Analyzing

consumer
markets &
buyer
behaviour
 Session Objectives
 In this session, we focus on two questions:
 How do cultural, social, personal, and
psychological characteristics of buyers influence
buying behavior?
 How do buyers make purchasing decisions?
The most important thing (for marketers) is
to forecast where customers are moving,
and be in front of them.

Consumer behaviour studies how individuals,

groups and organizations select, buy, use,
and dispose of goods, services, ideas or
experiences to satisfy their needs and
desires.
Model of Buyer Behavior
 Influencing Buyer Behavior
1. Cultural Factors
 Culture is the fundamental determinant of a
person’s wants and behavior. Indian child vs.
American child
 Subcultures: Kashmiri, Bihari, Gudarati, Bengali, etc.
 Diversity marketing to address different subcultures
(ads in different cultural situations, languages, etc.)
 Social class: relatively homogeneous and enduring
divisions in a society which are hierarchically ordered
and whose members share similar values, interests, and
behaviour. Upper class and lower class preferences.
Influencing Buyer Behavior
1. Social Factors
 Reference Groups influence person’s
attitudes and behavior
 Membership groups have direct influence
 Primary groups: family, friends, neighbours and co-
workers (continuous interaction)
 Secondary groups: religious, professional, formal and
less continuous
 Aspirational groups: which person wants to join
and copy (movie stars)
 Dissociative groups: does not want to join.
 Opinion leader: prominent informal advisor of
products and services in a community (Amitabh
Bacchan for Polio drops).
Influencing Buyer Behavior
 Family
 Family of orientation: parents and siblings
 Family of procreation: spouse & children
(greater influence)
 Roles and Status
 Role: consists of what a person is expected to
perform
 Status: each role carries a status relative to
another. Manager has a higher status as
compared to a clerk – use of status symbols –
unche log unchi pasand (pan parag)
 The Indian Consumer
• Highest concentration of illiterates, 2nd highest concentration of literates and 3rd
largest pool of trained manpower in the world. Geographic & economic
mobility results in changing preferences.
• Marketing opportunities and challenges posed by diversity in religion, language,
culture including dress and food habits.
• Kolkata, Mumbai, Delhi, Chennai, Bangalore and Hyderabad are large cities by
global standards. Ahmedabad, Kanpur, Pune, Nagpur, Lucknow & Jaipur has
high consumer concentration. Large cities are concentrated in South & West
India. Only eight, 23-million plus cities are there in the North and East zones.
64% of urban population live in 309 towns and the rest in 3400 towns. 73% of
total population is spread in 5 lakh villages.
• According to CMIE, the following is the pattern of final domestic spend (in 98-
99): Food (45.68%), Transport & communications (14.51%), Gross rent, fuel &
power (10.96%), Misc. goods and services (7.02%), Clothing & footwear
(5.53%), Medical services (4.25%), Recreation, education & cultural services
(3.67%), Furniture & household appliances (3.32%), Tobacco products (2.94%),
Hotels & restaurants (1.32%), Intoxicants (0.80%)
Classification of Indian consumer
based on economic status
 The affluent group: luxury product segment,
20% of Indians (180 million) account for 50% of
India’s GDP. One million households have an
income of > Rs. 10 lakh pa and buy refrigerators
worth Rs. 1 lakh etc.
 The middle class: 300 million > total US
population. ‘time saving, job-easying and enjoying
novelty is the lifestyle of the neo-middle class
woman. Top end looking for the 2nd purchase.
 The relatively poorer section: 75% purchases
