PHI Learning

UNDERSTANDING CONSUMER BEHAVIOUR

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CONSUMER BEHAVIOUR

Consumer behaviour entails the totality of consumers decision

involved in acquiring, consuming and disposing of goods and services, as
well as making use of experiences and ideas.

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Consumer Behaviour is a Complex Dynamic Process

Consumers Perspective Marketers Perspective

Prepurchase issues

Purchase issues

Postpurchase issues

Each stage poses varied issues and offers subsequent challenges for the marketer.
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Prepurchase Challenges for the Marketer

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How are consumers attitudes towards products formed and/or changed?

Changing consumer demographics Access to more choice of brands/ products

Consumer behaviour

Psychological Factors Consumer involvement Consumer motivation

Consumers perception Personal Factors Personality and lifestyle
Family lifecycle Social Factors Reference groups Family

Cultural influences on consumer behaviour The creation and diffusion of

consumer culture

Consumer age, sex, social class Subcultures

It is essential for the marketer to understand how each of these

factors influences consumers buying decision.
He can then formulate strategies in line with customer needs and demands. Consumer
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How do psychological factors affect the consumers purchase decision?

Changing consumer perception

LearningSuperior aftersaleservice

Motivationthe secret of energy

BeliefTATA signifies trust

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How do personal factors affect the consumers purchase decision? (Contd.)

Lifestyle

Self ConceptDefinitely male

GenderTargeting the male

AgeTargeting the youth

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How do social factors affect the consumers purchase decision?

Reference GroupIbankers Phone Influence of Family

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How do cultural factors affect the consumers purchase decision?

Targeting on the basis of Culture

Subculture: Targeting the Full of Life

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What cues/inferences do consumers use to choose and infer which

brand/product is superior to others ?

The extent of information search depends on: Motivation, ability and opportunity.
How extensive the search is for high involvement, high risk products.
Consumer demography and product type.
The marketer needs to select the right source for information to reach the
target consumer.
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Various Sources of Information the Marketer can Tap
Radio Transport

Events

Internet SMS Utilities Gaming

Outdoor

Sport

Podcasts

TV

Magazines Newspapers

WordofMouth

Posters

Direct mailers

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Purchase Time Challenges for the Marketer

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How do situational factors affect consumers purchase decision?

When to purchase

Three Possibilities in Consumer Purchase Decision

Where to purchase

How to purchase

Influencing Factors: Store atmosphereDisplay, music, fragrance Time pressure

Peak or offseason Pleasantness of shopping experience Schemes
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Postpurchase Challenges for the Marketer

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What determines whether a consumer will be satisfied with a brand choice and
whether he will buy it again?
After buying a product, the consumer compares it with his
expectations and is either satisfied or dissatisfied.
Satisfaction or dissatisfaction affects: Consumer value perceptions
Consumer communications Repeatpurchase behaviour

Marketers use various strategies to positively influence consumers Postpurchase b

ehaviour

Postpurchase Service

Feedback from Consumer

Loyalty Programmes

Advertisements

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Thank You

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Consumer Motivation

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What is Motivation?
Motivation refers to an activated state of needs within a person that leads to
goaldirected behaviour. Types of Needs Innate or learned Expressive (emotional)
Utilitarian (practical and functional) Hedonistic

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Maslows Hierarchy of Needs

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Characteristics of Needs
Needs: Are dynamic. Have hierarchy. Can be internally and externally aroused.
Can conflict.

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Motivational Conflict and Need Priorities

Satisfying a particular need often comes at the expense of another need. These
trade-offs cause motivational conflict.

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Types of Motivational Conflict

Approach-approach: deciding between two desirable options Avoidance-avoidance:
deciding between two undesirable options Approach-avoidance: behaviour has both
positive and negative consequences.

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Consumer Motivation
Represents the drive to satisfy both physiological and psychological needs
through product purchase and consumption. It gives insights into why people buy
certain products. Stems from consumer needs: industries have been built around
basic human needs.

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Motivated Purchase
Conspicuous consumption: Purchases motivated to some extent by the desire to show
other people how successful they are. Companies reinforce the consumer
motivations notion that products enable users to communicate their social status.
In general, marketers try to create an image or personality for their brands.

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Motivation

Consumer Behaviour

Motivation signifies the processes that cause consumers to

behave as they do, involving needs, goals and drives.
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Model of the Motivation Process

Previous learning

Unfulfilled need, want and desire

Tension

Drive

Behaviour

Goal/Need fulfillment

Cognitive processes

Tension reduction

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Needs/Wants

Beliefs

A Model of Consumer Motivation

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Emerging Trend

Skin care is increasingly becoming more important to men

Emotional Needs

Years for success in his career Feels he deserves better quality products.
Tries to upgrade his lifestyle.

Key Influencers

Celebrity endorsers Sportsmen (cricketers), prominent businessmen WOM,

friends

Likes

Just bought his first new bike (TVS Apache) and a new mobile (Nokia N Series).
Shops for clothes, shoes, etc. often in malls and shopping complexes. Often eats
out (with friends). Likes to visit pubs and discos.

Receptivity

Online needs are high Low towards mass media vehicles

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What are His Needs/Motivations?

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Maslows Hierarchy of Needs

Offline

Online

Ability to develop skills and fulfil ones potential

SelfActualization Self-Esteem

Ability to take on a community role that develops skills and opens up new
opportunities

Self-respect and ability to earn respect of others & contribute to society

Ability to contribute to the community and be recognized for those contributions

Ability to give and receive love; feeling of belonging to a group

Social

Belonging to the community as a whole and to sub-groups within the community

Protection from crimes; sense of living in fair and just society

Security and Safety

Protection from hacking; ability to maintain varying levels of privacy

Food, clothing, shelter, health

Physiological

Access to computer and Internet

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SOURCE: Amy Jo Kims Community Building on the Web (Peachpit, 2000)

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Motivational Intensity
Depends on: How strongly consumers are motivated to satisfy a particular need.
Importance of Involvement: Degree to which an object or behaviour is personally
relevant. Motivational intensity and involvement determine the amount of effort
consumers exert in satisfying needs.

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The Challenge of Understanding Consumer Motivation

Reasons underlying consumer motivation are not always obvious. Research is
necessary to discover real motivations behind behaviours. Consumers at times do not
always want to disclose real reasons for their particular choice or actions.
Consumers do not always know why they do what they do: unconscious motivation.
Motivations change over time. Let us take an example of car buying and its
underlying motivations.
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Why Automobile?

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Automotive Sector
Classification of the Automotive Industry Commercial vehicles (Trucks and Buses)
Passenger Cars and Multiutility vehicles Twowheelers Threewheelers
Tractors For explaining motivations , we will concentrate on
passenger cars and multiutility vehicles.

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Automotive SectorDemand Drivers

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Meansend Chains Structure

Attributes: Descriptive features that characterize a product.
Benefits: Personal beliefs and meanings attached or
derived from various product attributes.
Values: Stable and enduring personal goals.

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Issues a typical consumer considers when he chooses a car

Reliability/Durability Interior design and comfort
Manufacturers reputation, Brand name and its value Exterior appearance and
aesthetics Petrol vs. Diesel model
Fuel Efficiency or Mileage Recommendation of peer group, Word
of Mouth (WOM) and dealers opinion about servicing and overall performance.
Servicing and the deal offered Passenger and Luggage carrying capacity
Size, length, machine capacity Price and Resale Value of old car model
and Terms of Payment

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Automobile Purchase: Demographic Factors

Family life cycle

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Bachelor

Committed/ recently married

Impact of family life cycle on consumer need/preference

Married with children

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Family Life Cycle

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Things do not change, we change

HENRY DAVID THOREAU

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Let us unlock some key trends

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How the needs of the same consumer change as he moves along the family life cycle
Bachelorhood Married Married with children Nondependent children

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Information Gathering
Talking to dealers Talking to friends/Colleagues/Relatives Inspecting the car
Car ads Talking to mechanics Car brochures/Articles/Programmes Internet
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Study the various sources of information,

gather and find the reliability of various information sources.

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Major Motivators/Triggers
Increasing familys need Need to travel long distance Problem with old car
Status/Prestige

Rational Factors

Emotional Factors

Promotion Peer pressure

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Integrative Choice: Purchase decision is influenced by a mix of rational and

emotional factors.

