CHAPTER–1

CONSUMER BEHAVIOUR
 CHAPTER-1
CONSUMER BEHAVIOUR

This chapter elaborates the concepts behind the research study. These studies
scrutinizes Consumer Behaviour in a wider perspective and highlight its dependency

on the most popular Mobile Users segments. The study proceeds in two directions

where in Consumers and Telecom Industry moves parallel. Consumer behaviour

means more than just how person buys products. Marketing efforts therefore also

emphasize on consumer’s consumption of services, activities and ideas. The manner

in which consumer buys things is extremely important to the marketer. It involves

understanding the set of decisions (what, why, when, how much and how often) that

consumer makes over the time.

Consumer Behaviour is the Process Involved when Individuals or Groups

Select, Use, or Dispose of Products, Services, Ideas or Experiences (Exchange) to

Satisfy Needs and Desires. Consumer behaviour is the scientific learning of how

people buy, what they prefer to buy, when they need to buy and why they buy i.e. the

reason to buy. It mingles elements from psychology, sociology, socio psychology,

anthropology and economics. It makes effort to understand the buyer decision

processes/buyer decision making process, both individually and in groups. It

examines special characteristics of individual consumers such as demographics,

psychographics, and behavioral variables in an attempt to understand people's needs.

It also tries to assess influences on the consumer from groups such as family, friends,

reference groups, and society as a whole.

Consumer Behaviour 2

1.1 INTRODUCTION

In general terms “Consumer is a person who consumes”, especially any

individual of any gender, age, sex, religion etc. who acquires goods or services for

direct use or ownership rather than for resale or use in production and

manufacturing. In other words it can be said that Consumer is an individual who buys

products or services for (personal use) his own or his family / friends use and not for

manufacture or resale. A consumer is someone who can make the decision whether or

not to purchase an item at the store, and someone who can be swayed by marketing

and advertisements.

People usually consume things of daily use and also consume and buy these

products according to their personal needs, priorities and buying power. These can be

consumable goods, durable goods, specialty goods or industrial goods.

On the other part Consumer behaviour means more than just how an individual

buys products. Marketing efforts therefore also focus on consumer’s consumption of

services his activities and ideas. The way or manner in which consumer buys out

different things is of great interest to market. It involves to understand the set of

decisions (what, why, when, how much and how often) that consumer makes over

the time (Hoyer 2004)1. It is important to know consumer reaction towards different

product features, price, and advertisement pattern, in order to ensure strong

competitive advantage.

Consumer Behaviour is the Process Involved when Individuals or Groups

Select, Use, or Dispose of Products, Services, Ideas or Experiences (Exchange) to

Consumer Behaviour 3

Satisfy Needs and Desires. Consumer behaviour is the scientific learning of how

people buy, what they prefer to buy, when they need to buy and why they buy i.e. the

reason to buy. It mingles elements from psychology, sociology, socio psychology,

anthropology and economics. It makes effort to understand the buyer decision

processes/buyer decision making process, both individually and in groups. It

examines special characteristics of individual consumers such as demographics,

psychographics, and behavioural variables in an attempt to understand people's needs.

It also tries to assess influences on the consumer from groups such as family, friends,

reference groups, and society as a whole.

The fundamental five P’s of marketing are the best place to start looking for

gaps in your small business marketing plan.

Product: Should solve an urgent need or pain of the customer. Your product needs

the right features: It should be easy to use, visually interesting, and well-packaged. If

you own a catering business, the team delivering the service as well as the food, are

all considered the “product.” Make sure they have matching uniforms and are trained

in how to speak to the customers, and ensure the food is nicely arranged in plats and

properly served. Presentation is everything.

Place: For local businesses, place matters. Often front-store businesses pay for prime

locations so that they can have the needed foot traffic. Doing your research is

important. Local businessman want to be located on a highly coveted corridor, in a

location that provides him easy access to the target customer. A residential cleaning

company might open shop in a neighborhood instead of a business district. However,

if you’re focused on corporate clients, then a commercial district is where

Consumer Behaviour 4

you want to be. Not having the right location is a reason that many small businesses

fail.

Promotion: Without proper promotion to attract your target customer, you won’t

grow your revenue. Good promotion starts with a budget and marketing plan. Today,

social media provides small businesses low-cost opportunities for marketing. If your

customer is hanging out on Facebook and Twitter, you need to be there too, building

a relationship that you will eventually be able to turn into business.

Price: When pricing your product you must know four things: your cost, what the

competitor is charging, the standard markup or profit margin in your industry and the

value to the customer. Ask yourself this key question: “What will it cost the customer

to not have what competitor is offering?” If you can’t determine a perceived value,

then you need to redesign or reposition your product and need not compete on price.

A customer who’s deciding solely based on price is not a long-term customer and will

switch to a neighboring business for just a few cents less.

Profit: Profit is how we keep score in business. Specifically, it’s the difference

between your cost of goods or services and the price you’re charging to the customer.

