CB-Module1.pptx
- 1. CONSUMER BEHAVIOUR AND MARKET RESEARCH
- 2. Module 1 : INTRODUCTION • Introduction to Consumer Behaviour – Consumer mind as black box- Rational and irrational behavior of consumer- A managerial & consumer perspective; Need to study Consumer Behaviour; Role of Consumer Behaviour in Marketing; Applications of consumer behaviour knowledge; current trends in Consumer Behaviour; Market segmentation & consumer behaviour-Demographics and market segmentation-lifestyle and psychographic segmentation-usage and benefit segmentation
- 3. Consumer Behaviour • Consumer buyer behavior refers to the buying behavior of final consumers – individuals and households who buy goods and services for personal consumption-Kotler • Study of how people buy, what they buy, when they buy and why they buy. • Attempts to understand the buyer decision making process, both individually and in groups. • Studies characteristics of individual consumers such as demographics, psychographics, and behavioral variables
- 5. Consumer Buying Behaviour Consumers Who is Important? How do they buy? What are their choice criteria? When do they buy? Where do they buy?
- 6. MODELS • Marketing and other stimuli enter the buyers “black box” and produces certain choices / purchase response • Marketers must figure out what is inside the buyers “black box” and how stimuli are changed to responses
- 7. The Black box model
- 8. Rational and irrational behaviour of consumer- A managerial & consumer perspective • Rational-“individuals rely on rational calculations to achieve outcomes that are in line with their personal objectives.” Traditional economists believe that consumers buy products with the most amount of utility for the least amount of money. • Durability • Variety of uses • Economical • Safety • Convenience
- 9. Rational and irrational behaviour of consumer- A managerial & consumer perspective • Behavioral economists assert that consumers do not always act in their best interests because they lack self- control and are emotionally driven. • Although there are products of comparable quality available at lower prices in grocery stores, people opt to shop at farmers’ markets because they want to shop locally, reduce their carbon footprint, promote sustainable farming, support the ethical treatment of animals, and so on. • Consumer perceptions that the brand is an extension of the self. This connection is based on the closeness of the match between the ‘personality’ of the brand and the consumer’s own personality.”
- 10. Need to study CB • Because no longer can we take the customer/consumer for granted. • Consumer Behavior determines the economic health of a nation. • Consumer behavior determines the success of marketing programs • Failure rates of new products high-Only 8% of new product concepts offered by 112 leading companies reached the market. Out of that 83% failed to meet marketing objectives. • High Significance in daily lives-Much of our time is spent directly in the market place, shopping or engaging in other activities. • Application to decision making-Certain decisions are significantly affected by their behavior or expected
- 11. Role of Consumer Behaviour in Marketing • Retention of Consumers: Consumer behavior is of most importance to marketers in business studies as the main aim is to create and retain customers,” • When a customer is happy about a particular product, he/she will repeat the purchase. Therefore, marketing the product should be done in such a way that it will convince customers to buy the product again and again. • Thus, it is very evident that creating customers and retaining them is very important. This can be done only by understanding and paying attention towards the consumer’s buying behavior.
- 12. • Predicting Market Trend: • Consumer behavior analysis will be the first to indicate a shift in market trends. For example, the recent trend of consumers is toward environment-friendliness and healthy food. This changing market trend was observed by many brands including McDonalds. Based on consumer behavior, McDonald’s brought healthy food options. • By conducting a consumer behavior study, a company saves a lot of resources that might otherwise be allocated to produce a product that will not be sold in the market. For example, in summer a brand will not waste its resources producing a product that will not sell in summer. Based on consumer behavior the company decides on a production strategy which will save on warehouse costs and marketing costs.
- 13. • Consumer Differentiation: • In marketing, consumer differentiation is a way to distinguish a consumer from several other consumers. This helps to make a target group of consumers with the same or similar behavior. • Though you have a targeted customer demographic in your business, you can still have variations between individual customers. Each group of consumers are different and their needs and wants differ from other groups. When a marketer is knowledgeable about the differentiation of each group of consumers, he can design separate marketing programs. • Consumer differentiation will help to tailor your strategies to the needs of varying customer groups. When consumer differentiation is done, you can expand the width and breadth of your services. You will be able to effectively serve a wider group of people.
