Definitions of CONSUMER BEHAVIOR

 The

study of consumer behavior focuses on how individuals make their decisions to spend their available resources (time, money ,effort) on consumption related items  Consumer Behavior is the study of human responses to products/services and the marketing of products/services

Significance of CONSUMER BEHAVIOR
 The

primary purpose of studying consumer behavior is why and how consumers make their purchase decisions  To understand marketing and environmental stimuli  To know the factors influencing consumer behavior  To know how consumers will respond to different product features,prices,advertisement appeals

Significance of CONSUMER BEHAVIOR
 To

distinguish different consumer groups and to develop products that satisfy the needs.  To understand how consumers make purchasing choices among products/services.  To know “why same consumer is attracted to different products”

Significance of CONSUMER BEHAVIOR
 To

know buying dynamics of consumer  Understanding consumer behavior of target market is essential part of marketing manager  To know growing market segments of company for consumers  Study of consumer behavior enable them to become better and wiser consumers

Significance of CONSUMER BEHAVIOR
 Continuously

upgrading the consumer  To know what features or product design acceptable by consumer  To understand the buying roles of the consumer  To predict post purchase satisfaction or dissatisfaction behavior  Making the consumer individualistic more conscious

Significance of CONSUMER BEHAVIOR
 Help

marketers to assess the consumers needs and wants and to make better strategic marketing decisions  To know cross cultural needs and preferences and consumption habits  Study of internal and external influences which impel them to behave as they do  To understand unethical practices prevailing in the market

Significance of CONSUMER BEHAVIOR
 Consumer

behavior is the field of interdisciplinary dimensions  Psychology – The study of individuals – individual behavior – attitudes, values, belief, perception, learning, personality, motivation  Sociology – the study of groups – group behavior – social class, reference groups, group dynamics

Significance of CONSUMER BEHAVIOR
 Socio

Psychology – deals with interpersonal behavior – behavior of individuals in group context – intergroup collaboration, group decision – making, integration of individual needs with group needs  Anthropology – Influence of the culture and society on individual.

Model of consumer buying process
Components of consumer buying process a) Identify buying roles b) buying behaviour c) buying research Steps in buying process a) Need/recognition b) Informational search c) evaluation of alternatives d) purchase decision e) Post purchase behaviour

Model of consumer buying process
Buying roles  Initiator/Influencer – provides information about the product/service  Gatekeeper – controls the flow of information  Decider – decides whether to shop the purchase or not  Buyer – involves in actual purchase or the product

Model of consumer buying process
 Preparer

– transforms the product into consumption  Maintainer – provides repair/maintenance services  User – use or consume the product  Disposer – decides whether to continue or discontinue in using the product

Model of consumer buying process
Types of buying behaviour  Complex buying behaviour – It is a behaviour of the consumer when the purchase is highly inexpensive or the products which are bought infrequently and risky  Dissonance reducing buying behaviour- It is a behaviour when the consumer is confronted with a unfamiliar brand name in a familiar product class

Model of consumer buying process
 Habitual

buying behaviour - It is a behaviour when the consumer doesn’t find difficulty in making a purchase due to awareness of brands  Novelty seeking buying behaviour - It is a behaviour when the consumer involves in the purchase for novel or new brands

Model of consumer buying process
Buying Research  The methods used in conducting buying research :  a) Focus Group Interview  b) In-depth Interview  c) Projective Techniques–

Model of consumer buying process
a) Focus Group Interview - conducted by a trained moderator in a natural manner with a group of respondents. A focus group is a sample of respondents from the specified target market. Focus group interview takes place in the form of free-flowing group discussion among various target groups. The moderator plays a key role to establish the rapport with the participants to keep the discussion moving forward and probe the respondents to elicit insights into the problem.

