CONSUMER BEHAVIOUR

MODULE 1
Consumer Behaviour is the study of how individuals, groups, and organizations select,
buy, use and dispose of goods, services, ideas, or experiences to satisfy their needs and
wants.

Consumer behaviour refers to how a consumer behaves or acts or reacts in making a

purchase of goods and services of his choice in different situations.

1.1 RELEVANCE OF CONSUMER BEHAVIOUR IN MARKETING DECISIONS

An understanding of consumer behavior is necessary for long term success and survival
of a firm. The study of consumer behavior helps formulate appropriate marketing
strategies for a firm keeping in view the consumer and his environment. Consumer
behaviour principles are applied in many areas of marketing such as:

• Analyzing market opportunity: Consumer behaviour study helps in identifying

the unfulfilled needs and wants of consumers. This requires examining the trends
and conditions operating in the marketplace, consumers' lifestyles, income levels
and emerging influences. This may reveal unsatisfied needs and wants.
• Selecting target market: A review of market opportunities often helps in
identifying distinct consumer segments with very distinct and unique wants and
need. Identifying these groups, learning how they behave and how they make
purchase decisions enables the marketer to design and market products or
services particularly suited to their wants and needs.
• Marketing mix decisions: Once unsatisfied needs and wants are identified, the
marketer has to determine the right mix of product, price, distribution and
promotion.
• Use in social and non-profit marketing: Consumer behaviour studies are useful
to design marketing strategies by social, governmental and not-for-profit
organizations to make their programmes such as family planning, awareness
about AIDS, crime against women, safe driving, environmental concerns and other
more effective.
 1.2 FACTORS DETERMINING CONSUMER BUYING DECISIONS

There are various other factors influencing the consumer behaviour such as social,
cultural, personal and psychological.

PERSONAL FACTORS PSYCHOLOGICAL FACTORS

1. Age 1. Perception
2. Gender 2. Beliefs and attitude
3. Occupation 3. Learning
4. Lifestyle 4. Motivation
5. Income 5. Personality

SOCIAL FACTORS CULTURAL FACTORS

1. Reference groups 1. Culture

2. Family 2. Subculture
3. Role and status 3. Social class

1.3 CONSUMER BUYING DECISION PROCESS

1. Need Identification
2. Information search: Taking info from different sources
3. Evaluation of alternatives
4. Purchase and consumption (purchase decision): Trial purchase, repeat
purchase, long term purchase
5. Post – purchase evaluation

1.4 BUYER DECISION ROLES AND LEVEL OF CONSUMER DECISION MAKING

ROLES:

1. Initiator
2. Influencer
3. Decider: One who has power to decide
4. Buyer: One who makes actual purchase
5. User: One who consumes
 6. Gatekeeper: One who controls the flow and direction of contents of information

LEVELS:

1. Extensive problem solving: There is high involvement and take long decision-
making time. This level involves decision regarding high-cost goods. They evaluate
many brands after looking at so many information. E.g.: Buying car or computer.
2. Limited problem solving: There is only moderate involvement in selection
process and so the time taken is comparatively low. Evaluation of fewer
alternatives only. E.g.: Clothing and cosmetics
3. Routinized response behaviour: There is only little involvement in selection
process and consumers may stick with one brand. They take quick decisions. This
involves low-cost goods like soap, toothpaste, shampoo.

1.5 CONSUMER DECISION MODELS

Traditional Models- Economic Model, Learning model, psychological model,

sociological model

Contemporary models:
1. HOWARD SHETH MODEL:

John Howard and Jagadish Sheth introduced the model in the year 1969. It is a modern
approach model on buying behaviour. This model takes into account both personal and
industrial consumer.

The model also refers to 3 levels of decision making

It describes how a consumer behaves rationally in the market within the constraints of
limited individual capacities and incomplete information. It explains 4 sets of constructs
or variables influencing buyers before and during purchase action.

They are input variables, hypothetical constructs, exogenous constructs and output
variables.
Input variables are information received by buyer from market or other sources.
Significative refers to Physical characteristics of product/service. Symbolic refers to
Verbal or visual characteristics and Social refers to Ideas/images attached to product by
society, family etc.

