Consumer Behavior

• Facilitator – Anoop R Ohri (PGDM IIM Lucknow)



• Course – Consumer Behaviour



• Evaluation
– End Term – 60
– Case Study Analysis – 20
– Project - 10


• Objective – Industry Perspective

• So what is CB?
 Consumer Behavior
The behavior that consumers display
in searching for, purchasing, using,
evaluating, and disposing of products
and services that they expect will
satisfy their needs.
•
 Five Processes..
• Search
• Purchase
• Use
• Evaluate
• Dispose
A blow up of the definition
…
 Consumer Behaviour reflects:


 the totality about the of an by decision over

 of decision consumption offering making units time

W h e th e r Pro d u ct H o u rs
W hat s In fo rm a tio
A cq u isitio
n g a th e re r D a ys
W hy n
H ow S e rvice In flu e n ce r
W e e ks
W hen s D e cid e r
U sa g e
W h e re Pu rch a se r M o n th
H ow Tim e s
m u ch / D isp o sitio U se r
H ow n
o fte n / Ye a rs
H o w lo n g Id e a s
Marketing strategies and Tactics
Customers Search for Products
 Personal Consumer
The individual who buys goods and


services for his or her own use, for

household use, for the use of a family
member, or for a friend.


Consumption is key

 Organizational Consumer
A business, government agency, or


other institution (profit or nonprofit)

that buys the goods, services, and/or
equipment necessary for the
organization to function.


Can be raw materials, capital goods or



accessories
•
 How is Consumer Behaviour
studied?
Positivist Vs. Interpretivist approaches
 Differences Positivism Interpretivism



Purpose Prediction of Understanding
 consumer actions consumption practices


 Methodology Quantitative Qualitative



 Assumptions
Nature of reality Objective Socially constructed
 Tangible, Single Multiple
Knowledge generatedTime free Time bound
 Context independent Context dependent
View of causality Existence of identifiable, real causes Multiple, simultneous
shaping events;
 Cause and effect cannot be isolated
Research relationship Separation between researcher Interactive, cooperative with
 and subject researcher being part of
phenomenon under study
Generalizability Yes Often not
• Why study CB?
 Why study Consumer
Behaviour?
• (Micro) Marketing Implications
– Marketing Concept/Consumer Primacy
– Market Segmentation, Targeting and Positioning (S-T-
P)
– Influencing Product/Service Choices
• (Macro) Societal Implications
– Understanding Popular Culture--e.g., Jackie Chan,
Nike
– Understanding Consumer Culture around the World--
e.g., Christmas as a Global Holiday, Fast Food,
Music
– How does Marketing Affect Consumers?--e.g.,
Happiness, Envy, Materialism
• Why Else?
– An Increasingly Significant Part of Human Behaviour
– Understanding Our Own Consumption
 What are we going to do?

 CB and Solving Managerial Problems …a

3-step process


1.Gather information and identify the

problem/opportunity
2.Identify the relevant consumer behavior
concepts and how they apply to the
problem
3.Develop a managerial strategy by
identifying the implications of each
consumer concept.
–
Eras of Marketing
Next – Customerisation ….. You !...
Yahoo , Lays
Relationship ….
/ Partnering Era ( 1990 -): Short term
financial focus, downsizing, globalization,
reengineering trends. Publish or perish pressure on
research. Concern, trust, and investment in
collaborative relationships with long term customers
Marketing Era ( 1950s - 1980s ): Mass market boom!
Use of behavioral and quantitative sciences.
Customer is King! Find (create) a need and fill it;
(market segmentation & targeting) satisfy needs!
Sales Era ( 1925 - 1950s ): Marketing principles. Good
advertising and sales will overcome consumer
resistance” (Brand image differentiation)
Production Era ( 1900 - 1925 ): “a good product
sells itself”; offer more products! Build it and
they will come! [problem: unsold inventory
Pre - Marketing Era (1750 - 1900 ): “I got it, you
want it?”
• Dell, Reflect, You Tube, Lays,
Restaurants, Banks, Arvind Mills,
NikeID …..
 The Production Concept
• Assumes that consumers are
interested primarily in product
availability at low prices
• Marketing objectives:
– Cheap, efficient production
– Intensive distribution
– Market expansion
 The Product Concept
• Assumes that consumers will buy the
product that offers them the
highest quality, the best
performance, and the most
features
• Marketing objectives:
– Quality improvement
– Addition of features
• Tendency toward Marketing Myopia
 The Selling Concept
• Assumes that consumers are unlikely
to buy a product unless they are
aggressively persuaded to do so
• Marketing objectives:
– Sell, sell, sell
• Lack of concern for customer needs
and satisfaction
 The Marketing Concept
• Assumes that to be successful, a
company must determine the
needs and wants of specific target
markets and deliver the desired
satisfactions better than the
competition
• Marketing objectives:
– Make what you can sell
– Focus on buyer’s needs
–
 The Marketing Concept
Implementing the
Marketing Concept
• Consumer • The process and
Research tools used to
• Segmentation study consumer
behavior
• Targeting
• Positioning •
weblink
 The Marketing Concept
Implementing the
Marketing Concept
• Consumer • Process of dividing
Research the market into
• Segmentation subsets of
consumers with
• Targeting
common needs
• Positioning or characteristics
•
 The Marketing Concept
Implementing the
Marketing Concept
• Consumer The selection of one