Model of consumer buying process
Applications of focus group interview  Understanding consumer perceptions, perceptions concerning a product category  Obtaining impression of new product concepts  Generating ideas about new and existing products  Developing creative concepts of advertising copy from the consumer

Model of consumer buying process
b) In depth interview – It is method of obtaining qualitative data. An unstructured, direct, personal interview in which a single respondent is probed by a skilled interviewer to knowing underlying motivations, attitudes and feelings on a topic. The interviewer encourages the respondent to talk freely Applications of In depth interview  Discussion of confidential, sensitive or embarrassing topics or situations where the strong social norms exist

Model of consumer buying process
 Detailed

understanding the complicated behavior of the consumer and other groups  Situations where product consumption experience is sensory in nature ( which is emotional in nature) c) Projective techniques – an unstructured and indirect form of questioning that encourages the respondent to project their underlying motivations, attitudes, belief etc regarding the issue of concern.

Model of consumer buying process  In projective techniques, the respondents are asked to

interpret the behavior of others rather than their own behavior  Ex of projective techniques – word association tests, sentence completion tests, story completion tests, picture response or TAT ( Thematic Apperception Test), Role playing, Third person techniques etc.  Word association test – respondents are presented with the help of words one at a time and are asked to respond to each with the first word that comes in mind

Model of consumer buying process
 Sentence

completion test – respondents are provided with the part of story and required to give conclusion in their own words.  Picture response or TAT ( Thematic Apperception Test) – the respondents are shown a picture and asked to tell a story describing it.  Role playing – respondents are asked to assume the behavior of someone else and have to roleplay their behavior.

Model of consumer buying process
 Third

person technique – in which respondents are presented with verbal or visual situation and are asked to related the beliefs and attitudes of a third person. The third person may be friend, neighbour or family etc

Model of consumer buying process
2) steps in buying process  a) Need/recognition - It starts when the buyer recognises a problem or need  b) Informational search – Information about the felt need by the consumers can be collected through various sources – personal sources, commercial sources, public sources, experimental sources

Model of consumer buying process
 Evaluation

of alternatives - Consumer evaluates various alternatives before making a purchase – quality, price etc  Purchase decision - The factors that influence the purchase decision are product choice, brand choice, dealer choice, purchase timing & purchase amount

Model of consumer buying process
 Post

purchase behaviour - After making a purchase the consumer experiences satisfaction or dissatisfaction in using the product Types of post purchase behaviour  Post purchase satisfaction – the defects identified by the consumer should be replaced

Model of consumer buying process
 Post

purchase action – If the consumer is highly satisfied then there is a high probability of repeated purchase  Post purchase use and disposal –If the consumer finds a new use after using the product, that should be highlighted by the company through advertising

Product Innovation
 Product

Innovation refers to new idea, concept, method, practice, product or service which is perceived by someone as new  Innovations take time to penetrate into the members of the social system

Product Adoption
 Adoption

refers to the acceptance or continual use of new product or brand by the individuals  Adoption is a step-by-step mental process of adopting or accepting a new product  Adoption is the process by which the individual passes several stages to arrive at decision in using a new product

Adoption Process
 Stages

in Adoption process  a) Awareness – consumer is exposed to innovation, but lacks information  b) Comprehension – consumer has information & understanding about the new product. It reveals the interest towards the product

Adoption Process
 c)

Attitude – refers to favourable or unfavourable disposition of the consumer towards the product  d) Legitimisation – refers to – the consumers are highly convinced about the new product  e) Trial – The product is tested before acceptance

Adoption Process
 f)

Adoption or rejection – If the trial is positive, the product is accepted or otherwise the product is rejected Conclusion  Adoption process is helpful in managing product innovation and also in designing promotional strategy

Categories of Adopters
 Innovators

– constitute 2.5% of the total market. Innovators are first to adopt to new product. They are highly educated, esteem class and also cosmopolitian  Early adopters – constitute 13.5% of total market. They are the second to adopt new adopt. They are also educated and high social status. They are socially integrated and also the leaders of the social community

