A SEMINAR REPORT On Consumer Behaviour and Buying Decision Making.

Submitted in partial fulfillment for the award of degree of MBA.

Submitted by: Nilofer Anees.

Submitted to: Head of Department.

(MBA 2nd SEM)


Seminar is an important part of any discipline and the MBA course is no exception to this general rule. A seminar helps a student in getting acquainted with the manner in which his knowledge is being practically used and this is normally different from books. Studying the consumer buying behavior is a very complex process, as it involves not only the economic factors but also the emotional factors. However, there is a need to study the consumer behavior, as it helps to position the products better and develop effective marketing strategies.

I am happy to acknowledge that I have completed the seminar report after the full guidance, support and full encouragement of all those involved. This project cannot be completed without proper guidance and proper cooperation of faculty members of college and friends. I express my deepest indebtness to respected Director Sir, Dean and HOD, department of Management studies for stimulation to complete the project work in time. I wish to express my gratitude and indebtness to Miss Sheetal Soni, lecturer, for her encouragement, valuable suggestion, helpful comments and constructive criticism made by her. I pay my heartfelt regards to my parents who have been source of inspiration and motivation and their appreciation and creative comments on the work. Above all my sincere thanks to God- the almighty that made this task possible.


S.NO 1. 2. 3. 4. 5. 6. 7. 8.

Contents Pg No. Introduction 1 Models of Consumer 3 Behaviour Importance of 4 Consumer Behaviour Marketing 5 Implications Buying Decisions 8 Buying Decision 11 Process Conclusion 15 Bibliography 16

The field of consumer behaviour is enormous, and highlights the importance of the customer centre of the marketer's universe. Each consumer is unique with different needs and wants and buying choices and habits are influenced by habit, and choice that are in turn tempered by psychological and social drivers that affect choice and purchase decision process. It is a complex multi dimensional variable. Applications of consumer behavior decisions lie on marketing strategies, regulatory policies, social marketing and informed individual. The general structure and concept of consumer behaviour is fragmented into four major categories – 1) External influence 2) Internal influence 3) Self concept and 4) Lifestyle. External influences include culture, subculture, demographics, social status, reference group, marketing activities and family. Internal influences include perception, learning, memory, motives, personality emotions, and attitude. Self concept and Lifestyle produce needs and desire, many of which consumption decision is specified. Culture plays the most pervasive influence on external factors of consumer behaviour. It varies in values and nonverbal communications. Sub culture is a segment of larger culture whose members share distinguishing values and patterns of behaviour. Demographics consist of structure, size and distribution. Social status refers to ones position in relatives to others on one or more dimensions valued in society. Household plays an important decision on most consumption decisions. Family household consists of a family and any unrelated people residing in the same housing unit. Effect of household culture and values play an important role in buying decisions. Consumer behaviour theory prior to the Second World War was based on accepted economic theory of the "rational man" model of decision making. The central idea of

economics is that people make decisions by weighing costs and benefits in a rational manner. The consumer's objective is therefore to select a set of product quantities that maximize satisfaction (or utility), subject to available income. Utility in this context means the ability of a product to meet functional needs. Product prices and income are predetermined and, consequently only the quantities of the two products purchased are varied to maximize utility. Rational therefore means the "explainable" process of consumer behaviour. Current approaches suggest that behavioural underpinnings in consumer decision process is beyond pure rational dimensions and stem from both innate and acquired needs that involve a complex combination of conscious and unconscious process as well as rational and emotional factors. Thus consumer rationality is mediated by dynamics such as personal and perceptual distortion, risk tolerance and power relations which in turn are subject to cultural and intellectual prejudices such as gender, age, and ethnicity. This contributes to the notion of marketing as a normative discipline with elements of art rather than science in its practice. Arguably as research "explains" the complexity of the dynamics of consumer behaviour, it will expand the definition of what constitutes a rational consumer. This behavioural component allows marketers to identify prospective customers' needs and wants and influence the exchange, perception and satisfaction dynamics of the purchasing decision process.

Models of consumer behavior.
There are number of models to deal with entire gamut of consumer behavior. Some popular models are as follows:-

The Learning Model:
It is based on Pavlov a stimulus-response theory, relating to classical conditioning.pavlov was Russian physiologist. This model is very significant for the marketing firms. It explains that firms can change or influence consumer behavior by designing or manipulating the drives, stimuli or responses in order to get favorable results. The model believes on learning, forgetting, ability and discriminating of consumers.