Research or more of the

• Segmentation segments to pursue
• Targeting 

• Positioning Concentrated
Differentiated

Mass
 The Marketing Concept
Implementing the
Marketing Concept
• Consumer • Developing a distinct
Research image for the product in
the mind of the
• Segmentation consumer
• Targeting • Successful positioning
• Positioning includes:
– Communicating the
benefits of the
product
– Communicating a
 The Marketing Mix
• Product
• Price
• Place
• Promotion
Successful Relationships

Customer Customer
Value Retention

Customer
Satisfaction
 Successful Relationships
Value ,
Satisfaction , and
Retention
• Defined as the ratio
• Customer between the customer’s
Value perceived benefits and
• Customer the resources used to
Satisfactio obtain those benefits
n • Perceived value is relative
and subjective
• Customer • Developing a value
Retention proposition is critical
 Discussion Question
• How does McDonald’s create value
for the consumer?
• How do they communicate this
value?
 Successful Relationships
Value ,
Satisfaction , and
Retention
• Customer • The individual's perception of
the performance of the
Value product or service in
• Customer relation to his or her
Satisfactio expectations.
n • Performance =/</>
Expectation
• Customer
Retention –

 Successful Relationships
Value ,
Satisfaction , and
Retention
• The objective of providing
• Customer value is to retain highly
Value satisfied customers.
• Customer • Loyal customers are key
Satisfaction – They buy more products
• Customer – They are less price
Retention sensitive
– They pay less attention
to competitors’
advertising
– Servicing them is
cheaper
 Customer Profitability-Focused
Marketing - CRM
• Tracks costs and revenues of
individual consumers
• Categorizes them into tiers based on
consumption behavior
• A customer pyramid groups
customers into four tiers
Customer Profitability-Focused
Marketing

Tier 1: Platinum
Tier 2: Gold
Tier 3: Iron
Tier 4: Lead
 Traditional Marketing Concept Vs. Value
and Retention Focused Marketing

Traditional Marketing Value and Retention

Concept Focused Marketing
Make only what you can sell instead Use technology that enables
of trying to sell what you make customers to customize what
you make

Do not focus on the product; focus on Focus on the product’s

the need that it satisfies perceived value, as well as the
need that it satisfies

Market products and services that Utilize an understanding of

match customers’ needs better than customer needs to develop
competitors’ offerings offerings that customers perceive
as more valuable than
competitors’ offerings
A Portrayal of the Characteristics of
Relationship Marketing

The Firm provides The Customer provides

•Products/Services
•Individualized •Repeat Purchase
attention •Increased Loyalty
•Continuous Trust •Goodwill
information and •Positive word-of-
•Price offers promises mouth
•Customer services •Lower costs for the
•Extras and perks, firm
etc.
What’s common to Yahoo!, DoCoMo, Google and Lays? It’s a latest ploy in their
marketing strategy. These are all recent examples of brands that are boosting user
involvement by allowing consumers to tweak the brand experience as per their
tastes and preferences.

While Yahoo! has asked consumers to tweak its signature yodel, Google has a ‘Doodle
for Google’ contest where it invites school-kids to get creative and make
impressions of its logo under the My India theme, some of which it featured on its
homepage. Telecom brand DoCoMo recently features a TV advertisement created by one
of its users while Lays is running its ‘Give Us Your Delicious Flavour’ contest
that invites flavour suggestions from consumers. It follows the campaign by
Pepsico’s subsidiary Walkers in the United Kingdom — ‘Do us a Flavour’ and promises
the winner Rs 50 lacs each and 1% of the sales turnover. With constantly waning
consumer attention spans, marketers are having to deploy such strategies for
creating personalised experiences for consumers.
Explains Lloyd mathias, CMO, Tata Teleservices; “Our campaign is a basic acceptance
of the fact that the communication between brand custodians and consumers has now
evolved to become two-way. It is our brand philosophy to inspire consumers to do
the new and hence the campaign.” DoCoMo launched its campaign in August this year
through its microsite www.create.docomo.com, where so far consumers ‘in thousands’
have logged on and created animated commercials for the brand.