from people with income level below Rs. 25,000.
 The BPL section: unbranded products
 Indian middle class men
 Seeking economic, social & emotional security. Preserver.
 Blend of traditional & non-traditional. Own desire based
purchasing in rising.
 Prefer ready-mades growing @ 25%.
 Increased travel.
 Status conscious
 Strong family ties. Family is the immediate priority
 Influenced by wife & family on purchase decisions
 Money making machine with a mantra of acquisition.
 Younger men are pro-change, forward looking & optimistic
 Indian middle class women
 Working women 7% N, 12% E, 16% W, 20% S.
 Cosmetics, durables, 2-wheelers and holiday packages.
 Influences, purchasing agent, cashier, budgeter & image-builder and
approver. Cautious, discriminating sampling, asking before deciding to
purchase new products.
 Quality & cost conscious. Cross-checks, bargains, compares brands,
seeks information, develops preferences, relies on word-of-mouth
communication, likes re-usable containers, Neighbours’ products &
brands
 Leisure seeking, time-saving, ready-to-eat food.
 Aware of new developments from the media, fashion loving, good sense
of grooming, international viewpoint & lifestyle. Enhanced self-esteem
and confidence, exercising greater control of her life
 Need for personal achievement and achievement as a parent,
recognition,, personal leisure, emotional support, need to reconcile
personal ambition with traditional roles, yearning for romance.
 Indian middle class teenager
 150 million teenagers consume 28-32% of everyday
mainstream products
 Blend of western and Indian lifestyles, care less for religion
and tradition, value material comforts and physical well
being, seek novelties, variety, quickly adopt fashions,
receptive to change, cannot dupe them, easily motivated,
tastes and preferences easily influenced.
Influencing Buyer Behavior
1. Personal Factors
 Age and Stage in the Life Cycle
 Family life cycle
 Occupation and Economic Circumstances
Company president with buy expensive suits.
 Lifestyle: is a person’s pattern of living in the world
as expressed in activities, interests and opinions.
BOSE lifestyle audio.
Psychographics is the science of using psychology and
demographics to better understand consumers.
 Stages in the Family Life Cycle - 1
1. Bachelor Young, single, not living at home Few financial burdens.
stage: Fashion opinion leaders. Recreation oriented. Buy: basic home
equipment, furniture, cars, romantic accessories; vacations.
2. Newly Young, no children. Highest purchase rate and highest average
married purchase of durables: cars, appliances, furniture, vacations.
couples:
3. Full nest Youngest child < 6. Home purchasing at peak. Liquid assets
I: low. Interested in new products, advertised products. Buy:
washers, dryers, TV, baby food, chest rubs and cough
medicines, vitamins, dolls, wagons, sleds, skates.
4. Full nest Youngest child > = 6. Financial position better. Less influenced
II: by advertising. Buy larger-size packages, multiple-unit deals.
Buy: many foods, cleaning materials, bicycles, musical
instruments.
5. Full nest Older married couples with dependent children. Financial
III: position still better. Some children get jobs. Hard to influence
with advertising. High average purchase of durables: new, more
tasteful furniture, auto travel, unnecessary appliances, boats,
dental services, magazines.
 Stages in the Family Life Cycle - 2
6. Empty nest I: Young, no children. Children not living with older
married couples, head of household in labour
force. Home ownership at peak. Most satisfied with
financial position and money saved. Interested in
travel, recreation, self-education. Make gifts and
contributions. Not interested in new products. Buy
vacations, luxuries, home improvements.

