Consumer Behaviour

Meaning/Definition and Nature of Consumer Behaviour

Consumer Behaviour: Meaning/Definition and Nature of 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 determine—which 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 child’s 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:
1. According to Engel, Blackwell, and Mansard, ‘consumer behaviour is the actions and decision
processes of people who purchase goods and services for personal consumption’.
2. 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 dis-
tribution.
b. Personal factors such as age, gender, education and income level.
c. Psychological factors such as buying motives, perception of the product and attitudes towards
the product.
d. Situational factors such as physical surroundings at the time of purchase, social surroundings
and time factor.
e. Social factors such as social status, reference groups and family.
f. Cultural factors, such as religion, social class—caste 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 colourful 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.
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:
a. Product design/model
b. Pricing of the product
c. Promotion of the product
d. Packaging
e. Positioning
f. Place of distribution
6. Leads to purchase decision:
A 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 deprives themselves of higher standard of
living.
9. Reflects status:
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 Decision Making Process
What is Consumer Decision Making Process
Consumer decision making process involves the consumers to identify their needs, gather
information, evaluate alternatives and then make their buying decision. The consumer behavior
may be determined by economic and psychological factors and are influenced by environmental
factors like social and cultural values.

The consumer decision making behavior is a complex procedure and involves everything starting
from problem recognition to post-purchase activities. Every consumer has different needs in their
daily lives and these are those needs which make than to make different decisions. Decisions can
be complex, comparing, evaluating, selecting as well as purchasing from a variety of products
depending upon the opinion of a consumer over a particular product. This renders understanding
and realizing the basic problem of the consumer decision making process for marketers to make
their products and services different from others in the marketplace.

Types of Consumer Decision Making

The following are the types of decision making methods which can be used to analyze consumer
behavior −
Extensive Problem Solving
In extensive decision making, the consumers have no established or set criteria for evaluating a
product in a particular category. Here the consumers have not narrowed the number of brands
from which they would like to consider and so their decision making efforts can be classified as
extensive problem solving. In this particular set of problem solving phase, the consumer needs a
lot of information to set a criteria on the basis of specific brands could be judged.
Limited Problem Solving
In limited problem solving, the consumers have already set the basic criteria or standard for
evaluating the products. However, they have not fully set the established preferences and they
search for additional information to discriminate among other products or brands.
Routinized Response Behavior
Here, in routinized response behavior, consumers have experience with the product and they have
set the criteria for which they tend to evaluate the brands they are considering. In some situations,
they may want to collect a small amount of additional information, while in others they may
simply review what they are aware about. In extensive problem solving, consumer seeks for more
information to make a choice, in limited problem solving consumers have the basic idea or the
criteria set for evaluation, whereas in routinized response behavior consumers need only little
additional information.
Views of Consumer Decision Making
An Economic View
Consumers have generally been assumed to make rational decisions. The economic view of
consumer decision making is being criticized by researchers because a consumer is assumed to
posses the following traits to behave rationally −
 Firstly, they need to be aware of all the alternatives present in the market
 Secondly, they must be able to efficiently rank the products as per their benefits.
 Lastly, they must also know the best alternative that suits them as per their requirements.
In the world of perfect competition, consumers rarely have all the information to make the so
called ‘perfect decision.’
 A Passive View
Passive view is totally opposite to the economic view. Here, it is assumed that consumers are
impulsive and irrational while making a purchase. The main limitation of this view is that
consumers also seek information about the alternatives available and make rational or wise
decisions and purchase the products or services that provides the greatest satisfaction.
 A Cognitive View
The cognitive model helps individuals to focus on the processes through which they can get
information about selected brands. In the framework of cognitive view, the consumer very
actively searches for such products or services that can fulfill all their requirements.
 An Emotional View
Consumers are associated with deep feelings or emotions such as, fear, love, hope etc. These
emotions are likely to be highly involving.
5 Stages of Consumer Decision Making Process
The buying behavior model is one method used by marketers for identifying and tracing the
decision making process of a customer from the start to the end. The process is categorized into 5
different stages which are explained as follows:

Need Recognition
Need recognition occurs when a consumer exactly determines their needs. Consumers may feel
like they are missing out something and needs to address this issue so as to fill in the gap. When
businesses are able to determine when their target market starts developing these needs or wants,
they can avail the ideal opportunity to advertise their brands. An example who buys water or
cold drink identifies their need as thirst. Here; however, searching for information and evaluating
alternatives is missing. These consumer decision making steps are considered to be important
when an expensive brand is under buying consideration such as cars, laptops, mobile phones, etc.

