III Semester Marketing Management

Marketing Management
Module 2
Consumer Markets and Buyer Behaviour
Syllabus

Module 2

Consumer Markets and Buyer Behaviour: Factors influencing buyer behavior; Types of consumers;
Decision making process; Decision Making Unit; Consumerism; Consumer Protection Act 1986; Ethics
in Marketing

Learning Objectives

After reading this module, students should:

• Understand the consumer market.
• Understand consumer buying behaviour
• Know the decision making process and units involved
• Know the influences of buying behaviour.
• Understand the concept of customer delight and loyalty
• Know the global context of marketing
• Understand the role of ethics in marketing

INTRODUCTION

Buying Behaviour is defined as “all psychological, social and physical behaviour of potential customers
as they become aware of, evaluate, purchase, consume, and tell others about products and services”.
Buyer behaviour:
 Involves both individual and group processes (psychological and social)
 Awareness right through post purchase evaluation indicating satisfaction or non satisfaction

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 Includes communication, purchasing and consumption behaviour.
 Basically social in nature so social environment plays an important role
 Includes both consumer and business buyer behaviour.

Buyer behaviour includes the acts of individuals directly involved in obtaining and using economic
goods and services including sequence of decision processes that precede and determine these acts.
Actual purchase is only a part of the decision process as to why, how often, and where and what of
people buy. Buyer behaviour is the most important factors of successful marketing.

A customer responds to the stimuli or response model and may or may not purchase the product. The
inputs,(buying power, marketing mix and other factors) processing, outputs and feedback influence
the buying behaviour of the prospect if he is satisfied. Marketing mix is the marketing effort in
product, price promotion and distribution appeals. Promotion appeals are advertising, salesmen,
reference groups and sales promotion. Other inputs are intra & inter personal influences, and other
environmental factors. Intra-personal influences are reflected in motivation, perception, learning
attitudes and personality of buyers. Inter-personal influences are represented by family, social class,
reference groups and culture. Other environmental influences are general economic conditions,
pending legislation, fashion trends and technological advances.

CONSUMER PURCHASES ARE INFLUENCED STRONGLY BY FOUR FACTORS.

1. Cultural Factor
2. Social Factor
3. Personal Factor
4. Psychological Factor

1. Cultural Factor - Cultural factor divided into three sub factors (i) Culture (ii) Sub Culture (iii) Social
Class
• Culture: The set of basic values perceptions, wants, and behaviours learned by a member of
society from family and other important institutions. Culture is the most basic cause of a
person’s wants and behaviour. Every group or society has a culture, and cultural influences on
buying behaviour may vary greatly from country to country.

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• Sub Culture: A group of people with shared value systems based on common life experiences
and situations.
Each culture contains smaller sub cultures a group of people with shared value system based
on common life experiences and situations. Sub culture includes nationalities, religions, racial
group and geographic regions. Many sub culture make up important market segments and
marketers often design products.
• Social Class: Almost every society has some form of social structure, social classes are society’s
relatively permanent and ordered divisions whose members share similar values, interests and
behaviour.

2. Social Factors - A consumer’s behaviour also is influenced by social factors, such as the (i) Groups
(ii) Family (iii) Roles and status
• Groups: Two or more people who interact to accomplish individual or mutual goals. A person’s
behaviour is influenced by many small groups. Groups that have a direct influence and to
which a person belongs are called membership groups. Some are primary groups includes
family, friends, neighbours and co-workers. Some are secondary groups, which are more
formal and have less regular interaction. These include organizations like religious groups,
professional association and trade unions.
• Family: Family members can strongly influence buyer behaviour. The family is the most
important consumer buying organization society and it has been researched extensively.
Marketers are interested in the roles, and influence of the husband, wife and children on the
purchase of different products and services.
• Roles and Status: A person belongs to many groups, family, clubs, organizations. The person’s
position in each group can be defined in terms of both role and status. For example. M & “X”
plays the role of father, in his family he plays the role of husband, in his company, he plays the
role of manager, etc. A Role consists of the activities people are expected to perform according
to the persons around them.

3. Personal Factors - It includes i) Age and life cycle stage (ii) Occupation (iii) Economic situation (iv)
Life Style (v) Personality and self concept.

