CONSUMER 1

CONSUMER BEHAVIOUR

04/08/23UNDERSTANDING

CONSUMER/TSR/PIMSR 2

Sunder Singh

This example illustrates the fascinating subject matter of every marketer and every individual – CONSUMER BEHAVIOUR

Consumer behavior is the study of people and the products that help to shape their identities. (Schiffman & Kanuk 2000)

““India is a cultural unity amidst diversity, a India is a cultural unity amidst diversity, a bundle of contradictions held together by bundle of contradictions held together by strong but invisible threadsstrong but invisible threads””

-Jawaharlal Nehru-Jawaharlal Nehru



Is it comparable to any other market?



What is the need to study consumer behavior?

Determinants of Consumer Behaviour.“The spending patterns of an average Indian household points towards the emergence of an individualistic, indulgence happy and confident Indian consumer who enjoys spending money on personal needs and entertainment,” states Wallet Monitor, a study conducted by Henley Centre and IMRB International.

“This marks a clear shift from the traditional Indian mindset of collectivism, cautious spending and guilt associated with spending,” it adds. 04/08/23

UNDERSTANDING CONSUMER/TSR/PIMSR 5

Determinants of Consumer Behaviour India’s economic growth

Has a large and growing population Demographic trends Rising household income and resulting in rise in private

consumption Changing social structure of the Indian consumers Changing profile of Indian women Increased exposure to international brands and retailers Changing Technology Globalization Deregulation Privatization



Source: Indian Economy Review, Confederation of Indian Industry, August 7, 2004 & BusinesworldIndia , Deutsche Bank



0

300

600

900

1200

1500

1800

1990 1995 2000 2005 2010 2015

US$ B

illion

6% 7% 8%

1. India’s economic growth

Period Percent

July – Sep 2008-2009 7.7%

Oct – Dec 5.8%

Jan – Mar 5.8%

April – Jun 6.0%

July - Sep 7.9%

Glance of Economic Growth over 2008-2009, Quarter Wise



Country Percent

United States 0.9%

China 0.6%

Japan 0.1%

India 1.4%

Germany 0.0%

United Kingdom 0.3%

France 0.4%

Italy 0.1%

Brazil 1.1%

Russia - 0.4%

2. Has a large and growing population

Source: ACNielsen Global Services, CCTFA: 6th October 2005

3. Demographic trendsIndian Population is Young



Countries Median Age

China 31.8

India 24.6

Japan 42.6

Canada 38.5

Source: 2005 ACNielsen a VNU business

4. Rising household income and resulting in rise in private consumption



Private Consumption in billion

Year

16,896 2005

69,503 2025

Source: Oxford Economics, UN; MGI India, Consumer Demand Model, V1.D



4. Rising GDP & Disposable Incomes 2003 2004 2005 2006 2007 2008

Growth Rate (2003 -2008)

Population (mn) 1,062 1,077 1,093 1,109 1,124 1,140 7%

GDP per head (US$ at market exchange rates) 538 584 627 679 733 787 46%

GDP (US$ bn at PPP) 3,005 3,252 3,574 3,917 4,304 4,704 57%

GDP per head (US$ at PPP) 2,831 3,019 3,270 3,533 3,829 4,126 46%

Personal disposable income (US$ bn) 475 544 617 701 797 902 90%

Household consumption (US$ bn) 372 403 432 463 497 527 41%

Household consumption per head (US$) 350 370 400 420 440 460 31%

Source: Executive Briefing: India, ECONOMIST INTELLIGENCE UNIT, 2004



Table : Demographic Transformation

Source: Indian Market Demographics Report 2002, NCAER

5. Changing social structure of the Indian consumers



Deprived Less than Rs.90,000

AspiresRs. 90,000 – Rs.2,00,000

SeekersRs 2,00,000 – Rs.

5,00,000

StriversRs.5,00,000- Rs.10,00,000

Global IndiansAbove Rs. 10,00,000

2005 E

2015F2025

FDeprived (< 90) 54% 35% 22%

Aspires (90 – 200)

41% 43% 36%

Seekers (200 – 500)

4% 19% 32%

Strivers (500 – 1000)

1% 1% 9%

Global Indians ( > 1000)

0% 1% 2%

Table: Indian Households Economic ClassificationSource: MGI India, Consumer Demand Model, V1.D

Table: Share of Population in each income bracket

Note: The figures are added to nearest integral and the total may not be exactly 100%Source: MGI India, Consumer Demand Model, V1.D

6. Changing Profile of Indian Women



7. Increased exposure to National and International brands and

retailers





Marketing decisions are based on assumptions about consumer behavior



Pick up the number of your choice

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Why study consumer behavior?

