UNIT 1 : CONSUMER BEHAVIOUR

CONSUMER BEHAVIOUR

Consumer behaviour refers to the actions and decision-making processes of people when
they are buying, using, or disposing of products and services.

It includes:

 What they buy

 Why they buy it
 When and where they buy it
 How often they buy it
 How they use it
 What they feel before and after the purchase

Need to Study Consumer Behaviour

Studying consumer behaviour is important because it helps businesses understand their
customers better. When companies know how and why people buy products, they can
create better marketing strategies, improve sales, and satisfy customers.

Here are the main reasons:

1. Understand Customer Needs and Wants

 Every customer has unique preferences such as quality, price, features, and brand.
 Studying consumer behaviour helps businesses understand exactly what their target
audience is looking for.
 This allows companies to offer products that are more likely to meet those specific
needs.

2. Design Better Products and Services

 Feedback from consumers helps businesses identify product strengths and

weaknesses.
 It assists in modifying existing products or developing new ones that match
consumer expectations.
 Understanding preferences helps improve functionality, design, packaging, and
usability.

3. Create Effective Marketing Strategies

  Consumer behaviour data helps businesses decide the right medium (TV, online,
radio, etc.) to promote products.
 It helps in crafting messages that connect emotionally and logically with the target
audience.
 Pricing, promotional offers, product placements, and distribution strategies can be
adjusted based on consumer insights.

4. Improve Customer Satisfaction

 Satisfied customers are more likely to become loyal and recommend the product to
others.
 By studying consumer expectations and post-purchase experiences, companies can
improve service and support.
 Ensuring satisfaction reduces negative feedback and enhances brand image.

5. Forecast Market Trends

 By observing purchasing patterns, companies can predict what products may be in

demand in the future.
 Helps in staying prepared for shifts in consumer preferences and avoiding
overproduction or underproduction.

6. Market Segmentation

 Consumer behaviour helps in dividing the entire market into segments based on age,
gender, income, lifestyle, etc.
 Each segment can then be targeted with specific products and marketing messages
suited to their behaviour.
 This leads to more effective use of resources and higher conversion rates.

7. Build Strong Customer Relationships

 Understanding emotions, motivations, and expectations allows brands to build trust

and loyalty.
 Long-term relationships are more profitable and help in word-of-mouth promotion.

8. Reduce Business Risks

  Studying behaviour before launching a product can help avoid failures.
 Helps in testing market response and making data-based decisions rather than
assumptions.

9. Adapt to Environmental and Social Changes

 Consumer behaviour reflects changes in culture, technology, income levels, and

social norms.
 Businesses can adapt their products and strategies according to changing trends and
customer values.

10. Stay Ahead in Competition

 A better understanding of consumer behaviour can provide a competitive edge.

 Helps in offering unique products and solutions that meet unmet needs in the
market.
 Continuous observation of consumer preferences allows for faster and smarter
business decisions.

Factors Influencing Consumer Behaviour

Consumer behaviour is influenced by several internal and external factors. These factors
affect how a person chooses, buys, uses, or disposes of a product or service.

We can group them into the following categories:

1. Cultural Factors

These are the most basic influences on a person’s wants and behaviour.

a) Culture

 It includes values, beliefs, traditions, and customs learned from family and society.
 For example, in Indian culture, festivals like Diwali increase consumer spending.

b) Sub-culture

 Includes religion, caste, region, or ethnic groups that shape preferences.

 For example, food and clothing habits vary between South and North India.
c) Social Class

 People belonging to different income or status levels (upper, middle, lower) show
different buying behaviours.
 Higher classes may prefer luxury brands, while lower classes may focus on
affordability.

2. Social Factors

These are the influences from people around the consumer.

a) Family

 Family is the most important influence, especially in Indian households.

 Parents, spouse, and children play a key role in product selection.

b) Reference Groups

 Friends, colleagues, celebrities, or social media influencers guide buying decisions.

 Example: People may buy a phone used or recommended by their favorite YouTuber.

c) Roles and Status

 A person’s position in society (student, teacher, manager) affects what and how they
buy.
 Example: A manager may prefer branded formal wear, while a student may prefer
casuals.

