Project Mehul

8/3/2019 Project Mehul

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AN STUDY ON

CONSUMER PSYCHOLOGY

In

NILGIRIS

Bangalore

Dissertation submitted in partial fulfilment of the requirements for the award of the degree of

MASTER OF BUSINESS ADMINISTRATION

BANGALORE UNIVERSITY

By

MEHUL KUMAR

Reg.No:091PCMA012

2009 - 2011

Under the guidance of

Dr. C .Girish

Professor

CMR CENTER FOR BUSINESS STUDIES#5, Bhuvanagiri, OMBR Layout, Banaswadi,

BANGALORE-560 043


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STUDENT`S DECLARATION

I hereby declare that this Dissertation titled CONSUMER PSYCHOLOGY Submitted

by me to the Department of Management, Bangalore University in partial fulfillment for the

award of the Degree of Master of Business Administration, Bangalore University, is a

bonafide work carried out by me under the guidance of Dr.C.Girish. This has not been

submitted earlier to any other University or Institution for the award of any Degree or

Diploma or Certificate or Published any time.

Place: Bangalore Mehul kumar

Date: (091PCMA012 )


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CERTIFICATE FROM GUIDE

This is to certify that dissertation titled Consumer Psychology submitted in partial

fulfillment for the award of the Degree of Master of Business Administration, Bangalore

University was carried out by Mehul Kumar (091PCMA012) under my direct supervisionand guidance.

This has not been submitted to any other University or Institution for the award of any

Degree/Diploma/Certificate.

Place: Bangalore Guide Name

Date: Dr.C.Girish

CMR Center for Business studies


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ACKNOWLEDGEMENT

I owe deep sense of gratitude to my beloved institution, CMR center for Business Studies,

for molding me into a real management student.

My project wouldnt have been successful without the material assistance of a number ofpeople. I would like to acknowledge the help rendered by each of them. I express profound

gratitude and thanks to all the people who have been extremely inspirational and helped me

to complete this project.

I would also like to take this opportunity to express my deep gratitude and thanks to my

project guide Dr.C.Girish CMR CBS for his most valuable guidance and critical evaluation

throughout the course of project work. I would also like to thank all my faculty members for

their valuable suggestions.

Finally, my heart full thanks to my beloved parents and friends with whose love, blessings,

guidance, suggestions and encouragement, I could come up to this stage.


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EXECUTIVE SUMMARY

Having an insight into the mind of the consumer is extremely important in developing marketing

strategy especially in a country like in India where diversity is the norm. The insights about the

consumer behavior come from empathy with the consumer and familiarity with the socio economic

and cultural environment. It also needs sound analysis of consumer behavior. This programme

focuses on methodology to enable understanding of consumer psychology for marketing decisions.

Consumer psychology includes consumer decision making, Individual determinants of

behaviour, Perception, Motivation, attitudes, personality, learning and Environmental influences.

Nilgiris is one of the supermarkets in South India with leading chain of retail stores

providing consumers a shopping experience that hinges around freshness of produce,

superior quality and better value. From humble beginnings in the hills around Ooty and

Coonoor at the turn of the twentieth century, Nilgiris has grown from being a Dairy Farm

specializing in butter to a supermarket chain of over 90 stores spread across Indias southern

states.

With the mission of constantly improving and upgrading capacities to satisfy

consumers through a wide range of food products and service offered at the right quality,

quantity and price supported by innovative solutions, Nilgiris is all set to embrace emerging

technologies and be recognized for its integrity, customer focus and commitment to quality.

This report consists of the detailed study of the consumer psychology which revolves aroundthe consumer decision making. it includes understanding the consumers of Nilgiris, both

existing and prospective with the help of a sample survey of consumers.


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CHAPTER 1

INTRODUCTION


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Consumers mind is all most comparable with the mind of a fickle minded mistress. It is a

Pandoras Box. Its potential is unlimited. Its excitement and desire to full fill the just and

immediate wants is endless. Consumers or customers are the embodiment of the values and

virtues of psychology of human mind. Analyzing the psychology of consumers is just like a

blind man testing an elephant. In the fitness of things, a study of consumer mind or

psychology is interesting, exciting and useful to everyone in the supply chain of production

and marketing good and services.

Having an insight into the mind of the consumer is extremely important in developing

marketing strategy especially in a country like in India where diversity is the norm. The

insights about the consumer behavior come from empathy with the consumer and familiarity

with the socio economic and cultural environment. It also needs sound analysis of

CONSUMER BEHAVOIUR. This programme focuses on methodology to enable

understanding ofCONSUMER PSYSCHOLOGY for marketing decisions.

Introduction to consumer psychology: Consumer decision making Individual determinants

of behaviour, Perception, Motivation, attitudes, personality, learning and Environmental

influences.

Consumer Psychology seeks to explain human, or consumer behavior, in two basic ways:

what the consumer wants and what the consumer needs. The logical explanation for

fulfilling the needs is a simple one. If a person lives in New York, that person needs a winter

coat to survive the cold outside. But why the person buys a particular style or color hinges

on the more complex issues of why a particular choice is made. The Society for Consumer

Psychology is a division of the American Psychological Association (APA). The group's

main focus is conducting scientific research, development and practice in the field. Its

quarterly journal, Journal of Consumer Psychology as well as another publication, Journal of

Consumer Research and Psychology and Marketing, periodically serves as the voice of those

engaged in the understanding of why people buy what they buy.


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The key to unlocking consumer psychology understands that desires rule over needs when it

comes to consumer purchase. In a modern world with hundreds of brands of toothpaste,

where new food products and electronic gadgets emerge daily, it is the interest ofpsychologists, as well as those marketing the products, to understand the relationship

between financial and psychological factors that make people buy what they buy. In fact,

consumer psychology utilizes more than simply psychology. It must study economics and

culture too. Accordingly, there are several principles at play when examining this issue.

Psychology views certain factors that include:

The Gestalt principle. If you want to know why a particular restaurant is popular, itis important to understand what cultural implications are present beside the food.

The Iceberg principle. What could be the superficial or seemingly rational reasona person might have for making a purchase (the need)? What other factors (wants)

influence it? For instance, even if shoes are purchased as foot protection, the desired

shoe may be open-toed, strapless, and come with six-inch heels

The Dynamic principle. People and their motivations constantly change, whetherinfluenced by social, economic, or psychological factors. The millionaire who grew

up in dire poverty might still buy the cheapest margarine because the psychological

motivation takes time to catch up to the economic status and

Image and Symbolism. From product spokespersons to the picture on a candy barwrapper, the ever-elusive association people make with a product might be a big

factor in whether or not they buy it, more than the nature or quality of the product

itself.

In 1957, a writer named Vance Packard started a minor revolution with his book, The

Hidden Persuader. Packard uncovered the manipulations of the advertising community, done

to ensure a certain brand of a product becomes a best-selling item. He urged consumers to be

cautious and not fall prey to hidden meanings or symbols in advertising, and pointed out

less-than-honest representations of what a product could do for the buyer. The book was

popular, and people started looking for the subtle messages in everything from liquor ads to


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spaghetti packages. What they also did, and often, are buying the product anyway. Their

awareness did not necessarily combat their emotional needs.

Psychologists understand that in the burgeoning economy of the early twenty-first century

people's needs and wants are continually growing too. In the 1970s and early 1980s,

household items such as computers and video recorders were new, and counted as luxuries.

By 1999, by virtue of a changing society, those items had become more than simple

luxuries, as schools and businesses often came to require their use. Complex human

behavior can take one invention and create a hierarchy of needs around it. Whereas

economists or marketing strategists might look to numbers-wages or interest levels-

psychologists know that something more motivates the consumer purchase trends. Theyhave discovered that often in the most depressed economic times, the sales of luxury items

go up.

Consumer psychology is a pursuit that is likely to expand now that an estimated $5 billion

worth of products were purchased online by the spring of 2000. Online shopping habits

might differ drastically from catalogue sales or in-store purchases. These trends are just

beginning to be studied, and certainly consumer psychologists will be studying buying

habits well into the twenty-first century.

