U n i t 1 – C o n s u me r B e h a v i o u r &

M a r ke t S e g me n t a t i o n

Prepared by: Dr. Priyanka Mahanta

Contents
Consumer Behavior
Determinants of Consumer
Behavior Consumer Decision
Making Process Nature and
Importance of Segmentation
Bases of Segmenting Consumer
Markets Targeting
Positioning
Consumer
Behaviour
Consumer Behavior is the study of when,
why, how and where people do or do not buy
a product. It depends on the psychology of the
consumer. It attempts to understand the buyer
decision-making process both individually &
in groups. It studies the individual consumers
such as demographics & behavioral aspects
to understand the people’s wants.

In the study of Consumer Behaviour main

focus is customer satisfaction because the
customer is the only person with whose
presence businesses actually exists
► Some selected definitions of consumer behaviour are as
follows:
► 1. According to Engel, Blackwell, and Mansard,
consumer behavior is the actions and decision processes
of people who purchase goods and services for personal
consumption.
► 2. According to Louden and Bitta, consumer behavior is
the decision process and physical activity, which
individuals engage in when evaluating, acquiring, using
or disposing of goods and services. Consumer behavior
is the study of how individual customers, groups or
organizations select, buy, use, and dispose of ideas,
goods, and services to satisfy their needs and wants. It
refers to the actions of the consumers in the
marketplace and the underlying motives for those
actions.
 Scope of Consumer Behaviour:
► Demand Forecasting: Consumer behaviour helps in the forecasting of demands for
the business. Business can identify the needs and wants of the customers by
understanding their behaviour. They can easily find out their unfulfilled needs and
demands. If they get a clear idea of what customer needs, a business can design
their products accordingly. It will help them in the forecasting of demands for
products by understanding their behaviour. The business will be able to identify
the market opportunities available to them.

► Marketing Management: Marketing has an important role in the successful

functioning of every business. Better understanding of customer needs, problems
and expectations will help the business in framing sound marketing strategies. If a
company is able to do marketing effectively it can attract more and more
customers. Understanding customer behaviour will help companies to have better
knowledge about their customers. This will ultimately help business in conducting
their marketing in a better way.

► Selecting The Target Market: Consumer behaviour helps in identifying target

customers from the market. Study of customer behaviour identifies all customers
segments with unique and distinct needs. It helps in segmentation of the overall
market into different groups. Grouping of customers and identification of their
needs will help business in serving them better. The business will be able to design
their products in a better way as per the needs and wants of their customer. It
makes clear to businesses who are their target customers and what they want.
► Market Mix: Designing an accurate mix of important elements like
product, price, place and promotion are important for every business. It
helps in finding out the dislikes and unfulfilled wants of customers. This
helps marketers in designing the optimum marketing mix for improving
the effectiveness of marketing strategies. The proper marketing mix will
help marketers to attract more and more customers thereby increasing
the profit.

► Educating Customer: Consumer behaviour helps marketers to identify

how customers spend on their buying decision. By understanding their
behaviour marketers can easily guide their customers about how they
can improve their buying decisions. They can suggest ways to save their
money and guides them with better options available in the market.
Customers get aware of different opportunities available to them as per
their behaviour.

