Module 1

Study of Consumer Behaviour

The diversity of consumer behaviour

Each consumer is different from the other
In behaviour Wants Choice..

Segmentation to be done in micro level

Why we study consumer behaviour?

Consumers have more power than ever before Consumers have access to more info than ever before Marketers can offer more services and products than ever before The exchange between marketers and customers is increasingly interactive and instantaneous e.g.: online Marketers can gather more info about customers and quickly and easily Impact reaches beyond the PC-based connection to the web Each consumer is diff from the other in behaviour

What sells and what doesnt?

definition
Is defined as the behaviour that consumers display in searching for , purchasing, using, evaluating and disposing of products and services that they expect will satisfy them Focuses on how individuals make decisions to spend their available resources (time, effort, money) on consumption related items Includes what they buy, when, where, how often..

 In order to succeed In any business and especially in today's dynamic and rapidly evolving marketplace, marketers need to know everything about the customers
What they want ? Why they want? What they think? How they spend their leisure time?

Difference between consumer and customer

Consumer
A consumer is anyone who Engages himself/herself in physical activities of assessing, attaining, using or disposing of goods and services for which he/she pays the money for its usage.

Customer
Customer is someone to whom you are selling a good or service

Consumer Vs Customer
A mother buys a Barbie doll for her five year old daughter. Here as the mother has paid the money for the Barbie doll, she will be known as customer but actually the doll is used by her daughter, her daughter will be the consumer. Another case may be where a mother is buying a DVD player for her family. The mother being the actual buyer is the customer and all her family members (including her) are consumers. Customer can be a consumer but vice versa is not always true.

2 types of consumers
Personal consumer who buys goods and services for his or her use-pdts are bought for the final use by individuals
Organisational consumer

includes profit and non profit business, govt agencies and institutions which buy pdts for running their org

Nature & Characteristics of Indian Consumers

Things are changing

Attitude shift towards consumerism Age structure of population Disposable income Education level Gender bias

The Indian Consumer Is Rapidly Transforming

Paradigm Shift in almost all aspects of life

Outlook From Traditional to Modernized Traditional

 The worlds economic centre of gravity is shifting-away from the established, wealthy economies of Europe, Japan, and North America and towards the Asia Pacific India is one of the fastest-growing large economies in the world. Over the last 15 years India has changed much faster than many predicted.

Indian consumer is getting more materialistic

Majority of the Indian population have adopted work hard and get rich policy Gallo survey: Indians are more motivated than ever by personal ambition and a desire for material success with an average work week of 50 hours. India is the hardest working nation globally

 Overall, competition and structural changes within the economy have raised the bar in terms of what consumers have come to expect. Automobiles are a case in point. Where sheer availability was a variable before, today that's not even a factor given the 13 companies and 40-odd models that compete in the 700,000-strong market

Expected Utility from Products/ Services

From Functional to Lifestyle

Comfort with borrowing to fund future consumption

Being in debt is more a discomfort EMI is legitimizing borrowing, making indebtness more acceptable. Major portion of salary on EMI EMI makes a lot of sense in borrowing

 Made in India has got more credibility Faith in domestic companies have grown up Consumer wants products that are made for Indian needs E.g: Nokia 1100 Sunsilk shikakai version Among 20 most respected brands in India 8 are Indian

Eating habits
From traditional meals to Indianised McDonalds

The rise of woman

Influencing to decisive role in buying decision More eating out more phone calls Women are changing and recognizing their house hold chores

 With the availability of low-interest finance schemes, price is increasingly becoming a smaller factor in a purchase decision in a whole range of consumer durables also.

 Consumers jump steps as they enter: today the line between entry-level and upgraded products is disappearing. The newer generation is willing to pay more if he is convinced he is getting better value for the higher price. Upgrade is part of life. Today the average life of a mobile is 12 months, that of a TV three years; cars four to five years and soon even homes will be changed more frequently. Clearly durability is no longer the most desirable value.

 "One household, multiple products: two cars is no longer a luxury but a practical necessity for working couples; two TVs in the house is recognition of the fact that different family members have different interests

Buying a TV set- Factors

Early nineties
One, availability; two, price; and, three, picture quality

Mid-nineties,
The efficacy of an exchange scheme and the number of channels a company offered

Today
Sophistication -one of the fastest growing segments of the market is high-end flat TVs

Air-conditioners
In the early nineties, air-conditioner manufacturers focused on institutional sales, leaving the dodgy unorganised sector, with its dirt-cheap and poor quality offerings, to service households By the late nineties, sales to households boomed. In place of the clunky box that simply cooled the room came sleek plastic shapes offering such features as a dust-free environment, split-room cooling and so on and so forth.

Services are now taking away a huge chunk of the Consumers Wallet
1. 2. 3. 4. 5. 6. 7. Food and Grocery Clothing Footwear Consumer durable / appliances Home linen Movies and theatre Eating out

1991

1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. 15. 16. 17. 18.