40
And the tactic works like a charm with consumers, instilling brand loyalty in them.
Says Ankita Bhattacharji, a twenty year-old Mumbai college girl who had been just
one of the several Yahoo! users for the past few years. But that was until she took
part in, and won the brand’s Yodelling contest. She now says that she has become a
Yahoo! loyalist. “I took part in the campaign because I had never done such a thing
and wanted to explore the whole process. It was a really memorable experience for
me and I thank Yahoo! for it.” Ankita’s yodel has been flashed across the Yahoo!
homepage and continues to be watched by millions of netizens. Says Nitin Mathur,
director, marketing, Yahoo India; “The key is to help create a personally relevant
brand experience for our consumers. For us, the initiative is also an articulation
of fun, inventive, joy of discovery and happiness- the values that the Yahoo! brand
stands for.” As part of its brand rejuvenation campaign that Yahoo is running in US,
UK and India, the company created physical music recording set-ups christened yodel
studios at malls in New York, London and Mumbai, inviting people to record their
yodels instantly. It received over 100 responses within the campaign’s one-month
duration (October 14 to November 15).

User involvement and co-creation of brands is the need of the hour, a trend more
than a marketing fad, feel independent observers. Says Santosh Desai, MD and CEO of
Future Brands; “The practice of involving consumers in a brand experience is part
of a large global marketing practice where co-creation has now become the buzzword.
There is an overall change in thinking in marketing where consumers are given a
sense of brand ownership that strengthens their association with a brand.”

41
Consumers Are Less Loyal -
Why?
• Abundance of • Commoditization
choice • Insecurity
• Availability of • Time scarcity
information
• Entitlement
 Impact of Digital Technologies
• Consumers have more power and access
to information
• Marketers can gather more information
about consumers
• The exchange between marketer and
customers is interactive and
instantaneous and goes beyond the PC.
• Marketers must offer more products and
services
• Innovator’s dilemma
– Staying committed to a current, profitable
technology
– Failing to provide adequate levels of
investment to new and possibly risky
technologies
– Company is responding to the needs of
established customers

 Digital Age
• Intra Network
• Supply Chain
• Internet
• Evolution of Intermediaries
• Brick & Mortar
• Click : Rediff
• Click & Mortar : Wal Mart, Ferns & Petals

 The Online Consumer..
• WAS
 Young
 Affluent
 Aware


• NOW
 More mainstream now
 Controls interaction

 Marketing….What?
• Computer software & hardware
• Books
• Music
• Bookings
• Food…& Wine!
• Flowers
• Electronics
• Clothing
• Financial services
• Job search
• Politics
• Art of Living!

 Advantages
• Global products
• Convenience – for all
• Vast Information
• Few hassles
• Lower cost - middleman
• Audience segmentation
• Reach – small companies can reach
vast audience
 Evolving Marketing
Channels
Advertisements online
Email

Search Engines

Social networks

Forums – blogs

Affiliate Marketing

Own Website
 Email
• Classic Viral Marketing
• Hotmail / Yahoo / ……and many more
•
 Search Engines
• Next to Email as Primary Internet
Application
• Search Engine Optimization
• Google – Intelligent search
•
 Social Networks
• Community with common interest
• Classic example – Facebook 500 M users
• MySpace – 300 Million users
• LinkedIn – Business/working professionals
• Picture based
• Trusted
• Great for small entrepreneurs
• Viral Marketing
•
• You Tube / Metacafe – Online Video Advertising
• Viewer attention, cost effective
•
 Blogging
• Increasing immunity – spam filters,
caller IDs, pop up blockers


• Consumers increasingly refer to

Blogs for information, reviews and
discussion
• Thought leadership - Twitter
• Search Engine friendly

• Over the last one year, multitude of firms across industries
have discovered the potential of social media in a variety
of business functions, from addressing consumer
grievances and receiving consumer feedback to brand
building and market research.

Today, social media networks such as Facebook, Orkut

and Twitter — accessed by 8% of the country’s Internet
users — are among a marketer’s best tools to interact
with and respond to consumers.

Use of social media in India grew 43% in one year to 33

million users in July, making the country the seventh
largest market for social media, says a recent report by
digital market research firm comScore. The report,
released last week, also said that has overtaken Orkut as
the most popular network here.