Hypothetical constructs: It Deals with psychological variables and are Classified into two
groups, Perceptual Construct and Learning Construct.

Exogenous variables: These are list of a number of external variables (external to the
buyer) which can significantly influence buyer decisions.
Output variables: These are which buyer’s observable responses to stimulus inputs.

2. ENGEL, KOLLAT AND BLACKWELL MODEL

The EKB model is comprehensive model and shows the components of decision making,
their relationships and interactions among them. Introduced in 1968.
 3. HEDONIC CONSUMPTION MODEL FOR AESTHETIC PRODUCTS

Hedonic consumption is consumption of products by individuals for experiencing

happiness after satisfying basic needs of food, clothing and shelter. Hedonic consumption
is also pleasure derived due to experience of a particular brand and this study is
important in consumer behaviour theory.

Consumption of items which are necessary for survival is called as utilitarian

consumption. So, after satisfying utilitarian needs if individual is left with resources, they
can spend it on enhancing emotional pleasure which is known as hedonic consumption
in consumer behaviour theory. The emotional pleasure generated can vary with every
individual unlike in utilitarian consumption where satisfaction level is same for every
individual as they are basic needs.
An example is going to a movie theatre for watching a film. Watching a film gives
emotional pleasure to individual which cannot be obtained from utilitarian consumption
and helps them to take some time off from daily routine to experience happiness. Another
example is going for a vacation or camping trip by taking some time from daily routine.
 MODULE 2

2.1 PERSONALITY AND SELF CONCEPT- ROLE IN PURCHASE DECISION

Personality is the inner psychological characteristics (qualities, attributes, traits,

factors, and mannerisms) that both determine and reflect how a person responds to his
or her environment. No two individuals are similar. They differ in terms of various
personality characteristics. Personality is static, but still can change due to events like
death, marriage, habit change, being matured etc.
Traits are like happy go lucky, practical, relaxed, imaginative, serious, stable, short
tempered, stubborn etc.

The theories of personality

1. Freudian theory/psychoanalytic theory: Introduced by Sigmund Freud. Role of
unconscious mind in human behaviour. Unconscious needs or drives lie at the
heart of human motivation and personality.
Freud spoke of the Id, Ego and Super ego. The Id contains consists of primitive drives that
lack the real perception of reality. It operates on the pleasure principle, with the objective
of seeking pleasure and avoidance of pain, and doing what one wants to do. The processes
that come into play are primary processes like hunger, thirst etc. The Ego is aware of
reality and operates via the reality principle, where it recognizes what is real and
understands that behaviour has consequences. The processes that come into play are
secondary processes, like learning and memory, perception etc. It also includes the
impact that socialization has to play in the life of an individual; it recognizes the existence
of social rules that are necessary in order to live and socialize with other people, and thus,
plans to satisfy ones’ needs within the social values and rules. The Super ego comprises
the value system and the morals, which emanate from what an individual learns in
childhood from his parents. It is contained in the conscious part of our memory. It
believes in doing what the society says. While the Ego and Super Ego are partly conscious
and partly unconscious, the Id is the unconscious. Further, the Super ego acts as a
counterbalance to the Id; the former seeks to restrict the pleasure-seeking demands of
the latter, and it is left for the Ego to balance the demands of the Id and Super ego with
the constraints of reality; it controls the higher mental processes such as logical reasoning
to solve the Id-Super ego dilemma.
 2. Neo Freudian theory (Social interactions and relationships form the basis for
growth and development of personality). Here, they disagreed with their
contemporary, Freud who believed that personality was biological and rooted in
genetics, and was groomed as a result of early childhood experiences
3. Trait theory (Quantitative approach to personality as a set of psychological
traits). To identify traits within individuals and differentiate amongst themselves,
the trait theorists rely on personality tests, scales and inventories, continuous
observation.

SELF CONCEPT

It is about how people perceive themselves. A person’s opinion about his tastes,
personality, capabilities, and shortcomings all constitute his self-perception. The
components of self-concept are

Actual self-concept: the way consumers see themselves.

