2.

Consumer Markets

2.1Factors influencing consumer behavior

Consumer purchases are influenced strongly by or there are four factors.
01. Cultural Factor
02. Social Factor
03. Personal Factor
04. Psychological Factor.
01. Cultural Factor :

Cultural factor divided into three sub factors (i) Culture (ii) Sub Culture (iii) Social Class
Culture:o

The set of basic values perceptions, wants, and behaviours learned by a member
of society from family and other important institutions. Culture is the most basic
cause of a person's wants and behaviour. Every group or society has a culture, and
cultural influences on buying behaviour may vary greatly from country to country.

Sub Culture :o

A group of people with shared value systems based on common life experiences
and situations.
Each culture contains smaller sub cultures a group of people with shared
value system based on common life experiences and situations. Sub
culture includes nationalities, religions, racial group and geographic
regions. Many sub culture make up important market segments and
marketers often design products.

Social Class:o

Almost every society has some form of social structure, social classes are
society's relatively permanent and ordered divisions whose members share similar
values, interests and behaviour.

02. Social Factors :A consumer's behaviour also is influenced by social factors, such as the (i) Groups (ii) Family
(iii) Roles and status

Groups :o Two or more people who interact to accomplish individual or mutual goals.

o A person's behavious is influenced by many small groups. Groups that have a

direct influence and to which a person belongs are called membership groups.
o Some are primary groups includes family, friends, neighbours and coworkers.
Some are secondary groups, which are more formal and have less regular
interaction. These includes organizations like religious groups, professional
association and trade unions.

Family:o

Family members can strongly influence buyer behaviour. The family is the most
important consumer buying organization society and it has been researched
extensively. Marketers are interested in the roles, and influence of the husband,
wife and children on the purchase of different products and services.

Roles and Status :o

A person belongs to many groups, family, clubs, organizations.

The person's position in each group can be defined in terms of both role and
status.

For example. M & "X" plays the role of father, in his family he plays the role of
husband, in his company, he plays the role of manager, etc. A Role consists of the
activities people are expected to perform according to the persons around them.

03. Personal Factors :

It includes
i) Age and life cycle stage (ii) Occupation (iii) Economic situation (iv) Life Style (v)
Personality and self concept.
Age and Life cycle Stage: People changes the goods and services they buy over their lifetimes.
Tastes in food, clothes, furniture, and recreation are often age related.
Buying is also shaped by the stage of the family life cycle.
Occupation : A person's occupation affects the goods and services bought. Blue
collar workers tend to buy more rugged work clothes, whereas whitecollar workers buy more business suits. A Co. can even specialize in
making products needed by a given occupational group. Thus,
computer software companies will design different products for brand
managers, accountants, engineers, lawyers, and doctors.

 Economic situation : A person's economic situation will affect product choice

Life Style : Life Style is a person's Pattern of living, understanding these forces
involves measuring consumer's major AIO dimensions.
i.e. activities (Work, hobbies, shopping, support etc) interest (Food,
fashion, family recreation) and opinions (about themselves, Business,
Products)
Personality and Self concept : Each person's distinct personality influence his or her buying
behaviour. Personality refers to the unique psychological
characteristics that lead to relatively consistent and lasting responses to
one's own environment.
04. Psychological Factors :

It includes these Factors.

i) Motivation (ii) Perception (iii) Learning (iv) Beliefs and attitudes
Motivation : Motive (drive) a need that is sufficiently pressing to direct the person
to seek satisfaction of the need
Perception : The process by which people select, Organize, and interpret
information to form a meaningful picture of the world.
Learning: Changes in an individuals behavior arising from experience.

Beliefs and attitudes : Belief is a descriptive thought that a person holds about something

Attitude, a Person's consistently favourable or unfavourable

evaluations, feelings, and tendencies towards an object or idea

2.2 key psychological process

1. The starting point for understanding consumer behavior is the
stimulus-response model.
2. Marketing and environmental stimuli enter the consumer's
consciousness. A set of psychological processes combine with
certain consumer characteristics to result in decision processes and
purchase decisions.
3. The marketer's task is to understand what happens in the
consumer's consciousness between the arrival of the outside
marketing stimuli and the ultimate purchase decisions.
Stimulus-Response Model

Model of buying behavior

Four key psychological processes:

1) Motivation
2) Perception
3) Learning
4) Memory
It fundamentally influence consumer responses to the various marketing stimuli.
1. Motivation
1. A person has many needs at any given time. Some needs are biogenic; they
arise from physiological states of tension such as hunger, thirst, or
discomfort. Other needs are psychogenic; they arise from psychological
states of tension such as the need for recognition, esteem, or belonging. A
need becomes a motive when it is aroused to a sufficient level of intensity. A
motive is a need that is sufficiently pressing to drive the person to act.
2. Three of the best-known theories of human motivationthose of Sigmund
Freud, Abraham Maslow, and Frederick Herzbergcarry quite different
implications for consumer analysis and marketing strategy.

