Consumer Psychology

Module 1 Consumer Behaviour

Consumer behaviour is basically a study of any individual, groups, or any organization which involves
all the activities related with the purchase or buying strategy and the disposal of goods and services.
It deals with how the consumer’s emotions, attitudes, and choice affect the buying behaviour. It
deals with the study of any individual personality, lifestyles, a behavioural variable which helps in
understanding the patterns the consumer looking for.
Consumer behaviour refers to all the processes related to what, why, how, when, from whom
consumers purchase and pay for a product and how they consume and dispose of it in order to meet
their needs.
Definition by Philip Kotler
Consumer behaviour includes mental activity, emotional and physical that people use during
selection, purchase, use and dispose of products and services that satisfy their needs and desires
Impact of digital revolution and importance of marketing -
Information related to consumer behaviour is important to any businesses around the globe.
Through online mode consumer are able to boost their shopping experience. It helps in making
necessary changes that will empower consumers to make better purchasing decisions.
1) Talent to Research and Experiment
online technology helps the consumers to have good research about any product in the market.
This helps in comparing the product online before making any decision on what to buy. The
capacity of information available on the internet about any product had helped the consumer to
experiment with different brands which influence their purchasing decisions.
2) Accessible to Word-of-Mouth
The word- of- mouth plays a vital role in affecting the behaviour in the market. In the market it
is seen that the consumers are looking for what others say about the brand. Branding means a
lot for the consumer which actually helps in sharing their experience with their network of
people. Through social media, a consumer has the power of expressing their opinion about a
brand which directly affects the sales figures in the market.

3) Artificial Intelligence Impacts Consumer Behaviour

The rising new AI technologies will in reality have a large impact on customer behaviour. AI
played a completely huge role in search engine optimization and how the Google set of rules
works on this scenario. With AI it is feasible to maintain the manufacturers status among the
marketplace and in preserving the sturdy connections with clients.

Factors influencing consumer behaviour

There are five factors which affects the decision making for any product in the target market of any
consumer.
1. Social Factors
Reference Groups: Small group of people such as colleagues at workplace, friends etc. influence
values and choices of other members, expose them to new lifestyles and create pressure to choose
certain products E.g. Mobiles
Family: Family members influence buying decision. Parents influence decision of children. However,
nowadays, children are well informed about products and services through social media and
therefore, they influence the buying decision of parents.
Roles and Status: A person performs certain roles in a particular group in the organization. E.g.
Person may perform the role of senior executive in a firm and therefore, enjoy higher status. People
may purchase the products that conform to their status, especially in the case of branded clothes,
cars, shoes etc.
2. Cultural Factors
Religion: may influences consumer behaviour to a certain extent. E.g. consumption of alcohol,
tobacco or meat products is restricted in certain religions.
Sub-culture: Each culture consists of sub-cultures that provide specific identity to its members. Sub-
culture includes nationalities, racial groups, language etc.
Social Class: Human societies exhibit social stratification that may sometimes take the form of a
caste system where the members share similar values, interest and behaviour.
3. Personal Factors
Age Factor: The age factor influence buying behaviour. E.g. teenagers may prefer trendy watches,
whereas, office executive may prefer formal ones.
Gender: The consumer behaviour varies across gender. E.g. girls may prefer certain feminine colours
such as pink, boys may prefer blue, brown.
Education: Highly educated persons may spend on books and personal care products than the
people with low education.
Income Level: Normally, higher the income level, higher is the level of spending and vice-versa.
Status in Society: Persons enjoying higher status in society spend good amount on luxury items such
as luxury cars, luxury watches, premium brands of clothing etc.
4. Psychological Factors
Learning: takes place through information and experience. E.g. when customer buys a new brand of
shampoo and is satisfied with it, he is likely to be brand loyal.
Attitude: Tendency to respond in a given manner to a particular situation or object or idea.
Consumers may develop a positive, or negative or neutral attitude towards certain products or
brands.
Motive: the inner drive that motivates a person to act or behave in a certain manner. Marketer must
identify the buying motives of the target customers and influence them to respond positively.
Perception: It is the impression, which one forms about a certain situation or object. E.g. a student
may perceive Sports Day as an important event and therefore, he/she would make every possible
effort including purchase of new shoes, jersey etc. whereas, another student may be casual about it
and therefore, would not make any such extra efforts.
5. Marketing Factors
Marketing-mix variables greatly influence the consumer buying behaviour.
Product: The features of the product, its uniqueness, packaging etc. should appeal to the customers.
Pricing: Pricing is a very sensitive decision. Premium pricing strategy may appeal to upper income
customers groups and discount pricing may appeal to price sensitive.
Promotion: Promotion greatly influences buyer choice. The elements of promotion mix include
publicity, advertising, sales promotion, salesmanship etc.
Place: The number of middlemen involved, type of channels, area coverage etc.

