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Unit 1: Introduction the Consumer Behavior

Defining Consumer Behavior;

 The term consumer behaviour is defined as the behaviour that consumer display in
searching for, purchasing using, evaluating and disposing of products and services that
they expect will satisfy their needs.

 Consumer behaviour focuses on how individuals make decisions to spend their available
resources (time, money, effort) on consumption-related items that includes what they
buy, why they buy, when they buy it, where they buy it, how often they buy it, how often
they use it, how they evaluate it after the purchase and the impact of such evaluations on
future purchases, and how they dispose of it.

 Two different kinds of consuming entities: the personal consumer and the organizational
consumer.

 Personal Consumer  Buys goods and services for his or her own use, for the use of the
household or as a gift for a friend. The products are bought for final use by individuals,
who are referred to as end users or ultimate consumers.

 Organizational Consumer  Includes profit and non-profit businesses, government


agencies (local, state, national) and institutional (e.g. schools, hospitals, and prisons), all
of which buy products, equipment, and services in order to run their organizations.

What is Consumer Buying Behavior?


Consumer behavior is the study of individuals, groups, or organizations and the
processes they use to select, secure, and dispose of products, services, experiences, or
ideas to satisfy needs and the impacts that these processes have on the consumer and
society. It blends elements from psychology, sociology, social anthropology and
economics. It attempts to understand the decision-making processes of buyers, both
individually and in groups. It studies characteristics of individual consumers such as
demographics and behavioral variables in an attempt to understand people's wants. It also
tries to assess influences on the consumer from groups such as family, friends, reference
groups, and society in general.

Customer behavior study is based on consumer buying behavior, with the customer
playing the three distinct roles of user, payer and buyer. Research has shown that
consumer behavior is difficult to predict, even for experts in the field. Relationship
marketing is an influential asset for customer behaviors analysis as it has a keen interest
in the re-discovery of the true meaning of marketing through the re-affirmation of the
importance of the customer or buyer. A greater importance is also placed on consumer
retention, customer relationship management, personalization, customization and one-to-

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one marketing. Social functions can be categorized into social choice and welfare
functions

Definition of Buying Behavior:


Buying Behavior is the decision processes and acts of people involved in buying and
using products.

Need to understand:

• Why consumers make the purchases that they make?


• What factors influence consumer purchases?
• The changing factors in our society.

Consumer Buying Behavior refers to the buying behavior of the ultimate consumer. A
firm needs to analyze buying behavior for:
• Buyer’s reactions to a firms marketing strategy has a great impact on the firm’s
success.
• The marketing concept stresses that a firm should create a Marketing Mix (MM)
that satisfies (gives utility to) customers, therefore need to analyze the what,
where, when and how consumers buy.
• Marketers can better predict how consumers will respond to marketing strategies.

Stages of the Consumer Buying Process


Six Stages to the Consumer Buying Decision Process (For complex decisions). Actual
purchasing is only one stage of the process. Not all decision processes lead to a purchase.
All consumer decisions do not always include all 6 stages, determined by the degree of
complexity...discussed next.

The 6 stages are:


1. Problem Recognition (awareness of need)--difference between the desired state
and the actual condition. Deficit in assortment of products. Hunger--Food. Hunger
stimulates your need to eat.
Can be stimulated by the marketer through product information--did not know
you were deficient? I.E., see a commercial for a new pair of shoes, stimulates
your recognition that you need a new pair of shoes.
2. Information search--
o Internal search, memory.
o External search if you need more information. Friends and relatives (word
of mouth). Marketer dominated sources; comparison shopping; public
sources etc.

A successful information search leaves a buyer with possible alternatives, the


evoked set.

Hungry, want to go out and eat, evoked set is

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o Chinese food
o Indian food
o burger king
3. Evaluation of Alternatives--need to establish criteria for evaluation, features the
buyer wants or does not want. Rank/weight alternatives or resume search. May
decide that you want to eat something spicy, Indian gets highest rank etc.
If not satisfied with your choice then returns to the search phase. Can you think of
another restaurant? Look in the yellow pages etc. Information from different
sources may be treated differently. Marketers try to influence by "framing"
alternatives.
4. Purchase decision--Choose buying alternative, includes product, package, store,
method of purchase etc.
5. Purchase--May differ from decision, time lapse between 4 & 5, product
availability.
6. Post-Purchase Evaluation--outcome: Satisfaction or Dissatisfaction. Cognitive
Dissonance, have you made the right decision. This can be reduced by warranties,
after sales communication etc.
After eating an Indian meal, may think that really you wanted a Chinese meal
instead.

Understanding Consumers:
Different Types of Consumers

In business terms there are different types of consumers of goods and services that are
offered for sale by companies and manufacturers. A product manufacturing company has
to determine, know or understand the type of consumers it’s targeting with its goods to
make sure that there exists a market for the products they intend to introduce into the
market. Knowing the types of consumers for goods is also important in that it enables the
company to avail the right and desired product to the consumer hence increasing sales
and profitability.

There are different types, classes or categories of consumers of goods and services and in
this article each of them will be discussed in detail.

Seasonal consumers

These are types of consumers who purchase and consume products on seasonal basis.
You would most of the times not find these types of consumers buying the goods or
service in question but rather at certain times when the need for them arises. They buy
products that are season based or demanded at certain times and not all the times.

