Buyer Behaviour

Stages in Buying Decision


Need recognition.

Information search.

Evaluation of alternatives.

Attitude

Legitimisation

Trial

Purchase decision.

Post-purchase behaviour.
 Factors Influencing Buying
Behavior


Cultural Factors.

Social Factors.

Personal Factors.

Psychological Factors.
 Cultural Factors


Divided into 3 sub factors:

Cultural-The set of basic values perceptions,
wants, and behaviours learned by a member of
society from family and other important
institutions.Ex: Cigarattes and woman.
 Cultural Factors


Sub-Cultural-Each culture contains smaller sub
cultures a group of people with shared value
system based on common life experiences and
situations.

Sub culture includes nationalities, religions,
racial group and geographic regions.

Many sub culture make up important market
segments and marketers often design products.

Ex: Mc Donalds.
 Cultural Factors


Social Class- social classes are society’s
relatively permanent and ordered divisions
whose members share similar values, interests
and behaviour.

Ex: Branded products and Upper class.
 Social Factors


Reference Groups- consist of all the groups that
have direct or indirect influence on the person's
attitude.

Membership group- direct influence. Further
divided into- Primary group and secondary
group.Ex: Family and friends.

Opinion leaders- people who have strong
influence on the buying behaviour of the
individuals.Ex: Wife relating to household
purchase.
 Social Factors

Family members can strongly influence buyer behavior




The family is the most important consumer buying
organization society and it has been researched extensively.

Marketers are interested in the roles, and influence of the
husband, wife and children on the purchase of different
products and services.
Why women are shown in most of the ad?

 Social Factors


Roles and Status: A role consists of the
activities a person is expected to perform. Each
role carries a status.

Marketers must be aware of the status-symbol
potential of products and brands.

Ex: this factor influences in buying products like
car, house, dress, shoes etc.
 Personal Factors


Age and stage in the life cycle: people buy
different goods and services over a lifetime.

Consumption is shaped by the family life cycle.
Ex: Bachelor spend more on fashion and
recreation oriented activities.

Marketers choose life-cycle groups as their
target market.
 Personal Factors


Occupation and Economic circumstances:

A person’s occupation affects the goods and services
bought. Blue collar workers tend to buy more rugged work
clothes, whereas white-collar workers buy more business
suits. A Co. can even specialize in making products needed
by a given occupational group.

Ex: Software companies.

The economic circumstances like spendable income,
savings, debts, borrowing power etc affects the sale of
income-sensitive goods. Ex: Luxury goods.
 Personal Factors


Lifestyle: a lifestyle is a person's pattern of living
in the world as expressed in activities, interests
and opinions.

This concept can help marketers understand
changing consumer values and how they affect
buying behavior.

EX: alcohol ad.
 Personal Factors


Personality and Self-concept: Personality refers
to a set of distinguishing human psychological
traits such as self-confidence, dominance,
autonomy, sociability etc.

Ex: Scooty ad showing freedom.

Self- concept: actual self-concept, ideal self-
concept and others self-concept.Ex: personal
care product.
 Psychological factors


Motivation: A motive is a need that is sufficiently
pressing to drive the person to act.

Maslow's theory-Physiological, safety, social,
esteem and self-actualisation need.

Ex: insurance company sell products on safety
needs.
 Psychological factors


Perception- The process by which people select, Organize, and
interpret information to form a meaningful picture of the world.

Selective attention- marketers have to work hard to attract attention.

Selective distortion- tendency of the people to interpret information in
a way that will support what they already believe.EX: if we distrust
any company, any honest ad of that company we will not trust.

Selective retention- remember good points mentioned about a product
we like and forget good points mentioned about competing brands.
 Psychological factors


Learning- involves changes in an individual's
behavior arising from experience.

Ex: if experience of the consumer is good with
samsung refrigerator, then next time whenever
he/she plans to buy electronic item they give
first preference for samsung.
 Psychological factors


Beliefs and attitudes- a belief is a descriptive
thought that people holds about something.

Ex: People's belief about Infosys.

Attitude- person's relatively consistent
evaluations, feelings and tendencies toward an
object or idea.

Ex: oil ad.
 Market Segmentation


Markets are heterogeneous.

The act of disintegrating a market into number
of sub-markets, each with relatively more
homogenous characteristics is known as market
segmentation.

Ex: passenger car market.

Consumers are segmented not product or price.
 Bases for segmentation


Geographic.

Demographic.

