Consumer

Consumer is a person who purchases goods and services for personal use.

Customer

May or may not (use that product).

Consumer Behavior

Consumer Behavior is the study of how individual, group and organization select, buy, uses and dispose
of goods and services.

Nature of Consumer Behavior

1. Systematic Process
Systemic study is being performed by putting focus on consumer buying ,selecting ,uses and
disposing goods or products criteria in a systemic way.

2. Influenced by various factors

Consumer affected by influenced by various factors

 Psychological Factors
 Personal Factors
 Sociological Factors

Explained in next slides.

3. Different for different customers

Consumer behavior is different for everyone. Two persons can never have behavior.

4. Different for different products

Consumer behavior is also different regarding products for everyone. Product liked by one
person may be disliked by other.

5. Vital for marketer

For marketer it is really important to study the consumer behavior.

6. Vital across regions

Consumer living across the region will also vary different behavior and opinions regarding
products. It can never be similar.

Importance of Consumer Behavior

 Why do we study consumer behavior?

 Why do a marketer studies consumer behavior?
 1. Production Policies
For making production policies, the study of consumer behavior is really important. So, that we
can find out their preferences. To find; That what are customer demands and expectations in
market? For successful businesses, policies should always be based consumer behavior.

2. Production Policies
When to reduce and increase the price of a product? So that it can be beneficial for our
business.

3. Decision regarding sales promotion

In this, we have tools like discount, coupons, cash back or samples.

4. Exploit the market opportunities

In market, find out the opportunities. By exploiting changes in preference or nature of consumer
that keeps on changing with time.

5. Implement SPT (Segmentation, Positioning, Targeting) Strategies

Segmentation is dividing the market into smaller parts. After segmentation, choose a segment to
targets; means the segment to focus on. Afterwards by taking our brand in mind we position it.

 Factors affecting Consumer Buying Behavior

Whenever a consumer goes to market for the purchase of service or products. There are various factors
that either motivate or demotivate him in purchasing those products. In mainly, three types are being
found in these.

1. Economic Factors

2. Psychological Factors

3. Sociological Factors

Economic Factors

It is focused on money. All factor in it are related to money. In this consumer is a rational man. Who
takes all his decisions in great sane. It is further divided into points.

 Personal Income

Consumer personal income also impacts the consumer's buying process. Without money consumer
cannot purchase anything in market. Personal income to tax is of Disposable income and discretionary
income. Discretional income is when consumer after all the taxes, and other necessary payments and
the amount of income is left behind. Disposable income includes both spending and saving of consumer.
When consumer disposable income rises, the spending also increases. On other hand, when consumer
disposable income falls, the spending also declines. Discretional income is when consumer basic needs
are fulfilled and the amount of income is left behind. Means when discretional amount rises, he will
spend on things that will raise his standard of living. If discretional amount is low, then the standard of
living will remain stable.

 Family Income

Let's say child is by birth living in a family, after he gets married and lives with his family. So, the
aggregate (the total income) of individual family is family income. Rise in individual member income
maybe neutralize in fall in other member income. So family income also affects his buying decision.

 Consumer Credit

How much credit consumer can take/avail?

For example: Taking credit from bank, or buying good on credit but pays the amount later. So, his credit
capacity also affects his buying decision. If he likes spending, he will take credit. Else if he doesn’t like
taking credit his spending will be low and will also avoid purchasing.

 Level of standard of living

What is the living standard of consumer? E.g.: His living standard his high but his income has reduced,
still his spending won’t be declined as living standard is high. Incase his standard of living is low then he
can reduce his spending as standard of living was never high.

 Consumer liquid assets

How much liquid assets consumer has? E.g. If consumer has good amount of liquid assets; Like Money,
bank balance, shares bonds, saving certificates etc. As, he has a good backup of liquid assets. So, his
consumer buying behavior will be high so he will buy more and more. If his bank balance is low and has
no shares etc., then he will avoid purchasing. Consumer liquid assets also affects his buying decision.

Psychological Factors

Psychological Factors are consumer personal factors or are internal factors that also affects consumer
buying behavior.

 Motivation Level

E.g.: A consumer is interested in purchasing something. What are the factors that motivates him to
purchase it? We can apply Maslow Hierarchy Theory at this juncture. That includes basic needs, security
needs, social needs, esteem needs, and self-actualization. SO basic needs and security needs are his
motivational levels. He satisfies one need and then move towards the next need and then to third and
so on. Motivation Level also affects consumer buying behavior.