Food and Grocery Clothing Footwear Consumer durable / appliances Expenditure on DVDs and VCDs Home linen Home accessories Accessories Gifts Take-away/ Pre cooked / RTE meals Movies and theatre Eating out Entertainment parks Mobile phones and service Household help Travel packages Club membership Computer Peripheral & Internet Usage

2003-09

Categories constituting 80 % of SEC AB consumer discretionary spending

 Since 1990 (after deregulation) the number of sectors open to foreign participants have expanded steadily, and Indias working-class population have increased and is likely to continue to grow for the next two decades at least,

Segments
India has various consuming classes The young and the restless
Teen Riches, Dudes & Dudettes Call Centre Boomers

The Bold and bountiful

The Yeppies (Young Entrepreneurial Professionals) The Yippies (Young International Professionals) The raffles (Rural Affluent Farm-Folk):

The golden Folks in High Spirits

1 The Young & Restless

India has the youngest population profile in different income segments and locations, who are influencing their parents spending. Some of them are also beginning to earn money through part-time for full-time jobs, arising out of opportunities that did not exist earlier.
Some of these segments include

Teen Riches, Dudes & Dudettes

This group mainly comprises young people who are from relatively affluent families. Eating out, movies and occasional clubbing are an integral part of their lifestyle. Dress is invariably modern, and attire must be changed frequently

Call Centre Boomers

Formerly located mainly in the IT-savvy cities, call centers and other IT-Enabled Service centers are spreading to other cities and towns as well. Populated largely by youngsters out of school or college, drawing in their first incomes, and at levels unheard of earlier

2 The Bold and The Bountiful

The Yeppies (Young Entrepreneurial Professionals):
entrepreneurs liberalization who have made it after the good

The Yippies (Young International Professionals):

work with multi-national companies, who are based in India but travel extensively

The raffles (Rural Affluent Farm-Folk):

the farmer with tax-free income spend on a wider choice of products

The golden Folks in High Spirits

The retired folk, with kids who are married and living in their nuclear families, or even out of the country Several of them have led fairly good lifestyles, and have the means to continue to do so

Consumerism A social movement intended to safeguard the rights of consumers. Consummatory Advertising Advertising which stresses the benefits of taking immediate action to purchase.

Consumer movement
The consumer movement is an effort to promote consumer protection through an organized social movement which is in many places led by consumer organizations. It advocates for the rights of consumers, especially when those rights are infringed by the actions of corporations, governments, and other organizations which provide products and services to consumers.

Consumer movement
Since independence India has been struggling to develop its industrial base During this period consumers were treated badly Bad products and services Hence consumers united The consumer movement historically began in the early part of this century with the formation of the Passengers and Traffic Relief Association and the Women Graduates Union, Bombay, during 1915. But its real beginning in terms of sustained, visible and continuing expansion was during the Sixties.

Rights & Responsibilities of Consumers

The Right to Safety The Right to be Informed The Right to Choose The Right to be Heard The Right to Redressal The Right to Consumer Education The Right to Basic Needs The Right to a Safe & Healthy Environment

Consumer Protection Act, 1986

Consumer Protection Act, 1986 The third phase of growth covering the period from 1981 to 1990 signifies the expansion and consolidation of the consumer movement in India After enactment of COPRA, 1986 there has been spurt in the number of new organizations in the country The period from 1991 to 2000 A.D. is being considered as a period that empowered the Indian consumer. Consumer education, product testing, product safety and promotion etc., well activated Beginning with less than 10 organizations in 1965, by 1996 established over 900 consumer organizations and today there are more than 2000 active consumer organizations working in India.

Objectives To know about quality & price of goods and services being paid for, so that you are not cheated To be heard and be assured that consumer interest will receive due consideration To seek legal redressal against exploitation To be protected against the sale of goods and services which are spurious and hazardous for life and property To be assured, wherever possible, access to a variety of goods and services at competitive prices.

Consumers Responsibilities
To Consume Less & not give into over consumption. To consume all kinds of energy and not to waste. To pay a reasonable price and not to encourage black marketing. To cooperate in a situation of shortage and not to hoard. To be alert and not be apathetic. To complain systematically and await Redressal. To obtain full information regarding quality and price before making any purchase

 To be careful about false and misleading advertisements. To purchase goods having ISI mark, Agmark etc as and where available for safety and quality To obtain proper receipt/cash memo for the purchase made and guarantee/warranty card duly stamped and signed by the seller wherever applicable. To approach District Forum, State Commission or National Commission for redressal of consumer grievances

structure for redressal of consumer disputes

The District Consumer Disputes Redressal Forum The State Consumer Disputes Redressal Commission The National Consumer Disputes Redressal Commission