Consumer Behaviour

Topics to Cover:

· What is Consumer Behaviour?

· Need/Importance

· Process/Stages

· Factors influencing CB

o Cultural/Social

o Personal

o Psychological

o Economic

Content to Include in PPT

Slide 1: (M) Good Morning

Slide 2: (M) Okay guys so before diving deep into our topic we’d like to ask you what comes to
your mind when you see this image?

Slide 3: (S) What is consumer behaviour? Let us look at what the marketing guru philip kotler
has to say about consumer behaviour. According to him it is the study of how individuals,
groups, and organizations select, buy, use, and dispose of goods, services, ideas, or
experiences to satisfy their needs and wants.

In other words it refers to the actions and decision processes of the people who purchase
goods and services for personal consumption. It is important that the marketers must fully
understand both the theory and the reality of consumer behaviour.

A consumer’s buying behaviour is largely influenced by cultural, social, economic, personal and
psychological factors. Of these, cultural factors exert the broadest and deepest influence.

Now that we have a basic foundation of what consumer behaviour is, i’d like Mehul to take over
and walk you through the significance of consumer behaviour.
Slide 4: Significance of Consumer Behaviour

Thank you Sahil for giving us insights into what consumer behaviour is all about. Now let us look
at the significance of consumer behaviour.

1. Competition (M) - Starting with the first one, that is competition, it is one of the most
important reasons to study consumer behavior in order to find out answers to some of
the questions like:
● Is the customer buying from your competitor?
● Why is a consumer buying from your competitor?
● What features attract a consumer to your competitor's products?
● What gaps are your consumers identifying in your products when compared to
your competitors?
Based on consumers’ expectations, your brand can offer competitive advantages which
further facilitates understanding and facing competition. Doing need-gap analysis and
understanding consumer needs, allows the company to make the necessary changes
and adapt to the dynamic environment, which in turn helps it in establishing a strong
footing in the market and helps in growth and expansion plans.

2. Dynamic Market Conditions (M) - When we look at the Dynamic Market Conditions,
Consumer behavior analysis will be the first to indicate a shift in market trend. Real life
examples assist us in better understanding. The recent trend of consumers is towards
environment friendliness and healthy food consciousness. We have added a visual that
depicts the ‘healthy consciousness’ initiative taken by the renowned fast food chains.
This changing market trend was observed by many brands including McDonalds and
Burger King. Studying the behaviour of their consumers, both these companies
incorporated many healthy food options on their menus that I believe all of us present
here might’ve noticed whenever we last ordered a delicious meal.

By conducting consumer behavior studies, a company saves a lot of resources that

might otherwise be allocated to produce a product that will not be sold in the market. For
example, in summers, a brand will not waste its resources for producing a product that
will not sell in summers. Based on consumer behavior, the company decides on its
production strategies which helps them in saving their variable costs, and in turn achieve
their goal of profit maximisation.

3. Improving Customer Service (M)- When we look at the next importance of consumer
behaviour, it is something that we all, as consumers, care a lot about and can therefore
be challenging at the company’s front. And that is, Improving Customer Service.
Consumers require different levels of customer service and assistance. It is
important for companies to understand their varied customer base, helping them
assess the customer service needs in the appropriate preference order.

For example, if you own a mobile store, school or college students looking to buy
a new phone are more likely to understand the features they’re looking for than a
person buying his first one. With students being your customers, your service
goal would be to provide information about the latest trends in technology, while
in the latter case, you’ll need to spend more time educating the customer, finding
 out what his specific needs are, and even teaching him how to use the features
of his new mobile.

I would now like Sahil to take the stage and elucidate more on the Significance of
Consumer Behaviour.

4. Innovation (S) -Now lets go further in our discussion on the significance of consumer
behaviour. Innovation and constant adoption to the latest technological trends is a
must for the companies in order to have a strong footing in the market. The sad
truth however is that most new products and ideas end up in failure.

Companies consistently strive hard to improve the success rate of their new
products or ideas. In order to achieve this, sound and thoughtful consumer
behavior studies are extremely important.

Nike in the 2012 Olympics showed a great example of innovation. Further i chose this
example as tokyo olympics have been recently completed and india did fairly well with 7
medals. Consumer behavior analysis enabled Nike to realize that most of its target
audience is not professional athletes, but those striving to be more like them. So at the
2012 Olympics in London, Nike introduced a campaign to encourage athletics called
‘Find Your Greatness’. It aimed to promote the aspirations of being an athlete, not just
with high-performing athletes, but wanted to include all people regardless of their
physical capability. This message inspired many consumers and had enormous appeal
for target consumers.

