Unit – II: Consumer Behaviour and Marketing Process
Consumer Behaviour
Behaviour is a mirror in which everyone shows his or her image. Behaviour
is the process of responding to a thing or event. Consumer behavior is to do
with the activities of individual in obtaining and using the good and services.
The term consumer
behaviour is defined as the behaviour that consumer display in searching for, purchasing
using, evaluating and disposing of products and services that they expect will
satisfy their needs.
In the words of Kotler, ”Consumer behaviour
is the study of how
people buy, what they buy, when they buy and why they
buy.”
In the words of Solomon,” Consumer behaviour is the study of the
processes involved when individuals or groups select, purchase, use, or dispose
of products, services, ideas, or experiences to satisfy needs and desires”
In the words of Professor Bearden and Associates, ”Consumer behaviour is
the mental and emotional process and the physical activities of people who
purchase and use goods and services to satisfy needs and wants.”
Characteristics of consumer
behavior are:
a)
Consumer
behavior is the part of human behavior. This cannot be separated. Human
behavior decides what to buy, when to buy etc. This is unpredictable in
nature. Based on the past behavioral pattern one can at least estimate like the
past he might behave.
b)
Learning the consumer is difficult and
complex as it involves the study of human beings. Each individual
behaves differently when he is placed at different situations. Every day
is a lesson from each and every individual while we learn the consumer
behavior. Today one may purchase a product because of its smell, tomorrow it
may vary and he will purchase another due to some another reason.
c)
Consumer behavior is dynamic. A
consumer’s behavior is always changing in nature. The taste and preference of
the people vary. According to that consumers behave differently. As the
modern world changes the consumer’s behaving pattern also changes.
d)
Consumer behavior is influenced by psychological,
social and physical factors. A consumer may be loyal with a product due
to its status values. Another may stick with a product due to its economy in
price. Understanding these factors by a marketer is crucial before placing
the product to the consumers.
e)
Study of consumer behavior is crucial for
marketers. Before producing a product or launching a product, he has to
go through a clear analysis of the consumer behavior. If the people or
prospects reject the product, he has to modify it.
f)
Consumer behavior is a continuous process as
it involves the process starts before the buying and continuing after
purchasing. Before buying there will be high confusions and
expectations about the product. After buying it, if the buyer is satisfied
with the product he shows a positive behavior, otherwise negative.
Factors that influence consumer
behaviour
The buyer has a selective perception & is exposed to a variety of
products & information. He may ignore certain piece of information whereas
actually seek out some other information whereas actively seek out some other
information Therefore, marketers must fully understand both the theory &
reality of consumer behaviour. A consumer’s buying behaviour is influenced by
cultural, social & personal factors & they are a part of the buyer as
an individual.
(1)
Cultural Factors : Culture is the fundamental determination of a
person’s wants & behaviour. The growing child acquires a set of values perceptions,
Preferences & Behaviours through his or her family. Each culture consists
of various subcultures that provide more specific identification. It includes
nationalities, religions, social groups & geographic regions.
Every culture dictates its own unique patterns of social
conduct. Within each religion there may be several sects & sub sects, there
may be orthodox group & cosmopolitan groups. The do’s & don’ts listed
out by religion & culture impacts the individual’s lifestyle & buying
behaviour.
(2)
Social Factors: Consumer’s behaviour is influenced by social factors
such as reference groups, family, social roles & status. The buyer is
living in a society, is influenced & There is a constant interaction
between the individual & the groups to which he belongs. All these
interactions affect him in his day to day life.
a. Reference
Groups: A person’s reference groups consist of all the groups that
have a direct or indirect influence on his attitude. They can be family friends,
neighbours, co-worker, religious, professional & trade union groups.
Reference groups expose an individual to new behaviours & lifestyles &
influence attitude & self concept. Brands like Levi, Prologue & Planet
M used teenage icon as brand Ambassadors for in store promotions.
b. Family:
The family is the most important buying organization in society. From
parents a person acquires an orientation toward religion politics & a sense
of personal ambition, self worth & love. E.g. In traditional joint
families, the influence of grandparents on major purchase decisions affect the
lifestyles of younger generations. In urban India with the growth of nuclear
families & both husband and wife working the role of women in major family
decisions is prominent. Children & teenagers are being targeted by
companies using the internet as an interactive device.
c. Role
& Status: The person’s position in each group can be defined in terms
of role & status. A role consist of all activities that a person is expected
to perform. Each role carries a status. A Vice President of marketing has more
status than a sales manager & a sales manager has more status than an
office clerk & people choose those products that reflect & communicate
their role & desired status in society.