Almost all of those 33 million users belong to the

middleclass, which is driving the booming Indian
consumer market. Clearly, social media offers endless
possibilities. And most marketers seem to be making the
• The Influence of social media is phenomenal,
say analysts. “It gives a higher SEC, educated
audience which is well networked and quick
to shares ideas and opinions,” says Ramesh
Srinivas, executive director of KPMG. He
believes consumer grievance redressal, if
delayed, can generate bad mouth, which
travels faster on social medium. “Online
mediums like Facebook, Twitter and blogs
instantaneously transmit unedited, candid
opinions and companies have realized that
quick redressal of consumer complaints is a
competitive advantage”.
These consumers are aware of their rights
and are willing to exercise them. “The more
agile companies have moved from viewing
the redressal process as a compliance
process to seeing it as an opportunity to
enhance the brand image through a quick,
painless process,” he says.
• Today, most large retailers have in-house customer
grievance section to resolve any concerns. And firms
such as Kingfisher, Capital Foods, Shoppers Stop and
Café Coffee Day, are using Facebook and Twitter to
acknowledge and respond to complaints and are earning
praise.
A few weeks back, a consumer and a Greenpeace activist
queried Capital Foods, the maker of Ching’s Secret range
of Chinese food ingredients, about the use of Genetically
Modified (GM) food on its Twitter page. Within 20
minutes, Ajaay Gupta, managing director of Capital
Foods, confirmed that it absolutely does not use any GM
food. A similar issue had become a worldwide
controversy for another global food company when it
failed to respond to a query for days.
Gupta says that Capital Foods respond to any customer
comment —praise, complaint or feedback — within 45
minutes. “There’s a complete buy-in by the top
management on this project and we directly respond to a
lot of queries primarily through smart phones on social
networking sites,” he says. “The challenges in doing this
is the company should be prepared to be naked or
absolutely transparent and has to be very nimble-footed
to respond.”
Societal Marketing Concept
Marketers adhere to principles of
social responsibility in the marketing
of their goods and services; that is,
they must endeavor to satisfy the
needs and wants of their target
markets in ways that preserve and
enhance the well-being of consumers
and society as a whole.

 Consider this..
• Marketing people say consumers are increasingly
trying to do good as they spend. Research in 2008
by Cone, a brand consultancy, found that 79 per
cent of consumers would switch to a brand
associated with a good cause, up from 66 per cent
in 1993, and that 38 per cent have bought a
product associated with a cause, compared with 20
per cent in 1993. Rather than try to make products
that can be marketed as ethical in their own right,
such as “fair trade” goods, firms are increasingly
trying to take an ordinary product and boost its
moral credentials with what one marketing guru
calls “embedded generosity”. The fad for online
competitions to award the handouts also appeals to
another trend, so-called “slacktivism”, whereby
people are turning to the internet to give their
consciences a boost without doing anything more
onerous than clicking a mouse a few times.
• Fairtrade cosmetics are beginning to make headway in
India. And even local cosmetics companies are
seeking to obtain 'fairtrade' certifications for their
products. Fairtrade guarantees minimum price to
farmers, encourages sustainable practices and
invests in social projects such as securing the rights
of marginalized producers and workers. The global
umbrella body for fairtrade, Fairtrade Labelling
Organizations International (FLO), issues fairtrade
certification to companies trading in such fairtrade
products.
Fairtrade-labelled products and toiletries are gaining
popularity in countries like the UK, US, Canada,
France, Italy, Germany and Denmark. As per FLO
estimates, consumers spent 3.4 billion euros on fair
trade products in 2009, a 15% increase over the
previous year.
In India, expats and globe-trotting professionals
currently drive demand. "Just like consumers' buying
habits have changed over the decades, so has the
consciousness. We have seen an increase in demand
for ethical cosmetics, apparels, and coffee. But
pricing in such products remain a challenge," said
 Consumer Behavior Is
Interdisciplinary
• Psychology …individuals
• Sociology …groups
• Social psychology …how individuals
behave on groups
• Anthropology … study of humanity
• Economics
A Simplified Model of Consumer
Decision Making
• Consumer Research
• The case of GSK’s Horlicks
• P&G Vicks
• New Coke (1985)
 Quantitative Research
• Descriptive in nature.
• Enables marketers to “predict”
consumer behavior.
• Research methods include
experiments, survey techniques,
and observation.
• Findings are descriptive, empirical,
and can be generalized to larger
populations.
 Qualitative Research
• Consists of depth interviews, focus
groups, metaphor analysis, collage
research, and projective
techniques.
• Administered by highly trained
interviewer-analysts.
• Findings tend to be subjective.
• Small sample sizes.
 Qualitative Research Quantitative
Research
Study Provide insights about Describe target

Purpose ideas market

Exploratory research Results for strategic

before quantitative marketing decisions

study..to get a ‘feel’

Types of Open-ended Close-ended

Questions Unstructured Attitude scales

Data Projective techniques Observation

Collection Depth interviews Experimentation

Methods Focus groups Questionnaires

 Qualitative Research Quantitative
Research
Sampling Small Large

Methods Nonprobability samples Probability samples

Data Analyzed by Coded, tabulated,

Analysis researchers who and entered into
collected data database
Look for “key words” Use of statistical

Subjective methods
The Consumer Research Process
 Developing Research
Objectives
• Defining purposes and objectives
helps ensure an appropriate
research design.
• A statement of objectives helps to
define the type and level of
information needed.
 Market Information
• Market potential
• Consumer / customer attitudes and
behaviour
• Channels of distribution
• Communications and media
• Competition
• Pricing sensitivity

70
 Discussion Questions
Assume you are planning to open a


new restaurant near your campus.

