What is Consumer Behaviour?

behaviour is the study of consumers’ actions during searching for, purchasing, using,
evaluating and disposing of products and services they expect will satisfy their needs. It
helps marketers in understanding the consumer decision-making process.
Consumer behaviour can be defined as “activities people undertake when obtaining,
consuming, and disposing of products and services” provided and detailed.
 Obtaining “activities leading up to and including the purchase or receipt of a product”.
 Consuming “how, where, when, and under what circumstances consumers use products”.
 Disposing “how consumers get rid of products and packaging”.

Developing Marketing Concepts

1. Production Concept
According to the production concept, consumers prefer to buy those products that are
widely available and inexpensive. Executives of production-oriented businesses usually
concentrate on achieving high production efficiency, low cost, and mass distribution for
effective results. Consumers are interested more in product availability and low prices. This
type of business orientation is effective in developing countries.
Example − Local mobile companies in developing countries provide cell phones at a much
cheaper cost than the branded companies and due to this, people in these countries prefer
to purchase cell phones from them.
2. Product Concept
According to the product concept of business, consumers favour those products that
provide them with better quality, performance and innovative features. Managers in
product-oriented organizations mainly focus on making superior products and improving
them from time to time. In the product concept, it is considered that the consumers are
aware of the products’ quality and can evaluate good quality and performance.
3. Selling Concept
According to the selling concept, consumers will usually not buy enough if left on their own.
AnTherefore, an organisation mustntegrate an aggressive selling and promotional effort to
get a competitive edge in the market. According to this concept, the company constitutes
effective selling and promotion tools to encourage more buying.
The purpose of marketing is to sell more things to more people, more regularly, to make
more profit.
4. Customer Concept
According to the customer concept, companies focus on individual customers. They provide
individual offers, and services, and establish direct channels of communication with them.
These companies collect information on each customer's past transactions, demographics,
media and supply preferences. They believe in profitable growth by capturing a large share
of each customer’s expenditure by building high customer loyalty and customer lifetime
value.
Factors Influencing Consumer Behaviour
The consumer decision process explains the internal process as well as individual behaviour
for making product or service decisions.
1. Cultural Factors
2. Social Factors
3. Personal Factors
4. Psychological Factors
5. Economic Factors
6. Factors Influencing Consumer Behaviour

1. Cultural Factors
Culture: The set of basic values, perceptions, wants, and behaviours learned by a member
of society from family and other important institutions. Consumers live in a complex social
and cultural environment. The types of products and services they buy can be influenced by
the overall cultural context in which they grow up to become individuals.
Below are some of the important cultural factors given:
 Culture
 Subculture
 Social Class

2. Social Factors
Social factors, in turn, reflect a constant and dynamic influx through which individuals learn
different consumption meanings. Below are some of the important social factors given:
 Family
 Reference Groups
 Roles and status
3. Personal Factors
A person’s consumption behaviour is shaped by his characteristics. Below are some of the
important personal Factors given:
 Age
 Income
 Personality
 Self-concept
 Occupation
 Lifestyle
 Gender

4. Psychological Factors
Psychological factors also influenced consumers. Internal psychological factors also direct
the decision-making process. These factors influence the reason or ‘way’ of buying. Below
are some of the important psychological factors given:
 Motivation
 Learning
 Attitudes and Beliefs
 Perception

5. Economic Factors
Economic factor also has a significant influence on buying decision of consumer behaviour.
Below are some of the important economic factors given:
 Personal and Family Income
 Income Expectations
 Consumer Credit
 Liquid Assets
Importance of Consumer Behaviour
Marketers need to study consumer behaviour. This helps marketers to investigate and
understand how consumers behave. Below are some of the importance of consumer
behaviour is given below:
1. Manufacturing policies
2. Price policies
3. The decision regarding channels of distribution
4. The decision regarding sales promotion
5. Exploiting marketing opportunities
6. Highly diversified consumer preferences
7. New Technological product
1. Manufacturing policies
The study of consumer behaviour affects the manufacturing policies of the organisation.
Consumer behaviour helps an organisation plan and develop its products according to
consumer needs and preferences.
2. Price policies
Consumer behaviour helps the marketer to set the price in the market. Consumer prefers
optimal solution combined with production policies.
3. Decision regarding channels of distribution
Consumer prefers different channel of purchase which is influenced by many factors.
4. Decision regarding sales promotion
consumer behaviour enables the marketer to know what motive prompts consumers to
make a purchase and the same is used in the overall marketing strategy.
5. Exploiting marketing opportunities
Consumer behaviour guides the marketers to understand the consumer’s problems, needs,
wants and expectations and according to exploit marketing opportunities.
6. Highly diversified consumer preferences
The availability of more choices now has diversified consumer preferences. Therefore the
study of consumer behaviour is a crucial and challenging task for marketers.
7. New Technological product
Rapid introduction of a new product with technological advancement has made the job of
studying consumer behaviour more imperative.
Application of Consumer Behaviour in Marketing
Application of consumer behaviour in marketing are:
1. Analyzing market opportunity
2. Selecting target market
3. Marketing mix decisions
4. Use in Social and Non-profits Marketing

