Buying Behaviour

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Consumer Buying Behaviour CONCEPT Consumer The attitude of consumer or buyer decides how demand will emerge for a new product and service and how existing goods and services will be sold. The attitude in turn depends upon many economic, social, cultural, climatic factors. The decisions are also influenced by education, stage of economic development, lifestyle, information, size of family and hoast of other factors. To understand consumers each brand has to start by asking several basic questions: WHO? Who is the consumer? What are consumer’s demographics? Where does she stay? Which socio-economic class does she hail from? Who can influence her purchase behaviour? WHY? Why does she buy this product? This brand? What are her beliefs? What is her attitude towards this brand and the key competitors? What needs does this brand fulfill? 1

Transcript of Buying Behaviour

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Consumer Buying Behaviour

CONCEPT

Consumer

The attitude of consumer or buyer decides how demand will emerge for a new product

and service and how existing goods and services will be sold. The attitude in turn

depends upon many economic, social, cultural, climatic factors. The decisions are also

influenced by education, stage of economic development, lifestyle, information, size of

family and hoast of other factors.

To understand consumers each brand has to start by asking several basic questions:

WHO?

Who is the consumer? What are consumer’s demographics? Where does she stay? Which

socio-economic class does she hail from? Who can influence her purchase behaviour?

WHY?

Why does she buy this product? This brand? What are her beliefs? What is her attitude

towards this brand and the key competitors? What needs does this brand fulfill?

WHEN?

When does she buy the brand? Daily? Monthly? When does she use the brand?

WHERE?

Where does she buy the brand? Where else may she want to buy the brand? Where does

she use the brand? At home? Outside?

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Customer

Who’s running the organization?

Customers!!!

By Tom Peters

It’s an old saying that customer is the ‘king’ because he is the person on whose decision

demand of any product or any service is dependent.

The purpose of a business organization is to achieve the objectives set out by its

stakeholders, its shareholders, its employees and others. But among the most important

players in this game are the customers of the business. No business can be successful if it

ignores the needs of its customers.

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CONSUMER BEHAVIOUR

Meaning and definition

The study of consumer behaviour implies how and why a particular consumer or group

reacts to decisions of producers. Consumer behaviour could be defined as “those actions

directly involved in obtaining, consuming, and disposing of products and services,

including the decisions process that proceeds and follow the action.”

According to another author consumer behaviour is “the behaviour that consumer display

in scanning for purchasing, using, evaluating and disposing of products and services that

they expect will satisfy their needs. The study of consumer behaviour is the study of how

individuals make decisions to spend their available resources (time, money, effort) on

consumption related items. It includes the study of what to buy, when to buy, why to buy,

from where to buy, how often to buy, and how often they will use it.”

Normally in consumer behaviour one studies the behaviour of consumers for

consumption goods but in the study the behaviour of the buyer is also included. He may

be user i.e. ultimate consumer or he may be buying for someone else.

In a competitive environment, one cannot trust a product or a consumer. The producer

has to produce what is demanded or what can be demanded. Study of consumer

behaviour will help us to know what can be sold and what goods and services are likely

to get rejected.

In certain products like medicines one buys on the prescription of a physician which is

also a part of consumer behaviour. In case of capital goods that is plant, equipment,

machinery, buildings etc the decisions are often based on technical advise of others. In

case of industrial raw materials the decision is influenced by supplier of equipment. Then

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there are purely consumer goods with short life and once they are used they extinguish.

They are called Fast Moving Consumer Goods (FMCG). There are other consumer goods

which are durable like cars, refrigerators, electrical iron, juicer-mixer, etc but they

basically consumer items with long life. There are also goods like clothes, which are not

consumed in one go but are used for long. The behaviour of consumers for all these

products is taken on different considerations than short-term consumer goods like fruits,

juices, ice cream or milk.

In short consumer behaviour implies study of behaviour of purchaser of all goods and

services whether purely consumer goods, intermediate goods or capital goods. In other

words it implies study of attitude of all consumers in disposing of their resources. Further

it is not confined to final users but also include study of attitudes, of all those who take

investment decisions whether they consume themselves or buy for others. It also includes

study of behaviour of those who are consultant, advisers and give their opinion to but or

not to buy a particular thing and the study of factors which influence their advise/opinion.

Consumer behaviour is an art and a science, economics, psychology, sociology. The

study of consumer behaviour envelops all these and more. Be it a housewife buying a

tube of tooth paste, an executive buying a tie, a school kid buying a pen or a multi-

million dollar corporation buying heavy capital equipment, the process of buying is

complex and, at times, intriguing. The consumer buying process is influenced by the

consumer’s financial position, personality, tastes, preferences, reference groups, social

standing, and even the economic sentiment that is dictated by the status of the economy.

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Understanding consumers for brand building

The success of a brand is dictated by its acceptance by consumers and consumer

acceptance is dependent on whether or not the brand understands the consumer needs and

fulfils them consistently. Brand building is very important for retaining the customers.

When a brand is being launched, it is very important to understand the consumers and

figure out what will attract them to the brand.

If it is an established brand that is growing at a slow rate relative to the market,

understanding consumers will help the brand to rejuvenate itself, with a new variant, or a

new version.

Just as the consumer puts a face to an organization by using the brand as the recognition

device, it is the responsibility of the organization to recognize its consumers. The

organization should know who the regular users of the brand are? Who are the lapsed

users of the brand? Why the users are continuing to use the brand and why the lapsed

consumers have stopped using the brand?

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Understanding consumers has to start and end with a series of questions:

Who are the consumers for the brand?

Why should they buy it?

When will they buy it?

Where will they buy it from?

How often will they buy it?

How much will they pay for it?

Whom will they consult for advice?

What are their beliefs about the product category?

What are the other products that serve the same purpose?

What is the share of this product category in solving the problem?

What are their attitudes towards the brand?

Why are some consumers never using the brand?

Why are some consumers using the brand regularly?

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Economics

Economic theory talks about the producers of goods and consumers of goods. A

manufacturer makes consumption goods at a price and offers them to consumers at a

price. The consumers perceive value in the goods and are willing to pay a particular price

for the goods. Economic theory states that lower the price, higher the demand. But since

the manufacturer is trying to maximize his profits, the demand-supply situation arrives at

an equilibrium position. The economic theory of consumption gets more interesting as

the number of manufacturers increases and there is competition amongst them for the

consumer’s wallet. Economic theory treats consumers as purely rational beings.

P

R DEMAND

I

C

E

QUANTITY

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Buying behaviour

Consumer will buy whatever needed by him. But whatever he buys depends on some

factors. The consumer buying is based on a particular behaviour, which if predicted helps

the marketer to market his products thereby increasing the profits. This buying behaviour

can be explained in the following manner:

= * * * *

It is very important for marketers to understand consumer-buying behaviour because that

is the only possibility to offer greater satisfaction for the consumer. Although there

remains a certain amount of consumer dissatisfaction, the reason for this is that some

marketers still are not consumer oriented and do not regard customer satisfaction as a

primary objective.

Another problem is that the tools for analyzing consumer behaviour are not very precise,

so it is impossible for marketers to determine what is highly satisfying to buyers.

If a marketer can identify consumer buyer behaviour, he or she will be in a better position

to target products and services at them. Buyer behaviour is focused upon the needs of

individuals, groups and organizations.

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Ability Opportunity Motivation

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Buying decision

For some purchases, a consumer will spend very little time considering the purchase itself

before making the decision to buy e.g. buying a roll of selotape. However, in other cases,

consumers will ask the opinions of other people before making their purchase decision.

Hence, marketers are always interested in learning which people are likely to influence

the purchase decisions of a typical consumer in a target group. For example, if a member

of your family is considering attending college, then it is unlikely that they will decide

which college to attend without first discussing the matter with several people. The

opinions of parents, siblings, friends, teachers, professional acquaintances, etc. will all

have a certain degree of influence over the person’s final decision. Identifying the key

‘influencers’ is important. Companies may be able to target some forms of promotional

activity at the influencers, so that they in turn will speak favourably about the company’s

products/services to the actual purchaser or user.

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POTENTIAL INFLUENCES ON CONSUMER BUYING

BEHAVIOUR

Consumers are constantly being bombarded with marketing information and promotional

messages. These messages could be about new product launches, special product

promotions, and low-price offers. These appear everywhere from television

advertisements to web site banners. Consumers do not retain much of this marketing

information. However, when a promotional message is targeted to a specific group of

consumers, it can prove very effective indeed. This is because the marketing message has

been developed to appeal specifically to people in target group of consumers. Further

more the marketing message will have been transmitted using promotional methods that

these consumers have access to e.g. the Internet, T.V., etc.