Ideal self-concept: how consumers would like to see themselves

social self-concept: The way how consumers think others see them

ideal social self-concept: how consumers would like others to see them.

A person can have one or multiple selves: E.g., A woman can be seen as wife, mother and
a working woman. And a single consumer will act differently in different situations or
with different people. Consumers use self-altering products to express individualism by
Creating new self, Maintaining the existing self, Extending the self and Virtual Personality.

Like this way, a product is also assumed to have an image determined by physical
appearance, packaging, advertising, price.

2.2 PERSONAL VALUES AND LIFESTYLES

Personal values can be Self-fulfilment, Excitement, Sense of accomplishment, Self-respect,

Sense of belonging, Being well respected, Security, Fun and enjoyment and Warm
relationship with others.
MODERN LIFESTYLE TRENDS
1. Changes in male purchasing roles – Increased responsibilities for shopping and
child care and in more involvement with cooking and house cleaning
2. Changes in female purchasing roles-No longer identify with ads that show laundry
products or pleasing men. Rise of female decision maker
3. More health conscious
4. Greater time pressures: Adoption of time saving products (avoiding middle men)
5. Higher level of self-awareness
6. A more frugal and value-oriented lifestyle
7. Likely to spend on products that make life comfortable and provide a better
experience.
8. Almost all of them are tech-savvy (Corona)
9. Ideal for brands using digital marketing channels
10. Growing interest in customised products
11. Eco-friendly
12. A Preference for Indian Brands over International Ones.

2.3 ROLE OF MEMORY, LEARNING AND PERCEPTION IN CONSUMER

BEHAVIOUR

MEMORY

An active mental system that receives, stores, organizes, alters and recovers information.
A person can record past information and it guides the behaviour. Types are short and
long-term memory

• Marketers will try to have consumers remember the name and brand in preference
to those of competitors.
• Messages with unique aspects are more likely to be remembered.
• Material that is meaningful to the individual is learned more quickly and more
likely to be remembered
• Visual content is frequently more memorable than verbal content
LEARNING

Consumer learning is defined as a process by which people gather and interpret

information about products and services and use this information/knowledge in buying
patterns and consumption behavior. People learn from own or other’s experiences.
Elements of learning are: Motivation, cues, Response, reinforcement.
Reinforcement means likelihood of repeating the same response in future as a result of a
particular cues or stimuli or in a similar situation, because reinforced behaviour tends to
be repeated.

1.1 BEHAVIORAL LEARNING THEORY

1. Classical Conditioning Theory of Ivan Pavlov:

Conditioning is the change in the relation between natural stimulus and natural response.

According to Pavlov theory, conditioned learning results when a stimulus that is paired
with another stimulus that elicits a known response serves to produce the same response
by itself.
Pavlov demonstrated his theory (what he meant by conditioned learning) in his studies
with dogs. The dogs were hungry and highly motivated in his experiment, Pavlov sounded
a tone and immediately followed by applying a meat paste to the dogs’ tongues, which
caused salivation. This practice repeated sufficient number of times. Learning occurred
when after sufficient number of repetitions of the tone, followed almost immediately by
food, the tone alone caused salivation. The tone had been learned to be an indicator of the
reward of meat paste.
Strategic applications/ principles of conditioning theory

• Repetition forms associations: Repetition increases strength of associations and slows

forgetting but over time may result in advertising wear out. A repeated exposure of a
message in a magazine, newspaper or television advertisements will familiarize the brand
name and the product name to the consumers.

• Stimulus generalization: This is defined as a phenomenon that occurs when a stimulus

is so similar to another stimulus, that the former evokes the same response as the latter.

Pavlov noted that dogs could learn to salivate not only to the tone of bell but also to the
similar sound of jangling keys.
Stimulus generalization explains why imitative me-too products crowd into the market
immediately after the introduction of a new innovative product in the market.
Another marketing strategy that works on the principle of stimulus generalization is the
product line extension- adding related products to an already established brand.

