Consumer Behaviour-Ramanuj Majumdar

PHI Learning

UNDERSTANDING CONSUMER BEHAVIOUR

Consumer Behaviour: Insights from Indian Market—Ramanuj Majumdar

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CONSUMER BEHAVIOUR

Consumer behaviour entails the totality of consumer’s 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 Consumer’s Perspective

Marketer’s Perspective

Pre‐purchase issues

Purchase issues

Post‐purchase issues

Each stage poses varied issues and offers subsequent challenges for the marketer. Consumer Behaviour: Insights from Indian Market—Ramanuj Majumdar

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Pre‐purchase 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

Cultural influences on consumer behaviour The creation and diffusion of consumer culture

Psychological Factors ‐ Consumer involvement ‐ Consumer motivation ‐ Consumer’s perception Personal Factors ‐ Personality and lifestyle ‐ Family lifecycle Social Factors ‐ Reference groups ‐ Family

Consumer age, sex, social class Subcultures

It is essential for the marketer to understand how each of these factors influences consumer’s buying decision. He can then formulate strategies in line with customer needs and demands. Consumer Behaviour: Insights from Indian Market—Ramanuj Majumdar

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How do psychological factors affect the consumer’s purchase decision?

Changing consumer perception

Motivation—the secret of energy

Learning‐Superior after‐sale‐service

Belief—TATA signifies trust


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How do personal factors affect the consumer’s purchase decision? (Contd.)

Lifestyle

Self Concept—“Definitely male”

Gender—Targeting the male

Age—Targeting the youth


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How do social factors affect the consumer’s purchase decision?

Reference Group—I‐bankers Phone Influence of Family

Status Symbol Consumer Behaviour: Insights from Indian Market—Ramanuj Majumdar

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How do cultural factors affect the consumer’s purchase decision?

Subculture: Targeting the ‘Full of Life’

Targeting on the basis of Culture

Social Class Consumer Behaviour: Insights from Indian Market—Ramanuj Majumdar

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What cues/inferences do consumer’s 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. Consumer Behaviour: Insights from Indian Market—Ramanuj Majumdar

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Various Sources of Information the Marketer can Tap Radio Transport

Events

Internet

Outdoor

SMS Utilities

Gaming

Sport

Podcasts

TV

Magazines Newspapers

Word‐of‐Mouth

Posters


Direct mailers

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Purchase Time Challenges for the Marketer


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How do situational factors affect consumer’s purchase decision?

When to purchase

Three Possibilities in Consumer Purchase Decision

Where to purchase

How to purchase

Influencing Factors: Store atmosphere—Display, music, fragrance Time pressure—Peak or off‐season Pleasantness of shopping experience Schemes Consumer Behaviour: Insights from Indian Market—Ramanuj Majumdar

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Post‐purchase 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 ‐ Repeat‐purchase behaviour

Marketers use various strategies to positively influence consumer’s Post‐purchase behaviour

Post‐purchase 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? 9 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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Maslow’s 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. Consumer Behaviour: Insights from Indian Market—Ramanuj Majumdar

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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 Consumer Behaviour: Insights from Indian Market—Ramanuj Majumdar

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Emerging Trend

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• 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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Maslow’s Hierarchy of Needs

Offline

Ability to develop skills and fulfil one’s potential

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

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

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

Food, clothing, shelter, health

Online

SelfActualization Self-Esteem

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

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

Social

Security and Safety

Physiological

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

Protection from hacking; ability to maintain varying levels of privacy

Access to computer and Internet

Consumer Behaviour: Insights from Indian Market—Ramanuj Majumdar SOURCE: Amy Jo Kim’s 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. Consumer Behaviour: Insights from Indian Market—Ramanuj Majumdar

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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 Multi‐utility vehicles • Two‐wheelers • Three‐wheelers • Tractors For explaining motivations , we will concentrate on passenger cars and multi‐utility vehicles.