► Assists in Designing Product Portfolio: Designing the right product

portfolio is a challenging task for every business. Every business should
design such a portfolio consisting of all class of products. Consumer
behaviour helps in identifying the class and requirements of peoples. This
helps in designing products as per people‘s needs and include in the
product portfolio of the company. This way business is able to design the
optimum product portfolio and able to serve its customers in a better
way.
What is Customer Profiling?
► Consumer profiling is a marketing method that collects and
analyzes customer data to make a detailed picture of their
typical customer. This information can include things like their
age, gender, income, and buying habits, as well as other things
that might affect their decisions about what to buy.
► Focusing on your current clients comes first in this approach,
then your ideal target market and target audience, giving you
the assurance you need that you’re looking in the appropriate
places.
► Once you have this, it’s important to comprehend and define
these consumers to craft effective messaging, concentrating on
the best customer insights that might inspire helpful innovation
Why is customer profiling important in
business
► Businesses should consider using consumer profiling as a part of their
marketing for several important reasons. Some of the most important
benefits of customer profiling are:
• Improved understanding of target audience: Consumer profiling
lets businesses gather and analyze information about their target
customers. This helps them learn more about their customers and
develop marketing plans that are more likely to fit their needs and
preferences.
• Targeted marketing: Businesses can make personalized marketing
campaigns that are more likely to work if they divide their target
audience into smaller, more specific groups. This can increase the
chances of making a sale and strengthen customer relationships.
• Increased sales: Businesses can make marketing plans that are more
likely to lead to sales if they know more about their customers. This
can help the business run better overall and bring in more money.
• Customer loyalty: By creating personalized marketing campaigns that
meet their customers’ specific needs and preferences, businesses can
build stronger relationships with their customers and increase customer
loyalty.
• Competitive advantage: Businesses can build stronger relationships
with their customers and create a more loyal customer base by
marketing campaigns tailored to their needs and preferences.
Different types of Customer Profiling
► Businesses can use different kinds of consumer profiling, depending on
their specific needs and goals. Some common ways to profile a consumer
are:
• Demographic profiling
► This profile collects and analyzes consumer data based on age, gender,
income, education, and other demographics. This information can assist
companies in defining their target population and creating
demographic-specific marketing strategies.
• Behavioral profiling
► Consumer buying habits, interests, and behavior are used to profile
consumers in this way. This information can assist businesses in
understanding consumers’ purchase habits and creating sales-boosting
marketing strategies.
• Psychological profiling
► This sort of profiling collects and analyzes data on consumers’ attitudes,
beliefs, values, and motives. This information can help businesses
understand consumers’ purchase habits and create marketing strategies
that meet their requirements and preferences.
• Geographic profiling
► Geographic consumer profiling involves gathering and
evaluating consumer data by country, region, city, or
neighborhood. This information can assist businesses in
understanding local consumer needs and preferences and
creating targeted marketing tactics.
► In summary, businesses can use various consumer profiling
techniques to understand their target market better and create
winning marketing plans. The appropriate profiling type will
vary depending on the organization’s individual goals and
objectives.
Characteristics of consumer
behaviour
•It is a process where consumer decide what to buy, when to
buy, how to buy, where to buy & how much to buy.
•It comprises of both mental and physical activities of consumer.
•Consumer behaviour is very complex and dynamic which keeps
on changing constantly.
•Individual buying behaviour is affected by various internal
factors like his needs, wants, attitudes & motives and also by
external factors like social groups, culture, status,
environmental factors etc.
•Consumer behaviour starts before buying and even after
buying.
Importance/Need of study
of consumer behaviour
To make better strategies for increasing profits.
To take into consideration customer’s
health, hygiene & fitness.
To know the buying decisions and how
consumer make consumption.
Consistent change in Consumer’s tastes
or preferences.
Consumer behavior study is necessary to
make pricing policies.
To avoid future market failures.
 Consumer
Behaviour
•Consumer behavior is a study of how individuals decide to spend
their available resources (time, money and effort) or
consumption-related items.
•It is the study of individuals, or organizations and the processes
consumers use to search, select, use and dispose of products,
services, experiences, or ideas to satisfy needs and its impact on the
consumer and society
•Consumer behavior involves the process and activities people
engage in when searching for, selecting, purchasing, using,
evaluating and disposing of products and services to satisfy their
needs and desires. The activities directly involved in obtaining,
consuming and disposing of products and services, including the
decision processes that precede and follow these actions.
 Consumer
Behavior
•The American Marketing Association (AMA) defines consumer
behavior as “The dynamic interaction of cognition, behavior and
environmental events by which human beings conduct the exchange
aspect of their lives.

•Consumer behavior is “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.” Behavior occurs either for the individual, or in the context
of a group (e.g., friends influence what kinds of clothes a person
wears) or an organization (people on the job make decisions as to
which services the firm should use).
 Consumer Involvement
•Marketers develop products and services, segment market
and communicate to consumers accordingly.

•There are various types of buying decision processes.

•As the consumer moves from a very low level of involvement
with the purchase to a high level of involvement,
decision-making becomes increasingly complex.

