Understanding Consumer

Behaviour
Session 1& 2
 Agenda
• Consumer Behaviour – Introduction

• Consumer Behaviour Concepts

• Consumer Behaviour Research

What is Consumer Behavior……?
James F. Engel, Roger D. Blackwell and Paul W. Miniard,
“Consumer Behaviour” (1990).
• Consumer behaviour refers to “the mental and emotional
processes and the observable behaviour of consumers during
searching for, purchasing and post consumption of a product
or service.”

• 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. It is
concerned with learning the specific meanings that products
hold for consumers.
• Those activities directly involved in obtaining , consuming
and disposing of products and services, including the
decision processes that precede and follow these actions
 Why Study Consumer Behaviour?

• Differences among consumers

• Consumers change with time
• Limited success with new product launches
• Better understanding of how we think
• Rapid environmental changes

Marketers must become astute analysts

of consumer motivation and behaviour
• What type of drink/beverage would you
choose?
(On a hot summer’s day, For breakfast, During a 15-minute lunch break, When
in a bad mood, When waiting around for an hour, At a sporting event, As a
birthday gift for a relative and so on…)

• CB 2017\3d) How Men and Women Shop

Differently.flv
 Consumer Behavior Is
Interdisciplinary
Psychology

Economics Sociology

Social
Anthropology
psychology
• The Marketing Concept A 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. Focuses on: Consumer Research; Segmentation; Targeting;
Positioning

• Societal Marketing concept: Consumers consider issues

like carbon footprint, raw-materials sourcing practices, treatment of
employees, contributions to the communities and so on..

New graffiti ink made from pollution hits the

streets of Hong Kong
The Wheel of Consumer Behavior
Some Issues That Arise During Stages in
the Consumption Process
A Simple Model of Consumer Decision Making
 Understanding Consumers’ brain
• Two systems in the Brain: System 1 (Reptilian +
Middle brain) and System 2 (NeoCortex)
(source:Daniel Kahneman, recipient of the 2002
Nobel prize, Thinking Fast and Slow)
• Outer brain: responsible for processing the written
language, complex thinking, calculating, and
rationalizing your decision.
• Middle brain processes emotional responses
• reptilian brain is responsible for instinct and
survival. Its main focus is to avoid pain.
How To Reach The Reptilian Brain With
Your Value Proposition
Marketers use specific techniques to captivate
consumers:
• appeal to their innate selfishness,
• demonstrate importance through contrast,
• emphasize value tangibility,
• focus on beginning and end,
• use a visual metaphor,
• strike an emotional chord.
Strategy: 1. DIAGNOSE THE PAIN
2. DIFFERENTIATE YOUR CLAIMS
3. DEMONSTRATE THE GAIN
4. DELIVER TO THE REPTILIAN BRAIN
 Dark Side of Consumer Behaviour
• Deceptive advertising
• Advertising to children
• Telemarketing frauds
• Negligent consumer behaviour (product
misuse, consumption of hazardous products)
• Drivers of compulsive consumption
• Corporate social responsibility
• Corporate rumours
Understanding Consumer Behaviour
Exercise
 Understanding Consumer Behaviour
Exercise
• Self-notes on the following aspects:
– Consumer Benefits which was sought by Indian
consumer
– Consumer Benefits which was delivered by Gillette
before the introduction of Gillette Guard
– Consumer Benefits which was delivered by Gillette
after the introduction of Gillette Guard
 Understanding Consumer Behaviour
Exercise
Benefits sought by Indian Consumer Benefits delivered by Consumer Benefits delivered by
Consumer Gillette before introduction of Gillette after introduction of
Gillette Guard Gillette Guard
  

  

  

  

  

  
  
Sales of Gillette India (in US $ Million)

Sales of Gillette India Ltd.

(In US $ Million)

300

250
239.6
200
205.5
150
176.4
142.1
100 110.3
98.1
50

0
2009 2010 2011 2012 2013 2014
Source: Corporate presentation by Gillette India Ltd.
3. Consumer Behaviour Research
 Capturing Information
• State of Being
» Verifiable e.g. sex ; Unverifiable e.g. income

• State of Mind e.g. attitude, awareness

• Behaviour
Do respondents always give the right answer?

NO
• “Very little predictive validity”

• “Under reporting of information”

 Types of Observation Studies
• Based on environment
– Natural -Contrived
• Based on scope of coverage
– Going wider -Going deeper
• Based on specifics of coverage
– Unstructured observation -Structured observation
• Based on participant’s knowing about study
– Intrusive (Overt) observation
– Non-intrusive (Covert) observation
• Direct vs. Indirect Observation
When Observation studies are useful/not
useful?
 Levels of Insights

• Observations
– General
– Specific
• Inferences
– Drawn from previous experiences
– Obvious inferences
– Intelligent inferences
• Implications
Some other Consumer Insight
Research Methods
Motivation research (1950s)—e.g., depth interviews, projective methods,
story-telling (psychoanalytic bases)
Ethnographic Methods -When researcher becomes part of the shopper’s family
(participant observation) and observe them in their natural surrounding
Videographic Methods
Netnographic Methods
Projective methods
Metaphor Elicitation
 Examples
• Gillette – Employees are encouraged to come
unshaven and they shave in front of product
managers

• HUL – One of the staffers saw that her mother

kept soap wrapper in between her sarees,
because of the perfume. This gave the thought to
company that it should invest more on the
perfume in the wrapper as that would be
enhancing the consumer experience of the
product.
 Co-creation in Marketing
“Co-creation is an active, creative and social process, based on collaboration
between producers and users, that is initiated by the firm to generate value for
customers.“
ITC’s customer interaction Centre, Godrej Hair Care Institute, L’Oreal research and
innovation Centre, Immersion programmes
Presumers: push, fund, and promote products and services before they are
realized
Custowners: Funding in the brands they buy from
User generated content: advt, product innovation, feedback, test marketing
Threadless.com- online T-shirt seller, crowdsourcing model designs and community
voting (source: “Local Motors: Designed by the Crowd, Built by the Customer)
Challenge-Companies run the risk of diluting the cohesion of their brand message
and/or the coherence of their product lines; how to maintain sufficient control

Sunsilk uses co-creation in the formulation of Nike giving customers online tools
its shampoos, and has a SNS initiative to design their own sneakers
 Consumer Buying decisions can vary
• By product category
• By buying context
• By consumer’s personal idiosyncrasies

- Decision can be in isolation

- Or influenced by host of other individuals
Consumer Decision Making
 Cues

• Intrinsic Cues:
– product attributes which when changed will result in composition of
product itself, e.g. ingredients
– One can not know them without using the product
• Extrinsic Cues:
– product attributes that can be changed without affecting the
composition of the product itself, e.g. price, brand name
– One can get them without using the product

– Cues are important as in many situations, consumers do not know

the true quality of competing products (or brands) before making
their purchase decisions and they are likely to rely on simple
heuristics, or cues, to assess product quality
 Decision Making Frameworks

• Rational or Emotional
• Low Involvement or High Involvement
• Optimizing or Satisficing
• Compensatory or Non-compensatory

(Compensatory -A type of decision rule in which a consumer evaluates each

brand in terms of each relevant attribute and then selects the brand with the
highest weighted score.
Non-compensatory-A type of consumer decision rule by which positive evaluation
of a brand attribute does not compensate for a negative evaluation of the same
brand on some other attribute.)