3. Personal Factors

These are individual characteristics that vary from person to person.

a) Age and Life Cycle

 Needs and preferences change with age.

 Example: A teenager may want trendy gadgets, while an elderly person may prefer
health products.

b) Occupation

 A person’s job influences their purchasing power and needs.

 Example: A software engineer may invest in a high-end laptop, while a factory
worker may not.
c) Income

 More income means more purchasing options and higher spending.

 Example: High-income consumers may buy branded products, while low-income
groups go for budget options.

d) Lifestyle

 Lifestyle includes activities, interests, and opinions.

 For example, a fitness enthusiast may buy gym memberships and health food.

e) Personality

 Personality traits like confidence, boldness, or introversion affect product choice.

 Example: An adventurous person may choose a sports bike or travel gear.

4. Psychological Factors

These are internal personal feelings and thoughts that influence behaviour.

a) Motivation

 It is the inner drive to satisfy needs (like hunger, safety, status).

 Example: A person buys a car for both transportation and social status.

b) Perception

 How a person views a product or brand based on experience or marketing.

 Two people may see the same product differently.

c) Learning

 Consumer behaviour changes with experience.

 If someone had a bad experience with a brand, they may not buy it again.

d) Beliefs and Attitudes

 Beliefs are ideas a person holds, while attitudes are positive or negative feelings
toward something.
 Example: If someone believes that herbal products are healthy, they’ll avoid
chemical-based products.

Changing Trends in Consumer Behaviour

Consumer behaviour is not fixed. It keeps changing with time due to technology, lifestyle,
income levels, social values, and market conditions. Understanding these changes helps
businesses to stay relevant and competitive.

Here are the major changing trends in consumer behaviour:

1. Shift from Offline to Online Shopping

 Consumers now prefer online platforms (Amazon, Flipkart, Myntra) for convenience,
variety, and discounts.
 Home delivery, easy returns, and 24/7 availability have increased online shopping.
 Especially after the COVID-19 pandemic, e-commerce has become more popular.

2. More Focus on Quality and Value

 Consumers are becoming smarter; they compare prices, read reviews, and seek
value for money.
 Instead of just looking at price, they focus on durability, performance, and brand
reputation.

3. Increased Use of Digital Payments

 Use of UPI, mobile wallets, credit/debit cards has grown rapidly.

 People prefer cashless, secure, and fast payment methods.

4. Growing Preference for Sustainable and Eco-friendly Products

 Environmentally conscious consumers prefer organic, recyclable, cruelty-free and

plastic-free products.
 Brands that support green practices are gaining popularity.

5. Personalized Buying Experience

 Consumers expect personalized suggestions based on their past purchases.

 Use of AI, machine learning, and data analytics helps companies to recommend
products and offers.
6. Influence of Social Media and Influencers

 Platforms like Instagram, YouTube, Facebook and influencers have strong impact on
what people buy.
 Peer recommendations and user-generated content affect buying decisions.

7. Preference for Local and Homegrown Brands

 Consumers are now showing interest in Made in India and local brands over foreign
ones.
 Promoting local economy has become a buying motivation.

8. Rise in Health and Wellness Awareness

 People are shifting towards healthy food, fitness, and mental wellness products.
 Sales of supplements, fitness equipment, herbal products, and low-calorie food have
increased.

9. Omnichannel Shopping Behaviour

 Consumers today may explore products online, visit the store to experience them,
and then make the final purchase on mobile.
 They expect a seamless experience across all platforms – online, offline, app, and
call centres.

10. Emphasis on Instant Gratification

 Customers expect fast delivery, quick service, and instant support.

 Businesses like Zomato, Blinkit, Amazon Prime are built on quick service models.

Consumer Behaviour and Marketing

Consumer behaviour refers to the study of how individuals or groups select, purchase, use,
and dispose of products or services.
Marketing is the process of identifying, understanding, and satisfying consumer needs
through product, price, promotion, and place strategies (4Ps).

Understanding consumer behaviour is essential for effective marketing. Let’s explore how
they are connected:

1. Understanding Customer Needs

 Marketing starts with identifying what customers want.

