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CONSUMER BEHAVIOUR

Assignment#1

Done by:

Neha Goyal

Roll no 15

PGDM- IB (2012-14)

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Contents

1. Consumer influences on brands – Luxury, Durables & FMCG ............ 3

2. Consumer involvement ..................................................................... 5

3. Consumer attitudes: .......................................................................... 6

4. Internet Marketing ............................................................................ 8

5. Social Media ...................................................................................... 9

6. Consumer ethnocentrism ................................................................ 11

7. Targeting Inspirational Customers ................................................... 12

8. Consumer Trust ................................................................................. 13

9. Consumer Innovativeness ................................................................. 15

10. Hi-Tech Marketing, Impact of Digitalization .................................... 16

References ............................................................................................ 18

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1. Consumer influences on brands – Luxury, Durables & FMCG

Customer influence is of supreme importance when determining a customer's needs and tastes,

particularly when a business introduces new products. Companies conduct focus groups, in-

person research or customer phone surveys to determine the product features, flavors or styles

that consumers want. Customer feedback helps companies determine what's important to their

customers. As consumers have strong influence on brands, without customer feedback, a

company could not possibly meet the product needs of the consumer. Consequently, its

products would likely fail in the marketplace.

Customer influence helps companies to better understand how customers rate and use their

products versus competitive products. It is vital in determining where a company's products

and services excel or fall short compared to alternatives on the market.

Consumer influence is paramount and thus companies need to understand it especially when

a company surveys lost customers to determine why customers no longer are buying its

products. The goal of the survey becomes finding out if there is anything the company can do to

win a customer's business back.

IMPACT ON CONSUMER BUYING PATTERN AND EXAMPLES:

A new competitor in the market may introduce new and improved technology that potentially

threatens the older technology a company sells. If customers indicate they would prefer and

buy this technology, the company will need to consider switching to the new technology. This

type of consumer influence can be seen in IT services industry.

Consumer durables like washing machines also have strong consumer influence that

whether semi or fully automatic machines are preferred and whether front loaders are

preferred over top loaders or vice versa.

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Customers may like the performance of one company's faucets but predominantly favor

a competitor's faucets because for their style. The feedback would suggest that the first

company should add some stylish faucets to its product line.

Various soap brands are coming up with many new varieties, some are favored due to

their fragrance or some are favored due to some other attributes. This is an example of

increasing consumer influence on FMCG products.

Under luxury brands also consumer influence can be seen as the BMW X1 is a compact

luxury crossover SUV developed by BMW, and manufactured by BMW and BMW

Brilliance, and marketed worldwide in rear-wheel and all-wheel-drive configurations.

The X1 is slightly smaller and more affordable than the X3.

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2. Consumer involvement

Consumer involvement can be defined as a state of mind that motivates consumers to identify

with product/service offerings, their consumption patterns and consumption behaviour.

This involvement creates within consumers, an urge to look for and think about the

product/service category, and the options before making decisions on brand preferences and

the final action of purchase. Involvement can be high or low. Higher the involvement more will

be the impact on behavior of the consumer towards a product. It means how personally,

socially and economically involved the customer is with the product in order to buy it. Buyers

become psychologically involved when making the decision to buy a product.

IMPACT ON CONSUMER BUYING PATTERN AND EXAMPLES:

If a consumer seeks out, researches and feels drawn to the product, there is an involvement

level and this is the impact on behavior of the consumer.

• Sports bikes- It is an expensive product so a consumer will get highly involved which

results in more meticulous behaviour in terms of brand, functionality, features etc.

Honda Fireblade

• Medicines- This may not be very expensive but will impact behaviour a lot as the

involvement in purchasing a medicine is very high.

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3. Consumer attitudes:

Attitudes have been understood as learned predispositions that project a positive or negative

behavior consistently toward various objects of the world. The tangible and intangible objects,

toward which one can form an attitude, are called attitude objects. Attitudes influence the way

we think and behave and are therefore important for the marketers who study them to

understand how a consumer behaves. Attitudes have certain characteristics.

Consumer attitude is a representation of likes and dislikes. An attitude is a lasting general

evaluation of something - it has knowledge of that something, liking or disliking, and the

strength of the feelings.

Tri Component Model:

It is the first step of understanding the prevailing attitude and to bring change accordingly. It

has 3 components: Cognitive (knowledge), affective (feeling) and conation (intention)

IMPACT ON CONSUMER BUYING PATTERN AND EXAMPLES:

This is the positive/negative feeling about the brands desirability/undesirability that results

from evaluation of beliefs. Attitude is based on experience, perception and exposure which

have a psychological impact on behavior of the consumer. Consumer attitudes reflect the

feeling towards a product or service offering.

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• Flavors - There can be certain flavours of edible products like chips or ice cream which

may not be to the liking of the customers and hence customers will develop a negative

attitude towards it.

• Milk- It has a positive feeling attached to it in terms of nutrition and health. So

behaviour towards milk product will be positive and favorable.

