367095dfsd08 Consumer Behaviour Module 1

CONSUMER BEHAVIOR

Consumer behaviorThe term consumer behavior is defined as the behavior that consumers display in searching for, purchasing, using, evaluating and disposing of products and services that they expect will satisfy their needs.

Difference between customers and consumersEvery customer is a consumer but not every consumer a customer. Customer is one who is brand loyal, who has made a custom to purchase a particular company's product/services. thus customer is a sub set of consumer. One that consumes, especially one that acquires goods or services for direct use or ownership rather than for resale or use in production and manufacturing. A consumer is an end user. A customer: One that buys goods or services. A customer can in turn resell to a consumer.

The central premise to understand consumer behavior People do not buy products or services, they buy benefits.Purchases are made not for the products themselves but for the problems they solve or the opportunities they create Consumer benefits are those positive factors that the consumer obtains as a result of the possession and/or use of a product or service

Why We Study CB?Diverse Reasons - As ConsumersAs Marketers & future MarketersAs Students of Human Behavior

Consumer Benefits Tangible Benefits measurableIntangible benefits associated with the feelings that you experience

Two different kinds of consuming entitiesPersonal consumer

Organizational consumer

Personal ConsumerThe individual who buys goods and services for his or her own use, for household use, for the use of a family member, or for a friend.

Organizational ConsumerA business, government agency, or other institution (profit or nonprofit) that buys the goods, services, and/or equipment necessary for the organization to function.

Development of the Marketing ConceptProduction ConceptSelling ConceptProduct ConceptMarketing Concept

The Production ConceptAssumes that consumers are interested primarily in product availability at low pricesMarketing objectives:Cheap, efficient productionIntensive distributionMarket expansion

The Product ConceptAssumes that consumers will buy the product that offers them the highest quality, the best performance, and the most featuresMarketing objectives:Quality improvementAddition of featuresTendency toward Marketing Myopia

The Selling ConceptAssumes that consumers are unlikely to buy a product unless they are aggressively persuaded to do soMarketing objectives:Sell, sell, sellLack of concern for customer needs and satisfaction

The Marketing ConceptAssumes that to be successful, a company must determine the needs and wants of specific target markets and deliver the desired satisfactions better than the competitionMarketing objectives:Profits through customer satisfaction

The Marketing ConceptA consumer-oriented philosophy that suggests that satisfaction of consumer needs provides the focus for product development and marketing strategy to enable the firm to meet its own organizational goals.

Marketing Concept is based on the premise that a marketer should make what it can sell, instead of trying to sell what it has made

Implementing the Marketing ConceptConsumer ResearchSegmentationTargetingPositioning

Consumer ResearchThe process and tools used to study consumer behavior. Two perspectives:Positivist approachInterpretivist approach

Segmentation, Targeting, and PositioningSegmentation: process of dividing the market into subsets of consumers with common needs or characteristicsTargeting: selecting one ore more of the segments to pursuePositioning: developing a distinct image for the product in the mind of the consumer

Successful PositioningCommunicating the benefits of the product, rather than its featuresCommunicating a Unique Selling Proposition for the product

The Marketing MixProductPricePlacePromotion

Successful RelationshipsCustomer ValueCustomer SatisfactionCustomer Retention

Types of CustomersLoyalistsApostlesDefectorsTerroristsHostagesMercenaries

Customer retention Makes it in the best interest of customers to stay with the company rather than switch to another firmCustomers are grouped into four tiers:The platinum tier: heavy users, not price sensitiveThe gold tier: Heavy users, not profitable, price sensitiveThe iron tier: spending volume and profitability do not merit special treatment form the companyThe lead tier: customers who actually cost the company by spreading negative word of mouth

Ethics & social responsibilityAll companies prosper when society prospers, many people believe that all of us, companies as well as individuals, would be better off if social responsibility were an integral part of every marketing decision.

Societal Marketing ConceptA revision of the traditional marketing concept that suggests that marketers adhere to principles of social responsibility in the marketing of their goods and services; that is, they must endeavor to satisfy the needs and wants of their target markets in ways that preserve and enhance the well-being of consumers and society as a whole.

The Societal Marketing ConceptThe societal marketing concept, advocates a long term perspective.It recognize that all companies would be better off in a stronger, healthier society, and that companies that incorporate ethical behavior and social responsibility in all of their business dealings and maintain loyal consumer support over the long run.

Nature and characteristics of Indian consumerThe Indian consumption patterns are slowly converging with global norms. The Indian consumer is now spending more on consumer durables, apparel, entertainment, vacations and lifestyle related activities. Entertainment, clothing and restaurant dining are categories that have been witnessing a maximum rise in consumer spending since 2002.

The rate of growth of spending on discretionary items (unlike basic necessities like food) has been growing at an average of 9 per cent per year over the past five years. A nation of savers, India, has now altered into a nation of spenders.

Consumerism The movement seeking to protect and inform consumers by requiring such practices as honest packaging and advertising, product guarantees, and improved safety standards. Movement or policies aimed at regulating the products, services, methods, and standards of manufacturers, sellers, and advertisers in the interests of the buyer.

Rights of consumersRight to safetyRight to be informedRight to chooseRight to be heardRight to seek redressalRight to consumer education

Responsibilities of ConsumersResponsibility of self-helpProof of TransactionsProper claimProper use of Product/services