer Feelings

Consumer Intentions

Consumer Attitudes

Consumer Behaviour

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Beliefs are the knowledge and inferences that a consumer has about products/brands and possible benefits derived from using them.

Beliefs result from cognitive learning.

Attribute importance springs from:

A person’s assessment of the significance of an attribute.The amount of attention directed to it.A person’s self-concept, advertising, and the salience of the attribute can influence the attention focussed on it.

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Brand distinctiveness: Consumer perception of a brand and company’s marketing effort leads to developing certain personality of each brand, e.g. Tanishq Jewellery.

Inferential beliefs: Information about one product of a company makes consumers to form belief about another, price-quality beliefs, partially comparative pricing, e.g. Akai TV, Big Bazaar retail.

Consumer confusion: Insufficient/conflicting information, mistaken identity, irrelevant ad slogan/appeal, change in the brand’s key focus and positioning, e.g. Marie biscuits (Britannia, Parle).

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Beliefs Examples

Companies or Retailers mark up prices before putting them up on sale.Discounts offered by reputed companies are genuine reduction in prices.

Bargaining behaviour

Wait for the discount announcement

Celebrities are admired by their followers though they do not use the product they endorse.

Success of soaps and cosmetics

Lower price generally means inferior quality. Higher priced brands are not superior in quality by the same degree of multiplier.

Positioning at a lower quality end, as done by Haier, Lenovo

Shopping in a big departmental store saves money.

Big Bazaar, Subhiksha

Packaged ready-to-eat food items marketed in India are generally not fresh.

Limited success of MTR, ITC foods

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As part of “Advertising Experience”: Influence on viewers’moods, attitudes, recall, affinity, Examples: Hamara Bajaj Campaign, Amul Butter—“Utterly, butterlydelicious”

As part of “Shopping Experience”: Influence of availability, “environment/ambience”Examples: Maruti service centres, Cafe’ Coffee Day, Brista coffee

As part of “Consumption Experience”: Influence consumers’consumption evaluationExamples: Vanilla Coke, Blue Pepsi, Asian Paints

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“Desirable Attributes create positive attitudes”Example: Health drinks

Attitudes are:

a kind of feeling for or against a stimulus;stored in long-term memory;

the cognitive knowledge about an object;

predicted by beliefs in high involvement purchase situations.

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Utilitarian function: Used to obtain rewards and avoid punishmentsEgo-defensive function: Self-protectionExample: mouthwashKnowledge function: Simplifies decisionsExample: Forming of loyalty to certain brands Value-expressive function: Expresses identity to othersExample: use of (IIM-C) labelled t-shirts

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Direct formationCorresponds to the decision-making perspective and cognitive learning.Linked to the experiential perspective.Classical conditioning/Associative learning: Positive affect is attached to object–using a jingle.Mere exposure—frequent exposure to stimulus increases one’s desire for it.Environmental forces Example: design of the physical environment, cafes

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Decision-making hierarchies: High involvement: beliefs attitudes behaviourLow involvement: beliefs behaviour attitudes

Experiential hierarchy: Affect behaviour beliefs

Behavioural influence hierarchy:Behaviour beliefs affect

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Changing beliefs: Comparative advertisingExample: Sugar Free, Saffola oil (less cholesterol)

Changing attribute importance: Identification of new, improved attributesExample: Washing powders, soaps

Changing ideal points

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Firms hope that changing beliefs about products will result in more favourable product attitudes and influence what consumers buy.

If beliefs are false, they should be brought into harmony with reality and then stabilized and reinforced.

If beliefs are accurate, it may be necessary to change the product.

Comparative advertising can hurt beliefs about a competitive brand

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Changing Consumer Attitudes: Changing Changing Consumer Attitudes: Changing BeliefsBeliefs

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Changing an attribute’s importance is more difficult than changing a belief.

How is a brand perceived relative to ideal performance?

Increasing attribute importance is desirable when the competitor’s brand is farther from the ideal point than your product.

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Changing Consumer Attitudes: Changing Changing Consumer Attitudes: Changing Attribute ImportanceAttribute Importance

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Firms may add a new attribute which necessitated NPD or product revision.

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Changing Consumer Attitudes: Changing Changing Consumer Attitudes: Changing Ideal PointsIdeal Points

Altering consumers’ preferences for what the Ideal product should look like.

It is far more difficult than any other approach in changing consumers, attitudes toward brand and product.

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The best way to capture customer is to adjust with his or her desirable situation and favourable attitudes.

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Post-purchase

Action

Attitude

LearningPerception

Attention

Exposure

Sequential model of purchase and repurchase

behaviour in marketing

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Consumer Behaviour

Involvement & Emotion

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Consumer Involvement

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CarsFurniture

ApparelsPerfume

ToothpasteSalt

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InvolvementWhat is Involvement ?

Perceived relevance of the object of consideration based on inherent needs, values and interestsA general level of interest in or concern about an object or activity without reference to a specific position

Types of InvolvementSituational (Purchase-Decision) Involvement

The level of concern/care the consumer brings to bear on a particular purchase decision

Enduring InvolvementThe level of interest the buyer maintains for a class of product/activity, well beyond the specific purchase situation

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Involvement (Cont.)Enduring involvement is related to the way one views oneself and is often linked to Family, Group and Lifestyle (Psychographic) variables.

Perceived risk is related to purchase involvement.

In Low Involvement situations:

In High Involvement situations:

Behaviour Attitudes

Attitudes Behaviour

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Purchase Involvement

The Individual The ProductClass

Involvement

The Situation Communication

Is Effected by:

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Consumer Product InvolvementConsumer Characteristics• Social concepts• Personality needs• Expertise

Consumer Characteristics• Social concepts• Personality needs• Expertise

Product Characteristics• Time commitment• Price • Symbolic meanings• Potential for harm• Potential for poor performance

Product Characteristics• Time commitment• Price • Symbolic meanings• Potential for harm• Potential for poor performance

Situational context• Purchase situation• Intended-use situation• Time pressure• Social environment• Physical environment

Situational context• Purchase situation• Intended-use situation• Time pressure• Social environment• Physical environment

Intrinsic Self-relevance(Goals and Values)

Intrinsic Self-relevance(Goals and Values)

Situational Self-relevance(Consequences and Values)

Situational Self-relevance(Consequences and Values)

INVOLVEMENTINVOLVEMENTInterpretation

andIntegration process

Interpretation and

Integration process

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Means-End Basis for Involvement

PRODUCT KNOWLEDGE SELF KNOWLEDGE

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Enduring Involvement Characteristics

High Low

Many Attributes Evaluated

Narrow Latitude of Acceptance

Small Evoked Set

True Brand Loyalty

Attributes are less important (very few used)

Wide Latitude of Acceptance

Large Evoked Set

Spurious Brand Loyalty

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Enduring Involvement Characteristics

Central Route Arguments

Substantive Messages(reduce counter-arguments)

Fewer Ads but packed with Information

Price may be Relatively Less Important

Info Search is Active.

