Consumer Behavior pattern analysis across the world

1. Consumer Behaviour
& Spending Pattern

2. Who is a Consumer
•A person who has indicated his or her willingness to obtain goods
or services from a supplier with the intention of paying them
•Someone who has purchased goods or services for personal
consumption
•A person or group of people such as household who are the final
users of product or services

3. Consumer Behaviour
 It is a branch which deals with the
various stages a consumer goes
through before purchasing products
or services for his end use.

4. Need to study ?
‘You cannot take the consumer for
granted any more’
Therefore a sound understanding of
consumer behaviour is essential for
the long run success of any marketing
program

5. Globally ,more than half of consumers are worried about job loss,one-
third are optimistic about their finances
Consumer Sentiment

6. •The majority of consumers in Mainland China and North America aren’t
worried about job loss.
•About one-third of shoppers around the world are staying loyal to their
favorite brands instead of downgrading to cheaper options, and some are
even splurging on certain types of purchases.
•In North America, 65 percent expressed no concern about losing their job.
•Consumers in Mainland China also felt more secure in their employment,
with 57 percent saying they’re not worried about job loss.
Customer Insights

7. Four truths about today’s consumers
1. They proactively search for savings.
Forty-four percent agreed that they’re “increasingly looking for ways to save
money
2. They are brand-loyal . . . but only if the price is right.
Fifty-eight percent of survey respondents said they’ve modified their buying
behavior when it comes to their favorite brands.
3. They are selective splurges.
Eleven percent of consumers decided to upgrade their purchases in certain
categories. In aggregate, the world’s consumers appear to be “rebalancing the
portfolio”—spending less in categories where they don’t favor any particular
brand, and spending more in others
4. They shop across channels.
Consumers claimed to have shifted a considerable fraction of their spending
toward online and discount channels.

8. Factors Influencing Consumer Behaviour
Culture:
•Basic values, perceptions, wants and behaviors
•Learned from family and important institutions
Subculture:
•Group of people with shared value systems
•Based on common life experiences and situations

9. Social factors:
•Groups: reference, membership, and aspirational groups
•Opinion leader
•Family
•Roles and Status
Factors Influencing Consumer Behaviour

10. Personal factors:
•Family life cycle
•Occupation
•Economic situation
•Lifestyle: activities, interests, and
opinions (AIO’s)
•Personality and self-concept:
brand personality
Factors Influencing Consumer Behaviour

11. Psychological factors:
•Motivation: needs and motives, Maslow’s
Hierarchy of Needs
•Perception: selective attention, distortion,
and retention
•Learning: drives, stimuli, cues, responses,
and reinforcement
•Beliefs and attitudes
Factors Influencing Consumer Behaviour

12. Changes in Global Consumer Behaviour
•The most recent Accenture Global Consumer Survey found that 64
percent of consumers switched from at least one service provider — a
bank, utility or wireless carrier, for example — due to poor customer
service
•73% – say they have increasingly been using the Internet to
research and buy products and services in the past three years
•Use of social media is disrupting patterns of loyalty, creating new
forms of commercial communities and recreating the purchasing process
•over half of consumers globally tell us they increasingly consider the
environmental impact of the product or manufacturer before purchasing
• to deliver more tailored services and to shift from traditional products
to the more experiential offerings to consumers
•Customer experience begins before a consumer is actually a
customer. All consumer touch points should offer consistent, relevant
experiences

13. Models of Consumer Behaviour
•Learning Model
•Economic Model
•Psychoanalytic Model
•Sociological Model

14. Learning Model
•The response of satisfaction reinforces the
relationship
•Learns to associate connection between stimulus and
response which becomes habit
Drivers of Learning Model:-
Drive − A strong internal stimulus which compels action.
Stimuli − These are inputs which are capable of arousing
drives or motives.
Cues − It is a sign or signal which acts as a stimulus to a
particular drive.
Response − The way or mode in which an individual reacts
to the stimuli.

15. If the response to a given stimulus is “rewarding”, it reinforces the
possibility of similar response when faced with the same stimulus or cues.
If an informational cue like advertising, the buyer purchases a product
(response); the favorable experience with the product increases the
probability that the response would be repeated the next time the need
stimulus arises (reinforcement)

16. Economic Model
Individuals allocate their resources to maximum needs and
wants
• Law of Principal of Maximum utility
• Law of equal marginal utility enables a customer to secure the
maximum utility from limited purchasing power
1)Price effect
2)Substitution effect
3)Income Effect
Consumers have complete knowledge about the utility of each product
and service, i.e., they are capable of completing the accurate
satisfaction that each item is likely to produce.
Price is used as a measure of sacrifice in obtaining the goods or
services. The overall objective of the buyer is to maximize his
satisfaction out of the act of purchase