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Automotive Sector–Demand Drivers


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Means‐end 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

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Fuel Efficiency or Mileage

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Recommendation of peer group, Word of Mouth (WOM) and dealers opinion

• Manufacturer’s reputation, Brand name and its value • Exterior appearance and aesthetics • Petrol vs. Diesel model

about servicing and overall performance. •

Servicing and ‘the deal’ offered

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Passenger and Luggage carrying capacity

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Size, length, machine capacity

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Price and Re‐sale Value of old car model and Terms of Payment


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Automobile Purchase: Demographic Factors Family life cycle


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Committed/ recently married

Bachelor

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

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HENRY DAVID THOREAU


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Let us unlock some key trends Consumer Behaviour: Insights from Indian Market—Ramanuj Majumdar

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How the needs of the same consumer change as he moves along the family life cycle… Bachelorhood Æ Married Æ Married with children Æ Non‐dependent 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 Consumer Behaviour: Insights from Indian Market—Ramanuj Majumdar

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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 family’s need Need to travel long distance

Rational Factors

Problem with old car Status/Prestige

Emotional Factors

Promotion Peer pressure Consumer Behaviour: Insights from Indian Market—Ramanuj Majumdar

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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. Consumer Behaviour: Insights from Indian Market—Ramanuj Majumdar

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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. Consumer Behaviour: Insights from Indian Market—Ramanuj Majumdar

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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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z z

z

Perception Process by which sensations are selected, organized, and interpreted Adding meaning to raw sensations

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Elements of Perception z z z z

Sensation Absolute threshold Differential threshold Subliminal threshold

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zSensation z

z

z

Immediate response of our sensory receptors… z …eyes, ears, nose, mouth, fingers… …to basic stimuli… z …such as light, colour, sound, odour, and texture z …advertisements, brand names, commercials, and packages …depends on the sensitivity of the individual 55


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The Absolute Threshold ¾

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¾

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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. 56


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Attention z

The extent to which processing activity is devoted to a particular stimulus z

z

Competition for our attention z 3,500 ad info pieces per day z Multitasking Marketers need to break through the clutter z Microsoft’s butterfly decals on sidewalks z 3D logos on cricket grounds 57


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The Differential Threshold ¾

¾ ¾

¾

The minimal detectable difference between two similar stimuli (just noticeable difference). It’s not at all the absolute difference. It’s 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 z

Need to determine the relevant JND for the products so that z z

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 z

Stimulus Selection Factors z

z

Weber’s Law z Differences in size, colour, position, and novelty Interpretation: assigned meaning to stimuli z Schema leads to stimulus evaluation

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Weber’s 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). 63


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Perceptual Selection z

Depends on two major factors z z

Consumers’ previous experience (expectations) Consumers’ motives

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Some Marketing Variables Influencing Consumer Perception z z z z z z

Nature of the product Physical attributes of the product Package design Brand name Advertisements and commercials Position of an ad 65


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Concepts Concerning Selective Perception

z z z z

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 Principle—People tend to perceive an incomplete picture as complete. • The Principle of Similarity—Groups objects share similar characteristics. • The Figure–Ground Principle—One part of the stimulus will dominate (the figure/background). 67


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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.

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vs.

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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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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. 82


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Perceptual Positioning z

z

Brand perceptions =functional attributes + symbolic attributes Perceptual map z

Company’s own strengths and weaknesses in comparison with competitors

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Perceptual Map

High value for money

Low value for money

Low product quality 84


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Thank You

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

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

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

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

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

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Types of Perceived Risk y Functional risk: The risk that the product will not perform as expected. Will the cell phone I bought work for the given warranty period? y 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 y Financial risk: The risk that the product will not be worth its price. Will the price of mobile/laptop drop after I buy it? y 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 y Psychological risk: The Risk that a poor product choice will bruise the consumer’s ego. After buying this product, will my peer group members laugh that it is a wrong choice? y 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 y Seek information, word of mouth, newspapers y Buy known brands/become loyal, e.g. buy Annapurna Atta. y Select by Company/Brand image,

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

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How Customers Handle Risk (cont.) y Rely on Store image, e.g. buying from known shops. y Buy the most expensive model. y Seek reassurance (money‐back guarantees, pre‐purchase trial, warranty period).

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

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Thank You 98


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Consumer Beliefs Consumer Attitudes

Consumer Intentions

Consumer Behaviour

Consumer Feelings


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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 person’s assessment of the significance of an attribute. The amount of attention directed to it. A person’s 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 company’s 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 brand’s key focus and positioning, e.g. Marie biscuits (Britannia, Parle). Consumer Behaviour: Insights from Indian Market—Ramanuj Majumdar

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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.

Positioning at a lower quality end, as done by Haier, Lenovo

Shopping in a big departmental store saves money.

Big Bazaar, Subhiksha

Packaged ready-to-eat food items marketed in India are generally not fresh.