Examples

Purchasing umbrellas during the rainy season

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Purchasing cold drinks during the hot seasons

Going out for holyday during the Christmas season

Personal consumers

These types of consumers are individual consumers who purchase goods for the sole
purpose of personal, family or household use.

Examples

Going to the supermarket and shopping for goods which are to be used in the house

Purchasing a car that you intend to use personally

Purchasing clothes for personal use from a clothing mall

Purchasing a mobile phone to communicate with people

Organizational consumer

Organizational consumers are consumers of goods and services whose main intention is
not for immediate use but rather to use it for things like production, using them to carry
out the organization’s activities or for resale purposes aimed at getting profits as a result.
E.g. an organization may buy raw materials that are aimed at producing other goods
which will later be offered for sale to other consumers.

Impulse consumers

Impulse consumers or buyers are those who make unplanned buying decisions. Impulse
buyers make swift buying decisions in that they encounter products which they
immediately purchase after they fall in love with the product and its features. The
products they purchase were not initially in their plans but as a sort of something that
comes up all over sudden from somewhere and that calls for the consumer to make an
unplanned purchase.

Need based consumers

Need based consumers are those types of consumers who buy goods and services when
they need them and not any other time. A need for a certain product will necessitate
buying it as the consumer would find it tempting to buy the product because it is needed
immediately for a certain purpose.

Discount driven consumers

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Discount driven consumers are types of consumers who are purchase goods and services
primarily for the discounts on offer. They may not engage in any buying activity for most
of the times only to act when they hear or see large discounts being offered on products
they like. They are price sensitive and they would rather wait and purchase products
when they come with discounts as opposed to when they have no discount.

Habitual consumer

Habitual consumers are those who find it a must or compelling to use certain type of
goods whenever they are presented with the opportunity. It is just like a habit that they
can’t do without engaging in it. E.g. the cigarette smoker falls under this category of
consumers. The person would smoke at any given time when he/she has a cigarette. He
may also not be able to do without smoking because it is a habit that he has become
addicted to.

Types of Consumer Buying Behavior


Types of consumer buying behavior are determined by:
• Level of Involvement in purchase decision. Importance and intensity of interest in
a product in a particular situation.
• Buyer’s level of involvement determines why he/she is motivated to seek
information about a certain products and brands but virtually ignores others.

High involvement purchases--Honda Motorbike, high priced goods, products visible to


others, and the higher the risk the higher the involvement. Types of risk:
• Personal risk
• Social risk
• Economic risk

The four type of consumer buying behavior are:


• Routine Response/Programmed Behavior--buying low involvement frequently
purchased low cost items; need very little search and decision effort; purchased
almost automatically. Examples include soft drinks, snack foods, milk etc.
• Limited Decision Making--buying product occasionally. When you need to obtain
information about unfamiliar brand in a familiar product category, perhaps.
Requires a moderate amount of time for information gathering. Examples include
Clothes--know product class but not the brand.
• Extensive Decision Making/Complex high involvement, unfamiliar, expensive
and/or infrequently bought products. High degree of
economic/performance/psychological risk. Examples include cars, homes,
computers, education. Spend alot of time seeking information and deciding.
Information from the companies MM; friends and relatives, store personnel etc.
Go through all six stages of the buying process.
• Impulse buying, no conscious planning.

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The purchase of the same product does not always elicit the same Buying Behavior.
Product can shift from one category to the next.
For example:
Going out for dinner for one person may be extensive decision making (for someone that
does not go out often at all), but limited decision making for someone else. The reason
for the dinner, whether it is an anniversary celebration, or a meal with a couple of friends
will also determine the extent of the decision making.

The Ultimate Consumer:


Individual (such as a housewife) or a group (such as a family) which actually consumes
or uses a good or service, as distinct from the buyer or shopper who may only be a
purchasing agent. Marketers try to identify the ultimate consumers to aim their
promotional efforts at them
Individuals who use human inventions such as the internet to facilitate their consumption
of vast amounts of the earth’s natural resources. Can also be described as the final user of
any product or service.

Manufacturers and professional entertainers target ultimate consumers when making or


producing their goods. They use professional marketers to make sure their message
reaches their market.

Ultimate Consumers are the true drivers of the world economy and should not be ignored.
No business can hope to survive and prosper if their product or service has no appeal to
the end user (The Ultimate Consumer).

Health, wealth and entertainment are benefits consumers seek. They want the best of
everything.

Best Food, Best Tennis Racket, Best Face Cream, Best Home Loan, Best House, Best
Holiday, Best Golf Clubs, Best Credit Card, Best Romance, Best Partner, Best Business

Individual buyer:
The actions a person takes in purchasing and using products and services,
including the mental and social processes that precede and follow these actions.
The behavioral sciences help answer questions such as :
Why people choose one product or brand over another,
How they make these choices, and
How companies use this knowledge to provide value to consumers

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I. CONSUMER PURCHASE DECISION PROCESS
Behind the visible act of making a purchase lies a decision process that must be
investigated.

The purchase decision process is the stages a buyer passes through in making
choices about which products and services to buy. :

problem recognition,

information search,
Five Stages
alternative evaluation,
of
Consumer Behavior
purchase decision, and

post-purchase behavior.

A. Problem Recognition: Perceiving a Need


Perceiving a difference between a person's ideal and actual situations big enough to
trigger a decision.

Can be as simple as noticing an empty milk carton or it can be activated by


marketing efforts.