It allows you to grow the business, pay employees, and donate to your favourite

charities. Be sure you understand the margins typical for your industry. If you’re in a

food business, you may earn a 20 percent margin, while a clothing retailer averages

50 percent. There are no hard rules on this, if you run your business efficiently, there’s

no limit to your financial success.

Consumer Behaviour 5

Belch and Belch define Consumer Behaviour as 'the process and activities

people engage out when searching for, selecting, purchasing, using, evaluating,

and disposing of products and services which results in satisfying their needs and

desires'. Consumer behaviour allows a number of things, it opens up opportunities for

estimating demand, measures behaviour in society, brings a clear understanding about

how brands will behave, forecasts how the company can serve their expected

customers in most efficient manner, and also it is the base for the individual to control

one’s own expenditure. In fact, the study of consumer behaviour is relatively a rich

science that includes elements from psychology, marketing, economic, consumer

politics and many others fields of scientific research. (Antonides and

Raaij, 1998)2

Consumer behaviour includes two important types of elements i.e. both

tangible and intangible elements such as the concrete product or service, but also

of mental processes and systems of beliefs, values and self-realization (Ibid, 2002.)3.

Therefore, to understand the consumer behaviour in a broad context as possible it is

best to build a systematic and representative illustration on the matter as shown in

Figure 1.1 below.

1.2 Factors Influencing Consumer Behaviour

The factors that influence consumer behaviour are usually classified into two

types as follows

• Internal Factors

• External Environmental Factors.

Consumer Behaviour 6

There is no direct effect of External factors on the decision process of

consumer or buyer , but percolate or filter through the internal factors, to influence

the decision process.

Figure 1.1 - Elements of Consumer Behaviour

(*Source – Website www.consumerbehaviour.com)
 Consumer Behaviour 7

The Internal Factors That Affect Consumer Behaviour In General Are:

 Motivation and involvement of consumers for buying specific products


 Consumer’s attitude

 Personality and self concept of any individual consumer

 Ability to remember i.e. Learning and memory of consumer

 The channel or way in which Information processing takes.

The Most Common External Influences Or Factors Are:

 Cultural influences- Influences of culture of individual buyer


 Sub-cultural influences

 Social class influences – Influences related with the individual buyers

specific society, religion etc.


 Social group influences – The social group in which individual buyer resides

influences the buying behaviour.


 Family influences – It is also an important influences usually observed in

various consumers.

 Personal influences

 Other influences

Some Important Factors Which Influence Consumer’s Behaviour Are

Explained Below

Cultural Factors

Culture is the complex of values, ideas, attitudes and other meaningful

symbols that allows any human being to communicate, interpret and evaluate as a

member of society (Blackwell et al, 2001)4. It is the main reason behind a person’s
Consumer Behaviour 8

wants, desires and behaviour. Although, different social groups have their own culture

that usually affects consumers buying behaviour, but the extent of cultural influence

on the behaviour varies from country to country, region to region. Each cultural group

can be divided into small groups consisting of people with common life experiences

and similar situations, also known as subcultures (Kotler et al. 2005)5, such as

nationality, racial groups, religion, and specific geographical areas. The third cultural

factor is social class, which is constituted of other variables: occupation, income,

education, and wealth (Blackwell et al. 2007)6.

The knowledge and belief are the most important parts of culture, in India it is

believed that person with quick learning ability and sharp brain will do better in study,

similarly hardworking and a skilled individual will be successful while, in most of the

Asian countries luck and hard work are believed to be equally important factor. The

culture varies with region and religion; people of Punjab (one region in India)

traditionally wear turbans, in Middle East of region majority of women use head scarp

whenever they are at common places. Every culture has smaller groups who share the

same values and beliefs due to common life experience and situations. These groups

are very important to marketers since many of these subcultures make up important

segment of market. (Kotler et al, 2001)7

There is some specific form of social class and structure in every society; this

class system is different for every country in point of distribution and ratio. Income

divides every society into three sub-classes; rich, poor and middle. Every sub-class

has its own values, interests and behaviour.

Consumer Behaviour 9

Social Factors

The second important factor affecting consumer behaviour is social groups,

which is made up of small groups, social roles and same social status. Some of these

groups have a direct influence on an individual buyer, i.e. Membership groups, groups

that a person can belong to (Kotler et al. 2005)5, and reference groups which “serve

as direct (face-to-face) or indirect points of comparison or reference in forming a

person’s attitudes or beliefs” (Armstrong et al. 2005)8.

However, some people are affected by groups in which they are not a part of

these reference groups include inspirational groups, groups that a person desires to be

a part of and a fan’s admiration for an idol, etc. Wife, husband or a child have strong

influences on buying and thus the family of any individual is the most vital consumer

buying organization in the society.

