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Module 1 - Consumer Behaviour

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Consumer behaviour
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Module 1 - Consumer Behaviour

  1. 1. Prepared By: Shubhada Rao P Assistant Professor Department of MBA VCET, Puttur.
  2. 2. Module-1 Introduction to the study of Consumer Behaviour
  3. 3. Meaning and definition of CB The term Consumer Behaviour(CB) is defined as the behaviour that consumers display in searching for, purchasing, using, evaluating and disposing of products and services that they expect will satisfy their needs. - Leon G. Schiffman & Leslie Lazar Kanuk
  4. 4. Consumer behaviour focuses on how individuals make decisions to spend their available resources (time, money, effort) on consumption-related items that includes what they buy, why they buy, when they buy it, where they buy it, how often they buy it, how often they use it, how do they evaluate it after the purchase and the impact of such evaluations on future purchases, and how do they dispose of it.
  5. 5. Consumer behaviour refers to the actions and decision processes of people who purchase goods and services for personal consumption. -James F Engel, Roger D Blackwell and Paul W Miniard
  6. 6. Two different kinds of consuming entities: the personal consumer and the organizational consumer. Personal Consumer : Buys goods and services for his or her personal use, or for household consumption or for just one member of the family or as a gift for a friend. The products are bought for final use by individuals, who are referred to as end users or ultimate consumers. Organizational Consumer :Includes profit and non-profit businesses, government agencies (local, state, national) and institutional (e.g. schools, hospitals, and prisons), all of which buy products, equipment, and services in order to run their organizations.
  7. 7. Significance of CB •Production Policies •Price policies •Decision regarding channels of distribution •Decision regarding sales promotion •Exploiting marketing opportunities •Consumers do not always act or react predictably •Consumer preferences are changing and becoming highly diversified •Rapid introduction of new products •Implementing the marketing concept
  8. 8. Difference between consumer and customer The terms "consumer" and "customer" are often used interchangeably, but a consumer and customer are not always the same entity. In essence, consumers use products while customers buy them. Customer is a sub set of consumer
  9. 9. The term “customer” is used to refer to someone who regularly purchases from a particular store or company. The term “consumer” refers to any one engaging in any of the activities used in our definition of CB . These are the potential purchasers of products and services offered for sale.
  10. 10. •Customer is a sub set of consumer •A consumer is an end user. A consumer acquires goods and services for direct use or ownership. •Whereas customer can in turn resell the products and services to the consumers
  11. 11. A customer is an individual or organization who purchases goods, or sometimes just browses and doesn't buy, whereas a consumer is anyone who uses the goods that have been purchased, or uses any products or services that have been generated within the economy.
  12. 12. •Customer •The term “customer” is used to refer to someone who regularly purchases from a particular store or company. •Customer can in turn resell the products and services to the consumers. In other words, Customer is a person who uses the product for selling purpose •Customer purchases the product or service •A customer is an individual or organization who purchases goods, or sometimes just browses and doesn't buy •Consumer •The term “consumer” refers to any one engaging in any of the activities used in our definition of CB . These are the potential purchasers of products and services offered for sale. •A consumer is an end user. A consumer acquires goods and services for direct use or ownership. In other words,Consumer is the person who uses the product for their personal consumption •Consumer uses the product • A consumer is anyone who uses the goods that have been purchased, or uses any products or services that have been generated within the economy
  13. 13. So, therefore if a man was to go to a shop and purchase a bar of chocolate, and his wife was the one to eat it, the man would be the customer (as he bought the product) and his wife would be the consumer (as she used the product).
  14. 14. A consumer may also be a customer and a customer can also be a consumer, but situations occur where this is not the case. In general, your marketing efforts should be geared toward the consumer, rather than the customer.
  15. 15. Consumers and customers are very important people in maintaining the balance and profit of one’s company.
