Module 1 - INTRODUCTION TO CONSUMER BEHAVIOR.pptx
- 2. On 29 June 2007 Apple launched the iPhone in the US amid much fanfare about its touch screen interface, Internet capability and iPod features.1 In spite of its hefty price tag ($499–$599) 170,000 iPhones were sold in the first two days and sales topped one million units by September 2007. However, Apple received hundreds of complaints from early iPhone purchasers when the company reduced the price by $200 two months after the launch. Apple responded immediately with $100 store credit to any Apple store or the Apple website. The launch of the iPhone illustrates some of the questions that can be answered through the study of consumer behaviour. Which consumer needs were met by the iPhone? What motivated consumers to line up for days outside of Apple and AT&T stores to ensure that they were able to purchase the phone? Why was the phone so successful? Why did consumers react so negatively to the drop in price? Why did Apple react by offering iPhone owners $100 worth of credit? Finding answers to these questions and understanding why consumers behave the way they do is critical to any fi rm’s success.
- 3. The study of consumer behaviour examines the products and services consumers buy and use and how these purchases influence their daily lives. This field covers a lot of ground. It has been defined as: ‘the study of the processes involved when consumers acquire, consume and dispose of goods, services, activities, ideas in order to satisfy their needs and desires’.
- 4. Meaning and definition of CB •The term Consumer Behaviour(CB) is defined as the behaviour that consumers display in searching for, purchasing, using, evaluating and disposing of products and services that they expect will satisfy their needs - Leon G. Schiffman & Leslie Lazar Kanuk
- 5. • Consumer behaviour focuses on how individuals make decisions to spend their available resources (time, money, effort) on consumption-related items that includes what they buy, why they buy, when they buy it, where they buy it, how often they buy it, how often they use it, how do they evaluate it after the purchase and the impact of such evaluations on future purchases, and how do they dispose of it. • Consumer behaviour refers to the actions and decision processes of people who purchase goods and services for personal consumption. -James F Engel, Roger D Blackwell and Paul W Miniard
- 6. • Two different kinds of consuming entities: the personal consumer and the organizational consumer. • Personal Consumer : Buys goods and services for his or her personal use, or for household consumption or for just one member of the family or as a gift for a friend. The products are bought for final use by individuals, who are referred to as end users or ultimate consumers. • Organizational Consumer :Includes profit and non-profit businesses, government agencies (local, state, national) and institutional (e.g. schools, hospitals, and prisons), all of which buy products, equipment, and services in order to run their organizations.
- 7. Significance of CB •Production Policies •Price policies •Decision regarding channels of distribution •Decision regarding sales promotion •Exploiting marketing opportunities •Consumers do not always act or react predictably •Consumer preferences are changing and becoming highly diversified •Rapid introduction of new products •Implementing the marketing concept
- 8. Difference between consumer and customer • The terms "consumer" and "customer" are often used interchangeably, but a consumer and customer are not always the same entity. • In essence, consumers use products while customers buy them. Customer is a sub set of consumer • The term “customer” is used to refer to someone who regularly purchases from a particular store or company. • The term “consumer” refers to any one engaging in any of the activities used in our definition of CB . • These are the potential purchasers of products and services offered for sale.
- 9. • Customer is a sub set of consumer • A consumer is an end user. • A consumer acquires goods and services for direct use or ownership. • Whereas customer can in turn resell the products and services to the consumers • A customer is an individual or organization who purchases goods, or sometimes just browses and doesn't buy, whereas a consumer is anyone who uses the goods that have been purchased, or uses any products or services that have been generated within the economy.
- 10. Customer • The term “customer” is used to refer to someone who regularly purchases from a particular store or company. • Customer can in turn resell the products and services to the consumers. In other words, Customer is a person who uses the product for selling purpose • Customer purchases the product or service • A customer is an individual or organization who purchases goods, or sometimes just browses and doesn't Consumer • The term “consumer” refers to any one engaging in any of the activities used in our definition of CB . These are the potential purchasers of products and services offered for sale. • A consumer is an end user. A consumer acquires goods and services for direct use or ownership. In other words, • Consumer is the person who uses the product for their personal consumption • Consumer uses the product • A consumer is anyone who uses the goods that have been purchased, or uses any products or services that have been generated within the economy
- 11. • So, therefore if a man was to go to a shop and purchase a bar of chocolate, and his wife was the one to eat it, the man would be the customer (as he bought the product) and his wife would be the consumer (as she used the product). • A consumer may also be a customer and a customer can also be a consumer, but situations occur where this is not the case. In general, your marketing efforts should be geared toward the consumer, rather than the customer. • Consumers and customers are very important people in maintaining the balance and profit of one’s company.
- 12. Consumer Motives • Consumer has a motive for purchasing a particular product. • Motive is a strong feeling, urge, instinct, desire or emotion that makes the buyer to make a decision to buy. • Buying motives thus are defined as those influences or considerations which provide the impulse to buy, induce action or determine choice in the purchase of goods or service . • These motives are generally controlled by economic, social, psychological influences etc. • Motives which Influence Purchase Decision The buying motives may be classified into two: i. Product Motives ii. Patronage Motives
- 13. i. Product Motives • Product motives may be defined as those impulses, desires and considerations which make the buyer purchase a product. • These may still be classified on the basis of nature of satisfaction: a) Emotional Product Motives b) Rational Product Motives • Emotional Product Motives are those impulses which persuade the consumer on the basis of his emotion. The buyer does not try to reason out or logically analyse the need for purchase. He makes a buying to satisfy pride, sense of ego, urge to initiate others , and his desire to be unique. • Rational Product Motives are defined as those impulses which arise on the basis of logical analysis and proper evaluation. The buyer makes rational decision after chief evaluation of the purpose, alternatives available, cost benefit, and such valid reasons.