B. Information Search: Seeking Value

The information search stage clarifies the options open to the consumer and may
involve
Scanning one’s memory to recall previous
experiences with products or brands.
Internal
search Often sufficient for frequently purchased
products.
When past experience or knowledge is
insufficient
two steps of
information search
The risk of making a wrong purchase decision
External is high
search
The cost of gathering information is low.

The primary sources of external information

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are:
Personal sources, such as friends and family.

Public sources, including various product-rating


organizations such as Consumer Reports.

Marketer-dominated sources, such as


advertising, company websites, and salespeople

C. Alternative Evaluation: Assessing Value

The information search clarifies the problem for the consumer by

(1) Suggesting criteria to use for the purchase.

(2) Yielding brand names that might meet the criteria.

(3) Developing consumer value perception.


A consumer's evaluative criteria represent both

the objective attributes of a brand (such as locate speed on a portable CD player)

the subjective factors (such as prestige).

These criteria establish a consumer's evoked set

the group of brands that a consumer would consider acceptable from among all the
brands in the product class of which he or she is aware

D. Purchase Decision: Buying Value


which depends on such considerations

Terms of sale
From whom to buy
Past experience buying from the seller
Three possibilities
Return policy.
which can be influenced by

When to buy store atmosphere

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time pressure

a sale

pleasantness of the shopping experience.

Do not buy

E. Postpurchase Behavior: Value in Consumption or Use


After buying a product, the consumer compares it with expectations and is either
satisfied or dissatisfied.

Satisfaction or dissatisfaction affects

consumer value perceptions

consumer communications

repeat-purchase behavior.

Many firms work to produce positive postpurchase communications among


consumers and contribute to relationship building between sellers and buyers.

Cognitive Dissonance. The feelings of postpurchase psychological tension or


anxiety a consumer often experiences

Firms often use ads or follow-up calls from salespeople in this postpurchase stage
to try to convince buyers that they made the right decision.

F. Involvement and Problem-Solving Variations

Consumers may skip or minimize one or more steps in the purchase decision
process depending on

the level of involvement

the personal, social, and economic significance of the purchase

Three characteristics of high-involvement purchase

is expensive,

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can have serious personal consequences, or

Could reflect on one’s social image.

Decision Process:
A SIMPLIFIED MODEL OF CONSUMER DECISION MAKING:

 The process of consumer decision making can be viewed as three distinct but interlocking
stages: the input stage, the process stage, and the output stage.

 The Input Stage  Influences the consumer’s recognition of a product need and consists
of two major sources of information, the firm’s marketing efforts (the product itself, its
price, its promotion and where it is sold) and the external sociological influences on the
consumers.

 The Process Stage  It is the model focuses on how consumers make decisions. The
psychological factors inherent in each individual.

 The Output Stage  It is the consumer decision making model consists of two closely
related post decision activities.

Categories that Effect the Consumer Buying Decision


Process
A consumer, making a purchase decision will be affected by the following three factors:
1. Personal
2. Psychological
3. Social

The marketer must be aware of these factors in order to develop an appropriate MM for
its target market.

1.Personal
Unique to a particular person. Demographic Factors. Sex, Race, Age etc.
Who in the family is responsible for the decision making.
Young people purchase things for different reasons than older people.
Highlights the differences between male and female shoppers in the supermarket.

2.Psychological factors
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Psychological factors include:

• Motives--

A motive is an internal energizing force that orients a person's activities toward


satisfying a need or achieving a goal.
Actions are effected by a set of motives, not just one. If marketers can identify
motives then they can better develop a marketing mix.
MASLOW hierarchy of needs!!

o Physiological
o Safety
o Love and Belonging
o Esteem
o Self Actualization

Need to determine what level of the hierarchy the consumers are at to determine
what motivates their purchases.

Motives often operate at a subconscious level therefore are difficult to measure.

• Perception--

What do you see?? Perception is the process of selecting, organizing and


interpreting information inputs to produce meaning. IE we chose what info we
pay attention to, organize it and interpret it.
Information inputs are the sensations received through sight, taste, hearing, smell
and touch.

• Ability and Knowledge--

Need to understand individual’s capacity to learn. Learning, changes in a person's


behavior caused by information and experience. Therefore to change consumers'
behavior about your product, need to give them new information re: product...free
sample etc.

When making buying decisions, buyers must process information.


Knowledge is the familiarity with the product and expertise.

Inexperience buyers often use prices as an indicator of quality more than those
who have knowledge of a product.
Non-alcoholic Beer example: consumers chose the most expensive six-pack,
because they assume that the greater price indicates greater quality.

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Learning is the process through which a relatively permanent change in behavior
results from the consequences of past behavior.

• Attitudes--

Knowledge and positive and negative feelings about an object or activity-maybe


tangible or intangible, living or non- living.....Drive perceptions

Individual learns attitudes through experience and interaction with other people.
Consumer attitudes toward a firm and its products greatly influence the success or
failure of the firm's marketing strategy.

Honda "You meet the nicest people on a Honda", dispel the unsavory image of a
motorbike rider, late 1950s. Changing market of the 1990s, baby boomers aging,
Hondas market returning to hard core. To change this they have a new slogan
"Come ride with us".

Attitudes and attitude change are influenced by consumers personality and


lifestyle.

Consumers screen information that conflicts with their attitudes. Distort


information to make it consistent and selectively retain information that reinforces
our attitudes. IE brand loyalty.

There is a difference between attitude and intention to buy (ability to buy).