• What might be three objectives of a
research plan for your new
business?
• How could you gather these data?
 Choose a Unit of Analysis
• Will the market be
– Global
– A region
– A country
– A province
– A state
– A city
 Australia, China

72
 Secondary Data
• Data that has been collected for
reasons other than the specific
research project at hand
• Includes internal and external data
 Types of Secondary Data

 Internal Data  External Data

• Data generated in- • Data collected by an
house outside organization
• May include analysis • Includes federal
of customer files government,
• Useful for calculating periodicals,
customer lifetime newspapers, books,
value search engines
• Commercial data is
also available from
market research
firms
 Discussion Question
Personal Privacy
Many people do not like the fact that


their personal data are used for

marketing.
• How can marketer’s justify their need
for data?
• How can they acquire data and
maintain customer privacy?
 Privacy

• Safe Harbor Agreement establishes

principles for privacy protection for
companies that transfer data to the
United States from Europe
– Purposes of the information collected and
used
– An “opt out” option to prevent disclosure
of personal information
– Can only transfer information to third
parties that are in compliance with Safe
Harbor
– Individuals must have access to
information
 Online – Pre ticked boxes 76
 Assess Value of Research
• What is the information worth versus
what it will cost to collect?
• What will it cost if the data are not
collected?
• What will the company gain with this
information?

77
Designing Primary Research
• Quantitative Research Designs
– Include research design, data
collection methods, instruments to
be used, and the sample design
• Qualitative Research Designs
– Include depth interviews, focus
groups, projective techniques
–
 Data Collection Methods
Observational Research
• Helps marketers gain an in-depth
understanding of the relationship
between people and products by
watching them buying and using
products
• Helps researchers gain a better
understanding of what the product
symbolizes
• P&G
•
• Can observational research be
 Data Collection Methods
Mechanical Observational
Research
• Uses mechanical or electronic device
to record consumer behavior or
response
• Consumers’ increased use of highly
convenient technologies will create
more records for marketers
• Credit Cards
Suchitra and her friends are among the regulars at the Shopper’s Stop store at
Inorbit Mall, Mumbai. More often than not during her shopping jaunts, if she
opted for an ethnic ensemble, she’d make the trip upstairs to the first floor,
to pick out a pair of shoes to go with it. One day, when she walked into the
store, she was pleasantly surprised to find that the foot-wear section had
been moved to the level below, right next to the Indian wear section She
hadn’t planned to buy anything that day, but that’s exactly what she ended
up doing. Ethnicwear, shoes, the works.

To Suchitra, it seemed just a coincidence that the footwear section happened

to have been moved just where she wanted it. But coincidence, it wasn’t.
Rather, the move was the result of an adjacency analysis conducted by
Shopper’s Stop, which after sifting through 24 months of customer data,
found a pattern wherein it was found that women who buy ethnicwear
(salwar-kameez-dupatta) tended to buy footwear as well. Based on this
insight, Shoppers Stop moved its footwear section from the first floor to the
ground floor where the ethnicwear section was located. Soon enough it
found, that this translated into a 25% growth in sales.

Welcome to the world of analytics. Providing retailers valuable insights to

decide on where to operate, what to stock, which customers they should try
and retain, how to communicate to them and even how to minimise own-
store cannibalisation. That’s analytics, the gospel which is increasingly
playing a more critical role in the retail business in India.

Most retailers today have revved up on using analytics inside their stores.
Shopper’s Stop, for instance, has used analytics to start an internal
programme called ‘First Insight’, which leverages its ‘First Citizen’ loyalty
 Data Collection Methods
Experimentation (Test)
• Can be used to test the relative sales
appeal of many types of variables
• An experiment is usually controlled
with only some variables
manipulated at a time while the
others are constant
• Can be conducted in laboratories or
in the field
 Surveys
Data Collection Methods