- 14. ii. Patronage Motives: • Patronage motives may be defined as consideration or impulses which persuade the buyer to patronage specific shops. • Just like product motives, patronage motives can also be grouped as emotional and rational. • 1. Emotional Patronage Motives are those that persuades a customer to buy from specific shops, without any logical reason behind this action. He may be subjective for shopping in his favourite place. • 2. Rational Patronage Motives are those which arise when selecting a place depending on the buyer satisfaction that it offers a wide selection, it has latest models, offers good after sales service etc .
- 15. Nature and Characteristics of Indian Consumers 1. Young Demographics - Indian Market is blessed with young population (60% is below 30 yrs). They demand new set of products and services. They are able to earn more thus enabling them to spend more for better life 2. Aspirational consumer – The Indian consumers demands the same standard of living as the developed country. They look for better priced products that offers excellent value 3. Value Consciousness – Indian consumers are value conscious. They look for value in their purchases even in luxury products!!! 4. Networked consumer – The global trend of networked consumers are mirrored in India as well. They are connected thro’ websites, social media, mobile phones etc 5. Socially Conscious – there is an increased awareness about good practices, trust, transparency, ethics etc. Values have become important to the consumers. 6. Brand Switchers – due to lot of competitors and choices, consumers are constantly switching the brands. Thus the brand manager has to find a very powerful differentiator to encourage consumers to stay with the brands
- 16. Nature and Characteristics of Indian Consumers 7. Thinking beyond categories – categories, in India, are becoming irrelevant. E.g., Mobile – camera, music player, organizer, internet browsing, games etc. 8. Religious Diversity – the 1 billion Indians belong to 7 religions viz., Hinduism, Muslim, Christianity, Sikhs, Buddhism, Jainism and Zoroastrians + castes and sub-castes. The customs differs for different sect 9. Diversity in dress and food habits – every state or religion has its own dress styles, ornaments, jewellery etc north and south Indian food habits differs…even religion wise – food habits differs 10. Working women – tremendous growth in late 1990s – they are key decision- makers in purchasing 11. Conservatives – belongs to middle-class; cost-saving, spending more time -DM 12. Rising purchasing power – mkt for luxury products is increased at an astonishing rate;
- 17. Factors influencing Indian consumers: 1. Changing Demographics 2. Smaller Households 3. Increasing awareness 4. Westernization 5. Organized retail stores 6. Celebrity influence 7. Quality-oriented outlets 8. Freebies 9. Product color, size, design and shape 10. Changes in saving and investment patterns
- 18. Consumer Movement in India • In India, the consumer movement as a "social force" originated with the necessity of protecting and promoting the interests of consumers against unethical and unfair trade practices. • Food shortage, black marketing, adulteration of food-products, high prices, etc. gave birth to the consumer movement in an organized form in the 1960s. • At the initial stage, consumer organization were largely engaged in writing articles and holding protests. • Thus, they formed consumer groups to look into the malpractices in ration shops and overcrowding in the road passenger transport.
- 19. Consumer Movement in India • The consumer movement was started due to the dissatisfaction of the consumers as many unfair trade practices was followed by the sellers • There was no legal system available to consumers – to protect them from exploitation • In India, the movement started in the year 1920 via Consumer protection Act. • This act’s main objective was to protect the interest of the consumers by educating and uniting the consumers to fight against the malpractices and injustice done by any organization • This movement is a social movement where the consumers together fight against the injustice
- 20. Rights of Consumers in India • Right to Safety • Right to be Informed • Right to Choose • Right to be Heard • Right to seek redressal • Right to Consumer Education • Right to Healthy Education • Right to Basic Needs
- 21. Responsibilities of Consumers in India • Responsibility of Self-help • Proof of Transportation • Proper Claim • Proper use of Products/Services
- 22. Consumerism • In the word Consumerism, “ Consumer” means the user and “ism” means movement, and hence, consumer movement popularly known as consumerism. • It is an organised and collective movement of consumers. • The movement seeking to protect and inform consumers by requiring such practices as honest packaging and advertising, product guarantees, and improved safety standards. • Movement and policies aimed at regulating products, service, methods and standards of manufacturers, sellers and advertisers in the interests of the buyer. • Consumerism is an organized movement of citizens and government to protect the rights and increase the power of buyers in relation to sellers.
- 23. Benefits of Consumerism 1.Consumer education 2.Consumer Groups can liaison between Government & Industry 3.Product Research & Information to Consumer 4.Inculcate Honesty, Responsiveness & Responsibility on to Manufacturers & Marketers. 5.Move towards Societal Concept of Marketing 6.Improvement in supply 7.Product rating
- 24. Obstacles of consumerism 1. Lack of leadership 2. Illiteracy 3. Difficulty in disseminating consumer education 4. Cumbersome legal process 5. Lack of effective implementation of legislative measures
Editor's Notes
- #8: •Production Policies – CB enables an enterprise to plan and develop its products according to the needs and wants of the consumers •Price policies- helps in pricing the products based on consumers’ purchase abilility •Decision regarding channels of distribution - decisions regarding the channels of distribution are taken based on consumer behavior •Decision regarding sales promotion-helps in taking decision on sales promotion •Exploiting marketing opportunities – helps to understand the consumers needs aspirations, expectation and problems etc •Consumers do not always act or react predictably – earlier consumers – price..now – quality, design etc •Consumer preferences are changing and becoming highly diversified – this shift has occurred due to availability of choices •Rapid introduction of new products – new product with technological advancement has made the job of studying consume behavior more imperative •Implementing the marketing concept – give priority to consumers needs – thus need to study cb