1. Analyzing market opportunity

Consumer behaviour study helps in identifying the unfulfilled needs and wants of consumers. This
requires examining the trends and conditions operating in the marketplace, consumers’ lifestyles
and income levels. This may reveal some of the unsatisfied needs and wants of the consumers. The
trend towards an increasing number of dual-income households and greater emphasis on
convenience and leisure has led to emerging needs for household gadgets such as washing
machines, mixer grinders, vacuum cleaners and childcare centres etc.
2. Selecting the target market
A review of market opportunities often helps in identifying distinct consumer segments with
distinct and unique wants and needs. Identifying these groups, learning how they behave
and how they make purchase decisions enables the marketer to design and market
products or services particularly suited to their wants and needs.
For example, consumer studies have revealed that many existing and potential shampoo
users did not want to buy bigger shampoo packs and would rather prefer a low-priced
sachet containing enough quantity for one or two washes. This finding led companies to
introduce the shampoo sachet, which became a good seller.
3. Marketing mix decisions
Once unsatisfied needs and wants are identified, the marketer must determine the right
mix of product, price, distribution and promotion. Here too consumer behaviour study is
very helpful in finding answers to many perplexing questions. The answers to these
questions are obtained by consumer behaviour research.
4. Use in Social and Non-profits Marketing
Consumer behaviour studies are useful to design marketing strategies by social,
governmental, and not-for-profit organisations to make their programmes more effective
such as family planning, pulse polio, safe driving etc.
Consumer Buying Process
In the consumer buying process, the purchaser generally passes through five distinct: need
or problem recognition, information search, alternative evaluation, purchase decision, and
post-purchase behaviour.
1. Stage of Problem Recognition
2. Stage of Information Search
3. Stage of Alternative Evaluation
4. Stage of Purchase Decision
5. Stage of Post Purchase Behaviour

1. Stage of Problem Recognition

The recognition of a need is likely to occur when a consumer is faced with a ‘problem’. A
buying process starts when a consumer recognises that there is a substantial discrepancy
between his current state of satisfaction and expectations in a consumption situation.
2. Stage of Information Search
After need arousal, the behaviour of the consumer leads towards a collection of available
information about various stimuli i.e. products and services in this case from various
sources (personal, public, commercial, experiential) for further processing and decision-
making.
3. Stage of Alternative Evaluation
Once interest in a product(s) is aroused, a consumer enters the subsequent stage of
evaluation of alternatives.
When evaluating potential alternatives, consumers tend to use two types of information:
 a list of brands (or models) from which they plan to make their selection (the evoked set)
 the criteria they will use to evaluate each brand (or model).

Cognitive evaluation: When the consumer uses objective choice criteria.

Affective evaluation: Using emotional reasons for evaluating the alternatives.

4. Stage of Purchase Decision

Finally, the consumer arrives at a purchase decision. Purchase decisions can be one of the
three viz. no buying, buying later and buy now.
No buying takes the consumer to the problem recognition stage. Buying can be postponed
due to a lesser motivation or evolving personal and economic situation. If positive attitudes
are formed towards the decided alternative, the consumer will make a purchase.
There are three more important considerations in taking the buying decision:
 Attitude to others such as wife, relatives and friends.
 Anticipated situational factors such as expected family income, expected total cost of the
product and the expected benefits from the product.
 Unanticipated situational factors, like accidents, illness etc.

5. Stage of Post Purchase Behaviour

Post-purchase behaviour refers to a consumer’s behaviour after his commitment to a
product has been made.
So post-purchase behaviour leads to three situations, namely, the customer is satisfied; the
customer is delighted, and the customer is dissatisfied.
Cognitive dissonance: Buyer discomfort caused by post-purchase conflict.