 Perception of the consumer

What is consumer perception about service or product? Every person has his own perception about
color, smell, taste etc. and decides accordingly. Perception has a process in which an individual
interprets the information and dram a conclusion regarding a product. All consumer has different
perception regarding a product. Consumer perception also affects consumer buying behavior.

 Attitude
Attitude is gained by experience with product information acquired by mass media. When consumer
experiences a product he develops attitude. That can either be positive or negative. If a person has
negative attitude regarding a product it can also be changed. As attitude changes. Consumer attitude
also affects consumer buying behavior.

 Learning

Learning depends on knowledge, skills and intentions. Skills are developed by practice whereas
knowledge and intentions are flourished by experience. In learning is, how can we learn about
information. Everyone has their own learning process. Learning also affects consumer buying behavior.

 Personality

Personality also affects consumer buying behavior. Personation also varies individual among consumers.
Personality involves his way of thinking, What he thinks about others. His behavior is also part of his
personality trade. Trade are internal or external trade that falls under personality factor. How he
behaves in different situation are all part of his personality.

Sociological Factors

Let’s say: A consumer who lives or belongs to a society and cannot live alone. In sociological factors his
family, social cast, culture etc., are affected.

 Family

A child who is raised in a family then his preference also matches with his family. Whatever the parents
purchase the child will also prefer it. So, in this way family also affects consumer buying behavior. Family
affects his personality, attitude and behavior. It also affects his decision-making process.

 Reference group

Every consumer has a reference group that also known as social group. In that group whenever a
consumer purchases a product it also affects other individual as they also wishes to purchase it.
Reference group also affects his decision-making process.

 Opinion Leaders

Some consumers always prefer taking opinion from others. Opinion leaders are those who have already
purchased a product and has experience about it. Are they satisfied or not? Opinion leaders provide
their opinions regarding their experience about project to others. That you should prefer this brand or
purchase this product.

 Social Class
Social class involves upper class, middle class, lower class. Upper class purchasing power or behavior
would be different compares to middle class, and middle-class purchasing power would be different of
lower class. All thee has different buying behavior. The upper class will purchase products they like
ignoring the prices. The middle class can purchase products but cannot afford or prefer really expensive
products. Lower class will prefer products with lowest prices. So social class also affects consumer
buying behavior.

 Caste and Culture

Caste also affects the buying process as they prefer products according to their caste. The products or
goods that are being used in the caste. Culture involves beliefs, values, norms also affects consumer
buying behavior.

 Approaches to Consumer Behavior:

1. Problem Recognition
In this, consumer perceives that what are his needs? Why are problems arising?
He tries to find what are his needs that are not getting satisfied. He motivates himself to fulfill
his needs and tries to find out problem. There are three types of problems.

Routine Problems: These changes day by day. For example, a manager. Whose actual sale is less
than expected sale. So, it is important to find it solution early.

Emergency Problems:Problems that arrives suddenly and are not expected. It is also important to
immediate find its solution. For example; When we draw cash from ATM. Its emergency
problem.

Planning Problems: These are expected problems. When we are trying to do something; we are
aware that something can occur. We already find its solution in advance before planning or
always keep a backup in case something occurs. No need to find intermediate solution. For
example, when buying a property. The Consumer know he can have finance issue so he keeps
finance backup.

2. Information Search
We search for information to satisfy our required needs. It can be done in two ways.
Internal Information:
The information we have in our mind. The information we gained by the past experience with a
product.
External Information:
The information we perceive in external way. Like taking opinions of a person who has used that
product.

3. Evaluation of Alternatives
 Make comparisons between different products and brands. Salient Attributes like price, reliable,
style finishing etc., are being evaluated.

4. Purchase
After Evaluation the alternatives we finally make purchase. Means finally the ownership of
product is being handed over to consumer.

5. Consumption
Consumption of product can either be done immediately or can be delayed. Immediately
consumption is when we purchase routine products that we use for our daily life. Like food,
vegetables. Whereas, delayed consumption is not consumed on time. Like car, bike.

6. Post Consumption Behavior

What is our review about that products? Are we satisfied after using it or are dissatisfied?
Satisfaction is when Expected performance = Perceived performance.

7. Dispose
When we use product. We either reuse it, resale it or either dispose it off. For Example. A
consumer purchased a computer and fully consumed it. To dispose it off ,the consumer will
resale it in market.