Personal Interview

Mail

Telephone

Online
Online Surveys Are Growing in
Popularity

webli
nk
 Comparative Advantages

PERSONAL
MAIL TELEPHONE ONLINE
INTERVIEW
Cost Low Moderate High Low
Speed Slow Immediate Slow Fast
Response Self-
Low Moderate High
rate selection
Geographic
Excellent Good Difficult Excellent
flexibility
Interviewer
N/A Moderate Problematic N/A
bias
Interviewer
N/A Easy Difficult N/A
supervision
Quality of
Limited Limited Excellent Excellent
response
 Validity and Reliability
• If a study has validity it collects the
appropriate & authentic data for
the study.
• A study has reliability if the same
questions, asked of a similar
sample, produce the same findings.
 Attitude Scales
• Attitude – beliefs, feelings and values compelling to act in
certain way
•
• Likert scales: easy for researchers to prepare and
interpret, and simple for consumers to answer
(strongly agree or disagree)
• Semantic differential scales: relatively easy to
construct and administer (bipolar)
• Graphic rating scales: also easy to construct and
administer (factors rated between important
and not important)
• Rank-order scales: subjects rank items in order of
preference in terms of some criteria (number of
factors/competitors ranked)
 Example of a Likert Scale
Please place the number that best indicates how strongly you
agree or disagree with each of the following statements about
shopping online in the space to the left of the statement.

1 = Agree Strongly
2 = Agree
3 = Neither Agree or Disagree
4 = Disagree
5 = Disagree Strongly

_____ a. It is fun to shop online.

_____ b. Products often cost more online.
_____ c. It is a good way to find out about new products.
 Semantic Differential Profiles of Three
Pay-Per-Movie Services
Poor

3 DVD
Neutral

Digital
2 Cable
DIVX

1
Availability

Number of

Clarity of
Access
Ease of
Cost
Excellent

Picture
Titles
 Rank-Order Scales

Rank the following computer manufacturers in terms of hotline

help by placing a 1 next to the one who provides the best telephone
help, a 2 next to the second best, until you have ranked all six.

_____ IBM _____Hewlett Packard

_____ Dell _____ Gateway
_____ Compaq _____ NEC
 Qualitative Collection Method
Depth Interview
• Usually 30 minutes to 1 hour
• Nonstructured
• Interpreted by trained researcher
• Listen to words as well as “body
language”
•
 Qualitative Collection Method
Focus Group
• 8-10 participants
• Lasts about 2 hours
• Always taped or videotaped to assist
analysis
• Often held in front of two-way mirrors
•
•
 Focus Group Discussion Guide
1 . Why did you decide to use your current cellular
company?
2 . How long have you used your current cellular
company?
3 . Have you ever switched services? When? What caused
the change?
4 . What do you think of the overall quality of your
current service?
5 . What are the important criteria in selecting a
cellular service? Examples of Probe questions :
a . Tell me more about that . . .
b . Share your thinking on this . . .
c . Does anyone see it differently . . .
 Qualitative Collection Method
Projective Techniques
• Research procedures designed to
identify consumers’ subconscious
feelings and motivations
• Consist of a variety of disguised
“tests”
• Stimulus - Picture given, or word
• Fresh – Liril , Hygiene - Dettol
•
 Qualitative Collection Method
Metaphor Analysis
• Based on belief that metaphors are
the most basic method of thought
and communication
• Zaltman Metaphor Elicitation
Technique (ZMET) combines collage
research (to study cultural
associations) and metaphor
analysis to bring to the surface the
mental models and the major
themes or constructs that drive
consumer thinking and behavior.
 Customer Satisfaction
Measurement
• Customer Satisfaction Surveys
• Gap Analysis of Expectations versus
Experience
• Mystery Shoppers
• Customer Complaint Analysis
• Analysis of Customer Defections
 Sampling and Data
Collection
• Samples are a subset of the
population used to estimate
characteristics of the entire
population.
• A sampling plan addresses:
– Whom to survey
– How many to survey
– How to select them
• Researcher must choose probability
or nonprobabililty sample.
 Probability Sampling
Designs

Simple random Every member of the population has a known and

sample equal chance of being selected.
Systematic random A member of the population is selected at random
sample and then every “nth” person is selected.
Stratified random The population is divided into mutually exclusive
sample groups (such as age groups), and random samples
are drawn from each group.
Cluster (area) The population is divided into mutually exclusive
sample groups (such as blocks), and the researcher draws a
sample of the groups to interview.
 Analyzing Data

• Clean the data

• Tabulate the data
using statistical
techniques—
ANOVA,
regression,
factor analysis,
cluster analysis
• Perceptual
mapping,
conjoint 102
 Data Analysis and Reporting
Findings
• Open-ended questions are coded and
quantified.
• All responses are tabulated and
analyzed.
• Final report includes executive
summary, body, tables, and
graphs.
• Segmentation
Market Segmentation
 The process of dividing
a potential market
into distinct subsets of
consumers and
selecting one or more
segments as a target
market to be reached
with a distinct
marketing mix.
•
 Three Phases of STP