(3)
Personal Factors: The personal factors include the buyer’s age &
stage in the life cycle, occupation & economic position, personality &
self concept & lifestyle & values.
a. Age
& Stage in the Life Cycle: People buy different products like
food, cloths furniture & this is often age related. Trends like delayed
marriages, children migrating to distant cities, tendency of professionals has
resulted in different opportunities for marketers at different stages in
consumer life cycle.
b. Occupation
& Economic Position: Occupation also influences buyer’s behaviour.
A blue collar worker will buy work clothes, work shoes & lunch boxes; a
company president will buy dress suits, air travel & club memberships.
Marketers try to identify the occupational groups & then make products
according to their needs & demands. Product choice is greatly affected by
economic circumstances – spendable income, savings & assets & attitude
towards spending & savings.
c. Personality
& Self Concept: Each person has personality characteristics that
influence his / her buying behaviour. Personality means a set of distinguishing
psychological traits that has to response to environmental stimuli. Personality
can be a useful variable in analyzing consumer brand choice. The idea is that
brands also have personalities & consumers like to choose those brands
which suits or match their personality.
Importance of Consumer Behaviour
The consumer is the focus of marketing efforts. The modern concept spells
out the real significance of buyer’s Behaviour. The modern marketing management tries to solve the basic
problems of consumers in the area of consumption. To survive in the market, a
firm has to be constantly innovating and understand the latest consumer needs
and tastes. It will be extremely useful in exploiting marketing opportunities
and in meeting the challenges that the Indian market offers. It is important
for the marketers to understand the buyer behaviour due to the following
reasons.
1) Better Consumer: The study
of consumer behaviour enables us to become a better consumer. It will help
consumer to take more precise consumption related decisions.
2) Studying the need of
consumers: It helps marketers to understand consumer buying behaviour and make
better marketing decisions.
3)
Market Prediction: The size of the consumer market is
constantly expanding and their preferences were also changing and becoming
highly diversified. So without studying it, marketers cannot predict the future
of their business.
4) Economic Stability: It is
significant for regulating consumption of goods and thereby maintaining
economic stability.
5) Efficient utilisation of resources:
It is useful in developing ways for the more efficient utilisation of resources
of marketing. It also helps in solving marketing management problems in more
effective manner.
6) Studying consumer’s mood: Today
consumers give more importance on environment friendly products. They are
concerned about health, hygiene and fitness. They prefer natural products.
Hence detailed study on upcoming groups of consumers is essential for any firm.
7) Consumer Protection: The
growth of consumer protection movement has created an urgent need to understand
how consumers make their consumption and buying decision.
8) Studying Consumer’s
preference: Consumers’ tastes and preferences are ever changing. Study of
consumer behaviour gives information regarding colour, design, size etc. which
consumers want. In short, consumer behaviour helps in formulating of production
policy.
9) Market segmentation: For
effective market segmentation and target marketing, it is essential to have an
understanding of consumers and their behaviour.
10) Marketing research: Marketing
managers regarded consumer behaviour discipline as an applied marketing
science, if they could predict consumer behaviour, they could influence it.
This approach has come to be known as positivism and the consumer researcher
who are primarily concerned with predicting consumer behaviour are known as
positivists.
11) As the marketing research
began to study the buying behaviour of consumers, they soon realized that many
consumers rebelled at using the identical products everyone else used, for
example in case of purchase of house, interiors, car, and dress material etc.
people prefers unique products. Consumer preferred differential products that
they felt reflected their own special needs, personalities and lifestyles.
Steps in buying decision process
The
marketing scholars have developed a “stage model” of the buying process. The consumer
passes through 5 stages. But consumers do not always pass through all five
stages in buying a product. They may skip some stages.
(1)
Problem Recognition: The buying process starts when the buyer recognizes a
problem or need. The need can be triggered by internal or external stimulus.
With an internal stimulus, one of the person’s normal needs hunger thirst etc.
become a drive or a need can be aroused by external stimuli. Marketers needs to
identify the circumstances that trigger a particular need by gathering
information from a number of consumers.
(2)
Information Search: An aroused consumer will be inclined to search for more
information. A person at times simply becomes receptive to information about a
product or he may enter looking for a reading material, phoning friends, going
online etc. Through gathering information, the consumer learns about competing
brands & other features.
