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Unit No.

2 Unit Name- Consumer Behaviour Subject- (106 Basics of Marketing)

Course Code 106 Course Title- Basics of Marketing

Learning Objectives of the Course


1. Consumer behaviour relevance with marketing.
2. Organizational behaviour & Consumer behaviour.
Unit No.2 Consumer Behaviour
Contents of the Unit:-2
2.1 Meaning & importance of consumer behaviour, Comparison between, Organizational
Buying behaviour and consumer buying behaviour, Buying roles,
2.2 Five steps buyer decision process
Learning Objectives of the Unit:-
1. To understand process of Consumer behaviour in marketing.
Key Definitions, Key Words in the definitions
Consumer behaviour, Honking: the harsh sound of a car
horn, Screech: a harsh high-pitched scream or sound
Stimuli: something that rouses a person or thing to
activity or energy
Hierarchical: a system which grades ranking one above another
Please refer the attached Pdf copy of notes.
Key Concepts
Consumer behaviour,
Please refer the attached Pdf copy of notes.
Questions for Practice (Theory based, application based)
1. What is consumer behaviour? Discuss in brief its importance and
Application in marketing with illustrations.
2. Discuss the concept of need and motivation and its impact on
Marketing.
3. Explain the 5 steps of consumer buying behaviour
4. Write a detailed note on social surroundings and its impact
on Marketing.

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Prof.Nilesh Limbore
Unit No.2 Unit Name- Consumer Behaviour Subject- (106 Basics of Marketing)

Unit 2

Consumer Behaviour
Meaning and Definition:
Consumer behaviour is the study of how individual customers, groups or organizations select,
buy, use, and dispose ideas, goods, and services to satisfy their needs and wants. It refers to the
actions of the consumers in the marketplace and the underlying motives for those actions.
Marketers expect that by understanding what causes the consumers to buy particular goods and
services, they will be able to determinewhich products are needed in the marketplace, which
are obsolete, and how best to present the goods to the consumers.
The study of consumer behaviour assumes that the consumers are actors in the marketplace. The
perspective of role theory assumes that consumers play various roles in the marketplace. Starting
from the information provider, from the user to the payer and to the disposer, consumers play
these roles in the decision process.
The roles also vary in different consumption situations; for example, a mother plays the role of
an influencer in a childs purchase process, whereas she plays the role of a disposer for the
products consumed by the family.
Some selected definitions of consumer behaviour are as follows:
According to Engel, Blackwell, and Mansard, consumer behaviour is the actions and decision
processes of people who purchase goods and services for personal consumption.
According to Louden and Bitta, consumer behaviour is the decision process and physical
activity, which individuals engage in when evaluating, acquiring, using or disposing of goods
and services.

Nature of Consumer Behaviour:


1. Influenced by various factors:
The various factors that influence the consumer behaviour are as follows:
a) Marketing factors such as product design, price, promotion, packaging, positioning and
distribution.

b) Personal factors such as age, gender, education and income level.

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Prof.Nilesh Limbore
Unit No.2 Unit Name- Consumer Behaviour Subject- (106 Basics of Marketing)

Psychological factors such as buying motives, perception of the product and attitudes towards the
product.
Situational factors such as physical surroundings at the time of purchase, social surroundings and
time factor.
Social factors such as social status, reference groups and family.
Cultural factors, such as religion, social classcaste and sub-castes.

2. Undergoes a constant change:


Consumer behaviour is not static. It undergoes a change over a period of time depending on the
nature of products. For example, kids prefer colorful and fancy footwear, but as they grow up as
teenagers and young adults, they prefer trendy footwear, and as middle-aged and senior citizens
they prefer more sober footwear. The change in buying behaviour may take place due to several
other factors such as increase in income level, education level and marketing factors.

3. Varies from consumer to consumer:


All consumers do not behave in the same manner. Different consumers behave differently. The
differences in consumer behaviour are due to individual factors such as the nature of the
consumers, lifestyle and culture. For example, some consumers are technoholics. They go on a
shopping and spend beyond their means.
They borrow money from friends, relatives, banks, and at times even adopt unethical means to
spend on shopping of advance technologies. But there are other consumers who, despite having
surplus money, do not go even for the regular purchases and avoid use and purchase of advance
technologies.
4. Varies from region to region and country to county:
The consumer behaviour varies across states, regions and countries. For example, the behaviour
of the urban consumers is different from that of the rural consumers. A good number of rural
consumers are conservative in their buying behaviours.