INDUSTRY PROFILE

Retail is India's largest industry. It accounts for over 10 per cent of the India's GDP and

around eight per cent of the employment. Retail sector is one of India's fastest growing

sectors with a 5 per cent compounded annual growth rate. India's huge middle class base and

its untapped retail industry are key attractions for global retail giants planning to enter newer

markets. Driven by changing lifestyles, strong income growth and favorable demographic

patterns, Indian retail is expected to grow 25 per cent annually. It is expected that retail in

India could be worth US$ 175-200 billion by 2016. The organized retail industry in India

had not evolved till the early 1990s. Until then, the industry was dominated by the un-


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organized sector. It was a sellers market, with a limited number of brands, and little choice

available to customers. Lack of trained manpower, tax laws and government regulations all

discouraged the growth of organized retailing in India during that period. Lack of consumerawareness and restrictions over entry of foreign players into the sector also contributed to

the delay in the growth of organized retailing. Foundation for organized retail in India was

laid by Kishore Biyani of Pantaloon Retails India Limited (PRIL). Following Pantaloon's

successful venture a host of Indian business giants such as Reliance, Bharti, Birla and others

are now entering into retail sector. A number of factors are driving India's retail market.

These include: increase in the young working population, hefty pay-packets, nuclear

families in urban areas, increasing working-women population, increase in disposable

income and customer aspiration, increase in expenditure for luxury items, and low share of

organized retailing. India's retail boom is manifested in sprawling shopping centers,

multiplex- malls and huge complexes that offer shopping, entertainment and all food all

under one roof. But there is a flip side to the boom in the retail sector. It is feared that the

entry of global business giants into organized retail would make redundant the neighborhood

kiryana stores resulting in dislocation in traditional economic structure. Also, the growth

path for organized retail in India is not hurdle free. The taxation system still favors small

retail business. With the intrinsic complexities of retailing such as rapid price changes,

constant threat of product obsolescence and low margins there is always a threat that the

venture may turn out to be a loss making one. A perfect business model for retail is still in

evolutionary stage. Procurement is very vital cog in the retail wheel. The retailer has to fight

issues like fragmented sourcing, unpredictable availability, unsorted food provisions and

daily fluctuating prices as against consumer expectations of round-the-year steady prices,

sorted and cleaned food and fresh stock at all times. Trained human resource for retail is

another big challenge. The talent base is limited and with the entry of big giants there is a cat

fight among them to retain this talent. This has resulted in big salary hikes at the level of

upper and middle management and thereby eroding the profit margin of the business. All the

companies have laid out ambitious expansion plans for themselves and they may be

hampered due lack of requisite skilled manpower. But retail offers tremendous for the

growth of Indian economy. If all the above challenges are tackled prudently there is a great


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potential that retail may offer employment opportunities to millions living in small town and

cities and in the process distributing the benefits of economic boom and resulting in

equitable growth.Retailing consists of those business activities involved in the sale of goods and services to

consumers for their personal, family, or household use. Retailing comprises of four

elements:

Customer Orientation Coordinated Effort Value-driven and Goal Orientation.

Drivers of change in retailing

Changing demographics and industry structure Expanding Computer technology Emphasis on lower cost and prices Emphasis on convenience and service Focus on productivity Added experimentation

India emerges as most attractive retail market. According to AT Kearneys report Emergi

Market Priorities for Global Retailers, The 2006 Global Retail Development Index TM, India ran

as the most attractive emerging market as a retail destination. Indias retail market has grown by 10

on an average in the past five years. The report attributes the changing retail landscape in the countr

to the increasing mobility among the middle and upper classes and increasing urbanization. The tab

below displays the ranking of different countries and the various parameters considered in arriving

these rankings


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Essentials of Retailing

Customer orientation: The retailer makes a careful study of the needs of the customer and

attempts to satisfy those needs.

Goal orientation: The retailer has clear cut goal and devises strategies to achieve those

goals.

Value driven approach: The retailer offers good value to the consumer with merchandise

having the price and quality appropriate for the target market.


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Coordinated efforts: Every activity of the firm is aligned to the goal and is designed to

maximize its efficiency and deliver value to the consumer.

Four Axes of Retail scale up

The broad parameters along which the retailing activity can be scaled up. It represents the

choices available before a retailer in terms of how the business model can be designed. The

four parameters are the products that can be offered, the markets in which the retailer may

have a presence, the retailing format that may be adopted for operation and the profile of the

customers that are identified as the target segment. These four parameters are interlinked

and together frame the strategic disposition of the retail business.


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\Stages in growth of Organized Retail


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CHAPTER 2

RESEARCH DESIGN


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Having an insight into the mind of the consumer is extremely important in developing marketing

strategy especially in a country like in India where diversity is the norm. The insights about the

consumer behavior come from empathy with the consumer and familiarity with the socio economic

and cultural environment. It also needs sound analysis of CONSUMER BEHAVOIUR. This

programme focuses on methodology to enable understanding of CONSUMER PSYSCHOLOGY for

marketing decisions.

TITLE OF THE STUDY

A detailed study in the area of CONSUMER PSYCHOLOGY for NILGIRIS

SUPERMARKET

STATEMENT OF THE PROBLEM

Nilgiris do not adopt the latest trends, fads and not in favour of diversifying their products as

a result the company is losing its hold in the retail market.

OBJECTIVES OF THE STUDY

To study the buying strategy of customers towards NILGIRIS. To explain why consumer behavior is a central topic in marketing. To present a simple model of consumer decision-making. To provide some simple tools that can be used for thinking about consumers,

speculating about their possible behaviors, analyzing marketing problems from a

consumer-behavior perspective, and most important of all, designing studies that

investigate consumer behavior in a concrete product and market context.


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SCOPE OF THE STUDY

The scope is limited to operations of Nilgiris Superstores limited, Bangalore. The study confines itself in understanding the customers' view point of the marketing

mix strategies of NILGIRIS in BANGALORE.

RESEARCH DESIGN

RESEARCH METHODOLOGY

Data Sources:

1. Primary Data

Primary data is the information collected for research purpose at hand. Primary data was collected

through an interview with the help of a structured questionnaire, which contained quires that were

relevant to the purpose of the study as well as pertinent; industry related questions. The present study

questionnaire makes use of both open ended and close ended questions.

2. Secondary Data

Secondary data is the information which already exists. Secondary data is collected from journals,

magazines, books, dissertations etc. The secondary data for this research was obtained from

company profile, corporate magazines, corporate broachers, websites, journals etc. Various books

and other published matter were also referred to for sorting, tabulating and analysing the raw data

collected. Very little research specific data was available; hence much emphasis was given to

primary data.

RESEARCH APPROACH

Survey method was adopted in order to collect the primary data required for the study.

RESEARCH INSTRUMENT

Questionnaire was designed with open-end and close-end questions. The Questionnaire was

designed in such a manner so as to cater to all the areas and aspects of the study.


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SAMPLING PLAN

SAMPLING UNIT: A customer visiting NILGIRI is identified as the sampling unit. SAMPLING PROCEDURE: Random Sampling SMAPLE SIZE: 157

DATA ANALYSIS

Simple statistical tools such as averages, ranking, means etc. are used. Graphs and charts are also

used to have a better pictorial understanding.

PLAN OF ANALYSIS

The collected data has been classified, tabulated, analysed and interpreted in an organised manner.

Inferences have been drawn carefully and methodically with supportive guidance to avoid

discrepancies in the survey. Conclusions have been drawn and suggestions have been made to the

best of knowledge.

All the work is done under the assumption that the data collected from the respondents was accurate.

Throughout the survey and throughout the time the report was prepared, errors and mistakes have

been made minimal despite the knowledge of the fact, various hindrances are bound to occur.

Utmost care has been taken while preparing this report to see that it can be clearly understood by the

reader as well as beneficial to the company.

LIMITATIONS OF STUDY

Some of the limitations of this study are:

Due to geographic constraint the study was limited to BANGALORE City.

It is assumed that the information given by the respondents is true as per their knowledgeand hence the chances of biased information is remote but definitely cannot be ruled out.

Due to the limited number of respondents, the finding may not be the same for the wholepopulation.