Categories of Adopters
 Early

majority – constitute 34% of the total market . They are just before the average member of the social class.  Late majority – constitute 34% of the total market. They are skeptical . The people are after the average member of the social class  Laggards – constitute 16% of total market. They are last to adopt new product. They are having low social economic status. They have less interest to try new product and spend less on promotion

Diffusion of innovation
 Diffusion

refers to the acceptance of the innovation which is spread by the communication(mass media, salesman, opinion leaders) to the members of the social system over a period of time  Diffusion refers how new product captures target market  Diffusion is the aggregate of all individuals decision to adopt new product

Factors influence the rate of diffusion
 These

factors explain “what is the definition of new product or when it is called the new product according to consumers) Factors 1) Firm oriented definition – consistent with the view that a firm which is capable of copy or modify the competitors product was qualified as new product

Factors influence the rate of diffusion
2) Product oriented definition a) continuous innovation – it refers to the introduction of the modified product rather than new product b) dynamically continuous – creation of new products rather than modified products c) discontinuous innovation – consumers feel difficulty to adopt the patterns of new product

Factors influence the rate of diffusion
3) Market oriented definition – A product is considered new if it is relatively purchased by the majority of the potential market 4) Consumer oriented definition a) relative advantage – the degree to which the potential customer perceive a new product as superior to competitors

Factors influence the rate of diffusion
b) compatibility – the degree to which potential customer feel a new product is consistent with the needs of the consumer c) complexity – the degree to which the new product is difficult to understand its usage by the consumers d) trialability – the degree to which the new product is suitable to try before usage at free of cost

Factors influence the rate of diffusion
e) observability – the degree to which the product benefits or attributes can be described to potential consumers by the company sources

 Definition

: It is defined as the decision-making process by which formal organizations establish the need for purchased products/services to identify, evaluate and choose among alternative brands and suppliers.  It was developed by Fredrick E Webster & Yoram Wind

Organizational buying process/Industrial buying process

Characteristics/features of Organizational buying process
 1)

The organizational buyers are called as producer/manufacturer business units consists of all the individuals/organizations who acquire goods/services that enter into the production of other products/services that are sold, rented or supplied to others.  2) The various types of organizational buying units are in the areas of services, agriculture, forestry, fisheries, wholesalers, retailers, construction units, farming, governmental units etc.

Characteristics/features of Organizational buying process  3) organizational buyers make purchase decisions in

order to satisfy their goals as similar to final consumers.  4) Geographical Concentration – buyers are more concentrated by size in organizational market.  Ex: textiles are clustered predominantly in south  5) Group Involvement – A group of individuals may be involved in buying decision. People from engineering, manufacturing, production, purchase, finance departments along with top management participate in machinery purchase decision.

Characteristics/features of Organizational buying process
 6)

Technical knowledge – They are professional buyers and are quite knowledgable about products/services. Their purchase is directed by technically competent individuals.  7) Rational Motivators – they are economical in nature and the costs & benefits are carefully weighed. Product quality specifications, consistency, assurance, delivery, credit terms, warranty are other elements influencing in the selection of vendors.  8) Formal procedures – involves proposals, quotation requests, purchasing contracts, price and product specifications

Characteristics/features of Organizational buying process
 9)

Complexity – It requires conscious considerations with higher financial risks  10) lengthy negotiations – the size of the order is large and purchaser price is very important.  11) Derived demand – the demand for industrial goods will ultimately be derived from the demand for consumer goods  12) Inelastic demand – if the total demand for the industrial product remains affected by price changes then demand is inelastic

Characteristics/features of Organizational buying process
 Ex:

the footwear manufacturers are not going to buy more leather if the price of the leather reduces.  13) Fluctuating demand – the nature of the demand in industrial goods is highly volatile  14) Straight/routine rebuy – It is a buying situation where the purchaser will reorder the product without any modification  Ex: electricity, water, office supplies etc