The Economic Model:
This model assumes human being as a rational man. It believes that emotions play a little role in buying decision of consumers. It explains that consumers buying decisions are guided by utility n rationale considerations. her include economy,efficiency.quality,durability,safety,performance,resale value,etc,etc.the sole criterion for the allocation remains the intention of getting maximum benefits n utility frm the product.the allocation to purchase different products remains very judicious.

The Sociological Model:
It believes that consumer is a part of society.person has no existene in isolation of the society. The model explains that buying decisions of an individual is greatly influenced by the society. The society includes family, friends, relatives, social class, etc. all these make their own great impact on buying decisions of consumers. This model differs from the economic model.this model believes that consumers buying decisions r not totally governed by rationality n utility. In order to remain with the society n to remain the part of it consumer’s hv a desire to follow the consumption pattern prevailing in their social

group. It may b possible that specific consumer may not hv need of a particular product, but may b forced to purchase due to social compulsions.

Importance of Consumer Behavior.

To successfully market to different market segments and for a successful marketing campaign management the marketing manager needs appropriate marketing strategies which he can design only when he understand the factors which account for those differences in consumer behaviors and tastes. In today’s world of rapidly changing technology, consumer tastes are also characterized by fast changes. To survive in the market, a firm has to be constantly innovating and understand the latest consumer trends and tastes. Consumer behavior provides invaluable clues and guidelines to marketers on new technological frontiers which they should explore. For example, Mobile Phones, Lap Tops, LCD Monitors, etc. Consumer behavior is a process, and purchase forms one part of this process. There are various endogenous psychological and exogenous environmental factors which influence this process. All these factors and the type of influence which they exert on an individual’s consumption behavior can be understood and analyzed.

Consumers do not make their decisions in a vacuum. Their purchases are highly influenced by cultural, social, personal, and psychological factors. For the most part, they are “non controllable” by the marketer but must be taken into account. We want to examine the influence of each factor on a buyer’s behaviour. The basic belief of marketoriented company is that the customer is the hub around which the business revolves. Therefore, understanding what makes people in general buy and what makes your customer in particular buy is a vital part of business success. Market itself means customer around whom all marketing strategies are formulated and implemented. In order to meet competition at the market place, the marketing managers are using various methods to add value to the final product which will reach the hands of the consumers. It means in ever changing marketing environment, there is a growing concern or awareness among marketers to go for a careful study of the consumer behaviour around which all marketing activities are made. Following are the key marketing implications of consumer behavior:-

Family Structure The purchase and consumption of many products are driven by the household life cycle. The reason for this is that each stage in the family poses unique problems or opportunities to the family members and the solution of these problems often requires the consumption of products. The implication for the marketer is to decide which segment the product has to be focused i.e. on which household life cycle stage the product has to be marketed. Opportunity for the marketer lies in innovating fashionable products and focus on opinion leaders. Building brands is important as most of the respondents are brand loyal and have different perceptions on various brands. Cultural Factors In a diversified country like India cultural factors have the broadest and deepest influence on consumer behaviour; we will look at the role played by the buyer’s culture, subculture, and social class. Today, physical fitness, good health and smart appearance are on premium. Slimming centers and beauty parlors are mushrooming in all major cities of the country. Cosmetics for both women and men are being sold in increasing numbers. Even exclusive shops are retailing designer clothes Cross-cultural marketing is defined as “the effort to determine to what extent the consumers of two or more nations is similar or different. This will facilitate marketers to understand the psychological, social and cultural aspects of foreign consumers they wish to target, so as to design effective marketing strategies for each of the specific national markets involved.

Some important characteristics of Indian cultural traits:
a) Homogenous harmony to be valid and preserved

b) Group is important and not individual c) Ambiguous d) Public oriented

Time Time is a resource which is distributed equally amongst everybody. Every person has the same amount of time at his disposal. The role of time plays an important parameter for marketers as people in India mostly purchase attires during occasions, festivals like Diwali, Holi, etc. Friendship Friendship plays an important role in business transactions. Good personnel relationship and feelings matter most in a long term agreement. Social contacts developed by parties gain priority over technical specifications. In India, personnel ties, personal trust leads to cooperation and a lot of transaction can take place between parties. Friends play the role of opinion leaders and should be targeted by the marketers. Media Identified needs can be satisfied only when desired product is known and also easily available. Different products are available in the market, but consumer must know which product or brand gives him maximum satisfaction. The person has to search out for relevant information of the product, brand or location. Consumers can use many sources e.g., neighbours, friends and family. Marketers also provide relevant information through advertisements, retailers, dealers, packaging and sales promotion, and window displaying. Mass media like news papers, radio, and television provide information. Now a day’s internet has become an important and reliable source of information. As marketers are able to understand the exposure behaviour to the various source of media by a person as the customers are becoming highly computer savvy and internet savvy so the product should be made available to the internet also. It is important to understand the preference of channels most people like to watch.egs:STAR PLUS,CNBC 18,ZEE TV,etc.