Before developing a marketing access, a company should first determine the likely

influence on a potential consumer.

The behaviour of consumer is dependent on a number of factors, which may be economic

or non-economic factors and are dependent upon economic factors such as income, price,

psychology, sociology, culture, and climate. Therefore the study is dependent upon all

these sciences and consumer behaviour scientists study it through research and they

believe that behaviour can be influenced which has been proved by actual sales

promotion of a large number of products. However there is dispute whether customer

should be influenced or not and what methods should be applied to influence him. In

certain cases wrong statements are made that may influence the buying behaviour. For

instance, producers of certain face creams advertise that with usage of their creams,

complexion will become fair but actually it does not happen. There are ads for removing

baldness by using certain oils or creams, but this does not happen actually.

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The main factors that influence buying behaviour are as follows:

1. Economic factors:

Price

Income

Distribution of income

Competition with substitutes

Utility

Consumer preferences

2. Social factors:

Culture

Attitude of society

Social values

Life style

Personality

Size of family

Education

Health standards

3. Psychology

It decides the personality, taste, attitudes of individuals or groups, lifestyle, preferences

especially on occasions like marriage. The demonstration influence is also dependent

upon psychology of an individual.

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4. Anthropology and Geography

Climate, region, history all affect consumer behaviour. In hot countries like India, certain

products, which keep us cool like squashes, sarbats, are demanded, but they certainly

have no demand in cold regions. The dress is also influenced by climate along with other

factors. Culture is also influenced by climate.

5. Technology

In case of equipments, whether for consumer use or industrial use, is affected by

technological innovations and features. But it is not confined to durable goods only. Even

in case of perishable goods the shelf life etc are determined by technological

developments. Innovations and introduction of new products also depend upon

technological change.

6. Situational influences

Purchase task - who are you buying for?

Social surroundings - who are you shopping with?

Physical surroundings - where are you shopping?

Temporal factors - how much time do you have to shop?

Antecedent states -

What kind of mood are you in?

Have you just been paid?

Do you shop for status or self-gratification?

7. Others

This includes knowledge – technical or otherwise and information.

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Government decisions, laws, distribution policies have also big effect on consumer

behaviour. All these factors are studied by consumer behaviour scientists and then they

decide what production and marketing strategy should be adopted to develop a particular

product, change the existing product and what pricing and marketing mix should be used

to attract more customers towards the product or service to optimize sales and profits.

MNC’s and few big companies have ignored except the consumer behaviour study in

India. It is because till recently say upto the beginning of 90’s there was sellers market

and anything could be sold. Therefore hardly any attention was paid to the consumer. For

instance, Hindustan Motors continued to produce the same car for decades till Maruti

appeared on the arena. But with the competition emerging many cars, refrigerators, TV’s

and many items appeared on the scene. This resulted into the study of consumer

behaviour.

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Influence of attitudes on buying behaviour

Consumer characteristics like personality, lifestyles and attitudes, provide marketers with

a fuller understanding of consumer behaviour than do demographics alone. To understand

consumer attitudes, marketers need to know how consumers develop beliefs about and

preferences for brands based on the information they have processed. These beliefs and

preferences define consumers’ attitudes towards a brand.

Lifestyle is considered to be one of the most popular concepts in marketing as a way of

understanding consumer behaviour. Attitudes, interests and opinions of consumers

measure lifestyles.

Nature of consumer attitudes

Marketers need to know what are consumer’s likes and dislikes. In simple explanation,

these likes and dislikes are favourable or unfavourable attitudes. Attitudes can also be

defined as “learned predispositions to respond to an object or class of objects in a

consistently favourable or unfavourable way”. This means attitudes towards brands are

consumers learned tendencies to evaluate brands in a consistently favourable or

unfavourable way.

Attitudes help us understanding, why consumers do or do not buy a particular product

from a certain store. They are used for judging the effectiveness of marketing activities,

for evaluating marketing actions ever before they are implemented within the market

place.

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Three components of Attitudes:

Brand beliefs, evaluations and intentions to buy define the three components of attitudes

as shown below –

These are linked to the main three components of attitudes. Brand beliefs are the

cogniting (thinking) component of attitudes, brand evaluations, the affecting component

and intention to buy, the conative component. This linkage gives the high involvement

hierarchy of effects, brand beliefs influence evaluation, which influence intention to buy.

All these components are linked to behaviour.

There are important predicting and diagnostic differences among three components and

measures when prediction is of prime concern then behavioural intention measures are

most appropriate, since they offer the greatest predictive power, but are limited in their

diagnostic power. This is basically because of their inability to reveal why consumers

intend.

For example, consumer does not want to shop from a particular store for a number of

reasons. Intention measures do not reveal these reasons like convenient shopping hours.

Therefore, reasons for consumers’ attitudes and intention can be known by measuring

beliefs.

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Brand Beliefs

Evaluations Intentions

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Family influences

Family is an important influence on purchase decisions. Bonnet and Kassarjian say

“Attitudes towards personal hygiene, preferences for food items etc. are acquired from

parents.”

Peer group influences

Researchers say that peer groups are much more likely than advertising to influence

attitudes and purchasing behaviour.

Personality

Personality also affects consumer’s attitudes. Traits such as aggression, extroversion,

submissiveness or authoritarianism may influence attitudes toward brands and products.

Information and experience

According to learning theory, consumers past experiences influence their brand attitude

and condition their future behaviour. It is seen that brand loyalty will quickly end if brand

does not perform well. Therefore, information and experience also determines attitude.

Role of Direct or Indirect experience

Attitudes are formed as a result of direct contact with the object. Products that fail to

perform as expected can easily lead to negative attitudes. Sometimes, even in absence of

actual experience with an object one can form attitude. For example, many consumers

have never driven Mercedes – Benz or spent a vacation in Switzerland, but then also form

positive attitude for this. Similarly, the consumers can form an attitude by just seeing the

ad that means, they can form the product attitudes.

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Attitudes based on direct experience are held with more confidence. This means

consumers form stronger convictions about the product if had an actual direct experience

with it.

These processes that govern attitude formation are very important in order to develop

strategies and activities that will create, reinforce, or modify consumer attitudes.

Attitude -Toward the Ad models

In today’s scenario, where half of the business if fetched alone through advertising, the

need for understanding the impact of advertising on consumer attitudes toward particular

products or brands has increased. Advertisers have paid a considerable attention in

developing attitude – toward – the – ad – model.

The consumers form various judgements and feelings as and when they are exposed to an

ad. These judgements and feelings in turn affect the consumer’s attitude toward the ad

and beliefs about the brand acquired from exposure to the ad. Finally, consumer’s attitude

towards the ad and beliefs about the brand for his/her attitude the brand.

The model says that to assess consumer’s attitude towards an ad it is important to

distinguish between cognitive evaluations of the ad (i.e. whether it is informative or

humorous) and affective responses toward the ad (i.e. feelings like sense of fear, or smile,

or laughter, etc.) and also measures them separately.

According to this model, researcher suggests that the feelings conveyed by an ad not only

influence the attitude toward the ad but also affect the consumer’s evaluations of the

brand and also the attitude towards the brand. However, if the gap appears after exposure

of an ad (around one week) the positive effect of a liked ad an the attitude towards a

brand may change. This usually happens when the purchase order is postponed or

delayed by the consumer after an exposure of ad.

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Researchers say that both positive and negative feelings toward tend to exist side by side

where both affect attitude uniquely. So, in this wide variety of feelings (both positive and

negative) are to be assessed to study the influence of ad exposure.

It is also seen and tested through research that the consumer’s attitude toward the ad for a

novel product (new one) will have a stronger impact on brand attitude and purchase

intention than for a familiar product. Researchers also found that beliefs about a brand

that result from ad exposure play much stronger role in determining attitudes towards the

brand for a familiar product. So, in this research nature of attitude – object is used in

assessing the potential impact of advertising exposure.

It is observed that attitude towards a specific type of advertising (eg. comparative) may

have some impact on the attitude toward a specific ad (eg. liking or disliking it). But

attitudes toward ads in general seem to have little impact on the attitude toward a specific

ad.

Can attitudes be changed?

Formation of attitudes also explains how to change the attitudes but some other factors

are involved. The research shows that –

Exposure

Merely, exposing a subject to stimulus (product/service etc) may be enough for the

person to form positive attitudes towards the stimulus. Therefore in low involvement

products like detergents, the most heavily advertised brands would become most familiar

to the consumers, so most likely to be picked off the supermarket shelf.

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Effective communication

For changing the attitudes of consumers it is essential to treat the process of change as a

form of information processing that is being subjected to persuasive communications. So,

advertisers need to use persuasive communications in their advertisement.