• Stimulus discrimination: The ability to differentiate a particular stimulus from among

similar stimuli. Marketers want to distinguish their products from the products of their
competitors to win the consumer’s minds.
 2. instrumental conditioning- B.F Skinner

• Instrumental conditioning suggests that most learning takes place by mean of a

trial-and-error process and consumers experience more satisfying results
(outcomes or rewards) in case of some purchases than others.

• Favorable consequences reinforce the behaviour and increase the likelihood of its
repetition, that is, the consumer will purchase the product again; unfavorable
outcome will decrease that likelihood.

• In a marketing context, the consumer who tries several brands and styles of jeans
before finding a style that fits her figure (positive reinforcement) has engaged in
instrumental learning. There are positive and negative (insurance ads)
reinforcements.

3.Observational Learning

A.K.A Modeling, is the process through which an individual learns a behaviour by

observing the behaviour of others and the consequences of this behaviour.

B. COGNITIVE LEARNING THEORY

A person’s learning is a PROBLEM-SOLVING process. , a considerable amount of learning

takes place as the result of consumer thinking and problem solving. The view point
contends that much learning occurs not as a result of trial and error or Practice but
through mental activity discovering meaning patterns that enable us to solve problems.

2.3 FACTORS AFFECTING PERCEPTION IN CONSUMER BEHAVIOUR

• Packaging
• Pricing
• Quality
• Customer trust
• Loyalty
• Brand identity
 • Web design
• Social media presence

2.4 MOTIVATION AND CONSUMER BEHAVIOUR

Motivation is the driving force behind an individual’s action. Needs are the essence of the
marketing concept. Marketers do not create needs but can make consumers aware of
needs. Wants result due to needs. The needs, wants, drives, and desires of an individual
that lead him or her toward the purchase of products or ideas.

Main Theories- *
1. Maslow’s Need Hierarchy Theory-physiological, safety, social
(love/belongingness), esteem, self-actualization
2. Mc Clelland’s Need Theory- Need for achievement, need for affiliation,
need for power

MOTIVATION PROCESS

Unsatisfied needs and wants- tension- action- goal accomplished- feedback

2.5 ATTITUDES AND BELIEFS

Attitudes are learned predispositions to respond to an object or class of objects in a

consistently favorable or unfavorable way.

Consumer attitude may be defined as a feeling of favourableness or unfavourableness

that an individual has towards an object. As we, all know that an individual with a positive
attitude towards a product/service offering is more likely to make a purchase
 MODULE 3

3.1 CULTURE, SUBCULTURE AND IT’S IMPACT

Culture is the sum total of learned beliefs, values, and customs that serves to direct the
consumer behavior of members of a particular society. It is a detailed examination of the
character of the total society, including such factors as language, knowledge, laws,
religion, food customs, music, art, technology, work patterns, products, and other
artifacts that give a society its distinctive flavor. In a sense, culture is a society’s
personality.

The kinds of products and services and/or brands that consumers’ buy and use, are all
based on their cultures and sub-cultures. For example, the food they eat and the kinds of
clothes they buy and wear, are all impacted by their culture, their customs, traditions,
norms and values.

CHARACTERSTICS OF CULTURE

2. Culture satisfies needs

3. Culture is socially acquired
4. Culture is dynamic
5. Culture is shared
6. Culture is learned (formal, informal and technical learning) not inborn

Enculturation: Process of learning one’s own culture, Acculturation: Process of learning

a foreign culture

Subculture: Culture within a culture. It is a distinct cultural group that exists as an

identifiable segment within a larger, more complex society. A subdivision of a national
culture that is based on some unifying characteristics. Members share similar patterns of
behavior that are distinct from those of the national culture. Sub Culture Categories
Nationality, Religion, Geographic region, Race, Age, Gender, Occupation, Social class,
Ethnicity. each sub culture has its unique beliefs, values, traditions and customs.

Age: Baby, Teens, Middle aged, Elderly.