Psychographics.

Buying behaviour.
 Geographic segmentation


Segmentation based on factors like climate,
region, state, district, country, etc.

Used by companies whose product or service
vary based on place.

Ex: warm clothes.
 Demographic Segmentation


Based on factors such as age, gender, family
life cycle, income, occupation etc.

Age. Ex: Levis jeans.

Family life cycle. Ex: Appliances targeted to
newly wed.

Gender. Ex: Adidas.

Income. Ex: HCL.
 Psychographic segmentation


Based on factors such as lifestyle, personality.

Lifestyle.Ex: Coffee day.

Personality. Ex: Levis shows youthful,
rebellious, rugged,etc
 Behavioural segmentation.


Based on factors such as occasions, benefits,
user status, usage rate, loyalty status, etc.

Occasions. Ex: festival offers.

Benefits. Ex: Gym.

User status.Ex: Blood banks.

Usage rate. Ex: food products.

Loyalty status. Ex: Kirana shops.

A market can and must be
segmented using several
bases.
Target Marketing


Target Marketing
involves breaking a
market into segments
and then
concentrating your
marketing efforts on
one or a few key
segments.
 Target Marketing Strategies


Single segment concentration.

Selective specialisation.

Product specialization.

Market specialisation.

Full market coverage.
 Single segment concentration


Concentrated market- only one segment.

Strong market knowledge, strong market
presence and specialised promotion strategy.

High risk.

Ex: Rolex watches.
 Selective Specialisation


Different product for different segments.

Diversifying the firms risk.

Difficult to maintain product distinctiveness.

Ex: Radio channels.
 Product specialisation


The firm makes a certain product and sells it to
different segments.

Builds strong reputation for a product area.

Product risk.

Ex: hotel.
 Market specialisation


The firm concentrates on serving many needs
of a particular customer group.

Strong reputation in serving one customer
group.

Customer risk.

Ex: Kids shop.
 Full market coverage


Serves all customer groups with all kind of
products.

Only suited for large firms.

Ex: ITC
 Market positioning


Positioning is the act of designing the
company's offering and image to occupy a
distinctive place in the mind of the target
market.
 Market positioning


Position by features. Ex: laptop.

Positioning by benefits. Ex: medicine.

Positioning for user category. Ex: Pepsi
generation next.

Positioning against competitors. Ex: Rin.
Airtel Positioning and
Repositioning

the target customer was clearly
defined: elite, upmarket
professionals and
entrepreneurs.

Airtel was on a power trip: the
logo was black, uppercase bold
lettering; and the baseline was
"the power to keep in touch".
"From day one, it was decided
that the brand should always
connote leadership - be it in
network, innovations, offerings
or services,"
Airtel Positioning and
Repositioning

It incorporates two
solid rectangular
forms whose counter
form creates a
doorway.

A- leadership position.

Red dot on I-
Innovation.
Airtel Positioning and
Repositioning
Power to keep in touch(1995)

Touch Tomorrow(1999)

Live Every Moment(2002)

Express Yourself(2003)
 Product Life Cycle

Sales and
Profits ($)

Product Introduction Growth Maturity Decline

Develop-
ment

Losses/
Investments ($
Introduction Stage of the PLC

SalesSales
Sales Low
Low sales
sales
Costs
Costs High
High cost
cost per
per customer
customer
Profits
Profits Negative
Negative
Create
Create product
product awareness
awareness
Marketing
Marketing Objectives
Objectives and
and trial
trial
Product
Product Offer
Offer aa basic
basic product
product
Price
Price Use
Use cost-plus
cost-plus
Distribution
Distribution Build
Build selective
selective distribution
distribution
Build
Build product
product awareness
awareness among
among
Advertising
Advertising early
early adopters
adopters and
and dealers
dealers
Growth Stage of the PLC

Sales
Sales Rapidly
Rapidly rising
rising sales
sales
Costs
Costs Average
Average cost
cost per
per customer
customer
Profits
Profits Rising
Rising profits
profits
Marketing
Marketing Objectives
Objectives Maximize
Maximize market
market share
share
Offer
Offer product
product extensions,
extensions,
Product
Product service,
service, warranty
warranty
Price
Price Price
Price to
to penetrate
penetrate market
market
Distribution
Distribution Build
Build intensive
intensive distribution
distribution
Advertising Build
Build awareness
awareness and
and interest
interest in
in
Advertising
the
the mass
mass market
market
Maturity Stage of the PLC

