1.1. CONSUMER BEHAVIOR
1.1.1.
Meaning and Definition of Consumer Behavior
The term individual buyer behavior, end user behavior, consumer behavior, and consumer buying behavior all stands for the same. The study of consumer behavior is the study of how individuals make decisions to spend their available resources (time, money, effort) on consumption-related items. It includes the study of what they buy, why they buy it, when they buy it, where they buy it, how often they buy it, and how often they use it.
Take the simple product toothpaste. Consumer researchers want to know what types of toothpaste consumers buy (gel, regular, striped, in a tube, with a pump); what brand (national brand, private brand, generic brand); why they buy it (to prevent cavities, to remove stains, to brighten or whiten teeth, to use as a mouthwash, to attract romance); where they buy it (supermarket, drugstore, convenience store); how often they use it (when they wake up, after each meal, when they go to bed, or any combination thereof); and how often they buy it (weekly, biweekly, monthly).
Consumer behavior may be defined as the decision process and physical activity individuals engage in when evaluating, acquiring, using, or disposing of goods and services”.
According to Belch and Belch, “Consumer behavior is the process and activities people engage in when searching for, selecting, purchasing, using, evaluating, and disposing of products and services so as to satisfy their needs and desires”.
According to Solomon, “Consumer behavior is the process involved when individuals or groups select, purchase, use, or dispose of products, services, ideas or experiences to satisfy needs and wants”.
Consumer behavior may also be defined as the study of individuals, groups, or organizations and the processes they use to select, secure, use, and dispose of products, services, experiences, or ideas to satisfy needs and the impacts that these processes have on the consumer and society”.
According to Leon G. Schiffman and Leslie Lazar Kanuk, “Consumer behavior can be defined as the behavior that consumers display in searching for, purchasing, using, evaluating, and disposing of products and services that they expect will satisfy their needs”.
Consumer behavior focuses on how individuals make decisions to spend their available resources (time, money, effort) on consumption related items. That includes what they buy, why they buy it, where they buy it, how often they buy it, how often they use it, how they evaluate it after the purchase, the impact of such evaluations on future purchases and how they dispose of it. So in Consumer behavior it is not only learnt, what is the behavior of the consumer when he buys it but also before the consumption, during the consumption and after the consumption?
1.1.2.
Nature/Characteristics of Consumer Behavior
Characteristics of consumer buying behavior are discussed below:
1) Consumer behavior or buyer behavior is the process by which individuals decide whether, what, when, from whom, where and how much to buy.
2) Consumer behavior comprises both mental and physical activities of a consumer. 3) It covers both visible and invisible activities of a buyer.
4) Buyer behavior is very complex. 5) Buyer behavior is very dynamic.
6) An individual’s behavior is influenced by internal and external factors. 7) It is an integral part of human behavior.
8) In many cases, it is the sum total of the behavior of a number of persons. 9) It is influenced by a number of marketing stimuli offered by the marketer. 10) It involves both psychological and social process.
12) Consumers act differently at different times and often respond differently to the same stimulus at different times. 13) They learn and thereby change their attitudes and behavior.
14) Consumers are heterogeneous in nature and they are all different from each other in certain respects. 15) They often act emotionally rather than rationally.
1.1.3.
Scope of Consumer Behavior
There are varieties of practical applications in the field of consumer behavior. Some involve a societal perspective while others illustrate a micro viewpoint. Together they underscore the importance of understanding consumers for solving a variety of contemporary problems.
1) Consumer Behavior and Marketing Management: Effective business managers realize the importance of marketing to the success of their firm.
Marketing may be defined as, “The process of planning and executing the conception, pricing, promotion, and distribution of ideas, goods, and services to create exchanges that satisfy individual and organizational objectives”.
A sound understanding of consumer behavior is essential to the long-run success of any marketing program. In fact, it is seen as a cornerstone of the marketing concept, an important orientation of philosophy of many marketing managers. The essence of the marketing concept is captured in three interrelated orientations: i) Consumer’s Needs and Wants: When the focus is on identifying and satisfying the wants and needs
of consumers, the intention of the firm is not seen as merely providing goods and services. Instead, want and need satisfaction is viewed as the purpose, and providing products and services is the means to achieve that end.
ii) Company Objectives: Consumers’ wants and needs are numerous. Therefore, a firm that concentrates on satisfying a small proportion of all desires will most effectively utilize its resources. Company objectives and any of the firm’s special advantages are used as criteria to select the specific wants and needs to be addressed.
iii) Integrated Strategy: An integrated effort is most effective in achieving a firm’s objective through consumer satisfaction. For maximum impact this requires that marketing efforts be closely coordinated and compatible with each other and with other activities of the firm.
Several major activities can be undertaken by an organization that is marketing-oriented. These include market-opportunity analysis, target-market selection, and marketing-mix determination, which include decisions on the proper combination of marketing variables to offer consumers.
i) Market Opportunity Analysis: This activity involves examining trends and conditions in the marketplace to identify consumers’ needs and wants that are not being fully satisfied. The analysis begins with a study of general market trends, such as consumers’ lifestyles and income levels, which may suggest unsatisfied wants and needs.
ii) Target-Market Selection: The process of reviewing market opportunities often results in identifying distinct groupings of consumers who have unique wants and needs. This can result in a decision to approach each market segment with a unique marketing offering.
Consider the soft-drink market. Here, major segments of ultimate consumers are distinguished by the type of purchase situation:
a) The food-store segment,
b) The “cold bottle” or vending-machine segment, and c) The fountain market, which includes fast-food outlets.
iii) Marketing-Mix Determination: This stage involves developing and implementing a strategy for delivering an effective combination of want satisfying features to consumers within target markets. A series of decisions are made on four major ingredients frequently referred to as the marketing-mix variables: product, price, place and promotion. The following characterizes each area and provides a small sampling of how knowledge of consumer behavior is relevant for decision-making.
a) Product: The nature of the physical product and service features are of concern here, among decisions that are influenced by consumer behavior are:
• What size, shape, and features should the product have? • How should it be packaged?
• What aspects of service are most important to consumers?
• What types of warranties and service programs should be provided? • What types of accessories and associated products should be offered?
b) Price: Marketers must make decisions regarding the prices to charge for the company’s products or services and any modification to those prices. These decisions will determine the amount of revenues the firm will generate. A few of the factors involving consumer behavior are:
• How price-aware are consumers in the relevant product category? • How sensitive are consumers to price differences among brands?
• How large a price reduction is needed to encourage purchases during new-product introductions and sales promotions?