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CHAPTER 3

COMPANY PROFILE


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HISTORY:

Nilgiris Dairy Farm was founded in the year 1905 by Mr. Muthuswamy Mudaliar. He

started with selling butter and added fresh sales. Due to good principles of business and

services he developed the business and enjoyed great goodwill and reputation. He installed

first cream separator in Southern India in 1896.

In the year 1939, he opened a Branch in Bangalore on Brigade Road, starting with 10

pounds of butter sales per day that is Rupee 10 business in a day. Mr M Chenniappan, son of

Mr. Muthuswamy Mudaliar was placed in charge of Bangalore operation. He was supplying

milk and cream to the military dairy farm at Hebbal and the prisoners of war camp also. It

served British defense and citizens who stayed in India at that time. The business grew and

ventured into a small coffee/milk bar, slowly a small bakery was added and a little later the

milk bar started supplying breads, dairy products including ice cream. Mr. M

Chenniappanns brother Mr. M S Mani, the present managing director joined the business in

1950 and together started the full fledged mechanized bakery. Mr. M S Mani is in charge of

administration of the company and appointment of senior executives as well as acquisition

and development of company properties. The two units in Bangalore make about 2000

loaves of bread and few hundred varieties of buns, cakes, chocolates biscuits etc.

For the last 30 years the bakery unit has been organizing the Annual Cake Show and the

exhibition cum cake sale in which every year a special item is made to almost a life size

model of well known place made out of tons of sugar.

The true to life sugar and chocolate models are displayed

for the public to admire. Some of the pieces created in the past include Taj Mahal, Vidhana


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Soudha, St. Marys Basilica, Giffet Tower, Kargil, Titanic, The United Nations Building,

Kerala Boat Race, Bugee Jumping, Windmill etc.

MR. C Ramachandran, the first son of Mr. M Chenniappan is totally in charge of this annual

feature as managing director of the Bakery unit.

In 1960, a milk processing plant was set up at Erode and a milk selling unit was set up at

Madras. Mr. M Chellayan, another brother, studied at NDORI. He went abroad for further

training. He is in charge of the dairy operations at Erode and also in charge of the

supermarkets at Coimbatore and Erode.

In 1970, on a visit to Europe, Mr. M Chenniappan saw the self help department stores in

operation there and this kindled the idea of opening a similar store at Bangalore. In 1971, the

small operation of Nilgiris Dairy Farm was upgraded into a fully fledged self help

supermarket, the first of its kind in southern India. The family partnership business was also

converted into a private limited company in the year 1971.In 1984; a supermarket was set up

at Madras with restaurant and lodging.

A branch at Mangalore was opened around this period. It is a family business. Now the

fourth generation has also got into the business. Every male member in the family had

foreign training in different lines and has developed their departments. From Rs. 10/-

business a day in 1939, today they do a turnover of over Rs. 80 crores a year.

Nilgiris have set up a diary division at Bommasandra, where they have started

manufacturing cheese. They have also set up a chocolate factory ay Bommasandra. At the

bread unit Veerasandra Industrial Unit, about 20,000 loaves of bread is prepared every day.

Nilgiris have bakeries at Erode, Coimbatore and Chennai.During the last 30 years; Nilgiris

have grown into a chain of supermarkets. The company now runs six supermarkets in direct

management, i.e. 4 at Bangalore - Brigade road, Airport Road, Kammanahalli, Cox Town

and Golden Enclave. 2 at Erode -one at Chennai and one at Coimbatore.


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The company is managed by the board of directors, where the sons are also directors, who

are all technically qualified in bakery, dairy, supermarket operations and the like, heading

the respective divisions on a full time basis.

Nilgiris have also over the last two years, exported some of the Nilgiris products to

Singapore, Switzerland, United States, Germany and Australia. The dairy division handles

around 50,000 liters of milk daily with the plant at Erode as well as Bangalore. They also

procure another 5000 liters of milk at Bangalore form nearby sources.

Apart from supplying milk at Bangalore, Coimbatore and Chennai, Nilgiris also have the bi-

products of a daily production of 600kg of butter, 400kg of ghee, 600kg fresh cream and

about 150kg of cheese. They also have the Nilgiris Nest, lodging provided along with their

supermarkets at Bangalore, Chennai and Coimbatore. They have four star facilities at

reasonable rates.

Of the 80 crores turnover, 20 crores are from their dairy division alone. At the supermarkets

in Bangalore and Chennai, they have daily turnover of around Rs.5 lakhs each and they have

more than 2000 customers walking in for shopping daily.

Supermarket operation

They provide an ambient atmosphere; display well cleaned, and properly packed items under

the Nilgiris brand-bakery products, dairy products, instant food items, spice powders and the

whole list of provisions as also fresh vegetables. Of course, all popular brand gods are stored


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in plenty always. For the convenience of the customers, they have provided barcode and

computerized billing system. The customer receives the neatly printed bill with full details

of products, quality, quantity, price, tax etc. It is the most successful business as far as thepopularity of the brand name of Nilgiris is concerned.

It costs them a lot of money to run a store like this and they are today, the only supermarket

chain operating in India. It is to be noted that 50% of their business comes from their own

dairy, bakery and other products whereas the other half of the turnover comes from branded

goods, of other National and Multinational companies. Air conditioned and carefully

structured for a comfortable shopping experience, the Nilgiris chain of supermarkets use the

latest in automation technology and software to ensure that visitors have a very pleasant

shopping experience.

Nilgiris Supermarket

The main supermarket at Brigade Road Bangalore has branches at Airport Road,

Kammanahalli, and Cox Town. Chennai, Erode, Coimbatore and franchisee outlets at

Vishakapatnam, Hyderabad and Pondicherry.

Mini CounterAt the entrance of the supermarket, there is a mini counter, which is only for dairy products

like milk, curds, buttermilk, flavored milk, sandwich bread, fruit and milk bread, etc. Pure

coffee powder, ghee, mushroom, lacto soy milk i.e. plain milk, mishti doi, pudding (choco,

vanilla and chocolate), srikand, yoghurt, table butter, cream, paneer, processed cheese,

mozzarella cheese etc are available in this mini counter for those customers who need quick


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service only in dairy products. Only required quantity is kept in this counter. This is a busy

counter with the number of customers.

ServicesIn this counter the milk coupons are provided to the interested customers of liter and 1

liter. They also provide home delivery. One booklet is allotted for one month, wherein one

booklet consists of 30 coupons. A separate register for orders of the customers is written

down. This counter also maintains the complaint register wherein the customer writes down

the complaints regarding their dissatisfaction. As the company renders good service and

satisfies the needs of the customer there is no complaint registered. The launch coupons are

also provided which are known as the Bemel Coupons.

Departmental Stores

It provides an ambient atmosphere, display well cleaned, all popular brand goods are stored

in plenty always and properly packed items under the Nilgiris brand. The work force of the

department is 55.The credit facility is provided only for corporate officers and those

customers who provide bank guarantee.

Soaps And Detergents:This counter is mainly for soaps and detergents meant for the convenience of the customer

to select easily available for them. There are 55 different types of soaps, the mail supplier is

HLL. The major sales are Pears, Mysore Sandal, Lux, Rexona etc of 125gms & 75gms in

each quantity are sold about 10-20 pieces per day as per the customers requirement. There


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are different types of detergents like Rin, Rin Supreme, Henko, Surf, Ariel, Tide etc.

250gms are sold maximum.

Toothpastes:This counter also includes toothpastes of different types. The major sales among the pastes

are Pepsodent, Close Up, and Colgate etc. These items are received from Godown.

Cosmetics:This counter is separated into 2 parts, one is at entrance which displays all the cosmetics and

it functions mainly in selling lipsticks, nail polish, lip liner, eye liner etc. The major

suppliers are Lakme, Tips and Toes, Elle 18, Revelon etc. The other counter includes

lipsticks, nail polish, body sprays, perfumes, creams and lotions, shampoos, talcum powder,

hair oil etc.

For Creams the suppliers are Garnier, Ponds, Fair and Lovely etc.

For Shampoos the suppliers are Sunsilk, All Clear, and Panteen etc.