 15)

Modified rebuy – It is a buying situation where buyer/purchaser wants to modify product specifications/prices.  16) Reciprocal buying – a paper manufacturer will by necessary equipment from chemical manufacturer which inturn buys the stationery from the paper manufacturer  17) Leasing – organizational buyers go for equipment leasing instead of outright purchase

Characteristics/features of Organizational buying process

Steps in Organizational/Industrial buying process
 1)

Problem recognition  2) Need description  3) Vendor search  4) Proposal request  5) Vendor selection  6) Purchase routine selection  7) Post purchase evaluation

 1)

Problem recognition – for ex: breakdown of the machine which requires replacement of new parts immediately  2) Need description – Industrial buyer tends to define product , quality as the combination which fits the product to use in the future.  3) Vendor search – In this organization tries to identify companies who may be the appropriate suppliers of the specified product

Steps in Organizational/Industrial buying process

Steps in Organizational/Industrial buying process
 Organizational

buyers have a wide range of informational sources to use in their assessment of products & suppliers.  4) Proposal request – the company may send a request for proposal to qualified vendor asking them to bid based on product specification.  5) Vendor selection – the vendor selection is based on the following criteria :

 Overall

reputation of the supplier, financing terms, technical service offered, convenience in placing the order, data on the reliability of product, quality or price, reliability of the delivery time promised, repair and maintenance service after the date of purchase.  6) Purchase routine selection – Involves placing an order specifying all terms with vendor who processes it and ships the product. It is then received, approved and

Steps in Organizational/Industrial buying process

 payment

is made. Companies often negotiate a contract to cover purchase over specific length of time  7) Post purchase evaluation – involves evaluation of supplier’s performance by the buyer. It rates the supplier’s performance periodically based on quality, price, delivery, post sales service. Vendors may also receive the report so that they may modify their performance for better customer service.

Steps in Organizational/Industrial buying process

Cognitive Dissonance Theory
 Cognitive

dissonance is a tension between two opposite thoughts after consumer has bought something. The consumer is uncertain of the purchase decision he has made ( whether it is right choice or not)  This theory was developed by the former Stanford University Psychologist – Leon Festinger in 1957  Cognition – A thought about an object

 Cognitive

dissonance refers to the tendency of consumers to worry about the wisdom of major purchases after they have been made.  Ex: A product positioned as a luxury product with an elegant design, expensive packaging, limited distribution, and ads that stress exclusiveness should not be priced at or below an average product create dissonance in the minds of consumers

Cognitive Dissonance Theory

Cognitive Dissonance Theory
 This

theory suggests that we have an inner drive to hold all our attitudes and beliefs in harmony to avoid disharmony(dissonance – discomfort)  This theory refers to the situation involving conflicting attitudes, beliefs or behaviors. Due to this it creates a discomfort which is called dissonance.  When cognitive dissonance occurs after a purchase, it is called post purchase dissonance.

Cognitive Dissonance Theory
 For

instance : when consumers have made a commitment - made a down payment or placed an order for a expensive product (laptop), they often begin to feel cognitive dissonance when the unique qualities of the brand not selected i.e., left behind  The principle of this theory is to reduce post purchase dissonance in consumer purchase decision

 It

is one of the theory of Attitude. The basic concept of this theory was derived from the learning hierarchy of attitudes. The hierarchy of attitudes are :  Cognition - Affective -> Conative  (thoughts ->feelings ->actions) i.e, you think first, feel next & act last.  Attitudes are learned based on some experience or information about object which creates predisposition and cause consistent response.