• What size discount should be given to those who pay with cash?
c) Place: The place variable involves consideration of where and how to offer products and services for sale. It also is concerned with the mechanisms for transferring goods and their ownership to consumers. Decisions influenced by consumer behavior include:
• What type of retail outlet should sell the firm’s offering? • Where should they be located, and how many should there be? • What arrangements are needed to distribute products to retailers?
• To what extent is it necessary for the company to own or maintain tight control over activities of firms in the channel of distribution?
• What image and clientele should the retailer seek to cultivate?
d) Promotion: Of concern here are the goals and methods of communicating aspects of the firm and its offerings to target consumers. Consumer-related decisions include:
• What methods of promotion are best for each specific situation? • What are the most effective means for gaining consumers’ attention? • What methods best convey the intended message?
• How often should a given advertisement be repeated?
2) Consumer Behavior and Non-profit and Social Marketing: Can crime prevention, charitable contributions, or the concept of family planning be sold to people in much the same way that some business firms sell soap? A number of writers have suggested that various social and nonprofit organizations can be viewed as having services or ideas that they are attempting to market to target group of “consumers” or constituents. Such organizations include governmental agencies, religious orders, universities, and charitable institutions. Often these groups must also appeal to the public for support in addition to attempting to satisfy some want or need in society. Clearly, a sound understanding of consumer decision processes can assist their efforts.
3) Consumer Behavior and Governmental Decision-Making: In recent years the relevance of consumer-behavior principles to governmental decision-making has become quite evident. Two major areas of activity have been affected:
i) Government Services: It is increasingly evident that government provision of public services can benefit significantly from an understanding of the consumers, or users, of these services. Numerous analysts have noted that frequently failing mass-transportation systems will not be viable alternatives to private automobile travel until government planners fully understand how to appeal to the wants and needs of the public. In other cases, state and municipal planners must make a variety of decisions, including where to locate highways, what areas to consider for future commercial growth, and the type of public services (such as health care and libraries) to offer. The effectiveness of these decisions will be influenced by the extent to which they are based on an adequate understanding of consumers. This requires knowledge of people’s attitudes, beliefs, perceptions and habits as well as how they tend to behave under a variety of circumstances.
ii) Consumer Protection: Many agencies at all levels of government are involved with regulating business practices for the purpose of protecting consumers’ welfare. Some government programs are also designed to influence certain consumer action directly (such as the use of auto seatbelts) and discourage others (speeding, drug abuse, and so on).
4) Consumer Behavior and Demarketing: It has become increasingly clear that consumers are entering an era of scarcity in terms of some natural gas, and even water. These scarcities have led to promotions stressing conservation rather than consumption. The effort of electric power companies to encourage reduction of electrical use serves as one illustration. In other circumstances, consumers have been encouraged to decrease or stop their use of particular goods believe to have harmful effects. Programs designed to reduce drug abuse, gambling, and similar types of consumption are examples.
These actions have been undertaken by government agencies, nonprofit organizations, and other private groups.
The term “demarketing” refers to all such efforts to encourage consumers to reduce their consumption of a particular product or service.
Some demarketing efforts have met with considerable success while many others have made hardly any impact on changing long-established consumption pattern. An analysis of the success and failures of various efforts strongly suggests that demarketing programs must be based on a sound understanding of consumers’ motives, attitudes, and historically established consumption behavior.
5) Consumer Behavior and Consumer Education: Consumer also stands to benefit directly from orderly investigations of their own behavior. This can occur on an individual basis or as part of more formal educational programs
For example, when consumers learn that a large proportion of the billions spent annually on grocery products is used for impulse purchases, and not spent according to preplanned shopping lists, consumer may be more willing to plan purchases in an effort to save money. In general, as marketers discover the many variables that can influence consumers’ purchases, marketers have the opportunity to understand better how they affect their own behavior.
What is learned about consumer behavior can also directly benefit consumers in a more formal sense. The knowledge can serve as data for the development of educational programs designed to improve consumer’s decision-making regarding products and services. Such courses are now available at the high school and college level and are becoming increasingly popular.
1.1.4.
Importance of Consumer Behavior
In olden days, the importance of consumers’ behavior was not realized because it was seller’s market. But modern marketing is customer-oriented. Therefore, the study of customers’ behavior is vital in framing production policies, price policies, decisions regarding channels of distribution and above all decisions regarding sales promotion.
1) Production Polices: The study of consumer behavior affects production policies of the enterprise. Consumer behavior discovers the habits, tastes and preferences of consumers and such discovery enables an enterprise to plan and develop its products according to these specifications. It is necessary for an enterprise to be in continuous touch with the changes in consumer behavior so that necessary changes in products may be made.
2) Price Policies: The buyer behavior is equally important in having price policies. The buyers of some products purchase only because particular articles are cheaper than the competitive articles available in the market. In such a case the price of such products cannot be raised. On the other hand, some other articles are purchased because it enhances the prestige and social status of persons. The prices of such things can easily be prestige and social status of the persons. The price of such things can easily be raised or fixed higher. Some articles are purchased under particular attitudes and emotions such as khadi garments are purchased who think themselves the followers of Gandhi. Prices of articles purchased under emotional motives, can also be raised.
3) Decision Regarding Channels of Distribution: The goods, which are sold and purchased solely on the basis of low price, must have cheap and economical distribution channels. In case of those articles, which require after-sale service such as T.V. sets, refrigerators etc. must have different channels of distribution. Thus, decisions regarding channels of distribution are taken on the basis of consumer behavior.
4) Decision Regarding Sales Promotion: A study of consumer behavior is also vital in making decisions regarding sales promotion. It enables the producer to know what motive prompts consumer to make purchase and the same are utilized in advertising media to awaken desire to purchase. The marketer who takes decision regarding brand, packaging, discount, gifts etc. on the basis of consumer behavior for promoting sales of the products.
5) Exploiting Marketing Opportunities: A study of consumer behavior helps the marketers to understand the consumers, needs, aspirations, expectations, problems, etc. This knowledge will be useful to the marketers in exploiting marketing opportunities and meeting the challenges of the market.
6) Consumers do not always Act or React Predictably: The consumers of the past used to react to price levels as if price and quality had positive relation. Today, consumers seek value for money, lesser price but with superior features. The consumers’ response indicates that the shift had occurred.
7) Consumer Preferences are Changing and becoming highly diversified: This shift has occurred due to availability of more choice now. Thus study of consumer behavior is important to understand the changes. 8) Rapid Introduction of New Products: Rapid introduction of new product with technological advancement
has made the job of studying consumer behavior more imperative. For instance, the information technologies are changing very fast in personal computer industry.