Cognitive dissonance

According to this, all people strive to be consistent, if they hold two psychologically

inconsistent beliefs / ideas / values / attitudes at the same time or if their behaviour

contradicts these cognitions, they will find a way of reducing tension. At this moment,

marketer can come up with the benefits of the product, so the consumer can reduce

tension by buying that product and dissonance stage ends.

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Influence of personality on buying behaviour

Personality has many meanings. In consumer studies, personality is defined as consistent

responses to environmental stimuli or we can also say patterns of behaviour that are

consistent and enduring. An individual’s personality helps marketer to describe consumer

segments as it provides for orderly and coherantly related experiences and behaviour.

Personality characteristic may be a basis for product positioning. For example, one

segment of the market may die because they want to stick to the group norms and

therefore uses diet product. In contest another segment is on diet because of internal need.

Therefore, company’s positioning strategies will be different for both. For the first

segment, they will portray group approval as a result of product use, whereas positioning

for the second segment would portray individual achievement.

Marketers have used three personality theories to describe consumers:

1. Psychoanalytic theory or Freud’s theory.

2. Sociopsychological theory.

3. Trait theory.

Psychoanalytical theory

This theory was given by Sigmund Freud. This theory stresses the unconscious nature of

personality as a result of childhood conflicts. According to this theory, the human

personality system consists of the id; ego, superego and conflicts are derived from these

three components.

Researchers who apply this theory to marketing believe that id and superego operate to

create unconscious motives for purchasing certain products. Although consumers are

primarily unaware of their true reasons for buying what they buy. Focus of marketers is

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on developing means to incomes these unconscious motives and applying

psychoanalytical theory to marketing is known as motivational research.

Socio-psychological theory

According to this theory, individual and society are interlinked. This theory disagrees

with Freud’s contention. It is also called as Neo-Freudian theory. Researchers believe that

social relationships are fundamental to the formation and development of personality.

Karen Horney was a social theorist. She believed that personality is developed as an

individual learns to cope with basic anxieties that stems up from parent – child

relationships. She proposed that individuals could be classified into three personality

groups:

Complaint – Those individuals who moved toward others. They desire to be loved,

wanted and appreciated.

Aggressive – Those individuals who move against others. They desire to excel and win

admiration.

Detached – Those individuals who move away from others. They desire independence,

self-sufficiency and freedom from obligations.

Trait theory

This theory has been most widely used for measuring personality because it is a

quantitative approach. This theory states that an individual’s personality is composed of

definite attributes called trait. A trait can be defined as any distinguishable, relatively

enduring way in which one individual differs from another. For example, sociability

relaxed style, amount of internal control.

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Trait theorists construct personality inventories and ask respondents to respond to many

items by agreeing or disagreeing with certain statements or expressing likes or dislikes

for certain situations or types of people. These items are then are statistically analyzed

and reduced to a few personality dimensions.

Single trait personality tests, which measure just one trait, such as self-confidence, are

increasingly being developed for use in consumer behaviour studies. These personality

tests can be designed according to the need to measure traits such as consumer

innovativeness, consumer susceptibility to inter personal influence, consumer materialism

and consumer ethnocentrism.

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Personal values (self concept or self images)

Why do some people make their consumption decisions differently than others?

Personality can be one reason and another can be personal values. Personal values ask the

question “Is this product for me?” These are particularly important in the need-

recognition stage of consumer decision-making. Values are also used by consumers while

evaluating brands, as “Is this brand for me?”

Values are basically ‘ends’ people seek in their lives. Marketing often provides the

‘means’ to reach these ends. Values are defined as an enduring belief that a specific mode

of conduct or end-state of existence is personally or socially preferable to an opposite or

converse mode of conduct or End State of existence. Values are relatively stable but not

completely static beliefs about what a person should do. Values are concerned with the

goals and the ways of behaving to obtain goals.

Values serve as the invisible outline for the development of many of the other

components of the culture – the ideas, customs, traditions, myths, rituals, laws and

material artifacts. In order to recognize the differences among consumers in different

cultures and sub-cultures, marketers must be able to identify the values that define the

culture and their impact on consumer behaviour.

Self - Concept means the desire to attain self – consistency and the desire to enhance

one’s self-esteem. Attaining self-consistency means that individuals will act in

accordance with their concept of actual self. According to the marketer actual self means

consumers purchases are influenced by the image they have of themselves. They buy

products that they perceive as similar to their self-concept. Ideal self’s concept is related

to one’s self-esteem. According to the marketer, a person who is dissatisfied with one-

self will try and purchase products that could enhance their self-esteem. For example, a

woman who is confident, efficient, modern may buy a different type of perfume or shop

at different stores than a woman who would like to be more warm and attractive.

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It is not always that our self-image influences the products we choose but also the

products we choose frequently influence our self-image. The products purchased with

symbolic value say something about us and also what we feel about ourselves. Extended

self in simple term means we are what we wear, we are what we use. This means it

emphasizes the interaction between individuals and the symbols of environment. This

shows that consumers buy products for their symbolic value in enhancing their self-

concept.

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Life style concept

Lifestyle is another factor, which influences consumer behaviour.

Lifestyle can be defined as patterns, in which people live and spend time and money. It is

one of the most popular concepts in marketing for understanding consumer behaviour and

is more comprehensive and more useful than either personality or values. Marketers try to

relate the product to lifestyle, often through advertising, to the everyday experiences of

the target market.

Lifestyle can also be defined as a mode of living that is identified by how people spend

their time (activities), what they consider important in their environment (interests) and

what they think of themselves and the world around them (opinions). This means lifestyle

reflects a person’s activities, interests and opinions.

Consumer psychographics

Psychographics is commonly known as study of ‘lifestyle’ of consumers. It plays an

important part in consumer behaviour and helps in the promotion of those products and

services which are related to items of personal care, fashion, automobiles, telephonic

services, etc. in a country like India where lifestyle differs widely from region to region,

the study of consumer psychographic is of great significance to the marketer. Say for

instance, what is demanded or liked in Bengal may not be liked in Maharashtra.

Psychographic is the study of lifestyle of consumers based on their activities, interests

and opinions. The study of consumer psychographics helps to promote sales especially of

those products, which relates to personal comforts, personal care, fashion, etc.

In a country like India consumer psychographic is of great significance in developing

products and services, segmenting markets and promoting sales. Since the lifestyle

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depends on large number of factors the research also uses demographic and both are

interdependent and take the help of each other.

The psychographic research also takes the help of motivational research to find out why

people have particular lifestyle and with help of motivational research tries to change the

psychology of consumers and thus makes an effort to change their lifestyle which

become basis of action. The activities and interest of consumers help to develop products

for different segments and modify them according to the opinion of consumers surveyed.

The help of psychographic is also taken to change the opinion and conduct opinion

surveys on social, economic, political and cultural issues.

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Influence of group dynamics / peer groups / consumer reference groups

Group dynamics means how individual form groups, and how one person’s purchasing

influences the other individual’s actions.

A ‘group’ may be defined as two or more people who interact to accomplish either

individual or mutual goals.

This means that there can be an intimate group like two neighbours going out for

shopping, or a formal group like housing association members who are more concerned

about schools, parks, etc. in their vicinity.

Consumer Relevant Groups

The family

It is seen, that from childhood an individual’s needs and consumption decisions are

influenced by his/her family. Importance of family in various decisions is based on

frequency of contact that individual has with other family members.

Friendship Groups

The immediate group, which an individual forms after he/she moves out from the house,

is friendship group. Friendships are also sign of maturity and independence as they

represent a breaking away from the family and forming social ties with the outside world.

After family, friends most likely influence an individual’s purchase decisions. Friends

fulfill a wide range of needs like they provide companionship, security and opportunity to

discuss the matter, which they can’t with the family members.

Friend’s opinions and preferences are very important for influencing an individual’s

behaviour in determining the products or brands he/she actually selects.

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Formal Social Groups

Formal social groups, as the name says, lack intimate relationship and they serve

different function for an individual. Person joins this group to fulfill goals like making

new friends, pursuing special interest, etc. This type of group interests marketers because

often consume products together, can discuss products or brand or stores informally with

other members and sometimes can even copy the consumption behaviour of other

members whom they admire.

Consumer relevant group could be any person or any group that a consumer may ask for

to help him / her buying a particular product. Many a times, consumers are confused in

buying some products. These products could be of same utility, same price, different

brand, etc. At such times, consumer does not really know what to buy which brand to buy

and at what price to buy. So, here comes the need for consumer relevant groups.

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Influence of social and economic classes

Consumer behaviour is influenced by environment in which one lives. A number of

factors such as culture, social class, personal influences, family, religion and his situation

affect the decision process. Amongst them social class has great impact on consumer

behaviour.