• Personality--

all the internal traits and behaviors that make a person unique, uniqueness arrives
from a person's heredity and personal experience. Examples include:

o Workaholism
o Compulsiveness
o Self confidence
o Friendliness
o Adaptability
o Ambitiousness
o Dogmatism
o Authoritarianism
o Introversion
o Extroversion
o Aggressiveness
o Competitiveness.

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Traits effect the way people behave. Marketers try to match the store image to the
perceived image of their customers.

There is a weak association between personality and Buying Behavior, this may
be due to unreliable measures. Nike ads. Consumers buy products that are
consistent with their self concept.

• Lifestyles--

Recent US trends in lifestyles are a shift towards personal independence and


individualism and a preference for a healthy, natural lifestyle.

Lifestyles are the consistent patterns people follow in their lives.

3.Social Factors
Consumer wants, learning, motives etc. are influenced by opinion leaders, person's
family, reference groups, social class and culture.

• Opinion leaders--

Spokespeople etc. Marketers try to attract opinion leaders...they actually use (pay)
spokespeople to market their products. Michael Jordon (Nike, McDonalds,
Gatorade etc.)

• Roles and Family Influences--

Role...things you should do based on the expectations of you from your position
within a group.
People have many roles.
Husband, father, employer/ee. Individuals role are continuing to change therefore
marketers must continue to update information.

Family is the most basic group a person belongs to. Marketers must understand:

o that many family decisions are made by the family unit


o consumer behavior starts in the family unit
o family roles and preferences are the model for children's future family
(can reject/alter/etc)
o family buying decisions are a mixture of family interactions and individual
decision making
o family acts an interpreter of social and cultural values for the individual.

The Family life cycle: families go through stages, each stage creates different
consumer demands:

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o bachelor stage...most of BUAD301
o newly married, young, no children...me
o full nest I, youngest child under 6
o full nest II, youngest child 6 or over
o full nest III, older married couples with dependant children
o empty nest I, older married couples with no children living with them,
head in labor force
o empty nest II, older married couples, no children living at home, head
retired
o solitary survivor, in labor force
o solitary survivor, retired
o Modernized life cycle includes divorced and no children.
• Reference Groups--

Individual identifies with the group to the extent that he takes on many of the
values, attitudes or behaviors of the group members.

Families, friends, sororities, civic and professional organizations.


Any group that has a positive or negative influence on a persons attitude and
behavior.
Membership groups (belong to)
Affinity marketing is focused on the desires of consumers that belong to reference
groups. Marketers get the groups to approve the product and communicate that
approval to its members. Credit Cards etc.!!

Aspiration groups (want to belong to)


Disassociate groups (do not want to belong to)
Honda, tries to disassociate from the "biker" group.

The degree to which a reference group will affect a purchase decision depends on
an individuals susceptibility to reference group influence and the strength of
his/her involvement with the group.

• Social Class--

an open group of individuals who have similar social rank. US is not a classless
society. US criteria; occupation, education, income, wealth, race, ethnic groups
and possessions.

Social class influences many aspects of our lives. IE upper middle class
Americans prefer luxury cars Mercedes.

o Upper Americans-upper-upper class, .3%, inherited wealth, aristocratic


names.
o Lower-upper class, 1.2%, newer social elite, from current professionals
and corporate elite

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o Upper-middle class, 12.5%, college graduates, managers and professionals
o Middle Americans-middle class, 32%, average pay white collar workers
and blue collar friends
o Working class, 38%, average pay blue collar workers
o Lower Americans-lower class, 9%, working, not on welfare
o Lower-lower class, 7%, on welfare

Social class determines to some extent, the types, quality, quantity of products
that a person buys or uses.

Lower class people tend to stay close to home when shopping, do not engage in
much prepurchase information gathering.
Stores project definite class images.

Family, reference groups and social classes are all social influences on consumer
behavior. All operate within a larger culture.

• Culture and Sub-culture--

Culture refers to the set of values, ideas, and attitudes that are accepted by a
homogenous group of people and transmitted to the next generation.

Culture also determines what is acceptable with product advertising. Culture


determines what people wear, eat, reside and travel. Cultural values in the US are
good health, education, individualism and freedom. In American culture time
scarcity is a growing problem. IE change in meals. Big impact on international
marketing.

Why Study Consumer Behaviour ?

Importance of studying Consumer behaviour in marketing


management ;
In the highly specialised study of "BUSINESS MANAGEMENT", "BUSINESS
ADMINISTRATION" or just "MANAGEMENT" today, "MARKETING
MANAGEMENT" function plays a very critical role. This is because this functional area
of management (1) "EARNS" the revenue, & (2) "WORKS" in the close proximity with
the public or persons outside the organisation. Controlling these two attributes to have the
desired benefits are the most difficult part of the management, because none of these two
are within the direct control of the marketers. This doesn't mean that the other functional
areas are not useful, but they are not "DIRECTLY" involved in the activities mentioned
above.

Similarly, within the study of Marketing Management, the "Consumers" or the


"Customers" play a very critical role as these are the people who finally BUY the goods

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& services of the organisation, and the firm is always on the move to make them buy so
as to earn revenue. It's crucial from both the points of view as given below :

1. From the customers' point of view : Customers today are in a tough spot. Today,
in the highly developed & technologically advanced society, the customers have a
great deal of choices & options (and often very close & competing) to decide on.
2.
1. They have the products of an extreme range of attributes (the 1st P -
Product),
2. they have a wide range of cost and payment choices (the 2nd P - Price),
3. they can order them to be supplied to their door step or anywhere else (the
3rd P - Place),
4. and finally they are bombarded with more communications from more
channels than ever before (the 4th P - Promotion).