9) Implementing the “Marketing Concept”: This calls for studying the consumer behavior, as customers needs have to be given priority. Thus identification of target market before production becomes essential to deliver the desired customer satisfaction and delight.
1.1.5.
Model of Consumer Behavior
Consumers make many buying decisions every day. Most large companies research consumer buying decisions in great detail to answer questions about what consumers buy where they buy, how and how much they buy, when they buy, and why they buy. Marketers can study actual consumer purchases to find out what they buy, where, and how much. But learning about the whys of consumer buying behavior is not so easy – the answers are often locked deep within the consumer’s head.
The company that really understands how consumers will respond to different product features, prices, and advertising appeals has a great advantage over its competitors. The starting point for understanding buying behavior is the stimulus − response model of buyer behavior (as shown in figure 10.1). This figure shows that marketing and other stimuli enter the consumer’s “black-box” and produce certain responses. Marketers must figure out what is in the buyer’s black-box.
Marketing stimuli consist of the four Ps: product, price, place, and promotion. Other stimuli include major forces and events in the buyer’s environment: economic, technological, political, and cultural. All these inputs enter the buyer’s black-box, where they are turned into a set of observable buyer responses: product choice, brand choice, dealer choice, purchase timing, and purchase amount.
The marketer wants to understand how the stimuli are changed into responses inside the consumer’s black-box, which has two parts. First, the buyer’s characteristics influence how he or she perceives and reacts to the stimuli. Second, the buyer’s decision process itself affects the buyer’s behavior.
Figure 10.1: Black -box Model of Buying Behavior Marketing Stimuli Product Price Place Promotion Other Stimuli Economic Technological Political Cultural Buyers Characteristics Cultural Social Personal Psychological Buyers Decision Process Problem recognition Information search Evaluation of alternatives Purchase decision Post purchase behavior
Buyers Decisions Product choice Brand choice Dealer choice Purchase timing Purchase amount
It is assumed that if a sales person applies a stimulus (or sales presentation), the prospective buyer will respond in a predictable manner. However, the prospect may or may not buy the product, which the salesperson is trying to sell. Salesperson should, therefore, understand the psychological aspects in buyer behavior. Psychological factors of buyer or consumer behavior includes attitudes, perceptions, motivations, and personality of behavior. Study of consumer behavior helps the salesperson to understand the psychological aspects in selling or why the prospect is buying or not buying the product or services.
1.1.6.
Factors influencing Consumer decision making
A consumer’s buying behavior is influenced by cultural, social, personal, and psychological factors. Cultural factors exert the broadest and deepest influence.
1.1.6.1.
Psychological Factors
A person’s buying choices are influenced by four major psychological factors – motivation, perception, learning, beliefs and attitudes.
1) Motivation: A person has many needs at any given time. Some needs are biogenic; they arise from physiological states of tension such as hunger, thirst, discomfort. Other needs are psychogenic; they arise from psychological states of tension such as the need for recognition, esteem, or belonging. A need becomes a motive when it is aroused to a sufficient level of intensity. A motive is a need that is sufficiently pressing to drive the person to act.
2) Perception: A motivated person is ready to act. How the motivated person actually acts is influenced by his or her perception of the situation. Perception is the process by which an individual selects, organizes, and interprets information inputs to create a meaningful picture of the world. Perception depends not only on the physical stimuli but also on the stimuli’s relation to the surrounding field and on conditions within the individual.
3) Learning: When people act, they learn. Learning involves changes in an individual’s behavior arising from experience. Most human behavior is learned. Learning theorists that learning is produced through the interplay of drives, stimuli, cues, responses, and reinforcement. A drive is a strong internal stimulus impelling action. Cues are minor stimuli that determine when, where, and how a person responds.
4) Beliefs and Attitudes: Through doing and learning, people acquire beliefs and attitudes. These in turn influence buying behavior. A belief is a descriptive thought that a person holds about something. Beliefs may be based on knowledge, opinion, or faith. They may or may not carry an emotional charge. Manufacturers are very interested in the beliefs people carry in their heads about their products and services.
An attitude is a person’s enduring favorable or unfavorable evaluations, emotional feelings, and action tendencies toward some object or idea. People have attitudes toward almost everything: religion, politics, clothes, music, and food. Attitudes put them into a frame of mind of liking or disliking an object, moving toward or away form it. Attitudes lead people to behave in a fairly consistent way toward similar objects.
1.1.6.2.
Personal Factors
A buyer’s decisions are also influenced by personal characteristics. These include the buyer’s age and stage in the life cycle, occupation, economic circumstances, lifestyle, and personality and self-concept.
1) Age and Stage in the Life Cycle: As a person passes through different stages of his life he needs different set of products. Further the tastes, habits of persons change with age. They eat baby food in the early years, most foods in the growing and mature years, and special diets in the later years. Taste in clothes, furniture,
Factors Affecting Consumer Behavior
Psychological Factors Perception Motivation Learning Beliefs and Attitude
Age and Life Cycle Stage Occupation Life Style Personality and Self Concept Cultural Factors Culture Sub Culture Social Class Social Factors Reference Groups Family
Roles and Status
and recreation is also age related. Consumption is shaped by the family lifecycle. Some recent work has identified psychological life-cycle stages. Marketers pay close attention to changing life circumstances – divorce, widowhood, remarriage – and their effect on consumption behavior.
2) Occupation and Economic Circumstances: Occupation also influences a person’s consumption pattern. A blue-collar worker will buy clothes, work shoes, and lunchboxes. A company president will buy expensive suits, air travel, country club membership, and large sailboat. Marketers try to identify the occupational groups that have above-average interest in their products and services.
Product choice is greatly affected by economic circumstances; spend able income (level, stability, and time pattern), savings and assets (including the percentage that is liquid), debts, borrowing power, and attitude towards spending versus saving. Marketers of income-sensitive goods pay constant attention to trends in personal income, savings, and interest rates. If economic indicators point to a recession, marketers can take steps to redesign, reposition, and re-price their products so they continue to offer value to target customers.
3) Lifestyle: People from the same subculture, social class, and occupation may lead quite different lifestyles. A lifestyle is the person’s pattern of living in the world as expressed in activities, interests, and opinions. Lifestyle portrays the “whole person” interacting with his or her environment. Marketers search for relationships between their products and lifestyle groups. For example, a computer manufacturer might find that most computer buyers are achievement-oriented. The marketer may then aim the brand more clearly at the achiever lifestyle.