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4. Internet Marketing

The customer online purchase behavior starts 50% with searches. They start first with the

generic item term like watches, TV, or flash drives. As they learn more and are closer to their

purchase they then search for the brand name like Tommy Bahama, Sony, or Scan Disk. Of the

50% of searches conducted before a purchase most are completed before the purchase is

made. And what’s more most people DO NOT purchase in the first session.

If we look at the penetration of internet marketing then more than 20 per cent of Internet

users in several countries buy products and services online while more than 50 per cent of US

net users regularly buying online

IMPACT ON CONSUMER BUYING PATTERN AND EXAMPLES:

It provides easier and less expensive CRM for firms and there is quick and holistic information

availability for consumers. Internet marketing gives the consumers efficient comparison tools

across brands and across products

A good Internet marketing campaign would create stickiness with content and proper flow

based on the customer base.

What is the right flow to match the consumer behaviour of drinkers online?

What to drink tonight? To start?

What is the proper flow of a community site? Of an e-Magazine?

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5. Social Media

The social media is a form that ‘‘describes a variety of new sources of online information that

are created, initiated, circulated and used by consumers intent on educating each other about

products, brands, services, personalities, and issues’’. Social media encompasses a wide range

of online, word-of-mouth forums including blogs, company sponsored discussion boards and

chat rooms, consumer-to-consumer e-mail, consumer product or service ratings websites and

forums, Internet discussion boards and forums, moblogs (sites containing digital audio, images,

movies, or photographs), and social networking websites.

IMPACT ON CONSUMER BUYING PATTERN AND EXAMPLES:

The impact of social media is consistent with the use of traditional IMC tools. That is,

companies can use social media to talk to their customers through such platforms as blogs, as

well as Facebook and MySpace groups. These media may either be company-sponsored or

sponsored by other individuals or organizations.

Customers can use social media to communicate with one another. This role of social media–

enabling customers to talk to one another is an extension of traditional word-of-mouth

communication. In the new age of social media, a satisfied (or dissatisfied) has the tools to tell

his reaction to10 million.

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Social media Campaigns for various contraceptives

DKT's condoms: “Social Media marketing for a Better Life” - DKT aimed to use the

Internet for promoting safer sex and a new premium condom brand, Fiesta, to young

professionals and young married couples in Turkey.

Lifebuoy brand entered the online space with a campaign to promote their brand and its

values on a pan national basis. Rediff.com and Lifebuoy, tied up to promote the ‘Healthy

Hoga Hindustan’ campaign the brand started some while back. Conceptualized by

Rediff.com for Lifebuoy, the initiative is a drive for cleanliness and hygiene, which was

taken to the people of remote villages and towns of 10 states in India.

In Indonesia, a predominantly Muslim country of 230 million, the ‘Fiesta’ condom brand

has used Facebook, Twitter and YouTube talking about safe sex and condom use in a

ways that might make some Americans blush.

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6. Consumer ethnocentrism

From the perspective of ethnocentric consumers, purchasing imported products is wrong

because, in their minds, it hurts the domestic economy, causes loss of jobs, and is plainly

unpatriotic; products from other countries (i.e., out-groups) are objects of contempt to highly

ethnocentric consumers. Ethnocentrism is a psychosocial construct with relevance to

individual-level personality systems as well as to the more general cultural- and social analytic

frameworks. In general, the concept of ethnocentrism represents the universal proclivity for

people to view their own group as the center of the universe, to interpret other social units

from the perspective of their own group, and to reject persons who are culturally dissimilar

while blindly accepting those who are culturally like themselves.

IMPACT ON CONSUMER BUYING PATTERN AND EXAMPLES:

Country image is an important construct that is of interest not only for businesses that need to

enhance their competitiveness abroad, but also for public policy makers with similar interests

but at the national or industry level. The main practical contribution of this research lies in the

explanation of a greater proportion of variance in product image and buying intention, thus

providing international marketers with clear “do’s” and “don’ts” when operating in foreign

markets. From a theoretical perspective, linking consumer ethnocentrism, national identity and

consumer cosmopolitanism to established constructs such as country image and product image

will contribute to the theoretical explanation of the formation of such images and how they

impact on purchase intentions.

Consumers in India are not ethnocentric in reference to the Formal shirts and trousers.

That is the reason behind Arvind Mills Limited foray into various segments with Foreign

Names as brands. Peter England is level 1 with advertisements mostly by Indian Models.

Van Heusen and Louis Philipp come in next level which is completely advertised with

foreign models to create premium image impact.

Similarly when advertising sarees or kurtas, marketers stick to traditional weddings and

ceremonies to create grandeur and Indian feeling.

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7. Targeting Inspirational Customers

Every product goes through this diffusion cycle. The early stage is when only few customers

come up and use the product. They are called innovators who are prepared to take risk. Then

next set of people first adopt the product, they are educated opinion leaders. They are

inspirational customers who have the ability to influence the next level of customers.

IMPACT ON CONSUMER BUYING PATTERN AND EXAMPLES:

You can find your own target market by creating and engaging with your inspirational

customers. There are movie reviewers, new product reviewers. Whenever a new product or

service is on offer, these people are looked at for their views on the products or services. So it

might happen in coming days that satisfying the leaders can actually result in satisfying the

entire market.

