consumer behaviour

INTERNATIONAL MANAGEMENT INSTITUTE

A Study Of Buying Behaviour Of Two Different Classes Of Household Life Cycle.

Consumer Behavior

Executive PGDM – 2008-2009

Individual Project-1 (A)

A Study of Buying Behaviour of Two Different Classes of Household Life Cycle

Submitted By-

Modak Priy (08XPGDM31)

Roll No: 08XPGDM59 1



ACKNOWLEDGEMENT

I am sincerely thankful to Prof. Neena Sondhi, International Management Institute for her kind guidance and support during the development of this report.

I am also thankful to my friends and the respondents for their generous support in formulation of this report.




TABLE OF CONTENTS

S. No Content

1. Objective

2. Introduction

3. Stages of consumer buying process

4. PART I ( Young married couple )

5. PART II ( Empty nest I )

6. Comparison/Differences of the two categories

7. Implications to the marketer

8. Conclusion

9. Questionnaires




OBJECTIVE

The objective of this project is to study the implication of typical buying behaviour of two different classes of people especially Young married category and Empty nest I category in three different types of purchases which are as follows. 1. Regular grocery purchase 2. Last weekend entertainment decision 3. Last major purchase.The study has been designed to analyse differences/similarities, individual/ autonomous/ joint decision making of various aspects of behavioural decision making of consumers. It also implicates the opportunities for a marketer based on the response given by individual class and categories of the purchases.

INTRODUCTION

Buying Behaviour is the decision processes and acts of people involved in buying and using products. Buying behaviour is more often referred as consumer behaviour in marketing which is defined as the behaviour that's consumer display in searching for purchasing, using, evaluating and disposing of product and services that they think will satisfy their needs. It is important to know how individuals make decisions to spend their available resources like time, money etc .In this aspect we have to know that individuals we are focusing on what they buy, why they buy, from where they buy, how often they buy, how often they use it, what are their spending limits etc.

STAGES OF CONSUMER BUYING PROCESS

Six Stages to the Consumer Buying Decision Process (For complex decisions). Actual purchasing is only one stage of the process. Not all decision processes lead to a purchase. All consumer decisions do not always include all 6 stages, determined by the degree of complexity.

The 6 stages are:

1. Problem Recognition (awareness of need)—it is the difference between the desired state and the actual condition. Deficit in assortment of products. Hunger--Food. Hunger stimulates your need to eat.Can be stimulated by the marketer through product information--did not know you were deficient? I.E., see a commercial for a new pair of shoes, stimulates your recognition that you need a new pair of shoes.

2. Information search-- o Internal search, memory. o External search if you need more information. Friends and relatives

(word of mouth). Marketer dominated sources; comparison shopping; public sources etc.


http://www.blurtit.com/q779356.html



3. Evaluation of Alternatives--need to establish criteria for evaluation, features the buyer wants or does not want. Rank/weight alternatives or resume search. May decide that you want to eat something spicy, Indian gets highest rank etc.If not satisfied with your choice then returns to the search phase. Can you think of another restaurant? Look in the yellow pages etc. Information from different sources may be treated differently. Marketers try to influence by "framing" alternatives.

4. Purchase decision--Choose buying alternative, includes product, package, store, method of purchase etc.

5. Purchase--May differ from decision, time lapse between 4 & 5, product availability.

6. Post-Purchase Evaluation--outcome: Satisfaction or Dissatisfaction. Cognitive Dissonance, have you made the right decision. This can be reduced by warranties, after sales communication etc.After eating an Indian meal, may think that really you wanted a Chinese meal instead

PART 1

STAGES OF HOUSE HOLD LIFE STYLE

House hold life cycle is a traditional array of events through which an individual moves into a variety of relatively distinct and well defined categories over time. There are a variety of routes in most of the categories and the movement of categories into another frequently occurs. Each category in the house hold life cycle poses a set of problems that house hold decision makers must solve. The solution to these problems ultimately to the maintenance of lifestyle and thus to consumption.