7. Empty nest II: Older married. No children living at home, head of

household retired. Drastic cut in income. Keep
home, Buy: medical appliances, medical-care
products.
8. Solitary survivor: In labour force. Income still good but likely to sell
home.
9. Solitary survivor: Retired. Same medical and product needs as other
retired group; drastic cut in income, Special need
for attention, affection, and security.
 VALS™
The VALS™ (35-40 question) marketing tool identifies current and
future opportunities by segmenting the consumer marketplace on the
basis of the personality traits that drive consumer behavior.

The basic tenet of VALS is that people express their personalities

through their behaviour.

Rather than looking at what people do and segregating people with

like activities, VALS uses psychology to segment people according to
their distinct personality traits.

The personality traits are the motivation—the cause. Buying behavior

becomes the effect - the observable, external behavior prompted by
an internal driver.
 History
The first VALS system was based on social values, and VALS was an
acronym for Values and Lifestyles. The original VALS system was
built by consumer futurist Arnold Mitchell to explain changing U.S.
values and lifestyles in the 1970s.

The current VALS system is based on psychological traits instead of

social values, "Values and Lifestyles" was dropped but the VALS
brand was retained.

VALS was cited by Advertising Age as "one of the ten top market
research breakthroughs of the 1980s.“

By using psychology to analyze and predict consumer preferences

and choices, the current VALS system creates an explicit link
between personality traits and purchase behavior. The current VALS
system is described in depth in The VALS Segments.
The VALS segmentation system
 Innovators
Innovators are successful, sophisticated, take-charge
people with high self-esteem. Because they have such
abundant resources, they exhibit all three primary motivations
in varying degrees. They are change leaders and are the most
receptive to new ideas and technologies. Innovators are
very active consumers, and their purchases reflect cultivated
tastes for upscale, niche products and services.

Image is important to Innovators, not as evidence of status or

power but as an expression of their taste, independence,
and personality. Innovators are among the established and
emerging leaders in business and government, yet they
continue to seek challenges. Their lives are characterized by
variety. Their possessions and recreation reflect a cultivated
taste for the finer things in life.
 Thinkers
Thinkers are motivated by ideals. They are mature,
satisfied, comfortable , and reflective people who
value order, knowledge, and responsibility. They tend
to be well educated and actively seek out information
in the decision-making process. They are well-informed
about world and national events and are alert to
opportunities to broaden their knowledge.

Thinkers have a moderate respect for the status quo

institutions of authority and social decorum, but are open
to consider new ideas. Although their incomes allow
them many choices, Thinkers are conservative,
practical consumers; they look for durability,
functionality, and value in the products they buy.
 Achievers
Motivated by the desire for achievement, Achievers
have goal-oriented lifestyles and a deep commitment
to career and family. Their social lives reflect this focus
and are structured around family, their place of worship,
and work. Achievers live conventional lives, are politically
conservative, and respect authority and the status quo.
They value consensus, predictability, and stability
over risk, intimacy, and self-discovery.

With many wants and needs, Achievers are active in the

consumer marketplace. Image is important to Achievers;
they favor established, prestige products and services
that demonstrate success to their peers. Because of
their busy lives, they are often interested in a variety of
time-saving devices.
 Experiencers
Experiencers are motivated by self-expression. As
young, enthusiastic, and impulsive consumers,
Experiencers quickly become enthusiastic about new
possibilities but are equally quick to cool. They seek
variety and excitement, savoring the new, the offbeat,
and the risky. Their energy finds an outlet in exercise,
sports, outdoor recreation, and social activities.

Experiencers are avid consumers and spend a

comparatively high proportion of their income on
fashion, entertainment, and socializing. Their
purchases reflect the emphasis they place on looking
good and having "cool" stuff.
 Believers
Like Thinkers, Believers are motivated by ideals. They
are conservative, conventional people with concrete
beliefs based on traditional, established codes: family,
religion, community, and the nation. Many Believers
express moral codes that are deeply rooted and
literally interpreted. They follow established routines,
organized in large part around home, family,
community, and social or religious organizations to
which they belong.

As consumers, Believers are predictable; they choose

familiar products and established brands. They favor
national products and are generally loyal customers.
 Strivers
Strivers are trendy and fun loving. Because they are
motivated by achievement, Strivers are concerned
about the opinions and approval of others. Money
defines success for Strivers, who don't have enough
of it to meet their desires. They favor stylish products
that emulate the purchases of people with greater
material wealth. Many see themselves as having a job
rather than a career, and a lack of skills and focus often
prevents them from moving ahead.

Strivers are active consumers because shopping is

both a social activity and an opportunity to
demonstrate to peers their ability to buy. As
consumers, they are as impulsive as their financial
circumstance will allow.
 Makers
Like Experiencers, Makers are motivated by self-
expression. They express themselves and experience the
world by working on it-building a house, raising children,
fixing a car, or canning vegetables-and have enough skill
and energy to carry out their projects successfully. Makers
are practical people who have constructive skills and
value self-sufficiency. They live within a traditional
context of family, practical work, and physical recreation and
have little interest in what lies outside that context.