Sales
Sales Peak
Peak sales
sales
Costs
Costs Low
Low cost
cost per
per customer
customer
Profits
Profits High
High profits
profits
Marketing
Maximize
Maximize profit
profit while
while defending
defending
Marketing Objectives
Objectives
market
market share
share
Product
Product Diversify
Diversify brand
brand and
and models
models
Price
Price to
to match
match oror best
best
Price
Price competitors
competitors
Distribution
Distribution Build
Build more
more intensive
intensive distribution
distribution
Advertising Stress
Stress brand
brand differences
differences and
and
Advertising
benefits
benefits
Decline Stage of the PLC

Sales
Sales Declining
Declining sales
sales
Costs
Costs Low
Low cost
cost per
per customer
customer
Profits
Profits Declining
Declining profits
profits
Marketing
Reduce
Reduce expenditure
expenditure and
and milk
milk the
the
Marketing Objectives
Objectives
brand
brand
Product
Product Phase
Phase out
out weak
weak items
items
Price
Price Cut
Cut price
price
Go
Go selective:
selective: phase
phase out
out
Distribution
Distribution unprofitable
unprofitable outlets
outlets
Advertising
Advertising Reduce
Reduce to
to level
level needed
needed to
to retain
retain
hard-core
hard-core loyal
loyal customers
customers
 PLC Of Scissors

Introduction stage-

Introduced in 1912.

It was new form of smoking pleasure for
Indians.

Promoted concept cigarette than Brand
Scissors.

Promotion and distribution was costly. Sold
through sales person.

Price was low.

Profit was negative

Growth Stage-

1920,1930,1940.

Product was largely accepted.

Price was increased by small percentage but
kept low as part of penetration strategy.

Promotion was maintained at high.

Distribution widened to urban and rural areas.

Competition increased. Hence shifted from
concept promotion to brand promotion.

Maturity stage-

End of 1940.

Sales were stagnant.

High competition from Panama.

Consumers felt high price.

Ad and promotion became outdated.

Market share started to decline.

Decline stage-

1948

Sales declined from 234 million to 213 million.

Taken several measures to save but failed.

Ad was changed but gave wrong message.

Price was decreased by reducing cost through
cheaper tobacco and reduced length of stick-
spoiled the entire brand image.

Revival -

1961

Improved product quality.

Introduction of new pack.

Action satisfaction theme in ad.
 Lessons Learnt


ITC correctly identified the problems associated
with each of the stage of PLC.

The way product, price, promotion were
managed in the days of the launch and growth
of the brand could no more hold good in the
stages of maturity.

ITC proved revival of brand is possible through
appropriate modifications in strategies.
Causes of New Product Failures

• Overestimation of Market Size

• Product Design Problems
• Product Incorrectly Positioned, Priced or Advertised
• Costs of Product Development
• Competitive Actions

• To create successful new products, the company must:

– understand it’s customers, markets and competitors
– develop products that deliver superior value to customers.
 New Product Development
Process
•Idea Generation and Screening
•Concept Development and Testing
•Marketing Strategy
•Business Analysis
•Product Development
•Test Marketing
•Commercialization
New Product Development Process
Step 1. Idea Generation

Systematic Search for New Product Ideas

Internal sources
Customers
Competitors
Distributors
Suppliers
New Product Development Process
Step 2. Idea Screening


Process to spot good ideas and drop poor ones

Criteria

Market Size

Product Price

Development Time & Costs

Manufacturing Costs

Rate of Return
New Product Development Process
Step 3. Concept Development & Testing


Develop product ideas into alternative product
concept.

Test the product concept with the group of
target consumers.

Choose the best one.
New
New Product
Product Development
Development Process
Process
Step
Step 4.
4. Marketing
Marketing Strategy
Strategy Development
Development
Marketing Strategy Statement Formulation

Part
Part One
One -- Overall:
Overall:
Target
Target Market
Market
Planned
Planned Product
Product Positioning
Positioning
Sales
Sales && Profit
Profit Goals
Goals
Market
Market Share
Share

Part
Part Two
Two -- Short-Term:
Short-Term:
Product’s
Product’s Planned
Planned Price
Price
Distribution
Distribution
Marketing
Marketing Budget
Budget

Part
Part Three
Three -- Long-Term:
Long-Term:
Sales
Sales &
& Profit
Profit Goals
Goals
Marketing
Marketing Mix
Mix Strategy
Strategy
New Product Development Process
Step 5. Business Analysis
Step 6. Product Development


Review of product cost, sales and profit
projections, to see if it meets the company
objectives.