Phase 3
Product / Brand
Positioning

Phase 2
Target Market and Marketing Mix Selection

Phase 1
Market Segmentation
 Segmentation
• Discover the needs and wants of
groups of consumers to develop
specialized products to satisfy
group needs
• Used to identify the most appropriate
media for advertising
Ryka produces
sneakers that
meet the
special needs
of women’s
feet.
 Bases for Segmentation
• Geographic • Use-Related
• Demographic • Usage-
• Psychological Situation
• Psychographic • Benefit Sought
• Sociocultural • Hybrid
 Geographic Segments
• Can segment on basis of country – but usually
different segments exist with countries as well
• Can be due to weather, economic reasons too
• Intermarket segments – Small car in EU v US
• Intramarket segments – Whirlpool washing
machines in Italy v Germany
•
Demographic Segmentation
• Income
• Population
• Age distribution
• Gender
• Education
• Occupation
•
 What are the
trends?
 Demographic Facts and
Trends
• A widening age gap exists between the older
populations in the West and the large working-
age populations in developing countries -
Singapore
• In the European Union, the number of consumers
ages 16 and under is rapidly approaching the
number of consumers ages 60-plus
• Asia is home to 500 million consumers ages 16
and under
• Half of Japan’s population will be age 50 or older
by 2025
•
Demographic Facts and
Trends
• America’s three main ethnic groups—
African/Black Americans, Hispanic
Americans, and Asian Americans—represent
a combined annual buying power of $1
trillion
• The United States is home to 28.4 million
foreign-born residents with a combined
income of $233 billion
• By 2030, 20 percent of the U.S. population—70
million Americans—will be 65 or older versus
13 percent (36 million) today
• India has the youngest demographic profile
among the world’s large nations: more than
half its population is under the age of 25
Segmenting by Income and
Population
• Income is a valuable segmentation variable
– 75% of world GNP is generated in the
triad but only 13% of the world’s
population is in the triad
• Do not read into the numbers
– Some services are free in developing
nations so there is more purchasing
power
– Income information is an average –
disparities prevail
• For products whose price is low enough,
size of population is a more important
variable
 India – Income Segmentation
(NCAER)
• Rich – fastest growing
• Consuming – FMCG & durables
consumers, cost benefit seekers
• Climbers – new jobs
• Aspirants – auto walla
• Destitute


•
 Per Capita Income

 2007 Per Capita Income

1.
2. Luxembourg $56,380
3. Norway 51,810
4. Switzerland 49,600
5. United States 41,440
6. Denmark 40,750
7. Iceland 37,920
8. Japan 37,050
9. Sweden 35,840
10.Ireland 34,310
11.United Kingdom 33,630

Boro is slang for a popular profanity in Swahili. Hardly the kind of information that


marketers would be interested in one might imagine. Unless of course you

happen to be Emami trying to sell Boroplus in Africa. Then you have to think
of a new name for the very brand that you are trying to build and so Boroplus
becomes Beeuplus. Similarly the concentric circle shape of Good Knight coils
is a familiar sight to most of us.
However, when Godrej Sara Lee decided to market the coils in Bangladesh it
changed the shape to that of an octagon. Surely mosquitoes are not that
different? Well perhaps not but the consumer sure is. Turns out that in
Bangladesh consumers would rather have a lot of fumes as compared to the
low emission variant that sells in India.


Even though Emami group director, Prashant Goenka has travelled extensively


across Africa, the continent, he says never fails to amaze in terms of its
diversity. He’ll tell you Africa is the place to see people bathing with soda
instead of water, because they believe it lightens their complexion. Fair skin
clearly is not just a desi obsession.
“In west Africa, there is a strong French influence and complexions are dark,
but in North Africa people with light skin are in majority,” Goenka explains. So
there’s huge potential for Emami in the dark continent , particularly in skin
care, which today contributes around 35 % of the Rs 100 crore turnover of the
international business he states. However, for all that talk of its potential,
marketers say the going is tough for one has to be careful.
Often particular attention to local nuances translates into customisation not
only of product formulations but also brand names. Take Good Knight
mosquito coil for example. The coil which is sold in Bangladesh is not the
traditional circular coil Indian customers use to engulf themselves in smoke,
rather it’s octagonal.
• The change in design, explains Mohan Sapre, VP, International Operations,
Godrej Sara Lee, is based on consumer insights and some back-to-the-lab
observations.
“The rationale was that the shape allows the active chemicals in the coil to
disperse better in a room. However, compare that to the Indian market which
is more evolved, the design has not been replicated here. What sells in India
are coils that emit less smoke,” he states, adding; “there is no cookie cutter
formula because there are always bound to be some hidden need gaps that
we must fill.”
And these hidden gaps can emerge if one does pay attention to nuances like
language, culture and even the topography of the region . For instance, while
marketing Boroplus , Emami realised that the word ‘boro’ is a profanity, in
Swahili. So just for that particular market, the brand name has been changed
to Beeuplus. “It’s a consumer backward approach as opposed to a company
forward approach,” states Vijay Subramaniam , CEO, International Business
Group, Marico. Citing an example, Subramaniam says in the Middle East,
where the chlorine content in water tends to be high, Marico has
reformulated the flagship brand Parachute cream with the promise of
nourishment plus protection from harsh water.