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• Age and Life cycle Stage: People change the goods and services they buy over their lifetimes.
Tastes in food, clothes, furniture, and recreation are often age related. Buying is also shaped by
the stage of the family life cycle.
• Occupation: A person’s occupation affects the goods and services bought. Blue collar workers
tend to buy more rugged work clothes, whereas white-collar workers buy more business suits.
A Co. can even specialize in making products needed by a given occupational group. Thus,
computer software companies will design different products for brand managers, accountants,
engineers, lawyers, and doctors.
• Economic situation - A person’s economic situation will affect product choice
• Life Style - Life Style is a person’s Pattern of living, understanding these forces involves
measuring consumer’s major AIO dimensions. i.e. activities (Work, hobbies, shopping, support
etc) interest (Food, fashion, family recreation) and opinions (about themselves, Business,
Products)
• Personality and Self concept - Each person’s distinct personality influence his or her buying
behaviour. Personality refers to the unique psychological characteristics that lead to relatively
consistent and lasting responses to one’s own environment.

4. Psychological Factors - It includes these Factors i) Motivation (ii) Perception (iii) Learning (iv) Beliefs
and attitudes
• Motivation : Motive (drive) a need that is sufficiently pressing to direct the person to seek
satisfaction of the need
• Perception: The process by which people select, Organize, and interpret information to form a
meaningful picture of the world.
• Learning: Changes in an individual’s behaviour arising from experience.
• Beliefs and attitudes : Belief is a descriptive thought that a person holds about something
• Attitude, a Person’s consistently favourable or unfavourable evaluations, feelings, and
tendencies towards an object or idea

TYPES OF CONSUMERS

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In business terms there are different types of consumers of goods and services that are offered for
sale by companies and manufacturers. So why is it important to understand different types of
consumers and how to reach them?

A product manufacturing company needs to understand the type of consumers it is targeting with its
goods because it is essential to be confident a market exists for the products they intend to introduce
into the market.

Knowing the types of consumers for goods is also important because it enables the company to
appropriately present the product to the potential purchaser, hence increasing sales and profitability.

There are different types, classes or categories of consumers of goods and services

1. Seasonal Consumers
Many consumers purchase and consume products on a seasonal basis. They shop at certain times
when the need for them arises.

Cash flow for a business selling seasonal products can be very difficult. Long periods of the year may
be without sales, so it is vital to quickly and effectively target seasonal consumers.

Examples of products that rely on seasonal consumers:

 Umbrellas during the rainy season

 Cold or icy drinks during the hot seasons

2. 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 a mobile phone for personal communication.

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Manufacturers selling products to personal consumers are constantly looking for ideas for upgrades
and add-ons to enhance the appeal of their goods to individuals.

3. Organizational Consumer
Organizational consumers purchase products for organizations, governments or businesses, They
often buy in bulk and may place long-term recurring orders. For this reason, an organizational
consumer is generally highly prized and sought after.

Products and services sold to organizational consumers are often required to meet very strict
standards. They may need to be adapted to meet the specific requirements of the buyer, and specific
prices are negotiated.

Manufacturers and service providers who target organizational consumers are expected to be flexible
in their approach to negotiating a sale, but rigid in maintaining quality.

Goods may be offered for resale at a profit to the organizational purchaser. Or an organization may
buy raw materials that are aimed at producing other goods which will later be offered for sale to other
consumers.

4. Impulse Buyers
Impulse buyers are consumers who make unplanned buying decisions.

Impulse buyers make swift buying decisions and immediately purchase when they 'connect' with the
product and its features. There is often some kind of emotional appeal.

Products impulse consumers purchase are not initially in their plans, so product placement is very
important. Manufacturers who target impulse buyers need their goods to be featured prominently in
a store.

For example:

 Chocolates near the check-out counter

 Cookies at eye level on the shelf

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 Bright, eye-catching novelty items where children can spot them.

Service providers can also target impulse buyers, often by offering significant discounts or immediate
service.

5. 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. Many of the products in a hardware store, for instance, are sold to need
based consumers.

A need for a certain product will necessitate buying it because it is needed immediately for a certain
purpose. The challenge for marketers is to create a sense of 'need' to promote the sale of products
and services.

Examples:

 Paint when a wooden house needs to be protected from the weather

 Light bulbs when we need to see at night

 Heaters or air-conditioning if we need to be comfortable in our homes.

Life insurance sales increase if we are convinced we need to be sure our families are taken care of if
we die.

6. Discount Driven Consumers

Discount driven consumers are the type of consumers who purchase goods and services primarily for
the discounts on offer. They may not engage in any buying activity until they hear or see large
discounts being offered on products they like.

Discount driven buyers are price sensitive and would rather wait to purchase products when they
come with discounts as opposed to when they are sold for full price.