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 Butter—“Utterly, 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 object–using a jingle. Mere exposure—frequent exposure to stimulus increases one’s 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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Changing Consumer Attitudes: Changing Beliefs 9

Firms hope that changing beliefs about products will result in more favourable product attitudes and influence what consumers buy.

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If beliefs are false, they should be brought into harmony with reality and then stabilized and reinforced.

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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 9

Changing an attribute’s importance is more difficult than changing a belief.

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How is a brand perceived relative to ideal performance?

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Increasing attribute importance is desirable when the competitor’s brand is farther from the ideal point than your product.

Firms may add a new attribute which necessitated NPD or product revision. Consumer Behaviour: Insights from Indian Market—Ramanuj Majumdar

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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

Sequential model of purchase and repurchase behaviour in marketing

Perception Attention Exposure


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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 ? ¾ Perceived relevance of the object of consideration based on inherent needs, values and interests ¾ A general level of interest in or concern about an object or activity without reference to a specific position

Types of Involvement ¾ Situational (Purchase-Decision) Involvement The level of concern/care the consumer brings to bear on a particular purchase decision ¾ 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.) ¾ Enduring involvement is related to the way one views oneself and is often linked to Family, Group and Lifestyle (Psychographic) variables. ¾ Perceived risk is related to purchase involvement. ¾ In Low Involvement situations: ¾ In High Involvement situations: Behaviour

Attitudes

Attitudes

Behaviour 129


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Purchase Involvement Is Effected by: The Product Class

The Individual

Involvement The Situation

Communication 130


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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

Situational context • Purchase situation • Intended-use situation • Time pressure • Social environment • Physical environment

INVOLVEMENT

Interpretation and Integration process

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

Low

Many Attributes Evaluated

Attributes are less important (very few used)

Narrow Latitude of Acceptance

Wide Latitude of Acceptance

Small Evoked Set

Large Evoked Set

True Brand Loyalty

Spurious Brand Loyalty 133


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Enduring Involvement Characteristics High

Low

Central Route Arguments

Peripheral Route Arguments

Substantive Messages (reduce counter-arguments)

Reminder Ads and Ads with Little Substance

Fewer Ads but packed with Information

Frequent Ads–Little or no Content–only a few points

Price may be Relatively Less Important

Price may be Relatively Less Important

Info Search is Active.

Info Search is Passive.


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Low Involvement

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Selective

Problem Recognition

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

Few Simple

Internal External (Limited)


Purchase Decision


No Dissonance


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High Involvement Generic

Problem Recognition

Information Search

Many Complex

Internal External


Purchase Decision


Dissonance


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Effect of Product Knowledge and Involvement in Decision Making INVOLVEMENT LOW

HIGH

Adequate product at minimum effort

Choose the best product.

Very few concrete attributes

Unclear about criteria.

Motivation

Satisfactory product

Optimize satisfaction.

Choice Criteria

Very few abstract criteria

Use many search and decision tools.

Motivation KNOWLEDGE

LOW Choice Criteria

HIGH


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Creative Tactics INVOLVEMENT

MOTIVATION

LOW

INFORMATIONAL (–ve)

TRANSFORMATIONAL (+ve)

Provide one or two clear benefits.

Emotional authenticity of execution and liking the Ad.

HIGH

Provide believable information. Don’t overclaim.

Consumer must personally identify with feelings created.


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High Enduring Involvement Customers ¾ Develop product class, brand expertise. ¾ Search for information in an ongoing manner. ¾ Take special interest in product care. ¾ Augment/upgrade products; purchase “ad-ons” and complementary products. ¾ Become opinion leaders/brand advocates; build close bonds with the company. ¾ May participate in new product idea generation.


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A Model of Emotion-driven Choice

Symbolic meaning of consumption Self

Pride Status Anxiety

Social

Motivation

Preference formation

Justification


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The Psychology of a BRAND Domain

BRAND

CONSUMER

Symbolic meaning

Social language of the Brand Self-enhancement Self-Image

Personality Authenticity

Transformation of experience

Reassurance

Safe choice

Emotional Realm

Easy choice Functional Realm

Keeping promises of performance

Certainty in an uncertain world Replication of satisfaction 142


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Brand Strategy Alternatives High Involvement

Symbolic Brands

Cognition

Emotions Functional Brands

Low Involvement 143


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Brand Trust and Confidence Risk Perception

Symbolic Brands

Functional Brands

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Positioning a Brand Why?