Peripheral Route Arguments

Reminder Ads and Ads with Little Substance

Frequent Ads–Little or no Content–only a few points

Price may be Relatively Less Important

Info Search is Passive.

High Low

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Low Involvement

Problem RecognitionProblem Recognition

Information SearchInformation Search

Analysis of AlternativesAnalysis of Alternatives

Purchase DecisionPurchase Decision

Post-Purchase Behaviour


Selective

No Dissonance

Internal(Limited)

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Medium Involvement







Generic

InternalExternal (Limited)

FewSimple

No Dissonance

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High Involvement







Generic

InternalExternal

ManyComplex

Dissonance

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Effect of Product Knowledge and Involvement in Decision Making

LOW HIGH

Motivation Adequate product at minimum effort

Choose the best product.

LOWChoice Criteria Very few concrete

attributesUnclear about

criteria.

Motivation Satisfactory product Optimize satisfaction.

HIGH

Choice Criteria Very few abstract criteria

Use many search and decision tools.

INVOLVEMENT

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NO

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Creative Tactics

LOW HIGH

INFORMATIONAL(–ve)

Provide one or two clear benefits.

Provide believable information.Don’t overclaim.

TRANSFORMATIONAL (+ve)

Emotional authenticity of execution and liking the Ad.

Consumer must personally identify with feelings created.

INVOLVEMENT

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High Enduring Involvement CustomersDevelop product class, brand expertise.

Search for information in an ongoing manner.

Take special interest in product care.

Augment/upgrade products; purchase “ad-ons” and complementary products.

Become opinion leaders/brand advocates; build close bonds with the company.

May participate in new product idea generation.

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A Model of Emotion-driven Choice

Symbolic meaning of

consumption

Self Social

Motivation Preference formation

PrideStatusAnxiety

Justification

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The Psychology of a BRANDDomain BRAND CONSUMER

Symbolic meaning

Social language of the Brand

Self-enhancementSelf-Image

Personality Authenticity

Transformation of experience

Emotional Realm

Reassurance Safe choiceEasy choiceCertainty in an uncertain worldFunctional Realm Keeping promises of

performanceReplication of satisfaction

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Brand Strategy AlternativesHigh Involvement

Low Involvement

Emotions Cognition

Symbolic Brands

Functional Brands

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Brand Trust and Confidence

Symbolic Brands

Functional Brands

Risk Perception

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Positioning a Brand

For whom?Why?

When? Against whom?

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Brand Identity Prism

PersonalityPhysique

Relationship Culture

Self-ImageReflection

Picture of the Sender

Picture of the Recipient

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Building a Brand in Consumers’Mind-space

Perception of QualityBrand Awareness

Trust

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Thank You

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ConsumerLearning

Dissonance and

Experience

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Consumer Learning

• It is the cognitive process of acquiring skill and knowledge; learning is the acquisition and development of memories and behaviours, including skills, knowledge, understanding, values, and wisdom.

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Importance of Learning

• Marketers must teach consumers:where to buy

by whom and for whom the purchase is to be done

how to use, feel and perceive the product

how to maintain the product

how to dispose of products

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Learning Taxonomy

Learning

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Learning TheoriesBehavioural Theories

Theories based on the premise that learning takes place as a result of observable responses to external stimuli. Also known as stimulus response theory.

Cognitive Theories

A theory of learning based on mental information processing, often in response to problem solving.

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Learning Processes

Intentional

Learning acquired as a result of a careful search for information.

Incidental

Learning acquired by accident or without much effort.

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Elements of Learning Theories

1. Motivation2. Cues3. Response4. Reinforcement

• Stimulus

• Drive

• Response

• Reinforcement

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Reinforcement

A positive or negative outcome that influences the likelihood that a specific behaviour will be repeated in the future in response to a particular cue or stimulus.

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Stimulus Stimulus GeneralizationGeneralization

The inability to perceive differences between slightly dissimilar stimuli.

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Reinforcement

Positive Reinforcement

Positive outcomes that strengthen the likelihood of a specific responseExample: Ad showing beautiful hair as a reinforcement to buy shampoo

Negative Reinforcement

Unpleasant or negative outcomes that serve to encourage a specific behaviourExample: Ad showing wrinkled skin as reinforcement to buy skin cream

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Other Concepts in Reinforcement

• Punishment– Choose reinforcement rather than punishment.

• Extinction– Combat with consumer satisfaction.

• Forgetting– Combat with repetition.

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Observational Observational LearningLearning

A process by which individuals observe the behaviour of others, and consequences of such behaviour. Also known as modelling or vicarious learning.

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Components Of Observational Learning Components Of Observational Learning

Attention ProductionProcess

Retention Motivation

Observational Learning

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Cognitive Cognitive Learning Learning TheoryTheory

Holds that the kind of learning most characteristic of human beings is problem solving, which enables individuals to gain some control over their environment.

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Classical Classical ConditioningConditioning

A behavioural learning theory, according to which a stimulus is

paired with another stimulus that elicits a

known response which serves to produce the same response when

used alone.

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Models of Classical ConditioningModels of Classical Conditioning

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Instrumental Instrumental (Operant) (Operant)

ConditioningConditioning

A behavioural theory of learning based on

trial-and-error process, with habits forced as the

result of positive experiences

(reinforcement) resulting from certain

responses or behaviours.

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Operant Conditioning Operant Conditioning (Cont.)(Cont.)

is the process in which the frequency of occurrence of a bit of behaviour is modified by the consequences of the behaviour.

If positively reinforced, the likelihood of the behaviour being repeated increases.

If punished, the likelihood of the behaviourbeing repeated decreases.

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Stimulus

ResponseCan you explain

Reward habit?

Reinforcement

Operant (or instrumental) conditioning Operant (or instrumental) conditioning (Cont.)(Cont.)

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Instrumental (Operant) Conditioning Instrumental (Operant) Conditioning (Cont.)(Cont.)

Behaviour

Reinforcement

NegativeReinforcement

Punishment

LikelihoodOf Behaviour

LikelihoodOf Behaviour

NOT thesame thing!

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Reinforcement: An ExampleReinforcement: An Example

You eat a cake (behaviour)

‐‐‐‐> Delicious (reward)

‐‐‐‐> more likely to eat more cakes on other occasions

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ExtinctionExtinction

Behaviour which is not reinforced tends to become extinct

gradually.