Makers are suspicious of new ideas and large

institutions such as big business. They are respectful of
government authority and organized labour, but
resentful of government intrusion on individual rights.
They are unimpressed by material possessions other
than those with a practical or functional purpose.
Because they prefer value to luxury, they buy basic
products.
 Survivors
Survivors live narrowly focused lives. With few
resources with which to cope, they often believe that
the world is changing too quickly. They are
comfortable with the familiar and are primarily
concerned with safety and security. Because they
must focus on meeting needs rather than fulfilling desires,
Survivors do not show a strong primary motivation.

Survivors are cautious consumers. They represent a

very modest market for most products and services. They
are loyal to favorite brands, especially if they can
purchase them at a discount.
 What is VALS used for?
Marketers use VALS to understand why consumers
make the choices they do.

The more marketers know about the target, the better

they can design messages that resonate with the
target.

By using VALS to understand the motivations that

stimulate consumer behavior (such as buying a
product or participating in a loyalty program),
marketers increase their chance of cutting through the
advertising clutter.
 Influencing Buyer Behavior
 Personality and Self-Concept
 Personality: is a set of distinguishing human
psychological traits that lead to relatively consistent and
enduring responses to environmental stimuli. Eg. Self-
confidence, dominance, autonomy, sociability, etc.
 Brand personality: specific mix of human traits that
may be attributed to a particular brand.
 Sincerity: down-to-earth, honest, wholesome, cheerful
 Excitement: daring, spirited, imaginative, up-to-date, MTV
 Competence: reliable, intelligent, successful, CNN
 Sophistication: upper-class, charming, Mercedes
 Ruggedness: outdoorsy & tough: Levy’s
Customer buys when brand personality matches own
personality.
Influencing Buyer Behavior
 Psychological Factors
 Motivation
 Motive: biogenic or psychogenic need that
becomes sufficiently pressing to make a person
act.
Influencing Buyer Behavior
 Abraham Maslow’s Hierarchy of needs
 (fun, freedom, self-expression)
Personal
Needs

Social Needs
(love, friendship,
status, acceptance)

Safety Needs
(protection, physical well-being)

Physiological Needs
(food, drink, rest, sex)

PSSP Hierarchy of Needs

Influencing Buyer Behavior

 Herzberg’s Theory
 Dissatisfiers: should be absent, and
 Satisfiers: should be present,

for a purchase to take place.

 Influencing Buyer Behavior
The action of a motivated person depends on his/her perception
 Perception: is the process by which an individual selects,
organizes and interprets information inputs to create a
meaningful picture of the world.
 Selective attention: people will attend to only a few stimuli.
People are more likely to notice stimuli that
 relate to a current need
 that they anticipate
 whose deviations are large in relation to the normal size of the
stimuli (50% OFF v/s 5% off). Unexpected stimuli.
 Selective distortion: tendency to twist information to suit
preconceptions
 Selective retention: retain information that support beliefs and
attitudes.
 Influencing Buyer Behavior
When people act, they learn
 Learning: involves changes in an individual’s behaviour
arising from experience
 Drive: strong internal stimulus impelling action
 Cues: minor stimuli that determines when, where and how a person
responds.
 Generalisation: tendency to recognise and accept similarities
 Discrimination: tendency to differentiate
 Beliefs and Attitudes: influence buying behaviour
 Belief: is a descriptive thought that a person holds about something
 Spreading activation: A brand activates memory nodes (Hp
printer) which in-turn activates other nodes (professional) via links.
 Attitude: is a person’s enduring favourable or unfavourable
evaluations, emotional feelings and action tendencies toward some
object or idea.
The purchase of a product from a Company A
turns out to be a positive experience. You are
looking for a loosely related product, which is also
offered by Company A. Do you assume that you
will again have a positive experience with
Company A’s offering, or do you
look for the “best of breed,”
regardless of which
company offers it?
The Buying Decision Process
 Buying Roles
 Initiator
 Influencer: children
 Decider: housewives
 Buyer (customer): parent
 User (consumer): student
 Buying behavior
 4 Types of Buying Behavior
High Involvement Low Involvement
(expensive, infrequent,
risky)
Significant Differences Complex buying Variety-seeking
between Brands behavior buying behavior
Few Differences between Dissonance-reducing Habitual buying
Brands buying behavior behavior