Personal Factors

Various personal characteristics such as buyers age, occupation, financial

situation, lifestyle, personality and self concept also influences buyers decision

(Kotler et al 2001)7. Shifting in person’s demand for products mainly depends on

occupation and financial situation, as well as the particular stage in the life. An

individual’s lifestyle affects his or her activities, interests, and opinions and also

affects the choice of products (Armstrong et al. 2005)8. Moreover, all people are

individual; hence have a unique personality of different characteristics, which is often

depicted with traits, such as self-confidence, dominance, sociability, autonomy,

defensiveness, adaptability, and aggressiveness etc. (Blackwell et al.

2007)6.
 Consumer Behaviour 10

Goods and services that consumers buy frequently changes in their lifespan.

The product such as food, clothes (Dress) and furniture are age related and consumer’s

choice varies over the period of time. Person lives in particular society and works in

particular class, hence prefers the product as per his surroundings. Even a person

economic situation has considerable impact on buying behaviour.

The discussion covers personal factors and it is significant to discuss about

personal values, as each and every consumer possesses life goal and they purchase

product to achieve value related to their goals. According to Nicholson, values are

belief that describe preference and suggest choice between appropriate and

inappropriate behaviour. (Gutman et al, 1982)9 has developed list of values (LOV)

which consist of total nine internal and external values usually possessed by

consumers.

 External values- include sense of belonging, being well respected, security.


 Internal values deals with self fulfillment, excitement, sense of

accomplishment, self respect, fun and enjoyment, warm relationships

Psychological Factors

This group is constituted of four major factors, namely motivation,

perception, learning, and beliefs & attitudes. When a person is motivated, he or she

acts accordingly and the actions taken over are affected by the person’s perception of

the particular situation. Perception is an individual selection; organization and

interpretation of the information which flows through person’s senses, and

consequently a meaningful picture of the world are formed. Experience of new

 Consumer Behaviour 11

things, brings changes to persons behaviour. As a result, new beliefs and attitudes are

acquired and hence affect the normal buying behaviour (Armstrong et al. 2005)8

Consumer Motivation, Ability and Opportunity

Consumer behaviour is largely influenced by the amount of effort consumers

put into their own consumption behaviour and decisions. Efforts which a consumer

generally puts in searching for information is greatly affected by following three

important factors:-

(a) Motivation:

The first step in consumer purchasing process is to find and recognition of

need or motivation, where consumer realizes that he or she has need for something or

else. It reflects an inner psychological state of awakening that directs the consumer

motive to engage in goal relevant behaviours, effortful information processing and

detailed decision making, for e.g. if he or she like the jacket in shop then would look

at product attributes as well as relate with the information or style they have in their

own mind. Motivation is enhanced, when consumers regard something as

 Personally suitable

 Consistent with their values, goals and needs,

 Risky and

 Moderately inconsistent with their prior attitude (Hoyer 2004)1

Higher motivation usually makes consumers to do things willingly which are

closely related to their set goals, e.g. if one has an vision or aim to buy clothes which

can be fashionable as well as gives confidence to wear at work place and when such
 Consumer Behaviour 12

a style comes in front of his or her then they immediately go for that type of clothes.

Motivated people pay more attention and think about their goals, they examine the

information critically relevant to the same and they try to remember the information

for further use.

Personally relevant information or things also motivates consumers. Health

product or ladies cosmetics are the best example of product to get a broad view on

motivation in relevance to personally relevant products.

Consumers have different various specific kinds of needs behind purchase.

Maslow grouped these different consumers’ needs into five broad categories; (Hoyer

2004)1

 Physiological (Such as need for food, water and sleep),


 Safety (This includes need for shelter, protection and security),

 Social (It contains need for affection, friendship and acceptance),

 Egoistic (Examples are need for prestige, success, accomplishment and self

esteem) and

 Self actualization (This mainly deals with need for self fulfillment and

enriching experiences).

(b) Consumer Ability

Motivation of consumer is highly and significantly relevant to their ability of

process information. Ability is defined as the extent to which consumers have the

necessary resources to make the desired outcome happen. Consumer’s knowledge,

experience, cognitive style, intelligence, education, age and money majorly affect
Consumer Behaviour 13

the consumer’s ability to process information about product or buying of certain

product.

(c) Consumer opportunity

One of the most important factors in buying process is time. Even costumers

having high motivation and ability to process information but could not get

comfortable time to make decision or purchase. In some cases consumers take

decision under time pressure (shopping for festivals like Diwali) where they get

limited time and less opportunity to go through the information. Along with the time,

information presentation is another major factor in reducing consumer opportunity to

process information. Complex and improper information usually decreases

opportunity to process it.

1.3 CONSUMER PERCEPTION-AN OVERVIEW

Perception is the process of attaining awareness or understanding of sensory

information. It is a psychological process by which consumers derives certain

meanings to what has been sensed by different sensory organs It explains how a

person recognizes, selects, organizes and interprets each stimulus based on his/her

needs, values and expectations. It describes “how we see the world around us”.

Theories of perception mainly suggest that people make their own picture of

the world. Similarly, shoppers/customers perceive brands or products in their own

ways and take decision based on their perception about them rather than objective

reality. Perception in marketing influences our acquisition and consumption of goods

and services through our tendency to assign meaning to such things as color,
 Consumer Behaviour 14

symbols, tastes and packaging. Culture, tradition, and our overall upbringing

determine our perception of the world.