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Ehrenberg Ehrenberg ATRATR ModelModel

Awareness

Trial

Reinforcement

Repeat purchase

Advertising

Note: The thicker (darker) lines denote the major effects.

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Trial

Learning/Experience

Repeat purchasing

Commitment

Involvement

Loyalty

Behavioural Loyalty

AttitudinalLoyalty

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Brand Loyalty vs. HabitBrand Loyalty vs. Habit

• Habit: the consumer picks product without much thought, perhaps for convenience.

• Loyalty: the consumer actively seeks the product.

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Brand LoyaltyBrand Loyalty

Function of Three Groups of Influences1. Consumer drivers2. Brand drivers3. Social drivers

Four types of loyalty1. No loyalty2. Covetous loyalty3. Inertia loyalty4. Premium loyalty

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Developing Brand Loyalty: Tricks and TrapsDeveloping Brand Loyalty: Tricks and Traps

1. Product quality ‐‐‐> satisfaction2. Sales promotions3. Stealing loyal consumers away from

others4. Price

– value– exclusiveness

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MemoryMemory

• Short term (compare to RAM ‐‐> volatile)– mnemonic devices

• Long term (compare to hard disk ‐‐> longer in duration but imperfect—“I remember it well…”)

STM REHEARSAL LTM

DECAY

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RetentionRetentionInformation is stored in long‐termmemory

Episodically: by the order in which it is acquired

Semantically: according to significant concepts

Total package of associations is called a schema.

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Role of Memory in LearningRole of Memory in Learning

Stages

1. Encode

2. Storage

3. Decode and retrieval

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Recognition vs. Recall

Recognition

Remembering with stimulus

Recall/Retrieve

Remembering without stimulus

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The Cycle of RememberingThe Cycle of Remembering

LongLong--term term MemoryMemory

ShortShort--term term MemoryMemory

Retrievall

Learning

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The consumer observes a positive response by two teens.

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Information ProcessingInformation Processing

• Relates to cognitive ability and the complexityof the information.

• Individuals differ in imagery–their ability to form mental images, which influences recall.

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Information Processing and Memory StoresInformation Processing and Memory Stores

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Information ProcessingInformation Processing

• Movement from short‐term to long‐term storage

depends on:

• Rehearsal—cognitive practice

• Encoding—memory’s associations or the way information is stored.

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Experiential Marketing

Experiential Marketing

Identity RelatedLogo/Names

(NIKE)

Website/Electronic Media

(ENCYCLOPEDIAS)

Co‐BrandingEvents/Sponsorships(FEMINA MISS INDIA)

Communication/ Advertising

(TASTE OF INDIA)

Product PresenceDesign/Packaging(FRAGRANCES)

Spatial EnvironmentRetail/Office(BARISTA)

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Consumers Dissonance

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Cognitive Dissonance

• Psychological discomfort caused by inconsistencies among a person’s beliefs, attitudes, and actions.

• Varies in intensity based on importance of issue and degree of inconsistency.

• Induces a “drive state” to avoid or reduce dissonance by changing beliefs, attitudes, or behaviours and thereby restore consistency.

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Why the Dissonance?

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Causes of Dissonance

Performance riskPhysical risk (wear‐out) High financial commitmentHigh involvement levelHigh social visibilityInformation overload

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Is the Grass Greener on the Other Side?

• Dissonance–predominantly post‐purchase behaviour• Lack of confidence (doubts) about the correctness of a prior purchase decision and efforts to reconcile doubts

Did I do the right thing?

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Reactions to Dissonance• The Consumer eliminating or re‐evaluating one of the cognitive

elements, or his responsibility, or control over the act or decision.

• Information can be denied or distorted or forgotten in the service

of dissonance reduction.

• Minimizing the importance of the issue or decision that led to the

dissonant state.

• New cognitive elements can be added to support the decision.

• Potential Reactions• Return the product.

• Seek confirmatory information.

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Thank You.

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Communication and Consumer Behaviour

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Direct Communication

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What is Communication?A tool used by marketers to persuade consumers to act in a desired way.Transmission of message from a sender to a receiver via a medium of transmission.Modern technology is inducing tremendous change in mass communication media.

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Basic Communication Model:

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The SenderInitiator of a communicationFormal source–organizationInformal source–A close friend, peer group or relative who provides information or advice.

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The ReceiverA targeted prospect or a customer

Every receiver interprets the message in his/her own perceptions and experiences.

Intermediary receivers–Those who would specify or prescribe the marketer’s products (Wholesalers, retailers and distributors).

Unintended receivers–Shareholders, creditors, suppliers, employees, bankers, and the local community.

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The MediumThe communications channel

Impersonal–a mass media

Interpersonal–Formal or InformalFormal–between a marketer’s agent (sales person) and a customer

Informal–between two or more people by mail, etc.

Classification of mass mediaPrint (Newspapers, magazines, billboards)

Broadcast (Radio, television)

Electronic (Internet )199

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Social Media: DefinitionSocial media describes the online technologies and practices that people use to share opinions, insights, experiences, and perspectives with each other.Social media can take many different forms, including text, images, audio, and video. Popular social media include blogs, message boards, podcasts, wikis, and vlogs.

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“Social Media refer to people having communication

online.”

Simply put:

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The MessageVerbal

Spoken or writtenHas more product specific information.

Non-verbalA photograph, an illustration or a symbolStays in the mind of a customer for long.

Generally a mix of verbal and non-verbal message is preferred.

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Feedback

Permits the sender to reinforce, to change or to modify the message so that it is understood in the intended way.Common forms of feedback

Body languageFacial gesturesVerbal feedback

Feedback is essential and difficult to obtain in impersonal communication.

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The Communication ProcessCommunication process involves the:

SenderReceiverMediumMessageTarget Audience (the receivers)Feedback–the receiver’s response

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Comprehensive Communication Model

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The Message Initiator (Source)

Credibility of Informal SourcesCredibility of Formal SourcesCredibility of Spokespersons and EndorsersMessage Credibility

Sources include word of mouth.These sources are also called opinion leaders.Informal sources may not always be credible.

Issues with Credibility

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Neutral sources have the greatest credibility.Source credibility judged on past performance, reputation, service, quality, spokesperson’s image, retailers, and social responsibility.Institutional advertising used to promote favourable company image.