For Talcum powder the suppliers are Ponds, Nivea, and Axe etc.

Biscuits:There are varieties of biscuits available in this counter like Britania, Parle, Kelloggs,

Nutrine, Kwality etc. This counter is convenient for those customers to choose the product

of their own choice as per the taste and preference.

Chocolates:The tempting chocolates like Eclairs, Nutrine, Parle, Parrys, and Cadbury are available and

apart from these there are also Nilgiris home made chocolates available. We can also find

the imported chocolates in this counter.

Dry Fruits:Dry fruits like almond, sultana, apricot, pista, prunes, cashew nuts, figs, dates, walnuts etc

are available in this counter. Dry fruits are the major running products. The dry fruits are

purchased in bulk and are repacked for sales.


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Bakery:In this counter we find Nilgiris bread, rich plum cakes, rusk, sesame, garlic roll, cookies,

pizza base, pav bread, coconut sandwich, bread crumb, Danish Pasta are available.

Beverage and Sweets:Snacks are available in this counter like butter murukku, jackfruit chips, tapioca chips,

banana and potato chips, savouries and also haldiram products are available.

The mouth-watering sweets like jamoons, ladoos, burfis, cotton candy, pedas, and Mysore

pak are available in this cunter. Apart from this even fast foods are available like amosas,

puris etc.

Tea and Coffee:The name of activation of nerves is Tea. The tea and coffee are available in attractive

packages under the brand name like Nescafe, Sunrise, Broke Bond, Nilgiris herbal tea, Tata

Lipton, Duncans, Tetley etc. are available in this counter.

Health Food:This counter mainly attracts the health conscious customers. The Dabur Chyawanprash,

Nature Care, Nutri foods, Herbal Health Care Drink, Soya Flour, High Fiber Wheat Flour,

Health Mix etc are available. In this counter mainly ayurvedic products are available.

Imported Goods:In this counter all the imported products are displayed like frigate strawberry jam, pure

comb honey from New Zealand, sandwich spread, barilla, fettuccine, farfel are available

under the brand name Kraft.

Juices:Different varieties of juices to quench the thirst available is different flavours sun sweet

prune juice, Nortonapple juice, real grape, mango, orange, mixed fruits, Tropicana. Apart

from this beverages are also available like Coke, Pepsi, Mirinda etc.


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Home Made Sweets:The Nilgiris home made sweets are available in this counter white truffles, coconut, plain

truffles, milk truffles, orange truffles, cream caramel, pistachio tups etc. These aremanufactured in Nilgiris itself

Spices:Different varieties of spices like pepper, jeera, ajwine, khus-khus, white and black til,

mustard, methi, tirmeric stick etc under the brand name Everest, MDH, BMC, Bhadshah and

also Nilgiris brand name.

Provisions:Provisions like cereals, rice, atta, maida, instant mix chilly powder etc, are available in this

counter. The Nilgiris provisions are fixed at 10 % discount.

Oil and Ghee:All types of oils are available in this counter like Dhara, Saffola, Elite, Nature fresh, Corn

drop, Godrej, Cook lite, Sundrop, Parachute, Nilgiri Ghee, and Vanaspathi etc.

Pickles, Jams and Squash:In this counter mainly salt and fast food stuff is available. Different types of noodles and

smoodles (Maggi and Top Raman), Macaroni, Jelly, Custard powder, mustard powder,

variety of papads are available. Instant mixes are also available.

Baby Products:This counter is basically meant for baby products which contain baby food such as Cerelac,

Nestle, Lactogen, Milk powder, Milo, Badam mix, Drinking Chocolate, Horlicks,

AMULYA, Baby soaps and oils such as Johnson and Johnson, Baby cream, and nappies are

available.


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Frozen Items:In this counter the items are kept under frozen condition so that it shouldnt spoil. The items

kept under frozen are pizza, cheese, fish meat, fish steaks, mutton samosa, prawns and dairyproducts like amul malai, cheese, butter, srikand, ice creams, curds etc, the fresh green peas

are also kept here. There are 5 refrigerators to refrigerate the items.

Plastic and Utensils:The home appliances are displayed like plastic trolley, perfumed candles, agarbattis, paper

plates, glasses, boxes, hot pots, marts etc. All types of plastic items are available in this

counter.

The supermarket is fully computerized with 9 total numbers of computers. Each counter is

given a counter number.

The Nilgiris Cake Shop

The Nilgiris cake shop, with its wide range of oven-fresh pastries, puffs and milk shakes and

fruit juices gives a great pep to the tired shopper.

Nest

The pioneers in dairy products have not ignored the need for hospitality for the visiting

tourists. The Nilgiris Nest at Bangalore, Chennai and Coimbatore has ergonomically

designed rooms for perfect relaxation. The affordable lodging is surely a wise visitors

choice.


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CAFE

The tastefully furnished Nilgiris Caf spreads lip-smacking variety of delicacies for the

discerning customer. The plush interior, coupled with courteous service is a tourists delight.

Vision:

Nilgiris will be recognized for its Integrity, Customer focus and commitment toQuality

They will create a dynamic organization dictated to Business Excellence throughTrust, Team Work & concern for our commitment

They will also make use of the best technology to expand their Retail Networkacross the Country.

To enhance their 100 Years of Experience.

Mission:

Be a trusted partner who provides the best products & services the world has to offer,at the best quality in the most convenient setting.

Create an efficient and transparent global supply chain by the creation and optimalutilization of world-class infrastructure and international partnerships, thus creating

more value for their customers, suppliers, partners and stake-holders.

Bring prosperity to millions of Indian producers, especially their Customers, byproviding the most attractive returns for their efforts in Quality and Availability. Be

a capable and dependable partner to them right through their creation process and

help them become more successful.

Unleash the initiative, creativity & energy of Indian workforce through creation ofnew jobs, & provide their employees a supportive, rewarding environment to work

and grow.


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Inspiration

A customer is the most important visitor on their premises. He is not dependent on Nilgiris.

They are dependent on him. He is not an interruption on their work. He is the purpose of it.He is not an outsider on their business. He is a part of it. They are not doing a favour to him

by serving him. He is doing them a favour by giving them an opportunity to do so.

Purchase policy

They stock and sell around 6,000 different items in their store. They believe in ordering

goods to ensure all the items are available at all times. However, they take into account the

movement pattern of each item supply period as well as the value of the items, and

accordingly place orders frequently for the products which have to reach them from

outstation. They are ordering a largely quantity of items which are fast moving and the items

which are slow moving. They stock only much smaller quantities for not more than 10-12

days requirement, thereby keeping their inventory level in control.

Nilgiris have to keep a close watch on the market trend and accordingly place orders at the

most advantageous rate for some of suppliers like groceries. They have to continuously

monitor the profitability on each product, which they buy to ensure that a certain assured

minimum profit margin is available on each purchase.

Computerized accounting system, wherein every order is checked and goods inward notes

are prepared in detail to show them the margins available to them. While introducing a new

product in their store, they have to discuss with the suppliers and ensure that the product is

taken on consignment basis to be put on trial sale in their store. After the product moves

fairly well within 15days period, they place further order for large quantity subject to the

condition that their minimum required margin of profit is assured in the purchase. They also

ensure that as a large supermarket chain, all Nilgiris branches/franchise unit enjoy the

benefit of same rates/margin to all of them.


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Supplies co-operation, better margin for mutual growth statistics

The product of popular brands is no doubt required by all the customers. It is a pity that the

manufacturers offer very low margins of 4-5% on the sale value, whereas their companyoverhead today stands at around 12.5%. It is the Nilgiris own products sale which partly

offsets the very poor margins on the branded goods. In spite of the odds, they do continue

their service and keep their image but at what cost? Today, sales on credit card is followed

everywhere with great hesitation. They had also started accepting credit cards. Credit cards

do bring in lot more business but again, this business is at their cost. In Chennai, they have

been accepting these cards for the past couple of years, around 30% and of their business are

on credit cards.

At Coimbatore, around 16% sales are on credit card. The credit card business at Bangalore is

also fast going up. It must be noted here that on every sales, they have to pay a turnover tax

of around 1.75 to 3% and as on credit sales they have to meet 3-4% by way of card service

charges.