  16. 16. Consumer Motives Consumer has a motive for purchasing a particular product. Motive is a strong feeling, urge, instinct, desire or emotion that makes the buyer to make a decision to buy. Buying motives thus are defined as ̳those influences or considerations which provide the impulse to buy, induce action or determine choice in the purchase of goods or service . These motives are generally controlled by economic, social, psychological influences etc . Motives which Influence Purchase Decision The buying motives may be classified into two: i. Product Motives ii. Patronage Motives
  17. 17. i. Product Motives Product motives may be defined as those impulses, desires and considerations which make the buyer purchase a product. These may still be classified on the basis of nature of satisfaction: a) Emotional Product Motives b) Rational Product Motives
  18. 18. • Emotional Product Motives are those impulses which persuade the consumer on the basis of his emotion. The buyer does not try to reason out or logically analyse the need for purchase. He makes a buying to satisfy pride, sense of ego, urge to initiate others , and his desire to be unique. • Rational Product Motives are defined as those impulses which arise on the basis of logical analysis and proper evaluation. The buyer makes rational decision after chief evaluation of the purpose, alternatives available, cost benefit, and such valid reasons.
  19. 19. ii. Patronage Motives: Patronage motives may be defined as consideration or impulses which persuade the buyer to patronage specific shops. Just like product motives, patronage motives can also be grouped as emotional and rational. 1. Emotional Patronage Motives are those that persuades a customer to buy from specific shops, without any logical reason behind this action. He may be subjective for shopping in his favourite place. 2. Rational Patronage Motives are those which arise when selecting a place depending on the buyer satisfaction that it offers a wide selection, it has latest models, offers good after sales service etc .
  20. 20. Nature and Characteristics of Indian Consumers 1. Young Demographics 2. Aspirational consumer 3. Value Consciousness 4. Networked consumer 5. Socially Conscious 6. Brand Switchers 7. Thinking beyond categories 8. Religious Diversity 9. Diversity in dress and food habits 10. Working women 11. Conservatives 12. Rising purchasing power
  21. 21. Factors influencing Indian consumers: 1. Changing Demographics 2. Smaller Households 3. Increasing awareness 4. Westernisation 5. Organised retail stores 6. Celebrity influence 7. Quality-oriented outlets 8. Freebies 9. Product colour, size, design and shape 10. Changes in saving and investment patterns
  22. 22. Consumer Movement
  23. 23. In India, the consumer movement as a "social force" originated with the necessity of protecting and promoting the interests of consumers against unethical and unfair trade practices.
  24. 24. Food shortage, black marketing, adulteration of food-products, high prices, etc. gave birth to the consumer movement in an organized form in the 1960s.
  25. 25. At the initial stage, consumer organization were largely engaged in writing articles and holding protests. Thus, they formed consumer groups to look into the malpractices in ration shops and overcrowding in the road passenger transport.
  26. 26. Consumerism • In the word Consumerism, “ Consumer” means the user and “ism” means movement, and hence, consumer movement popularly known as consumerism. •It is an organised and collective movement of consumers. •The movement seeking to protect and inform consumers by requiring such practices as honest packaging and advertising, product guarantees, and improved safety standards. •Movement and policies aimed at regulating products, service, methods and standards of manufacturers, sellers and advertisers in the interests of the buyer.
  27. 27. Consumerism is an organized movement of citizens and government to protect the rights and increase the power of buyers in relation to sellers.
  28. 28. Benefits of Consumerism 1.Consumer education 2.Consumer Groups can liaison between Government & Industry 3.Product Research & Information to Consumer 4.Inculcate Honesty, Responsiveness & Responsibility on to Manufacturers & Marketers. 5.Move towards Societal Concept of Marketing 6.Improvement in supply 7.Product rating
  29. 29. Obstacles of consumerism 1. Lack of leadership 2. Illiteracy 3. Difficulty in disseminating consumer education 4. Cumbersome legal process 5. Lack of effective implementation of legislative measures
  30. 30. Consumer Movement in India India is a developing economy. Not all Indian consumers are well educated. Consumers are often exploited, misled by deceptive advertisements, packaging poor after sales service, adulteration, price collusion and so on. Liberalization and competition Survival of the fittest
  31. 31. More, recently, India witnessed an upsurge in the number of consumer groups. This is because of more and more cases of consumer exploitation by the private traders. The activities of various consumer forums forced the government to enact the Consumer Protection Act,1986 ,popularly known as COPRA .