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Effectiveness related to:The messageSynergy between the endorser and the type of productDemographic characteristics of the endorserCorporate credibilityEndorsement wording


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Maria Sharapova for Nike

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Credibility of retailersReputation of the medium that carries the adConsumer’s previous experience with product


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The Target Audience (Receivers)Personal characteristics and comprehensionInvolvement and congruencyMoodBarriers to communication

Selective exposure to messagesPsychological noise

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Feedback—Receiver’s ResponseFeedback should be gathered:

PromptlyAccurately

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Advertising Effectiveness ResearchMedia and message exposure measures:

How many consumers received the message.Which consumers received the message.

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Advertising Effectiveness Research (Cont.)

Message Attention and InterpretationPhysiological measuresTheater testsAttitudinal measures

Message Recall MeasuresDay-after recall

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Designing Persuasive CommunicationsCommunications strategy

Must include objectives.Includes cognitive models.Newer models include perception, experience, and memory.

Target AudienceSegmentation is the key.

Media StrategyConsumer profileAudience profiles

Message StrategyInvolvement theory– Central and peripheral routes

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Designing Persuasive Communications

WordplayUsed to create a double meaning when used with a relevant picture

ResonanceMessage framingComparative advertisingOrder effectsRepetition

Message Structure and Presentation

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Word PlayAn ad with word play used for signifying the need to save water.

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Word Play on SUV

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Designing Persuasive Communications


Positive framingNegative framingOne-sided vs. two-sided


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Designing Persuasive Communications (Contd.)


Marketer claims product superiority over another brand.Useful for positioning.


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Designing Persuasive Communications (contd.)


PrimacyRecencyOrder of benefitsBrand name


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Designing Persuasive Communications (contd.)


Important for learning


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Emotional Advertising Appeals

FearHumour

Abrasive advertisingSex in advertising

Audience participation

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Ads with Humour

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Messages with Fear

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THANK YOU.

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Consumer Personality


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Personality Selection

Product Target Segment

Psychological

Economic

Functional

Brand Personality

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Brand PersonalityPersonality created to appeal target customersAssociation with brand:

Character/PersonalityEmotional

Positioning of brand:SocialValues

Benefits provided:AttributesQuality

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Dimensions

Source: Dimensions of Brand Personality by Jennifer L. Aaker

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Consumer Expectations

Product ExpectationsClothes Sharp appearance, Style, Attractiveness, Comfort, Ruggedness

Cars Comfort, Value for money, Social status, Family product, Performance

Mobile Phone Durability, Style, Social status

Insurance Peace of mind, Secured future

Cellular Service Connectivity, Closeness to loved ones

Computer Pleasure, Profits from miracle of modern technology

House Comfort, Contentment, Good investment, Pride of ownership

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Components of Brand PersonalityBrand Name & LogoColour & PackagingAdvertisement (including Brand Ambassador)PricePerformance

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Personality-Colour Association

Respect Authority

Caution Novelty

Temporary Warmth

Secure Natural Relaxed

Informal Masculine Nature

Human Exciting, Hot

Strong Passionate

Powerful Affordable Informal

Purity Cleanliness

Delicacy Formality

Sophistication Power

Authority

Regal Wealthy Stately

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Brand NamesRed Bull, Power Horse – Energy DrinksHimalayan – Mineral WaterLe Bon – CheeseTwinings—Darjeeling TeaPuma – FootwearDove – Bathing Soap

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Thank You ☺

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Choice

Learning

Ideology

CONSUMER

Preference

Knowledge

Consumption

Behaviour

Intuition

Perception

Role of Age

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Increased Spending by Young Increased Spending by Young Unmarried EmployeesUnmarried Employees

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Tech savvy ConvenienceAdults

Shift from “value for money” to lavish lifestyle

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Stylish looks and features

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“Protection from germs”: Economical without sacrificing the quality

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Higher Spending by MiddleHigher Spending by Middle––aged aged People and Senior CitizensPeople and Senior Citizens

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Stylish looks and features

Feeling and looking good ConvenienceOld

Shift focus from “saving for children”to enjoying their own life

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People Change by AgePeople Change by Age

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AgeAge--specific Targetingspecific TargetingTarget kids, adults and older consumers with different

set of products

Customers classification–new born (0-1month), infant

(2–5 months), cruiser (6-12 months), toddler

(13–18 months), explorer (19–23 months), preschoolers

(24 + months)

Targeted 21 years old with the boxy image, sexy

college kids partying, but 42 yr olds felt nostalgic

about their youth and bought the car

“EZ squirt ketchup” for teens

$3 million marketing to attract 12–24 yr olds.

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Age and Life StageAge and Life Stage

Higher expenditure

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DecisionDecision--Making ProcessMaking ProcessType of Families

Delayed marriagesDual career familiesSmaller families

Need to understand decision maker at every stage

Role of spousesHusband-dominant decisionsWife-dominant decisionsAutonomous decisionsJoint decisions

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THANK YOU.

Influence of Reference Groups


Marketer Dominated Source Non-Marketer Dominated Source

MassMediaDelivered

PersonallyDelivered

HighHigh

LowLow

LowLow

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Contents

Reference Groups1

Types of Reference Groups2

Reference Groups in India3

Reference Group in Choice of Education—Possible Hypotheses

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Reference Group

FormationPerson

Group

Point of Ref.

Values

Attitudes

Behaviour

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Types of Reference Groups

Reference GroupsReference GroupsReference Groups

ContactualContactual AspirationalAspirational DisclaimantDisclaimant AvoidanceAvoidance

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Indian Reference Groups

Education & Career Choices

ParentsRelatives

Well-WishersSeniorsFriends

No professional catering

Indian Reference GroupsNon-Celebrity

Faith Groups

ReligiousRitual

WorshipSpiritual

Caste basedSocial marketing

quotient

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Education & Career Choices

CareerChoice

Early School Middle

School

Graduation(Entry)

Post-Graduation

Sphere of Influence

Reference Groups

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Hypotheses

1

Early School, unlike Middle School, is still

governed more by proximity to home than

by reference groups

2

Regional variations arise as supply—demand of occupations & societal

opinion govern graduation & career

3

Reference Group influences changes while at graduation Individual chooses

Reference group now

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Impact of Culture on Consumer Behaviour

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What is Culture?


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CULTURE

Culture is a combination of learned beliefs, values and customs that can direct the behaviour of consumers in a specific society.

Knowledge & beliefs

Values

Customs

In India, hard work is attributed with success.

Turban is worn by male members of the Sikh religion in India.

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Characteristics of Culture

Characteristics

• Culture is learned rather than being born with.

• Culture is manifested within boundaries of acceptable behaviour.

• Transmitted from generation to generation.• Rituals practiced.

• Dress sense–(Sari is the traditional Indian dress while jeans, skirts, frock, etc. are considered more modern.