Consumer Awareness, rights and protection act

Ethicists and Advocacy Groups-
Ethicists and Advocacy Groups Marketers’ actions sometimes raise important ethical questions.
Concerned consumers sometimes form advocacy groups to create public awareness of inappropriate
practices. They also influence other consumers as well as the targeted companies through strategies
such as media statements and boycotts.
For example, Mothers Against Violence in America is one of several groups protesting video games
that feature physical violence. The video game industry’s Entertainment Software Rating Board
labels games with designations such as M (mature, for persons 17 and older). Despite such labeling,
advocacy groups are concerned that younger teens can easily acquire and play games intended for
older consumers.
Public Policy Makers and Regulators-
Consumer behavior can be quite useful to legislators, regulators, and government agencies in
developing policies and rules to protect consumers from unfair, unsafe, or inappropriate marketing
practices. In turn, marketers’ decisions are affected by these public policy actions.
Consider the regulatory limits on tobacco marketing that are designed to discourage underage
consumers from smoking and to inform consumers of smoking’s health hazards. The United States,
European Union, and other areas ban cigarette advertising on television and radio and in certain
other media; they also require warning labels on each pack.
Understanding how consumers comprehend and categorize information is important for recognizing
and guarding against misleading advertising. For instance, researchers want to know what
impressions an ad creates and whether these impressions are true. They also want to know how
marketing influences consumers’ decisions to comply with product usage instructions, such as using
medical treatments as prescribed. And consumer behavior research helps government officials
understand and try to improve consumer welfare.
Consumers and Society –
An understanding of consumer behavior can help make a better environment for consumers. For
example, research indicates that we better understand the differences among brands when we can
view a chart, matrix, or grid comparing brands and their attributes. Thus, matrices such as those
presented in Consumer Reports are likely to help many consumers make better decisions. Product,
service, and communications developments to protect certain consumer segments have also grown
out of understanding how consumers behave. Many people want to protect children against
inappropriate advertising or guard themselves against invasion of privacy. Some companies have
changed their marketing voluntarily, whereas others have waited until legislators, regulators, or
advocacy groups forced them to make changes in their marketing. Finally, research on disposition
behavior has the potential to aid recycling programs and other activities related to environmental
protection.
Consumer protection in India
Consumer Rights
Right to safety
Means right to be protected against the marketing of goods and services, which are hazardous to life
and property. The purchased goods and services availed of should not only meet their immediate
needs, but also fulfil long term interests. Before purchasing, consumers should insist on the quality
of the products as well as on the guarantee of the products and services. They should preferably
purchase quality marked products such as ISI, AGMARK, etc
ISI Mark:
Indicates compliance with specific standards set by the Bureau of Indian Standards (BIS).
Ensures that products, especially electrical appliances, meet safety standards.
Offers consumers assurance about the quality and safety of the products they purchase.
Agmark:
Specifically for agricultural products, guaranteeing quality and grade.
Helps consumers make informed choices about food items, grains, spices, etc.
Aids in identifying products that meet specific quality standards and are safe for consumption.