Thus, perception is precisely the reason behind the differences in like and

dislikes, preferences and non-preferences about a product, a brand, a place, and

people.

The Nature and Elements of Perception

Information processing is a series of activities by which stimuli are perceived,

transformed into information and stored.

Thus, the perceptual process includes; Exposure occurs when a stimulus

comes within range of our sensory receptor nerves. Attention occurs when the

stimulus activates one or more sensory receptor nerves, and the resulting sensation go

to the brain for processing and Interpretation is the assignment of meaning to

sensations.

Elements of perception

 Sensation- it is the immediate and direct response of the sensory organs to

stimuli. Sensitivity of a stimulus depends on the quality of sensory receptors,

the amount of stimulus to which the individual is exposed, and the

environment within which the perception takes place.


 The Absolute Threshold – this is the lowest level at which an individual can

experience a sensation. The point at which one can detect a difference between

“something” and “nothing” is that person’s absolute threshold for that

stimulus.
 Consumer Behaviour 15

 Just Noticeable Difference (JND) - It is the minimal apparent difference

between two similar stimuli as observed by the consumer. It is also known as

the differential threshold. Weber’s Law states that the stronger the stimulus,

the greater the change required for the stimulus to be seen as different.

 Subliminal Perception- Subliminal perception occurs whenever the stimuli

presented below the threshold for awareness are found to influence thoughts,

feelings or actions. A subliminal message is a signal or message embedded in

another medium designed to pass below the normal limits of the human mind’s

perception. These messages are unrecognizable by the conscious mind, but, in

certain situations can affect the subconscious mind and can influence

subsequent thoughts, behaviours, attitudes, beliefs and value systems.

Subliminal messages are often found to be very effective to influence

consumption behaviour.

 Perceptual Selection – Consumers subconsciously exercise a great deal of

selectivity as to which aspects of the environment (which stimuli) they

perceive. An individual may look at some things, ignore others, and turn away

from still others. In actuality, people perceive only a small fraction of the

stimuli to which they are exposed. This is called as perceptual selection. The

selection of the stimuli depends on two major factors in addition to the nature

of the stimulus itself: (1) consumer’s previous experience as it affects their

expectations and (2) their buying motive at the time. Each of these factors can

serve to increase or decrease the probability that a stimulus will be perceived.

 Consumer Behaviour 16

 Perceptual Organization – People do not experience the numerous stimuli

they select from the environment as separate and discrete sensations; rather

they tend to organize them into groups and perceive them as unified whole

objects. Thus, the perceived characteristics of even the simplest stimulus are

viewed as a function of whole to which the stimulus appears to belong.


 Perceptual Interpretation – the interpretation of the stimuli is also uniquely

individual, because it is based on what individual expect to see in light of their

previous experiences, the number of plausible explanations they can envision,

and their motives and interests at the time of perception.

Retailing implications of the Perception or Perceptual Inference

Consumers tend to form images of brands, stores and companies. An image is

a total perception of the object that consumers form by processing information from

various sources over time. Gestalt psychology (Gestalt, in German, means “pattern or

configuration.”) suggests that forming an image is a natural process of developing a

total perception of the object. Weber’s law also has important applications in

marketing. It states that the stronger the stimulus, the greater the change required for

the stimulus to be seen as different.

Manufacturers and marketers endeavor to determine the relevant differential

threshold for their products for two very different reasons:

(1) So that negative changes like the reduction in the product size, or quality, or

increase in the product price not readily discernible to the public.

(2) So that product improvements like improved packaging, larger size or lower

price are very apparent to consumers without being wastefully extravagant.

Consumer Behaviour 17

Retailers do use this aspect of perception to attract customers and to create a

positive and noticeable picture of the retail world (store atmospherics, people,

services, merchandise etc.) in the eyes of the customers.

Retailers can thus, work on the various factors that influence the shoppers’

perception positively about the retailer and his outlet.

Dynamics of Perception

Perception is a result of two types of inputs: physical stimuli and past

experiences. The combined effect of these two factors produces different pictures for

each individual. This is because people are very selective as to which stimuli they

recognize and which they neglect. Secondly, for stimuli they recognized, their

interpretation would depend on their personal needs, expectations and experiences.

Perception has three aspects selection, organization and Interpretation of stimuli. As

consumers are invariably subject to a lot of information exposure and influences, they

tend to form their perceptions depending on their mindsets.

Marketers undergo perceptual mapping to understand how the consumers

perceive their offerings in relation to competitive brands on certain consumer-chosen

dimensions. It enables them to assess how consumers view different brands in a

product category and marketers can identify areas in which consumers’ needs are not

being adequately met. The nature of perception about a target market determines the

managerial actions which can influence them. The marketer influence the brand

perception of customers by a number of methods, including pricing, packaging

promotion, POP displays and distribution.

