SEMESTER III

304 MKT
SE MKT 01 – CONSUMER BEHAVIOUR
SUBJECT ELECTIVE MARKETING
MANAGEMENT SPECIALIZATION
DR CHETAN EKNATH KHEDKAR
UNIT 01
INTRODUCTION TO CONSUMER BEHAVIOUR
 DEFINITION OF CONSUMER BEHAVIOUR

Consumer behaviour refers to:

“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.”
DIFFERENCE BETWEEN CONSUMERS AND
CUSTOMERS

Aspect Customer Consumer

A person or organization that uses
A person or organization that
Definition or consumes the product or
purchases a product or service.
service.
Main role Buyer or purchaser. User or end user.
Focus is on the act of buying or Focus is on the act of using or
Focus
paying. benefiting from the product.
Makes the payment to acquire the May or may not be the one who pays
Payment
product or service. for the product or service.
Direct financial relationship; deals Indirect relationship; may or may not
Relationship with business
with the seller or supplier. interact with the seller.
Example A parent buying a toy for their child. The child who plays with the toy.
BUYERS VS. USERS

• Buyers are the individuals or entities that purchase a product or

service.
• Users are the ones who actually use or consume the product or
service.
• 👉 Example: A parent buys a video game (buyer), but the child plays it
(user).
ORGANIZATIONS AS BUYERS

• Organizations (companies, governments, non-profits) can act as buyers

rather than individuals.
• They buy goods/services for:
• Their internal operations (e.g. buying software, office supplies)
• Their employees (e.g. health insurance plans, training)
• Resale or integration (e.g. manufacturers buying parts)

• 👉 In these cases, the decision-making process usually involves multiple

stakeholders (procurement, management, end-users inside the
organization).
PROSUMERS

• Prosumers = producer + consumer

• These are individuals (or organizations) who:
• Both consume and produce a product or service
• Actively participate in customizing, creating, or enhancing the offering

• 👉 Examples:
• A customer who modifies open-source software they use
• A social media user who creates content for the platform
• A prosumer in energy who generates solar power for their own use and sells the
excess back to the grid
Role Definition Example

Buyer The one who purchases Company buys office chairs

User The one who uses Employee sits in the chair

Organization as Organization acts as School buys laptops for

buyer purchasing entity students

Homeowner installs solar

Consumer who also
Prosumer panels and sells energy to
produces
the grid
ROLE OF MARKET SEGMENTATION IN
UNDERSTANDING CONSUMER BEHAVIOUR
• 1️⃣What is Market Segmentation?
• Market segmentation is the process of dividing a broad market into smaller, more
defined groups (segments) of consumers who have similar needs, preferences, or
characteristics.
• 👉 Segments can be based on:
• Demographics (age, gender, income)
• Geographics (location, climate)
• Psychographics (lifestyle, personality, values)
• Behavioural traits (purchasing habits, usage rate, loyalty)
 How it helps understand
Benefit
behaviour
See how different groups think,
feel, and act towards
🎯 Identify patterns products/services. E.g. young
adults prefer digital channels
• 2️⃣How Segmentation for shopping.

Helps Understand 🧠 Understand needs &

Learn why certain segments
choose a product (e.g. budget-
motivations conscious buyers vs. premium
Consumer Behaviour seekers).
Anticipate how each segment
• Segmentation enables 📈 Predict purchasing
decisions
will respond to price,
promotion, or product
businesses to: changes.
Design messages that
🤝 Tailor marketing resonate with specific groups,
strategies rather than using a one-size-
fits-all approach.
Recognize underserved
💡 Spot opportunities &
segments or changing
gaps
behaviours in existing ones.
• 3️⃣Example
• Let’s say you sell athletic shoes:

• Segment A: Fitness enthusiasts → value performance features → respond to tech-

focused ads.
• Segment B: Casual users → value comfort + style → respond to lifestyle marketing.
• Segment C: Budget shoppers → sensitive to discounts/promotions.
• Without segmentation, you might miss these nuances and fail to connect effectively with
each group.
CHANGING PATTERNS OF
CONSUMER BEHAVIOUR IN THE
EVOLVING INDIAN ECONOMY
• 1️⃣Rise of the Middle Class & Aspirational Consumers

• India’s expanding middle class, with rising disposable incomes, is driving demand for premium products,
better quality, and branded goods.
• Consumers are moving from value-for-money to value-for-experience.