4) Personality and Self-Concept: Each person has a distinct personality that influences buying behavior. By personality, we mean distinguishing psychological characters that lead to relatively consistent and enduring responses to environment. Personality is usually described in terms of such traits as self-confidence, dominance, autonomy, deference, sociability, defensiveness, and adaptability. Personality can be a useful variable in analyzing consumer behavior, provided that personality types can be classified accurately and that strong correlations exist between certain personality types and product or brand choices. For example, a computer company might discover that many prospects show high self-confidence, dominance, and autonomy.
Related to personality is self-concept (or self-image). Self concept is the totality of person’s thoughts and feelings with reference to himself or herself as the object. Marketers try to develop brand images that match the target market’s self-image. It is possible that a person’s actual self-concept (how she views herself) differs from her ideal self-concept (how she would like to view herself) and from her others-self-concept (how she thinks others see her).
1.1.6.3.
Cultural Factors
Culture, subculture, and social class are particularly important in buying behavior.
1) Culture: Culture is the most fundamental determinant of a person’s wants and behavior. It consists of the learned values, norms, rituals, and symbols of society, which are transmitted through both the language and symbolic features of the society. The growing child acquires a set of values, perceptions, preferences, and behaviors through his or her family and other key institutions. A child growing up in the United States is exposed to the following values: achievement and success, activity, efficiency and practicality, progress, material comfort, individualism, freedom, external comfort, humanitarianism and youthfulness.
The basic characteristics of a culture are as follows: a) Culture exists to serve the needs of the society.
b) Culture is acquired from society, throughout our life time.
c) Culture is learned through interactions with other members of the culture.
d) Culture is transferred from generation to generation with new influences constantly being added to the cultural ‘soup’.
e) Culture will be adaptive to the needs of the society.
2) Subculture: Each culture consists of smaller subcultures that provide more specific identification and socialization for their
Social Class
Culture
Sub Cultures
Cultural Factors and Their Relationships
members. Subcultures include nationalities, religions, racial groups, and geographic regions. Many subcultures make up important market segments, and marketers often design products and marketing programs tailored to their needs.
3) Social Class: Virtually all-human societies exhibit social stratification. Stratification sometimes takes the form of a caste system where the members of different castes are reared for certain roles and cannot change their caste membership. More frequently, stratification takes the form of social classes.
Social classes are relatively homogenous and enduring divisions in a society, which are hierarchically ordered and whose members share similar values, interests, and behavior. Social classes have the following characteristics:
a) Persons within a given social class tend to behave more alike. b) Social class is hierarchical.
c) Social class is not measured by a single variable but is measured as a weighted function of one’s occupation, income, wealth, education, status, prestige, etc.
d) Social class is continuous rather than concrete, with individuals able to move into a higher social class or drop into a lower class.
Social class can be subdivided into four categories, viz., upper class, upper middle class, middle class and the lower class.
i) Upper Class: This class consists of people who are rich and possess considerable wealth, e.g., people with large businesses and wealthy corporate executives.
ii) Upper Middle Class: This class consists of well-educated people holding top class positions in middle size firms, or professionals. They have a strong drive for success and indulge in shopping for goods that speak of their social status.
iii) Middle Class: This class consists of white collar workers like middle level and junior executives, sales-people, small business owners, etc. These people lead a conservative lifestyle and spend moderately. iv) Lower Class: This class consists of blue collar workers like factory laborers, semi-skilled and unskilled
laborers in the unorganized sector. These people are more family oriented and depend on their family for economic and emotional support. Their families are usually male dominated.
1.1.6.4.
Social Factors
In addition to cultural factors, a consumer’s behavior is influenced by such social factors as reference groups, family, and social roles and statuses.
1) Reference Group: Generally speaking a reference group can designate to any person or group that serves as a point of comparison (or reference) for an individual informing either general or specific values, attitudes or behavior. Every human being because of his sociable nature prefers to evaluate his abilities and opinion based on the comparison of others abilities and opinions.
According to Philip Kotler, “A person’s reference groups consist of all the groups that have a direct (face to face) or indirect influence on the person’s attitudes or behavior”. Reference groups are of different types. According to Herbert Hyman, “Reference group is the type of group that an individual uses as a point of reference in determining his own judgments, preferences, beliefs and behavior”.
Classification of Reference Groups
i) Normative Reference Group: Reference groups that directly influence general or broadly defined values or behavior are usually called normative reference group. For example, a child's normative reference group will be his family.
ii) Comparative Reference Group: Reference group which will serve as a benchmark for certain specific or narrowly defined attitudes are called comparative reference group. Such a group serves as a point of comparison especially for evaluating ones own status.
iii) Contractual Group: Another way of classifying reference group will be in terms of a person's membership or degree of involvement with the group and in terms of the positive or negative influence
they are able to evolve on the person's attitudes, behavior and values. One such reference group is the contractual group. These are the groups with which the person interacts and has regular contact.
iv) Aspirational Group: An aspirational group is one to which the individual wishes or aspires to belong. The individual may not have a formal membership and also does not have face to face contact but he aspires to be a member. This aspiration acts as a positive influence on that person's attitude and behavior. v) Disclaimant Group: Another type of reference group is the disclaimant group. This is a group whose
values or behavior does not appeal to the individual. Here a person may have membership or face to face contact but he disapproves of the group values, attitudes and behavior. Here his behavior will be the opposite or reverse to the norms of the particular reference group.
vi) Avoidance Group: This may be a group with which the person may not hold membership nor have face to face contact and also of whose values, attitudes and behavior, the person totally disapproves. Here the person will tend to avoid the group and will adopt values, attitudes and behavior which will be in opposition to that of the group.
People are significantly influenced by their reference groups in at least three ways: a) Reference groups expose an individual to new behaviors and lifestyles.
b) They influence attitudes and self-concept.
c) They create pressures for conformity that may affect actual product and brand choices.
2) Family: Family members can strongly influence buyer’s behavior. The family is the most important consumer buying organization in society, and it has been researched extensively. Family is of two types:
a) Family of Orientation: From parents a person acquires an orientation towards religion, politics, self worth etc. In countries where parents live with their grown children, their influence can be substantial.
b) Family of Procreation: This involves a more direct influence on every buying behavior it includes one’s spouse and children. Marketers are interested in the roles and influence of the husband, wife, and children on the purchase of different products and services.
Husband-wife involvement varies widely by product category and by stage in the buying process. Buying roles change with evolving consumer lifestyles.