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Social Influences
Combined effects of Occupation, Education and Income levels

Conspicuous and compensatory consumption trends

Certain norms and values are created by social influences.

So it is essential to find out how these social influences
(occupation, education and income etc.) affect the
consumer motivation in the purchase of an automobile.
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Sex

Men and women possess unique personality traits,

interests, knowledge and judgment capabilities.
Find out how the motivating factors differ based on the gender of the consumer.
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Thank You.

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Consumer Perception
Consumer Perception

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Perception is Reality
LOUIS CHESKIN

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Perception Process by which sensations are selected, organized, and interpreted

Adding meaning to raw sensations

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Elements of Perception
Sensation Absolute threshold Differential threshold Subliminal threshold

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Sensation
Immediate response of our sensory receptors eyes, ears, nose, mouth, fingers to
basic stimuli such as light, colour, sound, odour, and texture advertisements,
brand names, commercials, and packages depends on the sensitivity of the
individual
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The Absolute Threshold

The lowest level at which an individual can experience a sensation. The point which
differentiates between something and nothing. Example: Absolute threshold of
driver driving on highway to notice billboard. Adaptation: Getting used to
certain sensation.
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Attention
The extent to which processing activity is devoted to a particular stimulus
Competition for our attention 3,500 ad info pieces per day Multitasking Marketers
need to break through the clutter Microsofts butterfly decals on sidewalks 3D
logos on cricket grounds
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The Differential Threshold

The minimal detectable difference between two similar stimuli (just noticeable
difference). Its not at all the absolute difference. Its an amount relative to
the intensity of the first stimulus. The stronger the initial stimulus, the greater
the additional intensity needed for second stimulus to be perceived as
differentiated.

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Marketing Applications of the JND

Need to determine the relevant JND for the products so that
negative changes are not readily discernible to the public. product improvements
are quite visible to consumers.

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Gradual Changes in Brand Name

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Subliminal Perception

Perception of very weak or rapid stimuli received below the level of conscious
awareness

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Perceptual Selection
Stimulus Selection Factors
Webers Law Differences in size, colour, position, and novelty Interpretation:
assigned meaning to stimuli Schema leads to stimulus evaluation

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Webers Law

A theory concerning the perceived differentiation between similar stimuli of

varying intensities (i.e. the stronger the initial stimulus, the greater the
additional intensity needed for the second stimulus to be perceived as different).
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Perceptual Selection
Depends on two major factors
Consumers previous experience (expectations) Consumers motives

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Some Marketing Variables Influencing Consumer Perception

Nature of the product Physical attributes of the product Package design Brand name
Advertisements and commercials Position of an ad
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Concepts Concerning Selective Perception

Selective exposure Selective attention Perceptual defense Perceptual blocking

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Stimulus Organization
Stimulus interpretation is associated with other related events, sensations, or
images Gestalt: The whole is greater than the sum of its parts.
The Closure PrinciplePeople tend to perceive an incomplete picture as complete.
The Principle of SimilarityGroups objects share similar characteristics. The
FigureGround PrincipleOne part of the stimulus will dominate (the
figure/background).
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Gestalt Laws of Grouping

The primary purpose of the visual system is the recognition of objects from basic
visual elements. The objects are seen as more than a sum of the parts, and the
critical problem facing the visual system is how to group the elements to form
objects.

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Demonstration of the Importance of Objects over Elements

When elements are arranged in groups that define an object, we tend to see the
object and not the elements.

FFFFFFF FF FFFF FF FFFFFFF

vs.

EEEEEE EE EEEE EE EEEEEE

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Law of Proximity
Things that are relatively close to one another tend to be grouped together.

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The Law of Similarity

Items that look similar will be seen as parts of the same form.

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The Law of Good Continuation

The tendency to perceive unseen parts of a pattern as continuing in a predictable
and simple manner.

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The Law of Closure

Often, an object is partly occluded by other objects in our environment, and the
visual system must fill in the missing information.

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A Related Phenomenon Illusory Contours

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The Law of Common Fate

Elements of visual perception that move together are seen as forming a common
object.

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Common Fate Example - 1

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Common Fate Example - 2

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Common Fate Example - 3

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Common Fate Example - 4

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Figuring out what the objects are

The Gestalt principles help us to understand how we figure out what the objects
are, and how to interpret them. However, they do not explain how we figure out what
an object is once we realize it is an object.

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Figure and Ground

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The Figure-Ground Principle

This billboard for Wrangler jeans makes creative use of the figure-ground
principle.
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Perceptual Positioning
Brand perceptions =functional attributes + symbolic attributes Perceptual map
Companys own strengths and weaknesses in comparison with competitors

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Excellent product quality

Perceptual Map

Low value for money

High value for money

Low product quality

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Thank You

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Consumer Perception
Consumer selects, organizes and interprets stimuli
into a meaningful and coherent picture of the world.
How we view the World around us! Consumers make decisions based on what they
perceive rather than what the objective reality is.
Consumers see what they want to see!

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Elements of Perception
Sensation: Stimuli and Intensity Absolute threshold (e.g. seeing an ad)
Sensory adaptation (Phenomenon of getting used to),
e.g. change ad campaigns, package
Differential threshold JND (Webers Law); product improvement decisions
Negative changes (Price rise, size, quality reductions, etc.)

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Selective Perceptions
Nature of the stimulus: What you want to see is based
on what your motives are at that time. Selective exposure: Pleasant ads
Expectations and previous experience

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Perceived Risk
An uncertainty arises when consumers cannot
foresee the consequences of their purchase decisions. Depends on the person,the
product, and the purchase situation. High risk perceivers categorized as narrow
categorizers.

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Broad Categories
Product category perceived risk, e.g. to buy a digital camera or not.
Product specific perceived risk, e.g. which brand of camera to buy.

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Types of Perceived Risk

Functional risk: The risk that the product will not perform as expected.
Will the cell phone I bought work for the given warranty period?
Physical risk: The risk to self and others that the product may pose .
Will the cell phone damage my health? Is it safe to use?

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Types of Perceived Risk

Financial risk: The risk that the product will not be worth its price.
Will the price of mobile/laptop drop after I buy it?
Social risk: The risk that a poor product choice
may result in some form of social embarrassment.
Will my mobile look like an outdated model?

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Types of Perceived Risk

Psychological risk: The Risk that a poor product choice
will bruise the consumers ego.
After buying this product, will my peer group members
laugh that it is a wrong choice?
Time risk: The risk that the time spent in product search
may be wasted if the product does not perform as expected.
I have spent so much time in buying a new camera/laptop.
Was it worth or a waste of time?
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How Customers Handle Risk

Seek information, word of mouth, newspapers Buy known brands/become loyal,
e.g. buy Annapurna Atta. Select by Company/Brand image,

e.g. buy Sony TV / Nokia Cell phones.

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How Customers Handle Risk (cont.)

Rely on Store image, e.g. buying from known shops. Buy the most expensive model.
Seek reassurance (moneyback guarantees, prepurchase trial, warranty period).

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Application of the Concept

Find out the nature of risk customers perceive before purchasing new products.
Remove the nature of anxiety of customers.

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Thank You
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Consumer Beliefs Consumer Attitudes Consumer Feelings Consumer Intentions Consumer

Behaviour

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Beliefs are the knowledge and inferences that a consumer has about products/brands
and possible benefits derived from using them. Beliefs result from cognitive
learning. Attribute importance springs from: A persons assessment of the
significance of an attribute. The amount of attention directed to it. A persons
self-concept, advertising, and the salience of the attribute can influence the
attention focussed on it.

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Brand distinctiveness: Consumer perception of a brand and companys marketing

effort leads to developing certain personality of each brand, e.g. Tanishq
Jewellery. Inferential beliefs: Information about one product of a company makes
consumers to form belief about another, price-quality beliefs, partially
comparative pricing, e.g. Akai TV, Big Bazaar retail. Consumer confusion:
Insufficient/conflicting information, mistaken identity, irrelevant ad
slogan/appeal, change in the brands key focus and positioning, e.g. Marie biscuits
(Britannia, Parle).
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Beliefs Companies or Retailers mark up prices before putting them up on sale.

Discounts offered by reputed companies are genuine reduction in prices.