Gender: Men, Woman (also working class)
Religion: Muslim, Christian, Hindu
Social Class: Upper, Middle, Lower

Cross Culture: The removal of trade barriers and international commitment to free trade
has led to the opening up of various conservative world economies. As a result, the
number of multinational companies has been increasing the world over. In India too, in
the past 10-15 years, the presence of foreign brands has increased significantly. This has
meant increased choice for the Indian consumer. Marketers have to understand the
cultural differences before entering a foreign market with their brands. They should have
good knowledge of foreign culture, respect for it, ignore cultural differences and minimize
it.

Country of Origin Effects: The purchase intention of consumers is often influenced by the
image of the country – of- origin of the product or brand. This influence is known as the
country-of-origin effect. The country image is generally associated with certain products
or a complete product category. Japan for example, is strongly associated with cutting –
edge technology, but more specifically with all kinds of cameras. France on the other hand,
is strongly associated with fashion, perfumes and wine. It would be very difficult for an
individual to believe that France can also make high-tech gadgets.

Consumer Ethnocentrism means preferring the products of one’s own country to foreign-
made products.

6.1 SOCIAL CLASS AND IT’S RELEVANCE

Division of members of a society into a hierarchy of distinct status classes, so that

members of each class have relatively the same status and members of all other classes
have either more or less status. Social class is primarily based on family income, wealth,
property, education and occupation, while social status has more to do with lifestyle and
prestige.

CHARACTERSTICS OF SOCIAL CLASS

• Social classes exhibit status

• Social classes are hierarchical
• Social classes restrict behaviour
 • People within a same class tend to behave alike
• Social classes are dynamic (Mobility)

Social Classes stratification- Upper class (Upper upper, Upper Lower), Middle (Upper
Middle class, Lower middle class), Lower class (Lower upper, Lower lower)

Middle and Lower- sometimes compromise quality over low price

Upper class- elite group, high status, high spending, look for more quality.

Place: If to attract middle/lower classes, then distribution of products and services must
be done is rural areas, and areas other than metro cities

Promotion: If to attract upper class, airports are good. Middle/lower- railways

Explain consumer behaviour further through examples like in transport, jewelry

Members belonging to a social class would go in for such products and services and/or
brands which are used by others in that class. This is due to the fact that they seek social
approval and want to purchase what others purchase and use what other use. Upper class
consumers favor fashion and sophistication, and this reflects itself in their purchase of
luxurious and prestige goods and branded products. Upper class involves in clubs. They
invest in stocks and real estate, as well as luxurious and prestige goods.
While making purchases, they pay through the credit cards instead of the usual cash,
purely for reasons of a convenient substitute of cash.

On the other hand, the middle class takes into account value for money and looks for
benefits that can be derived from a purchase; they go for good, moderately priced goods
and are less conscious of branded goods. The lower class goes for goods of necessity.
Social class impacts not only what the consumers buy, but also from where they buy.
Upper class visit shops, markets and malls which are frequented by members of their
social class.

FACETS OF CHANGING INDIAN CONSUMERS: Working women, from price sensitive to

value sensitive,
 MODULE 4

4.1 REFERENCE GROUP AND IMPACT ON CB

A reference group is a group of individuals whom one refers to or who serve as a point of
reference, with regard to information of behaviour, beliefs, attitudes, and aspirations.
Marketers view reference group as people who are consulted or who influence an
individual’s purchase decision.

Normative reference groups influence the person’s overall norms, values and behaviour
(e.g., family) while comparative reference groups are the ones that the individuals
aspire to and which serve as a role model for attitude or behaviour. They compare
themselves with those they admire (e.g., seniors at office, movie stars etc.)

Reference groups can also be classified as direct and indirect reference groups, on the
basis of interaction with the referent. In a direct reference group, there is personal
interaction with the referent say, a family member, friend, peer. In an indirect reference
group, there is no personal interaction with the referent, like in the case of politicians,
cricketers, or movie stars etc. someone we admire for good dress sense but haven’t ever
talked to, is also an indirect referent.
Reference groups- family, friends, shopping group, work group, brand communities,
celebrities, consumer action group.