Right to choose
Means right to be assured, wherever possible of access to variety of goods and services at
competitive price. In case of monopolies, it means right to be assured of satisfactory quality and
service at a fair price. It also includes right to basic goods and services. This is because unrestricted
right of the minority to choose can mean a denial for majority of its fair share. This right can be
better exercised in a competitive market where a variety of goods are available at competitive prices
Right to be informed
Means right to be informed about the quality, quantity, potency, purity, standard and price of goods
so as to protect the consumer against unfair trade practices. Consumer should insist on getting all
the information about the product or service before making a choice or a decision. This will enable
him to act wisely and responsibly and also enable him to desist from falling prey to high pressure
selling techniques.
Right to consumer education
Means the right to acquire the knowledge and skill to be an informed consumer throughout life.
Ignorance of consumers, particularly of rural consumers, is mainly responsible for their exploitation.
They should know their rights and must exercise them. Only then real consumer protection can be
achieved with success.
Right to be heard
Means that consumer's interests will receive due consideration at appropriate forums. It also
includes right to be represented in various forums formed to consider the consumer's welfare. The
Consumers should form non-political and non-commercial consumer organizations which can be
given representation in various committees formed by the Government and other bodies in matters
relating to consumers.
Right to Seek redressal
Means right to seek redressal against unfair trade practices or unscrupulous exploitation of
consumers. It also includes right to fair settlement of the genuine grievances of the consumer.
Consumers must make complaint for their genuine grievances. Many a times their complaint may be
of small value but its impact on the society as a whole may be very large. They can also take the help
of consumer organisations in seeking redressal of their grievances.
As the markets are globalizing, the direct link between the manufacturer and the final user
getting distant, post purchase grievances have to be heard through a strong redressal system.
For this, Consumer disputes redressal agencies (popularly known as Consumer Forums or
Consumer Courts) are set up under the Act at District, State and National level to provide simple
and inexpensive quick redressal against consumer complaints.
District Commissions shall have jurisdiction to entertain complaints where value of the goods or
services paid as consideration does not exceed 50 lakh rupees.
State Commissions shall have jurisdiction to entertain complaints where value of the goods or
services paid as consideration exceeds 50 lakh rupees but does not exceed 2 crore rupees.
National Commission shall have jurisdiction to entertain complaints where value of the goods or
services paid as consideration exceeds 2 crore rupees.
The Consumer Forum can order the company to take the following actions once it hears the
complaint and decides that the company is at fault:
Correct deficiencies in the product to what they claim.
Repair defect free of charges
Replace product with similar or superior product
Issue a full refund of the price
Pay compensation for damages / costs / inconveniences
Withdraw the sale of the product altogether
Discontinue or not repeat any unfair trade practice or the restrictive trade practice
Issue corrective advertisement for any earlier misrepresentation