Difference between Qualitative and Quantitative Research

 Qualitative Research Quantitative Research

A method for developing a better understandingIt of

is human
the method used to generate numerical data by using a lot
and social sciences, in understanding human behaviour
techniques
andsuch as logical, statistical, and mathematical techniques
personalities better

t employs a subjective approach It employs an objective approach

t is generally expressed using words It is expressed using the graphs and numbers

t has open-ended questions It has multiple choice questions

The qualitative research needs only a few respondents

Quantitative research requires many respondents

The data collection methods involved are interviews,

The data
focus
collection methods involved are experiments, surveys,
groups, literature review, ethnography observations expressed in numbers

Qualitative research is holistic Quantitative Research is particularistic

The reasoning used to synthesise data in this The

research
reasoning
is used to synthesise data in this research is deductive
nductive

This method involves a process-oriented inquiry This method does not involve a process-oriented inquiry

t develops the initial understanding of data It recommends a final course of action

The data taken in the Qualitative research method

Theisdata
pretty
taken in this method is pretty measurable
verbal

The objective of this research method is to engage

The mainandobjective of Quantitative research is to examine the ca
discover various ideas and effect between the variables

t is one of the exploratory research type methods It is a conclusive research type method

Consumer Research Process is the type of basic research conducted to know the tastes
and preferences of the customers so that the company can market the products according
to their changing tastes and preferences. So, The Consumer Research Process
Notes include various Steps like:-
1. Identification or Formulation of problems or opportunities,
2. Establishing the Design for Market Research,
3. Choosing a Basic Techniques of Research,
4. Select the Best Sampling Procedure,
5. Collection of Data,
6. Analysis of Data,
7. Preparing the Report.

1. Identification Or Formulation of Problems or Opportunities-

This is the first consumer research process and it means doing research for analyzing and
formulating the problems and opportunities of consumer behaviour. This step will help to
identify the causes, benefits, objectives, and remedial measures to solve the
problem. Consumer Research Process Example– Technological Advancement, Tastes, and
Preferences, and high unemployment rate.
2. Establishing the Design for Market Research-
This is the secondary consumer research process and it means,
a) It is a planned theme made by the researchers to follow to answer the research
objectives,
b) It is an approach technique to identify the solution to a particular problem,
c)It helps researchers in doing market research in two forms-
 Descriptive Design-
In descriptive design, the researchers find the answers to related questions. It is
calculated by the Mean, Median, and, Mode of the data collected. For eg– 30% of
the people said they like Virat Kohli.
 Casual Design-
In casual design, we will examine one variable with another and the second
variable. It can be calculated by regression analysis to formulate the
combination of two or more variables. For eg– the older the respondent, the
more he/she likes Virat Kohli.
3. Choosing a Basic Techniques of Research-
This is the third consumer research process, and it means choosing a word determines the
targeting. It includes various techniques for solving the problems:
(i) Market Survey-
The survey is an essential part of the research and by which the researchers can acquire the
market data, trends, and changing factors. Thus, the survey also helps to define the
structure of market challenges and opportunities.
(ii) Observations-
Observation includes cellular data by which the researchers observe the source of data and
factors which are collected through the market surveys. They observe the collected forms
of data and then placed a design format for our research.

