Consumer Rule:

Session 2
What is Consumer Behavior?
As a consumer we are all unique and this uniqueness is reflected in the
consumption pattern and process of purchase. The study of consumer
behavior provides us with reasons why consumers differ from one another
in buying using products and services. We receive stimuli from the
environment and the specifics of the marketing strategies of different
products and services, and responds to these stimuli in terms of either
buying or not buying product. In between the stage of receiving the
stimuli and responding to it, the consumer goes through the process of
making his decision.
Consumer behavior is the study of when, why, how, and where people do
or do not buy products.
Or
. . . Is defined as the study of the buying units and the exchange processes
involved in acquiring, consuming, and disposing of goods, services,
experiences, and ideas.
The study of consumers helps firms and organizations improve their
marketing strategies by understanding issues such as how

The psychology of how consumers think, feel, reason, and select

between different alternatives (e.g., brands, products);

The psychology of how the consumer is influenced by his or her

environment (e.g., culture, family, signs, media);

The behavior of consumers while shopping or making other marketing

decisions;

Limitations in consumer knowledge or information processing abilities

influence decisions and marketing outcome;

How consumer motivation and decision strategies differ between

products that differ in their level of importance or interest that they
entail for the consumer; and

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How marketers can adapt and improve their marketing campaigns and
marketing strategies to more effectively reach the consumer.

"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." Although it is not necessary to memorize this
definition, it brings up some useful points:

Behavior occurs either for the individual, or in the context of a group

(e.g., friends influence what kinds of clothes a person wears) or an
organization (people on the job make decisions as to which products
the firm should use).

Consumer behavior involves the use and disposal of products as well

as the study of how they are purchased. Product use is often of great
interest to the marketer, because this may influence how a product is
best positioned or how we can encourage increased consumption.
Since many environmental problems result from product disposal (e.g.,
motor oil being sent into sewage systems to save the recycling fee, or
garbage piling up at landfills) this is also an area of interest.

Consumer behavior involves services and ideas as well as tangible

products.

The impact of consumer behavior on society is also of relevance. For

example, aggressive marketing of high fat foods, or aggressive
marketing of easy credit, may have serious repercussions for the
national health and economy.

Consumer Behavior is a Process

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Consumers Impact on marketing Strategy:

Market Segmentation:
The method of identifying a group of consumers, within a broader market,
that has similar characteristics and needs. Segments can be identified by
examining demographic, Psychographic, and behavioral differences. Thus a
car manufacturer may identify different types of consumers preferring
different styles of cars, so they will segment their car buying markets
accordingly. Perhaps identifying those younger car buyers, with high
incomes, will be more likely to buy a sports car, while an older population
of car buyers may be more apt to purchase a town car. Once these
segments are identified, marketers can develop different marketing mixes
that target each segment. Again, the marketer may identify a number of
specialty magazines that the young, affluent market reads, thus they will
run their advertisements for sports cars in these magazines.

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Criteria Needed for Segmentation

For segmentation to occur:
1. Segments must have enough profit potential to justify developing
and maintaining a MARKETING MIX
2. Consumer must have heterogeneous (different) needs for the product.
3. Segmented consumer needs must be homogeneous
(similar)
4. Company must be able to reach a segment with a
MARKETING MIX,
For example, how do marketers reach children?
Cartoons
Cereal boxes
Sports illustrated for kids
Look at how media has changed recently due to changing demographics
etc. and therefore the need of marketers to reach these groups.
Media must respond because they are essentially financed by the
marketers or at least heavily subsidized
5. Must be able to measure characteristics & needs of consumers to
establish groups.
The most common profilers used in customer segmentation include the
following:
Profiler Examples
Geographic
Region of the country
Urban or rural
Demographic
Age, sex, family size
Income, occupation, education
Religion, race, nationality
Psychographic Social class Lifestyle type
Personality type
Behavioral
Product usage - e.g. light, medium, heavy users
Brand loyalty: none, medium, high
Basis for Segmentation:
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Potential
Consumer
Segments

Geographi Demograph Psychograph Product

related
c
ics
ic
consumer
characteristi
cs
Nation/Reg Age, Sex,
Social class
Amount
of
ion
Buying
Personality
Usage
Power,
Life Cycle
Type of usage
Brand Loyalty
State/regio expenditure
Benefits
n
patterns,
sought.
Climate/Te Occupation,
rra in
education,
Population Race or