• 2️⃣Digital Adoption & E-Commerce Boom

• Widespread smartphone penetration and affordable internet (thanks to players like Jio) have transformed
shopping behaviour.
• Online shopping, digital payments (UPI, wallets), and app-based services (food delivery, ride-hailing) have
become mainstream, even in smaller towns.
• 3️⃣Urbanization & Tier 2/3 City Growth

• Consumption is no longer an urban metro phenomenon. Tier 2 and Tier 3 cities are becoming growth hubs,
with consumers showing similar aspirations as metros.
• 4️⃣Shift Towards Health, Wellness & Sustainability

• Post-pandemic, Indian consumers are more health-conscious, seeking organic foods, immunity-boosting
products, fitness services, and eco-friendly goods.
• There’s greater awareness about environmental impact, influencing buying decisions.
• 5️⃣Experience-Driven & Customized Consumption
• Consumers seek personalization — from curated travel plans to customized clothing and tech.
• Experiential consumption (e.g., holidays, fine dining, entertainment) is gaining traction over material
goods.

• 6️⃣Price Sensitivity Balanced with Brand Affinity

• While Indian consumers remain price-conscious, brand loyalty is increasing where trust and value are
proven.
• Buy Now, Pay Later (BNPL) and EMIs have enabled access to higher-end products.
• 7️⃣Influence of Social Media & Digital Content
• Purchase decisions are heavily influenced by reviews, influencers, and social media marketing.
• Short videos (e.g., Reels, YouTube Shorts) are shaping consumer awareness and preferences.
• 8️⃣Preference for Omni-channel Shopping
• Consumers expect seamless integration between offline and online channels (e.g., ordering online,
picking up in-store; in-store digital kiosks).
RISE OF THE MIDDLE CLASS AND
ASPIRATIONAL SPENDING
• 🌟 Rise of the Middle Class
• Economic growth and liberalization since the 1990s have steadily expanded
India’s middle-income segment.
• According to various estimates, India’s middle class could exceed 500 million
people by 2030.
• Factors fueling this rise:
• Growth of IT, services, retail, and manufacturing sectors
• Urbanization and infrastructure development
• Access to education and skill development
• Government schemes supporting income growth and financial inclusion
• 💸 Aspirational Spending Trends
• The Indian middle class is no longer focused solely on necessities — their spending is
driven by aspirations for a better lifestyle, status, and convenience.
• Key spending patterns include:
• Premiumization: Willingness to pay extra for better quality (e.g., branded apparel,
smartphones, vehicles)
• Experiences over possessions: Vacations, fine dining, entertainment, adventure sports
• Home and lifestyle upgrades: Modular kitchens, smart appliances, home decor
• Education and skill enhancement: Spending on private schooling, coaching, online courses
• Health and wellness: Gym memberships, organic foods, health insurance
• ⚡ Drivers of Aspirational Spending
• Easy credit access: Growth of EMIs, Buy Now Pay Later (BNPL), credit
cards
• Digital influence: Social media, influencer marketing, and peer
comparison drive desire for branded and premium products
• Global exposure: Travel, OTT platforms, and the internet have
broadened consumer tastes
• 📈 Implications for Businesses
• Companies must offer value-added, affordable luxury to cater to
middle-class aspirations.
• Customization, financing options, and experiential marketing resonate
well with this segment.
• Tier 2 and 3 cities are emerging as new aspirational markets, not
just metros.
INFLUENCE OF THE INTERNET

• 🌐 Widespread Internet Penetration

• India is home to one of the largest internet user bases globally,
with over 850 million users (as of early 2024, growing rapidly).
• Affordable data (thanks to Jio and other players) and low-cost
smartphones have made the internet accessible across urban, semi-
urban, and rural India.
• 💡 How the Internet is Shaping Consumer Behaviour
• 1️⃣Informed & Empowered Consumers
• Consumers research products extensively — comparing prices, reading reviews, watching unboxing and
influencer videos — before purchasing.
• Price transparency has increased, pushing businesses toward competitive pricing and better service.

• 2️⃣E-commerce & Digital Shopping

• The internet has transformed shopping habits — Amazon, Flipkart, Myntra, Nykaa, Meesho and others
cater to millions of daily shoppers.
• Even small-town consumers now shop online, driven by convenience, variety, and doorstep delivery.
• 3️⃣Digital Payments & Financial Inclusion
• UPI, mobile wallets (Paytm, PhonePe), and net banking have made cashless transactions mainstream — even
street vendors and small businesses accept digital payments.
• This has enhanced trust in digital commerce.
• 4️⃣Social Media Influence
• Platforms like Instagram, Facebook, YouTube, and WhatsApp heavily influence buying decisions.
• Influencer marketing, reels, and short videos play a major role in product discovery and trends.
• 5️⃣Omni-channel Expectations
• Consumers expect seamless integration between online and offline channels (e.g.,
checking online reviews before buying in-store, or buying online and returning in-store).