- 14. Competition • One of the most important reasons to study consumer behavior is to find out answers to some of the questions: Is the customer buying from your competitor? Why is a consumer buying from your competitor? What features attract a consumer to your competitor's products? What gaps are your consumers identifying in your products when compared to your competitors? • Studying consumer behavior facilitates understanding and facing competition. Based on consumers’ expectations, your brand can offer competitive advantages.
- 15. Innovate New Products: • We all know some of the big names such as New Coke, Crystal Pepsi, Colgate Kitchen Entrées, Earring Magic Ken Doll, and Wheaties Dunk-a-Balls Cereal. Can you see the similarities in these products? Yes, they all failed!! • The sad truth is that most new products and new ideas end up in failure. There is an estimate of new product failures – they range from 33% to 90% based on the kind of industry. • Companies consistently strive hard to improve the success rate of their new products or new ideas. One of the most important ways is to conduct a sound and thoughtful consumer behavior study.
- 16. Improve Customer Service • Consumers require different levels of customer service, and understanding the differences within your customer base will help you provide the most appropriate service for individual needs. • For example, if you own an electronics store, high school or college students who buy a new laptop are more likely to understand the features they’re looking for than a person buying his first computer. With the first demographic, your service goal will be to provide information about the latest trends in technology, while with the second demographic, you’ll need to spend more time educating the customer, finding out what his specific needs are, and even teaching him how to use the features of his new electronic device.
- 17. Stay Relevant in the Market • When the world is changing as rapidly as it is happening today, the biggest challenge we all face is staying relevant to our target market. And do you know what is the main reason behind the rapid changes? It is the ever-changing behavior of our customers. • Today’s consumers have greater choices and opportunities, which means they can easily switch to a company that offers better products and services. • “The pre-eminent skill required to shift ahead in the twenty-first century is the ability to see and seize.” - Adamson and Steckel, authors of Shift Ahead. • Losing relevance will only cost the company its market share. Haven’t we seen Sony Walkman failing to stay relevant in the digital music era, and the taxi industry doom with no preparedness to battle the UBER uprise!!
- 18. Design Relevant Marketing Program: • Understanding consumer behavior allows you to create effective marketing campaigns. Each campaign can speak specifically to a separate group of consumers based on their behavior. • For example, while targeting the kid's market, you may have to look out for venues such as TV ads, school programs, and blogs targeting young mothers. You will need to take different messaging approaches for different consumer groups. • A study of consumer behavior enables marketers to understand what motivates consumers to make purchases. Furthermore, the same motive can be utilized in advertising media to stir the desire to make a purchase. Moreover, marketers should take decisions regarding the brand logo, coupons, packing, and gifts on the basis of consumer behavior.
- 19. SEGMENTING CONSUMER MARKETS • Demographic ( Age, gender, income, occupation ) • Behavioural ( frequency, brand loyalty, benefits ) • Psychographic ( motivation , priorities, social status ) • Geographic ( Area , region , climatic condition )
- 37. Age
- 42. - Consumers are inspired by one of the three primary motivations- • Ideals: those primarily motivated by ideals are guided by knowledge and principles. • Achievement: those primarily motivated by achievements are guided by products and services that demonstrate success to their peers. • Self-expression: those primarily motivated by self- expression are guided social or physical activity, variety and risk. VALS Network
- 43. The four groups with higher resources are: • Innovators-Successful, sophisticated, active, ‘take-charge’ people with high self-esteem. Purchases often reflect cultivated tastes for relatively upscale, niche-oriented products and services. • Thinkers- Mature, satisfied, and reflective people who are motivated by ideals and who value order, knowledge and responsibility. They seek durability, functionality and value in products. • Achievers- Successful, goal-oriented people who focus on career and family. They favor premium products that demonstrate success to their peers. • Experiencers- Young, enthusiastic, impulsive people who seek variety and excitement. They spend a comparatively high proportion of income on fashion, entertainment and socializing. VALS Network
- 44. 10-44 VALS Network The other four groups with lower resources are: Believers- Conservative, conventional and traditional people with concrete beliefs. They prefer familiar products and are loyal to established brands. Strivers- Trendy and fun-loving people who are resource-constrained. They favor stylish products that emulate the purchases of those with greater material wealth. Makers- Practical, down-to-earth, self-sufficient people who like to work with their hands. They seek products with a practical or functional purpose. Survivors- Elderly, passive people who are concerned about change. They are loyal to their favorite brands.