FORMS OF REFERENCE GROUP INFLUENCE

1. Information influence – The individual seeks information about various brands

from an association of professionals or independent group of experts and from
those who work with the product as profession.
2. Utilitarian Influence: The individual’s decision to purchase a particular brand is
influenced by the preferences of fellow workers and/ or preferences of the people
with whom he or she has social interaction.

3. Value expressive influence: The individual feels that the possession of a certain
brand, which is used by certain people, whom he admires, will also give him the
same kind of image. The individual feel that it would be nice to be like the type of
person that advertisements show using a particular brand.
There are many such people around us whom we perceive as experts in one thing or the
other. We seek advice from them in their respective area of expertise. Such people are
known as opinion leaders and people seeking advice from opinion leaders are known as
opinion seekers.
4.3 FAMILY

Traditionally, the family has been described as “two or more persons related by blood,
marriage, or adoption who reside together. A household, on the other hand is a housing
unit shared by persons who are either related or unrelated to each other.

A family household can be said as, a husband, wife and children, while a non-family
household can be a group of working bachelors or students living together.

Types of family- married couple, nuclear and extended families, joint family, single
parent.

ROLE OF FAMILY

The family performs certain essential functions-looks after economic wellbeing, offers
emotional support, maintains a family lifestyle and imparts consumer socialization,
provide moral and ethical values, religious and interpersonal values.

Traditionally, the husband used to act as the bread earner while the wife used to look after
home and children. But recent times have witnessed a change in these roles. In India men
are not the sole provider for the family anymore. They share equal responsibilities at
home, be it cooking or looking after the children.

FAMILY LIFECYCLE

A family lifecycle describes the various stages of a family, which provide an estimate of
the time and money available to a family at each stage. The underlying principle here is
that family requirements change with time, as does the disposable income of a household.

Some of the factors that affect the family’s time and money are marital status, family size,
employment status of the couple, and age of all the members of the family.
Traditional family systems had a predictable lifecycle with stages like bachelorhood,
honeymooners, parenthood, and post parenthood, dissolution. These lifecycle stages are
used by marketers to segment the market or family – oriented products.
• Bachelorhood: This is the first stage of the traditional family lifecycle and consists
of people who have established a separate household. In India though, this might
not be the case as a large majority still live with their parents while they are
working. The majority as this stage is employed, young single adults, but it also
consists of college students who live on their own. For these people, salary is more
like pocket money and thus, they are big spenders on food, fashion clothing,
entertainment and recreational activities.
• Honeymooners: The second stage of traditional family lifecycle starts with
marriage. Newlyweds spend a lot of money in setting up home. House, furniture,
furnishings necessary home appliances, and utensils are some of the major
expenses incurred by the newlyweds themselves or by their parents and other
relatives. They also spend a lot on dining out, entertainment, and other leisure
activities due to the high disposable income they have especially, if both husband
and wife are working.
• Parenthood: With the birth of their first child, families enter the parenthood stage
of the traditional family lifecycle. This stage is quite long and lasts till the children
become economically independent. This stage can be further divided into –
preschool phase, elementary school phase, high school phase, and college phase.
In the preschool phase, the families usually have to spend a considerable amount
on the child’s basic products like baby food etc. and disposable income also goes
down if the wife gives up her job to look after the child. The family’s disposable
income increases as the wife again starts working and the couples career
progresses.
• Post Parenthood: At this stage children establish their own households and the
original couple are called empty nesters. Empty nesters are generally believed to
have increased expenses on travel and medical needs. Members of a financially
stable household at this stage finds an increase in their disposable income and
uses this time and money to indulge themselves with their hobbies and other
interests.
 • Dissolution: At this stage, one of the couples dies and the other is left alone. The
adjustment is easier if the surviving spouse is in good health and economically
stable. Companionship is of prime importance at this stage and some chooses to
go in for remarriage.