Consumer Behaviour 18

Perception-preference relation

Shoppers tend to seek out favorable information on products which are

compatible with their needs, values and expectations. They prefer to avoid unpleasant

information. For instance, they prefer to pay more attention to an advertising message

that is in consonance with their value system and prefer to ignore a message that is in

contradiction with their cultural values. This is done primarily to avoid the creation of

cognitive dissonance. Generally, a product, service, a brand, a retail store, a format

that has been able to create a positive perception in the mindset of the consumer or a

shopper influences the preference of the shopper positively. Thus, a marketer always

tries to create and continue the positive or favorable perception for his brands, outlet,

product or service in the consumer’s mind and tries his level best that consumer

prefers his brands, outlet or products. He uses several factors or stimuli to influence

the perceptions of the prospective and current consumers in the desired manner.

1.4 Consumer Decision Making

'Decision Making can be simply being described as the act of choosing

between two or more courses of action'. However, it must always be remembered

that there may not always be a 'correct' decision among the available choices. There

may have been a better choice that had not been considered, or the right information

may not have been available at that moment of time. Because of this, it is important

to keep a track of all important decisions and the reasons of the decision taken, for

improvements in future. This also provides justification for any decision taken when

something goes not in favor. Hindsight might not be able to correct past mistakes,

but it will help or aid improved decision making in the future.

 Consumer Behaviour 19

Effective Decision Making

Normally decisions can are made using either intuition or the reasoning, a

combination of both approaches is often used. Whatever approach is made, it is

usually helpful to structure the decision making in order to:

 Reduce more complicated decisions down to simpler steps.


 See how any decisions are arrived at.

 Plan decision making to meet deadlines

Consumer Decision Process

The consumer undergoes several steps in the process of decision making. For

very first step, the decision is made to solve any kind of problem. For this, information

search is carried out, to find how the cold can be provided, e.g. by an air-conditioner

or, by a water-cooler. This leads to the evaluation of alternatives and a cost benefit-

analysis is largely made to judge which product and brand image will be suitable, and

can take care of the problem suitably and adequately. Thereafter the purchase is finally

made and the product is used by the consumer. The constant use of the product leads

to the satisfaction or dissatisfaction of the consumer, which leads to repeat purchases,

or else the rejection of the product.

Consumers Impact on Marketing Strategy

 Understanding consumer behaviour is good business.


Firms exist to satisfy consumers’ needs, so Firms must understand

consumers’ needs to satisfy them.

 The Process of Marketing Segmentation:


Identifies groups of consumers who are similar to one another in one or more

ways, and devises marketing strategies that appeal to one or more of these groups.
Consumer Behaviour 20

Segmenting Consumers by Demographic Dimensions:

Demographics are Statistics That Measure Observable Aspects of a

Population Such as:

Figure 1. 2:- Consumers by Demographic Dimensions

*Source- Abrahams et al (2008)

Consumption Typology Explores the Different Ways That Product and

Experiences Can Provide Meaning to People. There Are 4 Distinct Types of

Consumption Activities:

Figure 1.3:- Consumption Typology

*Source Batey etal (2004)
 Consumer Behaviour 21

 Decision making (information search, consider brand alternatives)


 Habit (little or no information search , considers only one brand)

 Consumers behaviour includes post purchase satisfaction or dissatisfaction

behaviour

 Two types of customers- personal and organizational consumer

1.5 MARKETING STRATEGY

Successful marketing strategy is the one through which consumer can

predict a need which a company’s product can resolve and, offers the best solution

to the existing problem. (Hornik et al. 1980)13

For a successful strategy, the marketer must emphasize on the product and

brand image in the consumer’s mind. The marketers must try to make the product

according to the customers’ needs and his or her likes and dislikes. The brand which

fulfils the desired image of a target customer usually sells well. Sales are important

and sales are likely to occur if the initial consumer analysis was correct and correlates

with the consumer decision process. Next part is the satisfaction of the consumer, after

the sales which have been affected, as an important for repeat purchase.

Retaining or existing customer’s i.e making them satisfying for times so that

they try to first purchase the product from same place is more beneficial and

profitable, rather than looking for new ones. The below figure 1.4 gives an idea of the

above discussion.
 Consumer Behaviour 22

Impact of marketing on consumers:

Building Bonds with Consumers

 Relationship Marketing- It occurs when a company makes an effort to have

proper interaction with the users or customers on a regular basis, and gives

them various reasons to maintain a bond with the company over long time.

 Database Marketing- This involves observing consumers’ buying habits very

intensely, and crafting products and messages which are tailored precisely to

people’s wants and needs based on this information. (Rio et al)14

Figure 1. 4:- Factors Affecting Consumer And Marketing Strategy

*Source – Self drawn with experience
Consumer Behaviour 23

Marketing’s Impact on Consumers:

The type of marketing strategy that organization such as small businesses

employ controls the consumer behaviour, so they conduct studies to determine which

strategy would be most effective. Small businesses need be aware of the selected

members of their target audience, their needs, where they are located and how they'll

react to product and its promotions. They gather this information through surveys and

also by studying data regarding the past behaviour of customers. Data is also obtained

from different sources such as marketing databases, sales history and the Internet.