Consumer Protection Act

An Act to provide for protection of the interests of consumers and for the said purpose, to establish
authorities for timely and effective administration and
settlement of consumers' disputes and for matters connected therewith.” (According to Consumer
Protection Act, 2019).
“An Act to provide for better protection of the interests of consumers and for that purpose to make
provision for the establishment of consumer councils and other authorities for the settlement of
consumers' disputes and for matters connected therewith.” (According to Consumer Protection Act,
1986).
Consumer Protection Act, 1986 seeks to promote and protect the interest of consumers against
deficiencies and defects in goods or services. It also seeks to secure the rights of a consumer against
unfair or restrictive trade practices. This act was passed in Lok Sabha on 9th December, 1986 and
Rajya Sabha on 10th December, 1986 and assented by the President of India on 24th December,
1986 and was published in the Gazette of India on 26th December, 1986.
Consumer Responsibilities
Ask Yourself-
Have you faced any problems as a consumer?
Have you ever complained when you have had such a problem?
Do you know that you could seek the assistance of a consumer group to protect your interests?
Be Critically Aware
The responsibility to be more alert and to question more – about prices, about quantity and quality
of goods bought and services used.
Be Involved
The responsibility to be assertive – to ensure that you get a fair deal as a consumer. Remember, if
you are passive, you are likely to be exploited.
Be Organized
The responsibility to join hands and raise voices as consumers; to fight in a collective and to develop
the strength and influence to promote and protect consumer interest.
Practice Sustainable Consumption
The responsibility to be aware of the impact of your consumption on other citizens, especially the
disadvantaged or powerless groups; and to consume based on needs – not wants.
Be Responsible to the Environment
The responsibility to be aware and to understand the environmental consequences of our
consumption. We should recognize our individual and social responsibility to conserve natural
resources and protect the earth for future generations.
Example of what to check for when consumers make a purchase -
For instance, when purchasing gold, it's crucial to consider several factors to ensure you're getting a
good value and authentic product. These include the gold's purity (karatage), the presence of a
hallmark (like BIS in India), making charges, and the buy-back policy. Additionally, understanding the
current gold rate in your city and comparing prices from different jewelers can help you make an
informed decision.
1. Purity:
Karats:
Gold purity is measured in karats, with 24K being the purest (99.9% pure). However, pure gold is
soft, so most jewelry is made with lower karats like 22K (91.6% pure) or 18K (75% pure).
Fineness:
Another measure of purity, fineness indicates the pure gold content per 1000 parts of the alloy.
Hallmark:
Look for the BIS hallmark (in India) or other relevant hallmarking system in your region, which
certifies the purity of the gold. The hallmark should include the BIS logo, purity grade, and a HUID
number (for hallmarked gold in India).
2. Hallmark and Certification:
BIS Hallmark (India):
Ensure the gold jewelry has a BIS hallmark, indicating it meets the prescribed purity standards.
HUID Number:
In India, hallmarked gold jewelry will have a unique HUID number, which can be verified on the BIS
Care mobile app.
3. Pricing:
Gold Rate: Check the current gold rate in your city before making a purchase.
Making Charges: These are the charges for crafting the jewelry and can vary significantly.
Wastage Charges: These charges may apply to certain types of jewelry and represent the metal loss
during the manufacturing process.
Other Charges: Be aware of taxes and other potential charges that may be added to the final price.
4. Buy-Back Policy:
Inquire about the buy-back policy: Understand the terms and conditions under which the jeweler
will buy back the gold in the future.
5. Other Considerations:
Reputable Jeweler: Buy from a trusted and reputable jeweler with a good reputation.
Bill: Always get a proper bill for your purchase, including details about the gold's purity, weight, and
price.
Compare Prices: Compare prices from different jewelers to ensure you're getting a fair deal.
Design and Craftsmanship: Consider the design, style, and craftsmanship of the jewelry.
Check for Offers and Discounts: Look out for any special offers or discounts that may be available
during certain times of the year.

