Consumer Behaviour
SM
S e s s io n- 1 9& 2 0
Consumer Behaviour Model
DIFFUSION OF INNOVATION
INNOVATION
Continuous innovation:- Small changes to existing product. Levis
shrink-to-fit jeans
Dynamically continuous Innovation:- Significant changes to an existing
product. Windows 10.
Discontinuous innovation:- Big changes like Computers, Mobile
Phones, Google Maps
DIFFUSION
What is
diffusing?
▪ Brands?
▪ Product
Categories?
▪ Trends?
PREREQUISITES FOR SUCCESSFUL ADOPTION
Relative Product should offer relative advantage over
Advantage other alternatives
Innovation should be compatible with
Compatibility consumers’ lifestyles
A product that is easy to understand will be
Complexity chosen over competitors
People are more likely to adopt an innovation if
Trialability they can experiment with it prior to purchase
Innovations that are easily observable are more
Observability likely to spread
Characteristic of the innovation
• Relative advantage: typewriter vs personal computer. Was there a
relative advantage?
• Compatibility: Can I use this new cartridge in my existing razor
• Complexity: how easy it is to adopt? What do I need to learn/practice
before using it ( Using a steam mop with various contraptions to clean
surfaces)
• Divisibility: example ( Can I buy a 50g pack and experience or do I
need to buy this curved TV at Rs.75000)
• Observability: Did I lose my weight with this diet food
• Other characteristic that affects are cost, risk, scientific credibility,
social approval etc.,
WHEN DO CUSTOMERS REJECT INNOVATION
▪ Value barrier :- Poor relative advantage
▪ Usage Barrier :- Not compatible ( Eco-system is not developed
▪ Risk Barrier :- High perceived risks
INNOVATION DIFFUSION CURVE
Continuum of Consumers’ Thought Processes
Rational Bounded Motivational
Approaches Rationality Approaches
Standard Behavioral Freudian and
Economic Theory Economics and Anthropological
Behavioral Decision Approaches
Theory
01 C o n s u me r B e h a v i o u r a n d M a r ke t i n g
D e ci s i o ns
MARKETING CONCEPT
The firm's goals can be best achieved through
identification and satisfaction of the customers' stated
and unstated needs and wants.
When you create value for consumer, you can
create value for the organization and sustain it over
time
Customer knows what he wants
Customer learns
What he wants
UNDERSTANDING THE CUSTOMER
Culture
Family & Social
Situational
Reference Group
Consumer Understanding and marketing decisions
Segmentation
W h a t i s my u n d er s t a n di n g o f t h e c o n s u m e r s
in t h e c o n t e x t o f t his p r o du c t ca t eg o r y ?
U s a g e c o n t e x t , N e e ds , Ga ps ,
Consumer Understanding and marketing decisions
T a r g e t i ng
W h i ch c o n s u m e r s eg me n t s h o u l d I t a r g et ?
W h o w i ll r e s p o n d t o m y m e s sa g i n g / va lu e
proposition
Consumer Understanding and marketing decisions
P o s i t i o ni ng
W h a t p r o mi se s ho u ld I ma k e a n d c r e a t e a
s t r o n g a s s o c ia t i o n w i t h m y b r a n d
Consumer Understanding and marketing decisions
P r o d u ct
W h a t b u n dl e o f b e ne f i t s a r e r e l e v a nt t o m y
T G?
H o w c a n I d e l i ve r i t b e t t e r t h a n c o m pe t it io n ?
Consumer Understanding and marketing decisions
Price
H o w c a n d is co ve r t h e “ V a l u e R e a l ize d ” by
t h e c o n s u m er
C a n I Ch a r g e t he p e r ce i v e d v a l u e ?
C o n s u me r U s a g e e l a s t i ci t y a nd pr ice
s e n si t i v i t y
SKIMMING VS PENETRATION
Usage Elasticity or
High Low
Price sensitivity
Consumer Understanding and marketing decisions
P la ce
C o n s u me r b u yi n g f r eq u e n cy /pl a c e .
I s t h e n e e d w e l l d e ve l o p e d?
Consumer Understanding and marketing decisions
Promotion
S o ci a l a n d c u lt u r a l co nt ex t
H o w c a n I t un e i nt o t he c o n s u m e r ’ s
e m o t i o na l d i m e ns i o n?
Sales Promotion
1. Sales promotion How it works
2. General principles for designing a
sales promotion
DIFFERENCE BETWEEN 2 SPECIES
CHANGE IN PERSPECTIVE
MAKES SENSE….
Are customers
Impulsive ??
Buy even when we don’t need it??
Sucker for offers ??
Sales Promotion- How it works
I got Smart/Lucky
1. Buying during consumer
promotion: Apart from the
gain due to the perceived
value of the free offer
a. There is a psychological
satisfaction of BEING
smart or lucky to have got
the offer
2. Positive stroking
Unexpected Gain
1.While buying a new car---
the satisfaction of selling
the old car at better than
‘expected’ price gives as
much happiness as the
deal on the new car
“Did not expect it”- windfall
Get money’ worth & MORE
1.Eating in a buffet:
Between eating what you
like and eating what has
higher perceived value----
consumers often want to
“maximise” the value of
what they eat !!
2. Thankfully, there is a
satiety threshold.
Believe me --it was free
1.Presented with a
deal, customer will
re-evaluate his
brand preference,
value proposition
and even take a
risk !!!
Irresistible…..
1.Buy on an
impulse----
Extra give away
1.Extra give away of
another is better
than lower price
or extra quantity
2.Tangible
3.Post purchase
validation
Price off
1.Easy to implement
but a boring offer
2. Cost to company and
gain to customer is
equal
Redemption offer
1. Deferred offer contingent on some usage
2. Works like loyalty
3. Must be higher cumulative value as it is not offering instant
gratification
1.Get 2 free movie tickets per month or INR 500 off whichever is less with SBI
Signature/Elite credit card
2.Offer valid on purchase of minimum 2 movie tickets
Designing a sales promotion
• Foreign travel for sales team or
channel partner
• Charm beyond the value of the offer
Designing a sales promotion
• Buyback of Mobile at a defined value
after X years
BOOKS TO GO DEEP
DIFFUSION PROCESS
VARIATIONS TO DIFFUSION CURVES
RATE OF DIFFUSION
New SEC Classification
SOCIAL ECONOMIC CLASSIFICATION
- Marketers use social & economic class to segment/target
- India used to follow the SEC considering the income,
occupation of the chief earner and education level
- A new sec has been proposed including asset ownership
NEW SEC
NEW SEC CATEGORIES
GEERT HOFSTEDE 6D MODEL
01