Stages Marital status Children at home

Single Married None <6 years

>6 years

Younger(<35)

Single I

Young Married

Full Nest I

Single parent I

Middle Aged




Single II

Delayed Full NestII

Full Nest II

Single Parent II

Empty Nest I

Older(>64)

Empty Nest II

Single III

YOUNG MARRIED COUPLE

The decision to marry, or to live together, brings about a new stage in the house hold life cycle. The lifestyles of married couples are greatly altered as they develop a shared lifestyle. Joint decisions and shared roles in house hold responsibilities are major attributes in this class of House hold life cycle. Savings, house hold furnishing, major appliances, and more comprehensive insurance coverage are among the new areas of decision making. Most house hold in this stage has dual income and is thus relatively affluent.

A study conducted in this project analyses the various aspects related to decision making of couples in the young married category and their implications on the marketer. In this paper I also follow the approach of classifying families into different categories according to a combination of variables that I consider to beIndicators of a particular stage of life; however, I also allow for life-cycle effects on the covariance structure of all the observable variables, and in particular on the way that income and family size affect expenditures. The study is organised to deal with three different types of buying by the people in this particular class especially

a) Regular grocery purchaseb) Last major purchase.c) Last weekend entertainment decision.( Any two)

The study asks the families to share their responses through a Questionnaire which has been designed to relate the important parameters in the buying behaviour of various segments of needs.

Results

The following sub paragraphs highlights the results of responses of the study carried out in this class of House hold life cycle.

1. Age - Respondent surveyed was in the age range of 25-30.Age plays an important role in decision making. Proper age positioning is essential for any




products. Age carries with it culturally behavioural and attitudinal norms. Age has a lot influence in the consumption of products.

2. Income – House hold income of the respondent studied was between 3 - 4.5 lakhs. The house hold was dual income with an estimated SDI of more than one lakh.

3. Frequency of purchase – In case of grocery purchase the frequency of the respondent was weekly. The dependence of purchase lies on the consumption pattern and time allocated by the respondent to this type of purchase. It was observed that young married couple are time cautious and are unable to spare substantial amount of time to such purchases. Frequency of entertainment decisions of the respondent was bimonthly. It was observed that in this category respondents do not have too much of spare time which they can enjoy so they try to hunt for better options once they get time. However since the respondent was a dual income house hold it was difficult for both members in the house hold to spare time more frequently on entertainment .In case of major last purchase, the respondent frequency was once in a month which implies that major purchase decisions are not taken frequently in this category. Reason can be lack of excess SDI of the hose hold.

4. Source – Source of general grocery purchase of the respondent was the nearby super market. Source selection may be an important parameter for a marketer to select the distribution channel for a particular product. Daily grocery products require intensive distribution so that it can be easily available in market. For very small and urgent purchases the respondent opted the nearby kirana store to fulfil needs like milk, bread, egg, etc.Other perishable and non perishable products were bought by the respondent on weekly bases and the purchase was need based and planned. Last major purchase source of the respondent was dependent on various factors like nearby showroom of the brand, freebees given by the retailer to the respondent, services and modes of payment. Source of the entertainment decision was newspaper and word of mouth.

5. Decision maker – Respondents joint decision making in the category of grocery purchase was observed but there was a slight inclination found towards the wife .Last major purchase decision was taken by the husband in the family. Entertainment decision was a joint decision taken by the couple.

6. Need based or impulsive purchase – Grocery purchase decision of the respondent was need based though the entertainment decision was an impulsive one. Last major purchase decision of the respondent was again a need based decision.




7. Brand considerations – Regular grocery purchase decision of the respondent was found to be in the category of brand switchers .Their buying behaviour was found to be erratic towards big brands .They considered to buy regular commodities like rice ,floor, sugar, etc in loose packages from the supermarket because of the price sensitiveness. Inclination towards a particular brand was seen in the category of last major purchase where the purchase was entirely need based. Respondents were cautious about the brand name though they were willing to spend extra for a particular product.

8. Effects of external sources like advertisement/word of mouth etc. – External

sources play an important role in the decision making process in all categories. The buying behaviour is inclined towards various lifestyles, categories of classes and sub classes, culture, subcultures and the influence of factors like advertising and word of mouth. Though grocery purchase product do not have large impact on external factors in this category but external factors play an important role in the major purchase of products and entertainment decisions.

9. Pattern of buying – Pattern depends upon the type of purchase of the

respondent.