Examples Bargaining behaviour Wait for the discount announcement

Celebrities are admired by their followers though Success of soaps and they do not
use the product they endorse. cosmetics Lower price generally means inferior
quality. Higher priced brands are not superior in quality by the same degree of
multiplier. Shopping in a big departmental store saves money. Packaged ready-to-eat
food items marketed in India are generally not fresh. Positioning at a lower
quality end, as done by Haier, Lenovo Big Bazaar, Subhiksha Limited success of MTR,
ITC foods

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As part of Advertising Experience: Influence on viewers moods, attitudes,

recall, affinity, Examples: Hamara Bajaj Campaign, Amul ButterUtterly, butterly
delicious As part of Shopping Experience: Influence of availability,
environment/ambience Examples: Maruti service centres, Cafe Coffee Day, Brista
coffee As part of Consumption Experience: Influence consumers consumption
evaluation Examples: Vanilla Coke, Blue Pepsi, Asian Paints

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Desirable Attributes create positive attitudes

Example: Health drinks
Attitudes are:

a kind of feeling for or against a stimulus; stored in long-term memory; the

cognitive knowledge about an object; predicted by beliefs in high involvement
purchase situations.

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Utilitarian function: Used to obtain rewards and avoid punishments Ego-defensive

function: Self-protection Example: mouthwash Knowledge function: Simplifies
decisions Example: Forming of loyalty to certain brands Value-expressive function:
Expresses identity to others Example: use of (IIM-C) labelled t-shirts

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Direct formation Corresponds to the decision-making perspective and cognitive

learning. Linked to the experiential perspective. Classical
conditioning/Associative learning: Positive affect is attached to objectusing a
jingle. Mere exposurefrequent exposure to stimulus increases ones desire for it.
Environmental forces Example: design of the physical environment, cafes

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Decision-making hierarchies: High involvement: beliefs Low involvement: beliefs

Experiential hierarchy: Affect behaviour

attitudes behaviour

behaviour attitudes

beliefs

Behavioural influence hierarchy: Behaviour beliefs affect

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Changing beliefs: Comparative advertising Example: Sugar Free, Saffola oil (less
cholesterol) Changing attribute importance: Identification of new, improved
attributes Example: Washing powders, soaps Changing ideal points

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BI A SN
act

= =

A =

act

+ SN
i j

b ie NB

i j

MC

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Changing Consumer Attitudes: Changing Beliefs

Firms hope that changing beliefs about products will result in more favourable
product attitudes and influence what consumers buy. If beliefs are false, they
should be brought into harmony with reality and then stabilized and reinforced. If
beliefs are accurate, it may be necessary to change the product. Comparative
advertising can hurt beliefs about a competitive brand

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Changing Consumer Attitudes: Changing Attribute Importance

Changing an attributes importance is more difficult than changing a belief. How is
a brand perceived relative to ideal performance? Increasing attribute importance is
desirable when the competitors brand is farther from the ideal point than your
product. Firms may add a new attribute which necessitated NPD or product revision.
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Changing Consumer Attitudes: Changing Ideal Points

Altering consumers preferences for what the Ideal product should look like.

It is far more difficult than any other approach in changing consumers, attitudes
toward brand and product.

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The best way to capture customer is to adjust with his or her desirable situation
and favourable attitudes.

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Post-purchase Action

Attitude Learning
Perception Attention Exposure

Sequential model of purchase and repurchase behaviour in marketing

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Consumer Behaviour

Involvement & Emotion

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Consumer Involvement
Cars Furniture

Apparels Perfume

Toothpaste Salt

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Involvement
What is Involvement ? Perceived relevance of the object of consideration based on
inherent needs, values and interests A general level of interest in or concern
about an object or activity without reference to a specific position

Types of Involvement Situational (Purchase-Decision) Involvement The level of

concern/care the consumer brings to bear on a particular purchase decision Enduring
Involvement The level of interest the buyer maintains for a class of
product/activity, well beyond the specific purchase situation

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Involvement (Cont.)
Enduring involvement is related to the way one views oneself and is often linked to
Family, Group and Lifestyle (Psychographic) variables. Perceived risk is related to
purchase involvement. In Low Involvement situations: In High Involvement
situations: Behaviour Attitudes Attitudes Behaviour
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Purchase Involvement
Is Effected by: The Product Class

The Individual

Involvement
The Situation
Communication
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Consumer Product Involvement

Consumer Characteristics Social concepts Personality needs Expertise
Intrinsic Self-relevance (Goals and Values)

Product Characteristics Time commitment Price Symbolic meanings Potential

for harm Potential for poor performance

INVOLVEMENT

Interpretation and Integration process

Situational context Purchase situation Intended-use situation Time pressure

Social environment Physical environment

Situational Self-relevance (Consequences and Values)

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Means-End Basis for Involvement

PRODUCT KNOWLEDGE

SELF KNOWLEDGE

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Enduring Involvement Characteristics

High
Many Attributes Evaluated Narrow Latitude of Acceptance Small Evoked Set True Brand
Loyalty

Low
Attributes are less important (very few used) Wide Latitude of Acceptance Large
Evoked Set Spurious Brand Loyalty
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Enduring Involvement Characteristics

High
Central Route Arguments Substantive Messages (reduce counter-arguments) Fewer Ads
but packed with Information Price may be Relatively Less Important Info Search is
Active.

Low
Peripheral Route Arguments Reminder Ads and Ads with Little Substance Frequent Ads
Little or no Contentonly a few points Price may be Relatively Less Important Info
Search is Passive.
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Low Involvement
Problem Recognition

Selective

Information Search

Internal (Limited)

Analysis of Alternatives

Purchase Decision

No Dissonance

Post-Purchase Behaviour
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Medium Involvement
Generic Problem Recognition

Information Search

Internal External (Limited)

Few Simple

Analysis of Alternatives

Purchase Decision

Post-Purchase Behaviour

No Dissonance
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High Involvement
Generic Problem Recognition

Information Search

Internal External

Many Complex

Analysis of Alternatives

Purchase Decision

Post-Purchase Behaviour

Dissonance
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Effect of Product Knowledge and Involvement in Decision Making

INVOLVEMENT LOW Adequate product at minimum effort Very few concrete attributes
Satisfactory product Very few abstract criteria HIGH Choose the best product.
Unclear about criteria. Optimize satisfaction. Use many search and decision tools.
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Motivation LOW KNOWLEDGE Choice Criteria

Motivation HIGH Choice Criteria

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Creative Tactics
INVOLVEMENT LOW HIGH

MOTIVATION

INFORMATIONAL (ve)

Provide one or two clear benefits.

Provide believable information. Dont overclaim.

TRANSFORMATIONAL (+ve)

Emotional authenticity of execution and liking the Ad.

Consumer must personally identify with feelings created.

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High Enduring Involvement Customers

Develop product class, brand expertise. Search for information in an ongoing
manner. Take special interest in product care. Augment/upgrade products; purchase
ad-ons and complementary products. Become opinion leaders/brand advocates; build
close bonds with the company. May participate in new product idea generation.

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A Model of Emotion-driven Choice

Symbolic meaning of consumption Self Social

Pride Status Anxiety

Motivation

Preference formation

Justification

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The Psychology of a BRAND

Domain BRAND Symbolic meaning Emotional Realm Personality Authenticity Reassurance
CONSUMER Social language of the Brand Self-enhancement Self-Image Transformation of
experience Safe choice Easy choice Functional Realm Keeping promises of performance
Certainty in an uncertain world Replication of satisfaction
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Brand Strategy Alternatives

High Involvement

Symbolic Brands

Cognition Functional Brands

Emotions

Low Involvement
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Brand Trust and Confidence

Risk Perception

Symbolic Brands

Functional Brands

144

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Positioning a Brand
Why? For whom?

When?

Against whom?

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Brand Identity Prism

Picture of the Sender
ue siq Pe rs y Ph on ali t y

Relationship

Culture

Re fle

ctio n

Se

e ag m lf-I

Picture of the Recipient

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Building a Brand in Consumers Mind-space

Trust

Pe

rce

pti on o

fQ ua

lity

Bra nd A

wa re

147

ne ss

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Thank You

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Consumer Learning Dissonance and Experience

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Consumer Learning
It is the cognitive process of acquiring skill and
knowledge; learning is the acquisition and
development of memories and behaviours,
including skills, knowledge, understanding, values, and wisdom.