Functions of the Family
a) Economic Well-Being: Economic security, providing financial means to its dependents is unquestionably a basic family function.
b) Emotional Support: Love, affection, support, intimacy, care, and courage.
c) Suitable Family Lifestyles: Another important family function in terms of consumer behavior is the establishment of a suitable lifestyle for the family. Upbringing, experience, and the personal and jointly held goals of the spouses determine the importance placed on education or career, on reading, on television viewing, and on the selection of other entertainment and recreational activities.
d) Socialization of Family Members: It encompasses young children and adults, and is a central function. These generally include moral and religious principles, interpersonal skills, dress and grooming standards, appropriate manner and speech and the selection of suitable educational and occupational or career goals.
3) Roles and Statuses: A person participates in many groups – family, clubs, and organizations. The person’s position in each group can be defined in terms of role and status. A role consists of the activities that a person is expected to perform. Each role carries a status. A Supreme Court justice has more status than a sales manager, and a sales manager has more status than an office clerk. People choose products that communicate their role and status in society. Thus company presidents often drive Mercedes, wear expensive suits, and drink Chivas Regal scotch. Marketers are aware of the status symbol potential of products and brands.
Goal (preparing/buying) Goal achievement (Eating) Motive | Need (Hungry) Goods (Food) Behavior
1.1.7.
Buying Motives of Consumers
Motive is the inner urge that moves or prompts a person to some action. Motive is an effectual desire that prompts one to a definite action. Customers purchase any goods as a result of certain mental and economic forces that create desires or wants that they know can be satisfied by the articles offered for purchase.
‘Motive’ can be a strong desire, feeling, an urge from within, a drive, stimulus or emotion, which plays a role in the consumer’s decision to purchase a product/service.
According to R.S. Davar, “A motive is an inner urge that moves or prompts a person to action”.
According to D.J. Durian, “Buying motives are those influences or considerations which provide the impulse to buy, induce action or determine choice in the purchase of goods or services”.
According to W. J. Stanton, “A motive can be defined as a drive or an urge for which an individual seeks satisfaction. It becomes a buying motive when the individual seeks satisfaction through the purchase of something”.
Thus an understanding of buying motives will help the firm to know what are the consumers attitudes, which make them act in a particular way while buying certain goods or services.
A consumer purchases a particular product or service because of a strong inner feeling or force, which instills in him a strong desire to have possession of the same. A buying motive can thus be said to all the desires, considerations and impulses, which induce a buyer to purchase a given product.
Behavior is a goal directed activity.
Motives behind purchase are of two types, which are as follows: 1) Personal Motives
i) Role-Playing: Shopping activities are learned behavior and are accepted as part of one’s position or role, such as mother or housewife. It is expected that a woman expecting her first child will shop extensively for baby clothes and other stuff meant for infants. It is also accepted that a housewife does the grocery shopping for her home.
ii) Diversion: Shopping can offer a diversion from the routine of daily life and is a form of recreation. iii) Learning about New Trends: Shopping provides consumers with information about trends and
movements, and product symbols reflecting attitudes and lifestyles. For example, a visit to Weekender will reveal the latest trend in casual wear and it is with this motive in mind that many young shoppers visit Weekender.
iv) Sensory Stimulation: Shopping can provide sensory benefits such as looking at and handling merchandise, listening to the sounds (music), and smelling the scents.
2) Social Motives
i) Social Experience: Outside the home shopping can provide opportunities for seeking new acquaintances, encounters with friends, or just “people watching”.
ii) Status and Authority: Shopping may provide an opportunity to attain a feeling of status and power by being waited on. It is a pleasure shopping at Big Jo’s in Delhi where the sales staff is extremely courteous and treats customers with a great deal of respect.
iii) Pleasure of Bargaining: Shopping may offer the enjoyment of gaining a lower price through bargaining, companion shopping, or visiting sales.
1.1.8.
Buying role of Consumers
There are following six different roles of persons, which can participate in the buying decision:
1) Initiator: The initiator is a person who first suggests or thinks of the idea of buying the particular service. 2) Influencer: Influencer is a person who explicitly or implicitly has some influence on the final buying
decision of others. Students are influenced by the advice of the professor while taking a decision to purchase a book. Here Professor is the influencer.
3) Decider: The decider is a person who ultimately determines any part or whole of the buying decision, i.e., whether to buy, what to buy, how to buy, when to buy or where to buy. Children are the deciders for buying the toys, house lady for kitchen provisions, and head of the family for durable or luxury items.
4) Gatekeeper: The person or organization or promotional materials which act as a filter on the range of services which enters the decision choice set.
5) Buyer: The buyer is the person who actually purchase. Buyer may be the decider or he may be some other person. Children (deciders) are the deciders for purchasing the toys, but purchases are made by the parents. Thus, parents are buyers.
6) User: User is the person who actually uses or consumes the services or products.
The marketer’s task is to study the buying process and its main participants and their role in the buying process. He should initiate all of them to make the purchases of his product at different stages and through different strategies
1.1.9.
Consumers Decision Making Process / Buying Process
Decision-making is a process of selecting an appropriate option from two or more alternatives. A customer enjoys the freedom of choosing a particular brand or product when there is
more than one brand or product to choose from.
The purchaser or consumer takes his buying decision, for some commodities immediately without much consideration such as items of daily use while for some other commodities mainly luxury or durable items, he thinks much before taking a decision to purchase it. Sometimes, he consults others. Generally, the purchaser passes through five distinct stages in taking a decision for purchasing a particular commodity. Broadly, in making a purchase decision the consumer goes through the following stages:
1) Problem Recognition: The buying process starts when the buyer recognizes a problem or need. The need can be triggered by internal stimuli. In the former case one of the person’s normal needs-hunger, thirst,
Problem Recognition
Pre purchase Information Search
Evaluation of Alternatives
Purchase Decision
Post Purchase Behavior
Figure 10.2: Buying Process Influencers (Children) Decision-Makers (Parents/ Children Purchasers (Parents) Consumers (Children) Information Gatherers (Parents) Communications Targeted at Children (Taste, Image) Communications Targeted at Parents (Nutrition)
sex-rises to a threshold level and become a drive. In the latter case, a need is aroused by an external stimulus. A person passes a bakery and sees freshly baked bread that stimulates her hunger, she admires a neighbor’s new car; or she watches a television ad for a Hawaiian vacation.
Marketers need to identify the circumstances that trigger a particular need by gathering information from a number of consumers; marketers can identify the most frequent stimuli that spark an interest in a product category. They can then develop marketing strategies that trigger consumer interest.
2) Pre-purchase Information Search: An aroused consumer will be inclined to search for more information. We can distinguish between two levels of arousal. The milder search state is called heightened attention. At this level a person simply becomes more receptive to information about a product.