 By studying consumer behaviour, marketers can know customer preferences,
expectations, and problems.
 Helps in creating products that are demand-based and customer-focused.

2. Product Development and Design

 Consumer behaviour insights guide what kind of products to create.

 Marketers can design products based on age, lifestyle, taste, or income level of
consumers.
 Example: Launching sugar-free products for health-conscious consumers.

3. Pricing Strategies

 Marketers use consumer behaviour to set prices based on what customers are
willing to pay.
 Helps in applying different pricing models (like premium pricing for luxury buyers or
discount pricing for price-sensitive customers).

4. Promotion and Advertising

 Behavioural understanding helps marketers to design relevant, emotional, or logical

messages that attract the target audience.
 Helps to choose the right media channel (TV, social media, print, etc.) based on
consumer habits.
 Example: Youth are more influenced by Instagram ads and influencers.

5. Distribution and Place

 Helps marketers choose where and how to sell the product.

  Example: Selling tech products online to digital-savvy users, or rural-specific products
in local markets.

6. Market Segmentation

 Based on behaviour, marketers divide the market into segments like teenagers,
working women, senior citizens, etc.
 Each segment is targeted with customized marketing strategies for better results.

7. Brand Loyalty and Retention

 By understanding why customers repeat their purchases, marketers can build loyalty
programs and personalized offers.
 Satisfied and loyal customers bring long-term business and positive word-of-mouth.

8. Forecasting and Demand Planning

 Past buying behaviour helps predict future demand.

 Helps in inventory management, marketing campaigns, and avoiding
overproduction.

9. Consumer Experience Management

 Marketing is no longer just about selling; it’s about giving a positive buying
experience.
 Understanding behaviour helps in improving customer service, packaging, website
design, and after-sales support.

10. Adaptation to Trends and Technology

 Consumer behaviour changes with time – businesses must adapt marketing

strategies to match new lifestyle, digital habits, and social trends.
 Example: Rise of online shopping has changed how marketing campaigns are run.

Marketing Segmentation
Definition:

Market segmentation is the process of dividing a large market into smaller groups of
consumers who have similar needs, characteristics, or buying behaviour. Each segment is
targeted with a specific marketing strategy.

According to Philip Kotler:

“Market segmentation is the process of dividing a market into distinct groups of buyers who
might require separate products or marketing mixes.”

Needs of Market Segmentation

Market segmentation is very important in today’s competitive and diverse market
environment. Every customer is different, and businesses cannot satisfy everyone with the
same marketing strategy. Hence, dividing the market into smaller segments helps serve
customers better and improve business results.

Here are the key needs for market segmentation:

1. Better Understanding of Customer Needs

 Every customer has different preferences, lifestyles, and expectations.

 Segmentation helps companies understand what different groups of customers
want.
 Example: Young customers may want trendy products, while older customers may
prefer comfort and durability.

2. Effective Targeting

 It allows companies to focus only on the most suitable or profitable customer

groups.
 This avoids wasting time and money on customers who are not interested in the
product.
 Example: A premium brand targets high-income customers instead of everyone.

3. Efficient Use of Resources

 Limited marketing resources (money, manpower, time) can be used more wisely.
  Instead of spreading resources across a large and diverse market, businesses can
focus on specific segments.

4. Helps in Product Development

 Businesses can develop products based on the unique needs of different customer
segments.
 Example: A cosmetic company may create separate products for dry skin, oily skin,
and sensitive skin.

5. Improved Marketing Communication

 Messages can be tailored according to the values, language, and needs of each
segment.
 This increases the chances of connecting with customers and gaining attention.
 Example: Ads for youth use trendy language and social media, while ads for seniors
may use traditional media.

6. Increased Customer Satisfaction

 When a company offers exactly what a customer needs, satisfaction and loyalty
improve.
 Customers feel more valued when products are made specifically for them.

7. Competitive Advantage

 Businesses can offer something different and better than competitors in specific
segments.
 Helps in creating a strong identity and brand loyalty within that segment.

8. Better Pricing Strategies

 Different segments may have different price sensitivities.