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Importance of Learning
Marketers must teach consumers:
where to buy by whom and for whom the purchase is to be done
how to use, feel and perceive the product how to maintain the product
how to dispose of products

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Learning Taxonomy

Learning
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Learning Theories
Behavioural Theories Theories based on the premise that learning takes
place as a result of observable responses to external stimuli. Also
known as stimulus response theory. Cognitive Theories
A theory of learning based on mental information processing, often in
response to problem solving.

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Learning Processes
Intentional Incidental Learning acquired as a Learning acquired by result
of a careful accident or without search for information. much effort.

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Elements of Learning Theories

1. 2. 3. 4. Motivation Cues Response Reinforcement Stimulus Drive Response
Reinforcement
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Reinforcement

A positive or negative outcome that influences the likelihood that a

specific behaviour will be repeated in the future in response to
a particular cue or stimulus.
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Stimulus Generalization

The inability to perceive differences between slightly dissimilar stimuli.

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Reinforcement Positive Reinforcement Positive outcomes that strengthen the

likelihood of a specific response Example: Ad showing beautiful hair as a
reinforcement to buy shampoo Negative Reinforcement Unpleasant or negative
outcomes that serve to encourage a specific behaviour Example: Ad showing
wrinkled skin as reinforcement to buy skin cream
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Other Concepts in Reinforcement

Punishment
Choose reinforcement rather than punishment.

Extinction
Combat with consumer satisfaction.

Forgetting
Combat with repetition.

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Observational Learning

A process by which individuals observe the behaviour of others, and

consequences of such behaviour. Also known as modelling or vicarious
learning.

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Components Of Observational Learning

Attention

Retention

Production Process

Motivation

Observational Learning

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Cognitive Learning Theory

Holds that the kind of learning most characteristic of human beings is

problem solving, which enables individuals to gain some control over their
environment.

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Classical Conditioning

A behavioural learning theory, according to which a stimulus is paired with another

stimulus that elicits a known response which serves to produce the same response
when used alone.

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Models of Classical Conditioning

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Instrumental (Operant) Conditioning

A behavioural theory of learning based on trial-and-error process, with habits

forced as the result of positive experiences (reinforcement) resulting from certain
responses or behaviours.

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Operant Conditioning (Cont.)

is the process in which the frequency of occurrence of a bit of behaviour
is modified by the consequences of the behaviour. If positively reinforced,
the likelihood of the behaviour being repeated increases. If punished, the
likelihood of the behaviour being repeated decreases.
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Operant (or instrumental) conditioning (Cont.)

Stimulus Response Reward Reinforcement Can you explain habit?

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Instrumental (Operant) Conditioning (Cont.)

Reinforcement

Likelihood Of Behaviour

Behaviour

Negative Reinforcement

NOT the same thing! Punishment

Likelihood Of Behaviour
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Reinforcement: An Example You eat a cake (behaviour) > Delicious (reward)

> more likely to eat more cakes on other occasions

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Extinction Behaviour which is not reinforced tends to become extinct gradually.

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Ehrenberg

ATR

Model

Awareness Trial

Reinforcement

Advertising
Note: The thicker (darker) lines denote the major effects.

Repeat purchase

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Trial Learning/Experience Repeat purchasing Commitment Involvement

Behavioural Loyalty
Loyalty

Attitudinal Loyalty

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Brand Loyalty vs. Habit Habit: the consumer picks product without much
thought, perhaps for convenience. Loyalty: the consumer
actively seeks the product.

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Brand Loyalty

Function of Three Groups of Influences

1. Consumer drivers 2. Brand drivers 3. Social drivers

Four types of loyalty

1. 2. 3. 4. No loyalty Covetous loyalty Inertia loyalty Premium loyalty
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Developing Brand Loyalty: Tricks and Traps 1. Product quality > satisfaction 2.
Sales promotions 3. Stealing loyal consumers away from others 4. Price
value exclusiveness

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Memory
Short term (compare to RAM > volatile)
mnemonic devices

Long term (compare to hard disk > longer in duration but imperfect
I remember it well)

STM

REHEARSAL

LTM

DECAY
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Retention
Information is stored in longterm memory
Episodically: by the order in which it is acquired Semantically: according to
significant concepts Total package of associations is called a schema.
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Role of Memory in Learning

Stages 1. Encode 2. Storage 3. Decode and retrieval

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Recognition vs. Recall

Recognition Remembering with stimulus Recall/Retrieve Remembering without stimulus

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The Cycle of Remembering

Learning

Short-term Memory

Long-term Memory

Retrievall

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The consumer observes a positive response by two teens.

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Information Processing

Relates to cognitive ability and the complexity of the information.

Individuals differ in imagerytheir ability to
form mental images, which influences recall.

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Information Processing and Memory Stores

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Information Processing

Movement from shortterm to longterm storage depends on: Rehearsal

cognitive practice Encodingmemorys associations or the way
information is stored.

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Experiential Marketing
Identity Related
Logo/Names (NIKE)

Communication/ Advertising
(TASTE OF INDIA)

Product Presence
Design/Packaging (FRAGRANCES)

Experiential Marketing

Website/Electronic Media (ENCYCLOPEDIAS)

CoBranding
Events/Sponsorships (FEMINA MISS INDIA)

Spatial Environment Retail/Office (BARISTA)

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Consumers Dissonance

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Cognitive Dissonance
Psychological discomfort caused by inconsistencies among a persons beliefs,
attitudes, and actions. Varies in intensity based on importance of issue
and degree of inconsistency. Induces a drive state to avoid or reduce
dissonance by changing beliefs, attitudes, or behaviours
and thereby restore consistency.
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Why the Dissonance?

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Causes of Dissonance
Performance risk Physical risk (wearout) High financial commitment
High involvement level High social visibility Information overload

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Is the Grass Greener on the Other Side?

Dissonancepredominantly postpurchase behaviour
Lack of confidence (doubts) about the correctness of a
prior purchase decision and efforts to reconcile doubts
Did I do the right thing?

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Reactions to Dissonance
The Consumer eliminating or reevaluating one of the cognitive
elements, or his responsibility, or control over the act or decision.
Information can be denied or distorted or forgotten in the service
of dissonance reduction.
Minimizing the importance of the issue or decision that led to the
dissonant state. New cognitive elements can be added to support the decision.
Potential Reactions
Return the product. Seek confirmatory information.

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Thank You.

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Communication and Consumer Behaviour

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Direct Communication

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What is Communication?
A tool used by marketers to persuade consumers to act in a desired way.
Transmission of message from a sender to a receiver via a medium of transmission.
Modern technology is inducing tremendous change in mass communication media.

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Basic Communication Model:

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The Sender
Initiator of a communication Formal sourceorganization Informal sourceA close
friend, peer group or relative who provides information or advice.

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The Receiver
A targeted prospect or a customer Every receiver interprets the message in his/her
own perceptions and experiences. Intermediary receiversThose who would specify or
prescribe the marketers products (Wholesalers, retailers and distributors).
Unintended receiversShareholders, creditors, suppliers, employees, bankers, and
the local community.

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The Medium
The communications channel Impersonala mass media InterpersonalFormal or Informal
Formalbetween a marketers agent (sales person) and a customer Informalbetween
two or more people by mail, etc.

Classification of mass media

Print (Newspapers, magazines, billboards) Broadcast (Radio, television) Electronic
(Internet )
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Social Media: Definition

Social media describes the online technologies and practices that people use to
share opinions, insights, experiences, and perspectives with each other. Social
media can take many different forms, including text, images, audio, and video.
Popular social media include blogs, message boards, podcasts, wikis, and vlogs.

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Simply put:
Social Media refer to people having communication online.

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The Message
Verbal
Spoken or written Has more product specific information.

Non-verbal
A photograph, an illustration or a symbol Stays in the mind of a customer for long.

Generally a mix of verbal and non-verbal message is preferred.

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Feedback
Permits the sender to reinforce, to change or to modify the message so that it is
understood in the intended way. Common forms of feedback
Body language Facial gestures Verbal feedback

Feedback is essential and difficult to obtain in impersonal communication.

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The Communication Process

Communication process involves the: Sender Receiver Medium Message Target Audience
(the receivers) Feedbackthe receivers response

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Comprehensive Communication Model

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The Message Initiator (Source)

Issues with Credibility
Credibility of Informal Sources Credibility of Formal Sources Credibility of
Spokespersons and Endorsers Message Credibility Sources include word of mouth.
These sources are also called opinion leaders. Informal sources may not always be
credible.