Coupons and stock-take sales are popular with this type of consumer.

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An increasing number of manufacturers, retailers and service providers offer discounts during
recession or harsh economic climates.

7. Habitual Consumer
Habitual consumers are those who feel compelled to use certain brands or types of goods.

Marketers work hard to create brand loyalty among this type of consumer. It may be as simple as
always choosing the same brand of deodorant, the same brand of soda, or shopping in the same store
for groceries or clothes.

Cigarettes and alcohol are classic examples of products that target habitual consumers. A beer drinker
can be expected to always buy the same type of beer, and smokers have been known to leave a store
and go to a different sales outlet if their brand of cigarette is not available.

Advertising often encourages a persona associated with a specific product to appeal to habitual
consumers.

8. Loyal Consumers:

Loyal consumers are likely to comprise a small segment of your consumer base. However, because of
their loyalty, they are valuable to every business. Once they have found the right company to do
business with they will remain loyal, often becoming a promoter of the brand by sharing their
experience with their friends, family and extended social network. According to a recent study, only
between 12 percent and 15 percent of consumers are loyal to a single retailer. However, that small
group tends to generate between 55 percent and 70 percent of brand sales. How can a brand
successfully market to a loyal consumer? The keys are personalisation, individualised attention, and
repeated marketing contact. These kinds of marketing strategies will yield the biggest return on
investment.

CONSUMER DECISION MAKING 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. :

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Problem Recognition,
Information Search,
Five Stages of
Alternative Evaluation,
Consumer Behaviour
Purchase Decision
Post-purchase Behaviour.

1. Problem/ Need Recognition: The buying process starts when the buyer recognizes a problem
or need. The need can be triggered by internal or external stimuli. The intensity of want
hastens the need to fulfill the unsatisfied want. Marketing management should promote sales
by offering appropriate and attractive cues.

2. Information Search: An aroused consumer tends to search for more information. A person

may simply become more receptive to information or actively look for information from
various sources. For a marketer, it is imperative to manage the information sources and how
the source will influence the subsequent purchase decision.

The information search stage clarifies the options open to the consumer and may involve two steps of
information search.
 Internal search: Scanning one’s memory to recall previous experiences with products or

brands. Often sufficient for frequently purchased products.

 External search: When past experience or knowledge is insufficient. The risk of making a wrong

purchase decision is high. The cost of gathering information is low. The primary sources of
external information 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

3. Evaluation of Alternatives: Available information can be employed to evaluate the

alternatives (products and brands). This is the critical stage in the process of buying costly
consumer durables. There are certain important elements in the process of evaluation.

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 A product is viewed by the features it attributes. E.g. Tea has attributes like taste, flavor, color,
aroma, strength number of cups per packet and price. Consumers will have different
preferences for these attributes.
 Information cues or hints about the brand like quality, price, distinctiveness, and availability

are provided by the marketers.

 Brand images and concepts can help in the evaluation of alternative.

 In order to reduce the alternatives they start eliminating or reducing the alternatives by their
critical attributes. For e.g. in sari purchases the women first specify the price range thereby
reducing their choices then they impose themselves to color restrictions and then move on to
the next level of choosing alternatives like quality, texture length etc..
Occasionally consumers may choose tradeoffs in their evaluation process. Marketers should
grasp and then design and promote the product that would be readily acceptable in the
market.

4. Purchase Decisions: In the evaluation stage, consumers form preferences among choices
available. While executing a purchase the consumer make up to five sub-decisions: brand,
dealer, quantity, timing, and payment method.

5. Post purchase Behaviour: After buying a product, the consumer compares it with expectations
and is either satisfied or dissatisfied. Many firms work to produce positive post-purchase
communications among consumers and contribute to relationship building between sellers
and buyers.
Cognitive Dissonance: The feelings of post-purchase 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.

DECISION MAKING UNIT (DMU)

The DMU is a collection of individuals (a family, a team) who participate in buyer decision process.

1. Initiators - are the players who recognise that there is a need to be satisfied or a problem to be

solved. There could be many reasons which stimulate the initiation.

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2. Gatekeepers - are individuals who press the stop/go button in the process. Often gatekeepers
will be proactive in searching for information and delivering recommendations for those
decision-makers

3. Influencers - are those who may have a persuasive role in relation to the deciders. They may

be specialists who make recommendations based upon experience and their knowledge of
products and services.