Blogs by young girls who try new fashionable clothes and accessories and post the

photos of the same to promote the clothes and accessories. They also tag the brands

which they wear in their photographs which inspire customers to buy those brands.

Alter Ego is one such brand.

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8. Consumer Trust

Trust is something that makes a serious difference when it comes to establishing, building and

maintaining strong customer relationships. While everyone will have their own list of factors

they consider important, there's one that's very significant - crucial, even. But while there's no

denying the importance of the many factors that contribute towards successful customer

relationships, the deeper issue that lies at the heart of successful relationships: the issue of

trust. If you don't have trust, you don't really have a relationship. That's equally true in business

as in your personal life.

Now the question arises: ‘How to win trust of your consumers?’

Trust is won by behaving in a trustworthy and reliable way in everything you do. To achieve

trust you must be trustworthy. Trustworthiness is based on both your character and your

competence. One of the most important character traits required to create trustworthiness is

integrity (i.e. your behaviour has to be consistent with your values).

IMPACT ON CONSUMER BUYING PATTERN AND EXAMPLES:

Impact of consumer trust is seen when the companies are able to win as well as keep that trust.

If you want to avoid losing the trust of your customers there are some simple rules to follow:

Never let them down.

Consider things from their perspective.

Always justify their faith in you.

Go the extra mile to exceed their expectations

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Trust in brands like TATA, AMUL

Baby products like Johnson & Johnson and baby food like Cerelac are brands which

need to build strong consumer trust as people will never experiment a product when it

comes to babies and infants.

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9. Consumer Innovativeness

Consumer innovativeness is often viewed as a personality trait reflecting a willingness to

change. Innovative consumers are an important market segment for marketers. Revenue from

new products adopted by innovative consumers plays a pivotal role for many firms. Successful

launching and marketing new products aimed at innovative consumers, therefore, is critical for

these firms.

IMPACT ON CONSUMER BUYING PATTERN AND EXAMPLES:

A good understanding of decision-making styles of innovative consumers is imperative for these

marketing activities. Consumer decision-making styles are the mental characteristic way that a

consumer approaches the purchase and consumption experience. They could help consumer

behavior researchers gain a deeper understanding of consumers’ shopping behavior and assist

marketing managers in approaching consumers more efficiently by targeting specific consumer

clusters or segments.

More innovative consumers are more likely to adopt new products. Product manufacturers and

suppliers should regard this group of consumers as their target market, because they have are

opinion leaders in their groups.

Lifebuoy created innovative roti reminder – More than 100 million people pray, eat and

live together at the Kumbh Mela. In 2013 Lifebuoy branded more than 2.5 million rotis

with the words “Did you wash your hands with Lifebuoy?” to encourage millions of

people to wash their hands before eating and help to stop the spread of preventable

diseases including diarrhea and pneumonia.

Starbucks had launched a separate website to take advice from across the world,

facilitating a healthy discussion among the users to come up with new innovations

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10. Hi-Tech Marketing, Impact of Digitalization

Digital revolution is a massive change in the use of digital tools. Digital revolution is meant here

is the use of advanced technology in marketing. Effect of digital revolution has caused a drastic

change to the business environment.

Digital marketing is the advancement of an organization or brand using one or more of the

various digital channels, such as email, cellular phones, social networks and the like. This could

be a classy birthday greeting sent to the customer's smart phone, a personally relevant coupon

sent by SMS to the customer or a weekly newsletter than includes updates and specials.

Customers and affiliates are interested in receiving these good news messages from companies.

IMPACT ON CONSUMER BUYING PATTERN AND EXAMPLES:

Consumers have more power than ever before and have access to more information than ever

before. The marketers can offer more products and services than ever before and the exchange

between marketers and consumers has become more interactive and spontaneous. With the

help of hi-tech marketing marketers can gather more information about consumers quickly and

easily.

Companies have gone overboard and even developed apps for smartphones. For

example McLaren’s P1 app available across mobile platforms allows users to interact

with a 3-D model of their car showcasing Aero feature. It works by pointing at a schema

diagram and model comes alive on the customers screen.

Lifebuoy has unveiled a breakthrough technology in germ protection – Active Naturol

Shield – launched as part of the new Lifebuoy clini-care10 range

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Zomato, Gaana.com, TOI, ET, Nike etc are ones which have developed apps for

smartphones to facilitate consumer convenience.

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References

http://ijebm.ie.nthu.edu.tw/IJEBM_Web/IJEBM_static/Paper-V9_N3/A08.pdf

http://myeconomicinfo.blogspot.in/2011/05/effect-of-digital-revolution-in.html

http://thenationshealth.aphapublications.org/content/42/3/E14.full

http://www.ncbi.nlm.nih.gov/pmc/articles/PMC3208930/

Journal of Consumer Marketing27/5 (2010) 437–446q Emerald Group Publishing Limited

[ISSN 0736-3761][DOI 10.1108/07363761011063330]

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