5. Product Differentiation (S) - Another aspect wherein consumer behaviour can be really
significant is product differentiation. Consumer research has vividly pointed out that
consumers dislike using identical products and prefer differentiated products to
reflect their special needs, personalities, and life-styles. Thus, when Onida 21
was introduced, it was advertised on the television for the elite class. Maggie
introduced Sour and Chilly sauce with emphasis 'its’ different’.

Similar to product differentiation, consumer differentiation is also an aspect studied in

consumer behaviour. It is a way to distinguish a consumer from others. This helps to
make a target group of consumers with the same or similar behavior. Each group of
consumer is different and their needs and wants differ from other groups. A
knowledgeable marketer having information about differentiation of each group of
consumers, can design separate marketing programs for its differentiated products.

This not only helps in retaining its current customers, but also helps the company
in expansion and diversification. As a result, it helps the company to effectively
serve a wider group of people.

6. Designing Marketing Programme (S)- consumer behavior is also very important in

creating effective marketing campaigns. A successful marketing campaign has the ability
to strengthen a company’s brand value and image, while an unsuccessful campaign
 taints the company’s image. Each campaign can speak specifically to the separate
group of consumers based on their behavior.

For example, while targeting the kids market, you may have to look out for
venues such as TV ads, school programs and blogs targeting young mothers. A
study of consumer behavior enables the marketers to understand what motivates
consumers to make purchases. Furthermore, the same motive can be utilized in
advertising media to stir the desire to make a purchase. Thus, marketers should
make decisions regarding the brand logo, coupons, packing and gifts on the
basis of consumer behavior.

7. Customer Retention(S) - Now the 7th and the last point we are going to discuss in
significance is customer retention. A successful company is not one making profits at the
expense of dissatisfied consumers, but one that is capable of retaining happy and
satisfied ones.

Consumer behavior is not just important to attract new customers, but it is very important
to retain existing customers as well. When a customer is happy about a particular
product, he or she will definitely repeat the purchase. Therefore, marketing the
product should be done in such a way that it will convince customers to buy the
product again and again. And here, consumers' buying behaviour plays a
significant role.

Now let us look at how the Process of Buying Decision operates with the help of
a dialect that my friend Mehul and I have prepared to provide you all with better
insights and have a lucid understanding of the topic.

Slide 5: The Laptop Dilemma

· M: Hey Sahil! I’ve noticed that something’s worrying you.

· S: Yeah Mehul, I’m facing issues while attending my college classes online due the
small mobile screen and mic issues.

· M: That’s something to worry about! Why don’t you look for a laptop with a bigger screen
and better audio & video quality?

· S: Yeah! I believe that it’s time for me to shift to a functional laptop for ease. Do you
mind helping me out in searching for a suitable laptop?

· M: With pleasure! What specifications are you looking for in your laptop?

· S: Umm…I think a good processor, enhanced audio and video quality, enough storage
capacity and most importantly at a reasonable rate.
 · M: Okay! So I found these 2 laptops which might fulfil your requirements. According to
me, this Lenovo laptop will be a handsome buy.

· S: Yeah! I like this one.

· M: Yes! I think that’s an excellent choice. I’ve heard that the company is known for its
customer satisfaction and prompt after sales services.

· S: Yeah! Looking forward to a good experience with my new laptop.

M: So this was a small sketch we carved out to demonstrate the ‘Five-Stage Model of
the Consumer Buying Process’ as depicted on the right side of your screens. Smart
companies try to fully understand customers’ buying decision process – all the experiences
in learning, choosing, using, and even disposing of a product.

When you relate our dialect with the Five Stage Model, you can notice that we first identified
the problem that Sahil was facing, that is, issues while attending his online college classes.

On pondering upon his problem, the centre of issue was searched and looked at, which
turned out to be the small screen of his phone and the mic issues acting as a contributing
problem factor.

In consultation with his friend, Mehul, that is me, he evaluated the prospective alternatives in
order to make a choice that which laptop would satisfy his needs, by listing the
specifications that each laptop had to offer.

Finally, he made a conscious decision to purchase the Lenovo laptop after analysing the
pros and cons of each alternative, and came to a decision that the Lenovo laptop is a fit for
his purpose.

I’d like to draw your attention to the fact that he remained cautious right from start and also
took into consideration his post purchase behaviour, and was convinced that the company
(Lenovo) is known for its customer satisfaction and good after sales services.

Now Sahil will give you a brief about the Factors Influencing Consumer Behaviour.

Slide 6: (S) Factors Influencing Consumer Behaviour

A large number of factors operate to influence the buyer's behaviour. Most of these factors are
interdependent and interrelated and often there is some overlapping between them. Mainly we
are going to discuss 4 factors i.e. Personal, Economic, Social and Cultural and Psychological.
The effect of these factors is briefly discussed in the following slides.
Now Mehul will talk about Personal Factors in detail.

