CONSUMER

BEHAVIOUR

By

Manishkumar N. Varma

Faculty
Department of Management Sciences (PUMBA)
University of Pune
Pune – 411 007
 Exercise

• Each group is having Rs. 75,000/-

• All groups required to buy items like
– Color Television
– DVD Player
– Microwave Oven
– Refrigerator
– Washing Machine
– Mobile Handset etc…….
2
 Understanding Customer

• The Key Questions

Who is
Important?

What are
How do
there choice
they buy?
criteria?
Customer

Where do When do
they buy? they buy?

3
 The Buyer

• Initiator
• Influencer
• Payer
• Decider
• Buyer
• User

4
 The Buyer
• One person may assume multiple roles in
the decision making process.
• Role differ according to the product type
being bought.
• As role change within household, so do
purchasing activities.

5
Hierarchy of Needs

6
 The Buying Process

• The Consumer Decision-Making Process

Need Recognition Problem Awareness

Information Search

Evaluation of alternatives

Purchase

Post-purchase evaluation of decision

7
 Problem Recognition

• May take over a period of time

• The magnitude of discrepancy between
desired and present situation is important
• Relative importance of the problem is
important
• There may be need inhibitors which the
consumer will have to overcome before he
buys the product.
8
 Information Search

• Internal search
• External search
• Third party reports
• Personal experience
• Objective: Solution to the problem
• Screening process to narrow down the
choices from bigger to smaller set.

9
 Evaluation of Alternatives

• Involvement is the degree of perceived

relevance and personal importance
accompanying a particular purchase decision.
• Low involvement products incur less expenditure
and personal risk, and hence the consumer
spends less time and effort in such decisions.
• In high involvement products, consumers
evaluate the consequences of the purchase and
what others will think about it.

10
 Evaluation of Alternatives

• Low involvement products are characterized by

awareness. Trial and repeat purchases.
• In high involvement situations, marketers should
provide a good deal of information to evaluate
the brands.
• In low involvement purchase , attempting to gain
top of the minds awareness through advertising
and providing positive reinforcement like sales
promotions to gain trial may be more important
than providing information.

11
 Purchase & Post Purchase
Evaluation of Decision
• Once customer has zeroed in on the right
choice, he purchase the product.
• Several mode of purchase: Marketers can
discover sources of competitive
advantage.
• Study of post purchase decision.

12
 CHOICE CRITERIA

• Technical criteria
• Economic criteria
• Social criteria
• Personal criteria
• Risk criteria
• Several choice criteria may be of an
emotional nature.

13
 The Buying Situation

• Extended problem solving.

• Limited problem solving.
• Habitual problem solving
• Household decision making process

14
 Personal Influences

• Perception
• Learning
• Motivation
• Belief and Attitude
• Personality
• Lifestyle
• Life cycle

15
 Social Influences

• Culture
• Social Class
• Reference Groups

16
 Social Influences

• Culture
• Social Class
• Reference Groups

17
 Customer Loyalty and
Profitability
• It is usually believed that loyal customers are
cheaper to serve because the upfront cost of
acquiring them is spread over a larger number of
transactions.
• Long term customers consistently pay less than
newer customer do.
• People who feel and talk positively about a
company are also more likely to sell others on
the company.
• The most common way to sort customers is to
score them according to how often they make
purchases and how much they spend.
18
 Customer Loyalty and
Profitability…
• After analyzing customer profitability and
projected duration of their relationships, it is time
to categorize them and treat them differently.
• Profitable loyal customers are satisfied with
existing arrangements and it is a bad idea to
intensify the level of contact with them as they
may be put off by more calls and mails.
• It is very difficult to convert profitable but
transient customers into loyal ones by spending
on them.
• The customer whose size and volume of
transaction are low can of two types
19
 Customer Loyalty and
Profitability…
• The customer whose size and volume of
transaction are low can of two types
– If they do not have adequate spending power,
they should be dropped.
– If they can spend more , they should be
pursued.
– Potentially profitable customers should be
pursued.

20
 Customer Loyalty and
Profitability…
• The customer whose size and volume of
transaction are low can of two types
– If they do not have adequate spending power,
they should be dropped.
– If they can spend more , they should be
pursued.
– Potentially profitable customers should be
pursued.

21
 Customer Portfolio
Management
• Creation of right portfolio.
• Classification in terms of profitability.
• Future spending Vs profitability.
• Evaluation of existing portfolio.
• Revenue and Risk.

22
 Emotional Engagement
with Customer
• It is important to show that company cares
about customers who have been with the
company for a long time.
• Treat customers with dignity especially
when they are faltering on some of their
commitments.
• A subtle way to earn loyalty is to show that
the company trusts its customer.
23
 Customer Relationship
Management
• Create a customer strategy before
implementing CRM.
• Customer focused organization has to be
created before CRM.
• Highly motivated employees who are
aware of & sensitive to customer needs.
• Relationship with wrong customer Vs
relationship with right customers in wrong
way.
24
 Relationship Marketing

• Identifying the customers.

• Differentiating the customers.
• Interacting with customers.
• Customizing the company’s Behaviour.

25
 BEST PRACTICES

Researched
Implemented
&
Result – Oriented Application

26
 Best Practices

• A customer focused organization can be

created by coordination.
• Relationship with customer has to begin
with trust. The Company will have to make
its intent clear to its customers and act
accordingly. Ill-timed, wrongly intentioned,
nagging relationships only bring miserly,
especially for customers.

27
 Perception

• Selective Attention.
• Selective Distortion.
• Selective Retention.

28
 Learning

• Classical Conditioning.
• Operant Conditioning.
• Cognitive learning
• Modeling/vicarious Learning
• Reasoning

29
 Motivation

• Maslow’s Theory of Motivation

30