•Buyer behavior is based on the degree of buyer involvement

for a particular product or service
•Buyer decision-making varies with the type of buying
decision.
•The buyer behavior can be divided in four categories based
on the degree of buyers involvement.
Factors Influencing Consumer
Behaviour

Factors Affecting
Consumer
Behavior

Cultural Personal Psychological Marketing

Social
 Factors Influencing Consumer
Behaviour
Social Factors
• Reference Groups: Small group of people such as colleagues
at workplace, friends etc. influence the values and choices of
other members, expose them to new lifestyles and create
pressure to choose certain products. E.g. Mobiles
• Family: Family members influence buying decisions. Parents
influence the decisions of children. However, nowadays,
children are well informed about products and services through
social media and therefore, they influence the buying decision
of parents.
• Roles and Status: A person performs certain roles in a
particular group in the organization. A person may perform the
role of senior executive in a firm and therefore, enjoys higher
status. People may purchase products that conform to their
status, especially in the case of branded clothes, cars, shoes
etc.
 Factors Influencing ConsumerBehaviour

Cultural Factors
• Religion: may influences consumer behavior to a
certain extent. E.g. consumption of alcohol, tobacco or
meat products is restricted in certain religions
• Sub-culture: Each culture consists of sub-cultures that
provide specific identity to its members. Sub- culture
includes nationalities, racial groups, language etc.
• Social Class: Human societies exhibit social
stratification, that may sometimes take the form of a
caste system where the members share similar values,
interest and behaviour.
 Factors Influencing Consumer
Behaviour
Personal Factors

• Age Factor: The age factor influence buying behavior. E.g. teenagers may
prefer trendy watches, whereas, office executives may prefer formal ones

• Gender: The consumer behavior varies across gender. E.g. girls may prefer
certain feminine colours such as pink, boys may prefer blue, brown

• Education: Highly educated persons may spend on books and personal care
products than the people with low education.
• Income Level: Normally, higher the income level, higher is the level of
spending and vice-versa.

• Status in Society: Persons enjoying higher status in society spend good

amount on luxury items such as luxury cars, luxury watches, premium brands
of clothing etc.
 Factors Influencing Consumer
Behaviour
Psychological Factors
• Learning: takes place through information and experience. E.g.
when customer buys a new brand of shampoo and is satisfied with
it, he is likely to be brand loyal.

• Attitude: Tendency to respond in a given manner to a particular

situation or object or idea. Consumers may develop a positive, or
negative or neutral attitude towards certain products or brands.

• Motive: the inner drive that motivates a person to act or behave in a

certain manner. Marketer must identify the buying motives of the
target customers and influence them to respond positively.
• Perception: It is the impression, which one forms about a certain
situation or object. E.g. a student may perceive Sports Day as an
important event and therefore, he/she would make every possible
effort including purchase of new shoes, jersey etc. whereas, another
student may be casual about it and therefore, would not make any
such extra efforts.
 Factors Influencing Consumer
Behaviour
Marketing Factors
Marketing-mix variables greatly influence consumer buying
behavior.
• Product: The features of the product, its uniqueness,
packaging etc. should appeal to the customers
• Pricing: Pricing is a very sensitive decision. Premium pricing
strategy may appeal to upper income customers. groups and
discount pricing may appeal to price sensitive
• Promotion: Promotion greatly influences buyer choice. The
elements of promotion mix include publicity, advertising,
sales promotion, salesmanship etc.
• Place: The number of middlemen involved, type of channels,
area coverage etc.
 Buying
Roles
For making strategic decisions, marketers have to identify the buyers
who make the final buying decisions.
1. Influencer: Several people may be involved in a particular
purchase decision, but all of them may not be consumers. A
person who has influence, whose views or advice is given
weightage while taking the final decision.

2. Gatekeepers: Family members who control the flow of information

about a product or service into the family.