(3)
Evaluation of Alternatives: The information search & comprehension (evaluation)
stages represent the information processing stage. These 2 stages constitute
the cognitive field of the purchase process. Cognition refers to acquisition of
knowledge.
Some
basic concepts help us in understanding consumer evaluation: first the consumer
is trying to satisfy a need, second the consumer is looking for certain
benefits & third the consumer views each product as a bundle of attributes
to satisfy this need.
(4)
Purchase Decision: The buyer must be convinced that the purchase of the product
is the legitimate course of action. This stage stands as a barrier between a
favourable attitude towards the product & actual purchase. Only if the
buyer is convinced about the correctness of the purchase decision, will be
proceed. At this stage, he may seek further information regarding the product
or attempt to assess the information already available.
(5)
Post Purchase Behaviour: The purchase leads to a specific post purchase behaviour,
usually it creates some restlessness in the mind of the individual. He is not
sure about the product. He may feel that the other brand would have been
better. It can be defined in terms of satisfaction. If the performance of the
product falls short of expectations, the consumers is disappointed, if it meets
expectations, the consumer is satisfied, it is exceeds expectations, the
consumer is delighted. These feelings make a difference in whether the customer
buys the product again & talks favourably or unfavorably about it to
others.
Marketing Segmentation
A market consists of
large number of individual customers who differ in terms of their needs,
preferences and buying capacity. Therefore, it becomes necessary to divide the
total market into different segments or homogeneous customer groups. Such
division is called market segmentation. They may have uniformity in employment
patterns, educational qualifications, economic status, preferences, etc. Market
segmentation enables the entrepreneur to match his marketing efforts to the
requirements of the target market. Instead of wasting his efforts in trying to
sell to all types of customers, a small scale unit can focus its efforts on the
segment most appropriate to its market. It is defined as “The strategy of dividing the market in order to
consume them”.
According to Philip Kotler, “It is the subdividing of market into
homogenous subsets of consumers where any subset may be selected as a market
target to be reached with distinct Marketing Mix”
According to Philip Kotler,
market segmentation means "the act of dividing a market into distinct groups of buyers who
might require separate products and/or marketing mixes."
According to William J. Stanton,
"Market
segmentation in the process of dividing the total heterogeneous market for a
good or service into several segments. Each of which tends to be homogeneous in
all significant aspects."
Basis of Segmentation:
Market segmentation dividing the
Hetrogenous market into homogenous sub-units. Heterogeneous means mass
marketing, which refers people as a people. Homogeneous means dividing the
market into different sub units according to the tastes and preferences of
consumers. The following factors are considered before dividing the market:
1.
Geographical Factors: On the basis of geographical factors,
market may be classified as state-wise, region-wise & nation-wise. Many
companies operate only in a particular area because people behave differently
in different areas due to various reasons such as climate, culture, etc.
2.
Demographic Factors: This is the most widely used basis for
market segmentation. Market is classified on the basis of population, using
ages, income, sex, etc as indicators.
a.
Age: It is known fact that people of different ages like different products,
need different things, & behave differently. Almost all companies use this
factor to reach the target market. On the basis of age, market in our country
is divided into children’s market, teenager’s market, adult’s market, & the
market for old people. Companies use the census data to prepare marketing strategies
on the basis of age.
b.
Sex: There is a variation of consumption behavior between males &
females. This factor is used as a basis for segmentation for products like
watches, clothes, cosmetics, leather goods, magazines, motor vehicle, etc.
c.
Family Life Cycle: This is another important factor, which
influences the consumer’s behavior. E.g.: Before making purchases, a bachelor
may consult his friends, a boy may ask his parents & a married man asks his
wife. The study of family life cycle helps a company to prepare an effective
promotional strategy.
3.
Psychological factors: In psychographic segmentation,
elements like personality traits, attitude lifestyle & value system form
the base. The strict norms that consumers follow with respect to good habits or
dress codes are representative examples. E.g.: Mr. Donald’s changed their menu
in India to adopt to consumer preference. The market for Wrist Watches provides
example of segmentation. Titan watches have a wide range of sub brands such as
Raga, fast track, edge etc. or instant noodle markers, fast to cook food brands
such as Maggi, Top Ramen or Femina, women’s magazine is targeted for modern
women.
4.
Economic Factors: On the basis of economic factors, markets
have been classified in the westerns countries as follows:
a. Upper Class b.