The rich rural consumers may think twice to spend on luxuries despite having sufficient funds,
whereas the urban consumers may even take bank loans to buy luxury items such as cars and
household appliances. The consumer behaviour may also varies across the states, regions and
countries. It may differ depending on the upbringing, lifestyles and level of development.

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Prof.Nilesh Limbore
Unit No.2 Unit Name- Consumer Behaviour Subject- (106 Basics of Marketing)

5. Information on consumer behaviour is important to the marketers:


Marketers need to have a good knowledge of the consumer behaviour. They need to study the
various factors that influence the consumer behaviour of their target customers.
The knowledge of consumer behaviour enables them to take appropriate marketing decisions in
respect of the following factors:
1. Product design/model
2. Pricing of the product
3. Promotion of the product
4. Packaging
5. Positioning
6. Place of distribution
7. Leads to purchase decision:
Positive consumer behaviour leads to a purchase decision. A consumer may take the decision of
buying a product on the basis of different buying motives. The purchase decision leads to higher
demand, and the sales of the marketers increase. Therefore, marketers need to influence
consumer behaviour to increase their purchases.

7. Varies from product to product:


Consumer behaviour is different for different products. There are some consumers who may buy
more quantity of certain items and very low or no quantity of other items. For example, teenagers
may spend heavily on products such as cell phones and branded wears for snob appeal, but may
not spend on general and academic reading. A middle- aged person may spend less on clothing,
but may invest money in savings, insurance schemes, pension schemes, and so on.

8. Improves standard of living:


The buying behaviour of the consumers may lead to higher standard of living. The more a person
buys the goods and services, the higher is the standard of living. But if a person spends less on
goods and services, despite having a good income, they deprive themselves of higher standard of
living.
9. Reflects status:

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Prof.Nilesh Limbore
Unit No.2 Unit Name- Consumer Behaviour Subject- (106 Basics of Marketing)

The consumer behaviour is not only influenced by the status of a consumer, but it also reflects it.
The consumers who own luxury cars, watches and other items are considered belonging to a
higher status. The luxury items also give a sense of pride to the owners.

Consumer Behaviour - Meaning and Important Concepts


Who is a Consumer?
Any individual who purchases goods and services from the market for his/her end-use is called a
consumer.
In simpler words a consumer is one who consumes goods and services available in the market.
Example - Tom might purchase a tricycle for his son or Mike might buy a shirt for himself. In
the above examples, both Tom and Mike are consumers.
What is consumer Interest?

Every customer shows inclination towards particular products and services. Consumer interest is
nothing but willingness of consumers to purchase products and services as per their taste, need
and of course pocket.

Let us go through the following example:


Both Maria and Sandra went to the nearby shopping mall to buy dresses for themselves. The
store manager showed them the best dresses available with him. Maria immediately purchased
two dresses but Sandra returned home empty handed. The dresses were little too expensive for
Sandra and she preferred simple and subtle designs as compared to designer wears available at
the store.
In the above example Sandra and Maria had similar requirements but there was a huge difference
in their taste, mind set and ability to spend.

What is Consumer Behaviour?


Consumer Behaviour is a branch which deals with the various stages a consumer goes through
before purchasing products or services for his end use.
Why do you think an individual buys a product?

Need

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Prof.Nilesh Limbore
Unit No.2 Unit Name- Consumer Behaviour Subject- (106 Basics of Marketing)

Social Status
Gifting Purpose
Why do you think an individual does not buy a product?

No requirement
Income/Budget/Financial constraints
Taste

When do you think consumers purchase products?

Festive season
Birthday
Anniversary
Marriage or other special occasions

There are infact several factors which influence buying decision of a consumer ranging from
psychological, social, and economic and so on.
The study of consumer behaviour explains as to:

Why and why not a consumer buys a product?