Cognitive Dissonance Theory

Cognitive Dissonance Theory
 When

the individual is consistent with the target behavior and the target attitude then it results in consonance. When there is inconsistency between the target behavior and the target attitude then it results dissonance ( which is the theme of cognitive dissonance).  Ex: I like driving car , but if the driving results in accidents or frequent repairs then it creates discomfort or dissonance

Cognitive Dissonance Theory
 In

this ex: driving car is (target behavior A) – and as a result of accident and repair which results negative attitude towards the product ( target attitude - B).  This theory states that cognitions are consonant, dissonant and irrelevant. Cognitions are consistent or consonant if A implies B ( A – Behavior , B – Attitude). Cognitions are consonant when one follows from the another on the basis of logic or experience.

 Cognitions

can be inconsistent or dissonant if A is opposite of B. Cognitions are dissonant when they are opposed to one’s experience and the relationship of events.  Ex: when an individual buys an expensive car but is not suitable of long drives then it is said to be dissonant  Cognitions can be unrelated or irrelevant if A is not related to B. cognitions are totally irrelevant when two events are not interrelated.

Cognitive Dissonance Theory

Cognitive Dissonance Theory
 The

extent to which dissonance depends on the significance of the purchase decision, attractiveness of the rejected alternative, the number of the negative views in the choice made, number of options considered , whether the choice is made (forced or voluntary).  Dissonance can be reduced by :  i)changing his/her attitudes  ii) beliefs based on the situation, actively seeking the positive information about chosen alternative

 iii)selective

exposure – It is the tendency to avoid information inconsistent with one’s attitudes/beliefs  Conclusion  Cognitive dissonance helps to reduce post purchase dissonance in consumer purchase decision.  It applies to all situations involving attitude formation and change.  It results in problem-solving and decision-making

Cognitive Dissonance Theory

Cognitive Dissonance Theory
 Motivation

is a drive that impels the individual to his goal. For ex: as hunger man impels to eat , so does dissonance impels a person to change individual outcomes or behavior.  The marketers need to design consistent marketing mix that matches consumers attitudes, beliefs etc to reduce dissonance

Opinion Leadership
 Opinion

Leaders are the individuals who actively seek information and advice about products/services.  Opinion leaders are also called as influentials.  Ex: Any satisfied customer is a opinion leader.  Opinion leaders have strong informal relationships with the end-users.

Opinion Leadership
 Features/characteristics

of opinion leaders  They are socially more active than end users  Opinion leaders are primarily community social leaders whom the mass market is associated because of snob appeal.  Opinion leaders are found in all the areas of society and a specific person can become a opinion leader to a certain product areas and they act as opinion followers to some other areas.

 The

presence of the opinion leaders is effective where the group influence is strong for the products that are visible to whom the buyer respects.  Opinion leaders creates diffused network.  Opinion leaders are prompted by mass media to spread the information while the general public seeks information from them.  If the influence of mass media on public is not direct, powerful or automatic then it is mediated through opinion leaders

Opinion Leadership

Opinion Leadership
 People

who primarily interact within social class and acquire their lifestyle and other ideas from people like themselves are called as opinion leaders.  Opinion leaders are the sources of both information and advice. It is a two way process. The consumers can seek the following information :  Ex: which of the brands are the best, where to shop, who provides the best service, how to make use of the specific product etc

Opinion Leadership
 Opinion

leaders satisfy variety of needs by engaging a product-related conversation with the consumer.  They obtain new product or new usage information  They reduce the perceived risk by receiving the primary knowledge from a user about a specific product or brand.  They reduce the search time entailed in the identification of a needed product/service

Opinion Leadership
 Self

– involvement motivators – reduce post purchase uncertainty. Gain attention or status. Assert superiority and expertise.  Product-involvement motivators – express satisfaction or dissatisfaction with a product/service  Social involvement motivators – express neighbourhoodness and friendship by discussing about product/service that may be useful to others.

Opinion Leadership
 Message

– involvement – express one’s reaction to a stimulating advertisement by telling others about it  Innovativeness, willingness to talk, self-confidence, adaptability, gregariousness, diffusion etc are some of the qualities of the opinion leaders.

