Lucknow University: Consumer Behavior Case Study Analysis

This case study examines Martin Incorp., a cosmetics and perfume company, and its challenges in adapting to changing consumer preferences. Initially, the company followed a product-oriented approach, focusing on what it produced rather than consumer needs. After hiring a marketing graduate, Mr. Ash, the company attempted to modernize its products, focusing on income and social factors. However, sales did not increase proportionately, leading the assistant and product managers to believe that other crucial consumer behavior factors were neglected. The analysis highlights the importance of understanding economic, personal, cultural, social, and psychological factors. The case study also reviews the consumer decision-making process and emphasizes the need for effective market segmentation and consideration of factors like age, occupation, lifestyle, and personality. The solution suggests the company needed to move beyond the product concept, segment the market effectively, and incorporate a broader range of consumer behavior factors to drive sales growth. The case study emphasizes the importance of understanding consumer behavior for successful marketing strategies.

INSTITUTE OF DEVELOPMENT STUDIES, LUCKNOW
UNIVERSITY
Consumer Behaviour
Assignment
Case Studies

Case: factors affecting conbsumer behaviour.
Martin Incorp. was a company carrying on business in cosmetics
and perfumes. It was not following the marketing concept and
was catering to a target market which was using its products. In
other words, it only concentrated on what it would make, and
did not bother about changes in preferences of its target market.
It was later joined by Mr. Ash, a marketing graduate who
advised the company regard- ing the changing consumer
preferences, and the changes that were necessary to be incorpo-
rated in the product. He emphasised upon the income factors,
and social factors only. He mod- ernised the products to a great
extent, and invested about 30 lakhs on new packing, etc. Even
after six months of these changes brought about by him, the
company did not seem to have a proportionate increase in sales.
The assistant manager and the product manager were not very
happy with the changes, and thought that although an effort has
been made in the right direction, some important factors
concerning consumer behaviour had been neglected.
Questions
1. Do you agree with the assistant and product managers, and
why?
2. What other factors, if any, could have been considered? El
Explanation of the case:
Martin Incorporation was involved in the cosmetics and perfume business. The company
was following the product concept of marketing and catered only to their existing customers,
while paying no attention to the changing needs and demands of the consumers.
A marketing graduate, named Ash, joined the company and advised the company about
necessary changes that must be made in the product on the basis of changing taste and
preferences of consumers to successfully sell the company`s products.
The product manager and assistant manager were not happy with the efforts made by Mr
Ash as even after 6 months of implementation of suggested changes the company was not
able to achieve effective growth in sales.
The product manager and Assistant manager were of the opinion that although some
progress was made by Mr Ash, yet many important factors affecting consumer behaviour
were also neglected by him.

Relevant Theory:
In a Market, different consumers have different needs. As all consumers are unique they
exhibit different behaviour while making a purchase decision due to various factors
influencing consumer behaviour. Therefore it is important to understand the various factors
influencing consumer behaviour.
Factors Influencing Consumer Behaviour
The Various factors influencing Consumer Behaviour can be classified into 4 categories:
 Economic Factors
 Personal Factors
 Cultural and Social Factors
Economic Factors influencing consumer behaviour:
 Personal Income – Total Income of the consumer
 Discretionary Income – Income available to a consumer after deducting taxes and basic
cost of living.
 Disposable Income – Income available with consumer to spend according to his wishes
 Family Income – Income of the family. Lower income families have less demand than
prosperous families.
 Consumer Expectations Regarding Future Income
 Availability of Liquid Assets with the consumer
 Consumer Credit – Availability of consumer credit, Credit policies
 Level of Standard of Living

A consumer demands more and spends more with increase in his income or expectations of
future profits or availability of liquid cash or availability of credit but saves and demands less
in its absence.
Personal Factors influencing Consumer Behaviour:
 Age – People of different ages have different needs.
 Occupation – Professionals, businessman, salaried-workers have different demands.
 Life Cycle Stage – Newly born, Teenager, Bachelor, Married, Parent, Grand Parent
 Lifestyle – Achievers, Strugglers, Strivers, Makers
 Personality – Aggressive, Shy, Introvert, Extrovert, Conservative, Experimental
 Self-Concept – One`s perceptions towards themselves.

Cultural Factors affecting Consumer Behaviour
 Culture – Culture is basically the way of living and thinking pattern that is followed
from generation to generation in a society.