When a consumer buys a product?
How a consumer buys a product?
During Christmas, the buying tendencies of consumers increase as compared to other months. In
the same way during Valentines week, individuals are often seen purchasing gifts for their
partners. Fluctuations in the financial markets and recession decrease the buying capacity of
individuals.
In a laymans language consumer behaviour deals with the buying behaviour of individuals.
The main catalyst which triggers the buying decision of an individual is need for a particular
product/service. Consumers purchase products and services as and when need arises.
According to Belch and Belch, whenever need arises; a consumer searches for several
information which would help him in his purchase.
Following are the sources of information:

Personal Sources

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Prof.Nilesh Limbore
Unit No.2 Unit Name- Consumer Behaviour Subject- (106 Basics of Marketing)

Commercial Sources
Public Sources
Personal Experience
Perception also plays an important role in influencing the buying decision of consumers.
Buying decisions of consumers also depend on the following factors:

Messages, advertisements, promotional materials, a consumer goes through also


called selective exposure.
Not all promotional materials and advertisements excite a consumer. A consumer does
not pay attention to everything he sees. He is interested in only what he wants to see.
Such behaviour is called selective attention.
Consumer interpretation refers to how an individual perceives a particular message.
A consumer would certainly buy something which appeals him the most. He would
remember the most relevant and meaningful message also called as selective retention.
He would obviously not remember something which has nothing to do with his need.

Stages in Consumer Decision Making Process


An individual who purchases products and services from the market for his/her own
personal consumption is called as consumer.
To understand the complete process of consumer decision making, let us first go through
the following example:
Tim went to a nearby retail store to buy a laptop for himself. The store manager showed
him all the latest models and after few rounds of negotiations, Tim immediately selected
one for himself.
In the above example Tim is the consumer and the laptop is the product which Tim
wanted to purchase for his end-use.
Why do you think Tim went to the nearby store to purchase a new laptop ?
The answer is very simple. Tim needed a laptop. In other words it was actually Tims
need to buy a laptop which took him to the store.
The Need to buy a laptop can be due to any of the following reasons:

His old laptop was giving him problems.


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Prof.Nilesh Limbore
Unit No.2 Unit Name- Consumer Behaviour Subject- (106 Basics of Marketing)

He wanted a new laptop to check his personal mails at home.


He wanted to gift a new laptop to his wife.
He needed a new laptop to start his own business.
The store manager showed Tim all the samples available with him and explained him the
features and specifications of each model. This is called information. Tim before buying the
laptop checked few other options as well. The information can come from various other sources
such as newspaper, websites, magazines, advertisements, billboards etc.
This explains the consumer buying decision process.
A consumer goes through several stages before purchasing a product or service.
NEED

INFORMATION GATHERING/SEARCH

EVALUATION OF ALTERNATIVES

PURCHASE OF PRODUCT/SERVICE

POST PURCHASE EVALUATION
Step 1 - Need is the most important factor which leads to buying of products and
services. Need infact is the catalyst which triggers the buying decision of individuals.
An individual who buys cold drink or a bottle of mineral water identifies his/her need as
thirst. However in such cases steps such as information search and evaluation of
alternatives are generally missing. These two steps are important when an individual
purchases expensive products/services such as laptop, cars, mobile phones and so on.
Step 2 - When an individual recognizes his need for a particular product/service he tries to gather
as much information as he can.
An individual can acquire information through any of the following sources:

Personal Sources - He might discuss his need with his friends, family members,
coworkers and other acquaintances.

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Prof.Nilesh Limbore
Unit No.2 Unit Name- Consumer Behaviour Subject- (106 Basics of Marketing)

Commercial sources - Advertisements, sales people (in Tims case it was the store manager),
Packaging of a particular product in many cases prompt individuals to buy the same, Displays
(Props, Mannequins etc)
Public sources - Newspaper, Radio, Magazine
Experiential sources - Individuals own experience, prior handling of a particular product (Tim
would definitely purchase a Dell laptop again if he had already used one)
Step 3 - The next step is to evaluate the various alternatives available in the market. An
individual after gathering relevant information tries to choose the best option available as per his
need, taste and pocket.
Step 4 - After going through all the above stages, customer finally purchases the product.
Step 5 - The purchase of the product is followed by post purchase evaluation. Post purchase
evaluation refers to a customers analysis whether the product was useful to him or not, whether
the product fulfilled his need or not?
5 Common Factors Influencing Consumer Behaviour

