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Q. 1 Define consumer Behavior. Outline the need and scope of study of consumer behavior for a marketing organization.

Ans: Consumer Behaviour: It is the study of consumers and the processes they use to choose, use (consume), and dispose of products and services. A more in depth definition will also include how that process impacts the world. Consumer behavior incorporates ideas from several sciences including psychology, biology, chemistry and economics. NATURE OF CONSUMER BEHAVIOUR Consumer behaviour can be defined as: "The decision process and physical activity engaged in when evaluating, acquiring, using or disposing of goods and services." This definition raises a few queries in our minds-what or who are consumers? What is the decision process that they engage in? Answers to these questions help define the broad nature of consumer behaviour. Why Study Consumer Behaviour ? The study of Marketing Management, the "Consumers" or the "Customers" play a very critical role as these are the people who finally BUY the goods & services of the organisation, and the firm is always on the move to make them buy so as to earn revenue. It's crucial from both the points of view as given below : From the customers' point of view : Customers today are in a tough spot. Today, in the highly developed & technologically advanced society, the customers have a great deal of choices & options (and often very close & competing) to decide on. From the marketers' point of view : "The purpose of marketing is to sell more stuff to more people more often for more money in order to make more profit". This is the basic principle of requirement for the marketers in earlier days where aggressive selling was the aim. Now it can't be achieved by force, aggression or plain alluring. For the customers are today more informed, more knowledgeable, more demanding, more discerning. And above all there is no dearth of marketers to buy from. The marketers have to earn them or win them over. The study of consumer behaviour (CB) is very important to the marketers because it enables them to understand and predict buying behaviour of consumers in the marketplace; it is concerned not only with what consumers buy, but also with why they buy it, when and where and how they buy it, and how often they buy it, and also how they consume it & dispose it. Consumer research is the methodology used to study consumer behaviour; it takes place at every phase of the consumption process: before the purchase, during the purchase, and after the purchase. Research shows that two different buyers buying the same product may have done it

for different reasons, paid different prices, used in different ways, have different emotional attachments towards the things and so on. According to Professor Theodore Levitt of the Harvard Business School, the study of Consumer Behaviour is one of the most important in business education, because the purpose of a business is to create and keep customers. Customers are created and maintained through marketing strategies. And the quality of marketing strategies depends on knowing, serving, and influencing consumers. In other words, the success of a business is to achieve organisational objectives, which can be done by the above two methods. This suggests that the knowledge & information about consumers is critical for developing successful marketing strategies because it challenges the marketers to think about and analyse the relationship between the consumers & marketers, and the consumer behaviour & the marketing strategy. Consumer behaviour is interdisciplinary; that is, it is based on concepts and theories about people that have been developed by scientists, philosophers & researchers in such diverse disciplines as psychology, sociology, social psychology, cultural anthropology, and economics. The main objective of the study of consumer behaviour is to provide marketers with the knowledge and skills, that are necessary to carry out detailed consumer analyses which could be used for understanding markets and developing marketing strategies. Thus, consumer behaviour researchers with their skills for the naturalistic settings of the market are trying to make a major contribution to our understanding of human thinking in general. The study of consumer behaviour helps management understand consumers' needs so as to recognise the potential for the trend of development of change in consumer requirements and new technology. And also to articulate the new thing in terms of the consumers' needs so that it will be accepted in the market well. The following are a few examples of the benefits of the study of consumer behaviour derived by the different categories of people : 1. A marketing manager would like to know how consumer behaviour will help him to design better marketing plans to get those plans accepted within the company. 2. In a non-profit service organisation, such as a hospital, an individual in the marketing department would like to know the patients' needs and how best to serve those needs. 3. Universities & Colleges now recognise that they need to know about consumer behaviour to aid in recruiting students. "Marketing Admissions" has become an accepted term to mean marketing to potential students. SCOPE OF CONSUMER BEHAVIOUR The scope of a subject refers to everything that is studied as part of that subject. When we set out to explain the scope of consumer behaviour we need to refer to all that which forms part of consumer behaviour. The scope of consumer behaviour has been briefly touched upon in the previous section wherein it was explained that how consumer behaviour includes not only the actual buyer and his act of buying but also the various roles played by different individuals and the influence they exert on the final purchase decision. In this section we shall define and explain the scope of study of consumer behaviour. To define the scope of a subject it is important to set parameters or a framework within which it shall be studied. presents one such framework for studying consumer behaviour. This framework is made up of three main sections-the decision process as represented by the inner-most circle,

the individual determinants on the middle Circle and the external environment which is represented by the outer circle. The study of all these three sections constitutes the scope of consumer behaviour. Here, we shall dwell on these constituents of the framework only briefly as they are explained in detail in the following units The decision-making process How do customers buy? Research suggests that customers go through a five-stage decision-making process in any purchase. This is summarised in the diagram below:

This model is important for anyone making marketing decisions. It forces the marketer to consider the whole buying process rather than just the purchase decision (when it may be too late for a business to influence the choice!) The model implies that customers pass through all stages in every purchase. However, in more routine purchases, customers often skip or reverse some of the stages.

For example, a student buying a favourite hamburger would recognise the need (hunger) and go right to the purchase decision, skipping information search and evaluation. However, the model is very useful when it comes to understanding any purchase that requires some thought and deliberation. The buying process starts with need recognition. At this stage, the buyer recognises a problem or need (e.g. I am hungry, we need a new sofa, I have a headache) or responds to a marketing stimulus (e.g. you pass Starbucks and are attracted by the aroma of coffee and chocolate muffins). An aroused customer then needs to decide how much information (if any) is required. If the need is strong and there is a product or service that meets the need close to hand, then a purchase decision is likely to be made there and then. If not, then the process of information search begins. A customer can obtain information from several sources: Personal sources: family, friends, neighbours etc Commercial sources: advertising; salespeople; retailers; dealers; packaging; point-of-sale displays Public sources: newspapers, radio, television, consumer organisations; specialist magazines Experiential sources: handling, examining, using the product The usefulness and influence of these sources of information will vary by product and by customer. Research suggests that customers value and respect personal sources more than commercial sources (the influence of word of mouth). The challenge for the marketing team is to identify which information sources are most influential in their target markets. In the evaluation stage, the customer must choose between the alternative brands, products and services. How does the customer use the information obtained? An important determinant of the extent of evaluation is whether the customer feels involved in the product. By involvement, we mean the degree of perceived relevance and personal importance that accompanies the choice. Where a purchase is highly involving, the customer is likely to carry out extensive evaluation. High-involvement purchases include those involving high expenditure or personal risk for example buying a house, a car or making investments. Low involvement purchases (e.g. buying a soft drink, choosing some breakfast cereals in the supermarket) have very simple evaluation processes. Why should a marketer need to understand the customer evaluation process?

The answer lies in the kind of information that the marketing team needs to provide customers in different buying situations. In high-involvement decisions, the marketer needs to provide a good deal of information about the positive consequences of buying. The sales force may need to stress the important attributes of the product, the advantages compared with the competition; and maybe even encourage trial or sampling of the product in the hope of securing the sale. Post-purchase evaluation - Cognitive Dissonance The final stage is the post-purchase evaluation of the decision. It is common for customers to experience concerns after making a purchase decision. This arises from a concept that is known as cognitive dissonance. The customer, having bought a product, may feel that an alternative would have been preferable. In these circumstances that customer will not repurchase immediately, but is likely to switch brands next time. To manage the post-purchase stage, it is the job of the marketing team to persuade the potential customer that the product will satisfy his or her needs. Then after having made a purchase, the customer should be encouraged that he or she has made the right decision. APPLICATIONS OF CONSUMER BEHAVIOUR IN MARKETING Marketing is defined as "human activity directed at satisfying needs and wants through exchange processes". Thus the beginning of marketing lies in identifying unsatisfied human needs and wants and understanding the ensuing activity which people engage in to fulfil these. And that, as we have described, is the realm of consumer behaviour. Consumer behaviour and marketing go hand-in-hand. Trying to do the latter without an understanding of the former in akin to firing a shot in the dark. 14 Consumer Behaviour-Issues and Concepts Consumer behaviour has a number of applications in the area of marketing as described in the following paragraphs. 1 Analyzing Market Opportunity: Study of consumer behaviour helps in identifying needs and wants which are unfulfilled. This is done by examining trends in income, consumers lifestyles and emerging influences. The trend towards increasing number of working wives. and greater emphasis on leisure and convenience have signalled the emerging needs for household gadgets such as vacuum cleaner, washing machine and mixer grinder. Tortoise Mosquito repellant coils and Good Knight electrical repellants were marketed in response to a genuinely felt need of the people. Its rapidly rising sales graph is an indication of how well the product has satisfied the consumer's need. 2 Selecting the Target Market: The study of the consumer trends would reveal distinct groups of consumers with very distinct needs and wants. Knowing who these groups are, how they behave, how they decide to buy enables the marketer to market products/services especially suited to their needs. All this is made possible only by studying in depth the consumer and his purchase behaviour. A study of potential consumers for shampoo revealed that there was a class