For whom?

When?

Against whom?

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Brand Identity Prism Picture of the Sender

y Ph

ue q i s

Pe rs

Relationship

Re fle

ctio n

on ali t y

Culture

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Picture of the Recipient 146


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Building a Brand in Consumers’ Mind-space Trust

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pti on o

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Bra nd A

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Thank You

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Consumer Learning Dissonance and Experience Consumer Behaviour: Insights from Indian Market—Ramanuj Majumdar

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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: 9 9 9 9 9

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 Consumer Behaviour: Insights from Indian Market—Ramanuj Majumdar

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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. Consumer Behaviour: Insights from Indian Market—Ramanuj Majumdar

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Operant (or instrumental) conditioning (Cont.)

Stimulus Response Reward

Can you explain habit?

Reinforcement


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Instrumental (Operant) Conditioning (Cont.)

Reinforcement

Behaviour

Likelihood Of 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

Repeat purchase

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


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Trial Learning/Experience

Behavioural Loyalty

Repeat purchasing Commitment Involvement

Attitudinal Loyalty

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 Consumer Behaviour: Insights from Indian Market—Ramanuj Majumdar

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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 Consumer Behaviour: Insights from Indian Market—Ramanuj Majumdar

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Retention Information is stored in long‐term memory Episodically: by the order in which it is acquired Semantically: according to significant concepts Total package of associations is called a schema. Consumer Behaviour: Insights from Indian Market—Ramanuj Majumdar

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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 imagery–their 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 short‐term to long‐term storage depends on: • Rehearsal—cognitive practice • Encoding—memory’s associations or the way information is stored.


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Experiential Marketing Identity Related Logo/Names (NIKE)

Product Presence Design/Packaging (FRAGRANCES)

Co‐Branding Events/Sponsorships (FEMINA MISS INDIA)

Communication/ Advertising (TASTE OF INDIA)

Experiential Marketing

Website/Electronic Media (ENCYCLOPEDIAS)

Spatial Environment Retail/Office (BARISTA)


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Consumers Dissonance


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Cognitive Dissonance • Psychological discomfort caused by inconsistencies among a person’s 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. Consumer Behaviour: Insights from Indian Market—Ramanuj Majumdar

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Why the Dissonance?


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Causes of Dissonance y y y y y y

Performance risk Physical risk (wear‐out) High financial commitment High involvement level High social visibility Information overload


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Is the Grass Greener on the Other Side? • Dissonance–predominantly post‐purchase 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 re‐evaluating 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 source–organization | Informal source–A close friend, peer group or relative who provides information or advice. |


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The Receiver |

A targeted prospect or a customer

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Every receiver interprets the message in his/her own perceptions and experiences.

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Intermediary receivers–Those who would specify or prescribe the marketer’s products (Wholesalers, retailers and distributors). Unintended receivers–Shareholders, creditors, suppliers, employees, bankers, and the local community.


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The Medium |

The communications channel

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Impersonal–a mass media

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Interpersonal–Formal or Informal

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y

Formal–between a marketer’s agent (sales person) and a customer

y

Informal–between two or more people by mail, etc.

Classification of mass media y

Print (Newspapers, magazines, billboards)

y

Broadcast (Radio, television)

y

Electronic (Internet ) Consumer Behaviour: Insights from Indian Market—Ramanuj Majumdar

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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 y Has more product specific information. y

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

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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 y Facial gestures y Verbal feedback y

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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) | Feedback–the receiver’s 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

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


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The Message Initiator (Source) Issues with Credibility |

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|

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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 y Demographic characteristics of the endorser y Corporate credibility y Endorsement wording y y


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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 Consumer’s 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 y Psychological noise y


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Feedback—Receiver’s Response Feedback should be gathered: Promptly y Accurately y


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Advertising Effectiveness Research Media and message exposure measures: How many consumers received the message. y Which consumers received the message. y


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Advertising Effectiveness Research (Cont.)

Message Attention and Interpretation Physiological measures y Theater tests y Attitudinal measures y

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Message Recall Measures y

Day-after recall


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Designing Persuasive Communications |

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

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Target Audience y

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Segmentation is the key.