Figure 1.5 :- Marketing Impact On Consumers

(*Source – Self drawn as per experience)

1.6 MODELS OF CONSUMER BEHAVIOUR

Consumers approach the marketplaces differently; they go though the buying

decision process differently as it gets impacted by internal and external forces.

Researchers have attempted to understand the dynamics of consumer decision

Consumer Behaviour 24

making and they have classified four varying views and perspectives, the underlying

forces operating within consumers that could be employed to approach the

marketplace. These are i) Economic, ii) Cognitive iii) Passive iv) Emotional (Loudon

et al. 2002)15

i) Economic view: According to the economic perspective of studying

consumers, the consumer is regarded as being rational. The model assumes

that there exists in the market a state of perfect competition; the consumer is

aware of the various alternatives; he has the knowledge and ability to rank all

of these; and he finally takes a rational decision. He takes a decision and makes

a choice as after taking into account the cost and benefit, and the overall value

in economic terms.

ii) Cognitive view: The consumer is regarded as being a problem solver, who

searches for products to fulfill his needs/wants. Consumer decisions are based

on information gathering and processing. The consumer is believed to take

decisions after a lot of thought and deliberation, so as to get maximum benefit

and value.

iii) Passive view: Here, the consumer is regarded as irrational and impulsive, who

easily succumbs to the selling and promotional efforts of the marketer. It is

assumed that the consumers are submissive to the self-serving interests of the

marketer and the salespersons are powerful.

iv) Emotional view: The consumer is regarded as being emotional and impulsive

who takes decisions based on moods and emotions. Marketers must put in

efforts and create positive mood and emotions. (Peter et al) 16

Consumer Behaviour 25

The consumer models refer to varying orientations and perspectives with

which consumers approach the marketplace and how/why they behave as they do.

They refer to how the varying orientations impact the buying decision process and

overall buyer behaviour.

Various models have been proposed by researchers; these models can be

classified as (a) General models (b) Specific models.

GENERAL MODELS: There are four models that fall under this category, viz.

Economic model, Psychological model, Psychoanalytic model and Sociological

model

(a) The Economic Model: The economic model explains buying behaviour from

an economic perspective; the assumption is that resources are scarce viz. a viz.

unlimited needs; a consumer seeks value: he wants maximum benefit at

minimum cost. The economic models showed concern as to how scarce

resources were allotted to satisfy the unlimited needs and wants.

Economic models can be further classified into Micro economic models and

Macroeconomic models. (Schiffman et al )17

Micro economic models: The micro economic models focus on the act of purchasing;

they focus on what an average consumer would purchase and in what quantity; they

also ignore why and how the needs/wants get prioritized, and how the behaviour is

underpinned. According to the micro economic view, consumers are rational in nature

and value utility. With resources being scarce, they would allocate money on their

purchases in a way that satisfies them maximally. The consumer

Consumer Behaviour 26

decisions are thus based on benefit to cost ratio; the consumer would settle on an

alternative that provides the highest ratio in terms of marginal utility. The limitations

of studying consumer behaviour with this orientation are that consumers are not

always rational, and they seek average /adequate satisfaction and not total satisfaction.

Also, consumers assess the benefit to cost ratio differently; they define the two

variables “cost” and “benefit” variedly; the issue is subjective. The view is also silent

about other forces that operate during the buying process.

Macro economic models: The macro economic models focus on the overall trend in

the economy that has an impact and is also impacted upon by buying patterns. They

focus on the aggregate flows in the economy. Conclusion about consumer behaviour

is made after analyzing such flows. This approach could also be studied with two

orientations: a) Relative income hypothesis: A persons’ expenses are influenced by

his social surrounding and group. With his income being constant, the relative

expenses and the resultant savings will not change, until and unless, there is a big

change in the total income. The hypothesis holds that what and how much a consumer

spends is not solely dependent on income, but is influenced by peers. b) Permanent

income hypothesis: Even if the total income increases, people initially exhibit inertia

towards spending as they want to accumulate wealth; so purchasing pattern does not

change immediately. The limitations of studying consumer behaviour with this

orientation are that the view is silent about other forces that operate during the buying

process.

(b) The Psychological model: The psychological model, also called the Learning

Model or the Pavlovian Learning Model, was proposed by classical

Consumer Behaviour 27

psychologists led by Pavlov. According to this model, consumption behaviour

and decision making is a function of interactions between human needs and

drives, stimuli and cues, responses and reinforcements. People have needs and

wants; They are driven towards products and services (stimuli and cues),

which they purchase (response), and they expect a satisfying experience

(rewards and reinforcements); Repeat behaviour would depend on

reinforcement received. The model believes that behaviour is deeply affected

by the learning experiences of the buyers; and learning is a product of

information search, information processing, reasoning and perception.