- 51. •User and usage related variables • Occasions • User status • Non users, ex-users, potential users, first time users, regular users • Usage rate – Light, medium and heavy users • Buyer readiness stage • Unaware, aware, informed, interested, desire, intend to buy • Loyalty status – Hard core, split, shifting, switchers • Attitude – enthusiastic, positive, indifferent, negative, hostile • Multiple bases
- 53. 10-53 Table: Major Segmentation Variables for Consumer Markets Geographic Region South India, western Region, North, East City Class-I Cities, Class-II Cities, Metro Cities, Cities with a Population of 0.5 Million o 1 Million, Cities with a Population of Over 1 Million Rural and Semi-Urban Areas Urban, suburban, rural Climate Northern southern Demographic Age Under 6, 6-11, 12-19, 20-34, 35-49, 50-64, 65+ Family size Young, single; young, married, no children; young, married, youngest child under 6; young, married, youngest child under 6 or over ; older, married, with children; older, married, no children under 18; older, single; other
- 54. Table: Major Segmentation Variables for Consumer Markets Gender Male, female Income Low, lower middle, middle, upper middle, and high Occupation Unskilled worker, skilled worker, petty traders, shop owners, businessman/industrialist, self-employed Education Illiterate, school upto 4 years, school between 5 to 9 years, SSC/ HSC, non-graduate, graduate/postgraduate (general), graduate/postgraduate (professional) Psychographic Socioeconomic Classification (SEC) A1, A2, B1, B2, C, D, E1, E2 Lifestyle Culture-oriented, sports-oriented, outdoor-oriented Personality Compulsive, gregarious, authoritarian, ambitious
- 55. Behavioral Occasions Regular, special Benefits Quality, service, economy, speed User Status Non-user, ex-user, potential user, first-time user, regular user User Rate Light, medium, heavy Loyalty Status None, medium, strong, absolute Readiness Stage Unaware, aware, informed, interested, desirous, intending to buy Attitude Toward Product Enthusiastic, positive, indifferent, negative, hostile
- 56. Current Trends in Consumer Behaviour • Health Conscious • Awareness of Mental health-Hyatt, the hotel company, has recently partnered with the meditation app company Headspace to offer free meditation and sleep therapy sessions as part of their ‘Get Some Headspace with World of Hyatt’ campaign. Users also get a 30 day free trial for Headspace Pro. • Snap has also taken a similar approach. During the height of global lockdown, they introduced a mental wellbeing tool on Snapchat aimed at delivering relevant content, including videos created by experts. • Community driven-Coca-Cola’s new global campaign, ‘The Great Meal’ also speaks to the current heightened sense of togetherness felt worldwide. The ad depicts families and communities coming together to share in the simple joy of cooking. Creating campaigns that celebrate community is a sure fire way to resonate with consumers right now.
- 57. Current Trends in Consumer Behaviour • Virtual workers and learners- • Fuss free online shoppers-Embracing shoppable features on social media – such as Instagram shoppable posts and Pinterest Shop the Look Pins, makes it easy for customers to shop for products via the platforms they love. • Visual search is also an exciting e-commerce feature not to be overlooked. 27% of online consumers worldwide intend to research more items before shopping physically in a store, especially in Latin America where 36% consumers said they would now browse online more before heading to physical stores. • Another interesting trend which consumers in China turned to during lockdown was livestream shopping (or shopstreaming). Shopstreaming allows consumers to buy products directly from a live video. • When shopping online, consumers want speed. In fact, 53% of mobile visits are abandoned if a site takes longer than 3 seconds to load
- 58. Current Trends in Consumer Behaviour • Flexible first- Consumers want flexibility with their purchases in order to take away the pressure of losing money in a time of recession. In the travel industry especially, policies which allow for fully refundable cancellations at the last minute, or which allow people to shift bookings, will help customers feel comfortable when parting with their money. • Eco-friendly- to celebrate Earth Day, Pinterest added products from small to medium-sized sustainable brands onto Pinterest Shop so that customers could locate them easily.
- 59. Applications of CB Knowledge • ACTIVITY