Media Strategy Consumer profile y Audience profiles y

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Message Strategy y

Involvement theory – Central and peripheral routes Consumer Behaviour: Insights from Indian Market—Ramanuj Majumdar

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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

Target Segment

Functional

Brand Personality

Product

Economic


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Brand Personality ` `

Personality created to appeal target customers Association with brand: ` `

`

Positioning of brand: ` `

`

Character/Personality Emotional Social Values

Benefits provided: ` `

Attributes Quality


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Dimensions

Source: Dimensions of Brand Personality by Jennifer L. Aaker Consumer Behaviour: Insights from Indian Market—Ramanuj Majumdar

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Consumer Expectations Product

Expectations

Clothes

Sharp appearance, Style, Attractiveness, Comfort, Ruggedness

Cars

Comfort, Value for money, Social status, Family product, Performance

Mobile Phone

Durability, Style, Social status

Insurance

Peace of mind, Secured future

Cellular Service

Connectivity, Closeness to loved ones

Computer

Pleasure, Profits from miracle of modern technology

House

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

Caution Novelty Temporary Warmth

Regal Wealthy Stately

Sophistication Power Authority Secure Natural Relaxed Human Exciting, Hot Strong Passionate Informal Masculine Nature

Powerful Affordable Informal Purity Cleanliness Delicacy Formality


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Brand Names ` ` ` ` ` `

Red Bull, Power Horse – Energy Drinks Himalayan – Mineral Water Le Bon – Cheese Twinings—Darjeeling 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

Convenience

Shift from “value for money” to lavish lifestyle

Stylish looks and features Consumer Behaviour: Insights from Indian Market—Ramanuj Majumdar

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“Protection from germs”: Economical without sacrificing the quality Consumer Behaviour: Insights from Indian Market—Ramanuj Majumdar

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Higher Spending by Middle–aged 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 Consumer Behaviour: Insights from Indian Market—Ramanuj Majumdar

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People Change by Age


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Age-specific Targeting

Target kids, adults and older consumers with different set of products Customers classification–new born (0-1month), infant (2–5 months), cruiser (6-12 months), toddler (13–18 months), explorer (19–23 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 12–24 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 Consumer Behaviour: Insights from Indian Market—Ramanuj Majumdar

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THANK YOU.


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Influence of Reference Groups


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Marketer Dominated Source

Non-Marketer Dominated Source

High

Low

Low

High

Mass Media Delivered

Personally Delivered

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Contents

1

Reference Groups

2

Types of Reference Groups

3

Reference Groups in India

4

Reference Group in Choice of Education—Possible 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 Reference Groups 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

Career Choice

Early School

Middle School

Sphere of Influence

PostGraduation

Graduation (Entry)


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Hypotheses 1

2

3

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

Regional variations arise as supply—demand of occupations & societal opinion govern graduation & career

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

Indian 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.

•

• •

•

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 y y y y

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 y y

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…. Consumer Behaviour: Insights from Indian Market—Ramanuj Majumdar

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

Implication for Marketers y y

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…

An Average Urban Eastern India Consumer…

Beliefs & values–conservative in thinking, respectful Lifestyle–flamboyant, likes to have a lot of external glitter Behaviour–warm and friendly, herd mentality, inquisitive

Beliefs & values–slow in speed, relaxed, simple Lifestyle–traditional, simple basic Behaviour–opinionated, slow adopters, rigid

An average Urban Western India Consumer…

An Average Urban South Indian Consumer…

Beliefs & values–progressive by nature, professional, values time Lifestyle–balanced, but very task‐ oriented Behaviour–non‐interfering but helpful, early adopter, trendsetter, calculative

Beliefs & values–orthodox and deep rooted Lifestyle–simple Behaviour–curt but pragmatic, practical, conservative, cautious, not a risk‐taker 282


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Marketers must Understand Indian Culture in Order to Succeed • • • • • • • • •

Ford cars specially designed for Indian roads. Electrolux's made‐for‐India fridge–chill drinking water, keeps food fresh & withstands long power cuts. Samsung–microwave oven with grill. Nokia launched a handset “Made for India” Nokia 1100. McDonald’s 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. Coca‐Cola 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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A Model of Consumer Behaviour


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Buyer Characteristics • Personal • Psychological

Marketing–4Ps • Product • Price • Place • Promotion

Environmental • Economic • Technological • Political • Socio–Cultural

Buyer Decision Process • Problem Recognition • Information Search • Evaluation Decision • Post-purchase Behaviour