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Article 1
Market Segmentation:
Going Regional
Marketers would do well to remember that a single marketing
strategy for the various markets in the country wont work.
Look at the traditional segmentation used by the marketers and
strategists. Most Plan specially in the FMCG`s industries are based on an
urban rural segmentation, or segmentation
by socio-economic
classification (SEC). The implicit assumption is that consumers across the
country are largely similar (except for language), and hence these
segmentations adequately capture any differentiation.
There are two reasons for re-examining this assumption. First, it simply
may not be true! India is a mosaic of very different cultures and regions are such simplistic assumptions work- able? True, this approach has
worked pretty well in the past, but that is more likely due to the first
mover effect. The rural markets in particular were so underdeveloped that
anyone at all who bothered to reach them got rich dividends.
Today, things are different. The growth of television and improvement in
roads has led to rural consumers becoming far more aware of products
and services. Companies in personal care, foods, textiles, consumer
appliances and other FMCG products have bombarded these markets with
small packs and other rural products. As a result, new entrants trying to
enter the rural markets today face issues such as lack of good stockiest,
overcrowded retail shelves, intense competition and brand-savvy
customers. In fact, the situation is very similar to the urban markets.
Which brings us to the second reason? With the rural markets no longer a
guaranteed source of sales, where do marketers go? One option is to
penetrate even deeper into the countryside, down to villages with
population less than 2,000.
HLL for one is doing this, but the effort remains beyond most other
companies. Another option is to go in for narrower product niches, like
toothpastes with three stripes versus those with two stripes. But these
lead quickly to consumer confusion and fatigue, as well as the company
finding itself saddled with a logistical nightmare. Further, these
approaches still assume a great degree of uniformity across the country.
A third approach is for a company to have a uniform platform for its
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product, but make it available in different forms in different regions, as

done by some tea brands like Taaza. But for this, the product category
must both be capable of a uniform promise (easy), and of being delivered
in different, yet suitable variants (very difficult except for a few products).
A promising way out is to re-examine this basic assumption. As
mentioned earlier, India is not a uniform market. Regional differences are
enormous. Yes, there will always be some common factors, which, after
all is what national brands tap into. But it is now time to shift from a one
size fits all approach to customized, region-specific marketing.
This needs a mindset very different from the one that, for example,
considers a Hindi, essentially northern belt ad translated into Tamil as
regionalized. Each region has a strong culture and set of traditions regionalized marketing must begin with products that fit this, then carry
on to communication specifically developed for the region.
It is not a coincidence that while the larger, national brand- oriented
FMCG companies are slowing down, small regional players with products
and communication fine-tuned to their markets is zipping ahead. An
Arokya ad is quintessentially Tamil, in a way that no translated Nestle ad,
no matter how slickly produced, can ever be.
The advantages are several. Regional markets are geographically
contiguous, making logistics much easier than for national brands. It is
easier to penetrate deeper into markets if the operation is geographically
restricted.
The burst of regional satellite TV means that they can be covered by TV
far more cheaply and more cost effectively than on national media.
Regional print can now be used far more efficiently. Economies of scale?
Most industries have more than enough excess capacity available for
outsourcing.
Of course, this is not a panacea. Some industries, such as cosmetics,
personal care and foods, lend themselves more to this approach. Others
either do not, or are so capital-intensive (like cars) that the approach isnt
economically viable.
More important, business will effectively move from a portfolio of a few,
large brands to an agglomeration of small, regional ones.
This puts severe stress on the organization. A regional strategy is useless
without decentralized control of production and marketing. A mechanism
is needed to maintain financial and operational control over several,
possibly dozens, of operating units. Communication between marketing
and front line sales representatives has to be improved to ensure a quick
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response
in local markets. Managers have to be convinced that working in a
regional, non-metro office is not a career dead-end.
But all these are manageable issues. In fact, companies such as Bata in
footwear, or even HLL (in its erstwhile Animal Foods Division), have
handled the challenge of delivering localized products from a national
system without ending up with inventory logjams or unwanted products.
Note that this entire approach involves changing the company so as to
meet consumer needs better, rather than trying to give the consumer
what is convenient for the marketer. And isnt that what marketing is
supposed to be all about?

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Brand Relationship Types:

1. Self-Concept Attachment:
a. The product helps to establish the users identity
i. "Clothes make the man
(or woman)"
2. Nostalgic Attachment:
a. The product serves a a link with the past self
i. When Campbell Soups tried to replace the familiar
Campbell Kids on their soup cans, sales dropped off
dramatically
3. Interdependence:
a. The product is a part of users daily routine
i. Think of starting your day WITHOUT your regular cup of
coffee, or whatever else gets you going in the morning
4. Love:
a. The product elicits emotional bonds of warmth, passion, or
other strong emotions.
i. Try talking any car lover into taking public transit instead;
North America's love of the automobile is much more
than just a method of transportation to be easily replaced
with lectures about pollution

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