GCEM
             ConsumerBehaviour
                     14MBAMM301
          Mr. SRINIVAS S, Assistant Professor,
                 Department of MBA
                                              2016
           GOPALAN COLLEGE OF ENGINEERING AND
                         MANAGEMENT
                                                                   Mr.Srinivas.S, Asst Professor
      CONSUMER BEHAVIOUR (14MBAMM301)        Module 01 
                             Introduction to the study of Consumer Behaviour 
                                                   
       Meaning and Definition of CB 
        
             Consumer behaviour is a rapidly growing application-oriented discipline of study. The recent 
       advancement in the technological and digital communication are also influencing consumer behaviour. 
        
             This study is not just restricted to how a person buys a product but it is dynamic, complex and multi-
       dimensional process and reflects the totality of consumers' decisions with respect to acquisition, 
       consumption or use and disposal activities. 
              
                  Consumer behaviour 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" (Leon G. Schiffman and Leslie Lazar Kanuk, "Consumer Behaviour" 2007) 
        
                 Consumer behaviour 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 Behaviour we not only 
       learn what is the behaviour of the consumer when he buys it but also before the consumption, during the 
       consumption and after the consumption. 
              
        
             Difference between Consumer and customer: 
              
                    A consumer is anyone who typically engages in any one or all of the activities mentioned in the 
       definition. Traditionally, consumers have been defined very strictly in terms of economic goods and services 
       wherein a monetary exchange is involved. This concept, over a period of time, has been broadened. Some 
       scholars also include goods and services where a monetary transaction is not involved and thus the users of 
       the services of voluntary organizations are also thought of as consumers. This means that organizations such 
       as UNICEF, CRY, or political groups can view their public as "consumers". 
        
       The Marketing Concept 
             In marketing concept the firms analyze the needs of their customers and then make decisions to 
       satisfy those needs, better than the competition. 
        
                      To better understand the marketing concept, it is worthwhile to put it in perspective by reviewing 
       other concepts that once were predominant. While these alternative concepts prevailed during different 
       historical time frames, they are not restricted to those periods and are still practiced by some firms today.
      Department of Management Studies, GCEM                                              1
                                          Mr.Srinivas.S, Asst Professor
    CONSUMER BEHAVIOUR (14MBAMM301) 
      
     The Production Concept: 
     The term production concept was coined by Henry Ford who made the auto-mobile which was till then only 
     affordable for the rich people for even a common man to purchase. 
      
     *Assumes that consumers are interested primarily in product availability at low prices 
     Marketing objectives: 
     * Cheap, efficient production 
     * Intensive distribution 
     * Market expansion 
      
     The production concept was the idea that a firm should focus on those products that it could produce most 
     efficiently and that the creation of a supply of low-cost products would in and of itself create the demand for 
     the products. 
      
     Virtually everything that could be produced was sold easily by a sales team whose job it was simply to 
     execute transactions at a price determined by the cost of production. The production concept prevailed into 
     the late 1920's. 
      
     The Product Concept: 
     Assumes that consumers will buy the product that offers them the highest quality, the best performance, and 
     the most features 
     Marketing objectives: 
     * Quality improvement 
     * Addition of features 
     Tendency toward Marketing Myopia 
      
     The Sales Concept: 
     Assumes that consumers are unlikely to buy a product unless they are aggressively persuaded to do so 
     Marketing objectives: 
     * Sell, sell, sell 
     Lack of concern for customer needs and satisfaction 
      
     By the early 1930's however, mass production had become commonplace, competition had increased, and 
     there was little unfulfilled demand. Around this time, firms began to practice the sales concept (or selling 
     concept), under which companies not only would produce the products, but also would try to convince 
     customers to buy them through advertising and personal selling. Before producing a product, the key 
     questions were: 
      
     * Can we sell the product? 
     * Can we charge enough for it? 
      
     The sales concept paid little attention to whether the product actually was needed; the goal simply was to 
     beat the competition to the sale with little regard to customer satisfaction. Marketing was a function that was 
     performed after the product was developed and produced, and many people came to associate marketing 
     with hard selling. Even today, many people use the word "marketing" when they really mean sales. 
      
     The Marketing Concept: 
     Assumes that to be successful, a company must determine the needs and wants of specific target markets and 
     deliver the desired satisfactions better than the competition 
     Marketing objectives: 
     * Make what you can sell 
     * Focus on buyer’s needs 
      
     After World War II, the variety of products increased and hard selling no longer could be relied upon to 
     generate sales. With increased discretionary income, customers could afford to be selective and buy only 
    Department of Management Studies, GCEM              2
                                                                                             Mr.Srinivas.S, Asst Professor
        CONSUMER BEHAVIOUR (14MBAMM301) 
          those products that precisely met their changing needs, and these needs were not immediately obvious. The 
          key questions became: 
           
          * What do customers want? 
          * Can we develop it while they still want it? 
          * How can we keep our customers satisfied? 
           
          In response to these discerning customers, firms began to adopt the marketing concept, which involves: 
          * Focusing on customer needs before developing the product 
          * Aligning all functions of the company to focus on those needs 
          * Realizing a profit by successfully satisfying customer needs over the long-term 
           
          When firms first began to adopt the marketing concept, they typically set up separate marketing departments 
          whose objective it was to satisfy customer needs. Often these departments were sales departments with 
          expanded responsibilities. While this expanded sales department structure can be found in some companies 
          today, many firms have structured themselves into marketing organizations having a company-wide 
          customer focus. Since the entire organization exists to satisfy customer needs, nobody can neglect a 
          customer issue by declaring it a "marketing problem" - everybody must be concerned with customer 
          satisfaction. 
           
          The marketing concept relies upon marketing research to define market segments, their size, and their needs. 
          To satisfy those needs, the marketing team makes decisions about the controllable parameters of 
          the marketing mix. 
           
          MARKET SEGMENTATION 
           
                  Definition: - market segmentation is defined as dividing a market into distinct groups of buyers who 
          might require separate products of marketing mix. A market segment is a buyer group having similar wants. 
                  Market segmentation is dividing homogenous market into different heterogeneous market based on 
          customer’s needs and wants. 
           
          Bases for market segmentation 
              •   Geographic segmentation – dividing the market into different geographical units such as nations, 
                  states, regions, countries, and cities. The company can operates in one or a few areas, or operate in all 
                  but pay attention to local variations. 
              •   Demographic segmentation – the market is divided into groups on the basis of variables such as age, 
                  family size, family life cycle, gender, income, occupation, education, religion, race, generation, 
                  social class and nationality. The consumer needs, wants, and usage rates and product and brand 
                  preferences are often associated with demographic variables. 
              •   Psychographic segmentation  –  the market is divided into different groups on the basis of 
                  psychological/personality traits, lifestyle or values. The people within the same demographic group 
                  can exhibit very different psychographic profiles. 
              •   Behavioral segmentation  –  buyers are divided into groups on the basis of their knowledge of, 
                  attitude toward, use of, or response to a product. Behavioral variables are occasions, benefits, user 
                  status, usage rate, loyalty status, buyer readiness stage, and attitude. 
                      o  Occasions – day, week, month and year. 
                      o  User status – nonusers, ex-users, potential users, first time users and regular users. 
                      o  Usage rate – light, medium, heavy product users 
                      o  Buyer –readiness stage – unaware of the product, aware of the product, informed about the 
                          product, interested about the product, desire about the product, intended to buy the product. 
                      o  Loyalty stage – hard-core loyal, split loyal, shifting loyal, switchers. 
                           
           
           
           
        Department of Management Studies, GCEM                                                                                3