Social class can be described as “divisions within society composed of individuals

sharing similar values, interest and behaviour.”

Two-category social class scheme divides the society in two classes based on profession

or level of income i.e.

Blue collar (workers) and white collar (office jobs) understand the buying behaviour of

consumers, occupation of people is to be studied as people of same profession are

expected to behave in a similar manner. All chartered accountants, all lawyers, all

architects behave similarly. However, they may not be having same outlook. For

example, the income of a lawyer varies between Rs.5000 per month to Rs.30 lakh per

month. A doctor may earn Rs.100 per day to Rs.10000 per day. These income differences

make big differences in their behaviour as a consumer.

Classification of social class

Occupation

To in one class marketer may not be able to get much advantage in marketing. Therefore

along with occupation there is further division based on income. Persons of some

occupation are therefore subdivided into various classes based on income.

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Education

The level of education also affects the behaviour as a consumer. An illiterate man has no

interest in newspapers; books and magazines but people with high education need these

products regularly. In the matter of other products, consumption also differs widely,

therefore sometimes it is desirable to classify as per level of education.

Income

The income of an individual or family plays an important role in his behaviour as a

consumer. The demand of products for rich, high income, middle income, low income

and poor differs widely and therefore it is most important criteria for social classification.

But people even in same bracket behave differently based on many other factors such as

place of their residence (urban, rural) or even state. Even people with same education,

occupation and income behave differently in different regions due to cultural factors,

climate, traditions, social customs, etc.

Religion

Religion is another factor, which influences the behaviour, as a consumer too

consumption of certain products is tobacco in some religion but permitted in other

irrespective of other factors. Jains, Brahmins, Agrawals generally will not eat meat but it

is openly consumed by many other classes. Sikhs will not consume tobacco and

cigarettes. Not only in the matter of eating religion also affects consumption in other

ways. People of different religion have different festivals when they are gee and happy

and buy new things for self, family and for gifting. These factors affect their behaviour as

a consumer and are very important for marketer.

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Life style of various social classes

The life style that is consumer behaviour of various social classes differs widely. A

person in lowest class is able to buy only the bare minimum requirements of life. In India

and some other countries there are people living below the poverty line. This class is not

able to meet even basic minimum and live on the many of state and/or social organization

for their shelter, education of children and meeting their day-to-day requirements. On the

other extreme there are rich people either because of historical factors like zamindars and

the like. But researchers have established that lifestyle of one social class in terms of

attitude towards life; activities, behaviour and beliefs tend to be similar. On this basis

researchers segregate them in different classes.

The decision process of individuals, families and classes are influenced by a number of

factors such as culture, social class, personal influence, region, religion, level of income

and profession, etc. In society there are divisions based on their values, interests and

behaviours and people of homogenous natures, values, culture, interest and religion often

are considered social class. But most of the marketers have measured social class on their

economic status, profession and income. They do not consider religion, region and other

social factors very important. But generally there is an agreement that “social classes are

very broad groupings of individuals which hold roughly similar status levels in the

society.”

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Influence of family in decision-making

Normally what one understands from family is husband, wife and their children living

with them in western civilization. But in India the family is much more extended and

includes all those persons who are related by blood, marriage or adoption and reside

together but often does not include those who are residing but have close blood relations.

The role and functions of the family depends upon education, lifestyle, family income,

etc. The basic functions of family are economic well being of members, provide

emotional support, establish suitable life style for the family and ensure proper

socialization of family members, which includes consumer socialization.

Regarding consumer decisions there are four types of parents namely authoritarian

parents, reflecting parents, democratic parents and permissive parents. The decision-

making depends to a great extent on item to be purchased, its usage and the price.

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BUYER BEHAVIOUR

Buyer behaviour model

How does a consumer make a purchase decision? What are the factors that influence this

process? How do these factors interact among themselves?

To explain in a very simple manner, say a boy feels thirsty. He wants a drink of water.

While grabbing a bottle of water, his eyes fall on the bottle of Pepsi. Will he pick the

Pepsi? What made his mother stock Pepsi at home? Was it meant for the kid or was it

meant for the guests arriving at 4 p.m.

A large amount of work has been done in the area of buyer behaviour. Models have been

developed to explain the various factors that influence purchase behaviour.

At the heart of any buyer behaviour model is the buying process:

Need recognition

Information research

Evaluation of alternatives

Selection of Brand and Outlet

Post-purchase Reactions

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The first stage refers to the need recognition. This is basically what the consumer wants.

What does the consumer needs? In the earlier example in can be explained as the need for

quenching thirst.

The second stage refers to the information search. This basically involves your network,

your sources. This will include what all drinks are available for quenching your thirst.

This will include water, soft drinks, sherbets, etc.

The third stage refers to evaluation of alternatives. This will include all the alternatives

you have and which of them is most promising in terms of your needs.

The fourth stage refers to selection of Brand and Outlet. This is basically out of the

alternatives which brand have you selected to go in for and out of the various outlets

available, from where you are planning to buy your selected product. This also includes

buying the product.

The fifth or the last stage is the Post-purchase Reactions. This basically includes your

reaction towards the product you purchased. This stage will show whether you are

satisfied with the product or not.

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How to predict buyer behaviour

This is a very important question for marketers and it has been the objective of most

personality research. Psychologists and other behavioural scientists have theorized that

personality characteristics should predict brand or store preference and other types of

buyer’s activity. We can classify them into two major categories:

1. Consumer innovativeness and their susceptibility to interpersonal influence.

2. Cognitive personality factors and interrelated consumption and possession traits.

Consumer innovativeness and their susceptibility to interpersonal influence

There are various personality traits that have helped in differentiating between consumer

innovator and non-innovators.

Consumer innovativeness means now receptive consumers are to new products / services

so that both consumers and marketers can be benefited from the right innovation. For

measuring the researchers have designed certain instruments because personality – trait

measure provides insights into the nature of consumer’s willingness to innovate.

Dogmatic persons are those who display rigidity towards the unfamiliar and toward

information that is contrary to their own established beliefs. Consumers who are low in

dogmatism are more likely to prefer innovative products to established alternatives. In

contrast, highly dogmatic consumers are more likely to choose established rather than

innovative product alternatives.

Variety – novelty seeking are of many types: exploratory purchase behaviour (brand

switchers for experiencing new brands), vicarious exploration (where the consumer

stores about the new information), and use innovativeness i.e. where the consumer uses

already adopted product on a new or novel way.

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Consumer researchers are also interested in knowing the traits of the consumers who are

likely to be responsive to the influence of others. According to this theory, there are three

types of interpersonal influence:

Information influence –the tendency to accept information from others as

evidence about reality.

Value – expressive influence – the consumers desire to enhance their standing

with others by being similar to them.

Utilitarian influence – the consumers confirms with the wishes of others in order

to obtain a reward or avoid punishment.

Cognitive Personality factors and interrelated consumption and possession

traits

It is very interesting for the researchers to know how cognitive personality factors

influence various aspects of consumer behaviour. There are two types of cognitive

personality traits.

Visualizer’s v/s verbalizers – Visualizers are those who prefer visual information

and products that stress the visual and verbalizers are those who prefer written or

verbal information and products.

Need for Cognition (NC) – Need for Cognition measures a persons craving for

or enjoyment of thinking. It is seen through research that consumers who are high

in NC are more likely to see that part of an ad first that is rich in product – related

information are unresponsive to the contractual or peripheral aspects of the ad,

such as the model or the situation in which the product is used.

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The failure of personality measures to predict consumer behaviour has given rise to new

approaches. First, is to study the personality of brands rather than of people. Second is to

develop broader behavioural concepts that are likely to be better targets for market

segmentation.

Consumers not only ascribe personality traits to products or services, they also tend to

associate personality factors with specific colours. For example, yellow is associated with

“novelty” and black means “sophistication”. Therefore, wishing to create a sophisticated

personal or a premium image use labeling or packaging that is primarily black. In some

cases, various or even brands are associated with a specific colour with personality - like

connotations. For instance, Coco-cola is associated with red, which connotes excitement.

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Decision-making

When one decides to buy a particular product it is an economic decision and expectations

play an important role. One expects best of performance, durability, and dependability

from a product or a service. Expectancy can be defined as “a monetary belief concerning

the likelihood that a particular act will be followed by a particular outcome.” Act is the

decision to buy a particular service or product and outcome is satisfaction or

dissatisfaction from use/consumption of purchased products or service. Finally there are a

number of alternatives for each product or service. The consumer has to decide which

one should be bought. In case of consumer non-durables choice is immense. Be it

shampoo, soap, wheat flour, cosmetics, garments or consumer durables like car,

refrigerator, washing machine, T.V., computer or something else or services like

restaurant, finance, doctor or others having long life, degree of involvement is high. In

case of short life FMCG the involvement is low and the degree of involvement is medium

in case of items which have medium life and have to be replaced after some time.