Reinforcement leads to a habit formation and the decision process for an

individual becomes routinized, leading to brand loyalty. Consumers also learn

through trial and error and resultant experiences that get stored in our memory.

The limitations of studying consumer behaviour with this approach are that

the model seems incomplete. Learning is not the only determinant in the

buying process and the decision making. The model totally ignores the role

played by (a) other individual determinants like perception, personality (the

sub-conscious), attitudes; as well as (b) interpersonal and group influences.

(C) Psychoanalytic model: The psychoanalytic model was proposed by Sigmund

Freud. The model tries to explain consumer behaviour as a resultant of forces

that operate at subconscious level. The individual consumer has a set of deep

seated motives which drive him towards certain buying decisions According

to the model, buyers needs and desires operate at several levels of

consciousness. Not all of the behaviour is understandable

Consumer Behaviour 28

and explainable by the person. Also not all of human behaviour is overtly

visible and explainable. Sometimes, the behaviour may not be realized and

understood by the person himself. Such causes can be understood by drawing

inferences from observation and casual probing. There have been two more

contributions that have been made to the psychoanalytic approach; these are

a) Gestalt model b) Cognitive theory.

Gestalt model: The model based on Gestalt principles (meaning “patterns and

configuration”) lays emphasis on the perceptual processes that impact buying

behaviour. According to this model, consumption behaviour and decision making is

based on how a consumer perceives a stimuli (the product and the service offering

and the 5 Ps) viz. a viz. the external environment and his own prior experiences.

Cognitive theory: The model proposed by Leon Festinger, views the consumer as one

who faces a feeling of anxiety (dissonance), while he is making a purchase; this is

because he is faced with many alternatives, all of which seem desirable. Post-

purchase, this dissonance increases even further. There is an imbalance in the

cognitive structure; and the consumer tries to get out of this state as soon as he can.

So a buyer gathers information that supports his choice and avoids information that

goes against it.

(D) Sociological model: The model is based on findings of Thorstien Veblen, and

focuses on the role played by social groups and social forces. A person’s

consumption pattern and buying behaviour is affected by social factors; his

family, friends, peers, social groups, reference group and culture have a major

role to play. According to the model, man is perceived as a “social

Consumer Behaviour 29

animal”, and thus he conforms to norms of its culture, sub culture and groups

amongst which he operates. Emulative factors and social influences have a big

role to play in consumer decision making. (Jones et al 2004)18

1.7 TOOLS TO STUDY CONSUMER BEHAVIOUR

It is very important for marketer to study buyer behaviour on regular basis.

The different tools available to him or her are:

Surveys

Surveys are the most commonly employed technique used in studying

consumer behaviour. It involves the use of formulated questionnaires. Different

scaling techniques like Likert and Thurstone are generally used to measure consumer

attitudes. The major drawback or problem with survey methodology is that it gives to

marketer only conscious response of the customer.

Projective Techniques

To throw the customer off his or her conscious level and to get know sub-

conscious-level responses, projective techniques like word association, picture

association and thematic appreciation tests are been largely used. Projective

techniques provide valuable information on his or her product or brand and about the

customer’s lifestyle and self concept.

Focus Group Discussions

It is a commonly used qualitative technique which is used to assess how

customers perceive the product and use situations. It also clarifies the marketer with

valuable information on the target market.

Consumer Behaviour 30

Outlet Selection and Purchase

As the number of product and brands are increasing day by day in the market,

so are the retail outlets and it becomes very confusing for the customers to choose the

any type of retail stores. The selecting of a retail store also involves almost the same

process as selecting a specific brand. A retail outlet relates to a service or a product

which caters to the consumer. The retail trade occurs from the stores as well as from

catalogues, direct mail via print media, television and radio and many novel internet

technologies. Retailing is also done in weekly markets which are put up in different

areas of a city on different days. It is also done from consumer, by means of various

media. It has become very challenging and exciting, both for consumers and

marketers. The consumer may give first preference to the store or the product or, he

may give equal importance to both. Sometimes one prefers a store first, where he can

get friendly and logical advice to buy the product or brand of second priority, if he is

assured of proper service and proper guidance, rather than buying a product of his

choice on first priority and missing out on other important aspects of purchase.

1.8 PURCHASE BEHAVIOUR

We know that in many products, decision-making is a very lengthy process,

and usually takes a very long time. First the problem is recognized and than a lot of

information is evolved. After this step is done, the last two important stages of

decision-making, that is, the purchase and post purchase come into action. Purchase

is very important as it generates revenue, and post purchase gives the marketer an idea

of the likes and dislikes of the consumer. Post purchase behaviour also establishes

link between the marketer and the target market segment.

Consumer Behaviour 31

Purchase is also important to the marketer as the product was planned,

produced, priced, promoted and distributed after a lot of effort. If there is no purchase

it proves that the marketer has entirely failed in his marketing effort. He or she then

needs to explore some other marketing mix. He or she is required to change the entire

strategy, as the ultimate aim of the marketer is to sell a product which will generate

funds and revenue and bring satisfaction to the customers. Purchase is necessary for

marketer’s success, for achieving their objectives and for formulating competitive

strategies against the competitors. It marks the end of his search, end of his efforts and

chooses the brand of his choice for expected benefits.