Consumer behaviour can be broadly classified as the decisions and actions that influence
the purchasing behaviour of a consumer. What drives consumers to choose a particular product
with respect to others is a question which is often analyzed and studied by marketers. Most of the
selection process involved in purchasing is based on emotions and reasoning.
The study of consumer behaviour not only helps to understand the past but even predict the
future. The below underlined factors pertaining to the tendencies, attitude and priorities of people
must be given due importance to have a fairly good understanding of the purchasing patterns of
consumers

1. Marketing Campaigns
Advertisement plays a greater role in influencing the purchasing decisions made by consumers.
They are even known to bring about a great shift in market shares of competitive industries by
influencing the purchasing decisions of consumers. The Marketing campaigns done on regular
basis can influence the consumer purchasing decision to such an extent that they may opt for one
brand over another or indulge in indulgent or frivolous shopping. Marketing campaigns if
undertaken at regular intervals even help to remind consumers to shop for not so exciting
products such as health products or insurance policies.

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Prof.Nilesh Limbore
Unit No.2 Unit Name- Consumer Behaviour Subject- (106 Basics of Marketing)

2. Economic Conditions

Consumer spending decisions are known to be greatly influenced by the economic situation
prevailing in the market. This holds true especially for purchases made of vehicles, houses and
other household appliances. A positive economic environment is known to make consumers
more confident and willing to indulge in purchases irrespective of their personal financial
liabilities.
3. Personal Preferences

At the personal level, consumer behaviour is influenced by various shades of likes, dislikes,
priorities, morals and values. In certain dynamic industries such as fashion, food and personal
care, the personal view and opinion of the consumer pertaining to style and fun can become the
dominant influencing factor. Though advertisement can help in influencing these factors to some
extent, the personal consumer likes and dislikes exert greater influence on the end purchase made
by a consumer.
4. Group Influence

Group influence is also seen to affect the decisions made by a consumer. The primary influential
group consisting of family members, classmates, immediate relatives and the secondary
influential group consisting of neighbors and acquaintances are seen have greater influence on
the purchasing decisions of a consumer. Say for instance, the mass liking for fast food over home
cooked food or the craze for the SUVs against small utility vehicle are glaring examples of the
same.
5. Purchasing Power

Purchasing power of a consumer plays an important role in influencing the consumer behaviour.
The consumers generally analyze their purchasing capacity before making a decision to buy and
products or services. The product may be excellent, but if it fails to meet the buyers purchasing
ability, it will have high impact on it its sales. Segmenting consumers based on their buying
capacity would help in determining eligible consumers to achieve better results.
Understanding, analyzing and keeping track of consumer behaviour is very critical for a
marketing department to retain their position successfully in the market place. There are various
other factors too that influence consumer behaviour apart from the four listed above.

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Prof.Nilesh Limbore
Unit No.2 Unit Name- Consumer Behaviour Subject- (106 Basics of Marketing)

Risk, uncertainty and heuristics


Surprisingly there is a risk associated with buying products. Some examples are:

Type of risk Explanation Examples

Physical risk The fear of injury from the Buying a car with defective brakes;
product buying drugs with unpleasant side
effects.

Financial risk Losing or wasting money Buying a car that depreciates quickly;
buying a computer and finding the price
falls to half within three months.

Functional risk Finding out the product will Buying a car that breaks down
not do the job you bought it constantly; buying a painkiller that does
for not stop the pain; buying a computer and
having to replace the falty hard drive
every two months.

Psychological risk The fear of looking foolish Buying a suit that friends think looks
weird on you; buying a Robin Reliant.