Eg. Indian culture is entirely different from cultures of other Asian, Arabic and Western
countries.
 Sub-culture – Sub-culture is a segment of culture which helps a marketer to know
another person's culture either psychologically, socially or through mass
identification. Sub-culture consists of a group of people within a culture who exhibit
similar buying behaviour and have similar believes.
E.g. Within India, buying behaviour of muslims of the north India can be differentiated
form the muslims of the south India
 Social class – Social class segments the market on the basis income criteria and standard
of living. It refers to divisions of members of a society on the basis of education,
occupation, income etc.

E.g. Buying behaviour of the upper class can be easily differentiated from the middle and
lower class.
Social Factors influencing Consumer Behaviour
Social Group – A group is any collection of individuals with similar interests, opinions and
activities. An individual draws cues regarding consumption and disposal of products from
various social groups he belongs to. The various social groups an individual forms a part of
are:
 Reference Group – It refers to all those people which directly affect the purchase
pattern and decision of a consumer as they serve as a point of reference or comparison
for the consumer while making a purchase decision.
 Contractual Group – It includes friends, family, peers who have a direct and daily face
to face interaction with an individual. They are the most important source of influence on
consumer behaviour.
 Avoidance Group – A group of people that have a negative impact on a consumer. A
consumer disassociates himself from such a group and avoid using products and
services used, recommended or promoted by the avoidance group.
 Aspirational Group – It includes film stars, TV celebrities, Sport stars etc. whom a
consumer aspires to be. A consumer wants to associate himself with people he aspires and
uses products and services used, recommended and promoted by them.

Opinion Leaders – It refers to a key individual in a group which influences the behaviour of
members of the group by providing them relevant information about new trends and
products in the market.
Role and Status – Every person plays many roles in the society i.e. employee to his boss,
parent to his children, referrer for young ones, advisor to peers etc. and their buying pattern
depends upon the role they play in the society. People also select and buy products according
to their status in the society.
E.g. CEO of a company would prefer to buy branded products from big stores, while a
worker in the same company may prefer value for money products from nearby stores.
Psychological Factors affecting Consumer Behaviour:
Customers behave differently towards the same marketing mix (product) due to their
respective psychological makeup. The psychological factors that affect consumer behaviour
are:
 Motivation – A motive is an internal force that drives a person to do something i.e.
fulfill a need, achieve a goal, solve a problem. Different motives of a consumer can be
understood through Maslow Hierarchy of needs. All consumers react differently towards
a product depending upon their position in the hierarchy. i.e. an individual will first
satisfy his basic needs and then move upward in the hierarchy with satisfaction of each
want.
 Involvement – It refers to the amount of interest or importance a consumers shows
towards a product. A consumer may have high or low involvement in a product.
 Perception – It is a process of selecting, organizing, and interpreting information from
our internal and external environment to form a meaningful picture. All consumers
perceive the same product differently according to their own perceptions.
 Learning – It is a process which brings a permanent change in the behaviour of a person.
People generally learn through past experiences and develop a certain behaviour towards
a product or service.
 Personality – It refers to the total of all physical, mental and moral characteristics of a
person. Customers buy products that suit their personality, for example some people
prefer wearing formal clothes some like to wear casual clothes depending upon what suits
their personality.

 Lifestyle – A person`s lifestyle is made up of his activities, opinions and interests.
Lifestyle of a person also depends upon his position in the life cycle stage i.e.
Teenager, Bachelor, Married etc.
 Attitude – Attitude is a person`s predisposition to act favourably or unfavourably
towards a product, service, event, people etc. It is the way a person thinks or feels about
an object. Consumers develop a positive or negetive attitude towards a product or service
due to a marketing stimuli, situational variables, experience or advertising and then
decide upon an intended action for that product or service.
Determinants of Consumer Behaviour
Factors influencing consumer behaviour can also be classified into Individual Determinants
and External Determinants. The individual determinants shape and determine the needs and
motives of a consumer and direct him towards a purchase, while the external determinants
indirectly influence the purchase process by filtering through individual determinants.
Individual Determinants affecting
Consumer Behaviour
External Determinants affecting
Consumer Behaviour
Motivation Culture
Perception Sub-culture
Attitude Social Class
Personality and Self Concept Social Group
Learning and Memory Family and Other Influences