Slide 7: (M) Personal Factors

Thank you Sahil!
Personal characteristics that influence a buyer’s decision include age or stage in the life cycle,
occupation and economic circumstances, personality & self-concept, and lifestyle & values.
Because most of these factors have a direct impact on consumer behaviour, it is very essential
for marketers to follow them closely.

In order to have an interactive session, we have incorporated pictorial depictions relating to

each of the factors listed on the slide. You’re supposed to identify which factor is being referred
to by seeing the pictures. You all are requested to use the chat box for sending in your answers.
We look forward to a collective participation from your end.

So, here’s the first group of pictures for you.

Sahil, do we have any right answers in the chat box?

I hope this thoughtful activity helped you all to have a better understanding of the Personal
Factors influencing consumer behaviour and assisted you in getting a closer look at how the
companies take these factors, or rather sub-factors, into consideration while analysing the
consumer mindset.

Slide 8: (S) Economic Factors

So now let’s discuss the economic factors. As the name suggests these decisions greatly
depend on the economic situation of a country, market or even an individual. A prosperous
economy suggests that consumers have higher purchasing power and are confident to spend
on buying products. There are several sub factors that make up the entire economic factor as
you can see in the slide itself. Today we will try to look at these with the help of some common
examples.
1. Income - the first sub factor is income, we have basically clubbed both personal and
family income in this point. When a person has higher disposable income, his or her
purchasing power increases leading to higher expenditure on other items. Spending on
multiple items similarly reduces when disposable income reduces. Family income also
implies the same thing, when there are more people earning in the family then people
can opt for more luxurious goods for example the expensive car as shown in this slide.
2. Standard of living - standard of living also defines the behaviour of a consumer
comprehensively. The classic example in this case is of the king and the general public.
Now because a person is a king, he is supposed to maintain a higher level of living
standard as compared to his citizens even if he does not require the goods. Therefore
that person, in our case the king, would opt to spend more on luxurious items. Another
example as mentioned in the slide is that a person of higher living standard would go to
the supermarket to buy a product which may also be available at a local confectionery
store even cheaper, but just because of the brand value of the product in the
supermarket and the supermarket itself, he will buy it from there.
3. Future Expectations - so the next factor is future expectations, it is a relatively simpler
point. If the person is expected to have higher income in the future or even sees a
 potential source of money in the future, he would start spending the money he hasn't
even earned yet. Similarly if a person notices or expects lower earnings, then he would
start saving money even if income has not yet started reducing. Even when the Covid-19
pandemic started and income didn’t reduce at the beginning, still people could sense
that their future earnings might reduce and started saving their money.
4. Consumer Credit - let us talk about consumer credit now. Sellers nowadays have
become really smart. If you look in the market, you would notice that almost every
company dealing with luxurious goods has started rolling out financing schemes like
EMIs or easy down payments so that consumer has easy credit for higher spending. Big
SUVs or expensive cars are often seen on roads nowadays but that is not proportional to
increase in the wealth of people but to easy credit availability on car purchase. Situation
is such that getting a car loan today is easier than a business loan.
5. National Economic Condition- so the last point in economic factor is the national
economic condition. This is the culmination of all the economic sub factors discussed
earlier. Therefore I have decided to discuss this at last. Basically if the country is
prosperous itself then, the citizens would spend higher on multiple products and a
country undergoing recession or even depression would force its citizens to spend its
least and save money wherever possible.

Now Mehul would discuss the social and cultural factors

Slide 9: (M) Social & Cultural Factors

In order to have a better and easy understanding, I’ll be talking about the cultural and social
factors separately.
1. Culture: The very first thing that we need to address is, What do we actually mean by
Culture? Culture is the sum total of learned beliefs, values, and customs which serve to
guide and direct the consumer behaviour of all members of that society. It is the way of
life and thinking patterns that are passed from generation to generation. Cultural
influences are so pervasive that they are hard to identify and analyse. However, they
provide an important basis for market segmentation, product development and
advertising etc.
Culture decides the consumption habits, eating habits, food preferences and food
preparation. For Eg: Indians do not eat beef because cow is religiously revered by
Hindus and it is considered as a sin to kill the holy cow, which also supplies and helps in
farming. I believe that there would be no one amongst us who wouldn’t be knowing
about the extreme boycott that Mc Donald’s had to face in India when it was discovered
that the company was selling ‘Beef Fries’ for consumption in the Indian Market. It took a
great deal for the company to revamp all its policies, not just marketing, in order to
regain confidence in the hearts of Indian customers and re-establish a strong footing in
the Indian market.

2. Sub-Culture:
 A sub-culture is an identifiable and distinct group that has unique characteristics. It is a
psychological, religious, social or geographical source of group identification that exists
within a large society. For Eg: A person residing in Delhi would feel that he is different
from the one living in Bihar. These sub-cultures are used by companies as a basis of
segmentation.