One of the most fundamental questions that companies must answer

about consumer behavior is, Why do people buy our product?

Answering this question requires understanding consumer

motivation.
Consumer Motivation

It represents the drive to satisfy both physiological and

psychological needs through product purchase and consumption

Gives insights into why people buy certain products

Stems from consumer needs: industries have been built around basic
human needs
Model of the Motivation Process

Freud Theory
1. Freud assumed that the psychological forces shaping people's behavior
are largely unconscious, and that a person cannot fully understand
his or her own motivations.
2. When a person examines specific brands, he or she will react not only to their
stated capabilities, but also to other, less conscious cues. Shape, size,
weight, material, color, and brand name can all trigger certain associations
and emotions.
3. Motivation researchers often collect "in-depth interviews" with a few dozen
consumers to uncover deeper motives triggered by a product. They use
various projective techniques such as word association, sentence completion,
picture interpretation, and role playing.
Maslow's Theory

1. Abraham Maslow sought to explain why people are driven by particular needs
at particular times.
2. Why does one person spend considerable time and energy on personal safety
and another on pursuing the high opinion of others? Maslow's answer is that
human needs are arranged in a hierarchy, from the most pressing to the least
pressing.
3. In order of importance, they are:
1. physiological needs,
2. safety needs,
3. social needs,
4. esteem needs
5. self-actualization needs.
Maslow's Hierarchy of Needs

Herzberg's Theory
1. Frederick Herzberg developed a two-factor theory that distinguishes:
1) Dissatisfiers (factors that cause dissatisfaction) and

2) Satisfiers (factors that cause satisfaction).

2. The absence of dissatisfiers is not enough; satisfiers must be present to
motivate a purchase. For example, a computer that does not come with a
warranty would be a dissatisfier. Yet the presence of a product warranty
would not act as a satisfier or motivator of a purchase, because it is not a
source of intrinsic satisfaction. Ease of use would be a satisfier.
2. Perception
1. The process by which an individual selects, organizes, and interprets
stimuli into a meaningful and coherent picture of the world
2. How we see the world around us
3. It is a highly individual process based on each persons needs, values and
expectations
In marketing, perceptions are more important than the reality, as it is
perceptions that will affect consumers' actual behavior.
People can form different perceptions of the same stimulus because of three
perceptual processes:
1. Selective Attention
2. Selective Distortion
3. Selective Retention
Selective Attention
1. It has been estimated that the average person may be exposed to over 1,500
ads or brand communications a day. Because a person cannot possibly attend
to all of these, most stimuli will be screened outa process called selective
attention.
2. Selective attention means that marketers have to work hard to attract
consumers notice. The real challenge is to explain which stimuli people will
notice.
Selective Distortion
1. Even noticed stimuli do not always come across in the way the senders
intended.
2. Selective distortion is the tendency to interpret information in a way that will
fit our preconceptions. Consumers will often distort information to be
consistent with prior brand and product beliefs.

3. A stark demonstration of the power of consumer brand beliefs is the typical

result of product sampling tests. In "blind" taste tests, one group of
consumers samples a product without knowing which brand it is, whereas
another group of consumers samples the product knowing which brand it is.
Invariably, differences arise in the opinions of the two groups despite the fact
that the two groups are literally consuming exactly the same product.
Selective Retention
1. People will fail to register much information to which they are exposed in
memory, but will tend to retain information that supports their attitudes and
beliefs. Because of selective retention, we are likely to remember good points
about a product we like and forget good points about competing products.
Selective retention again works to the advantage of strong brands. It also
explains why marketers need to use repetition in sending messages to their
target marketto make sure their message is not overlooked.