 Businesses can set prices accordingly for each segment—premium for high-income,
affordable for middle or lower-income groups.
9. Helps in Market Expansion

 Once a business succeeds in one segment, it can target new segments in a step-by-
step way.
 Example: A company that starts with sports shoes for men may expand to women’s
and kids’ shoes.

10. Supports Long-Term Growth

 Segmentation builds strong relationships with specific customer groups.

 This leads to repeat business, long-term loyalty, and business sustainability.

Types of Market Segmentation

Market segmentation is the process of dividing a large, diverse market into smaller groups
of consumers with similar needs or characteristics. There are several types of segmentation
based on different factors.

1. Geographic Segmentation

Definition:
Dividing the market based on geographical areas like country, region, state, city, or climate.

Why it’s used:

People living in different locations have different needs due to climate, culture, or lifestyle.

Examples:

 Woollen clothes sold in North India (cold climate).

 Coconut-based products promoted in South India.
 Raincoats and umbrellas marketed during monsoons in coastal areas.

2. Demographic Segmentation

Definition:
Dividing the market based on age, gender, income, occupation, education, religion, family
size, etc.
Why it’s used:
These factors strongly influence buying behaviour and affordability.

Examples:

 Toys targeted at children aged 3–10.

 Luxury watches marketed to high-income professionals.
 Cosmetic products designed separately for men and women.
 Budget phones for low-income groups, premium phones for high-income customers.

3. Psychographic Segmentation

Definition:
Dividing the market based on lifestyle, personality traits, values, interests, and social class.

Why it’s used:

Consumers with similar lifestyles often show similar buying behaviour.

Examples:

 Gym memberships or protein supplements for fitness lovers.

 Adventure travel packages for thrill-seekers.
 Organic food for health-conscious consumers.
 Eco-friendly brands for environmentally aware people.

4. Behavioural Segmentation

Definition:
Dividing the market based on consumer behaviour such as:

 Purchase occasions
 Usage rate
 Brand loyalty
 Benefits sought
 Buyer readiness

Why it’s used:

This segmentation is based on how and why customers buy.

Examples:

 Special gift packs during festivals (occasion-based).

 Loyalty programs for repeat buyers (brand loyalty).
 Whitening toothpaste for people looking for oral beauty (benefit-based).
  Heavy internet users targeted with unlimited data plans (usage rate).

5. Technographic Segmentation (Modern/Advanced Type)

Definition:
Segmenting the market based on technology usage and digital behaviour.

Why it’s used:

In today’s digital world, people use technology differently.

Examples:

 High-end gadgets marketed to tech-savvy professionals.

 Mobile app features targeted at smartphone users.
 Cloud storage plans designed for heavy online users.

6. Firmographic Segmentation (For B2B Marketing)

Definition:
Used in business-to-business (B2B) markets; it divides companies based on size, industry,
location, or revenue.

Examples:

 Software companies targeting small businesses with basic tools and large companies
with advanced features.
 Office supply firms targeting manufacturing companies differently than IT firms.

Components of Market Segmentation

Market segmentation is not just about dividing the market — it also involves certain key
components that help businesses identify, select, and target the right segments effectively.

Below are the main components of market segmentation:

1. Market Identification
  The first step is to identify the overall market for a product or service.
 It includes understanding who the potential customers are, their needs, and the
type of product they might want.
 Example: A company planning to sell electric scooters must first identify the demand
for them in urban areas.

2. Segmentation Criteria or Bases

 These are the methods or factors used to divide the market.

 Common bases include:
o Geographic (region, climate)
o Demographic (age, gender, income)
o Psychographic (lifestyle, personality)
o Behavioural (loyalty, usage, benefits sought)
 Choosing the right basis is critical for successful segmentation.

3. Segment Identification and Profiling

 Once segments are created, each one is clearly described and analyzed.
 This includes:
o Size of the segment
o Buying behaviour
o Needs and expectations
o Price sensitivity
 Helps in understanding which segments are worth targeting.

4. Evaluation and Selection of Target Market

 After identifying all segments, each is evaluated based on:

o Profitability
o Growth potential
o Competition
o Company's ability to serve the segment
 The business then selects one or more target segments to focus on.