• 6️⃣Rise of New Consumption Categories

• The internet has opened access to:
• Online education (Byju’s, Unacademy)
• Telemedicine (Practo, Tata Health)
• OTT content (Netflix, Hotstar, Prime Video)
• App-based services (Zomato, Swiggy, Ola, Uber)
E-COMMERCE AND INFORMATION
TECHNOLOGY ON THE CONSUMER
MARKETPLACE
• 🛒 Impact of E-Commerce on the Consumer Marketplace
• 1️⃣Greater Convenience & Access
• Consumers can now shop 24/7 from the comfort of their homes.
• E-commerce platforms (Amazon, Flipkart, Meesho, Nykaa, Ajio) provide access to
products not always available locally, especially in Tier 2, 3 cities and rural areas.
• 2️⃣Wider Choice & Variety
• Online marketplaces offer vast product selections across categories — fashion,
electronics, groceries, home décor — often with competitive pricing.
• Consumers can easily compare brands, prices, and features across sellers.
• 3️⃣Price Sensitivity & Discount Culture
• E-commerce has intensified price competition, with regular sales (Big Billion Days, Prime
Day) shaping buying behaviour.
• Consumers have become accustomed to discounts, cashback, and flash deals.
• 4️⃣Personalization & Recommendations
• Platforms use data analytics to provide personalized suggestions, offers, and advertising,
enhancing the shopping experience.
• 5️⃣Empowered Consumers
• E-commerce has amplified the role of consumer reviews and ratings, influencing
purchasing decisions and holding brands accountable for quality and service.
💻 ROLE OF INFORMATION TECHNOLOGY

• 1️⃣Digital Payments & Seamless Transactions

• UPI, net banking, and wallets have made transactions faster, safer, and cashless,
encouraging more online purchases.
• 2️⃣Data-Driven Marketing & Consumer Insights
• Companies leverage IT tools (AI, machine learning, big data) to study consumer behaviour,
predict trends, and refine marketing strategies.
• Targeted ads and loyalty programs are driven by these insights.
• 3️⃣Supply Chain & Logistics Efficiency
• IT has improved inventory management, order tracking, last-mile delivery —
reducing delivery times and enhancing reliability.
• 4️⃣Omni-Channel Integration
• Information technology supports seamless blending of online and
offline retail — e.g., click-and-collect, ship-from-store, virtual try-ons.
• 5️⃣Rise of New Business Models
• IT has enabled growth of platforms like:
• Subscription boxes (Blinkit, BigBasket Daily)
• C2C selling (OLX, Quikr)
• Hyperlocal delivery (Zomato, Swiggy)
NEW TRENDS IN CONSUMER BEHAVIOUR INCLUDING
ARTIFICIAL INTELLIGENCE (AI), AUGMENTED AND VIRTUAL
REALITY (AR/VR)

Trend Description Examples / Impact

AI analyzes consumer data to offer customized Personalized shopping on Amazon, Flipkart, Netflix
AI-driven personalization
recommendations, ads, and deals. suggestions.

Growth of AI-powered assistants for search and Use of Alexa, Google Assistant for grocery lists,
Voice-assisted shopping
ordering. orders.

AR enables consumers to virtually try products Lenskart virtual try-on, IKEA Place app for furniture
AR-powered product experiences
before buying. visualization.

VR offers interactive, 360-degree brand storytelling

VR for immersive brand experiences Real estate VR tours, VR-enabled fashion shows.
or store tours.

Seamless blending of online and offline Click & collect, in-store digital kiosks, app-based
Omni-channel digital integration
experiences. loyalty programs.

Buying decisions shaped by digital content, short

Influencer & social commerce Instagram Shops, YouTube reviews driving sales.
videos, influencers.

Subscription & auto-replenishment

Consumers opt for convenience via subscriptions. BigBasket Daily, Blinkit Instant Delivery subscriptions.
models

Sustainability-conscious Consumers seek eco-friendly, ethical, and local

Demand for organic food, cruelty-free cosmetics.
consumption products.

Consumers increasingly use flexible payment Simpl, LazyPay, ZestMoney popular among online
Buy Now, Pay Later (BNPL)
methods. shoppers.