17. Psychoanalytic Model
•According to this model, the individual consumer has a complex set
of deep seated motives which drive him towards certain buying
decisions.
• The buyer has a private world with all his hidden fears, suppressed
desires and totally subjective longings
• His buying action can be influenced by appealing to those desires
and longings

18. •According to sociological model, the individual buyer behaviour is
influenced by society—by intimate groups as well as social classes
•As his role, status, interaction, influence, group relation, lifestyle ,
income,
•occupation , place of residence, social class etc
•That is, his buying decisions are not totally determined by the
concept of utility. That is his buying decisions are governed by social
compulsions
Sociological model
For instance
A manager and an employee may have different buying behaviors
given their respective roles in the company they work for
But if they live in the same society or attend the same people , they
may buy the products from the same company

19. Household Spending

20. Global Household spending
•USA Spends maximum on healthcare about 21% and the least is spend
•by Saudi Arabia 1.7%
•Japan Spends maximum on housing , fuel and utilities about 21% and
the least is spend by Russia 10.3%
•South Korea Spends maximum on education about 6.7% and the least is
spend by Russia 1.1%
•Russia Spends maximum on food about 30.7% and the least is spend by
USA 6.8%
•Mexico Spends maximum on transport about 19% and the least is spend
by Saudi Arabia 9.1%

21. Spending Pattern

22. Demand Function of an Individual
The individual demand function has a functional relationship between
individual demand and the factors affecting individual demand.
It is expressed as −
Dx = f (Px, Pr, Y, T, F)
Where,
Dx = Commodity Demand x;
Px = Commodity x”s price;
Pr = Related Goods’ Price;
F = Expectation of Change in Price in future.
Y = Consumer’s Income;
T = Tastes and Preferences.

23. https://www.emergogroup.com/resources/worldwide-health-expenditures
•USA population spends heavily on healthcare followed by Switzerland
•USA, also tops in private healthcare and spends a total of USD 9000
annually on the healthcare
Global Health Expenditure

24. Global Food & Beverages
Asia spends around $1500 billion on food, followed by Sub-Saharan
Africa $286
By 2030, global food demand is expected to rise by 35%
Top countries spending on food –
•Switzerland — $8,024 per person
•Norway — $7,624 per person
•Australia — $7277 per person
•Japan — $6,556 per person

25. Global and regional per capita food consumption (kcal per capita per day
• The increase in the world average consumption would have been higher
but for the declines in the transition economies that occurred in the 1990s.
•It is generally agreed, however, that those declines are likely to revert in
the near future
•current energy intakes range from 2681 kcal per capita per day in
developing countries, to 2906 kcal per capita per day in transition countries
and 3380 kcal per capita per day in industrialized countries

26. Global Education
Expenditure
•Asia spends maximum on education, especially South Korea 7% of their
household income, while Europe and Central Asia spends least(Russia
approx, 1%)
•Luxembourg , Norway, Switzerland are the highest spending countries on
education with $19,049.81, $13, 510.48, $13,066.64 per student

27. Demand Function of Market
The market demand function has a functional relationship between
market demand and the factors affecting market demand.
The market demand function can be expressed as −
Dx = f(Px, Pr, Y, T, F, PD, S, D)
Where,
Dx = Market demand of commodity x;
Px = Price of given commodity x;
Pr = Related Goods’ Price;
Y = Consumer’s Income;
T = Tastes and Preferences;
F = Expectation of Change in Price in future;
PD = Size and Composition and Size of population;
S = Season and Weather;
D = Income Distribution.

28. Overall Model of Consumer Behaviour
Self-Concept
&
Learning
Decision ProcessesExternal Influences
Internal Influences
Culture
Subculture
Demographics
Social status
Reference groups
Family
Marketing Activities
Perception
Learning
Memory
Motives
Personality
Emotions
Attitudes
Problem Recognition
Information Search
Alt Eval & Selection
Outlet select & Purchase
Postpurchase
Processes

29. Expenses
Total Purchases
(%)
Doctors and Dentists 3.0%
Groceries 8.6%
Hospitals and Nursing Homes 1.7%
Rent or Mortgage 31.5%
Utilities 5.3%
USA Spending Pattern
The percentages cited below are based on an average
American household income of $63,000.

30. China's $2.2 trillion budget
Chinese Government Spending
China spends about 2.3 trillion yuan on education sector followed by
social security and employment

31. Chinese Spending Pattern
•Chinese mostly on FMCG goods and consumer electronics
•Most Chinese tend to do more saving than spending

32. Chinese HNWIs are worlds apart from American HNWIs when it
comes to luxury spending
There is a gaping 41% difference between Chinese HNWIs (86%), and
American HNWIs (45%), in terms of future aspiration to buying luxury
items

33. China’s working-age population
•By 2030, this group will expand by 20 percent—an
additional 100 million people—and per capita
consumption is expected to more than double
•2016 McKinsey Global Sentiment Survey of more than
22,000 consumers finds that nearly 30 percent of these
Chinese consumers are willing to pay more for new and
innovative household products—double the share of
their counterparts in North America and Western Europe
•These individuals are more optimistic about their
financial future and more willing to spend a greater
share of their disposable income than previous
generations.