To meet this, they have been continuously discussing with the brand majors, asking them to

realize that a modern retail supermarket offering their products in such convenience to the

customers in large volume turnover should not be treated on par with the small kirana stores.

Slowly the manufactures are realizing this and with reluctance they are coming forward to

meet a part of their demand with the maximum retail price fixed on all products, they cannot

survive in the business unless brand leaders recognize their service and offer better margins.

In fact, over the last few years, as a result of their constant discussions, with the major

manufactures/ suppliers, they have been given a special status by some of these companies.

Taking into account their strategy and stocking items afresh all the time and the large

volumes involved in their store and their own number of units whereby suppliers volume of

sales has grown considerable, they have come forward to treat them on par with C&F

agents/distributors and agreed to give direct supplies at better rates.


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Nilgiris Today

Today, decades of efforts to achieve total quality in product and service have taken Nilgiris

to summit of total achievement. The corporate office at Brigade Road, Bangalore is fully

automated with every transaction computerized. Nilgiris vans are plying all over to ensure

timely distribution of Nilgiris products to various locations. Besides India, Nilgiris products

are available in countries like Singapore, Germany, Australia, Malaysia and Sri Lanka.

Competitors:

Amul

Britannia Nandini Modern bread Kwality Sweet chariot

Human Resource Department of Nilgiris

Human Resource Department is one of the most essential departments here though it does

not directly contribute to the production or sales. The department continuously trains its

existing employees and builds a healthy working environment within the company.


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Human Resource:

Human Resource Planning is done by Managing Director, Human Resource Manager with

consultation with HR executives. They forecast the future demand and supply of the righttype of people in the right number. After the human resource planning is done, job

description and job specification is carried out. Job description describes the job title,

location and the job specification describes what is the educational qualification required for

the vacant post, how much experience is needed, what kind of training should be given,

what kind of physical skill is required etc.

Recruitment and selection:

For recruitment and selection Nilgiris uses both internal source as well as external source.

The internal sources of Nilgiris include present employees and employee referrals. That

means hen a job is vacant the employees who are already with Nilgiris is given preference if

that particular employee suits or fits for the vacant job. Another source of internal

recruitment is employee referrals, i.e. the employees refer or recommend someone who is

known to him and who fits for the vacant job.

The external source of recruitment in Nilgiris includes advertisement and placement cell.

The selection process in Nilgiris includes preliminary interview, employment interview,

selection decision, physical examination, and job offer and employment control.

Security Section:

Security arrangement of the company is provided by NESS National Ex-service man

security agency. It is headed by Major R.P Gopinathan. They provide security services to

many leading organization. The remuneration and welfare of these securities are taken care

by NESS and Nilgiris. NESS recruits the securities and sent them to different organization

which comes under this agency.


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Orientation Program in Nilgiris:

Orientation Program in Nilgiris is conducted for all the new employees in Nilgiris. Nilgiris

usually follow an informal orientation program wherein the HR manager or HR executivesintroduce the new employee to his colleagues and new work conditions.

Training and Development in Nilgiris:

Training and development does not play a major role in Nilgiris. They have only on the job

training, wherein the supervisor train the new employee and make him aware of the new

work condition. Training is very necessary for imparting skills to employees. Workers or

laborers need skills to operate machines and use other equipments with least damage and

scrap. So the supervisor trains the labour on the usage of machine.

Performance Appraisal in Nilgiris:

Assessment of an individuals performance is very essential for every organization. Nilgiris

also do performance appraisal for its employees. The performance of each employee is

measured against factors such as job knowledge, co-operation, attendance, punctuality etc.

Rating scale method is used for performance appraisal by Nilgiris. In rating scale method

several numerical scales are involved, each representing a job related performance criterion

such as job knowledge, initiative output, attendance, attitude, punctuality, co-operation etc.

Each scale ranges from excellent, good, and fair which is rated as 50%, 50-75% and above

75%. The HR manager of Nilgiris checks the appropriate performance level on each

criterion, and then computes the employees total numerical score. The number of points

scored is linked to salary increase.

Remuneration in Nilgiris:Remuneration is the compensation an employee receives in return for his or her contribution

to the organization. Nilgiris also provide good remuneration to its employees according to

the relative worth of the job. Employees get salary and fringe benefits. Their fringe benefits

include provident fund, gratuity, medical care by ESI hospitals, accident relief although

there has never been a case of accident in the factory premises, uniform, Rs 10 per day for


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meal, loan facilities. Employees also get overtime salary. Women get maternity leave.

Employees get bonus during festivals. Employees also get pension facilities after pension

from the company

Employee Welfare in Nilgiris:

Employee welfare helps to motivate and retain employees. Nilgiris provides some intra-

mutual facilities to its employees like medical facilities, compensation for accidents, supply

of drinking water, provision of safety measures, toilets, etc.

Labour Union in Nilgiris:

There is no labour Union in Nilgiris. One admissible fact in Nilgiris is that they never had a

labour problem till date neither they formed any Labour Union.

CONCEPTUAL BACKGROUND

The study of consumers helps firms and organizations improve their marketing strategies by

understanding issues such as how the psychology of how consumers think, feel, reason, and

select between different alternatives (e.g., brands, products, and retailers); the psychology of

how the consumer is influenced by his or her environment (e.g., culture, family, signs,

media); The behavior of consumers while shopping or making other marketing decisions;

Limitations in consumer knowledge or information processing abilities influence decisions

and marketing outcome; how consumer motivation and decision strategies differ between

products that differ in their level of importance or interest that they entail for the consumer;

and how marketers can adapt and improve their marketing campaigns and marketing

strategies to more effectively reach the consumer. The study of consumers helps firms and

organizations improve their marketing strategies by understanding issues such as how

The psychology of how consumers think, feel, reason, and select between differentalternatives (e.g., brands, products, and retailers);

The psychology of how the consumer is influenced by his or her environment (e.g.,culture, family, signs, media);


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The behavior of consumers while shopping or making other marketing decisions; Limitations in consumer knowledge or information processing abilities influence

decisions and marketing outcome; How consumer motivation and decision strategies differ between products that differ

in their level of importance or interest that they entail for the consumer; and

How marketers can adapt and improve their marketing campaigns and marketingstrategies to more effectively reach the consumer.

One "official" definition of consumer behavior is "The study of individuals, groups, or

organizations and the processes they use to select, secure, use, and dispose of products,

services, experiences, or ideas to satisfy needs and the impacts that these processes have on

the consumer and society." Although it is not necessary to memorize this definition, it brings

up some useful points:

Behavior occurs either for the individual, or in the context of a group (e.g., friendsinfluence what kinds of clothes a person wears) or an organization (people on the job

make decisions as to which products the firm should use).

Consumer behavior involves the use and disposal of products as well as the study ofhow they are purchased. Product use is often of great interest to the marketer,

because this may influence how a product is best positioned or how we can

encourage increased consumption. Since many environmental problems result from

product disposal (e.g., motor oil being sent into sewage systems to save the recycling

fee, or garbage piling up at landfills) this is also an area of interest.

Consumer behavior involves services and ideas as well as tangible products. The impact of consumer behavior on society is also of relevance. For example,

aggressive marketing of high fat foods, or aggressive marketing of easy credit, may

have serious repercussions for the national health and economy.

There are four main applications of consumer behavior:

The most obvious is for marketing strategyi.e., for making better marketingcampaigns. For example, by understanding that consumers are more receptive to

food advertising when they are hungry, we learn to schedule snack advertisements


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late in the afternoon. By understanding that new products are usually initially

adopted by a few consumers and only spread later, and then only gradually, to the

rest of the population, we learn that (1) companies that introduce new products mustbe well financed so that they can stay afloat until their products become a

commercial success and (2) it is important to please initial customers, since they will

in turn influence many subsequent customers brand choices.

A second application is public policy. In the 1980s, Accutane, a near miracle cure foracne, was introduced. Unfortunately, Accutane resulted in severe birth defects if

taken by pregnant women. Although physicians were instructed to warn their female

patients of this, a number still became pregnant while taking the drug. To get

consumers attention, the Federal Drug Administration (FDA) took the step of

requiring that very graphic pictures of deformed babies be shown on the medicine

containers.