Every person takes a number of decisions (to solve his / her problems) every day without stopping to think about the process involved in arriving at such decision. Decision-making is a process of selecting an appropriate option from two or more alternatives. A customer enjoys the freedom of choosing a particular brand or product when there is more than one brand or product to choose from.

Buying Roles
There can be a single user for a product or there may be multiple buyers for it. Buying roles are the roles, a person or a group of persons, play in purchasing and using the product. The number of members involved in each role may vary from product to product. In case of families, it may vary from one family to another. Buying roles are dynamic in nature. Hence, in order to target the right audience, marketers should have a clear idea about the different buying roles that people assume. Different roles assumed by people:Initiator: A person who initiates the idea of purchasing the product. Recognizes that the problem can be solved or avoided by acquiring the product. Influencer: A person whose views and advices influence the buying decision. The range of influencers becomes broad when major purchase decisions have to be made. Decider: A person who decides where, when, why and how to buy the products. He makes the final decision about the purchase. In case of major organizational purchases, it is often found that many senior managers act together to make the decision. Buyers: A person who actually purchases the products. User: A person who actually uses the product. Maintainer: A person who repairs or services the products. Disposer: A person who disposes the product.

A particular type of product is bought by a particular category of people who might or might not be the end user of that product. For e.g. parents buy chocolates and toys for their young ones. In the above example, we can see that there are different and distinct roles adopted by the parent and the children. The parent might assume the role of a decider, buyer, preparer and maintainer and the child assumes the roles of an initiator, influencer, user and disposer.

Buying Behavior
The buying behavior of people is not predictable. When a consumer buys an expensive product, it involves careful thinking and a large number of participants. Buying day-today products like vegetables and groceries is different from buying an apartment or an automobile. Consumer buying behavior is based on the degree of buyer’s involvement and the degree of differences he perceives among brands.

Extensive problem solving buying behavior
Consumers exhibit this type of behavior when they indulge in buying expensive, infrequently purchased and unfamiliar products. Consumers gather a lot of data regarding the various brands available in the product category. Extensive problem solving consumer behavior is a three-stage process. I.Buyer develops a belief about the product. Ii.Attitudes is shaped around that belief. Iii.The buyer makes a well-planned decision. This type of decision making process calls for marketers to develop strategies that assist the customers to learn more about the product. Instead they choose the brand, which they are familiar with or have been choosing for a long time. Purchase decision in such cases is quick. Therefore customer involvement in such purchase decisions is low. Customers usually do not evaluate the post purchase performance of such products.

Variety seeking behavior
Consumers show a great amount of brand differentiation when buying a low involvement product. They are not very brand conscious and often switch brands. They evaluate the product during consumption. For example, in the case of toilet soap, only very few people stick to a particular brand while buying soaps. This is not due to dissatisfaction, but due to the need for variety. Impulse buying is the situation where the customers do not make purchase decision before buying the product. It is an on the spot decision based on the instinct to buy. When a buyer perceives that there is little difference between different brands, the buyer will purchase instantly and impulsively. Purchase may be based on criteria.

Consumers pass through different stages before actually buying products. Data regarding these stages in the buying decision process can be obtained from the consumers who have already purchased the product or from prospective customer. Generally, the buying decision process can be divided into five stages – 1} Problem recognition 2} Information search 3} Evaluation of alternatives 4} Purchase decision and 5} Post purchase behavior (see Figure 5.1). All consumers may not go through all of the five stages.

{Figure 5.1}

Stages in Consumer Buying

Problem Recognition
The process of buying starts when a person realizes that he has a problem or an unsatisfied need. A need can be aroused internally within the person, for example, hunger or by an external stimulus. An external stimulus such as an advertisement or the attractiveness of a product package may also trigger a need in the person. Marketers try to arouse these needs and help people identify these through products, pricing strategies, packaging and advertisements.