At the next level the person may enter active information search: looking for reading material, phoning friends and visiting stores to learn about the product of key interest to the marketers, are the major information sources to which the consumer will turn and the relative influence each will have on the subsequent purchase decision. Consumer information sources fall into four groups.
i) Personal Sources: Family, friends, neighbors, acquaintance
ii) Commercial Sources: Advertising, salespersons, dealers, packaging, displays. iii) Public Sources: Mass media, consumer, rating organization.
iv) Experiential Sources: Handling, examining, uses the product.
The relative amount and influence of these information sources vary with the product category and the buyer’s characteristics. Generally speaking the consumer receives most of the information about a product from commercial source–that is, marketers-dominated sources. But most effective information comes from personal sources. Each information sources performs a different function in influencing the buying decision. Commercial information normally performs an informing function, and personal sources perform a legitimizing or evaluation function. For example, physicians often learn of new drugs from commercial sources but turn to other doctors for evaluative information.
3) Evaluation of Alternatives: There is no single evaluation process used by all consumers or by one consumer in all buying situations. There are several decision evaluation processes the most current models of, which see the process as cognitively oriented. That is, they see the consumer as framing judgment largely on a conscious and rational basis.
Evaluation may be thought of as a system as depicted in figure 10.3:
i) Evaluative (Choice) Criteria: These are the dimensions used by consumers to compare or evaluate products or brands. In the car example, the relevant evaluative criteria may be fuel economy, purchase price and reliability.
ii) Beliefs: These are the degrees to which, in the consumer’s mind, a product possesses various characteristics, e.g., roominess.
iii) Attitudes: These are the degrees of liking or disliking a product and are in turn dependent on the evaluative criteria used to judge the products and the beliefs about the product measured by those criteria.
iv) Intentions: These measure the probability that attitudes will be acted upon. The assumption is that favorable attitudes will increase purchase intentions, i.e., the probability that the consumer will buy. Some basic concepts will help us understand consumer evaluation processes.
i) The consumer is trying to satisfy a need.
ii) The consumer is looking for certain benefit from the product solution.
Evaluative Criteria
Beliefs
Attitudes
Intentions
iii) The consumer sees each product as a bundle of attributers with varying abilities of delivering the benefit sought to satisfy this need.
The attributes of interest to buyers vary by product.
Consumers vary as to which product attributers they see as most relevant and the importance they attach to each attribute. They will pay the most attention to attributers that deliver the sought benefit. The market for a product can often be segmented according to attributes that are salient to different consumer groups. The consumer develops a set of brand beliefs about where each brand stands on each attribute. The set of beliefs about a brand makes up the brand image. The consumer’s brand image will vary with his or her experience as filtered by the effects of selective perception selective distortion and selective retention. 4) Purchase Decision: In the evaluation stage, the consumer forms preference among the brand in the choice.
The consumer may also form an intention to buy the most preferred brand. However, two factors can intervene between the purchase intention and the purchase decision.
i) The first factor is the attitudes of others. The extent to which another person’s attitude reduces, one’s preferred alternative depends on two things:
a) The intensity of the other person’s negative attitude towards the consumer’s preferred alternative. b) The consumer’s motivation to comply with the other person’s wishes.
ii) The second factor is unanticipated situation factors that may erupt to change the purchase intention. Preferences and even purchase intentions are not completely reliable predictors of purchase behavior. A consumer’s decision to modify, postpone, or avoid a purchase decision is heavily influenced by perceived risk. The amount of perceived risk varies with the amount of money at stake the amount of attribute uncertainty and the amount of consumer self-confidence.
In executing a purchase intention, the consumer may make up to five purchase sub decisions: i) A brand decision (brand A);
ii) Vendor decision (dealer 2); iii) Quantity decision (one computer); iv) Timing decision (weekend), and v) Payment-method decision (credit card).
Purchase of everyday product involves fewer decisions and less deliberation. For example, in buying sugar a consumer gives little thought to the vendor or payment method.
5) Post-purchase Behavior: After purchasing the product, the consumer will experience some level of satisfaction or dissatisfaction. The marketer’s job does not end when the product is bought. Marketers must monitor post purchase satisfaction, post purchase actions and post purchase product uses.
i) Post-purchase Satisfaction: What determines whether the buyer will be highly satisfied, somewhat satisfies or dissatisfied with a purchase? The buyer’s satisfaction is a function of the closeness between the buyer’s expectations and the product’s perceived performance. If performance falls short of expectations, the customer is disappointed; if it meets expectations the customers is satisfied; if it beyond expectations the customer is delighted. These feelings signify a difference in whether the customer buys the product again and talks favorably or unfavorably about the product to others.
ii) Post-purchase Actions: The consumer’s satisfaction or dissatisfaction with the product will influence subsequent behavior. If the consumer is satisfied he or she will exhibit a higher probability of purchasing the product again.
Dissatisfied consumer may abandon or return the product. They may seek information that confirms its high value. The may take public action by complaining to the company, going to a lawyer, or complaining to other groups (such as business private or government agencies). Private action includes making a decision to stop buying the product (exit option) or, warning friends (voice option). In all these case the seller has done a poor job of satisfying the customer.
iii) Post-purchase Use and Disposal: Marketers should also monitor how buyers use and dispose of the product. If consumers store the product in a closet, the product is probably not very satisfying and word-of-mouth will be not being strong. If they sell or trade the product new product sales will be depressed. Consumer may also find new uses for the product.
1.1.10. Subcultures Buying Habits of Consumers/Levels of Consumer
Decision-Making
Consumer decision making varies with the types of buying decision. The decisions to buy toothpaste, a tennis racket, a personal computer, and a new car are all very different. If all purchase decisions required extensive effort, then consumer decision-making would be an exhausting process that left little time for anything else. On the other hand, if all purchases were routine, then they would tend to be monotonous and would provide little pleasure or novelty. On a continuum of effort ranging from very high to very low, we can distinguish four specific levels of consumer decision-making:
1) Complex Buying Behavior/Extensive Problem Solving: At this level, the consumer needs a great deal of information to establish a set of criteria on which to judge specific brands and a correspondingly large amount of information concerning each of the brands to be considered.
This behavior is adopted for the purchase of low cost, frequently purchased items. Here the buyers do not give much thought, or search or take a lot of time to make the purchase. The products in this class are generally classified as low involvement goods. The buyers are very well aware of the product class, know the brands and also have a clear preference among the brands. So the buyers have to take very few decisions for the purchase of such type of goods.
The marketer has to ensure two tasks:
i) The marketer must continue to provide satisfaction to the existing customers by maintaining quality, service and value.
ii) He must try to attract new customers by making use of sales promotion techniques like point of purchase displays, off-price offers, etc., and also introduce new features to the products.