3. Initiator: The person who is the first to suggest or think of the

idea of purchasing a product or service.
4. Decider: The person who finally takes the decisions of whether to
buy, what to buy, how to buy and from where to buy.
 Buying
Roles
5. Buyer: The person who actually buys
the product/service after making
payments.
6. User: The person who actually uses or
consumes the product or service
A market is a place which allows the purchaser
and the seller to invent and gather
information’s and lets them carry out exchange
of various products and services. In other words
the Meaning of Market refers to a place where
the trading of goods takes place
Markets are Heterogeneous; Segmentation divides them
into Homogeneous Sub-Units
The market for a product is nothing but the aggregate
of the consumer of that product
Markets break up the heterogeneous market for product
into several sub units, or sub markets, each relatively more
homogeneous within itself, compared to market into a
number of sub markets/ distinct sub units of buyer , each
with relatively more homogeneous characteristics, is
known as market segmentation.
What is market segmentation?
It is the Consumer who are Segmented, Not Product, nor Price
It would be useful to provide one important clarification right
at the beginning.
Markets, sometime, speaks of product segments and price
segments and use these expressions as synonymous with
market segments.
This can leads to a wrong understanding of what market
segments, or for that matter, the process of market
segmentation as a whole, actually connote
We have to be clear that in market segmentation, it is the
consumers who are segmented, not the product, nor price.
Market is about people who consume the product, not about
the product that’s gets consumed
 Example of market segmentation?
Titan Watches For the youth /the
Arrives in three broad outdoor lovers:
Segments
• The Rich
• The Middle
• The Lower
For the Gold
lovers: For Designer
Segment
For Children Segment
 Advantages of Segmentation
•Helps distinguish one customer group from another
within a
given market
•Facilitates properchoice of target market.
Facilitates effective tapping of the market.
•Helps divide the markets and conquer them.
•Helps crystallize the needs of the target
buyers
•Makes the marketing effort more efficient and economic
• Helps spot the less satisfied segments and succeed by satisfying
such segments.
•Brings benefits not only to the marketer butalso to
the customer as well.
What Is The Consumer Decision-Making Process?

•The consumer decision-making process outlines several steps

a customer takes from acknowledging the need for a good or
service to deciding if an end purchase meets those
requirements and expectations. Learning how customers make
decisions is crucial because it enables businesses to foresee
user requirements and develop marketing or sales tactics
based on those demands. Understanding how consumers
make decisions has the following additional benefits:
•Provides leverage against competition: Understanding
consumer buying habits in an industry benefits marketers and
sales professionals greatly. It enables professionals in these
domains to develop unique sales and marketing initiatives that
attract more consumers to purchase a company's products over
a competitor's.
•Provides customer base information: The customer
decision-making process can serve as a framework for
upcoming marketing initiatives, public relations efforts or
product introductions. It motivates marketing and sales
professionals to think about the initial demands of a consumer,
the channels they may use to obtain items and the aspects they
consider, like price, product design and quality.
•Increases sales and expands customer base: You
can enhance product sales and broaden a customer
base by studying the decision-making process of
patrons and identifying the best ways to communicate
with them. Understanding how a typical customer
addresses a need allows professionals to develop
targeted marketing materials and distribution
strategies.

•Provides useful insights for marketers: Learning

about decision-making processes in detail provides
the advantage of educating marketers on what occurs
after a consumer purchases a product or subscribes to
a service. This is helpful for marketers because they
can evaluate what customers require to be happy
during the consumption and post-evaluation phases.
What Are The 5 Stages Of Consumer Decision-Making
Process?
The decision-making process of consumers typically has five
stages. Understanding these stages helps marketers and sales
professionals discover the factors that influence a consumer's
purchase decisions. A customer:
1. Acknowledges a product or service need
In the first stage, consumers acknowledge their need for
purchasing a product or service. They may decide to acquire a
product to perform a task, advance their wellbeing, cheer up
someone else, broaden their knowledge or for a combination of
these reasons. This stage is crucial for marketers to target as it
becomes easy to
2. Researches gain the
product trust of consumers after establishing a
options
new or uniquemay
A customer requirement.
then investigate several product categories
available in the market in the second stage of the decision-making
process. After acknowledging their requirement for a product,
consumers may want to identify the best available solution for their
specific requirements. To assist in making a purchase decision,
they may perform online research, watch advertisements, inspect
items in person or consult with family and friends.
3. Compares products and services from different
providers
When a customer discovers a product or a service that suits
their needs, they often evaluate comparable products and
services from various sellers based on cost and quality.
Another aspect that customers may consider when choosing a
retailer is availability. This is crucial if they require a product
for an impending engagement at short notice. While making a
final selection, customers may also consider aspects like
industry trends and brand recognition.
4. Chooses a product and makes a purchase
The fourth stage of the decision-making process involves
customers choosing a product they can afford to buy. There
are a wide variety of channels through which consumers can
procure goods. They typically do this by discovering local
retailers who sell a particular item and making in-person
purchases or by making online purchases.
5. Reflects on a purchase and decided whether to
repurchase
After a consumer purchases a product and uses it, they can
accurately determine whether it was worth the price and
whether they want to make additional purchases from the
same company. They may decide to leave a review on the
product page or order more of the same product before it sells
out. Many consumers rely on online user reviews and
feedback to guide purchase decisions and marketers and
customer support teams can impact purchase decisions at this
stage of the decision-making process also.
T h a n kYou