2.3 buying decision process

Buying Decision Process: The Five Stage Model

Here we have used the five stage model of buying decision process to analyse the
different stages a consumer may go through while buying a product . From this
model we can clearly say that the entire buying process starts much before the
actual purchase of good and continues even after that with the consequences
reflected in their future buying behaviour . So regarding the buying decision of
reverse osmosis water filter we have analysed the following stages

Problem Recognition
The buying process starts as soon as the buyer recognizes a need either due to
internal or external stimulus. Our question on survey regarding the reason for
buying RO water filter targets this aspect. From the survey we conducted we came
across that most of the responses point to the fact that external stimulus like water
conditions in the locality (57%) and recommendation by acquaintances (10%) rather
than internal stimulus like advanced technology (20%) and peer purchase (5.%)
play a major role in arousing the need for RO water purifier .

Almost 57% of the respondents consider Water Conditions in the locality as the
major reasons for Opting RO water purifiers. The increasing awareness among the
people about the detoriating water conditions in their locality has forced consumers
to move towards water purifiers or bottled drinking water. For the remaining 43% of
the respondents though water conditions was not the primary reason for opting for
RO water purifier , they acknowledged it as secondary reason for opting for RO.
Better Technology has been the second major reason consumers opted for RO.
There seems to be a reasonable awareness among the consumers about the
benefits of RO water purifiers when compared to other technologies. But still most
of the consumers were not completely aware of the technology and had purchased
RO as their water purifier solution since it is the newest in the market.
Recommendation from acquaintances was another major reason why
consumers went for an RO. These recommenders are mostly current users of RO
and mostly recommended the current RO brand they were using.
Few respondents stated Advertisement in Media and Everyone has it as
reasons for choosing a RO.

Information Search

Even though advertisements dont play a major role in the reasons for choosing
RO over other Purifiers, it plays a major role in Consumer awareness about RO.

From our survey we came to know that about 51% of information about
RO comes from advertisements.
The fact that friends and relatives play an important role in the buying process is
further reinstated by the fact that for 28% of the respondents friends introduced
them to RO and for 13% of the respondents, it was relatives.
Stores, work group and other factors do not play a significant role in making
customers aware about RO as only a total of 8% responded that they come across
RO through these factors. This trend might be a result of the advertising strategy
followed by major RO players who supply only through exclusive dealers and not
through general stores and rely heavily on advertisements and word of mouth to
boost sales and are indifferent to sales promos.

Major sources of Product Information

Since, this is usually one time buying decision consumers do gather a

lot of information. From the survey we observed that majority of consumers
relied on recommendations, television, radio advertisements and live demonstration
for information about the RO water filter.
Once decision has been made to buy a water purifier, recommendations play a
major role in influencing buying decisions by serving as sources of product
information. Recommendation scored 27% importance as the major source of
information followed by live demonstration, 20%.
When it comes to advertisements, visual ads tend to be more effective than print
ads. Visual ads got 12% importance as the major source of information while only
around 8% importance was attributed to print ads.
Each information source plays a different role in influencing the decision making
process Consumer receives most information from television advertisements and
live demonstration whereas recommendation from friends and relatives help in
evaluation.
Also when it comes to product information, the internet also has an important role.
Consumers use the internet for getting reviews about products & brands. Word of
mouth plays a major role in these review websites.
Brochures were the least effective getting only 6 % importance as a major source of
product information.

Evaluation of Alternatives
Consumer processes competitive brand information and make a final decision on
the basis of their expected weights of different attributes of the product.

The major factors that influence the buying behaviour of the consumer in case of a
RO water purifier are its brand value and strong recommendations from other
consumers.
Majority of consumers prefer to buy a RO water purifier with a high brand value,
because water purifiers are related to the health of the family. Eureka Forbes is the
most preferred brand that people recognize in case of water purifiers. Kent RO is
another major brand because of its aggressive advertising strategy and its attached
image with the celebrity.
Strong recommendation from relatives and colleagues is the second major attitude
while evaluating different brands. Thus, word of mouth about the product plays a
major role in consumer evaluation process.
The price of the RO purifier plays only a minor role in the product evaluation
process. Though RO purifiers from Makelife cost INR 9000 & ZeroB cost INR 12000,
Kent with much higher price of around INR 15000 has the majority share in the
market. Thus it is evident that only for a few consumers it made sense to go for the
cheaper RO. Therefore, only when a consumer perceives two or more brands as
equal, then price may play a role in buying decision.

Ease in purchase, ease in availability of purchase point and simplicity of use of the
water purifier also has little influence on the buying behaviour of the consumer.
They do not have significant influence on the buying behaviour of the consumer as
most of the companies provide free installation of water purifier directly at their
homes.