2) Dissonance-Reducing Buying Behavior/Limited Problem Solving: At this level consumers already have established the basic criteria for evaluating the product category and the various brands in the category. However, they have not fully established preferences concerning a select group of brands. Their search for additional information is more like “fine-tuning”; they must gather additional brand information to discriminate among the various brands.
Here the marketer’s job is to design a communication programme, which will help the buyer to gather more information, increase his brand comprehension and gain confidence in the brand.
3) Habitual Buying Behavior/Routinized Response Behavior: At this level, consumers have some experience with the product category and a well-established set of criteria with which to evaluate the brands they are considering. In some situations, they may search for a small amount of additional information; in others, they simply review what they already know.
The marketers must understand the information gathering and evaluation activities of the prospective consumers. They have to educate the prospective buyers to learn about the attributes of the product class,
High Involvement Low Involvement
Complex buying behavior Variety-seeking buying behavior Habitual buying behavior Dissonance-reducing buying behavior Significant Differences between Brands Few Differences between
Brands
their relative importance and the high standing of the marketer’s brand on the more important brand attributes. In other words, the marketing communications should aim at supplying information and help the consumer to evaluate and feel good about his/her brand choice.
4) Variety-Seeking Buying Behavior: Some buying situation are characterized by low involvement but significant brand differences, here consumers often do a lot of brand switching.
The market leader and the minor brand in this product category have different marketing strategies. The market leader will try to encourage habitual buying behavior by dominating the shelf space, avoiding out-of-stock conditions, and sponsoring frequent reminder advertising. Challenger firms will encourage variety seeking by offering lower prices, deals, coupons, free samples, and advertising that presents reasons for trying something new.
Characteristics of Consumer Problem-Solving Approaches Characteristics Routine Problem
Solving Limited Problem Solving Extensive Problem Solving
Purchase Involvement
Level Low, Medium High
Problem Recognition Automatic Semiautomatic Complex
Information Search and
Evaluation Minimal Limited Extensive
Purchasing Orientation Convenience Mixed Shopping
Post Purchase Processes Very limited Limited Complex
Habit Inertia to repurchase Loyalty if satisfied
Brand loyalty Brand Switching If
dissatisfied Complaint if dissatisfied
1.1.11. Consumer Behavior and Marketing Strategy
Net Matter
When a consumer buys something, he or she gives-up resources in the form of time, money, and energy in return for whatever is being sold. Consider a customer who purchases a kindle. What does he or she really get? Well, the tangibles include mostly plastic and some integrated circuitry. These are the parts that make-up the product. No reasonable consumer would trade any significant sum of money for plastic and circuitry. A consumer is not really buying attributes or the physical parts of a product. However, the plastic enables the product to be small and light and the integrated circuitry enables this small, light product to function as an electronic reader. Once again, we can ask, is this really what the consumer wants? The fact is, this function enables the consumer to enjoy the benefits of information availability in a very convenient package. Outcomes like these are valuable and what the customer is ultimately buying.
Marketing firms often adopt poor strategies when they do not understand exactly what a product truly is, because they do not understand exactly what they are selling. With this in mind, a product is potentially valuable bundle of benefits. Theodore Levitt was one of the most famous marketing researchers.
A sound understanding of consumer behavior is essential to the long-run success of any marketing program. In fact, it is seen as a cornerstone of the marketing concept, an important orientation or philosophy of many marketing managers.
The following descriptions explore the role of consumer behavior in designing and deploying three major marketing activities:
1) Market-Opportunity Analysis: This activity involves examining trends and conditions in the marketplace to identify consumers’ needs and wants that are not being fully satisfied. The analysis begins with a study of general market trends, such as consumers’ lifestyles and income levels, which may suggest unsatisfied wants and needs. More specific examination involves assessing any unique abilities the company might have in satisfying identified consumer desires.
A variety of recent trends have resulted in many new product offerings for consumer satisfaction. For example, companies attuned to the fitness interests of Americans have been quick to offer such new products as exercise bicycles, weight training books, and clothing. In the healthcare field, companies sensing consumers’ unmet medical needs have offered coin-operated blood pressure testing machines at shopping centers and other convenient locations.
2) Target-Market Selection: The process of reviewing market opportunities often results in identifying distinct groupings of consumers who have unique wants and needs. This can result in a decision to approach each market segment with a unique marketing offering. Consider the soft drink market. Here, major segments of ultimate consumers are distinguished by the type of purchase situation:
i) The food store segment,
ii) The “cold bottle” or vending machine segment, and iii) The fountain market, which includes fast-food outlets.
Unique packaging arrangements (container type and size), point of purchase promotions, and other variations are made for each segment.
In other cases, the marketer may decide to concentrate company efforts on serving only one or a few of the identified target-markets. An excellent example of this occurred in the bath soap market. By segmenting consumers according to their lifestyle patterns and personalities, the Colgate-Palmolive company was able to identify a unique group of consumers in need of a certain type of deodorant soap. Development of Irish Spring for this target group led to the capturing of 15 per cent of the deodorant soap market within three years of introduction.
3) Marketing-Mix Determination: This stage involves developing and implementing a strategy for delivering an effective combination of want-satisfying features to consumers within target-markets. A series of decisions are made on four major ingredients frequently referred to as the marketing mix-variables – product, price, place, and promotion.
To survive in a competitive environment, an organization must provide target customers more value than is provided by its competitors. Customer value is the difference between
all the benefits derived from a total product and all the costs and risks of acquiring those benefits. For example, owning a car can provide a number of benefits, depending on the person and the type of car, including flexible transportation, image, status, pleasure, comfort, and even companionship. However, securing these benefits requires paying for the car, gasoline, insurance, maintenance, and parking fees, as well as risking injury from an accident, adding to environmental pollution, and dealing with traffic jams and other frustrations. It is the difference between the total benefits and the total costs that constitutes customer value.