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The Message Initiator (Source)

Issues with Credibility

Credibility of Informal Sources Credibility of Formal Sources Credibility of

Spokespersons and Endorsers Message Credibility

Neutral sources have the greatest credibility. Source credibility judged on past
performance, reputation, service, quality, spokespersons image, retailers, and
social responsibility. Institutional advertising used to promote favourable company
image.

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The Message Initiator (Source)

Issues with Credibility
Credibility of Informal Sources Credibility of Formal Sources Credibility of
Spokespersons and Endorsers Message Credibility

Effectiveness related to:

The message Synergy between the endorser and the type of product Demographic
characteristics of the endorser Corporate credibility Endorsement wording

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Maria Sharapova for Nike

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The Message Initiator (Source)

Issues with Credibility
Credibility of Informal Sources Credibility of Formal Sources Credibility of
Spokespersons and Endorsers Message Credibility Credibility of retailers Reputation
of the medium that carries the ad Consumers previous experience with product

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The Target Audience (Receivers)

Personal characteristics and comprehension Involvement and congruency Mood Barriers
to communication
Selective exposure to messages Psychological noise

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FeedbackReceivers Response
Feedback should be gathered:
Promptly Accurately

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Advertising Effectiveness Research

Media and message exposure measures:
How many consumers received the message. Which consumers received the message.

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Advertising Effectiveness Research

(Cont.)

Message Attention and Interpretation

Physiological measures Theater tests Attitudinal measures

Message Recall Measures

Day-after recall

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Designing Persuasive Communications

Communications strategy
Must include objectives. Includes cognitive models. Newer models include
perception, experience, and memory.

Target Audience
Segmentation is the key.

Media Strategy
Consumer profile Audience profiles

Message Strategy
Involvement theory
Central and peripheral routes
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Designing Persuasive Communications

Message Structure and Presentation
Resonance Message framing Comparative advertising Order effects Repetition Wordplay
Used to create a double meaning when used with a relevant picture

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Word Play
An ad with word play used for signifying the need to save water.

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Word Play on SUV

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Designing Persuasive Communications

Message Structure and Presentation
Resonance Message framing Comparative advertising Order effects Repetition Positive
framing Negative framing One-sided vs. two-sided

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Designing Persuasive Communications (Contd.)

Message Structure and Presentation
Resonance Message framing Comparative advertising Order effects Repetition Marketer
claims product superiority over another brand. Useful for positioning.

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Designing Persuasive Communications

Message Structure and Presentation

(contd.)

Resonance Message framing Comparative advertising Order effects Repetition

Primacy Recency Order of benefits Brand name

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Designing Persuasive Communications

(contd.)

Message Structure and Presentation

Resonance Message framing Comparative advertising Order effects Repetition
Important for learning

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Emotional Advertising Appeals

Fear Humour Abrasive advertising Sex in advertising Audience participation

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Ads with Humour

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Messages with Fear

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THANK YOU.

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Consumer Personality

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Personality Selection
Psychological

Brand Personality

Product

Target Segment

Functional

Economic

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Brand Personality
Personality created to appeal target customers Association with brand:
Character/Personality Emotional

Positioning of brand:
Social Values

Benefits provided:
Attributes Quality

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Dimensions

Source: Dimensions of Brand Personality by Jennifer L. Aaker

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Consumer Expectations
Product
Clothes Cars Mobile Phone Insurance Cellular Service Computer House

Expectations
Sharp appearance, Style, Attractiveness, Comfort, Ruggedness Comfort, Value for
money, Social status, Family product, Performance Durability, Style, Social status
Peace of mind, Secured future Connectivity, Closeness to loved ones Pleasure,
Profits from miracle of modern technology Comfort, Contentment, Good investment,
Pride of ownership

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Components of Brand Personality

Brand Name & Logo Colour & Packaging Advertisement (including Brand Ambassador)
Price Performance

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Personality-Colour Association
Respect Authority Secure Natural Relaxed Human Exciting, Hot Strong Passionate
Informal Masculine Nature Sophistication Power Authority

Caution Novelty Temporary Warmth

Powerful Affordable Informal Purity Cleanliness Delicacy Formality

Regal Wealthy Stately

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Brand Names
Red Bull, Power Horse Energy Drinks Himalayan Mineral Water Le Bon Cheese
TwiningsDarjeeling Tea Puma Footwear Dove Bathing Soap

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Thank You

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Role of Age
Consumption Perception

Behaviour Learning

Choice

CONSUMER
Knowledge

Preference

Ideology

Intuition

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Increased Spending by Young Unmarried Employees

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Tech savvy

Adults Shift from value for money to lavish lifestyle

Convenience

Stylish looks and features

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Protection from germs: Economical without sacrificing the quality

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Higher Spending by Middleaged People and Senior Citizens

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Feeling and looking good

Old

Convenience

Shift focus from saving for children to enjoying their own life

Stylish looks and features

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People Change by Age

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Age-specific Targeting
set of products

Target kids, adults and older consumers with different Customers classificationnew
born (0-1month), infant (25 months), cruiser (6-12 months), toddler (1318
months), explorer (1923 months), preschoolers (24 + months) Targeted 21 years old
with the boxy image, sexy college kids partying, but 42 yr olds felt nostalgic
about their youth and bought the car EZ squirt ketchup for teens $3 million
marketing to attract 1224 yr olds.

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Age and Life Stage

Higher expenditure

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Decision-Making Process
Type of Families Delayed marriages Dual career families Smaller families Role of
spouses Husband-dominant decisions Wife-dominant decisions Autonomous decisions
Joint decisions

Need to understand decision maker at every stage

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THANK YOU.

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Influence of Reference Groups

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Marketer Dominated Source High

Non-Marketer Dominated Source

Low

Mass Media Delivered

Personally Delivered

Low

High
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Contents

1 2 3 4

Reference Groups Types of Reference Groups

Reference Groups in India

Reference Group in Choice of EducationPossible Hypotheses

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Reference Group

Person Group Point of Ref.

Values

Formation

Attitudes Behaviour

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Types of Reference Groups

Reference Groups Reference Groups

Contactual

Aspirational

Disclaimant

Avoidance

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Indian Reference Groups

Indian Reference Groups
Non-Celebrity

Education & Career Choices

Parents Relatives Well-Wishers Seniors Friends No professional catering

Faith Groups
Religious Ritual Worship Spiritual Caste based Social marketing quotient

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Education & Career Choices

Reference Groups

Early School

Middle School

Career Choice

Sphere of Influence
Graduation (Entry)

PostGraduation

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Hypotheses
1
Early School, unlike Middle School, is still governed more by proximity to home
than by reference groups

2
Regional variations arise as supplydemand of occupations & societal opinion govern
graduation & career

3
Reference Group influences changes while at graduation Individual chooses Reference
group now

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Impact of Culture on Consumer Behaviour

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What is Culture?

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CULTURE
Culture is a combination of learned beliefs, values and customs that can direct the
behaviour of consumers in a specific society.
Knowledge & beliefs

In India, hard work is attributed with success.

Values

Customs

Turban is worn by male members of the Sikh religion in India.

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Characteristics of Culture
Characteristics
Culture is learned rather than being born with. Culture is manifested within
boundaries of acceptable behaviour. Transmitted from generation to
generation. Rituals practiced. Dress sense(Sari is the traditional Indian dress
while jeans, skirts, frock, etc. are considered more modern.

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Cultural rules can be categorized into three types

Formal Rules
Explicit standards as to how one should behave, and violations often carry severe
sanctions.

Informal Rules

Technical Rules

Involve implicit standards as to what constitutes a good product. In Bollywood,

normally a Hindi movie must have at least five good songs to be successful.

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Sub-cultures
Sub-cultures consist of ethnic groups such as regional, linguistic, rural vs.
urban, family composition, economic strata etc. Variations seen within a culture.
These groups have common traditions, heritage, beliefs, customs and experiences
that would differentiate different sub-cultures. For example, there are certain
common aspects in the Indian culture but almost each state in the country reflects
a sub-culture. Dress, eating habits, customs etc. are somewhat unique in different
parts of India and also, the life style pattern varies.