  32. 32. Consumer Groups in India Voluntary Organization in Interest of Consumer Education (VOICE) Consumer Care Society Bombay Telephone Users' Association Citizen consumer and Civic Action Group (CAG) Grahak Sahayak Consumer Guidance Society of India All India Chamber of Consumers (AICOC) Consumer Coordination Council Akhil Bhartiya Upbhokta Congress Consumer Unity and Trust Society Consumer Rights Education & Awareness Trust (CREAT) Rajkot Saher/Jilla Grahak Suraksha Mandal Upbhokta Sanrakchhan & Kalyan Samiti Upbhokta Margdarshan Samiti "UMAS"
  33. 33. Anti Cigarette Campaigns – Consumer Group & Govt. Initiative
  34. 34. Reasons for the rise of consumerism 1.Low literacy levels and lack of awareness of rights encourages businessmen to be indifferent to consumers 2.Backwardness 3.Ignorance 4.Lack of education and information 5.Indian consumers get carried away by clever advertising 6.Imbalance in demand and supply of commodities leading to hoarding, black marketing, profiteering. 7.Vastness of the country
  35. 35. Consumer Protection Act 1986 (COPRA) It is an important legislation passed by the Government of India to ensure that a proper system is established for the protection of consumer rights and the redressing of consumer disputes. The Act Applies to the whole of India except the state of Jammu and Kashmir and as by central Government it applies to all goods and services.
  36. 36. Objectives : 1. To protect the interests of the consumers 2. To protect the rights of the consumers regarding (a) Marketing goods and services (b) Quality of goods and services (c) Price of the goods and services 3. To protect the consumer against unfair trade practices 4. To set up consumer protection council at the centre and the state level 5. To provide speedy and simple redressal to consumer disputes by (a) giving reliefs (b) compensation to consumers
  37. 37. Consumer Protection Council Central Consumer Protection Council (Sec 4 to Sec 8) State Consumer Protection Council Sec 7 to Sec8) Consumer Redressal Agencies (Sec 9 to Sec27) 1. A District Forum 2. A State Commission 3. A National Commission
  38. 38. Rights and Responsibilities of consumers in India Although businessman is aware of his social responsibilities even then we come across many cases of consumer exploitation. That is why government of India provided following rights to all the consumers under the Consumer Protection Act:
  39. 39. 1. Right to Safety 2. Right to Information 3. Right to Choose 4. Right to be Heard or Right to Representation 5. Right to Seek Redressal Case: Spring Meadows Hospital V/s Harjot Ahluwalia 6. Right to Consumer Education 7. Right to Healthy Environment 8. Right to basic needs
  40. 40. 1. Right to Safety
  41. 41. 1. Right to Safety According to the Consumer Protection Act 1986, the consumer right is referred to as ‘right to be protected against marketing of goods and services which are hazardous to life and property’. It is applicable to specific areas like healthcare, pharmaceuticals and food processing, this right is spread across the domain having a serious effect on the health of the consumers or their well being viz. Automobiles, Housing, Domestic Appliances, Travel etc. When there is violation of the right then there occur medical malpractice lawsuits in the country
  42. 42. 2. Right to information
  43. 43. 2. Right to information The right to information is defined as ‘the right to be informed about the quality, quantity, potency, purity, standard and price of goods or services, as the case may be so as to protect the consumer against unfair trade practices’ in the Consumer Protection Act of 1986. In the market place of India, consumers get information by two ways namely advertising and word of mouth however these sources are considered to be unreliable but still this word of mouth is quite common here. Because of this, the Indian consumers hardly have precise and complete information for assessing the true value, safety, suitability, reliability of any product. Usually the hidden costs can be found, lack of suitability, quality problems and safety hazards only after the purchase of the product. There is another right claimed by Indian government, this right must ideally make sure that all consumable products have been labelled in a standard manner containing the cost, quantity, the ingredients and instructions given to use the product safely.