Upper-upper class c.
Lower-upper class
d. Middle class e.
Upper-middle class f.
Lower-middle class
g. Lower class h.
Upper-lower class i.
Lower-lower class
In our country, it is classified as upper class (rich), middle class,
& the lower class. Another classification based on income in our country is
as follows:
a. Very Rich b.
The Rich class c.
The Aspiration Class &
d. The Destitute.
5.
Behavior Factors: This is one of the most important bases used
for market segmentation. Market is classified on the basis of attitude of
consumers and special occasions.
a.
Occasions: Sellers can easily find out certain
occasions when people buy a particular product. E.g.: Demand for clothes,
greeting cards, etc increases during the festival season. Demand for
transportation, hotels etc increases during the holiday seasons.
b.
Benefits: Each consumer expects to fulfill certain desire or to derive some
benefits from the product he purchases. E.g.: A person may purchase clothes to
save money & another to impress others. Based upon this, markets may be
classified as markets for cheap price products & market for quality
products etc.
c.
Attitude: On the basis of attitude of consumers, markets may be classified as
enthusiastic market, indifferent market, positive market, & negative
market.
Advantages / Importance / Significance of Market Segmentation:
The purpose of segmentation is
to determine the differences among the purchases which may affect the choice of
the market area & marketing strategies. Following are some of the benefits
of marketing segmentation.
1) Facilitates consumer-oriented marketing: Market segmentation facilitates formation
of marketing-mix which is more specific and useful for achieving marketing
objectives. Segment-wise approach is better and effective as compared to
integrated approach for the whole market.
2) Facilitates introduction of suitable
marketing mix: Market
segmentation enables a producer to understand the needs of consumers, their
behavior and expectations as information is collected segment-wise in an
accurate manner. Such information is purposefully usable. Decisions regarding
Four Ps based on such information are always effective and beneficial to
consumers and the producers.
3) Facilitates introduction of effective
product strategy: Due
to market segmentation, product development is compatible with consumer needs
as there is effective crystallization of the specific needs of the buyers in
the target market. Market segmentation facilitates the matching of products
with consumer needs. This gives satisfaction to consumers and higher sales and
profit to the marketing firm.
4) Facilitates the selection of promising
markets: Market
segmentation facilitates the identification of those sub-markets which can be
served best with limited resources by the firm. A firm can concentrate efforts
on most productive/ profitable segments of the total market due to segmentation
technique. Thus market segmentation facilitates the selection of the most
suitable market.
5) Facilitates exploitation of better marketing
opportunities: Market
segmentation helps to identify promising market opportunities. It helps the
marketing man to distinguish one customer group from another within a given
market. This enables him to decide his target market. It also enables the
marketer to utilize the available marketing resources effectively as the exact
target group is identified at the initial stage only.
6) Facilitates selection of proper marketing
programme: Market
segmentation helps the marketing man to develop his marketing mix programme on
a reliable base as adequate information about the needs of consumers in the
target market is available. The buyers are introduced to marketing programme
which is as per their needs and expectations.
7) Provides proper direction to marketing
efforts: Market
segmentation is rightly described as the strategy of "dividing the markets
in order to conquer them". Due to segmentation, a firm can avoid the
markets which are unprofitable and irrelevant for its marketing purpose and
concentrate on certain promising segments only. Thus due to market
segmentation, marketing efforts are given one clear direction for achieving
marketing objectives.
8) Facilitates effective advertising: Advertising media can be more effectively
used because only the media that reach the segments can be employed. It makes
advertising result oriented.
9) Provides special benefits to small firms: Market segmentation offers special benefits
to small firms. The resources available with them are limited as they are
comparatively new in the market. Such firms can select only suitable market
segment and concentrate all efforts within that segment only for better
marketing performance. Such firms can compete even with large firms by offering
personal services to customers within the segment selected.
10) Facilitates optimum use of resources: Market segmentation facilitates efficient
use of available resources. It enables a marketing firm to use its marketing
resources in the most efficient manner in the selected target market. The
marketing firm selects the most promising market segment and concentrates all
attention on that segment only. This offers best results to the firm in terms
of sale, profit and consumer support as compared to the results available from
spending such resources on the total market.
In conclusion, it can be said
that market segmentation offers benefits not only to marketing firms but also
to customers. The marketing job will be conducted efficiently and the available
resources will be utilised in a better mariner. These advantages also suggest
the importance of market segmentation and make a case in its favour.
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