Social marketing involves getting ideas across to consumers rather than sellingsomething. Marty Fishbein, a marketing professor, went on sabbatical to work for the

Centers for Disease Control trying to reduce the incidence of transmission of

diseases through illegal drug use. The best solution, obviously, would be if we could

get illegal drug users to stop. This, however, was deemed to be infeasible. It was also

determined that the practice of sharing needles was too ingrained in the drug culture

to be stopped. As a result, using knowledge of consumer attitudes, Dr. Fishbein

created a campaign that encouraged the cleaning of needles in bleach before sharing

them, a goal that was believed to be more realistic.

As a final benefit, studying consumer behavior should make us better consumers.Common sense suggests, for example, that if you buy a 64 liquid ounce bottle of

laundry detergent, you should pay less per ounce than if you bought two 32 ounce

bottles. In practice, however, you often pay a size premium by buying the larger

quantity. In other words, in this case, knowing this fact will sensitize you to the need

to check the unit cost labels to determine if you are really getting a bargain.


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There are several units in the market that can be analyzed. Our main thrust in this course is

the consumer. However, we will also need to analyze our own firms strengths and

weaknesses and those of competing firms. Suppose, for example, that we make a productaimed at older consumers, a growing segment. A competing firm that targets babies, a

shrinking market, is likely to consider repositioning toward our market. To assess a

competing firms potential threat, we need to examine its assets (e.g., technology, patents,

market knowledge, and awareness of its brands) against pressures it faces from the market.

Finally, we need to assess conditions (the marketing environment). For example, although

we may have developed a product that offers great appeal for consumers, a recession may

cut demand dramatically.

In 1957, a writer named Vance Packard started a minor revolution with his book, The

Hidden Persuader. Packard uncovered the manipulations of the advertising community, done

to ensure a certain brand of a product becomes a best-selling item. He urged consumers to be

cautious and not fall prey to hidden meanings or symbols in advertising, and pointed out

less-than-honest representations of what a product could do for the buyer. The book was

popular, and people started looking for the subtle messages in everything from liquor ads to

spaghetti packages. What they also did, and often, are buying the product anyway. Their

awareness did not necessarily combat their emotional needs.

Psychologists understand that in the burgeoning economy of the early twenty-first century

people's needs and wants are continually growing too. In the 1970s and early 1980s,

household items such as computers and video recorders were new, and counted as luxuries.

By 1999, by virtue of a changing society, those items had become more than simple

luxuries, as schools and businesses often came to require their use. Complex human

behavior can take one invention and create a hierarchy of needs around it. Whereas

economists or marketing strategists might look to numbers-wages or interest levels-

psychologists know that something more motivates the consumer purchase trends. They

have discovered that often in the most depressed economic times, the sales of luxury items

go up.


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Consumer psychology is a pursuit that is likely to expand now that an estimated $5 billion

worth of products were purchased online by the spring of 2000. Online shopping habits

might differ drastically from catalogue sales or in-store purchases. These trends are justbeginning to be studied, and certainly consumer psychologists will be studying buying

habits well into the twenty-first century.

(Electronic equipment run by firms such as A. C. Nielsen will actually recognize the face of

each family member when he or she sits down to watch).

It is now possible to assess the relative impact of a number of factors on the consumers

choicee.g.

What brand in a given product category was bought during the last, or a series ofpast, purchase occasions;

Whether, and if so, how many times a consumer has seen an ad for the brand inquestion or a competing one;

Whether the target brand (and/or a competing one) is on sale during the store visit; Whether any brand had preferential display space; The impact of income and/or family size on purchase patterns; and Whether a coupon was used for the purchase and, if so, its value.


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A split cable technology allows the researchers to randomly select half the panel members

in a given community to receive one advertising treatment and the other half another. The

selection is truly random since each household, as opposed to neighborhood, is selected toget one treatment or the other. Thus, observed differences should, allowing for sampling

error, the best result of advertising exposure since there are no other systematic differences

between groups.

Interestingly, it has been found that consumers tend to be more influenced by commercials

that they zap through while channel surfing even if they only see part of the commercial.

This most likely results from the reality that one must pay greater attention while channel

surfing than when watching a commercial in order to determine which program is worth

watching.

Scanner data is, at the present time, only available for certain grocery item product

categoriese.g., food items, beverages, cleaning items, laundry detergent, paper towels,

and toilet paper. It is not available for most non-grocery product items. Scanner data

analysis is most useful for frequently purchased items (e.g., drinks, food items, snacks, and

toilet paper) since a series of purchases in the same product category yield more information

with greater precision than would a record of one purchase at one point in time. Even if

scanner data were available for electronic products such as printers, computers, and MP3

players, for example, these products would be purchased quite infrequently. A single

purchase, then, would not be as effective in effectively distinguishing the effects of different

factorse.g., advertising, shelf space, pricing of the product and competitors, and

availability of a couponsince we have at most one purchase instance during a long period

of time during which several of these factors would apply at the same time. In the case of

items that are purchased frequently, the consumer has the opportunity to buy a product, buy

a competing product, or buy nothing at all depending on the status of the brand of interest

and competing brands. In the case of the purchase of an MP3 player, in contrast, there may

be promotions associated with several brands going on at the same time, and each may

advertise. It may also be that the purchase was motivated by the breakdown of an existing

product or dissatisfaction or a desire to add more capabilities.


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Physiological measures are occasionally used to examine consumer response. For example,

advertisers may want to measure a consumers level of arousal during various parts of an

advertisement. This can be used to assess possible discomfort on the negative side and levelof attention on the positive side.

By attaching a tiny camera to plain eye glasses worn by the subject while watching an

advertisement, it is possible to determine where on screen or other ad display the subject

focuses at any one time. If the focus remains fixed throughout an ad sequence where the

interesting and active part area changes, we can track whether the respondent is following

the sequence intended. If he or she is not, he or she is likely either not to be paying as much

attention as desired or to be confused by an overly complex sequence. In situations where

the subjects eyes do move, we can assess whether this movement is going in the intended

direction.

Mind-reading would clearly not be ethical and is, at the present time, not possible in any

event. However, it is possible to measure brain waves by attaching electrodes. These

readings will not reveal what the subject actually thinks, but it is possible to distinguish

between beta wavesindicating active thought and analysisand alpha waves, indicating

lower levels of attention.

An important feature of physiological measures is that we can often track performance over

time. A subject may, for example, be demonstrating good characteristicssuch as

appropriate level of arousal and eye movementduring some of the ad sequence and not

during other parts. This, then, gives some guidance as to which parts of the ad are effective

and which ones need to be reworked.

In a variation of direct physiological measures, a subject may be asked, at various points

during an advertisement, to indicate his or her level of interest, liking, comfort, and approval

by moving a lever or some instrument (much like one would adjust the volume on a radio or

MP3 player). Republican strategist used this technique during the impeachment and trial of

Bill Clinton in the late 1990s. By watching approval during various phases of a speech by

the former President, it was found that viewers tended to respond negatively when he

referred to speaking truthfully but favorably when the President referred to the issues in

controversy as part of his private life. The Republican researchers were able to separate


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average results from Democrats, Independents, and Republicans, effectively looking at

different segments to make sure that differences between each did not cancel out effects of

the different segments. (For example, if at one point Democrats reacted positively andRepublicans responded negatively with the same intensity, the average result of apparent

indifference would have been very misleading).