  44. 44. 3. Right to Choose
  45. 45. 3. Right to Choose The definition of Right to Choose as per the Consumer Protection Act 1986 is ‘the right to be assured, wherever possible, to have access to a variety of goods and services at competitive prices’. For regulating the market place, there is just one factor required and that is competition.The existence of cartels, oligopolies and monopolies prove to be counterproductive to consumerism.
  46. 46. 4. Right to be Heard or Right to Representation
  47. 47. 4. Right to be Heard or Right to Representation As stated in the Consumer Protection Act 1986, ‘the right to be heard and to be assured that consumer's interests will receive due consideration at appropriate forums’ is the definition of the right to be heard. This right helps to empower the consumers of India for putting forward their complaints and concerns fearlessly and raising their voice against products or even companies and ensure that their issues are taken into consideration as well as handled expeditiously.
  48. 48. 5. Right to seek redressal
  49. 49. 5. Right to seek redressal The right to seek redressal against unfair trade practices or restrictive trade practices or unscrupulous exploitation of consumers’ is referred to as the right to redressal according to the Consumer Protection Act 1986. The government of India has been bit more successful with regard to this right. The Consumer courts like District Consumer Disputes Redressal Forums at district level, State Consumer Disputes Redressal Commissions and National Consumer Disputes Redressal Commissions have been incorporated with the help of the consumer protection act. These consumer grievance redressal agencies have fiduciary as well as geographical jurisdictions which address consumer cases between businesses and consumers. About 20 lakhs Consumer cases are heard in the district consumer forum, and around one crore can be heard in the state consumer court while more than one crore cases are heard at national consumer court.
  50. 50. 6. Right to Consumer Education
  51. 51. 6. Right to Consumer Education The right of every Indian citizen to have education on matters regarding consumer protection as well as about her/his right is regarded as the last right provided by the Consumer Protection Act 1986. The right makes sure that the consumers in the country have informational programs and materials which are easily accessible and would enable them to make purchasing decisions which are better than before. Consumer education might refer to formal education through college and school curriculums as well as consumer awareness campaigns being run by non- governmental and governmental agencies both. Consumer NGOs, having little endorsement from the government of India, basically undertake the task of ensuring the consumer right throughout the country
  52. 52. Means right to a physical environment that will enhance quality of life. It involves protection against environmental dangers over which individuals have no control. 7.Right to Healthy Environment
  53. 53. 8. Right to Basic needs
  54. 54. Various efforts have been made by government and non-government organizations to protect the interests of consumers but exploitation of consumer will stop only when consumer himself will come forward to safeguard his own interest. Consumers have to bear some responsibilities which are given below
  55. 55. Responsibilities of a Consumer Responsibility of self help Proof of transactions Proper Claim Proper use of Product or Service
  56. 56. Proper use of Products/ Services •Some consumers, especially during the guarantee period, make rough use of the product, thinking that it will be replaced during the guarantee period. •This is not fair on their part. They should always use the products properly.
  57. 57. Other responsibilities of the consumer
  58. 58. 1. Consumer must Exercise his Right 2. Cautious Consumer 3.Filing Complaints for the Redressal of Genuine Grievances 4. Consumer must be Quality-Conscious 5. Do not be carried away by Advertisements
  59. 59. 6. Insist on Cash Memo 7. Form consumer societies which could play an active part in educating consumers and safeguarding their interest. 8. Respect the environment; avoid waste littering and contribution to pollution.
  60. 60. 9. Discourage black marketing, hoarding and choose only legal goods and services. 10. Be aware of variety of goods and services available in market.
  61. 61. The movement seeking to protect and inform consumers by requiring such practices as honest packaging and advertising, product guarantees, and improved safety standards.
  62. 62. THANK YOU

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