Purchase Decision
In the evaluation stage, the consumer forms preferences among the competitive
brands available to him.
Purchase decision of consumers was not influenced by discount available for the
product. Majority of consumers who came across discount believed that they would
have purchased the product even without any discount. The major reason they
prefer buying the water purifier is because of poor water conditions in the locality
and associated risks of illness. Hence the consumer would prefer a standard product
and is not affected by the discount provided by the company. Moreover a majority of
consumers did not come across any discount offers.
Likewise mode of purchase preferred by majority of consumers we have come across
following observations.
Mode of Purchase
The majority of consumers used dealer as a medium of purchase for the RO water
purifier. Consumers prefer this medium since they can see, touch, and test the
product. Moreover, they get good service and a very small lag time in delivery. This
provides a very good shopping experience to the consumers.
Despite of being a much easier means of purchase, the online booking system is
still not very popular in India. Moreover this medium lacks faith in proper and timely
delivery.
There is also a trend of home delivery in case of RO water purifier. The sales person
closes the sales directly with the consumer and the product is directly delivered to
the consumers home. This type of behaviour is closely observed in residential
colonies where a lot of people make the purchase. Sales people target these areas
by providing some sort of demonstration of the water purifier and then closing sale
with some of the customers.
Ease of installation

For a significant percentage of respondents (poor & average - 41%) ease of

installation was a major concern. This may be due to the reason that consumers
cannot shift the purifier to a different location even within the house on their own
and have to rely on the after sales service unit every time they want to shift.
Therefore, the lack of portability is a concern.

Post Purchase Behaviour

In the survey, we found out that nearly 50% were quite satisfied and another 32%
were highly satisfied with the RO purifiers. From the consumers point of view, this
affirms that the performance of the product exceeds their different prior
expectations and very much serves the purpose of their purchase.
Since RO water purifiers are one time purchases, the high level of satisfaction
indicates that consumers are very likely to spread good word of mouth about the
company. This is reinforced by the fact that a large proportion of users
acknowledged that they came across RO purifiers manly through friends and
relatives.
A major reason for the remaining 20 % of consumers being either dissatisfied or
indifferent after the purchase of RO purifiers is the fairly slow nature of the
purification process .This is particularly applicable to larger households (greater
than 4 members) where the total requirement of treated water per day is
substantially more than smaller households. The time it takes to purify 5 litres of
water, typically, is around an hour. Added to this, the low efficiency (5 litres of
untreated water on passing through the filter resulted in only 1.5- 2 litres of pure
water) and the associated high wastage makes the RO purifiers less attractive for
use in larger households where the demand is high and in places where the
availability of water is less.

Consumer Loyalty:

The water purifier market in India has a very high consumer loyalty. This is borne
out by the fact that for a large proportion(80%) of the respondents, their current
brand was the one which came to their mind when they thought of RO purifiers. This
indicates that all the brands have managed to create a strong, tight connection to
customers and are well positioned for long-term marketing success. It is evident
that satisfaction with the product and service quality has contributed to this loyalty.
The fact that an overwhelming 90% were willing to recommend their purifiers to the
others reiterates the role of recommendations from friends and colleagues in
making people aware of RO water purifiers and contributing to their buying
decisions and the extremely high overall perception of quality which leads to strong
customer commitment to the relationship
Quality of after sales service:

It is evident that after sales service remains the key consideration for a consumer to
be satisfied with the RO purifier. To reduce membrane fouling and to maintain
optimal performance, it is important to ensure that scheduled replacements of
carbon pre-filters are followed. The membrane) should be replaced periodically
depending on use. Thus to carry out a quality check of the purifier once every 6
months, most consumers prefer to go for an annual maintenance contract with the
companies. Over 83% of the respondents rated the after-sales service as either
good or outstanding, contended with the excellent service support that
supplemented the product. The lower ratings by the remaining 17% can be
attributed to the high out-of pocket costs required for regular maintenance.
For the consumers, the major expectation from the purchase of the purifier units is
the improvement in the quality of drinking water. From the responses, it is easy to
gather that RO purifiers do not fail on that count, with only 3 % of the respondents
indicating that the quality of the treated water continued to be bad or poor.

http://www.scribd.com/doc/36066282/Factors-Influencing-Consumer-Behavior
http://www.scribd.com/doc/147362384/04-Key-Psychological-Processes
http://www.scribd.com/doc/64488978/Buying-Decision-Process
http://www.comindwork.com/weekly/2013-09-23/productivity/buyer-behaviourstimulus-response-model
http://en.wikipedia.org/wiki/Maslow's_hierarchy_of_needs
http://www.scribd.com/doc/24312853/Market-Segmentation-Targeting-And-Positioning