of consumers who would like to use shampoo only on special occasions and who otherwise use soap to wash their hair. Further, this consumer class would not afford to spend more than three or four rupees on shampoo. Having identified this target market, companies with leading brands launched their shampoos in small sachets containing enough quantity for one wash and priced just at two or three rupees. 3 Determining the Product Mix: Having identified the unfulfilled need slot and having modified the product to suit differing consumer tastes, the marketer now has to get down to the brass tacks of marketing. He has to determine the right mix of product, price promotion and advertising. Again consumer behaviour is extremely useful as it helps find answers to many perplexing questions. Product: The marketer has the product that will satisfy hitherto unfulfilled consumer need, but he must decide the size, shape and attributes of the product. He must figure out whether it is better to have one single product or a number of models to choose from. Does the product require any special kind of packaging? Does it need any guarantee or after sales service? What associated products and services can be offered alongside? Maggi Noodles were first launched in the most common flavours such as masala and capsicum. The study of consumer behaviour also guides the marketer in making decisions regarding packaging. Pan Parag was first introduced in tins. But study of consumer behaviour revealed that people wanted smaller packing which they could conveniently carry on their person and in response to this the individual pouches were introduced. Further study of consumers revealed a problem with, these pouches. Once opened and kept in the purse or pocket, the pan masala would spill out of the pouch into the purse or pocket. To overcome this problem, Pan Parag has now launched a pouch with a zip. You eat as much as you want, zip up the packet and put it in your pocket without fear of spillage and wastage. Price: What price should the marketer Charge for the product? Should it be the same as that of the competing product or lower or higher? Should the price be marked on the product or left to the discretion of the retailer to charge what he can from the customer? Should any price discounts be offered? What is the customer perception of a lower or higher price? Would a lower price stimulate sales? Or is a lower price associated with poor quality? Distribution: Having determined the product size, shape, packaging and price, the next decision the marketer has to make is regarding the distribution channel. What type of retail outlets should sell the products? Should it be sold through all the retail outlets or only through a selected few? Should it be sold through existing outlets which also sell competing brands or should new outlets selling exclusively your brand of product be created? How critical is the location of the retail outlets from the consumers' viewpoint? Does the consumer look for the nearest convenient location or is he willing to travel some distance for buying the product?

Promotion: The marketer here is concerned with finding the most effective methods of promotion which will make the product stand out amongst the clutter of so many other brands: and products, which will help increase the sales objective and yet be within the budget. This is possible only when the marketer knows who his target consumers are, where are they located, what media do they have access to, what is their preferred media and what role does advertising play in influencing the purchase decision? 4 Use in Non-profit and Social Marketing: The knowledge of consumer behaviour is also useful in the marketing of non-profit or social or governmental services of institution such as hospitals, voluntary agencies, law enforcement and tax collection agencies. The income tax authorities have always been perceived in negative manner by the common man who fears them and views them in a suspicious light. To overcome this poor image, advertisements on TV and in newspapers and magazines are regularly released, wherein a friendly, helpful image is sought to be projected. Moreover, there is greater dissemination of information regarding the rights and responsibilities of the taxpayer. Similarly, Delhi Police is trying to overcome the problem of poor image by projecting itself as always alert and available for help through regular newspaper advertisements. 5. Activity In your own work experience, can you identify some decisions regarding product pricing, distribution and promotions, which were based on the knowledge of consumer behaviour.

Q.2 What are the stages of consumer decision process? Ans The consumers decision making process is the way in which people gather and assess information and make choices among alternative goods, services, organizations, people, places, and ideas. It consists of the process itself and factors affecting the process. The consumer decision making process consists of five basic stages. Factors affecting the decision making process are a consumers demographic, social, and psychological characteristics.