Post-purchase Evaluation • Product Choice • Brand Choice • Dealer Choice • Purchase Timing • Purchase Amount


Trial

Repeat Purchase 290

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Decision-Making Process Problem Recognition

Information Search


Purchase Decision

Post‐Purchase Behaviour

Perceiving a difference between a person’s ideal and Perceiving a Need actual situation big enough to trigger a decision

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

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

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 Post‐purchase 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

External Search

Process of recalling stored information from memory

Using outside sources

Dependent on motivation, ability & opportunity More recall in high involvement, perceived risk Information retrieved Brand Attribute Evaluation Experience

Information Search

Types: Pre‐purchase Due to problem recognition Ongoing Regular; due to enduring involvement Retailer; media; experiential; interpersonal; independent


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Evaluation of Alternatives: Alternative Set


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Total Set

Awareness Set

Consideration Set Purchase Decision Consumer Behaviour: Insights from Indian Market—Ramanuj Majumdar 301

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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 decision‐making 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

Experiential Limitations

More attention on recent information Ignores/Forgets distant information Inability to look beyond the scope of past experiences Rejection of unfamiliar Consumer Behaviour: Insights from Indian Market—Ramanuj Majumdar 307

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Consumer decision making process among today’s 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. Consumer Behaviour: Insights from Indian Market—Ramanuj Majumdar

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Advantages y Instant awareness, knowledge about the brand and easy recall. y Values and image of the brand are defined, highlighted and refreshed by the celebrity. y The celebrity adds new edge and dimension to the brand. y Credibility, trust, association, aspiration and connectivity to brand. y Belief in efficiency and new appearance that will result in at least trial usage. Consumer Behaviour: Insights from Indian Market—Ramanuj Majumdar

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Hypothesis 1 Every product has its own identity and it’s very important to endorse a product with a suitable personality.


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The Right Personality Perfect match between brand image and celebrity y Celebrity's fit with the brand image and the celebrity‐ target audience match. y Celebrity associated values and the celebrity‐product match. y Costs of acquiring the celebrity and his or her popularity along with controversy risks associated with the celebrity. y Credibility, availability and physical attractiveness of celebrity. Consumer Behaviour: Insights from Indian Market—Ramanuj Majumdar

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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 celebrity—Multiple products: Consumer’s 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 y

Sudden, compelling, unplanned, hedonically complex purchase.

y

Generates billions of dollars in sales every year for consumer products.

y

Reacts often ‘mindlessly’ to stimuli that trigger certain automated responses.

y

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 y

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.

y

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. Consumer Behaviour: Insights from Indian Market—Ramanuj Majumdar

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Hypothesis 1 Promotion and placement of product in the supermarkets have positive impact on impulsive purchase behaviour Promotion y Advertisement of product in print and visual media y Various promotional activities regarding product y Erecting hoardings and distributing pamphlets of product Display y Packaging of product y Placing of product in store Consumer Behaviour: Insights from Indian Market—Ramanuj Majumdar

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Hypothesis 2 Lifestyle traits of a person characterize his impulsive purchase. Traits considered: y Fashion involvement y Price consciousness


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Hypothesis 3 y 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. Consumer Behaviour: Insights from Indian Market—Ramanuj Majumdar

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Hypothesis 4 Shopping with others increases impulsive purchasing. y Impulsive purchasing at individual level vs. impulsive purchasing with others y Shopping with family members, friends and colleagues y 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

Diversity in Women Normally, an Indian Woman is: • Housewife; happy with her state of her life/society

Anxious Rebel

• Working women; happy with existing state of affairs

Troubled Homebody

• Housewife; unsure of sitting at home • Traditional; believes in saving for future

Tight-Fisted Traditionalist

• Affluent; comfortable with the finer things in life

Affluent Sophisticated

• Working women; believes in looking after herself

• Housewife; active & sees herself as equal to husband

Contemporary Housewife Gracious Hedonist Consumer Behaviour: Insights from Indian Market—Ramanuj Majumdar

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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. Consumer Behaviour: Insights from Indian Market—Ramanuj Majumdar

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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 y India still lives in her villages. y Urban markets are overcrowded and getting saturated. y The understanding of the ‘rural’ consumer behaviour is diffused and sometimes confusing . y ‘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

Limitations Rural not defined

75% of the male working population is engaged in agriculture.