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Cultural rules can be categorized into three types

• Explicit standards as to how one should behave, and violations often carry severe sanctions.

• Involve implicit standards as to what constitutes a good product.• In Bollywood, normally a Hindi movie must have at least five

good songs to be successful.

Formal Rules

Informal Rules

Technical Rules

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• Sub-cultures consist of ethnic groups such as regional, linguistic, rural vs. urban, family composition, economic strata etc. Variations seen within a culture.

• These groups have common traditions, heritage, beliefs, customs and experiences that would differentiate different sub-cultures.

• For example, there are certain common aspects in the Indian culture but almost each state in the country reflects a sub-culture.

• Dress, eating habits, customs etc. are somewhat unique in different parts of India and also, the life style pattern varies.

Sub-cultures

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Indian Teenagers in contrast to Western Teenagers

Western teenagers• Grew up in relative economic stability.

• Confronted by new realities: drugs, AIDs, pollution, teenage pregnancy, divorce, etc.

• Less sheltered home environment and unstable family life. From young age itself learn to be independent and make their own choices in life.

• More independent and self-sufficient. • Focus early on things they believe would

provide for a secure and happy life, like earning money, spending culture or material possession and acquisition.

• A more stressful life as self-esteem is vested in doing well in multi-faceted roles.

Indian teenagers • Grew up in period of fast economic growth

with good prospects.• Confronted by new realities through the

mass media but with few real-life experiences.

• Have more sheltered home environment and stable family life. Youth live with family of origin until their marriage.

• Are less independent and self-sufficient.• Are idealistic in their expectations and tend

to deal only with issues that touch them personally.

• Lead a less stressful life as achievement in studies is paramount and other matters appear secondary.

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Features of Indian CulturePHI Learning


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Dimensions of Cultural Diversity in India

• Language

• Rural vs. Urban India

• Rich vs. Poor

• Geographical diversity

• Liberal vs. Conservative

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Diversity in Language, Religious Customs, Beliefs

There are 28 states and 22 languagesNumerous dialects spoken by peopleReligious customs, rituals and beliefs varyDifferent identities, ideologies, interests and outlook

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Implication for MarketersImplication for MarketersCommunication & packaging in local languageProducts need to be aligned with culture

There is a right way and wrong way for everything, but that can change from place to place….

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Rural vs. Urban India30% of the population live in urban areas.70% live in rural areas–but this means the majority of the market is spread across the country.Different income levels in rural and urban India.Rural customers attach more importance to functionality while urban consumers give importance to aesthetics/service parameters.

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Implication for MarketersImplication for MarketersDifferent marketing mix for both the markets

Mode of distribution/channels differs

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Rich vs. Poor: Different needs to fulfill

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Source: Bijapurkar 2007 (NCAER)

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Geographical Diversity

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An Average Urban North Indian Consumer…Beliefs & values–conservative inthinking, respectful Lifestyle–flamboyant, likes to have a lot of external glitter Behaviour–warm and friendly, herd mentality, inquisitive

An Average Urban Eastern India Consumer…Beliefs & values–slow in speed, relaxed, simpleLifestyle–traditional, simple basic Behaviour–opinionated, slow adopters, rigid

An average Urban Western India Consumer…Beliefs & values–progressive by nature, professional, values time Lifestyle–balanced, but very task‐oriented Behaviour–non‐interfering but helpful, early adopter, trendsetter, calculative

An Average Urban South Indian Consumer…Beliefs & values–orthodox and deep rooted Lifestyle–simpleBehaviour–curt but pragmatic, practical, conservative, cautious, not a risk‐taker

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Marketers must Understand Indian Culture in Order to Succeed

• Ford cars specially designed for Indian roads.• Electrolux'smade‐for‐India fridge–chill drinking water, keeps food fresh &

withstands long power cuts.• Samsung–microwave oven with grill. • Nokia launched a handset “Made for India” Nokia 1100.• McDonald’s McAloo Tikki Burger & Pizza McPuff. • Cartoon Network introduced South Indian folk tale “Tenali Ram”.• Walt Disney cartoon TV shows are in Hindi.• Omega watches picked an Indian film personality to replace Cindy

Crawford in its ad campaign.• Coca‐Cola has redesigned its crates as well as trucks for safe delivery on

poor roads.

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Overall Marketers need to…

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……Indianize, Humanize, Harmonize !!Indianize, Humanize, Harmonize !!

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OR

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OR

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A Model of Consumer BehaviourPHI Learning


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Marketing–4Ps• Product• Price• Place • Promotion

Environmental• Economic• Technological• Political• Socio–Cultural

Buyer Characteristics• Personal• Psychological

Buyer Decision Process• Problem Recognition • Information Search • Evaluation Decision• Post-purchase Behaviour

Post-purchase Evaluation• Product Choice• Brand Choice• Dealer Choice• Purchase Timing• Purchase Amount

Trial

Repeat Purchase

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Problem RecognitionPerceiving a difference between a person’s ideal and actual situation big enough to trigger a decision

Information SearchClarifies the options open to consumersPrior Experience, Word of Mouth, Advtg/Publicity Mktgefforts.

Analysis of AlternativesEvaluate the parameters and options available for product purchase: Form Choice Criterion

Purchase DecisionDecision on ‘when, where and from whom to buy’

Post‐Purchase Behaviour

Evaluation during consumption/use

Perceiving a Need

Seeking Value

Assessing Value

Buying Value

Value in consumption/Use

Decision-Making ProcessPHI Learning


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• Why do I need it?Problem Recognition

• What exactly is this product?Information Search

• What options are available?Analysis of Alternatives

• How exactly does purchase happen?Purchase Decision

• Did I make the right choice?Post‐purchase Behaviour

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Problem Recognition

Problem Recognition

Perceived difference between an ideal state and actual statemotivates the consumer to take actions.

Ideal State

Simple ExpectationsFuture goals/AspirationsMotivations/Self Image

CultureChange in Personal Circumstances

Actual State

Physical factorsNeed

External Stimuli

Difference

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Marketing Implications

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Information Search

Information Search

Internal SearchProcess of recalling stored information from memory

Dependent on motivation, ability & opportunity

More recall in high involvement, perceived risk

Information retrievedBrandAttributeEvaluationExperience

External SearchUsing outside sources

Types:Pre‐purchaseDue to problem recognitionOngoingRegular; due to enduring involvement

Retailer; media; experiential; interpersonal; independent

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Evaluation of Alternatives: Alternative SetPHI Learning


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Total Set

Awareness Set

Consideration Set

Purchase Decision

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Purchase Decision: Process

Roles played by members of the family varies with demographic parameters as well as with the type of the products

Influencer plays an important role in consumer decision making.Influencer may not be an expert but he/she assumes a key role in consumer decision and his/her family dynamics.