The degree of involvement depends upon the level of knowledge, information,

psychology, culture and social system for the same product in different settings. The

involvements are ego involvement, commitment, communication, involvement, purchase

importance and extent of information research.

The decision making process is a process where by a buyer decides to purchase a

particular product out of various available alternatives. The buyer expects best of

performance, durability and dependability, which he evaluates from a product. The

process of selection and final selection is known as buying decision making.

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Consumer buyer behaviour segments products into four quadrants:

High involvement-think

This actually makes the consumer to think before buying. For buying these

products the consumer has to do a bit of thinking as the products are expensive

and can be bought once and not again and again. This will involve the economic

side. Examples could be cars, T.V., camera, etc.

High involvement-feel

For buying products included in this category, the consumer has to actually feel

the importance or the need of the product. This will involve the psychological

side. Examples could be baby food, cooking oil, special skin creams, etc.

Low involvement-think

For buying the products included in this category, a consumer does not have to

think much. These products are needed in daily life. These products are

responsive i.e. you don’t have an option, if you have to buy you will. Examples

would be detergents, headache pills, engine oil, etc.

Low involvement-feel

These products are basically there to satisfy the needs and wants of a consumer.

For buying these products, a consumer does not have to think much. Examples

included in this category would be ice creams, soft drinks, etc.

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High versus Low Involvement Problem-Solving

High Involvement purchase occasions, require extensive problem-solving.

Items can be expensive.

Have serious personal consequences.

Reflect one’s social image.

These occasions typically involve:

Extensive information search, identification and evaluation of alternatives.

Consideration of several products attributes and brands.

The formation of attitudes.

Word-of-mouth. i.e. communication.

E.g. the purchase of an automobile or stereo system.

Low Involvement purchase occasions, require routine problem solving, typically involve

little information search or consideration of various brands, other than price. Items may

be purchased frequently or out of habit, they usually don’t involve any personal

consequences. They tend to be privately consumed. E.g. the purchase of soap or

toothpaste.

Decision making process

A consumer can pass through a number of stages when making a purchase decision. In

some buying situations, the process moves very quickly, such as in the repeat purchasing

of a family brand of convenience product. However, in other situations each stage of the

consumer buying process can be clearly observed.

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The stages that a consumer typically passes through are as follows:

Awareness

Interest in product/service

Evaluation

Trial when allowed

Rejection/purchase

Product evaluation

Final adoption or rejection

No future purchase

Repeat purchase in case of FMCG

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The decision-making process starts by awareness. This is whether you are aware about

the product or not. Take the case of a shampoo. For instance there are hundreds of

shampoos available in the Indian market but unless the consumer is aware about its

performance, the brand is not considered. Unless he knows about the availability of the

product (in this case take a shampoo) of a particular brand, it will not enter into consumer

decision-making. Therefore, it is the function of the marketer to make the prospective

customers to know about a product i.e. consumer must be informed about its availability.

The next stage is your interest in the product. This can be there or can be developed only

if you very well know the utility of the product i.e. for what all purposes the product can

be used. Say if someone has to decide to buy a car, he must not restrict his choice to a

few well-known brands, he must show interest in the new brands also. This is equally

applicable to any other product also. If there are 10/15 shampoo brands in the market all

of them should interest the customer, so that he may evaluate them.

Evaluation in certain items can be done by the trial of the product. For instance, these

days most car producers allow trial run and one can evaluate the automobile by trial run.

In case of certain consumer items like shampoos, washing powders, etc. small packets are

available. The consumer before making the purchase decision can buy small packs for

trial.

After trial or evaluation of its attributes the consumer may either purchase or reject the

product or the service. If the consumer decides to purchase the product, he gets first hand

experience and the product can be evaluated once again. For example, if a consumer

purchases a shampoo and likes it, he will have repeat purchase. In case of durables like

refrigerator, T.V., etc. if one finds the product as per his expectations; he will not only

adopt it but will recommend it to others as well. If after the use the product is not found

satisfactory it will not only be rejected but the experience will be narrated to others also.

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These stages can be clearly demonstrated in the following example:

The consumer recognizes that they wish to make a purchase, such as purchasing a

family vacation.

The consumer starts to search for information about potential holiday

destinations, availability of hotel accommodations, flight schedules, holiday

activity for the family, etc. This information may involve talking to friends and

family, obtaining holiday brochures, surfing the Internet, etc.

The consumer evaluates the alternative vacation possibilities.

The consumer makes a final decision about which vacation alternative to

purchase.

The consumer purchases the vacation alternative. This may be in the form of

single purchase through a travel agent or may consist of several purchases such as

hotel accommodation, airline tickets, etc.

The consumer experiences the vacation. If the consumer and his/her family are

satisfied with the vacation, they may decide to take this vacation again or

recommend it to other family members or friends. If the vacation experience has

been an unhappy one, then the negative aspects of the vacation may be related to

family and friends, discouraging them from making the same purchases.

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Purchase decisions for FMCG

Alternative 1 Alternative 2

To purchase and consume one’s To purchase new brand which

usual tried brand. is well known.

To depend on same service provider To try another Service

i.e. Hotel, Doctor, Hospital, Courier provider who has reputation.

service, Insurance Company

To purchase a new brand To purchase usual tried brand.

To purchase on sale brand Not to purchase on sale brand.

To buy on discount sales Not to buy on discount sales.

To buy national brand To buy store brand.

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Purchase decisions for Consumer Durables

Alternative 1 Alternative 2

Buy national brand with highest Buy cheap brand

market share

Buy new innovative product Buy only well known brand

Buy on the basis of Company’s Buy new company’s items

reputation

Buy international brands Buy domestic known brands

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PURCHASES

Methods of purchases

The method of purchase depends upon the product to be purchased and purchase

intentions. The purchases can be fully planned, partially planned or unplanned.

Fully planned purchases

Most of the purchases of consumer durables like T.V., cars, refrigerators, cooking range

are fully planned. Similarly purchases of durables like house property, insurance policy

are fully planned. They are normally purchased after proper evaluation of the product. In

these cases consumer decides in advance what product model and what brand he will

buy. The author survey in Delhi suggests that 90 percent of purchases of durables and

consumer durables are fully planned.

The next category of purchases is daily consumption items for which a list of products to

be purchased is decided before visiting a shop or a store i.e. shopping list is decided

before stepping out of the house. But very often the brand is decided at the shop after

looking around; only in few items the brand is also predetermined but the decision

sometimes is changed after visiting the shop/store on the recommendation of the

retailer/shop keeper or by seeing the product.

Partially planned purchases

In this category those items fall which consumer intents to buy but does not make a

shopping list before visiting the store/shop. In this group often the decision on the

quantity to be purchased is decided by seeing the prices, the display of packaging and the

mood of the consumer at the time of purchase. For instance, a consumer may decide

before visit to the shop that what items he wants to purchase like soap, tea, wheat flour,

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vegetable oil but the quantity and the brand is decided at the store. If consumer finds that

there are discounts or sales promotion schemes, he may decide to buy larger quantities

than otherwise intended.

Unplanned purchases

Those purchases, which are made spontaneously without prior planning, are called

unplanned purchases. In such items advertisements, display, discounts, sales promotion

schemes, free coupons, lottery gifts, etc. induce a consumer to purchase them when

otherwise he has no intention to buy. Home purchases from sales persons are largely of

this nature as well as certain purchases at the store. But study done in Delhi suggest that

only 10 percent of purchases fall in this group.

Unplanned purchases occur “when a consumer experiences a sudden, often powerful and

persistent urge to buy something immediately. The impulse to buy is hedonically

complex and may stimulate emotional conflict. Also, impulse buying is prone to occur

with diminished regard to consequences”. For example, a person from South India visits

Delhi in December/January unaware of weather. When after arrival in Delhi he feels

cold, he is forced to buy a woollen jacket. A person from Delhi when visits Kerela in

July/August without knowing that it rains heavily there all the time, he is forced to buy an

umbrella or a raincoat. This is also situational influence on purchase decision.

When one visits a store and sees that certain products are at 80 percent discount or ‘one is

free with one’ or there is a scope of winning a lottery the consumer puts aside ‘shopping

list’ and purchases such a product, thinking that it is bargain purchase and its advantage

must be taken. This is spontaneous purchase.