4. Select the Best Sampling Procedures-

This is the fourth consumer research process and it means the sample is a subset or sub-
part of the individual term. In this, two types of sampling will be used, the first
is probability and the second is non-probability. We can give the information related to the
population and number of respondents which constitutes the sample size.
5. Collection of Data-
This is the fifth consumer research process and it means data collection is proper in a
systematic order to gather the necessary information collected from the various sources.
The researchers will collect data from various sources:
a) Creating surveys in a particular target market for acquiring the necessary information
related to their problems.
b) Through direct marketing (from website surveys, email marketing surveys, creating
ads for surveys and so on.
c)Through market mediators and government reports,
d) Through personal interaction with the public.
6. Analysis of Data-
This is the sixth consumer research process and it means observation of data, it consists of
analysing the particular data and transforming it into meaningful or objective information.
The collected data is analyzed using statistical tools such as Standard deviation, correlation,
regression, Keyes square test, e-test, f-test, and ANOVA (Analysis of Variants).
7. Preparing the Report-
This is the seventh consumer research process and it means in this last process step, the
researchers should communicate their reports to the team and managers (in the form of
oral or written).
And, in this, the researchers made a report on market research for solving the queries and
finding the answers to a particular problem. The reports also contain various points like:
a) Approval Letter,
b) Table of Contents,
c) List of Examples,
d) Methodology research,
e) Research Goal,
f) Techniques,
g) Results,
h) Hypothesis,
i) Conclusions.
 What is Culture?
 The total of learned beliefs, values, and customs that serve to regulate the consumer
behaviour of members of a particular society.
 Culture is a complex whole that includes knowledge, belief, art, and law. Morale, customs,
and any other capabilities and habits acquired by humans as members of society.
Cultural Factors Influencing Consumer Behaviour
Some of the important cultural factors are:
1. Culture: Culture refers to the beliefs, customs, rituals and practices that a particular group
of people follows. As a child grows, he inculcates the buying and decision-making patterns
through his family and the key institutions. The culture varies from region to region and
even from country to country. Such as the sale of “sarees” and “Lungis” is more in South
than North India. Therefore, the marketer should carefully study all the different cultures
and frame the marketing strategies accordingly.
2. Subculture: The culture can be further divided into subcultures wherein the people are
classified more specifically based on their shared customs and beliefs, including religions,
geographic regions, nationalities, etc. The different sub-cultures form several market
segments whose needs can be carefully studied by the marketer, and the strategic
marketing decisions can be taken accordingly. Such the needs of the people living in metro
cities and the ones living in B-grade cities must be identified before the launch of the
marketing campaign.
3. Social Class: The social class to which an individual belongs influences the buying decision.
Generally, the people belonging to the same class are said to be sharing similar interests,
values, and behaviour. Our society is classified into three social classes upper class, middle
class, and the lower class. The consumers belonging to these classes possess different
buying behaviours. Such as an individual belonging to the upper class buy those products or
services that advocate his status while the lower class people buy those products which
satisfy their basic needs.
Characteristics of Culture in Consumer Behaviour
Culture has several important characteristics:
1. Culture is comprehensive. This means that all parts must fit together in some logical
fashion. For example, bowing and a strong desire to avoid the loss of face are unified in
their manifestation of the importance of respect.
2. Culture is learned rather than being something we are born with. We will consider the
mechanics of learning later in the course.
3. Culture is manifested within boundaries of acceptable behaviour. For example, in
American society, one cannot show up to class naked, but wearing anything from a suit
and tie to shorts and a T-shirt would usually be acceptable. Failure to behave within the
prescribed norms may lead to sanctions, ranging from being hauled off by the police for
indecent exposure to being laughed at by others for wearing a suit at the beach.
4. Conscious awareness of cultural standards is limited. One American spy was intercepted
by the Germans during World War II simply because of the way he held his knife and
fork while eating.
5. Cultures fall somewhere on a continuum between static and dynamic depending on
how quickly they accept change. For example, American culture has changed a great
deal since the 1950s, while the culture of Saudi Arabia has changed much less. Culture
can be divided into two distinct components.
Group Influence on Consumer Behaviour
Each consumer in society is a member of different groups depending on their culture,
various subcultures or even social class can influence their consumer purchase. A group can
be formed when two or more individuals share a set of norms and beliefs. A group
becomes a reference group when an individual recognizes the group and takes on many of
the values, attitudes or personal standards of group members and use them as the base of
his/her day to day behaviour. The reference group is defined as having significant relevance
to an ‘individual’s evaluations, aspirations or behaviour influencing the consumer. The
nature of reference group influence can take three forms, this is because some groups and
individuals can influence greater than others and affect a range of consumption.
1. Informational influence: This is when the reference group is used as a knowledgeable
source in the different parts of the buyer’s decision process. This type of influence
emerges when an individual or the member uses the behaviours and beliefs of the
reference group as dependable sources. This influence is based either on the
similarity of the buyer’s desires with the ones of the group members. For example, in
the biker subculture, the members all share similar desires for purchasing Harley
Davidson products, therefore, influencing the individual decision process in selecting
certain products. The members of the baby boomer subculture are also likely to
purchase similar latest fashion products.
2. Normative influence is known as (utilitarian influence): The reference group creates a
level of values and norms of an individual, in the process of purchasing brands or
products. For example, both the Harley Davidson biker subculture and baby boomer
subculture will influence the member’s decisions on which types of products to
