Consumer Behavior CHAPTER 1 Marketing BBA I Year

Consumer Behavior Unit 1 PPT for BBA Students.

1. BBA I Semester BB – 606 M Consumer Behavior Chapter 1

2. Consumer Behavior 1 Market Analysis 2 Consumer decision Process 3 Chapter’s Overview

3. Learning Objectives The purpose of this Chapter is: To know the concept of consumer Behavior To understand the concept of market analysis Consumer decision making process To use these SKILLs in getting CAREER Opportunities…….

4. Consumer Behavior

5. Consumer Behavior ■ “ Buyer behavior is the decision process and actions of people involved in buying and using a product ” (Baker )

6. Consumer Behavior ■ Consumer behavior is those activities directly involved in Obtaining Consuming and Disposing of products and Services( including the decision process that precedes and follow these actions) Consumer Behavior -Engel, Blackwell & Miniard – Eight Edition 1995 ■ ■ ■ ■ ■

7. Why should a marketer study consumer buyer behavior ■ As per the marketing concept , marketer has to identify the needs and wants of the consumer and satisfy them through the supply of goods and services If the marketer has to identify the needs and wants, understanding the consumers behavior will help a lot in that process If marketer understands the consumers reaction( behavior) to marketers Marketing Mix ( 4 ps), marketer can offer the best mix that suits the consumer. ■ ■

8. Definition of a need ( not in tute pls draw) Desired State Current State GAP = Need

9. Needs ■ The Gap between the Current Status and the Desired Status is called the need. It is also called a state of deprivation When there is a need usually a consumer can do one of the following ■ ■ (1) Look for means of satisfying the need (2) Reduce the level of desired stat ( suppress )

10. Marlow's Theory of needs Hierarchy ■ Prof. Abraham T. Maslow did research on how humans satisfy their needs He found that humans have simple to complex needs It is organized as a hierarchy ( one after the other) He says that humans may have many needs but will try to satisfy the most important need first . Then they will try to satisfy the next most important need ■ ■ ■ ■

11. Maslow’s Needs hierarchy

12. ■ Physiological Needs These include the most basic needs that are vital to survival, such as the need for water, air, food and sleep. Maslow believed that these needs are the most basic and instinctive needs in the hierarchy because all needs become secondary until these physiological needs are met. ■ Security Needs These include needs for safety and security. Security needs are important for survival, but they are not as demanding as the physiological needs. Examples of security needs include a desire for steady employment, health insurance, safe neighborhoods and shelter from the environment.

13. ■ Social Needs These include needs for belonging, love and affection. Maslow considered these needs to be less basic than physiological and security needs. Relationships such as friendships, romantic attachments and families help fulfill this need for companionship and acceptance, as does involvement in social, community or religious groups. Esteem Needs After the first three needs have been satisfied, esteem needs becomes increasingly important. These include the need for things that reflect on self-esteem, personal worth, social recognition and accomplishment. Self-actualizing Needs This is the highest level of Maslow’s hierarchy of needs. Self-actualizing people are self-aware, concerned with personal growth, less concerned with the opinions of others and interested fulfilling their potential. ■ ■

14. Consumer needs and wants ■ Needs are fundamental – such as hunger, Wants are the means of expressing a need – such as rice and curry, bread, noodles, dosai, pittu, string hoppers etc Want will depend on the individuals culture, taste, ability, social status, availability and circumstances ■ ■

15. Demand ■ Demand in economic/marketing terms is not just having the need A need backed by the purchasing power is called demand. It is also called the effective demand The purchasing power includes the financial ability plus the authority to buy ■ ■

16. Consumer and Customer ■ Customer is the person takes the buying decision and he may consume the product too. Consumer is an individual or organization who may consume the product not necessarily involved in the buying decision. Both are important for the marketers. ■ ■

17. Customer/Consumer

18. Simple Model of Consumer Buying Behavior

19. How to select a phone ?

20. Problem Recognition A need may arise as an internal stimuli such as hunger or an external stimuli such as seen a nice dress displayed in a showroom window. Marketers study this behavior and use different stimuli to initiate need for their products)

21. Information search Depending on the nature and value of the product, information search may differ. ■ Internal search – remembering previous experience of buying or using the product or had heard about the product from others ( searching the information from memory) External search – obtaining information from friends, newspapers, catalogues, TV or Radio ads or from internet etc.