PURCHASING DECISIONS IN A FAMILY

• Household decisions: consensual and accommodative (difference in opinion)

purchase decisions
• Gender roles: Traditional stereotype confined husband and wife to some specific
purchase decisions. There are broadly four types of decisions – (joint) decisions,
Wife dominated, Husband dominated, and autonomous (independent decision,
taken by either husband or wife). For example, the wife has more to say (wife
dominated) when it comes to groceries, children’s clothing and toys, while the
husband has more of an influence (husband dominated) in the purchase of
financial investments, insurance etc. in some cases like vacations, homes,
furniture, home appliance etc. a joint decision is taken. Now the modern society
has changed
• Children as decision makers: Gone are the days children did what their parents
told them. Today’s younger generation is not only better informed about new
products and brands than their parents but also has considerable power over
them. For products like video games, technology etc. parents depend on children’s
opinion.

ROLE OF FAMILY IN BUYING BEHAVIOUR- Same as buyer roles.

Gatekeeper- look for an example

 MODULE 5
5.1CONSUMERISM

A person who buys a good or service for his own personal use and not for further
manufacture is called a consumer.

Consumerism refers to wide range of activities of government, business and independent

organizations designed to protect rights of the consumers. Consumerism is a process
through which the consumers seek redress, restitution and remedy for their
dissatisfaction and frustration.

Earlier, In the markets the products ran in shortage, adulteration & black-market prices. The
profit-making attitude of the business failed to discharge social responsibilities of
maintaining fair price, quality of goods & providing services etc. For example: tooth paste
tube filled with air.

IMPORTANCE

• Stop unfair trade practices

• Provide complete & latest information
• Discourage anti-social activities
• Implementation of consumer protection laws
• Protect against exploitation

5.2CONSUMER RIGHTS IN INDIA

There are six consumer rights as mentioned in the regulatory Consumer Protection Act of
1986.

1. Right to safety: Means right to be protected against the marketing of goods and
services, which are hazardous to life and property. The purchased goods and
services availed of should not only meet their immediate needs, but also fulfill long
term interests. Before purchasing, consumers should insist on the quality of the
 products as well as on the guarantee of the products and services. They should
preferably purchase quality marked products such as ISI, AGMARK, etc.
2. Right to choose
3. Right to be informed: Means right to be informed about the quality, quantity,
potency, purity, standard and price of goods so as to protect the consumer against
unfair trade practices. Consumer should insist on getting all the information about
the product or service before making a choice or a decision.
4. Right to consumer education: Ignorance of consumers, particularly of rural
consumers, is mainly responsible for their exploitation. They should know their
rights and must exercise them. Only then real consumer protection can be
achieved with success.
5. Right to be heard
6. Right to Seek redressal: Means right to seek redressal against unfair trade
practices or unscrupulous exploitation of consumers. It also includes right to fair
settlement of the genuine grievances of the consumer. Consumers must make
complaint for their genuine grievances. Consumer disputes redressal agencies
(popularly known as Consumer Forums or Consumer Courts) are set up under the
Act at District, State and National level to provide simple and inexpensive quick
redressal against consumer complaints. Old- 20L, 1c, above 1Cr

5.3 RECENT TRENDS- NEW ACT- CONSUMER PROTECTION ACT 2019.

Came into force in 2020

• District Forum upto 1 Cr, State 1cr -10 cr, National_ Above 10 cr. (complaints with
value of goods).
• E-commerce also taken into consideration
• E-filing of complaints and
• hearing of complaints can be done through video conferencing
• Right to seek compensation under product liability
• Right to know why a complaint was rejected
• Punishment for misleading ads
• Regulating authority: Central Consumer Protection Authority established
The Consumer Forum can order the company to take the following actions once it hears
the complaint and decides that the company is at fault:
• Correct deficiencies in the product to what they claim.
• Repair defect free of charges
• Replace product with similar or superior product
• Issue a full refund of the price
• Pay compensation for damages / costs / inconveniences
• Withdraw the sale of the product altogether
• Discontinue or not repeat any unfair trade practice or the restrictive trade practice
• Issue corrective advertisement for any earlier misrepresentation

5.4INDIAN CONSUMER- DEMOGRAPHIC AND SOCIO-ECONOMIC BEHAVIOUR

DEMOGRAPHIC BEHAVIOUR: Consumer behavior can be affected by several factors. It can

be different from person to person based on his age, income, sex, education and marital
status.