Research sequence, In general, if more than one type of research is to be used, the more

flexible and less precise methodsuch as focus groups and/or individual interviews

should generally be used before the less flexible but more precise methods (e.g., surveys and

scanner data) are used. Focus groups and interviews are flexible and allow the researcher to

follow up on interesting issues raised by participants who can be probed. However, because

the sample sizes are small and because participants in a focus group are influenced by each

other, few data points are collected. If we run five focus groups with eight people each, for

example, we would have a total of forty responses. Even if we assume that these are

independent, a sample size of forty would give very imprecise results. We might conclude,

for example, that somewhere between 5% and 40% of the target market would be interested

in the product we have to offer. This is usually no more precise than what we already

reasonably new. Questionnaires, in contrast, are highly inflexible. It is not possible to ask

follow-up questions. Therefore, we can use our insights from focus groups and interviews

to develop questionnaires that contain specific questions that can be asked to a larger

number of people. There will still be some sampling error, but with a sample size of 1,000+

responses, we may be able to narrow the 95% confidence interval for the percentage of the

target market that is seriously interested in our product to, say, 17-21%, a range that is much

more meaningful.

Cautions: Some cautions should be heeded in marketing research. First, in general,

research should only be commissioned when it is worth the cost. Thus, research should

normally be useful in making specific decisions (what size should the product be? Should

the product be launched? Should we charge $1.75 or $2.25?)

Secondly, marketing research can be, and often is, abused. Managers frequently have their

own agendas (e.g., they either would like a product to be launched or would prefer that


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it not be launched so that the firm will have more resources left over to tackle their favorite

products). Often, a way to get your way is to demonstrate through objective research that

your opinions make economic sense. One example of misleading research, which wasreported nationwide in the media, involved the case of The Pentagon Declares War on

Rush Limbaugh. The Pentagon, within a year of the election of Democrat Bill Clinton,

reported that only 4.2% of soldiers listening to the Armed Forces Network wanted to hear

Rush Limbaugh. However, although this finding was reported without question in the

media, it was later found that the conclusion was based on the question What single thing

can we do to improve programming? If you did not write in something like Carry Rush

Limbaugh, you were counted as not wanting to hear him.

Segmenting, Targeting, and Positioning

Segmentation, targeting and positioning together comprise a three stage process. We first

(1) determine which kinds of customers exist, then (2) select which ones we are best off

trying to serve and, finally, (3) implement our segmentation by optimizing our

products/services for that segment and communicating that we have made the choice to

distinguish ourselves that way.

Segmentation involves finding out what kinds of consumers with different needs exist. In

the auto market, for example, some consumers demand speed and performance, while others

are much more concerned about roominess and safety. In general, it holds true that You


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cant be all things to all people, and experience has demonstrated that firms that specialize

in meeting the needs of one group of consumers over another tend to be more profitable.

Generically, there are three approaches to marketing. In the undifferentiated strategy, allconsumers are treated as the same, with firms not making any specific efforts to satisfy

particular groups. This may work when the product is a standard one where one competitor

really cant offer much that another one cant. Usually, this is the case only for

commodities. In the concentrated strategy, one firm chooses to focus on one of several

segments that exist while leaving other segments to competitors. For example, Southwest

Airlines focuses on price sensitive consumers who will forego meals and assigned seating

for low prices. In contrast, most airlines follow the differentiated strategy: They offer high

priced tickets to those who are inflexible in that they cannot tell in advance when they need

to fly and find it impractical to stay over a Saturday. These travelersusually business

travelerspay high fares but can only fill the planes up partially. The same airlines then

sell some of the remaining seats to more price sensitive customers who can buy two weeks

in advance and stay over.

Note that segmentation calls for some tough choices. There may be a large number of

variables that can be used to differentiate consumers of a given product category; yet, in

practice, it becomes impossibly cumbersome to work with more than a few at a time. Thus,

we need to determine which variables will be most useful in distinguishing different groups

of consumers. We might thus decide, for example, that the variables that are most relevant

in separating different kinds of soft drink consumers are (1) preference for taste vs. low

calories, (2) preference for Cola vs. non-cola taste, (3) price sensitivitywillingness to pay

for brand names; and (4) heavy vs. light consumers. We now put these variables together to

arrive at various combinations.

Several different kinds of variables can be used for segmentation.

Demographic variables essentially refer to personal statistics such as income, gender,education, location (rural vs. urban, East vs. West), ethnicity, and family size.

Campbells soup, for instance, has found that Western U.S. consumers on the

average prefer spicier soupsthus, you get a different product in the same cans at


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the East and West coasts. Facing flat sales of guns in the traditional male dominated

market, a manufacturer came out with the Lady Remington, a more compact, handier

gun more attractive to women. Taking this a step farther, it is also possible tosegment on lifestyle and values.

Some consumers want to be seen as similar to others, while a different segmentwants to stand apart from the crowd.

Another basis for segmentation is behavior. Some consumers are brand loyali.e., they tend to stick with their preferred brands even when a competing one is on

sale. Some consumers are heavy users while others are light users. For

example, research conducted by the wine industry shows that some 80% of the

product is consumed by 20% of the consumerspresumably a rather intoxicated

group.

One can also segment on benefits sought, essentially bypassing demographicexplanatory variables. Some consumers, for example, like scented soap (a segment

likely to be attracted to brands such as Irish Spring), while others prefer the clean

feeling of unscented soap (the Ivory segment). Some consumers use toothpaste

primarily to promote oral health, while another segment is more interested in breathe

freshening.

In the next step, we decide to target one or more segments. Our choice should generally

depend on several factors. First, how well are existing segments served

by other manufacturers? It will be more difficult to appeal to a segment that is already well

served than to one whose needs are not currently being served well. Secondly, how large is

the segment, and how can we expect it to grow? (Note that a downside to a large, rapidly

growing segment is that it tends to attract competition). Thirdly, do we have strengths as a

company that will help us appeal particularly to one group of consumers? Firms may

already have an established reputation. While McDonalds has a great reputation for fast,

consistent quality, family friendly food, it would be difficult to convince consumers that

McDonalds now offers gourmet food. Thus, McDs would probably be better off targeting

families in search of consistent quality food in nice, clean restaurants.


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Positioning involves implementing our targeting. For example, Apple Computer has chosen

to position itself as a maker of user-friendly computers. Thus, Apple has done a lot throughits advertising to promote itself, through its unintimidating icons, as a computer for non -

geeks. The Visual C software programming language, in contrast, is aimed a techies.

Michael Treacy and Fred Wiersema suggested in their 1993 book The Discipline of Market

Leaders that most successful firms fall into one of three categories:

Operationally excellent firms, which maintain a strong competitive advantage bymaintaining exceptional efficiency, thus enabling the firm to provide reliable service

to the customer at a significantly lower cost than those of less well organized and

well run competitors. The emphasis here is mostly on low cost, subject to reliable

performance, and less value is put on customizing the offering for the specific

customer. Wal-Mart is an example of this discipline. Elaborate logistical designs

allow goods to be moved at the lowest cost, with extensive systems predicting when

specific quantities of supplies will be needed.

Customer intimate firms, which excel in serving the specific needs of the individualcustomer well. There is less emphasis on efficiency, which is sacrificed for

providing more precisely what is wanted by the customer. Reliability is also

stressed. Nordstroms and IBM are examples of this discipline.


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Technologically excellent firms, which produce the most advanced productscurrently available with the latest technology, constantly maintaining leadership in

innovation. These firms, because they work with costly technology that needsconstant refinement, cannot be as efficient as the operationally excellent firms and

often cannot adapt their products as well to the needs of the individual customer.

Intel is an example of this discipline.

Treacy and Wiersema suggest that in addition to excelling on one of the three value

dimensions, firms must meet acceptable levels on the other two. Wal-Mart, for example,

does maintain some level of customer service. Nordstroms and Intel both must meet some

standards of cost effectiveness. The emphasis, beyond meeting the minimum required level

in the two other dimensions, is on the dimension of strength.

Repositioning involves an attempt to change consumer perceptions of a brand, usually

because the existing position that the brand holds has become less attractive. Sears, for

example, attempted to reposition itself from a place that offered great sales but unattractive

prices the rest of the time to a store that consistently offered everyday low prices.