Post Purchase Behaviour

It is important for the marketer to know whether his product is liked by the

consumer or rejected. He needs the proper and unbiased feedback about his product

so that appropriate action, if necessary, can be taken, and the marketing mix can be

modified as desired and needs of customers. Post purchase behaviour refers to the

reaction of the consumers; it gives an idea of his likes and dislikes, preferences and

attitudes and satisfaction towards the product. It indicates whether or not the purchase

motives have been achieved. It can be said that Purchase is the means and post

purchase is the end. Post purchase behaviour indicates whether repeat purchase will

be made or the consumer will select another store or brand next time .Whether the

customer will recommend the product to others or not, which may or may not create

the mouth publicity of product. It indicates whether long term profits should or should

not be expected. All these can be evolved and found out by the post purchase

behaviour or the customers. Post purchase is the last phase in the decision-making

process.
Consumer Behaviour 32

1.9 INDIAN CONSUMER AND HIS CHARACTERISTICS

Presently India has the youngest and second largest population profile among

the numerically significant countries - there are a lot of young people, in different

income segments and locations, who influence their parents' spending, or spending

their own money. On the other hand, many farmers have unquestionably grown

beyond “rural” in the broadly understood sense. Are we even comprehending, let

alone capitalizing, on the power of the consumer of tomorrow as well as some

consumers of today, who remains an after-thought for many marketers. (Kapferer et

al 2004) 19

These days’ Indian consumption patterns are slightly and slowly converging

with the impact of globalization. The Indian consumer is now spending extra on

consumer durables, apparel, entertainment, vacations and lifestyle and other related

activities. Entertainment, clothing and restaurant dining categories are witnessing a

maximum rise in consumer spending since 2010. The rate of growth of spending on

discretionary items (unlike basic necessities like food) has been growing at an average

of 9 per cent per year over the past five years. India a nation of savers is regularly

changing and turned to be a nation of spenders with the quantum of the sales, force

and other factors within the company. The study of the above factors provides better

understanding of the consumer and their needs. (Keller et al 2008)20

The Competition

For analyzing the market, it is important to examine about the strengths and

weaknesses of the competitors, their strategies, their expected anticipated moves and
Consumer Behaviour 33

their reaction to the companies ’moves and thereafter Plans is to be made. This is a

very difficult but important process and it is easier said than done. To have correct

information about the competitors and to anticipate their further moves is the job of

the researcher.

The Conditions

The operating conditions of the firms are also to be seriously considered. The

common factors to be studied are majorly the economy, the physical environment, the

government regulations, the technological developments, etc. These effect the

consumer needs, i.e. the deterioration of the environment and its pollution may lead

to the use and innovation of safer products. People are more health conscious and are

concerned largely about their safety. Hence safer products would have a better chance

with the consumer. In case of recession, the flow of money is restricted greatly. This

leads to the formulation of different marketing strategies.

Market Segmentation

The market is divided into various segments which are a portion of a larger

market whose needs are similar and, they are homogeneous in themselves. Such

segments are identified with similar kind of needs.

Characteristic Features of Indian Consumer: Various important characteristics on

which the decision of Indian consumer is depended on Geography; Population;

Urban-Rural; Sex ;Age factor; Literacy level ; Incentive level; Linguistic diversity;

Religion; Dress, food and Habits and fashion.

Consumer Behaviour 34

1.10 CONSUMER BEHAVIOUR AND MOBILE NUMBER

PORTABILITY

The main purpose of this study is to understand the customers’ behaviour

towards the choice of changing their existing service provider and the strategies used

by the telecom companies to pull the customers towards themselves and to retain their

existing customers. The regulatory bodies like Department of Telecommunications

(DOT) and Telecom Regulatory Authority of India (TRAI) have facilitated the cell

phone users to freely roam among desirable services by retaining their existing mobile

numbers and also to avail different technologies like 2G, 3G, 4G, CDMA and GSM

or post- paid and pre-paid. MNP has brought many new prospects in the telecom

sectors which for sure has exaggerated the competition in market to pull each other’s

customers and retain their existing customers as well as it would end the existing

monopoly of several big players in the telecom sector and would be a leverage to

ascertain the best possible services to the common mobile users in the country. This

competition has emerged into the better services provided by the telecom operators as

well as introduction of newer technologies like 4G, Virtual Reality, etc. to attract the

customers.

Telecom operators today are doing lot of research to understand the value

added service requirement of the customer. Various mobile applications have been

launched with the accessibility of smart phones. The prices of these phones are most

reasonably priced with competition at its peak. Consumers today are happy as they

can customize their phone using several applications available at no cost or at very

small costs. Not just the cell phone but MNP has made the customer a Boss allowing

him to preserve his mobile number along with his own preferred type of mobile.
Consumer Behaviour 35

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