When venturing and establishing the brand in new markets, companies say they


are not talking to the Indian diaspora, but to the local populace. In markets like
Africa and South America, where companies like Bajaj Auto, Ceat, Marico ,
Godrej and Dabur are getting aggressive, acclimatising to these markets means
forging relationships with local partners.
Ceat Tyres with an export turnover of Rs 500 crore is looking to create a
footprint in South America and Africa for both performance (trucks and off the
road) and mass (passenger cars) segments. Arnab Banerjee, VP, sales &
marketing, Ceat, says segmentation of consumer s, say in the performance
segment is critical to penetrate high potential markets like Brazil or Zambia .
“If we are working with copper mines in Zambia, there the product performance


requirement is different. Similarly, in Brazil with sugarcane cultivation, we have

to understand and develop tyres according to specification,” explains Banerjee.
To understand customers and also to build the network, inputs from Mozambique
based Abhishek Ghosh is valuable for Ceat.
Ghosh runs Tanzi, an auto spare parts and components company with an interest
in retail, in Maputo (the capital of Mozambique) and for the past five years has
helped Ceat establish a footprint in the country. So if Ceat is exporting 10
containers a month fetching an annual turnover of $ 6 mn, it’s because of the
repeat visits to each and every dealer in Mozambique by Ghosh taking the Ceat
team along. Similarly , it’s been the persistence of Mr Aziz, the national
distributor for Emami in Morocco on aspects like pricing and packaging which has
prompted the company to re-visit its strategy in the country. “Initially, it wasn’t
smooth and I faced problems with pricing. My mandate is to ensure my
customers make profit on Emami products. For that, the company has revised
pricing and introduced a new face and packaging for products ,” explains Aziz.

However, the appointment of distributors is not necessarily the only route to go-


tomarket . For Bajaj Auto, the entry into new markets like Latin America and the
continent of Africa, depends on the size and level of competition from traditional
Japanese brands and Chinese bikes who are typically the price warriors. Rakesh
Sharma, CEO, International Business, Bajaj Auto says that large and complex
markets require a direct presence while for the smaller markets, local partners
can be used as distributors cum assemblers .
“Striking the balance between operating costs, adequate reach and strategic
control drives the retail level distribution strategy and these three dimensions
differ from market to market,” says Sharma. Similarly in most of these markets
when it comes to dealing with channel partner, Subramaniam of Marico says “the
• When it comes to advertising for these markets, it’s a mix of Indian
ads translated into local languages and local ads featuring local
stars. In certain markets in Africa, Indian brands ride on the
popularity of Bollywood . Says Lamia Ahmed, director, Tareek Nour,
an ad agency based in Egypt which handles Emami’s Fair &
Handsome and Himani fast relief; “At present we have adapted
Indian commercials for local taste. It helps get visibility considering
Indian movie stars like Amitabh Bachchan and Shahrukh Khan are
famous among locals.”
So attributes which work in India and are therefore highlighted in
communication here is sometimes completely overhauled to
project a different image in overseas markets. For Piruz
Khambatta , chairman, Rasna International, the picture is clear.
“Brands make a mistake when they go in spelling things like we are
from India or we are from the US, especially with their marketing. In
a category like foods, the crucial thing is to use emotional values, a
more universal approach, say like a grandmother eating your brand
of chewing gum.”Sharma of Bajaj Auto says some of the partners in
South America have de-emphasised attributes like fuel efficiency
and promoted styling and performance aggressively. “Even choice
of medium is important - rallies, stunt events and biking
communities have been extremely well leveraged by them in some
Latin American markets where such media are popular and aligned
to local lifestyles,” he states.
 Age Segmentation
• Global teens—young people between the
ages of 12 and 19
– A group of teenagers randomly chosen from
different parts of the world will share
many of the same tastes
– Pepsi
• Global elite—affluent consumers who are
well traveled and have the money to
spend on prestigious products with an
image of exclusivity
• Carrefour - DINKs
 Gender Segmentation
• In focusing on the
needs and wants
of one gender, do
not miss
opportunities to
serve the other
• Companies may
offer product
lines for both
genders
– Nike, Levi
Strauss
– Wills Lifestyle,