Research Methods
Researchers collect and analyze two types of data for marketing purposes: primary and secondary.
Data collected for its own purpose is called primary data. When marketers gather data using surveys,
focus groups, experiments, and the like to support their own marketing decisions, they are collecting
primary data.
Data collected by an entity for one purpose and subsequently used by another entity for a different
purpose is called secondary data. For example, after the government collects census data for tax
purposes, marketers can use the results as secondary data to estimate the size of markets in their
own industry.
Focus groups
A focus group is a research method that brings together a small group of people to discuss a specific
topic in a moderated setting. It's a form of qualitative research used to gather in-depth insights
about attitudes, opinions, and perceptions. The group is typically selected based on predefined
characteristics relevant to the research question.
The reasons for the popularity of focus groups in industry include being relatively quick, easy, and
inexpensive to conduct as well as able to give managers (often behind one-way glass mirrors) a first-
hand glimpse of their potential customers.
The main reasons for the lack of popularity of focus groups in academic research are that they are
complicated by group dynamics, they generally lack the depth of one-on-one interviews, and some
people may be more reluctant to express their feelings and behaviour in a group setting, even
though the focus group is generally composed of strangers.
Group dynamics include dominant or persuasive focus group members leading the group in a type of
groupthink. There may also be a tendency to take more risky stances in a focus group due to the
'risky shift' that can arise due to the diffusion of responsibility in a group (Catterall and Maclaren
2006).
But in a well-conducted focus group, group dynamics can also result in a free-form sharing of
opinions if the moderator is able to nurture a creative environment in which participants are
accepting, there are no wrong answers, and diversity of opinion is healthy.
Recruiting Focus Group Members -General advice for the number of participants for a focus group is
6-12 people, with 8 being a common target (Catterall and Maclaran 2006; Stewart et al. 2007).
When it is to be a virtual focus group conducted online, it is best to use a smaller number of people
with 5 being a good maximum (Kozinets 2010a). For face-to-face focus groups, participants should
generally be relatively homogeneous with respect to age, gender, and degree of expertise in the
area of interest (e.g., cooking, car repair, gardening). Age and gender homogeneity are less
important in virtual focus groups unless a synchronous visual form of communication is used.
However, asynchronous virtual focus groups, like those conducted on closed membership forums,
offer greater conversational cases (if less group spontaneity) for participants (Fox et al. 2007;
Kozinets 2010a).
Although focus groups for any given project are generally too few and too small to worry about
representativeness, having appropriate heterogeneity across groups can give some feel for
differences in key consumer variables like income and education.
Market research firms offer focus group recruitment to client specifications, but there is sometimes
a danger of getting 'professional" focus group participants. They are often motivated by money
(common for focus groups where participants must come to a central location) and participate in
many focus groups such that over time they become atypical consumers.
Generally speaking, focus groups work on the principle of anonymity, so that strangers are better
recruits than friends (Catterall and Maclaren 2006). An exception might be when naturally occurring
interactions are of interest, such as when studying the group phenomena involved in everyday
texting and social media.
For focus groups, sometimes stimuli like products, packaging, or advertising are used during the
interview to direct attention to a focus of the researcher’s interest. The moderator also needs to
provide a safe comfortable environment in which focus group members feel free to express
themselves. When some participants start to dominate, the moderator may want to stimulate others
by calling on the shy or asking what others think.
When groupthink seems to be emerging, the moderator might specifically ask for other opinions or
points of view. Projective methods can also be useful in getting more diverse opinions. Protocols
should be pretested as well to see what works best. Sometimes the group dynamics can be of
interest to observing processes of conflict resolution, consensus building, and coalition formation.
Focus groups are especially good when the researcher wants to examine shared meanings and
shared terminology. They may also work well for taste and smell tests or reactions to package
design. There are many topics where focus groups are not the best approach, including those in
which the intent is to elicit long narratives and those in which the intent is to gauge attitudes. In
general, focus groups are probably best used for exploratory research.
Analysis- it is important not to rush to judgment based on recollections and re-examining audio or
video recordings of focus groups. These should be carefully transcribed. Given the group dynamics at
play, it is even more important to capture non-verbal information in these transcripts. A further
difficulty with focus groups is attributing who said what. Even if the moderator manages to get the
participants not to talk over one another, an audio recording is often difficult to transcribe with
proper attributions. Video recordings are better in this regard, but if an oval table has been used, a
two-camera setup is needed to capture conversations on both sides of the table. Boundary area
microphones can also ensure good recording of voices all around the table. Once transcripts have
been made, analysis can proceed with the sorts of coding and data reduction.