Providing superior customer value requires the organization to do a better job of anticipating and reacting to customer needs than the competition does. As figure aside indicates, an understanding of consumer behavior is the basis for marketing strategy formulation. Consumers’ reactions to this marketing strategy determine the organization’s success or failure. However, these reactions also determine the success of the consumers in meeting their needs, and they have significant impacts on the larger society in which they occur. Marketing strategy is conceptually very simple. It begins with an analysis of the market the organization is considering. This requires a detailed analysis of the organization’s capabilities, the strengths and weaknesses of competitors, the economic and technological forces
Market Segmentation
Identify product-related need sets Group customers with similar need sets
Describe each group Select attractive segment(s) to target
Outcomes
Individual Firm Society
Consumer Decision Process
Problem recognition Information search Alternative evaluation Purchase Use Evaluation Marketing Strategy
Product, Price, Distribution, Promotion, Service Market Analysis Company Competitors Conditions Consumers
Marketing Strategy and Consumer Behavior
affecting the market, and the current and potential customers in the market. On the basis of the consumer analysis undertaken in this step, the organization identifies groups of individuals, households, or firms with similar needs. These market segments are described in terms of demographics, media preferences, geographic location, and so forth. Management then selects one or more of these segments as target markets based on the firm’s capabilities relative to those of its competition (given current and forecast economic and technological conditions).
Next, marketing strategy is formulated. Marketing strategy seeks to provide the customer with more value than the competition while still producing a profit for the firm. Marketing strategy is formulated in terms of the marketing mix; that is, it involves determining the product features, price, communications, distribution and services that will provide customers with superior value. This entire set of characteristics is often referred to as the total product. The total product is presented to the target market, which is consistently engaged in processing information and making decisions designed to maintain or enhance its lifestyle (individuals and households) or performance (businesses and other organizations).
1) Market Analysis: Market analysis is the process of analyzing changing consumer trends, current and potential competitors, company strengths and resources, and the technological, legal, and economic environments. All these factors add dimension and insight to the potential success of a plan for a new product or service.
Market Analysis Components
i) Consumer Insight and Product Development: When marketers attempt to get consumers to buy their products, most of the time they fail. Why is this failure rate so high? The answer is simple and straightforward – a new product must satisfy customers’ needs, wants, and expectations, not those of a management team, and they must do it better than existing solutions. Although formal analyses might point to product life-cycles, poor performance, or ineffective communication, often the bottom-line issue is a failure to understand the intended market. For example, many firms don’t understand how targeted consumers are likely to react to new products. Different consumers possess different levels of innovativeness, affecting which advertising and positioning strategies will be most effective. For example, highly innovative consumers attach more importance to stimulation, creativity, and curiosity, characteristics that marketers can use to target product offerings and advertising to specific segments. Organizations around the world continue to spend billions of dollars annually on product concepts that would never be introduced to the marketplace if they had been more closely tested against consumer insight.
Consumer insight can be defined as an understanding of consumers’ expressed and unspoken needs and realities that affect how they make life, brand and product choices. This process combines facts (either from primary or secondary research, sales data, or customer information) with intuition, resulting in an insight that can lead to a new product, existing product innovation, brand extension, or revised communication plan. As companies turn to consumer feedback for new product guidance and ideas, researchers and marketers search for ways to channel ideation (the process of forming and relating ideas) to allow consumers to be more focused and productive, providing better information to marketers. ii) Company: A firm must fully understand its own ability to meet customer needs. This involves evaluating
all aspects of the firm, including its financial condition, general managerial skills, production capabilities, research and development capabilities, technological sophistication, reputation, and marketing skills. Marketing skills would include new-product development capabilities, channel strength, advertising abilities, service capabilities, marketing research abilities, market and consumer knowledge, and so forth. Failure to adequately understand one’s own strengths can cause serious problems. IBM’s first attempt to enter the home computer market with the PC Jr. was a failure in part for this reason. Although IBM had an excellent reputation with large business customers and a very strong direct salesforce for serving them, these strengths were not relevant to the household consumer market.
iii) Current and Potential Competitors: A thorough market analysis also examines current and potential competitors. A traditional approach to this type of analysis focuses strategic thinking on staying ahead
of the competition, which might include looking at existing competitive products and figuring out how to add a feature that might make a product “just a little better” in the mind of consumers. Other, more innovative firms pay less attention to matching and beating their rivals, but focus instead on using innovation to weaken or make competitors irrelevant in the marketplace. How does a firm accomplish this, how easy will it be for competitors to enter the market, and how will current competitors react? Firms can construct alternative scenarios to anticipate reactions of current competitors and anticipate how firms, though not necessarily competitors at present, might respond with similar products.
iv) Conditions: The state of the economy, the physical environment, government regulations, and technological developments affect consumer needs and expectations as well as company and competitor capabilities. The deterioration of the physical environment has produced not only consumer demand for environmentally sound products but also government regulations affecting product design and manufacturing.
International agreements such as NAFTA (North America Free Trade Agreement) have greatly reduced international trade barriers and increased the level of both competition and consumer expectations for many products. The development of computers has changed the way many people work and has created new industries.
Clearly, a firm cannot develop a sound marketing strategy without anticipating the conditions under which that strategy will be implemented.
In India, each region, each state, provides a different environment. Tastes and combinations of food products would change significantly across states. Logistics and infrastructure across the interiors of Maharashtra and M.P. would require radically different strategies.
2) Market Segmentation: Perhaps the most important marketing decision a firm makes is the selection of one or more market segments on which to focus. A market segment is a portion of a larger market whose needs differ somewhat from the larger market. Since a market segment has unique needs, a firm that develops a total product focused solely on the needs of that segment will be able to meet the segment’s desires better than a firm whose product or service attempts to meet the needs of multiple segments. To be viable, a segment must be larger enough to be served profitably.
Market segment involves four steps: i) Identifying product related need sets. ii) Grouping customers with similar need sets. iii) Describing each group.
iv) Selecting an attractive segment(s) to serve.
i) Product-Related Need Sets: Organization should identify needs of the market and offer a product, features, services according to their capabilities may be a reputation, an existing product, a technology, or some other skill set. With these potential capabilities they should develop such product that satisfy more than one need, cater to a large segment thus proving itself to be economical to the market segment need.
ii) Customers with Similar Need Sets: The next step is to group consumers with similar need sets. For example, the need for moderately priced, fun, sporty automobiles appears to exist in many young single individuals, young couples with no children, and middle-aged couples whose children have left home. These consumers can be grouped into one segment as far as product features and perhaps even product image are concerned despite sharply different demographics.
This step generally involves consumer research, including focus group interviews, surveys, and product concept tests. It could also involve an analysis of current consumption patterns.
iii) Description of Each Group: Once consumers with similar need sets are identified, they should be described in terms of their demographics, lifestyles, and media usage. In order to design an effective marketing program, it is necessary to have a complete understanding of the potential customers. It is only with such a complete understanding that we can be sure we have correctly identified the need set. In addition, we cannot communicate effectively with our customers if we do not understand the context in which our product is purchased and consumed, how it is thought about by our customers, and the language they use to describe it. Thus, while many young single individuals, young couples with no