Consumer Decision Making Process
The Consumer decision making process consists of a series of steps that a buyer goes through
in order to solve a problem or satisfy a need. They are as follows:
(1) Need/Problem Recognition – A purchase process starts with a need, a problem or a
motive within a consumer`s mind.
(2) Information Search – When a need/problem receives heightened attention from a buyer,
he become more receptive about information that may solve his problem and starts gathering
data about products/services that will satisfy this need.
(3) Evaluation of Alternatives – After collecting information from various sources, the
customer evaluates the benefits and disadvantages of various product alternatives and
develops a set of choices regarding the product attributes, brand, store etc. that suit his/her
needs, taste & preference, personality, lifestyle etc.
(4) Selection and Trial – After keeping a set of choices in mind the customer makes the first
product trial. He may buy different products in small quantities (1 kg, 1 packet, 1 bottle) or
actually use products individually for some time (tasting food, inspecting phones, taking a
test drive) to form an opinion and develop an attitude towards the product.
(5) Purchase Decision – When the customer believes that a product or service offers the
best solution to his need or problem, he makes the actual purchase. This includes making a
product choice, choosing a brand, a dealer and deciding the amount and time of purchase.
(6) Post Purchase Dissonance/Behaviour – A person seeks reassurance after making
a purchase. A purchase generally has the following three outcomes:
 Actual Performance is equal to expected performance
 Actual Performance is less than expected performance
 Actual Performance is more than expected performance

Solution:
Focus: New Product Development to increase sales of cosmetics and perfume products
Yes, I agree with the product manager and assistant manager that efforts were made in
the right direction, but many factors affecting consumer behaviour were ignored. The
reasons being the following:
I. The company was using the product concept of marketing which is out dated in
today`s era as now producers manufacture products that match consumer`s demand,
tastes and preferences.
II. The target audience was limited to the existing customers of the company. Various
new markets must be explored to increase sales. For example:
 Grooming products for men
 Safe and chemical free cosmetics for babies
 Organic and herbal cosmetics for women
III. The market for cosmetics was not effectively segmented by Mr Ash. Cosmetics
market can be segmented effectively by dividing the market into groups which are
homogenous within and heterogeneous among themselves on the basis of their
age, gender, occupation etc. For e.g. Market can be segmented into:
 Working women, Housewife, Teenage girls
 Daily consumers, Beauty Parlours, Film Industry
 Rich people, Middle class people, Low income group
IV. While attention was paid to income and social factors many personal factors such
as Age, Occupation, Lifestyle, personality of a consumer were neglected. For e.g.
 Age
 Income
 Occupation
 Personality
 Attitude
 Lifestyle
V. . small units of previous products. Keeping in mind the social factors no efforts
were

made to use opinion leaders like celebrities or doctors which would have been more
effective in influencing sales than change in product packaging.
VI. Existing products were modernised while no attention was paid to new product
development for new potential markets in cosmetics industries. For e.g. Grooming
products for men
VII. No efforts were made to advertise the products to targeted audience or reposition the
brand according to the changing customer taste and preferences. No offers,
discounts or sales promotion activities were carried out by Mr Ash to boost sales.
Other Factors that should have been considered are:
I. Age – Babies, Teenagers, Middle aged people and elderly all have different needs and
requirements related to cosmetics and beauty products.
II. Occupation – Working ladies v/s Housewife, Clerical staff v/s Top
management, Daily consumer v/s consumers from Fashion Industry
While a housewife, a normal clerk and daily consumer may have nominal needs and
demand basic products, working ladies, Directors and CEO`s of a company, make-up
artists, beauticians, film stars may have specific needs and high demand for beauty
products.
III. Standard of Living – Rural v/s Urban People, Low income group v/s High income
group
While rural people and low income groups may make use of soaps and traditional
products, urban people and the high income group are more inclined towards
expensive beauty products.
IV. Perception & Attitude – Chemicals v/s Organic/Herbal products
While some people perceive beauty products negatively due to chemical ingredients
in them some people recommend them.
V. Involvement – Normal consumers v/s Film Industry
Consumer segments like make-up artists, beauticians, film starts will have a high
involvement in buying beauty products than normal consumers.
VI. Culture – Due to different cultural norms regarding appearances laid down by
different religions, men and women of a particular religion dress up and make use of
specific cosmetic products.

VII. Opinion Leaders
VIII. Personality and Self-concept
While alpha males and feminine girls may use and encourage use of beauty
products while passive males and tomboyish girls may like to stay raw and refrain
from using beauty products.