Sometimes one is influenced by sudden excitement and stimulation to purchase a product

suddenly. When one sees a store and finds a product, which he was urging to buy for,

long immediately buys it, thinking that it may not be available when actually he will need

it.

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When one visits a fair, exhibition or mela almost 100 percent of purchases are unplanned.

People in India visit many fairs and melas where they go with the intention to buy certain

goods but neither have they decided in advance their purchase basket nor they have

shopping list. If they find something attractive to purchase either price wise, quality wise

or product wise or they see some new product purchases are made spontaneously without

any prior plan.

The unplanned purchases can be under following circumstances:

Spontaneous.

Power compulsion and intensity to acquire a product.

Excitement and stimulation.

Situational influence.

Purchase in fairs, exhibitions.

The survey of buyers in Delhi suggests that only 60-70 percent of purchases are planned,

23-30 percent of purchases are partially planned and 10-20 percent of purchases are

unplanned.

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Process of purchases

Purchases can be made in the following ways:

Home shopping salesman, hawkers.

Direct mail.

E-commerce/telemarketing.

Visiting a shop or store or showroom.

Home shopping

There was a time when very high percentages of purchases were made through home

shopping. Now in USA and other developed countries the role of home shopping has

very much reduced and now does not account for more than 10 percent of total purchases.

However, in India such purchases are much higher of the total, especially in rural areas

where shops are few and on them all the products are not available. Therefore when a

hawker or a salesperson visits a house, he induces the consumer to purchase from him.

Many persons specially ladies purchase from them to save time and inconvenience to

visit the market. In order to help consumers to buy sitting at home now many suppliers of

food, drinks, ice-creams, pizza are delivered at home. Such purchases are increasing day

by day and the share of home purchases in the recent years has gone up from 10 percent

in 1999 to 15 percent in 2001 in Delhi as per the survey. But home purchases are of two

types of goods. One those which are branded and well known and other in which brand

does not matter or where it is felt that it is a bargain purchase when sales person of well

known companies make door to door selling for sales promotion. In rural areas home

purchases are also made of products, which are not available on the shop in villages.

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Direct mailing

In Europe, USA and Japan a significant purchases are made through direct mail. In these

system manufacturers, distributors or marketer mails the catalogue to the consumers

giving certain basic details about the product, its price and mode of payment preferred by

the seller. Some customers in USA get lots of such mails everyday. Some of the

consumers study them and place orders but some others discard such mail literature. In

India also some companies are mailing literature to the consumers directly or through

agencies. But most of the consumers do not have faith in such sales and just ignore them.

They are afraid that they may not be cheated with regard to the product or it may be

inferior or may not be dispatched at all. The theory of such marketing is that it eliminates

intermediaries and so consumers get products at cheaper price. But consumers buy them

through mail only if they are well known brands; in other cases one prefers to see the

product. Therefore this system of purchase is not popular in India in spite of renewed

efforts by some companies but it is quite popular in USA.

E-Commerce, Telemarketing

E-commerce is becoming increasingly popular round the globe. Telemarketing is

gradually becoming popular. In this type of sales the marketer gets telephone numbers of

likely consumers and tries to persuade them to buy the particular property, service or

product. Its basic limitation is that most of the people in India do not have telephones and

those who have telephones do not want to talk during office hours; still insurance

companies and banks are trying in a big way.

Retail shop purchases

Though exact figures are not available about purchases at retail shops or departmental

stores, it is estimated that in USA 90 percent of purchases are in stores. In India also the

purchases from shops may be almost same percentage or little lower because in India

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home purchases are more. The retail shops may be traditional shops in the colony or in

the market or there can be departmental stores. In Europe, USA, Japan, Australia, etc in

last few decades the importance of departmental stores in total sales is quite substantial.

In India also in metropolitan cities and in big towns gradually the role of such stores is

increasing specially after globalization, which are visited by upper income group people

or youngsters.

The motivation for shopping in markets and superstores is not just purchases. Many

ladies visit the market for removal of boredom, passing time, recreation and sometimes

even for window shopping for increasing the knowledge about various products and

utilize it later on for actual purchases. It is said that “shopping has almost become a way

of life itself for some”. This type of habit is declining in USA and Europe because more

and more ladies take to a job. But in India ladies of big families who have little work at

home, have a car at their disposal and shop only for pleasure. Along with shopping they

go to some eating-house specially ‘chat’ shop. There are many reasons for frequent

shopping such as loneliness, dispelling boredom or hunt shopping to buy something

which may be available cheap I.e. bargain purchases. But there is also a group of

consumers who feel boredom to go to a shop and prefer home shopping; such consumers

are generally non-responsive to marketing efforts and visit the market only when they are

forced to do so but their percentage in population is around 10 percent of the total.

Discount stores

There are certain stores who sell throughout the year at a discount. These stores make

bulk purchases generally from the manufacturers and thus get bulk discount. They keep

only those items, which sell fast and thus streamline inventory management and save on

inventory cost.

These stores have low overhead cost, they do not have innovative shop displays and save

on space; they work in small space and save on rent. These stores generally do not have

air condition shop, nor piped music or fancy light.

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These discount stores offer goods below the price charged by other shops and often

discount is 10-15 percent. In Delhi Economy store works on this principle. These stores

appeal most to the middle class who are price conscious. In Delhi Super Bazaar, a

cooperative store works on this principle. According to recent studies such discount

stores are increasingly becoming popular and so more of them are coming up.

Direct Response Advertisement

The direct is stimulated most by television advertisement for specific products which

generally are not made available in the market. They are innovative products. Besides

television advertisements for such purchases, ads are also given in magazines and

newspapers. This type of buying requires a confidence in the seller and therefore to create

confidence among many such stores advertise that if the product is not found satisfactory,

it can be returned after a week or fortnight of use but cost of return has to be borne by the

buyer. This type of advertisement ahs helped in promoting sales, and ‘sky-shop’ is one of

the biggest sellers through television advertisement in India. In USA, Home Shopping

Network Inc. was the pioneer in selling through television advertisement.

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Results of purchases

Whatever process and method of purchase is adopted the ultimate objective of a

consumer is to get a satisfaction from the use or consumption of a product, which may be

one or the other as shown below:

Outcome of purchase

Based on experience and results the consumer reconfirms his decision for the failure (if

result matches expectations or are better than expectations) but modifies his decision if he

is not satisfied. The post purchase evaluation by the consumers is important not only for

the consumers for future decisions but they are also equally important and valuable for

the marketer to maintain and expand its sales. There are four purchase results for the

consumer. They are:

First, he learns whether his perception about a product or service was right decision.

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Results matchExpectation

Results are better than

Expectation

Results below Expectation

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Secondly, consumer acquires knowledge and information about the product or service,

which will help in future decision making.

Third, he learns whether he is satisfied.

Fourth, about disposition of a product after it has been used.

The post purchase results are also very important for the marketer to help him to maintain

and expand his sales value. If a consumer is satisfied with a product he may normally buy

same brand in future but in order to keep his products ahead of competitors, he is

required to know the reactions of consumers. He has to find out why consumers are

satisfied. And if the consumers are satisfied more than their expectations the marketer has

to maintain his lead. And if the results are below expectations of consumers, he will not

buy the product second time.

In all three circumstances the marketer has to make strategy for future after knowing

consumers satisfaction and dissatisfaction level. There comes the need of market

research.

Consumer response to Dissatisfaction

When consumers are dissatisfied with a product or service, they may respond in one or

more of the following ways:

Take no action.

Discontinue purchasing the product or using a service.

Complain to company.

Complain to consumer court or other bodies’ setup for the purpose by the industry

/ trade associations or consumer associations.

Engage in negative word of mouth communication to other consumers.

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CASE STUDY

Research Methodology

1. Problem identification

Marico’s Objectives: “To determine the market potential and the ways through

which sales of blister pack can be increased”.

Market Research Problem: “Awareness about parachute blister pack among the

consumers and identification of needs for blister pack purchase.”

Objectives

Exploring the market of blister pack.

Which types of consumers are purchasing blister packs?

What are the key factors in buying decision of blister pack?

Whether there is market potential or not for the blister pack?

What are the other substitutes consumers are using for blister pack?

Role of retailers in promotion of blister pack.

2. Type of research

Exploratory Research

The research work was Exploratory in nature and was meant to provide the basic

information required by research objectives. It is a preliminary study and findings can be

further consolidated after detailed conclusive study has been carried out. The major

methods employed in research are survey and observation. The survey method was

followed. This method of obtaining information is based on the questioning of the

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respondents. Typically, the questioning is structured, meaning some standardization is

imposed on the data collection process.

Advantages

The questionnaire is simple to administer.

Data obtained are reliable because the responses are limited to the alternatives

stated.