Significance in Daily lives Consumer behavior theory provides the

manager with the proper questions to ask Marketing practice designed to influence

consumer behavior influences the firm, the individual, and society

All marketing decisions and regulations are based on assumptions about consumer behavior



Shoes conti….

The consumer behavior researchers want to know several things like:

What type of Shoes consumers buy?

What brand?

Why they buy it?

Where they buy it?

How often they use it?

How often they buy it?



Shoes conti…. The consumer behavior researchers want to

know several things like: What type of shoes consumers buy? (Sports,

casual, office, party wear, Rainy, fitness shoes(reebok)

What brand? (national, local) Why they buy it? ( to protect the feet, to

enhance their attire, in attract others attention)



Shoes conti….

The consumer behavior researchers want to know several things like:

Where they buy it? (general stores, supermarket, Specialtity, convenience store or hypermarket)

When do they use it?( While doing morning walk or exercise, office, evening walk, at home or any combination)

How often they buy it? (weekly, biweekly, monthly, once the old shoe is worn out)



What is CB? conti….

The study of consumer behavior is the study of how individuals make decisions to spend their available resources (time, money, effort) on consumption related items. (Blackwell, Miniard & Engel.2006)



What is CB? conti….

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. (Schiffman & Kanuk 2000)



Disposing of the used product

Get any prestige kitchen item and get discount on any prestige item

Hero honda old bike buyback offer and get the new bike




The researchers are interested in understanding how individuals dispose of their used product?

After the use of a product, the researchers wants to know what the consumers do with it, throw it, or give it away or sell it or rent it or lend it?????????????????




The answers to this are important for two reasons

To develop strategies to buy back the old ones To match the company’s production to the

frequency with which consumers buy replacements products.

To the society at large how the disposing is going to create more pollution.

Sunder Singh case also deals with issue also



Where did CB originate from?

CB was a relatively new field of study in the mid-to-late 1960’s

This is borrowing the concepts from other scientific disciples like:

Psychology: the study of the individual Sociology: the study of groups Social Psychology: the study of how an individual

operates in groups Anthropology: the influence of society on the individual Economics: study of scarce resources and optimization

of the usage



Model of Consumer Behavior

Model of Consumer Behavior

Marketing andOther Stimuli

Marketing andOther Stimuli

Buyer’s Black BoxBuyer’s Black Box

Buyer’s ResponseBuyer’s Response

Product

Price

Place

Promotion

Economic

Technological

Political

Cultural

Characteristics Affecting Consumer Behavior

Buyer’s Decision Process

Product Choice

Brand Choice

Dealer Choice

Purchase Timing

Purchase Amount

Input

Process

Output

The Various Individual and Environmental Factors Influencing Purchase Decisions


CONSUMER/TSR/PIMSR 29Individual Factors Environmental Factors

StimuliThe

ConsumerDecision Making

ResponseInformation Processing



Organizational Buyer versus Individual Buyer

Renuka Ramnath buying a pantene 40ml sampoo for his household use is a _________ consumer.

Renuka Ramnath buying 32 IBM Laptops of for ICICI ventures a private equity fund company is a ________________ consumer.

The Key Factors of Differentiation are

i Market Structure and Demand

ii. Buyer Characteristics

iii. Decision Process and Buying Patterns



Customers versus Consumers



LEVELS OF CONSUMER DECISION MAKING

1) Extensive Problem Solving ( EPS ) Example: insurance policy for the first time

2) Limited Problem Solving ( LPS ) Sports shoes or Branded Apparels

3) Routine Problem Solving ( RPS ) Salt. Sugar, Atta, Biscuits etc.



CONSUMER BEHAVIOUR AND MARKETING STRATEGIES

CONSUMER BEHAVIOUR AND MARKETING STRATEGIES

CONSUMER BEHAVIOUR AND MARKET SEGMENTATION

CONSUMER BEHAVIOUR AND PRODUCT POSITIONING

CONSUMER BEHAVIOUR AND MARKETING RESEARCH

CONSUMER BEHAVIOUR AND NON-PROFIT AND SOCIETAL MARKETING

CONSUMER BEHAVIOUR AND GOVERNMENTAL DECISION MAKING



Neeru, The Archetypal Provider Neeru epitomizes simplicity, her life is

untangled. It runs on a set time table with almost clockwork precision. She works as a primary school teacher in a rural government school about 50 kilometers from her district town residence. She is married to a social worker in an NGO whose income is erratic. Her three children, two teenaged sons and 10 yrs daughter are getting school education.



The day begins with the lady getting up before anybody else and finishing the households chores as fast as she can. There is no room for delay as the state government ‘Express’ bus, on which she travels to her school will be at the bus stop across the road prescisely at 8.00 am. If she missed that, the next ordinary bus comes at 11.15 am quite useless as it will reach her school only at 1.00p.m. the



CONSUMER 1

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