5. Positioning

 This involves creating a clear image or identity of the product in the minds of the
target segment.
  Businesses use product features, branding, and messaging to differentiate their
product from competitors.
 Example: A smartphone brand might position itself as “affordable but powerful” for
students.

6. Development of Marketing Mix (4Ps)

 Once the target segment and positioning are clear, companies design a customized
marketing mix for each segment:
o Product: Features, quality, design suitable for the segment.
o Price: Set based on the segment's income level or value perception.
o Place: Right channels for availability.
o Promotion: Ads, offers, and communication tailored for the segment.

Steps in Marketing Segmentation

Market segmentation is a step-by-step process that helps businesses divide the market,
identify target customers, and develop strategies to meet their needs effectively.

Here are the main steps involved in marketing segmentation:

1. Identify the Market

 Define the broad market for a product or service.

 Understand the industry, customer groups, and potential users.
 Example: For sports shoes, the broad market includes athletes, gym-goers, students,
etc.

2. Determine Segmentation Variables (Bases)

 Choose the criteria to segment the market.

 Common segmentation bases include:
o Geographic (region, climate)
o Demographic (age, gender, income)
o Psychographic (lifestyle, values)
o Behavioural (usage, loyalty, benefits sought)
 You may use one or combine several bases depending on the product.
3. Segment the Market

 Divide the total market into distinct and meaningful segments based on the selected
variables.
 Each segment should have similar characteristics, needs, and responses.
 Example: Segmenting customers of a mobile phone brand into students,
professionals, and senior citizens.

4. Evaluate the Segments

 Not all segments are profitable or useful. So, analyze each segment on the basis of:
o Size and growth potential
o Purchasing power
o Accessibility
o Compatibility with company goals
o Competitive situation
 This helps in identifying the best segments to target.

5. Select Target Market(s)

 Choose one or more segments to focus marketing efforts on.

 There are three types of targeting strategies:
o Undifferentiated targeting – One strategy for all
o Differentiated targeting – Separate strategy for each segment
o Concentrated (niche) targeting – Focus on a single segment

6. Develop Positioning Strategy

 Create a clear and unique image of the product in the minds of the target segment.
 Positioning involves highlighting the unique benefits or differences from
competitors.
 Example: A phone brand may position itself as “affordable for students” or
“premium for professionals”.

7. Design the Marketing Mix (4Ps)

 Customize the 4Ps (Product, Price, Place, Promotion) based on the needs of the
selected segment:
o Product: Features, design, and quality suited to the segment.
 o Price: Affordable or premium pricing as per segment’s income level.
o Place: Choose channels like online, retail stores, or both.
o Promotion: Select media and messages that appeal to the specific segment.

1. Segmentation
Definition:
Market segmentation is the process of dividing a large market into smaller groups of
consumers with similar needs, characteristics, or behaviours so that businesses can target
them more effectively.

Importance:

 Helps identify specific customer groups.

 Supports focused marketing strategies.
 Improves product positioning and communication.

Types of Segmentation:

1. Geographic: Based on region, city, climate.

2. Demographic: Based on age, gender, income, education.
3. Psychographic: Based on lifestyle, values, personality.
4. Behavioural: Based on usage, loyalty, or benefits sought.

Example:
A clothing brand may segment the market into men, women, and children and offer
different styles for each group.

2. Marketing Communication
Definition:
Marketing communication is the process of sharing promotional messages with the target
audience to inform, persuade, and influence their buying decisions.

Components Include:

 Advertising
 Sales promotion
  Public relations
 Personal selling
 Digital marketing

Process:

1. Sender (Company)
2. Message (What they want to say)
3. Medium (TV, social media, etc.)
4. Receiver (Customer)
5. Feedback (Customer’s response)

Importance:

 Builds brand awareness.

 Attracts and retains customers.
 Encourages action (like buying or inquiry).

3. Message
Definition:
In marketing, a message is the core idea or information that a company wants to
communicate to its audience through advertising or promotions.

Key Elements of a Good Message:

 Clarity: Easy to understand.

 Relevance: Connected to customer needs.
 Consistency: Matches brand image.
 Persuasiveness: Influences customer thinking or behaviour.