 Complex Buying Behavior: develop belief > develop

attitude > take thoughtful action.
 Dissonance-Reducing Buyer Behavior: shop around
before purchasing after prioritising quality, price or
convenience
 Habitual Buying Behavior: habit is different from loyalty
 Variety-Seeking Buying Behavior: enhance involvement
 Stages in the Buying Decision Process
 How marketers learn about the stages:
 Introspective method: how they act themselves
 Retrospective method: ask others to recall events leading to
purchase
 Prospective method: ask prospective customers to think
aloud the buying process
 Prescriptive method: ask consumers ideal way to buy a
product
 Metamarket: associated services
 Metamediaries: associated service providers
The Edmunds.com metamediary
 Stages of the Buying Decision Process
 Problem recognition: find out what triggers
problem or need.
 Information search
 Personal sources: family, friends, neighbours
 Commercial sources: Ads, salespersons etc.
 Public sources: mass-media, consumer-rating
organisations
 Experiential sources: Handling, examining,
using the product
Successive Sets Involved in Customer Decision Making
The Buying Decision Process
1. Evaluation of Alternatives
 Potential Attributes of interest
 Cameras: picture sharpness, camera speeds, camera
size, price
 Hotels: location, cleanliness, atmosphere, price
 Mouthwash: colour, effectiveness, germ killing capacity
 Tires: Safety, tread life, ride quality, price
 Brand beliefs: where each brand stands on each
attribute
 Brand image: set of brand beliefs
Example: A Consumer’s Brand Beliefs about Computers
Attribute
Computer (weight%)
Memory Graphics Size and Price
Capacity Capability Weight (10%)
(40%) (30%) (20%)
A 10 8 6 4
B 8 9 8 3
C 6 8 10 5
D 4 3 7 8
A: 8.0; B: 7.8, C: 7.3; D: 4.7
Strategies to Enhance interest in computer C
• Redesign the computer: (real repositioning)
• Alter brand beliefs: (psychological repositioning)
• Alter competitor brand beliefs: (competitive depositioning)
• Alter importance weights: (persuade customers to attach more importance to
characteristics in which the brand excels)
• Call attention to neglected attributes:
• Shift buyer’s ideals:
The Buying Decision Process
 Purchase Decision: brand decision, vendor
decision, quantity decision, timing decision and
payment-method decision
 Infomediaries: publish product evaluations.
Steps Between Evaluation of
Alternatives and a purchase decision
The Buying Decision Process
 Postpurchase Behavior
 Postpurchase Satisfaction
 Disappointed
 Satisfied
 Delighted
 Postpurchase Actions
 Postpurchase Use and Disposal
How Customers Dispose of Products

Reverse logistics
The Buying Decision Process
Other Models of the Buying Decision Process
 Health Model
 Stages of Change Model
 Precontemplation: not recognizing the problem or need for change
 Contemplation: Seriously thinking about the problem and
possibility of change
 Preparation: Making a commitment to change and taking steps to
prepare for that change
 Action: Successful modification of behavior for a period from 1 day
to 6 months
 Maintenance: Continuation of change from 6 months to 1 year
 Customer Activity Cycle Model
 Pre (deciding what to do), during (doing it) and post (keeping it
going) phases.
Activity cycle
for IBM
customers in the
global electronic
networking
capability
market space
Value adds
for IBM
customers in
the global
electronic
networking
capability
market space
 Summary
 Consumer behaviour is influenced by cultural, social,
personal and psychological factors. Research into these
factors can provide clues to service customers better.
 To understand how customers make purchasing
decisions understand who makes the decisions and
enhance his/her involvement at the appropriate stage
with the appropriate product attribute.
 The buying process is a 5-step process. The marketer
must understand buyer behaviour at each stage in order
to satisfy/delight her and keep her loyal to the
product/brand/company. Health model and customer
activity models are other models of the buying decision
process.