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Indian Teenagers in contrast to Western Teenagers

Western teenagers
Grew up in relative economic stability. Confronted by new realities: drugs,
AIDs, pollution, teenage pregnancy, divorce, etc. Less sheltered home environment
and unstable family life. From young age itself learn to be independent and make
their own choices in life. More independent and self-sufficient. Focus early on
things they believe would provide for a secure and happy life, like earning money,
spending culture or material possession and acquisition. A more stressful life as
self-esteem is vested in doing well in multi-faceted roles.

Indian teenagers
Grew up in period of fast economic growth with good prospects. Confronted by new
realities through the mass media but with few real-life experiences. Have more
sheltered home environment and stable family life. Youth live with family of origin
until their marriage. Are less independent and self-sufficient. Are idealistic in
their expectations and tend to deal only with issues that touch them personally.
Lead a less stressful life as achievement in studies is paramount and other matters
appear secondary.
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Features of Indian Culture

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Dimensions of Cultural Diversity in India Language Rural vs. Urban India

Rich vs. Poor Geographical diversity Liberal vs. Conservative

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Diversity in Language, Religious Customs, Beliefs

There are 28 states and 22 languages Numerous dialects spoken by people
Religious customs, rituals and beliefs vary
Different identities, ideologies, interests and outlook

Implication for Marketers

Communication & packaging in local language
Products need to be aligned with culture
There is a right way and wrong way for everything, but that can change from
place to place.
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Rural vs. Urban India

30% of the population live in urban areas. 70% live in rural areas
but this means the majority of the market is spread across the country.
Different income levels in rural and urban India.
Rural customers attach more importance to functionality
while urban consumers give importance to aesthetics/service parameters.

Implication for Marketers

Different marketing mix for both the markets Mode of distribution/channels differs
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Rich vs. Poor: Different needs to fulfill

Source: Bijapurkar 2007 (NCAER)

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Geographical Diversity
An Average Urban North Indian Consumer
Beliefs & valuesconservative in thinking, respectful Lifestyle
flamboyant, likes to have a lot of external glitter Behaviour
warm and friendly, herd mentality, inquisitive

An Average Urban Eastern India Consumer

Beliefs & valuesslow in speed, relaxed, simple Lifestyle
traditional, simple basic Behaviouropinionated, slow adopters, rigid

An average Urban Western India Consumer

Beliefs & valuesprogressive by nature, professional, values time Lifestyle
balanced, but very task oriented Behaviournoninterfering but helpful,
early adopter, trendsetter, calculative

An Average Urban South Indian Consumer

Beliefs & valuesorthodox and deep rooted Lifestylesimple Behaviour
curt but pragmatic, practical, conservative, cautious, not a risktaker 282
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Marketers must Understand Indian Culture in Order to Succeed

Ford cars specially designed for Indian roads. Electrolux's made
forIndia fridgechill drinking water, keeps food fresh &
withstands long power cuts. Samsungmicrowave oven with grill. Nokia
launched a handset Made for India Nokia 1100. McDonalds McAloo Tikki
Burger & Pizza McPuff. Cartoon Network introduced South Indian folk tale Tenali
Ram. Walt Disney cartoon TV shows are in Hindi. Omega
watches picked an Indian film personality to replace Cindy
Crawford in its ad campaign. CocaCola
has redesigned its crates as well as trucks for safe delivery on poor roads.

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Overall Marketers need to

Indianize, Humanize, Harmonize !!

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OR

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OR

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A Model of Consumer Behaviour

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Buyer Characteristics Personal Psychological

Buyer Decision Process Problem Recognition Information Search Evaluation

Decision Post-purchase Behaviour

Marketing4Ps Product Price Place Promotion

Environmental Economic Technological Political SocioCultural

Post-purchase Evaluation Product Choice Brand Choice Dealer Choice Purchase

Timing Purchase Amount

Trial

Repeat Purchase
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Decision-Making Process
Problem Recognition Perceiving a difference between a persons ideal and
Perceiving a Need actual situation big enough to trigger a decision

Information Search

Clarifies the options open to consumers Seeking Value Prior Experience,

Word of Mouth, Advtg/Publicity Mktg efforts.
Evaluate the parameters and options available for product
purchase: Form Choice Criterion Assessing Value

Analysis of Alternatives

Purchase Decision

Decision on when, where and from whom to buy Buying Value

PostPurchase Behaviour

Value in Evaluation during consumption/use consumption/Use

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Problem Recognition

Why do I need it?

Information Search What exactly is this product? Analysis of Alternatives

Purchase Decision Postpurchase Behaviour
What options are available? How exactly does purchase happen?
Did I make the right choice?

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Problem Recognition
Ideal State
Simple Expectations Future goals/Aspirations Motivations/Self Image Culture
Change in Personal Circumstances

Actual State
Difference
Physical factors Need External Stimuli

Problem Recognition

Perceived difference between an ideal state and actual state

motivates the consumer to take actions.

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Marketing Implications

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Information Search
Internal Search
Process of recalling stored information from memory Dependent on motivation,
ability & opportunity More recall in high involvement, perceived risk
Information retrieved Brand Attribute Evaluation Experience

External Search
Using outside sources Types: Prepurchase Due to problem recognition Ongoing
Regular; due to enduring involvement Retailer; media; experiential;
interpersonal; independent

Information Search

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Evaluation of Alternatives: Alternative Set

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Total Set

Awareness Set

Consideration Set Purchase Decision

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Purchase Decision: Process

Influencer plays an important role in consumer decision making.

Roles played by members of the family varies with demographic
Influencer may not be an expert but he/she assumes a key role in
parameters as well as with the type of the products
consumer decision and his/her family dynamics.

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Decision-Making Approaches

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Post-Purchase Behaviour
Consumer evaluates the product during consumption to see if it
satisfies the need/expectation.

Influenced by type of preceding decisionmaking processes.

Depends on the level of purchase involvement or the level of interest
in a purchase. Cognitive dissonance and Experiential marketing play an
important role in shaping up these behaviours.

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Selective Search for Evidence

Gathers facts that supports a particular decision

Disregards facts that support other conclusion.

Conservatism and Inertia

Unwillingness to change thought pattern

Group Think

Peer pressure to conform to views held by a group

Recency

More attention on recent information Ignores/Forgets distant information

Inability to look beyond the scope of past experiences Rejection of unfamiliar
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Experiential Limitations
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Consumer decision making process among todays youth

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What is Celebrity Endorsement?

The use of celebrities in order to increase the sales and/or
the recall value of a brand is called celebrity endorsements.
Types of Celebrity Endorsements
Testimonial: Attestation by a celebrity based on personal usage. Endorsement:
Celebrity lends his/her name and appears on behalf of the product or service.
Actor: Character endorsement. Spokesperson:
Celebrity represents the brand or company over an extended part of time.
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Advantages
Instant awareness, knowledge about the brand and easy recall.
Values and image of the brand are defined,
highlighted and refreshed by the celebrity.
The celebrity adds new edge and dimension to the brand.
Credibility, trust, association, aspiration and connectivity to brand.
Belief in efficiency and new appearance that will result in at least trial usage.
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Hypothesis 1
Every product has its own identity and its very important to
endorse a product with a suitable personality.

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The Right Personality

Perfect match between brand image and celebrity
Celebrity's fit with the brand image and the celebrity target audience match.
Celebrity associated values and the celebrityproduct match.
Costs of acquiring the celebrity and his or her
popularity along with controversy risks associated with the celebrity.
Credibility, availability and physical attractiveness of celebrity.
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Hypothesis 2
Indian consumers have matured and celebrity
endorsement alone is not sufficient to attract them.

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Hypothesis 3
There are chances that the celebrity gains higher
popularity than the product endorsed.

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Hypothesis 4
Single celebrityMultiple products: Consumers
dilemma to associate the brands with the celebrity.

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Hypothesis 5
Consumer buys a product based on its features rather
than the celebrity endorsement.

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Thank You!

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IMPULSIVE BUYING BEHAVIOUR

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Impulse Buying
Sudden, compelling, unplanned, hedonically complex purchase. Generates billions of
dollars in sales every year for consumer products. Reacts often mindlessly to
stimuli that trigger certain automated responses. Information processing might have
taken place earlier; otherwise, behaviour may be totally impulse driven.