Coding analysis and interpretation of data are relatively simple.

Disadvantages

Respondents may be unwilling or unable to provide the desired information.

Respondent may not respond if the desired information is sensitive or personal.

Wording questions properly is not easy.

3. Sampling design process

Target population: The target population about which the inferences are to be

made is consumers of parachute blister pack

Population frame: Retailers.

Sampling frame: Mumbai region

Sampling technique: Judgmental sampling

Sampling size: From whole of Mumbai, 300 consumers and 50 retailers are

covered for which we have nearly contacted 1000 people.

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4. Tools used for research

Tools used for this research are questionnaire and in-depth interview. A brief

questionnaire focused to collect the relevant information was prepared. The respondents

were asked to fill up this questionnaire followed by in-depth interview. The data gathered

through these questionnaires was analyzed using different statistical tools to judge the

buyer behavior and major influencing factors for the purchase of blister pack. For back

up information and more in-depth look data has been collected from retailers regarding

sale and promotional tools for blister pack.

5. Time for completion

The time taken to complete the market survey was 4 weeks. 3 weeks for the consumers

and 1 week for retailers.

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Profile of hair oil industry

Unlike shampoos or hair colors, which are products relatively new to the Indian psyche,

the usage of hair oil is a deeply ingrained habit with Indian consumers. Therefore, this is

one product where the major players do not have to fight either monetary or

psychological barriers to usage. But this does not necessarily mean that being a branded

player in the Rs1, 300 crore hair oils market is easy.

Hair oiling is an age-old traditional habit of Indians. Hair oil is perceived to provide

benefits of nourishment, strengthening hair, faster and better growth and reducing the

problem of falling hair. Some consumers perceive that massaging hair oil has a cooling

impact on the head.

It also has a cosmetic appeal in terms of hair styling, as hair remain straight, soft and

shining after applying oil.

Coconut oil is very popular in the south. In north people use coconut oil as well as some

other oil such as rapeseed, sesame, etc.

Hair oil is primarily used as a pre-wash nourisher. Some people also use hair oil after

bath as a conditioner.

Segmentation

It is very important to segment the target market before selling or marketing your

product. This will make the job of the marketer easier and simpler, as he will be aware

and very clear as to what he has to actually do and decide the strategies thereby.

The major positioning platforms for hair oil are purity, hair nourishing and more recently,

non-greasy look. Coconut oil and perfumed oil accounts for about 65% and 35% of

market in volume terms.

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Consumer Awareness and Penetration

Hair oil is an everyday habit with about 50% of the population.

Hair oiling, a peculiarly Indian habit, is extremely popular in urban as well as rural India.

Penetration of hair oil is 87% at all India level and is almost evenly distributed in urban

and rural areas. While penetration in urban areas is marginally higher at 90.2%, the same

closely follows at 85.8% in rural areas. In urban areas, penetration is higher in small

towns (0.1-0.5m population) at 91.8% compared to medium and large town where it is

89.5-89.9%. Awareness about hair oil is over 90% in rural as well as urban areas.

Market size

The coconut hair oil market is currently estimated at Rs14bn, 60% of which is sold in

branded form. The branded hair oil market is estimated at 70000 ton. The market has

been growing at around 3-4% in volume terms and 6-7% pa in value terms. Market

growth, although significantly lower than the shampoo market, is impressive, as

penetration is already high. In fact, this growth rate has been maintained with strong

marketing aggression by leading players in the segment.

Growth

There are several consumers who use coconut oil in cooking (especially in the south), and

conversely other edible oil classified as cooking medium (for e.g. castor oil) is used for

hair care also. Therefore, the actual size of the oil market should be larger than what is

estimated on the basis of branded hair oils.

During the last few years, several product variants, such as non-sticky hair oil, value

added hair oil, etc have become very popular. These variants are growing at a much faster

pace, compared to the pure coconut hair oil segment. The market for these products is

estimated at Rs4.25bn and has been growing at 20-25% pa.

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Organization Profile

History of Marico

The history of Marico can be traced all the way back to 1857, when a young man Kanji

Moorarji, set up a modest trade in spices which, in time, grew to include other export

worthy commodities. This firm's success gave birth to The Bombay Oil Industries in

1948, set up to convert the traditional buying strengths of the firm in the commodities

areas, to value added manufactured products.

At first Bombay Oil was involved in copra trading besides crushing and refining of

vegetable oils. Gradually, the company established itself firmly as a marketer of branded

vegetable oils and later expanded into fatty acids, specialty chemicals and spice extracts.

In 1983, Bombay Oil divisionalised its operations to create three Businesses: a Consumer

Products Division; a Fatty acids and Chemicals Division and an Oleoresins Division, also

called the Spice Extracts Division.

In 1990, Bombay Oil again restructured itself to form several companies, each focusing

on a specialized area of business. In April 1990, the Consumer Products Division became

Marico.

The history of Marico can be traced all the way back to 1857, when a young man Kanji

Moorarji, set up a modest trade in spices which, in time, grew to include other export

worthy commodities. This firm's success gave birth to The Bombay Oil Industries in

1948, set up to convert the traditional buying strengths of the firm in the commodities

areas, to value added manufactured products

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About Marico

A leading Indian group operating in:

Consumer Products.

Aesthetic Services.

Global Ayurvedics business.

Financial Year 2002-03 Turnover ~ Rs.7.75 billion (USD 163 Million) 12 brands and

extensions with leadership in respective categories are as follows:

Parachute, Saffola, Sweekar, Hair & Care, Shanti, Mediker, Mealmaker, Sil, Revive,

Kaya and Sundari.

The Overseas Sales franchise of Marico's branded FMCG products is one of the largest

among the Indian companies.

Marico's own manufacturing facilities are located at Goa, Kanjikode, Jalgaon, Saswad,

Pondicherry and Daman Supported by subcontracting units.

In Bangladesh, Marico operates through Marico Bangladesh Limited, a wholly owned

subsidiary manufacturing facility at Mouchak, near Gazipur.

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International Business Group (IBG)

Marico’s International Business is one of the top three among the Indian Consumer

Goods companies. Marico reaches, more than fifteen countries in the Middle East and the

Asian sub-continent. Marico’s product offerings in the international markets include

Parachute Coconut Oil, Perfumed Oils, Hair Creams and edible oils.

IBG’s product offering

The portfolio comprises:

Parachute Coconut Oil

Parachute Gold - a hair oil

Parachute Hair Cream

Parachute Beliphool – a perfumed hair oil

Parachute Rose – a perfumed hair oil

Parachute Shanti Him Kesh Tel – a cooling hair oil

Saffola and Sweekar Refined edible oils

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Geographical Reach

Our products reach several countries in the Middle East and the Asian sub-continent:

UAE, Saudi, Oman, Qatar, Bahrain, Kuwait, Yemen, Bangladesh, Pakistan, Nepal,

Bhutan, and Sri Lanka, US, Canada, Singapore, Malaysia, Australia and Afghanistan.

About Parachute

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Parachute is premium edible grade oil, a market leader in its category. Synonymous with

pure coconut oil in the market, Parachute is positioned on the platform of Vital

Nourishment today. From a loosely available commodity to a path-breaking brand,

Parachute pioneered the switch from coconut oil sold in tins to plastic. Parachute is also

available in pouch packs, to service the rural sectors, increasing penetration. The

positioning of Parachute has evolved over time. From the initial stand of purity to that of

clarity to the `Coconut Dream' theme, with a new look and logo, to today's positioning of

vital nourishment. The Coconut Dream logo is seen as an opportunity to transform

Parachute from being the largest coconut oil brand into a mega brand with several value

added products under the 'Coconut Goodness' umbrella.

Innovations in Parachute

To support its continuing endeavour to provide high quality Parachute Coconut Oil to its

consumers, Marico has been constantly innovating for this brand. Some of the examples

of innovation for Parachute are:

Flip Top Cap for Parachute bottles to enhance the safety and protect the purity of

Parachute.

Easy Jar of Parachute to facilitate usage especially during winters.

Parachute Mini - a bottle shaped small pack being sold at an MRP of Re. 1

Parachute blister pack.

These innovations have not only ensured protection of existing franchise; they have

propelled further penetration, enabling conversion of loose oil consumers to packaged

Parachute Coconut Oil. Innovation will continue to be at forefront in Marico's efforts to

strengthen this brand.

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Our consumers

Parachute's primary target has been women of all ages. The brand has a huge loyalty, not

only in the urban sections of India but also the rural. Parachute has several brand

extensions, each filling existing need gaps, acquired from consumer insight.