10. Determinants – Determinants like Price, quality, services etc do not have much impact on regular grocery purchase but they play an important role in major buying decisions. Respondents in this category rated price as their major determinant followed by quality and then services.

Responses of purchases

Observation Regular grocery purchase

Last weekend purchase

Entertainment decision

Product General items like commodities, daily house hold items etc

Television Movie and Dinning out.

Frequency Weekly Need based BimonthlySource Super market Nearest Dealer Nearby hallDecision maker Joint Male JointDeterminants Price conscious Price conscious Price consciousExternal effects Not much Much Much

PART II

EMPTY NEST I CATEGORY

The empty nest one category basically consists of people who are married long ago, having children who are not living with their parents. This category also includes people with second marriage in which children from first marriage are not living




together. Both adults will typically have jobs ,so they are very busy.However,the absences of children and their responsibilities creates more time for intertainment.They also have money to spend on dinning out, expensive vacations, second house,luxuary cars and time saving services.Theyare prime markets for financial services.

Similar study as done above has been done here to study the various aspects of buying behaviour in this class of house hold life cycle. Respondents were asked to indicate their responses through a questionnaire based model approach attached at the end of the project. Results of their responses and the analyses of the implications of important factors have been highlighted below.

1. Age - Respondent surveyed was in the age range of 35 and above.

2. Income – House hold income of the respondent studied was between 4.5 lakhs and above. The house hold was single income with an estimated SDI of more than two lakh.

3. Frequency of purchase – In case of grocery purchase the frequency of the respondent was weekly. Here the dependence of purchase lies on the consumption pattern only. It was observed that empty nest have plenty of spare time which they allocate in buying their products. They spend their time in purchasing major items and entertainment.

4. Source – Source of general grocery purchase of the respondent was the nearby super market. For major purchases the respondents experienced options were they get easy after sales services and the nearness of the market from their house.

5. Decision maker – Respondents joint decision making in the category of grocery purchase was observed .Last major purchase decision was taken by the husband in the family. Entertainment decision was a joint decision taken by the couple.

6. Need based or impulsive purchase – Grocery purchase decision of the respondent was need based though the entertainment decision was an impulsive one. Last major purchase decision of the respondent was an impulsive decision based on the facilities of lifestyle improvement.

7. Brand considerations – Regular grocery purchase decision of the respondent was found to be in the category of brand loyal. .They considered to buy regular commodities like rice, floor, sugar, etc in loose packages from the supermarket. Major purchase items bought by the respondent was based on various determinants like brand , its after sales service, its reputation in the market, word of mouth, variety etc.




8. Effects of external sources like advertisement/word of mouth etc. – Here the respondents are sensitive towards external sources like word of mouth , advertisements, etc.They are social and want to remain as members of the class they belong. They percolate values and ethics of the cultures they belong. They are highly confident of their decisions taken and want to buy the best available brand .

9. Pattern of buying – Pattern depends upon the type of purchase of the respondent.

10. Determinants – Determinants like Price, quality, services etc do not have much impact on regular grocery purchase but they play an important role in major buying decisions. Respondents in this category rated price as their major determinant followed by quality and then services

Responses of purchases

Observation Regular grocery purchase

Last weekend purchase

Entertainment decision

Product General items like commodities, daily house hold items etc

Air Conditioner Travelling and religious prayers.

Frequency Weekly Improving living standard.

Monthly

Source Super market Nearest Dealer -Decision maker Joint Male JointDeterminants After sales service

consciousAfter sales service conscious

After sales service conscious

External effects Much Much Much

COMPARISON OF BUYING BEHAVIOURS OF THE TWO CLASSES

Observation for Regular Grocery Item Purchased

Observation Young Married Empty Nest I

Item purchased Household kitchen items, basic utilitarian like toilet soap, washing powder,shampoo,etc

Household kitchen items, basic utilitarian like soap, washing powder,shampoo,toothpaste etc




Frequency Weekly Monthly

Need Basic need plus few items influenced by promotion offer on some products

Basic need plus few items influenced by impulsive movement due to special attribute of the product

Selection Joint selection Individual selection

Decision Joint decision Individual decision but admitted by both.

Price sensitive/Brand loyality

More price sensitive, less brand loyal, brand switchers.