4. Deciders - are responsible for making the final deal or decision.

5. Buyers - are individuals who actually make the purchase transaction.

6. Users - are people most directly involved in the use or consumption of the purchased product.

CONSUMERISM

By the 1950s, a movement called consumerism began to gather a following, pushing for increased
rights and legal protection against malicious business practices. By the end of the decade, legal
product liability had been established in which an aggrieved party need only prove injury by use of a
product, rather than bearing the burden of proof of corporate negligence.

CONSUMER PROTECTION ACT 1986 (INDIA)

Consumers play a vital role in the economic system of a nation because in the absence of effective
demand that emanates from them, the economy virtually collapses. The Act enshrines all the
consumers' rights which are internationally accepted. As per the Act, the consumer protection
councils have been established at Central, State and District levels to promote and protect the
consumer rights. They are:

1. Right to Safety: The right to be protected against goods which are hazardous to life and property.
2. Right to Information: The right to be informed about the quality, quantity, purity, price and
standards of goods.
3. Right to Choose: The right to be assured access to a variety of products at competitive prices,
without any pressure to impose a sale, i.e., freedom of choice.

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4. Right to be Heard: The right to be heard and assured that consumer interests will receive due
consideration at appropriate forums.
5. Right to Seek Redressal: The right to get relief against unfair trade practice or exploitation.
6. Right to Education: The right to be educated about rights of a consumer.

ETHICS IN MARKETING

Marketing ethics is the area of applied ethics which deals with the moral principles behind the
operation and regulation of marketing. Eg. Ethics in promotional activities, strategies etc.
Ethics are a collection of principles of right conduct that shape the decisions people or organizations
make. Practicing ethics in marketing means deliberately applying standards of fairness, or moral rights
and wrongs, to marketing decision making, behavior, and practice in the organization.

In a market economy, a business may be expected to act in what it believes to be its own best interest.
The purpose of marketing is to create a competitive advantage. An organization achieves an advantage
when it does a better job than its competitors at satisfying the product and service requirements of its
target markets. Those organizations that develop a competitive advantage are able to satisfy the
needs of both customers and the organization.

As our economic system has become more successful at providing for needs and wants, there has
been greater focus on organizations' adhering to ethical values rather than simply providing products.
This focus has come about for two reasons. First, when an organization behaves ethically, customers
develop more positive attitudes about the firm, its products, and its services. When marketing
practices depart from standards that society considers acceptable, the market process becomes less
efficient—sometimes it is even interrupted. Not employing ethical marketing practices may lead to
dissatisfied customers, bad publicity, a lack of trust, lost business, or, sometimes, legal action. Thus,
most organizations are very sensitive to the needs and opinions of their Customers and look for ways
to protect their long-term interests.

Second, ethical abuses frequently lead to pressure (social or government) for institutions to assume
greater responsibility for their actions. Since abuses do occur, some people believe that questionable
business practices abound. As a result, consumer interest groups, professional associations, and self-
regulatory groups exert considerable influence on marketing. Calls for social responsibility have also

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subjected marketing practices to a wide range of federal and state regulations designed to either
protect consumer rights or to stimulate trade.

The Federal Trade Commission (FTC) and other federal and state government agencies are charged
both with enforcing the laws and creating policies to limit unfair marketing practices. Because
regulation cannot be developed to cover every possible abuse, organizations and industry groups
often develop codes of ethical conduct or rules for behavior to serve as a guide in decision making.
The American Marketing Association, for example, has developed a code of ethics (which can be
viewed on its Web site at www.ama.org). Self-regulation not only helps a firm avoid extensive
government intervention; it also permits it to better respond to changes in market conditions. An
organization's long-term success and profitability depends on this ability to respond.
Several areas of concern in marketing ethics are explored in the remainder of the article.

UNFAIR OR DECEPTIVE MARKETING PRACTICES

Marketing practices are deceptive if customers believe they will get more value from a product or
service than they actually receive. Deception, which can take the form of a misrepresentation,
omission, or misleading practice, can occur when working with any element of the marketing mix.
Because consumers are exposed to great quantities of information about products and firms, they
often become sceptical of marketing claims and selling messages and act to protect themselves from
being deceived. Thus, when a product or service does not provide expected value, customers will
often seek a different source.
Deceptive pricing practices cause customers to believe that the price they pay for some unit of value
in a product or service is lower than it really is. The deception might take the form of making false
price comparisons, providing misleading suggested selling prices, omitting important conditions of the
sale, or making very low price offers available only when other items are purchased as well. Promotion
practices are deceptive when the seller intentionally misstates how a product is constructed or
performs, fails to disclose information regarding pyramid sales (a sales technique in which a person is
recruited into a plan and then expects to make money by recruiting other people), or employs bait-
and-switch selling techniques (a technique in which a business offers to sell a product or service, often
at a lower price, in order to attract customers who are then encouraged to purchase a more expensive
item). False or greatly exaggerated product or service claims are also deceptive. When packages are

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intentionally mislabelled as to contents, size, weight, or use information, that constitutes deceptive
packaging. Selling hazardous or defective products without disclosing the dangers, failing to perform
promised services, and not honouring warranty obligations are also considered deception.