Repositioning in practice is very difficult to accomplish. A great deal of money is often

needed for advertising and other promotional efforts, and in many cases, the repositioning

fails. To effectively attempt repositioning, it is important to understand how ones brand and

those of competitors are perceived. One approach to identifying consumer product

perceptions is multidimensional scaling. Here, we identify how products are perceived on

two or more dimensions, allowing us to plot brands against each other. It may then be

possible to attempt to move ones brand in a more desirable direction by selectively

promoting certain points. There are two main approaches to multi-dimensional scaling. In

the prior approach, market researchers identify dimensions of interest and then ask

consumers about their perceptions on each dimension for each brand. This is useful when

(1) the market researcher knows which dimensions are of interest and (2) the customers

perception on each dimension is relatively clear (as opposed to being made up on the spot

to be able to give the researcher a desired answer). In the similarity rating approach,

respondents are not asked about their perceptions of brands on any specific dimensions.

Instead, subjects are asked to rate the extent of similarity of different pairs of products (e.g.,


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How similar, on a scale of 1-7, is Snickers to Kitkat, and how similar is Toblerone to Three

Musketeers?) Using computer algorithms, the computer then identifies positions of each

brand on a map of a given number of dimensions. The computer does not reveal what eachdimension meansthat must be left to human interpretation based on what the variations in

each dimension appears to reveal. This second method is more useful when no specific

product dimensions have been identified as being of particular interest or when it is not clear

what the variables of difference are for the product category.

Information Search and Decision Making

Problem Recognition. One model of consumer decision making involves several steps.

The first one is problem recognitionyou realize that something is not as it should be.

Perhaps, for example, your car is getting more difficult to start and is not accelerating well.

The second step is information searchwhat are some alternative ways of solving the

problem? You might buy a new car, buy a used car, take your car in for repair, ride the bus,

ride a taxi, or ride a skateboard to work. The third step involves evaluation of

alternatives. A skateboard is inexpensive, but may be ill-suited for long distances and for

rainy days. Finally, we have the purchase stage, and sometimes a post-purchase stage (e.g.,

you return a product to the store because you did not find it satisfactory). In reality, people

may go back and forth between the stages. For example, a person may resume alternative

identification during while evaluating already known alternatives.


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Consumer involvement will tend to vary dramatically depending on the type of product. Ingeneral, consumer involvement will be higher for products that are very expensive (e.g., a

home, a car) or are highly significant in the consumers life in some other way (e.g., a word

processing program or acne medication). It is important to consider the consumers

motivation for buying products. To achieve this goal, we can use the Means-End chain,

wherein we consider a logical progression of consequences of product use that eventually

lead to desired end benefit. Thus, for example, a consumer may see that a car has a large

engine, leading to fast acceleration, leading to a feeling of performance, leading to a feeling

of power, which ultimately improves the consumers self-esteem. A handgun may aim

bullets with precision, which enables the user to kill an intruder, which means that the

intruder will not be able to harm the consumers family, which achieves the desired end-

state of security. In advertising, it is important to portray the desired end-states. Focusing

on the large motor will do less good than portraying a successful person driving the car.

Information search and decision making. Consumers engage in both internal

and external information search.


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Internal search involves the consumer identifying alternatives from his or her memory. For

certain low involvement products, it is very important that marketing programs achieve top

of mind awareness. For example, few people will search the Yellow Pages for fast food

restaurants; thus, the consumer must be able to retrieve ones restaurant from memory

before it will be considered. For high involvement products, consumers are more likely to

use an external search. Before buying a car, for example, the consumer may ask friends

opinions, read reviews in Consumer Reports, consult several web sites, and visit several

dealerships. Thus, firms that make products that are selected predominantly through

external search must invest in having information available to the consumer in neede.g.,

through brochures, web sites, or news coverage.

A compensatory decision involves the consumer trading off good and bad attributes of a

product. For example, a car may have a low price and good gas mileage but slow

acceleration. If the price is sufficiently inexpensive and gas efficient, the consumer may

then select it over a car with better acceleration that costs more and uses more gas.

Occasionally, a decision will involve a non-compensatory strategy. For example, a parent

may reject all soft drinks that contain artificial sweeteners. Here, other good features such

as taste and low calories cannot overcome this one non-negotiable attribute.

The amount of effort a consumer puts into searching depends on a number of factors such as

the market (how many competitors are there, and how great are differences between brands


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expected to be?), product characteristics (how important is this product? How complex is

the product? How obvious are indications of quality?), consumer characteristics (how

interested is a consumer, generally, in analyzing product characteristics and making the bestpossible deal?), and situational characteristics (as previously discussed).

Two interesting issues in decisions are:

Variety seeking (where consumers seek to try new brands not because these brandsare expected to be better in any way, but rather because the consumer wants a

change of pace, and

Impulse purchasesunplanned buys. This represents a somewhat fuzzy group.For example, a shopper may plan to buy vegetables but only decide in the store to

actually buy broccoli and corn. Alternatively, a person may buy an item which is

currently on sale, or one that he or she remembers that is needed only once inside the

store.

A number of factors involve consumer choices. In some cases, consumers will be

more motivated. For example, one may be more careful choosing a gift for an in-law than

when buying the same thing for one self. Some consumers are also more motivated

to comparison shop for the best prices, while others are

more convenience oriented. Personality impacts decisions. Some like variety more than

others, and some are more receptive to stimulation and excitement in trying new

stores. Perception influences decisions. Some people, for example, can taste the difference

between generic and name brand foods while many cannot. Selective perception occurs

when a person is paying attention only to information of interest. For example, when

looking for a new car, the consumer may pay more attention to car ads than when this is not

in the horizon. Some consumers are put off by perceived risk. Thus, many marketers offer

a money back guarantee. Consumers will tend to change their behavior through learning

e.g., they will avoid restaurants they have found to be crowded and will settle on brands that

best meet their tastes. Consumers differ in the values they hold (e.g., some people are more

committed to recycling than others who will not want to go through the hassle). We will

consider the issue of lifestyle under segmentation.


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Families and Family Decision Making

The Family Lifecycle. Individuals and families tend to go through a "life cycle:" The

simple life cycle goes from

For purposes of this discussion, a "couple" may either be married or merely involve living

together. The breakup of a non-marital relationship involving cohabitation is similarly

considered equivalent to a divorce.

In real life, this situation is, of course, a bit more complicated. For example, many couples

undergo divorce. Then we have one of the scenarios:

Single parenthood can result either from divorce or from the death of one parent. Divorce

usually entails a significant change in the relative wealth of spouses. In some cases, the non-

custodial parent (usually the father) will not pay the required child support, and even if he or

she does, that still may not leave the custodial parent and children as well off as they were

during the marriage. On the other hand, in some cases, some non-custodial parents will be

called on to pay a large part of their income in child support. This is particularly a problem

when the non-custodial parent remarries and has additional children in the second (or

subsequent marriages).


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In any event, divorce often results in a large demand for:

Low cost furniture and household items Time-saving goods and services

Divorced parents frequently remarry, or become involved in other non-marital relationships;

thus, we may see

Another variation involves

Here, the single parent who assumes responsibility for one or more children may not form a

relationship with the other parent of the child.

Integrating all the possibilities discussed, we get the following depiction of the Family Life

Cycle:

Generally, there are two main themes in the Family Life Cycle, subject to significant

exceptions:

As a person gets older, he or she tends to advance in his or her career and tends toget greater income (exceptions: maternity leave, divorce, retirement).


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Unfortunately, obligations also tend to increase with time (at least until onesmortgage has been paid off). Children and paying for ones house are two of the

greatest expenses.Note that although a single person may have a lower income than a married couple, the

single may be able to buy more discretionary items.

Family Decision Making. Individual members of families often serve different roles in

decisions that ultimately draw on shared family resources. Some individuals are information

gatherers/holders, who seek out information about products of relevance. These individuals

often have a great deal of power because they may selectively pass on information that

favors their chosen alternatives. Influencers do not ultimately have the power decide

between alternatives, but they may make their wishes known by asking for specific products

or causing embarrassing situations if their demands are not met. The decision maker(s) have

the power to determine issues such as:

Whether to buy; Which product to buy (pick-up or passenger car) Which brand to buy; Where to buy it; and When to buy.

Note, however, that the role of the decision maker is separate from that of the purchaser.

From the point of view of the marketer, this introduces some problems since the purchaser

can be targeted by point-of-purchase (POP) marketing efforts that cannot be aimed at the

decision maker. Also n

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Project Mehul