If yes, Move to product development

If no, Eliminate product concept.
New
New Product
Product Development
Development Process
Process
Step
Step 7.
7. Test
Test Marketing
Marketing

Standard
Standard Controlled
Controlled
Test
Test Market
Market Test
Test Market
Market
Full
Fullmarketing
marketingcampaign
campaign AAfew
fewstores
storesthat
thathave
have
in
inaasmall
smallnumber
numberof of agreed
agreedto
tocarry
carrynew
new
representative
representativecities.
cities. products
productsfor
foraafee.
fee.
Simulated
Simulated
Test
Test Market
Market
Test
Testininaasimulated
simulated
shopping
shoppingenvironment
environment
to
toaasample
sampleof of
consumers.
consumers.
New Product Development Process
Step 8. Commercialisation


Take decisions on-

When(timing)

Where(Geographic location)

To whom( Target market prospects)
 Product Mix and Product Line

Product mix is the set of all products and items
that a particular seller offers for sale.

Product line is a group of closely related
products. The product mix of a company is
composed of all the product line it carries.

Width of product mix- no.of product lines it
carries.

Length of product line- number of products in
the line.

Depth of product line- total no.of items under
each brand in terms of variants, size, color etc.
 HUL

Product Mix Width

Bath Soap Fabric Wash Beverages

Product Dove Bru

Line Surf Red label
Liril
length Rin Lipton
Pears
Wheel 3 Roses
Rexona
Sunlight Tajmahal
Lifebuoy
501 Super Dust
Hamam
 Product line analysis

Sales and Profits- 4 types of product that yield
different margin, on sales volume and
promotion.

Core product- high sales, high promotion, low
margin as undifferentiated product.

Staples- low sales, no promotion, high
margin.Ex: Memory card

Specialties- low sales, high promotion, high
margin.

Convenience- high sales, low promotion, high
margin.
 Product line analysis


Market profile- the Product line manager must
review how the line is positioned against
competitors' lines.

It must be seen that company's own products
should not be the competitors against each
other.
 Product line length


Reasons for influencing product line length:

To induce upselling. Ex: BMW 5 series to 7
series.

To facilitate cross selling. Ex: computer &
printer.

Protect against economic ups and downs.

Seeking high market share.
 Product line length


Company can lengthen its product line in 2
ways:

Line stretching.

Line filling.
Line stretching


The aim is to enter a new price slot and a new
market segment which is not covered by the
existing offers of the firm.

Upmarket stretch- A company which was initially
positioned its product for the lower end markets,
decide to make higher priced product for the top
slots. Ex: Philips- music player.

Downmarket stretch- a company which was
selling products at high price might begin to
offer at lower price slot. Ex: Ariel.
 Line Filling


It refers to adding more items within the present
range of product line. But each item should
possess a just noticeable difference.

Ex: Videocon introduced 14 inch Private for
modern youngsters, Bazooka for top end and
Turbo tough for middle level.
 Branding


A name, term, sign, symbol or design or a
combination of them, intended to identify the
goods or services of one seller or group of
sellers and to differentiate them from those of
competitors.-AMA
 Branding Decisions

1.To Brand or not to brand.

2.Brand sponsor decision: Private labels.
3.Brand name decisions: Individual names, family name,
Corporate Name.
4.Brand strategy decisions:

Line extension: brand name extended to new flavors. Ex:
Lux.

Brand extension: extended to new product category. Ex:
Dettol soap, handwash.

Multi brands: different brand name for same product
category Ex: HUL.
 Packaging


All the activities of designing and producing the
container for a product.

Decisions on packaging:

Package materials- wood, metal, plastic, paper.

Package aesthetics-design and shape.

Handling convenience- Ex:Harpic

Package size.
 Price


The amount of money charged for a product or
service- Price

Procedure for setting price:

Selecting the pricing objectives- survival,
maximum current profit, maximum market
share, maximum market skimming, product
quality leadership.

Determining demand- to know how responsive,
or elastic demand would be to change in price.
 Price


Estimating Costs-Fixed and Variable cost.

Analyzing competitors' costs, prices and offers.

Selecting a pricing method-

Mark up Pricing-

Markup price= unit cost/ (1- desired return on
sales)

Target return pricing= Unit cost+ (desired return
x invested capital/unit sales)