Quality

Quality is all about satisfying consumers. It is not about profits or efficiencies but

keeping the consumer happy, so that he/she stays loyal. One of the basic requirements to

do this is to give the consumer a consistent product.

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Data Collection and Analysis

Frequency of hair oil application

41.3% respondents said that they apply hair oil daily. 16.7% says 2-3 times a week and

15.3% says they apply hair oil once a week. The least number of people are in category

of less than once a month (3.3%).

Conclusion

Hair oil is an every day habit with most of the people. Therefore a large chunk of market

consists of bulk purchase like tin or bottle. This signifies that market for blister pack is

small and niche.

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Purchase of blister pack

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First came to know about blister pack

Maximum number of people came to know about Blister pack at the shop outlet. Most of

the respondents in our research replied that they have never seen any advertisement of

parachute Blister pack on television or in any magazine. Even the people those who have

responded that they first came to know about blister pack in magazine or radio or

television, where not sure that is it really the medium which they are replying is correct

or any other.

Conclusion

This clearly shows that the awareness of blister pack is very low and the awareness,

which is there, is by looking at the packs in shop outlets.

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Pack the customer is using other than the blister pack

55% i.e. more than half of the people are using bottle other than blister pack, followed by

tin. A few number of people said they are using blister pack along with bottle or tin pack.

Least number of people said they are using sachet. Most of those using sachet earlier,

said they are now using blister pack due to less usage and as wastage of oil is less in

blister pack as compare to sachet. People using bottle or tin said that they are using bottle

for regular purpose while blister pack for traveling or once in a while purpose.

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How often customer buy blister pack

Maximum number of people are purchasing blister pack for traveling or as and when

need arises like when the regular pack is over or for trial purpose etc. Number of people

using blister pack everyday is least.

In this graph X-axis shows the frequency of hair oil application, and the Y-axis shows

purchase of blister pack.

The graph clearly shows that in the category of people applying hair oil regularly, the

purchase of blister pack is not regular and mainly on occasions of traveling purpose or as

and when needed. This strengthens our conclusion from the earlier chart that regular oil

users are not opting for blister pack for their general usage.

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Other than this we can se from the graph that people those who are purchasing blister

pack regularly are in the habit of using oil rarely or once in a month time.

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Application of Blister Pack

how many times you can apply blister pack * sex Crosstabulation

Count

40 34 74145 29 17432 4 36

7 3 10

5 1 6229 71 300

oncetwicethriceThere is not quantityeven for one timeOthers ____________

how manytimes youcan applyblister pack

Total

male femalesex

Total

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The table and accompanied graph shows that most mail says that quantity of hair oil

blister pack is sufficient to use twice, while the most number of female says they can

apply hair oil out of blister pack only once. In the category of thrice use the share of

female is almost nil.

Conclusion

This finding shows the usage habits of male and female. Females are in habit of using

more oil as compare to man due to long hair and looks consciousness. Therefore the

target market of blister pack consists of less woman and more males.

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As depicted by the table and chart given below, maximum numbers of respondents are

using blister pack either for traveling for some other purpose but not for regular use.

Nearly 22% respondents said that they might purchase blister pack when there regular

pack is over but not for the regular use.

on which occasions you buy blister pack

103 34.3 34.3 34.3

65 21.7 21.7 56.0

127 42.3 42.3 98.35 1.7 1.7 100.0

300 100.0 100.0

When travellingWhen my regular packis overAs and when 1 need itOthers ____________Total

ValidFrequency Percent Valid Percent

CumulativePercent

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How to open blister pack

Maximum numbers of respondents are opening blister pack by bending or cutting it.

Although most of the people said that they didn’t faced any problem in opening the pack,

they were of idea that opening the pack can be made still easier and better

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SWOT Analysis of Blister Pack

In any business, it is imperative that the business be its own worst critic. A SWOT

analysis forces an objective analysis of a company's position viz a viz its competitors and

the marketplace. Simultaneously, an effective SWOT analysis will help determine in

which areas a company is succeeding, allowing it to allocate resources in such a way as

to maintain any dominant positions it may have.

Strengths

Wide distributions network reaching nearly 1.3 million outlets.

Near total dominance of the branded coconut hair oil market, with its flagship

brand.

Top of mind brand recall in customers.

Immense brand loyalty enjoyed by the brand.

Weaknesses

Almost negligible promotion and low consumer awareness.

Raw material prices of all key products are susceptible to wide fluctuations and

can lead to earnings variability.

This pack is totally a niche product in nature and therefore cannot enjoy bulk

sales.

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Opportunities

The hair-oil market is likely to grow at 5-6% pa. The value added hair-oil

segment will grow at a much faster pace of 15-20% pa. Volume growth will be

driven by a demand shift from unorganized sector (80% of market) to branded

oils.

Product is mainly catering to the need of traveling segment, which is growing

fast.

The value-added hair oils market is growing at a healthy 30 per cent per annum in

volumes. Marico can encourage consumers to shift to the value-added market.

The growing consumer population offers a huge market for consumer products.

At an average GDP growth of 5.5% until FY2007, the present consumer

population of 80 m households can grow by 60% to around 130 m households.

Threats

Nearly 120 look alike local brands eating share of parachute.

Low customer loyalty in case of small sachets and blister packs.

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Findings

Hair oil is a peculiar habit in India. More than 40% of people are in habit of

applying hair oil daily.

Maximum no. of people are using blister packs for traveling purpose and not for

regular usage.

Consumer awareness of blister pack is very low. Most of the people came to

know about it at shop outlet.

In our research we found that usage of blister pack or small size sachets is among

lower class that mainly comprises of labors and low-income group.

Students residing in hostels or out of home are using blister pack for their regular

use.

There is a direct relation we found in frequency of hair oil application and

purchase of blister pack, i.e. people using less hair oil comprises more of the

customers of blister pack.

Regarding packaging, customer’s response is very nice and most of the people

said that packaging is excellent although we can still make some improvements.

Blister pack is mainly used for traveling purpose for which it is facing

competition with hair gel and creams.

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Conclusion

Marketing research is the systematic procedure of collection, recording and analysis of

data about problems related to the marketing of goods and services. It is both a science

and an art. The essential purpose of marketing research is to provide information, which

will facilitate the identification of an opportunity or problem, and to assist managers in

arriving at the best possible decisions when such situation comes.

This project report on parachute blister pack has enriched my knowledge of marketing

research and Marico Industries limited.

Finally once again I extend my sincere thanks to all those who helped me in completing

this research work. I hope our recommendations will be worthwhile for all those who are

interested in it.

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Recommendations

Recommendations as based on the case are as per the four P’s of marketing, i.e:

Product

Price

Place

Promotion

Product:

As far as product is concerned there is not any necessity of changing the basic features of

product. Parachute hair oil enjoys a great customer satisfaction and brand loyalty. Our

suggestion is in relation to the packaging. Most of the customer feels that there should be

a cap at the top so that after using the oil from blister pack they can recap it, as it will

prevent oil wastage.

Price:

As far as price is concerned we can’t suggest anything better as it is already competitive.

Place:

Although distribution channel of Marico is among the best in corporate India, during our

retail analysis we found that many of the retailers are not storing the blister pack.

Company needs to place blister pack on most of the stores and especially on pan-beedi

shops were the lower segment people comes more, who are the major customers of blister

pack.

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Many of the retailers are not storing blister pack and storing the local brands of

competitors in the same category. The major reason posted by retailers is low margin in

case of parachute blister pack. Many a retailers replied that they are getting margin just

double of parachute in other local brands. For more penetration of the pack in the market

retailer margin needs to be increased.

Promotion:

Promotion is the most neglected area in case of blister pack. Most of the respondents said

they have never seen an advertisement of blister pack on T.V. or any other medium also.

The respondents who are aware of blister of blister pack replied that they have seen it

first time on shop outlet. Marico needs to take some promotional programme for blister

pack. Other than television advertising, hoardings will be the best medium of promotion

for blister pack especially on railway stations.

To increase the retailer visibility Company should provide hangers or some sort of

dispensers to retailers in which they can keep blister packs on shop counter or shelf near

to the visibility of customers. Point of purchase advertising like glow sign boards,

gondolas will also be lot productive to increase awareness of blister pack.

Advertising of blister pack should be done targeting the traveling segment, which is the

major customer segment of blister pack.

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BIBLIOGRAPHY

Web sites:

www.marketingteacher.com

www.bized.ac.uk

www.ihec.net

www.busmgt.ulst.ac.uk

www.austrainer.com

www.maricoindia.com

Books:

Understanding Consumers – By M.G.Parameswaram.

Consumer Behaviour – By P.C. Jain and Monica Bhatt.

Newspapers:

The Times of India

The Economic Times

Mid Day

`

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