Types of Marketing Messages:

 Informational (Product details, features)

 Emotional (Appealing to feelings)
 Urgent (Limited time offers)

Example:
"Buy 1 Get 1 Free – Only for Today!" is a short, urgent marketing message.

4. Persuasion
Definition:
Persuasion in marketing means influencing the customer's attitude, belief, or behaviour to
encourage them to buy a product or service.

Methods of Persuasion:

 Emotional appeal: Using feelings like love, fear, or pride.

 Logical appeal: Using facts, stats, and comparisons.
 Social proof: Showing customer reviews, ratings, or endorsements.

Importance:

 Helps change consumer minds.

 Builds trust and brand loyalty.
 Encourages purchase decisions.

Example:
An ad that says, “90% of doctors recommend this toothpaste” uses logical and social proof
to persuade.

5. Needs
Definition:
Needs are the basic requirements or desires that motivate consumers to buy products or
services. Understanding consumer needs is the foundation of marketing.

Types of Needs (as per Maslow’s Hierarchy):

1. Physiological: Food, water, shelter.

2. Safety: Security, protection.
3. Social: Love, friendship.
4. Esteem: Status, respect.
5. Self-actualization: Growth, self-improvement.

Importance in Marketing:

 Helps design relevant products.

 Assists in customer satisfaction.
 Guides promotional strategies.

Example:
A health drink advertises immunity benefits, addressing safety and health-related needs.
6. Appeal
Definition:
An appeal in marketing refers to the approach or technique used in advertisements to
attract attention and influence the emotions or thinking of consumers.

Types of Appeals:

1. Emotional Appeal: Love, fear, happiness (e.g. insurance ads).

2. Rational Appeal: Facts, quality, price (e.g. mobile phone features).
3. Moral Appeal: Ethics, doing the right thing (e.g. eco-friendly ads).
4. Social Appeal: Status, image, acceptance (e.g. luxury brands).

Role of Appeals:

 Increases ad effectiveness.
 Connects with audience values.
 Builds a strong brand image.

Example:
“Save trees, save life” uses a moral appeal to promote paperless products.

Process of Marketing Communication

Marketing communication is the process of delivering promotional messages to the target
audience to inform, persuade, and influence their buying decisions. It includes advertising,
sales promotion, public relations, personal selling, and digital marketing.

The marketing communication process involves several key components working together
to deliver the right message to the right people at the right time.

Steps in the Marketing Communication Process:

1. Sender (Marketer/Company)

 The sender is the business or brand that initiates the message.

 It is responsible for creating and planning the communication.
 Example: A mobile phone company wants to advertise its new model.
2. Message

 The message is the actual content or idea the company wants to communicate to
the audience.
 It includes words, visuals, sounds, or symbols designed to inform or influence.
 Example: “Our phone has the longest battery life in the market.”

3. Encoding

 Encoding is the process of converting the message into symbols or a form that the
audience can understand.
 This includes designing the ad, choosing words, images, colors, music, etc.
 Example: Making a TV commercial that shows a phone lasting 3 days without
charging.

4. Medium/Channel

 The channel is the medium used to deliver the message to the target audience.
 Channels can be:
o Traditional: TV, radio, newspaper, magazines
o Digital: Social media, email, websites, mobile apps
 Example: Showing the ad on YouTube or Instagram.

5. Receiver (Target Audience)

 The receiver is the person or group who receives and interprets the message.
 This could be potential or existing customers.
 Example: A college student watching a smartphone ad on Instagram.

6. Decoding

 Decoding is the process by which the receiver understands or interprets the

message.
 The effectiveness depends on the clarity of the message and the receiver’s
knowledge or interest.
 Example: The student understands that the phone has a long battery life and may
consider buying it.
7. Response

 This is the reaction or feedback from the receiver after decoding the message.
 It could be an inquiry, purchase, visiting a website, or simply showing interest.
 Example: The student searches the phone on Google or visits the store.

8. Feedback

 Feedback is the response sent back to the sender by the receiver.

 It helps marketers know whether the message was successful.
 Example: Online reviews, customer queries, social media comments.