Survey
It is a written instrument that asks consumers to respond to a predetermined set of research
questions. Some responses may be open-ended, with the consumer filling in the blanks; others may
ask consumers to use a rating scale or check marks. Surveys can be conducted in person, through the
mail, over the phone, or by using the Web.
Procter & Gamble, for example, conducts about 1,500 online consumer surveys every year and
obtains results 75 percent faster than it does with traditional survey methods—at half the cost.
Although companies often undertake specialized surveys to better understand a specific customer
segment, some organizations carry out broad-based surveys that are made available to marketers.
The U.S. Bureau of the Census is a widely used source of demographic information. Its Census of
Population and Housing, conducted every ten years, asks U.S. consumers questions regarding their
age, marital status, gender, household size, education, income, and home ownership. This database
helps marketers learn about population shifts that might affect their offerings or their industry.
Survey data can also tell marketers something about media usage and product purchase. Mediamark
Research Incorporated conducts yearly surveys (in English and Spanish) with more than 26,000
consumers, asking about their media habits, demographics, and product purchases.
Researchers are even studying how to encourage survey response. In one study, more consumers
completed the survey when the package was topped by a Post-It note asking them to participate.

Interviews
Like focus groups, interviews involve direct contact with consumers. Interviews are often more
appropriate than focus groups when the topic is sensitive, embarrassing, confidential, or emotionally
charged. They provide more in-depth data than surveys when the researcher wants to pick
consumers’ brains.
For instance, when Volvo sought closer connections with car buyers, its ad agency interviewed valet
parking attendants around the world to get a well-rounded picture of Volvo owners. The agency
learned that Volvo customers are doers—more concerned with what they do than with what they
have—and value togetherness and sharing. This research helped the agency create a new Volvo
campaign with the theme -Life is better lived together. In some interviews, researchers ask
customers about the process they use to make a purchase decision.
One research company assigns professional interviewers to tape-record consumers’ thoughts while
they shop for groceries. This research helps marketers understand how factors in the shopping
environment affect purchasing. For example, a company might learn that a consumer didn’t buy a
certain cereal because it was placed too close to the laundry detergent.
Traditional interviews require a trained interviewer who attempts to establish rapport with
consumers. Interviewers also note nonverbal behaviors like fidgeting, voice pitch changes, and
folded arms and legs as clues to whether the respondent is open to the discussion or whether
certain questions are particularly sensitive.
Researchers often record interviews for later transcription so they can examine the results using
qualitative or quantitative analysis. Sometimes researchers videotape nonverbal responses that
cannot be captured in the transcription process and analyze the interviews later to identify patterns
or themes.

Experiments
Consumer researchers can conduct experiments to determine whether certain marketing
phenomena affect consumer behavior. For example, they might design an experiment to learn
whether consumers’ attitudes toward a brand are affected by the brand name as opposed to factors
such as product features, package, color, logo, room temperature, or the consumer’s mood.
By measuring emotional arousal, salivation levels, and eye movements of participants, marketers
may determine which ads are most arousing and attention getting or which products are preferred.
Ford used brain scanning technology as a way to gauge European consumers’ reactions to a new
vehicle in development. With experiments, researchers randomly assign consumers to receive
different treatments and then observe the effects of these treatments.
For example, consumers might be assigned to groups that are shown different brand names. The
researchers collect data about participants’ attitudes toward the name and compare attitudes across
groups.
In a taste-test experiment, they might randomly assign consumers to groups and then ask each
group to taste a different product. Comparing evaluations of the product across the groups will show
which product is preferred. An important aspect of such experiments is that the groups are designed
to be identical in all respects except the treatment, called the independent variable. Thus, in a taste-
test experiment, only the taste of the food or beverage is varied.
Everything else is the same across groups- consumers eat or drink the same amount of the product,
at the same temperature, from the same kind of container, in the same room, in the presence of the
same experimenter, and so on. After consumers taste and rate the product, researchers can
compare the groups’ responses to see which taste is preferred. Because the groups are identical in
all other respects, researchers know that any differences between the two groups are caused by the
treatment (the food’s taste).