Planning Commission

Places up to 5,000 population are considered rural

Characteristics not defined


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Rural India–Population Trends


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Rural Income Dispersal


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FMCG Consumption Trends Products

Urban (1000 HH)

Rural (1000 HH)

Toilet Soap

998

992

Detergent Cake

980

950

Cooking Oil

968

952

Hair Oil/Cream

897

787

Tea

876

758

Toothpaste

822

449

Washing Powder

819

576

Electric Bulb

723

394

Shampoo

663

352

Biscuits

579

314

Health Beverages

324

67

*HH = Households Source: National Council for Applied Economic Research, 2002 Consumer Behaviour: Insights from Indian Market—Ramanuj Majumdar

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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 ?

Percentage Of HH's Owning

45 40

C olTV

35

C & S C onn

30

Tw o-W hlrs

25

P hone

20

F ridge

15

A /C ooler

10

F our-W hlr

5

W /M ac h

0 R1

R2

R3

R4

Stereo-typed view of undifferentiated rural consumers no longer valid Consumer Behaviour: Insights from Indian Market—Ramanuj Majumdar

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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 y 742 million people y Estimated annual size of the rural market (Rs., crore) y

FMCG

y

Durables

y

Agri‐inputs (including tractors)

y

Two/Four‐Wheelers

y

Total

65,000 5,000 45,000 8,000 1,23,000


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Marketing Opportunities y Low penetration rates in rural areas (per 1000 households)

Durables y Motor Cycle y CTV y Pressure Cooker y Refrigerator

Urban Rural 77 28 304 48 635 178 335 35

FMCG Urban y Shampoo 663 y Tooth Paste 822 y Health Beverage 324 y Packaged Biscuits 579 y Face Cream 429

Total 42 121 309 120

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 Percentage Exposed At Least Once/ Week

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 80 70 60 P re s s

50

TV

40

C & S TV

30

R a d io

20 10 0 R1

R2

R3

R4


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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. Consumer Behaviour: Insights from Indian Market—Ramanuj Majumdar

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Myth 4: Rural GDP is All about Agriculture


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100% 80%

33.9

60%

17.7

40%

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 Consumer Behaviour: Insights from Indian Market—Ramanuj Majumdar

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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 y It’s great fun to watch TV, but I cannot understand and relate to it. y I am willing to listen and change, only if you interact and engage with me. y I am simple–I take things literally, especially when it comes to ads. y I can’t read or write, but I can understand symbols, colours and images. y Talk to me in my language in a simple way, that’s what I understand.


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FAMILIARITY BREEDS COMFORT “Only if it’s familiar, will I trust.” Supporting Insights y I have faith in the Brands I have used. y If I am satisfied with my familiar products, then why should I change? y I am averse to taking risks, particularly if it is new and unfamiliar. y Familiar things make me secure. y 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 Consumer Behaviour: Insights from Indian Market—Ramanuj Majumdar

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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 y I buy low cost products because they fit into my budget, as they give the value I am seeking. y At any time I have limited amount to spend, but I need to buy a number of things, so luxury products are important. y Rs. 5–my lakshman rekha–I do not have more than that to spend.

Rs. 5 and Rs. 10 are magical price points in rural India. Consumer Behaviour: Insights from Indian Market—Ramanuj Majumdar

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SHOW VALUE–Then 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 y If I see and feel the difference – only then will I believe and act. y Show me the value–Performance quality or quantity; only then will I buy. y If I can sense the difference, I don’t mind paying a little extra for it. y If I can’t see the difference, I shall select the cheaper one. y Price is important; yet it should meet my expectations.

Packaging and brand experience are the key. Consumer Behaviour: Insights from Indian Market—Ramanuj Majumdar

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HAAT–MERI DUNIYAN “Haats (village markets) are my window to the worldwhere I experience new things.”

Supporting Insights y y

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


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Discoveries about Rural Market y Discovery 1 y Discovery 2 y y y y y y

: 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 y Consumer activation y Use of non‐conventional media like haats, fairs, etc. y Price point SKUs. Consumer Behaviour: Insights from Indian Market—Ramanuj Majumdar

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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 y Product–Price–Place–Promotion y Acceptability–Affordability–Availability–Awareness Marketing Tools

Marketing Challenges

Product

Acceptability

Price

Affordability

Place

Availability

Promotion

Awareness


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Product


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Appropriate Product Strategies y Small unit packaging y Product features–service quality–price and performance relationship y Simplicity is the key y New product designs y Sturdy products y Utility‐oriented products y Branding strategy


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


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Fakes: Some Examples


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Pricing


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Issues in Pricing‐Affordability y Low cost/cheap products y Avoid sophisticated packing y Refill packs/reusable packaging y Highlighting value y Price adaptations


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Examples of Rural Pricing Strategies y Godrej: Cinthol, Fair Glow and Godrej in 50 g packs, priced at Rs. 4‐5, meant specifically for Madhya Pradesh, Bihar and Uttar Pradesh.