9. Noise (Interference)

 Noise refers to any disturbance or barrier that prevents the message from being
received clearly.
 It can be physical (bad network), psychological (lack of interest), or semantic (unclear
language).
 Example: A customer skips the ad or misunderstands the offer.

Needs and Importance of Appeal in Marketing

What is an Appeal?

An appeal is the technique or method used in advertisements to attract attention, create

interest, and influence emotions or behaviour of consumers. It is the heart of any
advertisement and helps in connecting the message with the audience.

Needs of Appeal in Marketing

1. To Grab Attention
o In a competitive market, many brands advertise at the same time.
o Appeal is needed to make the ad stand out and catch the consumer’s eye.
2. To Create Interest
o A good appeal helps in engaging the customer emotionally or logically.
o It pulls the consumer towards the message.
3. To Influence Buying Behaviour
 o Appeals persuade consumers by touching their emotions, logic, or ethics.
o Example: Emotional appeal in a family insurance ad builds trust and urgency.
4. To Build Connection
o Appeals help in relating the product to the consumer’s life, values, or
problems.
o It builds a personal bond between the brand and the customer.
5. To Communicate Benefits Clearly
o A strong appeal highlights the main benefit or purpose of the product.
o Example: “Low sugar – high energy” directly appeals to health-conscious
consumers.
6. To Support Brand Positioning
o Different appeals help brands create a unique identity in the market.
o Example: A luxury watch brand uses social/status appeal to attract high-
income consumers.

Importance of Appeal in Marketing

1. Enhances Ad Effectiveness
o The right appeal ensures the message is remembered and acted upon.
o It increases recall value and response rate.
2. Helps in Targeting Specific Segments
o Different customer groups respond to different appeals.
o Example: Youth respond more to humour or adventure appeal, while parents
respond to emotional or safety appeals.
3. Builds Brand Image
o Consistent use of appeal builds a strong, emotional image of the brand over
time.
o Example: Amul’s humorous appeal has created a long-lasting brand identity.
4. Improves Consumer Engagement
o Appealing content encourages interaction on digital platforms (likes, shares,
comments).
o Especially useful in modern social media marketing.
5. Encourages Action
o Whether it’s visiting a website, making a purchase, or calling a number, a
strong appeal motivates the customer to take the next step.
6. Drives Emotional Connection
o Emotions like love, fear, pride, or happiness can influence decision-making
more than logic alone.
o Emotional appeals create loyalty and trust.

7 Ps of Marketing
Also called the Extended Marketing Mix, the 7 Ps help businesses plan and implement
effective marketing strategies. These are:

1. Product | 2. Price | 3. Place | 4. Promotion | 5. People | 6. Process | 7. Physical Evidence

Let’s understand each in detail:

1. Product

Definition:
A product is the actual good or service offered by a business to meet the needs and wants of
the customer.

Key Elements:

 Features: What the product can do (e.g., dual camera in phones).

 Design & Style: The look and feel that attracts customers.
 Quality: The level of performance, durability, or reliability.
 Brand Name: Creates identity (e.g., Nike, Samsung).
 Variety: Different models or versions for different customers.
 Packaging & Labelling: Attractive and informative covers.
 Warranty & Guarantee: Builds customer trust.

Example:
Apple sells premium smartphones with high-end features, strong brand value, and excellent
design.

2. Price

Definition:
Price is the amount of money a customer pays to get the product or service.

Key Considerations:

 Cost-based Pricing: Price based on production cost + profit margin.

 Value-based Pricing: Based on the perceived value by the customer.
 Competition-based Pricing: Set according to competitor pricing.
 Discounts & Offers: Temporary reductions to attract buyers.
 Payment Terms: EMI, cash, credit card options.

Why It Matters:

 Affects customer perception.

 Impacts company profit and market share.
Example:
Tata Nano was priced for low-income customers, while Audi targets luxury buyers with high
pricing.

3. Place (Distribution)

Definition:
Place refers to the channels through which a product reaches the final customer.

Key Elements:

 Retail Outlets: Physical stores (e.g., supermarkets, malls).