34. Indian Spending Pattern

35. Indian Household Budgets

36. •More than 30% of Indians say they cannot afford vacation/travel.
•Around half of all Indians spend 500 to 2,500 on clothes each month.
•75% of Indians with a household income of 15 lakhs or more spend 1,500 or
more per month on clothes
•46% of full-time workers spend over 1,500 per month on clothes, for part-time
workers this is 18%.
•21% of Indian women spend more than 3,000 per year on new footwear
compared to 16% of Indian men
•1 in 3 Indians in Central India say they can't afford eating out, as opposed to 1
in 10 in West India.
•16% of Indian women state they spend 3,000 or more on a date, while only
14% of men spend the same.
Spending Behaviour Survey In India 2016

37. Japan Spending
Consumer Spending in Japan decreased to 297004.80 JPY Billion in the
fourth
quarter of 2016 from 297023.80 JPY Billion in the third quarter of 2016.

38. Monthly Expenditure Household of
Japan
Japan is an aging population and is under huge debt of (US$10.46 trillion)
in 2013, more than twice the annual gross domestic product

39. •About two thirds of internet users in the
EU shopped online in 2016
•The most popular type of goods and
services purchased online in the EU was
clothes and sport goods (61 % of e-
buyers),
•followed by travel and holiday
accommodation (52 %).
•68 % of e-buyers reported to have no
problem when purchasing online
•32 % of online shoppers bought or
ordered goods or services from sellers in
other EU countries
EuroStat of Individuals

40. • E-shoppers aged 16-24 were the top age group when it came to clothes
and sports goods purchases (69 %),
•Those aged 25-54 in buying household goods (49 %) and the older age
group (55-74) in online purchases of travel and holiday accommodation
(57 %).
EuroStat of
Individuals

41. Clothes and sports goods predominate
in online purchases
•The 16-24 age-group had the highest
proportions of e-shoppers purchasing
clothes and sport goods (69 %), video
games software, other software and
upgrades (28 %) and e-learning material (8
%).
•People aged 25-54 had the highest
proportion of internet users buying
household goods (49 %), tickets for events
(40 %), electronic equipment (26 %), food
or groceries (25 %), telecommunication
services (20 %) and computer hardware
(18 %).
•The older (55-74) age group took the lead
in buying travel and holiday
accommodation (57 %), books, magazines
EuroStat of Individuals

42. •This group will grow by more than one-third in number,
from 164 million in 2015 to 222 million in 2030. It will
generate 51 percent of urban consumption growth in
developed countries and 19 percent of global urban
consumption growth
•These consumers spend more per head than
younger people, largely because of heavy spending on
healthcare.
•People over 50 bought nearly two-thirds of the new cars
sold in the United States in 2011
The retiring and elderly in developed
economies

43. North America’s working-age population
•MGI research finds that many younger consumers are under income
pressure, are poorer than the previous generation, and are more cost
conscious.
•Compared with older cohorts, young adults are 10 to 20 percentage points
more likely to consider and use sharing-economy services for everything from
accommodation to car rental to furnishings.

44. Service Dominated Categories

45. •By 2020, in addition to the BRIC economies, Mexico, Indonesia, Turkey and
Poland will rank in the world’s top 20 biggest consumer markets;
•As the spending potential of consumers increases, there will be growing
demand for higher-end fast moving consumer goods products leading to a
gradual shift in spending patterns from basic necessities to discretionary
items
•luxuries, household durables and communications but demographic
challenges will persist for consumer goods companies;
Spending Pattern across Emerging Companies

46. Spending Pattern Analysis
•Different countries have different spending pattern
•Critical for companies to provide the right amount of services, so
there
•comes the need of Analytics, which give insightful to companies
Customer analytics is becoming critical.
To understand why, consider this:
•Customers are more empowered and connected than ever. And
becoming more so.
•Customers have access to information anywhere, any time – where
to shop, what to buy, how much to pay, etc

47. Analytics
•That makes it increasingly important to predict how customers will
behave when interacting with your organization, so you can respond
accordingly.
•The deeper your understanding of customers' buying habits and
lifestyle preferences, the more accurate your predictions of future
buying behaviors will be
•Successful will be at delivering relevant offers that attract rather
than alienate customers

48. Applications in Industry Verticals

49. With customer analytics, you can:
•Increase response rates, customer loyalty and, ultimately, ROI
by contacting the right customers with highly relevant offers and
messages.
•Reduce campaign costs by targeting those customers most
likely to respond.
•Decrease attrition by accurately predicting customers most
likely to leave and developing the right proactive campaigns to
retain them.
•Deliver the right message by segmenting customers more
effectively and better understanding target populations.

50. Thanks!!