How can they possibly decide where to spend their time and money, and where they
should give their loyalty ?

1. From the marketers' point of view : "The purpose of marketing is to sell more
stuff to more people more often for more money in order to make more profit".
This is the basic principle of requirement for the marketers in earlier days where
aggressive selling was the aim. Now it can't be achieved by force, aggression or
plain alluring. For the customers are today more informed, more knowledgeable,
more demanding, more discerning. And above all there is no dearth of marketers
to buy from. The marketers have to earn them or win them over.

The global marketplace is a study in diversity, diversity among consumers, producers,


marketers, retailers, advertising media, cultures, and customs and of course the individual
or psychological behaviour. However, despite prevailing diversity, there also are many
similarities. The object of the study of consumer behaviour is to provide conceptual and
technical tools to enable the marketer to apply them to marketing practice, both profit &
non-profit.

The study of consumer behaviour (CB) is very important to the marketers because it
enables them to understand and predict buying behaviour of consumers in the
marketplace; it is concerned not only with what consumers buy, but also with why they
buy it, when and where and how they buy it, and how often they buy it, and also how
they consume it & dispose it. Consumer research is the methodology used to study
consumer behaviour; it takes place at every phase of the consumption process: before the
purchase, during the purchase, and after the purchase. Research shows that two different
buyers buying the same product may have done it for different reasons, paid different
prices, used in different ways, have different emotional attachments towards the things
and so on.

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According to Professor Theodore Levitt of the Harvard Business School, the study of
Consumer Behaviour is one of the most important in business education, because the
purpose of a business is to create and keep customers. Customers are created and
maintained through marketing strategies. And the quality of marketing strategies depends
on knowing, serving, and influencing consumers. In other words, the success of a
business is to achieve organisational objectives, which can be done by the above two
methods. This suggests that the knowledge & information about consumers is critical for
developing successful marketing strategies because it challenges the marketers to think
about and analyse the relationship between the consumers & marketers, and the consumer
behaviour & the marketing strategy.

Consumer behaviour is interdisciplinary; that is, it is based on concepts and theories


about people that have been developed by scientists, philosophers & researchers in such
diverse disciplines as psychology, sociology, social psychology, cultural anthropology,
and economics. The main objective of the study of consumer behaviour is to provide
marketers with the knowledge and skills, that are necessary to carry out detailed
consumer analyses which could be used for understanding markets and developing
marketing strategies. Thus, consumer behaviour researchers with their skills for the
naturalistic settings of the market are trying to make a major contribution to our
understanding of human thinking in general.

The study of consumer behaviour helps management understand consumers' needs so as


to recognise the potential for the trend of development of change in consumer
requirements and new technology. And also to articulate the new thing in terms of the
consumers' needs so that it will be accepted in the market well.

The following are a few examples of the benefits of the study of consumer behaviour
derived by the different categories of people :

1. A marketing manager would like to know how consumer behaviour will help him
to design better marketing plans to get those plans accepted within the company.
2. In a non-profit service organisation, such as a hospital, an individual in the
marketing department would like to know the patients' needs and how best to
serve those needs.
3. Universities & Colleges now recognise that they need to know about consumer
behaviour to aid in recruiting students. "Marketing Admissions" has become an
accepted term to mean marketing to potential students.

Consumer behaviour has become an integral part of strategic market planning. It is also
the basis of the approach to the concept of Holistic Marketing. (See the article on
"HOLISTIC MARKETING " written by the author). The belief that ethics and social
responsibility should also be integral components of every marketing decision is
embodied in a revised marketing concept - the societal marketing concept - which calls

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on marketers to fulfil the needs of their target markets in ways that improve society as a
whole

DEVELOPMENT OF THE MARKETING CONCEPT AND THE DISCIPLINE OF


CONSUMER BEHAVIOUR:

MARKETING CONCEPT, A BUSINESS ORIENTATION:

 The field of consumer behaviour is rooted in the marketing concept, a business orientation
that evolved in the 1950s through several alternative approaches toward doing business
referred to respectively: -

1) The Production Concept.

2) The Product Concept.

3) The Selling Concept.

4) The Marketing Concept.

5) The Societal Marketing Concept.

1) THE PRODUCTION CONCEPT:

 The production concept assumes that consumers are mostly interested in product
availability at low prices; its implicit marketing objectives are cheap, efficient product
and intensive distribution.

 It makes sense when consumer are more interested in buying what’s available rather than
wait for what they really want.

 The main objective is to expand the market.

2) THE PRODUCT CONCEPT:

 The product concept assumes that consumers will buy the product that offers them the
highest quality, the best performance, and the most features.

 It ensures the company to improve the quality of its product and add new features.

 The product concept often leads to “marketing myopia” that is focusing on the product
rather than the customer needs.

3) THE SELLING CONCEPT:

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 The assumption of the selling concept is that consumers are unlikely to buy the product
unless they are aggressively persuaded to do so – mostly through “hard sell” approach.

 The problem in this concept is that it fails to satisfy a customer.

 Promotion can be done through advertisement, sales promotion and public relation.

 Today the selling concept is utilize be marketers of unsought products – that is which
people are not willing to buy it (such as life insurance).