3. Social Class:
When we look at social class, it is a very common thing in any society. The society
inhibits some social class which is homogenous and relatively permanent. The divided
social class might bring about individuals and families having similar values, interests,
behaviour and life styles together.

Social: Shifting towards the Social Factors, they exert a powerful influence on the buying
decision. The buying pattern of a rich family will be totally different from that of a lower
income family. A status conscious person will visit a prestige store in order to make a
purchase, while an ordinary person will go to an economy store for a similar purchase,
as we saw in the example of the Supermarket and the Confectionery store before.

4. Reference Groups:
Our first social factor is the reference groups. A group means interaction of two or more
persons to realise common goals. A reference group consists of groups that have
influence on the forming of individual and group values, attitudes and behaviour. Thus,
they provide a frame of reference for an individual or a group for their purchase,
consumption, use or influence.

5. Roles & Status: Roles and Status is yet another important sub-factor that cannot be
understated while discussing social factors. Women for example have so many roles to
play. She is a mother to her son, wife to her husband, daughter to her parents, sister to
her brothers or even a manager at a workplace. The relative position of a person at
home decides the type of status one can have in the society. For instance, Sushma
mam’s status is higher than ours, a lower level employee's status is lower than that of a
CEO, and so on. Roles and status play an important role for marketers and therefore,
products must be prepared as per the customer's requirements and the role & status that
he or she enjoys in the society.

6. Family: Now let’s talk about the last social sub-factor i.e. family. Family is the most
integral part of any individual. Every person's world starts with the family in which he/she
is born. You all must have noticed that everyone you see around yourself including
yourself have been majorly influenced by the behaviour of family members. However
nowadays, the concept of family has changed from joint family to nuclear family not only
in western companies but also in Indian urban population raising some questions
regarding its validity. Another aspect affecting the consumption pattern of a concerned
family is the emergence of working women that has forced marketers to change their
approach regarding how they used to portray women as a part of a family in
 advertisements. Still the advertisements by Titan Watches, Maruti, Everest, and Tata
Gold Tea deliver the importance and influence of family in the life of an individual due to
which the topic is believed to have retained its dynamic nature.

Slide 10: (M) Video

Through this advertisement by Snapdeal, the company has very beautifully focused on the
social and cultural needs of the customers. The lady who is the ‘to be mother-in-law’ of the bride
leaves her a note on noticing her uneasiness in her bridal outfit, saying that “it is the purity of
one’s heart that enables stronger and lovable bonding amongst family and friends, and she
doesn’t need anyone’s permission to wear what she likes.” Through this video Snapdeal is
trying to make room in the hearts of its customers by directly targeting their social and cultural,
and for that matter personal beliefs.

Now, I would like to call upon Sahil to discuss the Psychological Factors in detail.

Slide 11: (S) Psychological Factors

Now Psychological factors is a discrete topic as it cannot be measured however has a major
impact on consumer behaviour. Again we are going to discuss the sub factors that make up this
factor as a whole.
1. Motivation - so the first one is motivation. This can be explained using the maslow’s
need hierarchy chart which is visible on the screen. So a person has all kinds of needs
starting from physiological, security, esteem and self actualization needs. But, basic and
security needs are the most important or we can say essential need of a person and
thus can motivate a person to buy product and service fulfilling these needs.
2. Perception - second factor is perception. Now perception is something that marketers
often use to sell their products. Their aim is to show advertisements and promotions that
leave an impression on thef consumers. For example fevicol ads are the weirdest, i
mean in their ads there is absolutely nothing related to the product itself. However the
distinctive or the unique nature of their ads make them memorable. Today the word
fevicol has become almost synonymous with glue itself.
3. Learning - now lets talk about learning. It is the process through which the knowledge
and experience acquired from the purchase, consumption and use of the product is
applied to the future behaviour. An example also mentioned in TN Chabra is of the
advertisement by ONIDA which caught many unaware customers in its initial period of
introduction because of the presentation of a devil in that advertisement.
4. Beliefs and Attitude - the last sub factor is beliefs and attitude. Consumers already have
a predefined attitude and belief which will definitely influence their buying decision.
Hence a marketer should always try to understand the pre-existing attitude of the
consumer and then try to design their marketing campaigns around them rather than
trying to modify consumer beliefs according to the product itself. For example- most of
the products we see in the malls are manufactured in local factories along with the
clothes sold on footpath or pavements. But because of our beliefs and attitude, we are
ready to pay a higher amt just to have access to the clothes sold in the malls.
Slide 12: (M) Thank You
So that was our presentation, I hope we were able to share all the knowledge we ourselves
gained while making and preparing for this insightful presentation. It was a really fun experience
for us to try to explain this topic in an entertaining way. Now that we're done with it, the floor is
open for any questions or doubts you might have. Thank you for being such a patient audience!