OFFENSIVE MATERIALS AND OBJECTIONABLE MARKETING PRACTICES

Marketers control what they say to customers as well as and how and where they say it. When events,
television or radio programming, or publications sponsored by a marketer, in addition to products or
promotional materials, are perceived as offensive, they often create strong negative reactions. For
example, some people find advertising for all products promoting sexual potency to be offensive.
Others may be offended when a promotion employs stereotypical images or uses sex as an appeal.
This is particularly true when a product is being marketed in other countries, where words and images
may carry different meanings than they do in the host country.
When people feel that products or appeals are offensive, they may pressure vendors to stop carrying
the product. Thus, all promotional messages must be carefully screened and tested, and
communication media, programming, and editorial content selected to match the tastes and interests
of targeted customers. Beyond the target audience, however, marketers should understand that there
are others who are not customers who might receive their appeals and see their images and be
offended.
Direct marketing is also undergoing closer examination. Objectionable practices range from minor
irritants, such as the timing and frequency of sales letters or commercials, to those that are offensive
or even illegal. Among examples of practices that may raise ethical questions are persistent and high-
pressure selling, annoying telemarketing calls, and television commercials that are too long or run too
frequently. Marketing appeals created to take advantage of young or inexperienced consumers or
senior citizens— including advertisements, sales appeals disguised as contests, junk mail (including
electronic mail), and the use and exchange of mailing lists—may also pose ethical questions. In
addition to being subject to consumer-protection laws and regulations, the Direct Marketing
Association provides a list of voluntary ethical guidelines for companies engaged in direct marketing.

ETHICAL PRODUCT AND DISTRIBUTION PRACTICES

Several product-related issues raise questions about ethics in marketing, most often concerning the
quality of products and services provided. Among the most frequently voiced complaints are ones
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about products that are unsafe, that are of poor quality in construction or content, that do not contain
what is promoted, or that go out of style or become obsolete before they actually need replacing. An
organization that markets poor-quality or unsafe products is taking the chance that it will develop a
reputation for poor products or service. In addition, it may be putting itself in jeopardy for product
claims or legal action. Sometimes, however, frequent changes in product features or performance,
such as those that often occur in the computer industry, make previous models of products obsolete.
Such changes can be misinterpreted as planned obsolescence.
Ethical questions may also arise in the distribution process. Because sales performance is the most
common way in which marketing representatives and sales personnel are evaluated, performance
pressures exist that may lead to ethical dilemmas. For example, pressuring vendors to buy more than
they need and pushing items that will result in higher commissions are temptations. Exerting influence
to cause vendors to reduce display space for competitors' products, promising shipment when
knowing delivery is not possible by the promised date, or paying vendors to carry a firm's product
rather than one of its competitors are also unethical.
Research is another area in which ethical issues may arise. Information gathered from research can be
important to the successful marketing of products or services. Consumers, however, may view
organizations' efforts to gather data from them as invading their privacy. They are resistant to give out
personal information that might cause them to become a marketing target or to receive product or
sales information. When data about products or consumers are exaggerated to make a selling point,
or research questions are written to obtain a specific result, consumers are misled. Without self-
imposed ethical standards in the research process, management will likely make decisions based on
inaccurate information.

References:

1. Kotler, Philip.; Kevin Lane Keller (2006). Marketing Management, 12th ed. Pearson Prentice Hall.

2. Michael R. Solemon,(2001) ‘Consumer behaviour’, Prentice hall of India Pvt. Ltd

3. Ramuswamy. V.S. and Namakumari: (1999) ‘Marketing management’, Macmillian, New Delhi.

4. William L. Wilke, ‘Consumer behaviour’, John Wiley & Sons, New York

5. Leon G. Schiffman, Laslie Lazar Kanuk, (2003) ‘Consumer Behaviour’, Pearson India Pvt. Ltd. New Delhi.

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