 Online Channels: E-commerce platforms (Amazon, Flipkart).
 Distributors & Wholesalers: Middlemen who help distribute.
 Inventory & Logistics: Efficient supply chain and storage.
 Market Coverage: Local, national, or international reach.

Importance:

 Right place ensures product availability where and when the customer needs it.

Example:
A rural FMCG company might use local kirana stores, while a tech brand sells online and in
metro cities.

4. Promotion

Definition:
Promotion refers to all activities used to inform, persuade, and remind customers about the
product.

Tools of Promotion (Promotional Mix):

 Advertising: TV, radio, newspaper, social media.

 Sales Promotion: Discounts, offers, coupons, contests.
 Personal Selling: Direct interaction by salespeople.
 Public Relations (PR): Brand building through media.
 Digital Marketing: SEO, influencer marketing, email.

Purpose:

 Increase awareness
 Build interest
 Encourage action (buying)
Example:
McDonald’s uses advertising, combos, and app coupons to promote sales.

5. People

Definition:
People include all the human resources involved in the marketing and delivery of
products or services.

Includes:

 Frontline staff (salespersons, service reps)

 Company employees
 Management team
 Customer interactions (especially in services)

Importance:

 Staff behaviour influences customer experience.

 Good training = better service = happy customers.

Example:
In a hotel, well-trained, polite staff ensures a positive experience and builds brand loyalty.

6. Process

Definition:
Process refers to the systems and procedures used to deliver the product or service
efficiently.

Elements:

 Order handling
 Service delivery
 Complaint management
 Billing and checkout systems
 Automation and technology

Why It Matters:

 Ensures consistency, speed, and quality.

 A smooth process builds customer trust.

Example:
Domino’s uses a time-bound delivery process with live tracking to ensure timely and reliable
service.
7. Physical Evidence

Definition:
Physical evidence includes the tangible and visible elements that support the service and
give confidence to customers.

Includes:

 Store layout and cleanliness

 Website design
 Uniforms, packaging
 Business cards, brochures
 Customer reviews and testimonials

Why It Matters:

 Especially in services, where the product is intangible, physical elements build trust.

Example:
In a bank, the physical environment (clean counters, clear signage) reassures customers about
professionalism.

7 Os of Marketing (Customer-Oriented Model)

Used to study consumer behaviour and for marketing research, especially during market
segmentation and targeting.

Sr. O Meaning
No.
1. Occupants Who are the customers? (age, gender, income, etc.)
2. Objects What do they buy? (products, brands, services)
3. Objectives Why do they buy? (needs, wants, motivations)
4. Occasions When do they buy? (time, season, situation)
5. Outlets Where do they buy? (place, store, online)
6. Operations How do they buy? (payment method, process, decision-making)
7. Organization Who is involved in the decision? (individual, family, group)

🔍 Explanation of Each "O":

1. Occupants – Who are the buyers?

 Focus on demographic and psychographic characteristics:

 o Age, gender, income, occupation, education, lifestyle.
 Helps in market segmentation.
 Example: Youth (18–25) are target customers for fashion wear.

2. Objects – What do they buy?

 Identifies the type of product or service customers purchase.

 Includes brand preferences, categories, features.
 Example: Buying budget phones vs premium smartphones.

3. Objectives – Why do they buy?

 Understanding the reason/motivation behind purchases:

o Need, status, comfort, fashion, security.
 Helps in building effective marketing appeals and positioning.

4. Occasions – When do they buy?

 Time-based purchase behavior:

o Festivals, seasons, sales, birthdays, weekends.
 Useful for timing promotional campaigns.
 Example: Air conditioners sell more in summer.

5. Outlets – Where do they buy from?

 Preferred channels and places of purchase:

o Online, malls, retail stores, kirana shops.
 Helps in distribution strategy planning.

6. Operations – How do they buy?

 The buying process and method:

o Cash, EMI, credit card, online payment.
o Comparison, research, peer influence.
 Useful for understanding the customer journey.

7. Organization – Who makes the decision?

 Understand who influences or makes the buying decision:
o Individual, family, peer group, influencer.
 Important in B2B and family-oriented purchases.

UNIT : 2
CONSUMER DECISION MAKING