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Decision-Making Approaches

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Consumer evaluates the product during consumption to see if it satisfies the need/expectation.

Influenced by type of preceding decision‐making processes.

Cognitive dissonance and Experiential marketing play an important role in shaping up these behaviours.

Depends on the level of purchase involvement or the level of interest in a purchase.

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Selective Search for Evidence

Gathers facts that supports a particular decisionDisregards facts that support other conclusion.

Conservatism and Inertia Unwillingness to change thought pattern

Group Think Peer pressure to conform to views held by a group

RecencyMore attention on recent informationIgnores/Forgets distant information

Experiential Limitations

Inability to look beyond the scope of past experiencesRejection of unfamiliar

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Consumer decision making process among today’s youth

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The use of celebrities in order to increase the sales and/or the recall value of a brand is called celebrity endorsements.

Types of Celebrity Endorsements

Testimonial: Attestation by a celebrity based on personal usage.

Endorsement: Celebrity lends his/her name and appears on behalf of the product or service.

Actor: Character endorsement.

Spokesperson: Celebrity represents the brand or company over an extended part of time.

What is Celebrity Endorsement?

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AdvantagesInstant awareness, knowledge about the brand and easy recall.Values and image of the brand are defined, highlighted and refreshed by the celebrity.The celebrity adds new edge and dimension to the brand.Credibility, trust, association, aspiration and connectivity to brand.Belief in efficiency and new appearance that will result in at least trial usage.

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Hypothesis 1Every product has its own identity and it’s very important to endorse a product with a suitable personality.

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The Right PersonalityPerfect match between brand image and celebrity

Celebrity's fit with the brand image and the celebrity‐target audience match.Celebrity associated values and the celebrity‐product match.Costs of acquiring the celebrity and his or her popularity along with controversy risks associated with the celebrity.Credibility, availability and physical attractiveness of celebrity.

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Hypothesis 2Indian consumers have matured and celebrity endorsement alone is not sufficient to attract them.

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Hypothesis 3There are chances that the celebrity gains higher popularity than the product endorsed.

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Hypothesis 4Single celebrity—Multiple products: Consumer’s dilemma to associate the brands with the celebrity.

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Consumer buys a product based on its features rather than the celebrity endorsement.

Hypothesis 5

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Thank You!

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IMPULSIVE BUYING BEHAVIOUR

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Impulse BuyingSudden, compelling, unplanned, hedonically complex purchase.

Generates billions of dollars in sales every year for consumer

products.

Reacts often ‘mindlessly’ to stimuli that trigger certain

automated responses.

Information processing might have taken place earlier;

otherwise, behaviour may be totally impulse driven.

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Factors Affecting Impulse Buying Behaviour in FMCG

Price and discountAdvertising and sales promotionVisual merchandisingEmotional attachmentCompanyIncomeFestival season

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Stops Needed for Boosting Impulse Sales

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ExamplesA fan of Arsenal Football Club watching a football match of the team in a mall deciding to buy an Arsenal T-shirt on display at the same store.

A person with no special passion for a brand of high end wristwatches is impressed with the look and make of a Rado watch and buys it.

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Hypothesis 1Promotion and placement of product in the supermarkets have positive impact on impulsive purchase behaviourPromotion

Advertisement of product in print and visual media Various promotional activities regarding productErecting hoardings and distributing pamphlets of product

DisplayPackaging of product Placing of product in store

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Hypothesis 2Lifestyle traits of a person characterize his impulsive purchase.

Traits considered:Fashion involvementPrice consciousness

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Hypothesis 3Discount offers on products have a strong positive effect on impulsive buying consumer behaviour.

Branded products attract more on discount offers as opposed to unbranded ones.

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Hypothesis 4Shopping with others increases impulsive purchasing.

Impulsive purchasing at individual level vs. impulsive purchasing with othersShopping with family members, friends and colleaguesFactors

Susceptibility to influenceNormative: conformance to social norms

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Thank you ☺

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Indian Market Diversity

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Demographic Diversity

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Diversity in MenNormally, an Indian Male is:

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Diversity in WomenContented

Conservative

Affluent Sophisticated

Anxious Rebel

Troubled Homebody

Tight-Fisted Traditionalist

Contemporary Housewife

Gracious Hedonist

Normally, an Indian Woman is:

• Housewife; happy with her state of her life/society

• Working women; happy with existing state of affairs

• Housewife; unsure of sitting at home

• Traditional; believes in saving for future

• Affluent; comfortable with the finer things in life

• Housewife; active & sees herself as equal to husband

• Working women; believes in looking after herself

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Diversity in Youth

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Types of Diversity

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Regional Diversity in India

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Regional Diversity (cont…)

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Socio-Economic Diversity

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Diversity in Cuisine• The food available in

India is as diverse as its culture, its racial structure, its geography and climate.

• The essence of good cooking revolves around appropriate use of aromatic spices.

• The cultures that have influenced Indian food are the traditions of different religions.

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Diversity in Clothing• Traditional Indian

clothings for women are sari, salwar-kameez, ghagra-choli.

• For men, it is kurta, dhoti, pancha.

• Influenced by western culture: Blend of Indian and Western clothings.

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Understanding Indian

Rural Market Behaviour

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Importance of Rural India

India still lives in her villages.

Urban markets are overcrowded and getting saturated.

The understanding of the ‘rural’ consumer behaviour is diffused and sometimes confusing .

‘Rural markets’ need different approach from marketing in urban locations.

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Defining Rural IndiaOrganization Definition Limitations

NSSO ( Census) Population density < 400/sq km

75% of the male working population is engaged in agriculture.

Rural not defined

Planning Commission

Places up to 5,000 population are considered rural

Characteristics not defined

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Rural India–Population Trends

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Rural Income Dispersal

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FMCG Consumption Trends Products Urban (1000 HH) Rural (1000 HH) Toilet Soap 998 992

Detergent Cake 980 950

Cooking Oil 968 952

Hair Oil/Cream 897 787

Tea 876 758

Toothpaste 822 449

Washing Powder 819 576

Electric Bulb 723 394

Shampoo 663 352

Biscuits 579 314

Health Beverages 324 67

*HH = HouseholdsSource: National Council for Applied Economic Research, 2002

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Myth 1: Rural is one homogeneous mass.

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Rural SEC classification

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Upmarket Rural ConsumersRural SEC Groups

0

5

1015

2025

3035

4045

Per

cent

age

Of H

H's

Ow

ning

R1 R2 R3 R4

H o w D ifferen t Are U p -M arket R u ra l C o n su m ers?