Platforms use game-like features to engage Flipkart SuperCoins, Myntra's shopping challenges,
Gamified shopping & loyalty
customers. Spin & Win offers.
HYPER-PERSONALIZATION IN CONSUMER EXPERIENCE
AND ITS APPLICATION IN MARKETING

• 💡 What is Hyper-Personalization?
• Hyper-personalization refers to using real-time data, artificial intelligence
(AI), machine learning, and analytics to deliver highly tailored content,
products, services, and experiences to individual consumers.
• Unlike basic personalization (e.g., addressing the consumer by name), hyper-
personalization:
✅ Analyzes deeper consumer data — browsing patterns, purchase history,
preferences, location, behaviour.
✅ Adapts in real time to changing consumer intent and context.
✅ Aims to create experiences that feel uniquely designed for the individual.
🔑 APPLICATION OF HYPER-
PERSONALIZATION IN MARKETING

Application Area How Hyper-Personalization Works Example

Product AI suggests products based on browsing, Amazon, Flipkart “Recommended for
recommendations purchase history, and preferences. You”; Netflix show suggestions.
Dynamic pricing & Customized deals or discounts tailored to Myntra app flash offers tailored by
offers user segments or individuals. shopping behaviour.
Targeted email & app Emails/push notifications personalized for Zomato’s meal deals based on prior
notifications interests, timing, and context. orders, location, and time.
Content marketing & Showing relevant ads or content based on Google, Facebook, Instagram serve
ads detailed consumer profiles. tailored ads for each user.
Website/app Personalized homepages, banners, Nykaa beauty app custom landing pages
experience navigation flows based on user patterns. for skincare vs. makeup fans.
Location-based Offers and messages triggered by user Starbucks app suggests nearby stores
personalization location in real time. and location-specific deals.
Conversational AI / AI-driven bots provide contextual, Banking chatbots offering custom loan
chatbots individualized responses. offers or balance info.
• ⚡ Why Hyper-Personalization Matters
• Increased consumer engagement & loyalty
• Higher conversion rates (consumers more likely to buy)
• Better customer satisfaction (brand feels more relevant)
• Competitive edge in crowded markets
BUSINESS CASELET: NYKAA’S SUCCESS THROUGH
PERSONALIZED BEAUTY RECOMMENDATIONS AND
UNDERSTANDING OF EVOLVING CONSUMER BEHAVIOR IN
INDIA
🌸 BUSINESS CASELET: NYKAA’S SUCCESS STORY

• Background:
Founded in 2012, Nykaa emerged as one of India’s leading beauty and lifestyle
retailers, offering a wide range of cosmetics, skincare, personal care, and wellness
products through its online platform and physical stores.
• Challenge:
In a highly fragmented and competitive beauty market, Indian consumers:
• Were traditionally reliant on in-store trials and salesperson guidance.
• Had varied preferences due to diverse skin tones, types, and regional beauty needs.
• Became increasingly digitally engaged, yet needed guidance for online beauty
purchases.
🎯 NYKAA’S STRATEGIC APPROACH

Consumer Insight / Behaviour Nykaa’s Solution

Consumers sought personalized advice in absence of Built AI-driven personalized recommendation engines
physical trials. for skincare, makeup, and haircare.

Growing comfort with digital shopping but fear of wrong Developed virtual try-on tools (AR) and shade finders;
product fit. detailed tutorials and reviews.

Offered region-specific, skin-tone inclusive brands;

Diverse beauty needs across regions, skin types, tones.
custom filters for skin type/concern/finish.

Rising demand for trusted information and expert Created content marketing via Nykaa TV, beauty blogs,
guidance. influencer partnerships, and masterclasses.

Consumers influenced by social media trends & peer Integrated ratings, reviews, and user-generated
reviews. content prominently in the app & site.

Aspirational middle-class, price-conscious yet brand- Balanced luxury and affordable brands; provided
seeking. flexible payment (EMI, BNPL) and curated deals.
✅ OUTCOMES

• Nykaa grew to become a market leader in online beauty retail in

India.
• Built strong consumer loyalty, especially among millennials and Gen
Z.
• Successfully scaled an omnichannel presence (online + 150+
physical stores).
• Went public via a highly successful IPO in 2021.
📝KEY TAKEAWAY / SOLUTION

• Nykaa’s success lies in its:

• Hyper-personalization: AI-driven recommendations, AR tools, personalized emails.
• Deep understanding of evolving Indian consumers: regional diversity, digital
adoption, price sensitivity balanced with aspiration.
• Content + Commerce model: Educated and engaged consumers alongside selling.
• Omnichannel strategy: Seamless experience across app, web, and stores.
• 👉 Lesson for businesses: Combining tech-enabled personalization, content-
driven engagement, and consumer-centric product curation is key to winning
in India’s evolving consumer market.