Information Search
The information search stage in the buyer decision process tends to change continually as
consumers require obtaining more and more information about products which can satisfy their
needs. Information can also be obtained through recommendations from people having previous
experiences with products. At this level, consumers tend to consider risk management and
prepare a list of the features of a particular brand. This is done so because most people do not
want to regret their buying decision. Information for products and services can be obtained
through several sources like:

 Commercial sources: advertisements, promotional campaigns, sales people or packaging

of a particular product.
 Personal sources: The needs are discussed with family and friends who provided product
recommendations.
 Public sources: Radio, newspaper and magazines.
 Experiential sources: The own experience of a customer of using a particular brand.
Evaluation of Alternatives
This step involves evaluating different alternatives that are available in the market along with the
product lifecycle. Once it has been determined by the customer what can satisfy their need, they
will start seeking out the best option available. This evaluation can be based upon different
factors like quality, price or any other factor which are important for customers. They may
compare prices or read reviews and then select a product which satisfies their parameters the
most.

Purchase Decision
When all the above stages have been passed, the customer has now finally decided to make a
purchasing decision. At this stage, the consumer has evaluated all facts and has arrived at a
logical conclusion which is either based upon the influence from marketing campaigns or upon
emotional connections or personal experiences or a combination of both.

Post Purchase Behavior

The purchase of the product is followed by post-purchase evaluation which refers to analyzing as
to whether the product was useful for the consumer or not. If the product has matched the
expectations of the customer, they will serve as a brand ambassador who can influence other
potential consumers which will increase the customer base of that particular brand. The same is
true for negative experiences; however, it can halt the journey of potential customers towards the
product.

Industrial and Individual Consumer Behavior Models

Understanding buyer behaviors plays an important part in marketing. Considerable research on
buyer behavior both at conceptual level and empirical level has been accumulated. There are two
types of buyers −

 Industrial (organizational) buyer

 Individual consumer
Organizational buying behavior has many distinctive features −
 First, it occurs in a formal organization which is caused by budget and cost.
 Second, in some conditions, joint decision-making process may occur, and this is not
possible in individual buying behavior.
 Finally, conflict occurs and they are hard to avoid in the joint decision making process.
In order to understand the organizational buying behavior, we first consider who will be involved
in the buying process and what are their expectations. At least, purchasing agents, engineers, and
final consumers will participate in the buying process.
The potential of different decision maker are different in different situations. In this model, there
are five different sets of variables determining the expectations of the individual −
The individuals' background, information sources, vigorous search, the selective bend of the
information based on their previous information and expectations, satisfaction with previous
purchase.
Except the perceptual distortion, the other four variables that are easy to gather information.
The second part of the model is regarding the industrial buying processes − Independent decision
which means that the decision is delegated to one department, joint decision processes.
The product-specific factors (the perceived risk, the type of purchase, and time pressure) and the
company-specific factors (company orientation, company size, and degree of centralization) will
determine the type of factor.
The greater the apparent risk, the more preferred to joint decisions. If it is a life-time capital buy,
the more likely the joint decision will take place.
If the decision has to be made at an emergency, it is likely to entrust to one party. A small and
privately-owned company with product or technology orientation will lean towards independent
decisions.
While a large public company with decentralization will tend to have joint decision process.
Economic Man Model
In this model, consumers follow the principle of maximum utility based on the law of diminishing
marginal utility. Economic man model is based on the following effects −
 Price Effect − Lower the price of the product more will be the quantity purchase.
 Substitution Effect − Lower the price of the substitute product, lower will be the utility
of the original product purchase.
 Income Effect − When more income is earned, or more money is available, quantity
purchased will be more. The economic theory of buyer’s decision-making was based on
the following assumptions −
As consumer resources are limited, he would allocate the available money which will maximize
the satisfaction of his needs & wants.
Consumers have complete knowledge about the utility of each product and service, i.e., they are
capable of completing the accurate satisfaction that each item is likely to produce.
As more units of the same item are purchase the marginal utility or satisfaction provided by the
next unit of the item will keep on decreasing, according to the law of diminishing marginal utility.
Price is used as a measure of sacrifice in obtaining the goods or services. The overall objective of
the buyer is to maximize his satisfaction out of the act of purchase.
Learning Model
This model suggests that human behavior is based on some core concepts − the drives, stimuli,
cues, responses and reinforcements which determine the human needs and wants and needs
satisfying behavior.

 Drive − A strong internal stimulus which compels action.

  Stimuli − These are inputs which are capable of arousing drives or motives.
 Cues − It is a sign or signal which acts as a stimulus to a particular drive.
 Response − The way or mode in which an individual reacts to the stimuli.
If the response to a given stimulus is “rewarding”, it reinforces the possibility of similar response
when faced with the same stimulus or cues. Applied to marketing if an informational cue like
advertising, the buyer purchases a product (response); the favourable experience with the product
increases the probability that the response would be repeated the next time the need stimulus
arises (reinforcement).
The Psychoanalytic Model − The model suggests that human needs operate at various levels of
consciousness. His motivation which is in these different levels, are not clear to the casual
observer. They can only be analyzed by vital and specialized searching.
Sociological Model − This is concerned with the society. A consumer is an element of the society
and he may be a member of many groups and institutions in a society. His buying behavior is
influenced by these groups. Primary groups of family friend’s relatives and close associates
extract a lot of influence on his buying. A consumer may be a member of a political party where
his dress norms are different from different member. As a member of an elite organization, his
dress needs may be different, thus he has to buy things that confirm to his lifestyle in different
groups.