4) THE MARKETING CONCEPT:

 It started in 1950’s when some marketers realized we can sell more products by
determining what consumer would buy.

 Consumer need and wants became the firm’s primary focus.

 The marketers should made product what t can sell, instead of what it has made.

STARTING POINT FOCUS MEANS ENDS

SELLING CONCEPT

Factory  Product  Selling & Promotion  Profit through sale volume

MARKETING CONCEPT

Market  Needs  Marketing  Profit via customer satisfaction

5) THE SOCIETAL MARKETING CONCEPT:

 Developing that product which benefits the society. Doing marketing in such a way that it
helps you in increasing your production & also giving benefits to society.

 The organization should determine the needs, wants and interest of target markets and
deliver the desired satisfaction more effectively and efficiently then do competitors in a
way that maintains or improves the customers and society’s well being.

IMPLEMENTING THE MARKETING CONCEPT:

 To identify unsatisfied consumer need, companies had to engage in extensive marketing


research. The marketing concept underscored the importance of consumer research.

 The strategic tools that are used to implement the marketing concept include segmentation,
targeting, positioning and the marketing mix.

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THE ROLE OF CONSUMER RESEARCH:

 Consumer research describes the process and tools used to study consumer behaviour.

 Two theoretical perspectives that guides the development of consumer research: -

 Positive Approach  It tend to be objective and empirical, to seek caused for behaviour,
and to conduct research studies that can be generalized to larger population.

 Interpretivists  the research done by Interpretivists, on the other hand tends to be


qualitative and based on small samples.

Importance of studying consumer behavior in marketing management :

Consumer behavior is an important consideration when constructing a marketing plan.


While profits, sales numbers and all profit generating departments are important, when it
comes down to it consumer behavior is a big part of the marketing puzzle.

Businesses that cannot understanding how a consumer's mind operates will have a more
challenging time figuring out how to target a campaign that will attract or catch attention.

Trying to discover what drives, attracts and motivates consumers is pretty valuable
information. Marketers who can successfully figure out what makes potentially interested
consumers tick will have gained a terrific opportunity to use the information in order to
develop a strong campaign.

Pre-technology a lot of this information could not be seen by the naked eye, or if so,
would take an enormous amount of time to compile and analyze. Today through
technology marketers have an easier means to collect and reflect upon the information
collected and learn more about consumer behavior from different perspectives. As a
result marketing experts can then use the information to improve their marketing
strategies.

According to Lars Perner, Ph.D. of the Marshall School of Business as USC, "the study
of consumers helps firms and organizations improve their marketing strategies by
understanding issues" and continues to describe how "the psychology of how consumers
think, feel, reason and select between different alternatives" and he cites brands and
products as examples.

Other consumer behavioral factors of value are gaining perception of how consumers are
influenced by their environments, shopping routines, decision making processes, and
motivations.

Professor Perner also suggests there are four main benefits related to consumer behavior:

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*Marketing Strategies - this includes grasping good timing, effective advertising
techniques and pleasing customers.

*Public Policy - Gaining knowledge of public policy and how products can impact
(i.e. side effects) is critical.

*Social Marketing - This factor involves ensuring ideas are passed to consumers rather
than aggressive sales. This could include awareness or if society is resistant, alternative
methods.

*Better Consumers - Studying consumer behaviors make marketers better consumers too.

Understanding how to utilize the information gleaned from consumer behavior is the key.
Armed with this information marketers can focus on producing products and/or services
targeted markets are actually interested in, and they can also figure out how to develop
effective campaigns..

If these two objectives can be accomplished, then the chance of converting marketing
efforts to sales increases Seems if a good glimpse in consumer behavior can be made,
then the rest comes more naturally.

Social Marketing:
What is Social Marketing?
The health communications field has been rapidly changing over the past two decades. It has
evolved from a one-dimensional reliance on public service announcements to a more
sophisticated approach which draws from successful techniques used by commercial marketers,
termed "social marketing." Rather than dictating the way that information is to be conveyed from
the top-down, public health professionals are learning to listen to the needs and desires of the
target audience themselves, and building the program from there. This focus on the "consumer"
involves in-depth research and constant re-evaluation of every aspect of the program. In fact,
research and evaluation together form the very cornerstone of the social marketing process.

Social marketing was "born" as a discipline in the 1970s, when Philip Kotler and Gerald Zaltman
realized that the same marketing principles that were being used to sell products to consumers
could be used to "sell" ideas, attitudes and behaviors. Kotler and Andreasen define social
marketing as "differing from other areas of marketing only with respect to the objectives of the
marketer and his or her organization. Social marketing seeks to influence social behaviors not to
benefit the marketer, but to benefit the target audience and the general society." This technique
has been used extensively in international health programs, especially for contraceptives and oral
rehydration therapy (ORT), and is being used with more frequency in the United States for such
diverse topics as drug abuse, heart disease and organ donation.

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Like commercial marketing, the primary focus is on the consumer--on learning what people want
and need rather than trying to persuade them to buy what we happen to be producing. Marketing
talks to the consumer, not about the product. The planning process takes this consumer focus
into account by addressing the elements of the "marketing mix." This refers to decisions about 1)
the conception of a Product, 2) Price, 3) distribution (Place), and 4) Promotion. These are often
called the "Four Ps" of marketing. Social marketing also adds a few more "P's." At the end is an
example of the marketing mix.