Less price sensitive, more brand loyal, not brand switchers

Observation for Last weekend entertainment decision


Item purchased Movie , Dinning out Travelling and religious prayer

Frequency Weekly Weekly

Need Need Based Entertainment based

Selection Joint selection Joint selection

Decision Joint decision Joint decision

Price Price sensitive Not price sensitive

Observation for Last major purchase


Item purchased TV Air Conditioner

Need Entertainment Luxury based

Selection Individual Individual

Decision Joint Joint

Effect on purchase

Media affected Media affected

Price Sensitive/Brand Loyal

Price sensitive, could change the brand for a good offer or discount available.

Strictly Brand loyal




Differences of purchase decision between two category

Factors Young Married Empty Nest I

Price Sensitiveness

This category is more price sensitive towards items either it’s a grocery items or a heavy purchase, more often they are willing to respond to change or differences in price.

This category is less price sensitive for all items.

Brand Loyalty Young married are not a brand loyal consumer, they are brand switchers, more often they switch their brand towards price and amount or any special deal. This is the time when their taste for a specific brand is under development.

Empty nest I consumer are a complete brand loyal, they do not switches their brand occasionally, they are in the phase where taste of a specific brand is developed fully.

Group impact Have slight group impact Do not have group impact

Materialism Instrumental materialism Terminal materialism

IMPLICATIONS FOR THE MARKETER

The purchase and consumption of many products are driven by the HLC.The reason for this is that each stage poses unique problem or opportunity to house hold members and the resolution requires the consumption of products and services.Marketting manager must analyse the house hold decision process separately for each product category within each target market. House hold member participation in the decision process varies by involvement with the specific product, role specialization, personal characteristics and one’s culture and sub culture. Participation also varies with stage in the decision process. Most decisions are reached by consensus.

Purchase of each of products and brands is caused by a different motive, each require a distinct marketing and advertising program. Concentrating on segments like Young married couples the marketer should study the pattern and behaviour of this class. The category consists of young respondents who are generally price sensitive and their purchase is need based. Consumer of this class does not buy products; instead, they buy motive satisfaction or problem solution. Managers must discover the motives that their products and brands can satisfy and develop marketing mixes around these motives. People make such purchases for a variety of motives, including rewarding




themselves for an accomplishment. A marketer should identify the feeling related for a particular product and to be run advertising campaigns according to the feeling associated with the product. Each customer will have a certain price acceptability window and different customers have different limits in their perceptions of what price is within their range. For the marketing professional the trick is to figure out how customers determine what "price" means. Price Sensitivity Measurement method may be used. This method asks survey respondents to define a possible range of prices noted in a scale called a price ladder. In order for the survey to be valid and not become a self fulfilling prophecy, the prices represented must be positioned on the upper or lower ends of the scale and not in the middle. Survey respondents are asking to pick two different price points on the price scale: The point where the product is beginning to appear "expensive" or a poor value for the money, and the point where they perceive the product to be a "good buy".Implications for the marketer in the category of empty nest I lie on their behaviour which indicates that this class of people have the absence of responsibilities of children, a well settled lifestyle and a good financial base to support. They have free time which they enjoy in dinning out, in vacations spend on new houses, luxury cars , time saving services etc.They are prime markets for financial services. The marketer must realise various channels of promotion to these individuals and the values which can be added to ensure complete satisfaction.

CONCLUSION

The house hold is the basic purchasing and consuming unit and is therefore a great importance to marketing managers. Family house holds also are the primary mechanism where by culture and social class values and behaviour patterns are passed on to the next generation. The house hold life cycle is a useful way to develop the marketing strategy. One axis is the stage in the HLC, which determines the problem the house hold will likely to encounter, the other is a set of social strata ,which provides a range of acceptable solutions. Each cell represents a market segment.

Family decision making involves consideration of questions such as who buys, who decides, and who uses. It is complex and involves emotions and interpersonal relationship as well as product evaluation and acquisition.

Marketing managers must analyse the house hold decision process separately for each product category within each target market. House hold member participation in the decision process varies by involvement with the specific product, role specialization personal characteristics, and ones culture and sub culture. Participation also varies by stage in decision process.




QUESTIONAIR FOR LAST WEEKAND GROCERY PURCHASE

When you fill in this questionnaire please use a pen and mark (√) on the best response.