Information Search
A consumer who realizes the need for a product will try to gather information regarding the product. Information search helps the customer understand the features of a product and competing brands better. Past purchase experiences can also help the customer reduce the time for information search and

evaluation. The information can be gathered from several sources like personal, commercial, public and experimental sources.

1) Evaluation of Alternatives
In this stage, a customer analyzes the information available with him to select the right brand or product. The criteria to evaluate a product may differ depending either on the buying situation or on the level of involvement required. For high value and infrequently purchased items, a customer can be involved in detailed analysis of information. However, for low involvement or low priced products, customers can use simple criterion, such as price. Customers can also give a certain level of attention to the different features and characteristics like the quality of the product or guarantee provided with the product. Sales personnel can help customers evaluate the product or brand features vis a vis other products of the customers. When the customer’s evaluating process results in identifying brands, he is ready to buy, he moves on to the next stage – the actual purchase.

2) Purchase Decision
Selection or purchase of a particular brand depends upon the evaluation criteria and ratings. The purchase decision also depends on the availability of the brand. This stage also accounts for a large number of sub decisions about purchasing a product like seller and location of the store, time of purchase, size of the product, color and attractiveness of the package, price and payment methods, delivery and warranty, etc.

3) Post Purchase Behavior
A customer evaluates the performance of a product after buying it. He will also compare the performance of the product with that of the competitor’s product. The consumer will be either satisfied or dissatisfied after the evaluation. Buyer’s

post purchase feelings are of significant importance to marketers. The post purchase evaluation might either lead to repeat purchase and the buyer talking favorably about the product to others or the buyer may talk negative about the firm’s product. Post purchase satisfaction: If the product meets the expected performance, the customer is satisfied. If the performance exceeds the expectation, the customer is delighted and if it doesn’t the customer is dissatisfied. Marketers should try to improve the performance of the products and add new and unique features to delight the customers. Post purchase satisfaction with the product leads the customer to make repeat purchase and recommend it to others in his reference group. Post purchase dissonance: In case of high involvement and less frequently purchased products a customer tries to gather information about the product. The post purchase use of the product might make him feel dissatisfied about his purchase decision. This dissatisfaction or dissonance might arise, when the customer hears goods things about other brands, or when he does not get all the features he was looking for in the product. When products of competitors brands have the desirable features that the customer was seeking, the customer experiences cognitive dissonance. The buyer may even try to return the product. In order to avoid these, marketers should try to reassure the customers about their purchase decision. Post purchase use and disposal: Marketers should observe how consumers use the purchased product and how they dispose off their products. Some consumers may discover new uses for the products other than what the product was meant for. For example, people in Punjab used the single tub washing machines for making the summer drink “lassi”. Marketers should also make an effort to educate the customers on how to dispose the products like hazardous material and other items like plastic bags, beverage containers, aerosol cans, etc. They come up with new ideas like

refilling the packs. Reusing the product’s package helps the company reduce cost of packaging, reduces the waste disposal cost and improves ergonomics. Many socially responsible companies are engaged in recycling their products. Kodak recycles acetate films and other manufacturing solvents, uses recycled paper, and jute for packing its products. Marketers may also come up with innovative products for successful disposal of their product.

Studying the consumer buying behavior is very complex process, as it involves not only the economic factors but also the emotional factors. However, marketers need to study the consumer behavior, as it helps them position their products better and develop effective marketing strategies. Consumer buying behaviour is influenced by the culture and subculture. Likes and dislikes of the people belonging to a particular culture or subculture can affect the marketing efforts of a firm to a great extent. The social class to which the individual belongs tells about the type of products the individual prefers. Other factors that influence the buying behavior are social factors like reference group, family, personal factors like the age, life cycle and occupation, and psychological factors like motivation, perception and attitudes of the customers. Buying roles and buying decision constitute consumer’s decision-making behavior. A customer can adapt various buying roles like initiator, influencer, decider, buyer prepare, maintainer and disposer in purchasing and using the products. Buying behavior helps marketers learn the intensity and degree of involvement of customers in purchasing the products. Customer buying behavior is broadly classified into three types. Extensive problem solving buying behavior is exhibited when a customer buys high involvement, expensive and less frequently purchased products. Consumers are involved in routine problem solving decision making process, when they purchase routinely purchased, low cost products. Variety seeking behavior is seen when customers purchase low involvement products.

www.google.com www.managementparadise.com Philip Kotler

Sign up to vote on this title
UsefulNot useful