To deal with these risks people learn heuristics. These are simple rules that seem to work most
of the time. Heuristics are subject to alteration in the light of new knowledge.
Heuristics can be used by the consumer to simplify decision making. They may be stored in the
consumers memory, or may be constructed on the spot based on the information received, but
either way they allow the consumer to reach rapid decisions without overstretching his or her
cognitive capacity.
Use of heuristics in the extreme leads to habitual behaviour. For example I go to the same
restaurant on the same night with the same bloke to eat the same meal and have a natter. I
cannot be bothered with scanning a huge menu and have to go through that entire decision
making - I am usually too tired and simply want to enjoy the company.

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Prof.Nilesh Limbore
Unit No.2 Unit Name- Consumer Behaviour Subject- (106 Basics of Marketing)

Some customers may have less rigid heuristics but they may still be a barrier to purchasing. A
customer has the price of 1000 as the most he or she will pay for a computer. This may be so
strong that a good value for money machine at 1,200 will be spurned in order to buy one which
is only half as good for 800.

ORGANISATIONAL BUYER BEHAVIOUR


Organisational buyer behaviour has usefully been broken down into three elements by Fisher.13
1. Structure: the who factor who participates in the decision-making process and their
particular roles.
2. Process: the how factor the pattern of information getting, analysis, evaluation and
decision-making which takes place as the purchasing organisation moves towards a decision.
3. Content: the what factor the choice criteria used at different stages of the process and by
different members of the decision-making unit

Process for Organizational buying behaviour

Recognition of a problem
(need)

Determination of
characteristics, specification
and quantity of needed item

Search for and qualification


of potential sources

Acquisition and analysis of


proposals

Evaluation of proposals and


selection of supplier(s)

Selection of an order routine

Performance feedback and


evaluation

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Prof.Nilesh Limbore
Unit No.2 Unit Name- Consumer Behaviour Subject- (106 Basics of Marketing)

Difference between Consumer Buying Behaviour and Organizational Buying Behaviour


The differences between consumer buying behaviour and organizational buying behaviour can
be listed as follows:

Bases Consumer Buying Behaviour Organizational Buying Behaviour

Purpose of The individual consumers buy The organizations buy goods and services for
Buying goods and services for ultimate their business needs. The buying purpose of
use or satisfy their needs. The them is to earn profit by using and reselling
buying purpose of such the goods and services.
consumers is not to earn profit by
reselling the goods and services.

Quantity Although consumers buy various Organizational buying is done in large


kinds of goods, the quantity of quantities. There are several reasons why
goods remains small. They buy organizations must buy the goods they need
only the necessary quantity of in bulk. In the first place, they use large
goods, which they need for quantities of each item and must maintain
regular use. inventories at a level high enough that they
will not run out of stock. Secondly, it is
cheaper and more efficient to make large-
volume purchases.

Purchase Consumer buying takes decision Organizational purchasing is a rational


Decision by consumers themselves. process because the purchasing behaviour of
Sometimes they can consult with organizations is guided by objective factors
family members and friends. having to do with production and distribution.
They need not fulfil any It takes long time than consumer buying.
formality like organizational
buying.

Market Most of the consumers may not Organizational purchase criteria are
Knowledge have adequate knowledge and specifically defined. Organizational buyers
information about market usually have fewer brands to choose from
situation, available goods and than do individuals, and their purchases must

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Prof.Nilesh Limbore
Unit No.2 Unit Name- Consumer Behaviour Subject- (106 Basics of Marketing)

services, etc. The educated be evaluated on the basis of criteria that are
customers may be aware and specific to the overall needs of the
have knowledge about market organization. The organizational buyers have
and goods. full knowledge of market and suppliers.

Types of Consumers buy many goods to Organizational buyers buy limited goods to
Goods use to satisfy personal or family use to conduct business.
needs.

Effect Consumer buying behaviour is Many individuals are involved in the buying
effected by age, occupation, process. Within large organizations, rarely is
income level, education, gender one individual solely responsible for the
etc. of consumers. purchase of products for the purchase of
products or services. Instead, many
individuals and departments may be involved
and departments may be involved in the
buying process.

Buying The consumer buying process is Buyers and sellers in the organizational
Process very simple. No need to fulfil any market must maintain extensive contact.
formality. There is also no need
to maintain extensive contact
with sellers.

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Prof.Nilesh Limbore