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Factors Affecting Impulse Buying Behaviour in FMCG

Price and discount Advertising and sales promotion Visual merchandising Emotional
attachment Company Income Festival season

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Stops Needed for Boosting Impulse Sales

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Examples
A fan of Arsenal Football Club watching a football match of the team in a mall
deciding to buy an Arsenal T-shirt on display at the same store.

A person with no special passion for a brand of high end wristwatches is impressed
with the look and make of a Rado watch and buys it.
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Hypothesis 1
Promotion and placement of product in the supermarkets have positive impact on
impulsive purchase behaviour Promotion Advertisement of product in print and visual
media Various promotional activities regarding product Erecting hoardings and
distributing pamphlets of product Display Packaging of product Placing of product
in store
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Hypothesis 2
Lifestyle traits of a person characterize his impulsive purchase. Traits
considered: Fashion involvement Price consciousness

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Hypothesis 3
Discount offers on products have a strong positive effect on impulsive buying
consumer behaviour.

Branded products attract more on discount offers as opposed to unbranded ones.

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Hypothesis 4
Shopping with others increases impulsive purchasing. Impulsive purchasing at
individual level vs. impulsive purchasing with others Shopping with family members,
friends and colleagues Factors
Susceptibility to influence Normative: conformance to social norms

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Thank you

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Indian Market Diversity

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Demographic Diversity

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Diversity in Men
Normally, an Indian Male is:

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Contented Conservative Anxious Rebel Troubled Homebody Tight-Fisted Traditionalist

Affluent Sophisticated Contemporary Housewife Gracious Hedonist

Diversity in Women
Normally, an Indian Woman is: Housewife; happy with her state of her life/society
Working women; happy with existing state of affairs Housewife; unsure of
sitting at home Traditional; believes in saving for future Affluent;
comfortable with the finer things in life Housewife; active & sees herself as
equal to husband Working women; believes in looking after herself

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Diversity in Youth

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Types of Diversity

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Regional Diversity in India

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Regional Diversity (cont)

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Socio-Economic Diversity

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Diversity in Cuisine
The food available in India is as diverse as its culture, its racial structure,
its geography and climate. The essence of good cooking revolves around
appropriate use of aromatic spices. The cultures that have influenced Indian food
are the traditions of different religions.
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Diversity in Clothing
Traditional Indian clothings for women are sari, salwar-kameez, ghagra-choli.
For men, it is kurta, dhoti, pancha. Influenced by western culture: Blend of
Indian and Western clothings.

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Understanding Indian Rural Market Behaviour

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Importance of Rural India

India still lives in her villages.
Urban markets are overcrowded and getting saturated.
The understanding of the rural consumer behaviour is diffused
and sometimes confusing . Rural markets
need different approach from marketing in urban locations.

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Defining Rural India

Organization NSSO ( Census) Definition Population density < 400/sq km
75% of the male working population is engaged in agriculture. Limitations
Rural not defined

Planning Commission

Places up to 5,000 population are considered rural

Characteristics not defined

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Rural IndiaPopulation Trends

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Rural Income Dispersal

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FMCG Consumption Trends

Products Toilet Soap Detergent Cake Cooking Oil Hair Oil/Cream Tea Toothpaste
Washing Powder Electric Bulb Shampoo Biscuits Health Beverages Urban (1000 HH)
998 980 968 897 876 822 819 723 663 579 324 Rural (1000 HH) 992 950 952 787 758
449 576 394 352 314 67

*HH = Households Source: National Council for Applied Economic Research, 2002
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Myth 1: Rural is one homogeneous mass.

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Rural SEC classification

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Upmarket Rural Consumers

Rural SEC Groups
H o w D iffe re n t A re U p -M a rk e t R u ra l C o n s u m e rs ?
45 Percentage Of HH's Owning 40 35 30 25 20 15 10 5 0 R1 R2 R3 R4 C olTV C & S C
onn Tw o-W hlrs P hone F ridge A /C ooler F our-W hlr W /M ac h

Stereo-typed view of undifferentiated rural consumers no longer valid

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Myth 2: Companies/Brands can Thrive by Operating Entirely on Urban Market

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Rural Market has Emerged by its Sheer Size

742 million people Estimated annual size of the rural market (Rs., crore)
FMCG Durables Agriinputs (including tractors) Two/FourWheelers Total 65,000 5,000
45,000 8,000 1,23,000

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Marketing Opportunities
Low penetration rates in rural areas (per 1000 households) Durables Motor Cycle CTV
Pressure Cooker Refrigerator Urban Rural 77 28
304 48 635 178 335 35 Total 42 121 309 120

FMCG Urban Shampoo 663 Tooth Paste 822

Health Beverage 324 Packaged Biscuits 579 Face Cream 429

Rural Total 352 442 449 556 67 140 315 390 185 254
Source: NCAER 2002

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Myth 3: Rural India A Black hole for communication

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Media Exposure Levels

U p m a rk e t C o n s u m e rs U s e M o re M e d ia
Percentage Exposed At Least Once/ Week 80 70 60 50 40 30 20 10 0 R1 R2 R3 R4 P re s
s TV C & S TV R a d io

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Infrastructure Improving Rapidly

70 60 50 40 30 20 10 0 Satellite TV Radio Press Cinema TV All Media

70% of R1,R2,R3 can be reached through mass media.

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Myth 4: Rural GDP is All about Agriculture

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100% 80% 60% 40%

33.9 17.7 48.4

20% 0%

AGRI

IND

SER

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Myth 5: Rural Disposable Income is a Function of Monsoon and not Growing.

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Myth 6: Reach and only reach is the key.

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Distribution of Villages

Source: Census 2001

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Myth 7: Urban trickle down communication works in rural India.

What is a Rural Consumer Like?

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KEEP IT SIMPLE
I am eager to adopt or buy, but I do so only if you talk in my language and
signage.

Supporting Insights
Its great fun to watch TV, but I cannot understand and relate to it.
I am willing to listen and change, only if you interact and engage with me.
I am simpleI take things literally, especially when it comes to ads.
I cant read or write, but I can understand symbols, colours and images.
Talk to me in my language in a simple way, thats what I understand.

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FAMILIARITY BREEDS COMFORT

Only if its familiar, will I trust.
Supporting Insights I have faith in the Brands I have used.
If I am satisfied with my familiar products, then why should I change?
I am averse to taking risks, particularly if it is new and unfamiliar.
Familiar things make me secure.
If I find my village folks are using a particular brand, then I feel reassured.

Propensity for trial is relatively poor. Choice dictated by Group Influence

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LUXURIES@ Rs.5
Jo Chahoon Woh Paoon, Lekin Panch Rupai Mein (Will get what I want, but only at
Rs. 5) Supporting Insights
I buy low cost products because they fit into my budget, as they give the value
I am seeking. At any time I have limited amount to spend, but I need to buy a
number of things, so luxury products are important. Rs. 5my lakshman rekha
I do not have more than that to spend. Rs. 5 and Rs. 10 are magical price points
in rural India.
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SHOW VALUEThen Rural Buyers WILL BUY

I will pay more only if you show me that I get more tangible benefits that I want
out of the product.
Supporting Insights If I see and feel the difference
only then will I believe and act. Show me the value
Performance quality or quantity; only then will I buy.
If I can sense the difference, I dont mind paying a little extra for it.
If I cant see the difference, I shall select the cheaper one.
Price is important; yet it should meet my expectations.

Packaging and brand experience are the key.

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HAATMERI DUNIYAN
Haats (village markets) are my window to the worldwhere I experience new things.

Supporting Insights
Haat is my outing. I am looking to explore . Haat
gives me an opportunity to buy products that I wish to buy. Haats
are a festive outing and lots of funwhere I get to see new things.
I have some places (Haats) which I regularly visit and where I am open to change.