Field Experiments
Although experiments are often conducted in controlled laboratory situations, sometimes marketers
conduct experiments in the real world, known as field experiments.
One type of field experiment, a market test, reveals whether an offering is likely to sell in a given
market and which marketing-mix elements most effectively enhance sales. Suppose marketers want
to determine how much advertising support to give to a new product. They could select two test
markets of a similar size and demographic composition and spend a different amount of money on
advertising in each market.
By observing product sales in the two markets over a set period, the marketers would be able to tell
which level of advertising expenditure resulted in higher sales.
All marketing-mix elements can be market tested. P. F. Chang’s China Bistro, a restaurant chain,
recently tested a new dinner menu in its Dallas restaurant. The results were so successful that the
company added the menu to 45 of its other restaurants.

Purchase Panels
Sometimes marketers try to understand consumer behavior by tracking what consumers buy on
different purchase occasions. This kind of research, conducted by IRI and other firms, simply records
whether a behavior occurred; for instance, Campbell Soup uses IRI to track soup purchases in U.S.
stores.
Such behavioral data may be collected from special panel members, from a representative sample of
the general population, or from the marketer’s target market. Every time panel members go
shopping, the cash register records their purchases. By merging purchase data with demographic
data, marketers can tell who is purchasing a product, whether those consumers are also buying
competitors’ products, and whether a coupon or other sales promotion was involved.
Marketers can also use these data to determine whether, for example, the shelf space allocated to a
product, or added advertising in the test area, affected panel members’ purchases. A growing
number of firms, including Del Monte Foods, Procter & Gamble, and Coca-Cola, also conduct
research through a proprietary online purchase panel.
For instance, Del Monte’s research firm set up the password-protected “I Love My Dog” website and
invited 400 dog owners to participate in answering questions about dog food products. Feedback
from participants helped Del Monte select flavors for its Snausages Breakfast Bites dog treats.

Database Marketing
Marketers can dig deeper into consumer behavior if they combine different forms of consumer
research into a common database. This database might contain information about targeted
consumers’ demographics and lifestyles combined with data about their purchases in various
product categories over time, their media habits, and their usage of coupons and other promotional
devices.
Using data mining, the company then searches for patterns in the database that offer clues to
customer needs, preferences, and behaviors. Wal-Mart is at the cutting edge of the data-mining
movement. It follows every piece of merchandise from warehouse to store shelf by using radio
frequency identification tags. Every item sold at the checkout is recorded, along with the item’s
price, the time of sale, and the store location.
These data are reported to Wal-Mart hourly and daily by product, by category, by store, by supplier,
and so on. Wal-Mart also analyzes what else goes into the shopping cart, store by store and region
by region, for clues to pricing products in different categories.
Finally, data mining helps the company identify promising new store locations and profile each
store’s shoppers so it can stock the right assortment of goods in appropriate quantities.
More marketers are collecting consumer data online for promotional purposes, such as to plan e-
mail messages or build website traffic. Although e-mail is fast and cheaper than other
communication methods, consumers are inundated with electronic messages.
Therefore, to trigger a response, an e-mail campaign must be based on consumer needs—for
instance, it might provide information the consumer requested—and should tailor the content and
timing to each individual.
For instance, after consumers agree to receive e-mail from Frederick’s of Holly wood, which markets
women’s clothes, the company customizes messages based on the pages and products viewed by
each consumer. This customization helps the company retain customers and build sales.
It is even possible to use clickstream data from websites to analyze consumer behavior. One study
looked at consumers’ use of websites to buy automobiles and found that the best predictor of
purchase was not the use of sophisticated decision-making aids or the number of repeat visits
consumers made to the site but rather how long they browsed and navigated through the site.
Database marketing and data mining have raised concerns about invasion of consumer privacy.