ColTVC& S ConnTwo-W hlrsP honeFridgeA /CoolerFour-W hlrW /M ac h

Stereo-typed view of undifferentiatedrural consumers no longer valid

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Myth 2: Companies/Brands can Thrive by Operating Entirely on Urban Market

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Rural Market has Emerged by its Sheer Size

742 million people

Estimated annual size of the rural market (Rs., crore)FMCG 65,000

Durables 5,000

Agri‐inputs (including tractors) 45,000

Two/Four‐Wheelers 8,000

Total 1,23,000

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Marketing OpportunitiesLow penetration rates in rural areas (per 1000 households)

Durables Urban Rural TotalMotor Cycle 77 28 42CTV 304 48 121Pressure Cooker 635 178 309Refrigerator 335 35 120

FMCG Urban Rural TotalShampoo 663 352 442Tooth Paste 822 449 556Health Beverage 324 67 140Packaged Biscuits 579 315 390Face Cream 429 185 254

Source: NCAER 2002

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Myth 3: Rural India – A Black hole for communication

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Media Exposure Levels U p m arke t C o n su m e rs U se M o re M ed ia

0

10

20

30

40

50

60

70

80

R1 R2 R3 R4Perc

enta

ge E

xpos

ed A

t Lea

st O

nce/

Wee

k

P res sTVC& S TVRadio

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Infrastructure Improving Rapidly

0

10

20

30

40

50

60

70

SatelliteTV

Radio Press Cinema TV AllMedia

70% of R1,R2,R3 can be reached through mass media.

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Myth 4: Rural GDP is All about Agriculture

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0%

20%

40%

60%

80%

100%

AGRI IND SER

48.4

17.7

33.9

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Myth 5: Rural Disposable Income is a Function of Monsoon and not Growing.

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Myth 6: Reach and only reach is the key.

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Distribution of Villages

Source: Census 2001363

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Myth 7: Urban trickle down communication works in rural India.

What is a Rural Consumer Like?

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KEEP IT SIMPLE

Supporting InsightsIt’s great fun to watch TV, but I cannot understand and relate to it. I am willing to listen and change, only if you interact and engage with me. I am simple–I take things literally, especially when it comes to ads. I can’t read or write, but I can understand symbols, colours and images.Talk to me in my language in a simple way, that’s what I understand.

“I am eager to adopt or buy, but I do so only if you talk in my language and signage.”

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FAMILIARITY BREEDS COMFORT

Supporting InsightsI have faith in the Brands I have used.If I am satisfied with my familiar products, then why should I change?I am averse to taking risks, particularly if it is new and unfamiliar.Familiar things make me secure.If I find my village folks are using a particular brand, then I feel reassured.

“Only if it’s familiar, will I trust.”

Propensity for trial is relatively poor.Choice dictated by Group Influence

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LUXURIES@ Rs.5

Supporting InsightsI buy low cost products because they fit into my budget, as they give the value I am seeking.At any time I have limited amount to spend, but I need to buy a number of things, so luxury products are important.Rs. 5–my lakshman rekha–I do not have more than that to spend.

“Jo Chahoon Woh Paoon, Lekin Panch Rupai Mein”(Will get what I want, but only at Rs. 5)

Rs. 5 and Rs. 10 are magical price points in rural India.367

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SHOW VALUE–Then Rural Buyers WILL BUY

Supporting InsightsIf I see and feel the difference – only then will I believe and act.Show me the value–Performance quality or quantity; only then will I buy.If I can sense the difference, I don’t mind paying a little extra for it.If I can’t see the difference, I shall select the cheaper one.Price is important; yet it should meet my expectations.

“I will pay more only if you show me that I get more tangible benefits that I want out of the product.”

Packaging and brand experience are the key.

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HAAT–MERI DUNIYAN

Supporting InsightsHaat is my outing. I am looking to explore . Haat gives me an opportunity to buy products that I wish to buy. Haats are a festive outing and lots of fun—where I get to see new things.I have some places (Haats) which I regularly visit and where I am open to change.

“Haats (village markets) are my window to the world-where I experience new things.”

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Discoveries about Rural MarketDiscovery 1 : The rural market is a huge potential market.Discovery 2 : The rural consumer can be reached with a

combination of mass and unconventional media.Discovery 3 : The rural market is a differentiated market.Discovery 4 : Rural GDP is not about agriculture alone.Discovery 5 : Rural disposable incomes are growing and

growing fast.Discovery 6 : Quality of reach and not mere reach is going to

be the key differentiator for the rural market.Discovery 7 : Need for a rural marketing mix.Rural relevant advertising

Consumer activationUse of non‐conventional media like haats, fairs, etc.Price point SKUs.

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“The future lies with those companies who see the poor as their customers.”

CK Prahalad, Jan 2000

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4 Ps & 4 AsProduct–Price–Place–Promotion Acceptability–Affordability–Availability–Awareness

Marketing Tools Marketing ChallengesProduct Acceptability

Price Affordability

Place Availability

Promotion Awareness

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Product

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Appropriate Product StrategiesSmall unit packaging Product features–service quality–price and performance relationship Simplicity is the key New product designsSturdy products Utility‐oriented productsBranding strategy

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Packaging Associated with affordability ‐ convenience ‐ consumer recognition, and product protection

Packaging material, size, convenience and aesthetics

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Fakes: Some Examples

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Pricing

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Issues in Pricing‐Affordability Low cost/cheap products

Avoid sophisticated packing

Refill packs/reusable packaging

Highlighting value

Price adaptations

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Examples of Rural Pricing Strategies

Godrej: Cinthol, Fair Glow and Godrej in 50 g packs, priced at Rs. 4‐5, meant specifically for Madhya Pradesh, Bihar and Uttar Pradesh.HLL: Lifebuoy at Rs. 2 for 50 g.Coca‐Cola: The returnable 200‐ml glass bottle priced at Rs. 5.

Colgate‐ Cibaca

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Place‐Rural Distribution Challenges Large number of small markets

Dispersed population and trade

Poor connectivity

Low availability of suitable dealers

Inadequate banking/ credit facilities

Poor product display and visibility

Poor communication of offers and schemes

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Levels of Distribution LevelLevel Partner Partner Location Location

1 Company Depot/C & FA National/State level

2 Distributor/Van Operator/ Super Stockist / Rural

Distributor

District level

3 Sub‐Distributor/ Retail Stockist/Sub‐Stockist/Star

Seller

Tehsil HQ, towns and large villages

4 Wholesaler Feeder towns, large villages, haats

5 Retailer Villages, haats

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Distribution AdaptationsHub and Spoke Model Example: Coca‐Cola

Use of affinity groups Example: Project Shakti

Haat Activation Example: Colgate

Syndicated distribution Example: Cavin Care & Amrutanjan

Use of marketing cooperatives Example: Warna Bazaar in

Rural Areas

Mobile traders Example: FMCG companies

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Promotion IssuesMost of the products are sold in the local rural haats. Result:

They may not fetch a very good price.They have limited demand resulting in low turnover and low income.Chance for product improvement is limited.