Product

The social marketing "product" is not necessarily a physical offering. A continuum of products
exists, ranging from tangible, physical products (e.g., condoms), to services (e.g., medical
exams), practices (e.g., breastfeeding, ORT or eating a heart-healthy diet) and finally, more
intangible ideas (e.g., environmental protection). In order to have a viable product, people must
first perceive that they have a genuine problem, and that the product offering is a good solution
for that problem. The role of research here is to discover the consumers' perceptions of the
problem and the product, and to determine how important they feel it is to take action against the
problem.

Price

"Price" refers to what the consumer must do in order to obtain the social marketing product. This
cost may be monetary, or it may instead require the consumer to give up intangibles, such as
time or effort, or to risk embarrassment and disapproval. If the costs outweigh the benefits for an
individual, the perceived value of the offering will be low and it will be unlikely to be adopted.
However, if the benefits are perceived as greater than their costs, chances of trial and adoption of
the product is much greater.

In setting the price, particularly for a physical product, such as contraceptives, there are many
issues to consider. If the product is priced too low, or provided free of charge, the consumer may
perceive it as being low in quality. On the other hand, if the price is too high, some will not be able
to afford it. Social marketers must balance these considerations, and often end up charging at
least a nominal fee to increase perceptions of quality and to confer a sense of "dignity" to the
transaction. These perceptions of costs and benefits can be determined through research, and
used in positioning the product.

Place

"Place" describes the way that the product reaches the consumer. For a tangible product, this
refers to the distribution system--including the warehouse, trucks, sales force, retail outlets where
it is sold, or places where it is given out for free. For an intangible product, place is less clear-cut,

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but refers to decisions about the channels through which consumers are reached with information
or training. This may include doctors' offices, shopping malls, mass media vehicles or in-home
demonstrations. Another element of place is deciding how to ensure accessibility of the offering
and quality of the service delivery. By determining the activities and habits of the target audience,
as well as their experience and satisfaction with the existing delivery system, researchers can
pinpoint the most ideal means of distribution for the offering.

Promotion

Finally, the last "P" is promotion. Because of its visibility, this element is often mistakenly thought
of as comprising the whole of social marketing. However, as can be seen by the previous
discussion, it is only one piece. Promotion consists of the integrated use of advertising, public
relations, promotions, media advocacy, personal selling and entertainment vehicles. The focus is
on creating and sustaining demand for the product. Public service announcements or paid ads
are one way, but there are other methods such as coupons, media events, editorials,
"Tupperware"-style parties or in-store displays. Research is crucial to determine the most
effective and efficient vehicles to reach the target audience and increase demand. The primary
research findings themselves can also be used to gain publicity for the program at media events
and in news stories.

Additional Social Marketing "P's"

Publics--Social marketers often have many different audiences that their program has to address
in order to be successful. "Publics" refers to both the external and internal groups involved in the
program. External publics include the target audience, secondary audiences, policymakers, and
gatekeepers, while the internal publics are those who are involved in some way with either
approval or implementation of the program.

Partnership--Social and health issues are often so complex that one agency can't make a dent
by itself. You need to team up with other organizations in the community to really be effective.
You need to figure out which organizations have similar goals to yours--not necessarily the same
goals--and identify ways you can work together.

Policy--Social marketing programs can do well in motivating individual behavior change, but that
is difficult to sustain unless the environment they're in supports that change for the long run.
Often, policy change is needed, and media advocacy programs can be an effective complement
to a social marketing program.

Purse Strings--Most organizations that develop social marketing programs operate through
funds provided by sources such as foundations, governmental grants or donations. This adds
another dimension to the strategy development-namely, where will you get the money to create

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your program?

Example of a Marketing Mix Strategy

As an example, the marketing mix strategy for a breast cancer screening campaign for older
women might include the following elements:

• The product could be any of these three behaviors: getting an annual mammogram,
seeing a physician each year for a breast exam and performing monthly breast self-
exams.
• The price of engaging in these behaviors includes the monetary costs of the
mammogram and exam, potential discomfort and/or embarrassment, time and even the
possibility of actually finding a lump.
• The place that these medical and educational services are offered might be a mobile van,
local hospitals, clinics and worksites, depending upon the needs of the target audience.
• Promotion could be done through public service announcements, billboards, mass
mailings, media events and community outreach.
• The "publics" you might need to address include your target audience (let's say low-
income women age 40 to 65), the people who influence their decisions like their
husbands or physicians, policymakers, public service directors at local radio stations, as
well as your board of directors and office staff.
• Partnerships could be cultivated with local or national women's groups, corporate
sponsors, medical organizations, service clubs or media outlets.
• The policy aspects of the campaign might focus on increasing access to mammograms
through lower costs, requiring insurance and Medicaid coverage of mammograms or
increasing federal funding for breast cancer research.
• The purse strings, or where the funding will come from, may be governmental grants,
such as from the National Cancer Institute or the local health department, foundation
grants or an organization like the American Cancer Society.

Each element of the marketing mix should be taken into consideration as the program is
developed, for they are the core of the marketing effort. Research is used to elucidate and shape
the final product, price, place, promotion and related decisions.

De-marketing:

Efforts aimed at discouraging (not destroying) the demand for a product which (1) a
firm cannot supply in large-enough quantities, or (2) does not want to supply in a
certain region where the high costs of distribution or promotion allow only a too
little profit margin. Common de-marketing strategies include higher prices, scaled-
down advertising, and product redesign.