22. Evaluation of alternatives ■ After gathering information, the consumer will evaluate the alternatives in order to make a decision Items that he found will be placed in one of three categories Evoked set – Alternative products that will be a seriously considered. Inert set – alternatives that the consumer is neutral Inept set – alternatives that consumer will reject Eg. Discuss and example of a person who wants to buy a mobile phone with a camera below Rs. 12500 ■ ■ ■ ■ ■

23. Pros and cons of different alternatives will be weighed. Feature, benefits, after sales service, guarantees, price etc will be analysed (If evaluation does not lead to selection of the product, buyer might abandon the purchase or postpone the purchase or may go for information search again to select a product) Finally the closest product to the sought benefits and the budgeted price will be selected. ( Intention to purchase) Evaluation of alternatives (Cont.)

24. Purchase Decision ■ The purchase intention may always not result in making a purchase decision. The closeness of the sales outlet, attitude of the sales staff, product availability, availability of credit, opinion of others, situational factors may have an influence on the final buying decision ■

25. Post Purchase Evaluation Buyer will have an evaluation of the product on its actual performances while or after using. If a customers gets what he expected or more from the product customer will tell others as well as repurchase the product On the contrary, if the product does not live up to the expected level, consumer will tell others not to buy and will not repurchase the product After sales services, follow up procedures will help to adjust customer dissatisfaction

26. Cognitive Dissonance This is a psychological status of the buyer in the post purchase evaluation This happens when the chosen product have some drawbacks but the rejected product have some positive elements” E.g.. Although you selected phone by paying a higher price, the rejected lower priced one has better picture quality in the camera You would be asking from yourself ” Did I make the correct decision” Reinforcing advertising and after sales services may help to reduce the Cognitive dissonance. ■ ■ ■ ■

27. Why consumers decision making process is important to marketers Marketer can influence the consumer behavior in different stages Can reduce cognitive Dissonace by way of reinforcing information Marketer can direct various communications at each stage the consumer goes through

28. Major types of buying situations New Task purchase : buyer buys for the first time. So much of information may be required to take a decision as the supplier is new and risk is high. Marketer should strive to influence all the members of the DMU. Straight re-buy : buyer routinely orders without any modification to the order. It could be from the list of suppliers that the buyer is having. Modified re-buy : buys the product with changes in product specifications, prices, delivery or terms of credit etc.

29. Market Analysis

30. NEW BUSINESS VENTURE… ‹#›

31. ANSWER TO HIS WORRIES…. ‹#›

32. MARKET ‹#› A market is defined as the sum total of all the buyers and sellers in the area or region under consideration. The area may be the Earth, or countries, regions, states, or cities. The value, cost and price of items traded are as per forces of supply and demand in a market. The market may be a physical entity, or may be virtual. It may be local or global, perfect and imperfect.

33. MARKET ANALYSIS ‹#› A market analysis is the best way to get a third-party perspective of all of the best options for your marketing campaign, and to ensure that your marketing dollars are spent in the most effective way possible. The goal of market analysis is to determine the attractiveness of a market and to understand its evolving opportunities and threats as they relate to the strength and weakness of the firm.

34. OBJECTIVES ‹#› Determine attractiveness of a market. Find & identify new business opportunities. Targeting and dividing the market into niche. Positioning the products or brands in the mind of customers Understand the dynamics of the market

35. WHY MARKET ANALYSIS ? ‹#› Market information Insight into existing customers Identifying potential customers Customer need Customer behaviour pattern Identify business opportunity Competitor Analysis Economic overview Shift share analysis Occupational changes Strategic advantage Resolving Business Problems

36. WHEN MARKET ANALYSIS? ‹#› Determining the sales potential of your products and services. Attracting customers to your business Selling to customers and earning repeat business

37. How MARKET ANALYSIS helps? ‹#› A market analysis answers these questions about your customers: Who are they? Where are they? What do they need? How do they make their buying decisions? Where do they buy? How do you reach them with your marketing and sales messages?

38. DIMENSIONS OF MARKET ANALYSIS 12 Market size (current and future) Market segment Market trends Market growth rate Market profitability Industry cost structure Distribution channels Key success factors

39. ‹#› Identify why a customer would buy your product. Define your target market through segmentation. Conduct market research. Analyze the results of your research. Incorporate your findings into strategic business decisions. Performing Market Analysis

40. CONCLUSION 28 Market Analysis is Important to know your business inside and out. Helps us to stick to the concept of describing the market and the industry as they exist today, a sort of situation analysis. If Market is analysed well then the stage will be set to present your plan and product to the world. Helps in proper implementation of Marketing Plan and Strategy of the product.