Some state government bodies extend preferential treatment to these products at the time of procurement.

Limited awareness.

Attempts are made to publicize and promote the sale of these products through periodic exhibitions and melas.

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Promotion Adaptations Conventional Non‐ Conventional Personalised

Television Haat and Mela Direct mailer

Radio Folk Media( puppet and magic show)

POS (demonstration, leaflet)

Press Video Van Word of mouth

Cinema Mandi (Market) Interpersonal communication

Outdoor: Wall Painting, Hoarding

Animator

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Melas & Haats

Melas Haats

1. 25,000 melas

2. Companies can concentrate on the top 100 melas

3. Pushkar Mela in Rajasthan

4. Organized by the state Veterinary Department

5. Product sales, promotion, demonstration and database generation

6. Cultural activities and rural sports

1. Periodic markets located in larger villages (> 40,000) populations.

2. 10–50 villages are serviced.

3. Sunday markets are most popular.

4. Average number of outlets is 315 and average daily sales are about Rs. 2 lakhs.

5. Traders participate in at least 4 haats.

6. 81% of the visitors are repeat customers.

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Types of Promotions Advertising

Sales promotions–coupons, contests, demonstrations and sampling, Example: Tata Shakti Haat Hungama

Direct marketing, Example: Videocon

Publicity, Example: Project Shakti and AP Online

Using a direct selling through a salesforce, Example: Swasthya Chetnafor Lifebuoy

Push strategy–salesforce and trade promotion

Pull strategy–advertising and consumer promotion

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Future ProspectsRural per capita consumption of FMCGs to equal current urban levels by 2017.

Industry analysts expect the FMCG sector in rural areas to grow 40% against 25% in urban areas.

Telecom expected to grow from 100 million connections today to 300 million by 2012

Semi‐urban & rural life insurance market expected to rise from US$ 5 bn to US$ 20 bn by 2012.

Government spending will continue to grow.

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Changing Indian Consumer

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Is India Different?

India has shown tremendous growth in the last two decades.

Brand India is riding high.

Happy times for Indian consumer as disposable income has

increased considerably over the years.

India's growing consumer goods market provides the

opportunity for multinationals.

But with this opportunity lies the hurdle to understand the ever

changing Indian consumer.

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Factors Responsible for ChangeRising disposable income and increasing western influence.

Average Indian consumer today is richer, ambitious, more knowledgeable and profile-conscious.

More and more women focusing on career instead of home-making.

A more dynamic lifestyle leading to reliance on easy-to-use products like ready-to-eat food, home delivery, etc.

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Who are the New Indian Consumers?India's consumers are young:

70% of the country's citizens are below the age of 35 years, and half of those are under 18 years of age.

People are deeply rooted in Indian culture and traditions yet connected to and curious about the outside world.People in the middle-income segment still spend about half their budgets on the basics, that amount is falling every year, leaving more money for other areas of consumption.Beyond basic needs, households make their children's future a clear priority.

Education is seen as a passport to a better tomorrow.To gain a winning edge, parents spend much money and effort choosing the right schools and tutoring for their children and invest in nutrition, computer games, and books.

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Has the Indian Consumer Changed?

Yes! But the change is gradual and noticeable only over a sufficient period of time.

It is not visible unless we look back.

An individual’s values/beliefs may differ from the prevalent culture unorthodox.

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SOME CHANGES AS NOTICED IN INDIA

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Eating OutIn urban India, families that do not eat out are considered old-fashioned and conservative.

Most popular-multi-cuisine restaurants offering Indian fare, along with a form of Chinese and Western fast food.

Pizza and cheese, with Indian flavours and spice.

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Health & Fitness• Indians are paying more attention to

their health and striving for better fitness levels. For example, joining gyms or clubs.

• Rapid rise in sale of fruit juices, cool drinks, etc.

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Metro-sexual Male• Male grooming a growing

business in India

• Annually growing at 15%

• Currently, usage is restricted to the young, urban upper income male.

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Women Empowerment• More women entering the

workforce• Increased use of cosmetics• Increasing time pressures

Convenience gains value • Easy to cook food, home

delivery, wide choices in shops, etc.

• Demand for ancillary services/products, e.g. cook, domestic help, microwave oven

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TeensWith increased awareness through television and advertising, teens are an important influence on family decision-making in urban India.Have mastered the art of bullying their parents into making purchases.Gadgets or products that they want

newly launched chocolate bar, instant noodles and breakfast cereals.mobile phones, the TV remote, DVD player and computer programs

Marketing mangers also exploiting this surge in the number of ads for children

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Marriage• Earlier, arranged marriages used to

happen with elder’s consent.• Many people nowadays rely on

individual choice and judgement.• Examples: matrimonial sites

proliferate – shaadi.com, bharatmatrimony.com

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Luxury• India is experiencing a rise in

incomes and higher consumption patterns.

• Demand for luxury products is also on the rise.

• Vertu mobiles, Tag Heuer, Louis Vuitton, Hugo Boss, Porsche, Ferrari, Parker Pen.

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Digitalization• Young people in urban areas

are increasingly using the Internet.

• Online banking for service payments and even for buying company shares.

• Success of social networking websites.

• Avail Online booking of tickets for movies, trains and airlines.

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Credit• Earlier, people avoided

buying things (non-essential) on credit/loan.

• Controlling desires Instant gratification

• Easy availability of credit• Rise in number of home and

vehicle (Two, four wheelers) loans

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Snacking• Eating 2 or 3 times a day

Eating when hungry.

• Snacks and chocolates of wide variety available –Lays, Kurkure, Perk, Cadbury Dairy Milkchocolates, Britanniabiscuits, etc

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Movies and Serials • Earlier, Movies made in

Bollywood (Emotions, Action, Drama) were a craze.

• In India, women are mostly housewives–idle time at home.

• Hence, the debut of serials targeting this segment was launched by BalajiTelefilms (Ekta Kapoor).

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Western Influences• Opening of Indian economy,

mass and social media exposure and increase in overseas travelling

• Acceptance of western clothing, especially in urban India

• Gifting Cards

• Pub culture

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THANK YOU

Documents

Consumer Behaviour-Ramanuj Majumdar