SOCIO-ECONOMIC BEHAVIOUR: Big savers, new to e-commerce, reference group, family,

role and status, lifestyle, personality

5.5 LIVING STANDARD MEASURE

The Living Standards Measure or LSM is a marketing and research tool ( same as social
economic class: SEC but more refine ) to classify standard of living and disposable
income. It segments the population into ten deciles based on their relative means, with
LSM 1 being the decile with the least means and 10 being the decile with the greatest
means. It does this by ranking people based on ownership of the components of a
standard basket of goods (which varies over time).

LSM is evaluated based on the ownership of certain facilities/conveniences by the

customer, such as Television, DVD Player, iPod, AC, Home theatre, swimming pool,
dishwasher, Laptop, DTH etc. The parameters vary across geographies and cultures.
LSM is more of a mix of behavioral and psychographic segmentation. As the name
indicates, it is an indicator of the Lifestyle of a consumer.
 5.6 CHARACTERSTICS OF BOP CUSTOMERS IN INDIA

Bottom of the pyramid. Poorest people- very low income, low literacy

• Private companies can make significant profits by selling to the poor.

• By selling to the poor, private companies can bring prosperity to the poor, and thus
can help eradicate poverty. Bring enhanced wellbeing.
• Research should be done before launching product in those areas
• E.g.: Selling shampoo in sachets to poor, Annapurna (iodized salt for poor),
• Some Companies that target BOP are Unilever, P&G
• To penetrate India's rural market, Coca-Cola launched its Coca-Cola soda drink in
a 5 rupee bottle after observing that their rural consumers were buying 10 rupee
bottle and 2 people were sharing them. They also created a campaign with Aamir
Khan with a slogan of 'Thanda Matlab Coca-Cola."
• Any business operating in the BOP market should ensure a distribution system
specifically meant for the Bottom of the pyramid market as per their
requirements.

• Companies have to offer products that resonate well with the BOP market. The
people in the market should be able to afford such products.

CHARACTERSTICS OF BOP MARKETS-

The needs of this market are unique as compared to the other top tier markets. They have
been neglected in the past, and it's a no brainer that most of their needs go unnoticed.
Here are some of the characteristics that define the buying behaviour of consumer in a
BOP market:

• Unmet Needs: The people in this market segment are also varied because some
of their needs are similar to the other market segment, yet some needs are unique
to them. For example, they have everyday needs like an efficient transportation
system, water, electricity access, health services etc. But their needs for
electronics, apparels, entertainment may vary from the others. There is a higher
 chance that people in the BOP are willing to pay for it, but they may not have access
to the same.
• Subsistence Livelihood: It is defined as the minimum resources one needs for
their basic survival needs. The people in the BOP are dependent on informal
sectors and as is highly volatile are living hand-to-mouth. Most of the products
generated in this market segment like agriculture goods, handicrafts, labour, etc.
are unable to fetch a fair price and are highly prone to exploitation by the
middlemen.
• Poverty Penalty: It can be explained as the poor segment's excessive price against
the price paid by the rich for the same goods and services. For example, BOP
people borrow money from informal sources at a really high rate because their
access to organized banking is highly limited. This charging of high-interest rate
can be seen as the poverty penalty.

CHARACTERSTICS OF BOP CONSUMERS

Price-Sensitive: Needless to say, the market segment at the bottom will not have a large
disposable income and is highly price-sensitive to the products and services available. An
example of this case is dalda ghee's preference over cow's milk ghee due to the price
difference.

Value-Conscious: The consumer will also pay more to the product if it is providing more
value to the consumer. For example, Vim soap's sale with a plastic coating increased as
the consumers perceived this soap will last more than other soaps. In short, the
consumers want to drive maximum utility from a product.

Brand-Conscious: It is a common misconception that this market segment is not brand

conscious. The consumer does, in fact, pay a lot of value to the brand. It can be seen in the
case of Chotukool, which was not perceived well by the consumers of this segment, even
though it was made specifically for their needs.