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Discoveries about Rural Market

Discovery 1 Discovery 2 : The rural market is a huge potential market. :
The rural consumer can be reached with a
combination of mass and unconventional media. Discovery 3 :
The rural market is a differentiated market. Discovery 4 :
Rural GDP is not about agriculture alone. Discovery 5 :
Rural disposable incomes are growing and growing fast. Discovery 6 :
Quality of reach and not mere reach is going to
be the key differentiator for the rural market. Discovery 7 :
Need for a rural marketing mix. Rural relevant advertising Consumer activation
Use of nonconventional media like haats, fairs, etc. Price point SKUs.
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The future lies with those companies who see the poor as their customers.
CK Prahalad, Jan 2000

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4 Ps & 4 As
ProductPricePlacePromotion AcceptabilityAffordabilityAvailabilityAwareness
Marketing Tools Product Price Place Promotion Marketing Challenges
Acceptability Affordability Availability Awareness

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Product

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Appropriate Product Strategies

Small unit packaging Product featuresservice qualityprice and
performance relationship Simplicity is the key New product designs
Sturdy products Utilityoriented products Branding strategy

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Packaging
Associated with affordability convenience consumer
recognition, and product protection
Packaging material, size, convenience and aesthetics

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Fakes: Some Examples

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Pricing

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Issues in PricingAffordability
Low cost/cheap products Avoid sophisticated packing
Refill packs/reusable packaging Highlighting value Price adaptations

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Examples of Rural Pricing Strategies

Godrej: Cinthol, Fair Glow and Godrej in 50 g packs, priced at Rs. 4
5, meant specifically for Madhya Pradesh, Bihar and Uttar Pradesh.
HLL: Lifebuoy at Rs. 2 for 50 g. CocaCola: The returnable 200
ml glass bottle priced at Rs. 5.

Colgate Cibaca

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PlaceRural Distribution Challenges

Large number of small markets Dispersed population and trade Poor connectivity
Low availability of suitable dealers Inadequate banking/ credit facilities
Poor product display and visibility Poor communication of offers and schemes

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Levels of Distribution
Level Partner Company Depot/C & FA Distributor/Van Operator/
Super Stockist / Rural Distributor SubDistributor/ Retail Stockist/Sub
Stockist/Star Seller Wholesaler Retailer Location National/State level
District level

1 2

Tehsil HQ, towns and large villages

4 5

Feeder towns, large villages, haats Villages, haats

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Distribution Adaptations
Hub and Spoke Model Example: CocaCola
Use of affinity groups Example: Project Shakti Haat Activation Example: Colgate
Syndicated distribution Example: Cavin Care & Amrutanjan
Use of marketing cooperatives Example: Warna Bazaar in Rural Areas
Mobile traders Example: FMCG companies

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Promotion Issues
Most of the products are sold in the local rural haats. Result:
They may not fetch a very good price.
They have limited demand resulting in low turnover and low income.
Chance for product improvement is limited.

Some state government bodies extend preferential treatment to

these products at the time of procurement. Limited awareness.
Attempts are made to publicize and promote the sale of these
products through periodic exhibitions and melas.

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Promotion Adaptations
Conventional Television Radio Non Conventional Haat and Mela
Folk Media( puppet and magic show) Video Van Mandi (Market) Personalised
Direct mailer POS (demonstration, leaflet)

Press Cinema

Word of mouth Interpersonal communication

Outdoor: Wall Painting, Hoarding

Animator

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Melas & Haats

Melas 1. 25,000 melas 2. Companies can concentrate on the top 100 melas 3. Pushkar
Mela in Rajasthan 4. Organized by the state Veterinary Department 5.
Product sales, promotion, demonstration and database generation 6.
Cultural activities and rural sports
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Haats 1. Periodic markets located in larger villages (> 40,000) populations. 2.

1050 villages are serviced. 3. Sunday markets are most popular. 4.
Average number of outlets is 315 and average daily sales are about Rs. 2 lakhs.
5. Traders participate in at least 4 haats. 6.
81% of the visitors are repeat customers.
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Types of Promotions
Advertising Sales promotionscoupons, contests, demonstrations and sampling,
Example: Tata Shakti Haat Hungama Direct marketing, Example: Videocon
Publicity, Example: Project Shakti and AP Online
Using a direct selling through a salesforce, Example: Swasthya Chetna for Lifebuoy
Push strategysalesforce and trade promotion Pull strategy
advertising and consumer promotion

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Future Prospects
Rural per capita consumption of FMCGs to equal current urban levels by 2017.
Industry analysts expect the FMCG sector in rural areas to
grow 40% against 25% in urban areas.
Telecom expected to grow from 100 million connections today to 300 million by 2012
Semiurban & rural life insurance market expected to rise from US$ 5 bn
to US$ 20 bn by 2012. Government spending will continue to grow.

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Changing Indian Consumer

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Is India Different?
India has shown tremendous growth in the last two decades. Brand India is riding
high. Happy times for Indian consumer as disposable income has increased
considerably over the years. India's growing consumer goods market provides the
opportunity for multinationals. But with this opportunity lies the hurdle to
understand the ever changing Indian consumer.
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Factors Responsible for Change

Rising disposable income and increasing western influence. Average Indian consumer
today is richer, ambitious, more knowledgeable and profile-conscious. More and more
women focusing on career instead of homemaking. A more dynamic lifestyle leading to
reliance on easy-to-use products like ready-to-eat food, home delivery, etc.
391

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Who are the New Indian Consumers?

India's consumers are young:
70% of the country's citizens are below the age of 35 years, and half of those are
under 18 years of age.

People are deeply rooted in Indian culture and traditions yet connected to and
curious about the outside world. People in the middle-income segment still spend
about half their budgets on the basics, that amount is falling every year, leaving
more money for other areas of consumption. Beyond basic needs, households make
their children's future a clear priority. Education is seen as a passport to a
better tomorrow. To gain a winning edge, parents spend much money and effort
choosing the right schools and tutoring for their children and invest in nutrition,
computer games, and books.

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Has the Indian Consumer Changed?

Yes! But the change is gradual and noticeable only over a sufficient period of
time. It is not visible unless we look back. An individuals values/beliefs may
differ from the prevalent culture unorthodox.

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SOME CHANGES AS NOTICED IN INDIA

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Eating Out
In urban India, families that do not eat out are considered oldfashioned and
conservative. Most popular-multi-cuisine restaurants offering Indian fare, along
with a form of Chinese and Western fast food. Pizza and cheese, with Indian
flavours and spice.

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Health & Fitness

Indians are paying more attention to their health and striving for better fitness
levels. For example, joining gyms or clubs. Rapid rise in sale of fruit juices,
cool drinks, etc.

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Metro-sexual Male
Male grooming a growing business in India Annually growing at 15% Currently,
usage is restricted to the young, urban upper income male.

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Women Empowerment
More women entering the workforce Increased use of cosmetics Increasing time
pressures Convenience gains value Easy to cook food, home delivery, wide choices
in shops, etc. Demand for ancillary services/products, e.g. cook, domestic help,
microwave oven
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Teens
With increased awareness through television and advertising, teens are an important
influence on family decision-making in urban India. Have mastered the art of
bullying their parents into making purchases. Gadgets or products that they want
newly launched chocolate bar, instant noodles and breakfast cereals. mobile phones,
the TV remote, DVD player and computer programs

Marketing mangers also exploiting this surge in the number of ads for children

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Marriage
Earlier, arranged marriages used to happen with elders consent. Many people
nowadays rely on individual choice and judgement. Examples: matrimonial sites
proliferate shaadi.com, bharatmatrimony.com

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Luxury
India is experiencing a rise in incomes and higher consumption patterns. Demand
for luxury products is also on the rise. Vertu mobiles, Tag Heuer, Louis Vuitton,
Hugo Boss, Porsche, Ferrari, Parker Pen.

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Digitalization
Young people in urban areas are increasingly using the Internet. Online banking
for service payments and even for buying company shares. Success of social
networking websites. Avail Online booking of tickets for movies, trains and
airlines.
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Credit
Earlier, people avoided buying things (nonessential) on credit/loan.
Controlling desires Instant gratification Easy availability of credit Rise in
number of home and vehicle (Two, four wheelers) loans

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Snacking
Eating 2 or 3 times a day Eating when hungry. Snacks and chocolates of wide
variety available Lays, Kurkure, Perk, Cadbury Dairy Milk chocolates, Britannia
biscuits, etc
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Movies and Serials

Earlier, Movies made in Bollywood (Emotions, Action, Drama) were a craze. In
India, women are mostly housewivesidle time at home. Hence, the debut of serials
targeting this segment was launched by Balaji Telefilms (Ekta Kapoor).
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Western Influences
Opening of Indian economy, mass and social media exposure and increase in
overseas travelling Acceptance of western clothing, especially in urban India
Gifting Cards Pub culture
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THANK YOU

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