Colgate‐ Cibaca

y HLL: Lifebuoy at Rs. 2 for 50 g. y Coca‐Cola: The returnable 200‐ml glass bottle priced at Rs. 5.


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


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Levels of Distribution Level

Partner

Location

1

Company Depot/C & FA

National/State level

2

Distributor/Van Operator/ Super Stockist / Rural Distributor

District level

3

Sub‐Distributor/ Retail Stockist/Sub‐Stockist/Star Seller

Tehsil HQ, towns and large villages

4

Wholesaler

Feeder towns, large villages, haats

5

Retailer

Villages, haats


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Distribution Adaptations y Hub and Spoke Model Example: Coca‐Cola y Use of affinity groups Example: Project Shakti y Haat Activation Example: Colgate y Syndicated distribution Example: Cavin Care & Amrutanjan y Use of marketing cooperatives Example: Warna Bazaar in

Rural Areas y Mobile traders Example: FMCG companies


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Promotion Issues

Most of the products are sold in the local rural haats. Result: y They may not fetch a very good price. y They have limited demand resulting in low turnover and low

income. y 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

Non‐ Conventional

Personalised

Television

Haat and Mela

Direct mailer

Radio

Folk Media( puppet and magic show)

POS (demonstration, leaflet)

Press

Video Van

Word of mouth

Cinema

Mandi (Market)

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

Haats 1. Periodic markets located in larger villages (> 40,000) populations. 2. 10–50 villages are serviced.

3. Pushkar Mela in Rajasthan

3. Sunday markets are most popular.

4. Organized by the state Veterinary Department

4. Average number of outlets is 315 and average daily sales are about Rs. 2 lakhs.

5. Product sales, promotion, demonstration and database generation

5. Traders participate in at least 4 haats. 6. 81% of the visitors are repeat customers.

6. Cultural activities and rural sports Consumer Behaviour: Insights from Indian Market—Ramanuj Majumdar

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Types of Promotions y Advertising y Sales promotions–coupons, contests, demonstrations and sampling, Example: Tata Shakti Haat Hungama y Direct marketing, Example: Videocon y Publicity, Example: Project Shakti and AP Online y Using a direct selling through a salesforce, Example: Swasthya Chetna for Lifebuoy y Push strategy–salesforce and trade promotion y Pull strategy–advertising and consumer promotion


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Future Prospects y Rural per capita consumption of FMCGs to equal current urban levels by 2017. y Industry analysts expect the FMCG sector in rural areas to grow 40% against 25% in urban areas. y Telecom expected to grow from 100 million connections today to 300 million by 2012 y Semi‐urban & rural life insurance market expected to rise from US$ 5 bn to US$ 20 bn by 2012. y 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. Consumer Behaviour: Insights from Indian Market—Ramanuj Majumdar

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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.


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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 individual’s values/beliefs may differ from the prevalent culture Æ 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 Æ 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 Consumer Behaviour: Insights from Indian Market—Ramanuj Majumdar

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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 elder’s 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. Consumer Behaviour: Insights from Indian Market—Ramanuj Majumdar

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Credit • Earlier, people avoided buying things (nonessential) on credit/loan. • Controlling desires Æ 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 Æ Eating when hungry. • Snacks and chocolates of wide variety available – Lays, Kurkure, Perk, Cadbury Dairy Milk chocolates, Britannia biscuits, etc Consumer Behaviour: Insights from Indian Market—Ramanuj Majumdar

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Movies and Serials • Earlier, Movies made in Bollywood (Emotions, Action, Drama) were a craze. • In India, women are mostly housewives–idle time at home. • Hence, the debut of serials targeting this segment was launched by Balaji Telefilms (Ekta Kapoor). Consumer Behaviour: Insights from Indian Market—Ramanuj Majumdar

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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 Consumer Behaviour: Insights from Indian Market—Ramanuj Majumdar

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THANK YOU


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