 Measurement

techniques for determining opinion leadership  Self designating method – Each respondent is asked a series of questions to determine the degree to which he/she perceives as an opinion leader. This method measures the individual’s self perception  Ex: do you influence other people in the selection of the products

Opinion Leadership

 Sociometric

method – the members of the social system are asked to identify whom they give advice and to whom they go for advice and information about a product category. This method measures the pattern of the individuals living in the society.  Ex: whom do you ask, who asks you for information about product category.

Opinion Leadership

 Key

informant method – carefully selected key information in a social system are asked to designate as opinion leaders  Ex: who are the most influential people in the group  Objective Method – it artificially places individuals in a position to act as opinion leaders and measures the results of their efforts. It measures the individuals ability to influence others.

Opinion Leadership

Opinion Leadership
 Conclusion

Opinion Leaders are the individuals who actively seek information and advice about products/services. Opinion leaders may be the friends, neighbours, family members , leaders of the social community.  Opinion leadership is effective due to the effective word-of-mouth communication

Opinion Leadership
 Measurement

techniques for determining opinion leadership  Self designating method  Sociometric method  Key informant method  Objective Method

 Consumerism

is a social force which makes the business community more honest, efficient, responsive and responsible.  Consumerism makes manufacturers & sellers compelled to adopt fair trade practices.  Consumerism can be viewed as an opportunity for businessmen to serve the consumers in a better and more effecient way.

Consumerism

Consumerism
 Features/

Characteristics  It proves to be a weapon for marketers to effectively implement the societal concept of marketing.  It helps the consumers to get rid of traders who resort to practices from hoarders, black marketers etc.  It ensures that government takes necessary measures to protect the consumer interests by guaranteeing their legitimate rights.

Consumerism  It makes the marketers to provide the true

It makes the marketers to provide the true information in their advertisements, truth about labeling & product performance.  Consumerism is the collective action of the consumers to protect their own interest.  It has three determinants – business, government and consumers itself.  Through consumerism, it is the moral responsibility of the manufacturer to provide the necessary instructions manual to the consumers along with the product

 To

ensure that the products are safe, products are tested before getting it affixed with the necessary quality standards approval.  Consumer education – information and knowledge about company, product etc.  Consumerism is any organised movement of citizens and government to enhance the rights and power of buyer in relation to sellers.

Consumerism

Consumerism
 Factors

influencing consumerism  Poverty & backwardness of the country  Explosive population growth  Unemployment  Illiteracy  Inability to understand the technical complexity of the product.  Disparities in the distribution of income & wealth.

 The

Consumer Protection Act , 1986  It is an important legislation passed by the government of India to ensure a proper system in the protection of consumer rights and the redressal of consumer disputes.  The objectives of this act are  To provide for the better protection of the interests of the consumers  To make establishment of consumer councils and authorities for the

Consumerism

 According

to section 2(d) of this act, he who purchases goods for consideration and who hires any services for consideration is a consumer.  To protect the legitimate rights of the consumer.  It includes all the services – banking, finance, insurance, transportation etc  This act also ensures right to give protection against marketing of goods which are hazardous, dangerous to life & property

Consumerism

 Right

to give correct information on the quality, quantity, purity and standards of the products/services delivered by the company.  To protect the consumer from unfair trade practices from the marketers.  The right to be able to make a choice from a variety of products at competitive prices.  The right to seek redressal against unfair trade practices and exploitation.  The right to consumer education

Consumerism

 Statutory

Regulators of Consumer Protection Act, 1986  The Monopolies & Restrictive Trade Practices Act ( MRTP Act, 1969)  Drugs Control Act, 1950  Sale of Goods Act, 1935  Essential Commodities Act, 1955  Standard Weights & Measures Act, 1956  Agricultural Products Grading & Marketing Act, 1937

Consumerism

 Topics

covered  Features of Consumerism  Factors influencing Consumerism  The Consumer Protection Act, 1986  Statutory Regulators Consumer Protection Act

Consumerism

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