Q1. Indicate the category you belong to?a) Young Married ( Married in a span of one year)b) Married with no children.c) Singled) None of these.

Q2. Please mark your age slot to which you belong?a) Average couple age less than 25.b) Average couple age between 25 to 30.c) Average couple age between 30 to 35.d) Average couple age 35 and above.

Q3. Mark your annual family income from the options given?a) Less than 2 Lakhs.b) Between 2 -3 Lakhsc) Between 3- 4.5 Lakhs.d) Above 4.5 Lakhs

Q4. Please indicate the frequency of your grocery purchases?a) Daily.b) Weeklyc) Biweeklyd) Once in fortnighte) Monthly

Q5. Where do you generally purchase grocery products?a) Supermarketsb) Wholesalersc) Nearby kirana storesd) Internet purchasee) Others

Q6. Your latest grocery purchase if any?a) Food productsb) Health productsc) Lifestyle productsd) Cosmeticse) Others




Q7. Was the product a necessity or it was an impulse purchase?a) A necessityb) Impulse purchasec) Both the above

Q8. Who all participates in grocery buying decision in your family?a) Husband onlyb) Wife onlyc) Both husband and wifed) Others

Q9. Do you consider asking others responses in decision making?a) Yesb) No

Q10. While buying regular grocery products are u brand specific or not?a) Yesb) Noc) Can be either of the two.

Q11. What is the normal pattern of buying grocery that you generally follow?a) Necessity first and then other purchasesb) Other purchases first and then necessityc) Can be anything

Q12. Rate factors according to your preferences? (Indicate 1 as first preference and follow the sequence)?

a) Quality of the product. ( )b) Cost of the item. ( )c) Brand Name ( )d) Place of buying ( )e) Responses of others ( )

Q13. What is your preferred mode of payment?a) Creditb) Cashc) Bothd) Other




QUESTIONAIR FOR LAST MAJOR PURCHASE

When you fill in this questionnaire please use a pen and mark (√) on the best response.Q1. Indicate the category you belong to? a) Young Married (Married in a span of one year)

b) Married with no children.c) Single

d) None of these



Q4. What major purchase you have made in the last six months? Indicate……………………………………………………

Q5. Was the purchase really required?a) Yes it was.b) No, it was not badly needed.c) I had planned it earlier.d) No it was a spontaneous purchase.e) Just for a change.

Q6. Did you go for a particular brand?a) Yesb) No

Q7. Why did you select that brand? Mark the best alternative?a) Good Qualityb) Flamboyant Looksc) Priced) Aestheticse) After sales servicef) Payment optionsg) Special discounts




Q8. Was it your first purchase of the product or you was buying for the second time?a) Yes it was my first purchaseb) No I had that product earlier.

Q9. Were you unhappy with your last brand?a) Yes b) No

Q10. Where did you come to know about the product?a) Media advertisements.b) Magazinesc) Friends and relatives.d) Internete) Sales persons f) Others

Q11. Before purchasing did you surveyed the retailers/shops?a) Yesb) No (Please do not mark the next question)

Q12. What were you prime factors in the survey? a) Priceb) Serviceabilityc) Discountsd) Mode of paymente) Variety in product.




QUESTIONAIR FOR LAST WEEKAND ENTERTAINMENT DECISION

Q1. Indicate the category you belong to?a) Young Married ( Married in a span of one year)b) Married with no children.c) Singled) None of these.



Q4. Your entertainment decision?a) A movie in a hall.b) Shopping and outdoor purchase.c) A visit to Historical place.d) Outstation visit.e) Visit to a restaurant.f) Others.

Q5. Was your decision planned?a) Yes b) Noc) Spontaneous.

Q6. Did you look for any other option before deciding to go for the one you preferred?

a) Yesb) No

Q7. How frequently you go for a decision like the one you took above?a) Twice a year.b) Once a year.c) Frequently.d) Once in a month.




e) Once in a week.f) Fortnightly.

Q8. Who all in you family are involved in taking such decisions?a) Husband only.b) Wife only.c) Both wife and husband.d) Influenced by family members.e) Others.

Q9. Before making an entertainment decision what is the first factor that comes to your mind?

a) Price.b) Quality of entertainment.c) Time Constraintd) Others.


consumer behaviour

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