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De-marketing is a process to make a product less attractive (so that the demand of the
product will reduce). The company will take measures to decrease the demand of
customers on a product. A good example of de-marketing is cigarettes. Companies put
phrases as ‘’smoking kills’’ on the boxes of their cigarettes, to make people aware of the
hazards of smoking. They hope this measure will reduce the amount of smokers in the
world. This is a great example for de-marketing.

Government Decision Making Process

Public policy is an attempt by a government to address a public issue by instituting laws,


regulations, decisions, or actions pertinent to the problem at hand. Numerous issues can
be addressed by public policy including crime, education, foreign policy, health, and
socialwelfare. While public policies are most common in the United States, several other
countries, such as those in the United Kingdom, implement them as well. The process to
create a new public policy typically follows three steps: agenda-setting, option-
formulation, and implementation; the time-line for a new policy to be put in place can
range from weeks to several years, depending on the situation. Public policies can also be
made by leaders of religious and cultural institutions for the benefit of the congregation
and participants, and the term can also refer to a type of academic study that covers topics
such as sociology,economics, and policy analysis.

The Process

When new public policies are created, there are generally three key things involved in the
process: the problem, the player, and the policy. The problem is the issue that needs to be
addressed, the player is the individual or group that is influential in forming a plan to
address the problem in question, and the policy is the finalized course of action decided
upon by the government. Typically the general public will make the government aware of
an issue through writing letters and emails, or making phone calls, to local government
leaders; the issue is then brought forward during government meetings and the process
for creating new public policies begins.

The rational model for the public policy-making process can typically be divided into
three steps: agenda-setting, option-formulation, and implementation. Within the agenda-
setting stage, the agencies and government officials meet to discuss the problem at hand.
In the second stage, option-formulation, alternative solutions are considered and final
decisions are made regarding the best policy. Consequently, the decided policy is
implemented during the final stage; in most cases, once public policies are in place, they

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are widely open to interpretation by non-governmental players, including those in the
private sector. Implied within this model is the fact that the needs of the society are a
priority for the players involved in the policy-making process; also, it is believed that the
government will follow through on all decisions made by the final policy.

Examples

In 1993, due to ineffective healthcare policies, the Clinton administration in the US


sought to implement a policy that would bring about a national healthcare system. As part
of the policies being considered, the US federal government would protect the healthcare
consumer’s rights, consumers would be able to form alliances to obtain better healthcare
prices, and caregivers would be required to provide fair healthcare packages. Players
involved in the policy-making process included lobbying groups and politicians. While
some changes were made to healthcare provisions by legislators, the policies advocated
by the Clinton administration were not put into effect as result of political differences.

Model Of Consumer behavior

The Five-Step Decision Making Process

You can adapt the familiar five-step decision making process (outlined below) to decide
which program or service to assess.

Step 1 Identifying/clarifying the decision to be made. If the decision has not yet been
isolated, it should be identified as a first step. Sometimes the decision to be made will
have been presented to the decision maker. In those situations, Step 1 calls for the
clarification of what the decision actually entails.

Step 2 Identifying possible decision options. The next step requires the decision maker
to spell out, as clearly as possible, just what the decision alternatives really are. For
instance, if one were attempting to buy a bicycle, do the decision options only consist of
the different types of bicycles, or is another option to refrain from buying a bicycle
altogether?

Step 3 Gathering/processing information. Next, the decision maker collects or


processes information that can help guide the decision. If such information is already at
hand, then it simply needs to be processed; that is, studied and understood by the decision
maker. If there is no relevant information available, or if there is insufficient information,
then such information must be collected so it can be processed. The more significant the
decision, the more rigorous the information-gathering process.

Step 4 Making/implementing the decision. After the information has been considered
according to its relevance and significance, a decision based on that information should
be made and, thereafter, implemented.

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Step 5 Evaluating the decision. In recognition of the fact that not all of one's decisions
are likely to be defensible, the final step in the five-step decision making process is to
determine whether the decision was appropriate. Ordinarily, this will be done by
ascertaining the decision's consequences.

Consumer Behaviour models

The purpose of consumer behaviour models is to attempt to


give a simplified version of the relationship of the various
factors that influence consumer behaviour. Various models
have been developed to describe consumer behaviour with
the intention of trying to control the behaviour patterns. The
models, however, fall short of these objectives and at best
give the reader an appreciation of interactive factors that influence
behaviour patterns. It is only possible to review some
of the general consumer behaviour models here. One of the
earliest models of consumer behaviour was proposed by
Andreason (1965). This model is shown in Figure 3.1.
Figure 3.1
Andreason model of consumer behaviour

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The model recognizes the importance of information in the
consumer decision-making process. It also emphasizes the
importance of consumer attitudes although it fails to consider
attitudes in relation to repeat purchase behaviour.
A second model, which concentrates on the buying decision for a
new product was proposed by Nicosia (1966). This model is shown in
Figure 3.2. The model concentrates on the organization’s attempts to
communicate with the consumer, and the consumers’ predisposition to
act in a certain way. These two features are referred to as Field One. The
second stage involves the consumer in a search evaluation process
which is influenced by attitudes. This stage is referred to as Field Two.
The actual purchase process is referred to as Field Three, and the postpurchase
feedback process is referred to as Field Four. This model was
criticized by commentators because it was not empirically tested
(Zaltman, Pinson and Angelman, 1973), and because many of the variables
were not defined (Lunn, 1974).

28 Prepared by:Sabin Yadav


Caliber International College

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