consumer fit in with the values and attitudes of the subculture. Harley Davidson
subculture values can affect the characteristics of the members’ lives such as their
‘social, political and spiritual aspects.
3. Identification influence is known as (value-expressive influence): The reference group
is used to confirm the consumer’s attitudes, norms and actual behaviour. The
individual behaves reliably with the group’s norms and beliefs because the
individual’s and the group’s norms, attitudes and beliefs are the same. For example,
this can be seen in the Harley Davidson subculture in which the members view the
subculture as a ‘religious icon’ sharing the same values and norms as other
members.
Buying Roles of a Family
The various roles played by members of a family while making a purchase decision are:
1. Influencer – The family member or family members who provide information about a
product or service to other family members
2. GateKeeperper – Family members who control the flow and direction of the contents
of the information
3. Decider – The one with the power to select the product whether individually or jointly
4. Buyer – The one who makes the actual purchase
5. Preparer – The family member or family members who prepare the product for family
consumption
6. User – The consumers of the product or service
7. Maintainer – The members who maintain the product for continued use and
satisfaction
8. Disposer – The member who disposes of the product.
Consumer Perception – Meaning and Definition
Derived from the word ‘perceive’, perception refers to the ability to give meaning to
whatever stimuli are sensed by our sense organs. The stimuli are inputs to any of our
sensory receptors, be it vision, hearing, smell, taste, or touch. An individual uses the
perceptual mechanism to select a stimulus from many in the environment, organize them
into a coherent picture, and interpret it to derive meaning it. Perception is the process
through which an individual interprets his sensory impressions to give meaning to them.
What are the Factors Influencing Customer Perception?
Customer perception can be influenced by external factors, some of which are listed
below:
1. Personal experience
Customer perception is highly influenced by the personal experience that a customer had
while buying and using a particular product. If the quality, customer service, price, logo,
colour, discounts, etc. were able to make an excellent impression on the minds of the
customers, they would build a good perception of the brand. But in case they did not
enjoy the experience with the brand, it will leave an everlasting impression.
2. Advertising
Customers get to see the products first through advertisements and therefore become
one of the biggest factors that influence customer perception. The advertisement and
campaigns that a company runs will help to build a positive customer perception.
3. Influencers
People generally buy things when another person has tried and tested them. Such people
who have bought it first and tried the product become influencers. When people hear
about a great product that the influencer has tried out, it will influence the person to buy
it and test it out, as the recommendation has come from a known person whom they
trust.
4. Customer reviews
Many people look into customer reviews before buying a product. This shows that
customer reviews are an important factor in defining customer perception. If the
consumers see that a product has a lower number of stars it means that the product does
not have good customer reviews. The impression that it creates on the consumer’s mind
is negative.
5. Social Media
Social media has become the strongest medium to manage customer perception. When a
social media audience gets consistent communication regarding a product, the users build
an image of the product. Social media can be used to post content, images, videos, etc.
which helps to build the kind of perception intended by the company.
Consumer Behavior - Marketing Strategies
Marketing strategies and tactics are normally based on explicit and implicit beliefs about
consumer behaviour. Decisions based on explicit assumptions and sound theory and
research are more likely to be successful than decisions based solely on implicit intuition.
Knowledge of consumer behaviour can be an important competitive advantage while
formulating marketing strategies. It can greatly reduce the odds of bad decisions and
market failures.
The principles of consumer behaviour are useful in many areas of marketing, some of
which are listed below −
1. Analyzing Market Opportunity
Consumer behaviour helps in identifying the unfulfilled needs and wants of consumers.
This requires scanning the trends and conditions operating in the market area, customers’
lifestyles, income levels and growing influences.
2. Selecting Target Market
The scanning and evaluating of market opportunities helps in identifying different
consumer segments with different and exceptional wants and needs. Identifying these
groups, and learning how to make buying decisions enables the marketer to design
products or services as per the requirements.
Example − Consumer studies show that many existing and potential shampoo users did
not want to buy shampoo packs priced at Rs 60 or more. They would rather prefer a low
price packet/sachet containing sufficient quantity for one or two washes. This resulted in
companies introducing shampoo sachets at a minimal price which has provided
unbelievable returns and the trick paid off wonderfully well.
3. Marketing-Mix Decisions
Once the unfulfilled needs and wants are identified, the marketer has to determine the
precise mix of four P’s, i.e., Product, Price, Place, and Promotion.
 Product
A marketer needs to design products or services that would satisfy the unsatisfied needs
or wants of consumers. Decisions taken for the product are related to size, shape, and
features. The marketer also has to decide about packaging, important aspects of service,
warranties, conditions, and accessories.
Example − Nestle first introduced Maggi noodles in masala and capsicum flavours.
Subsequently, keeping consumer preferences in other regions in mind, the company
introduced Garlic, Sambar, Atta Maggi, Soupy noodles, and other flavours.
 Price
The second important component of the marketing mix is price. Marketers must decide
what price to be charged for a product or service, to stay competitive in a tough market.
These decisions influence the flow of returns to the company.
 Place
The next decision is related to the distribution channel, i.e., where and how to offer the
products and services at the final stage. The following decisions are taken regarding the
distribution mix −
 Are the products to be sold through all the retail outlets or only through the
selected ones?
 Should the marketer use only the existing outlets that sell the competing
brands? Or, should they indulge in new elite outlets selling only the marketer’s
brands?
 Is the location of the retail outlets important from the customers’ point of view?
 Should the company think of direct marketing and selling?
4. Promotion
Promotion deals with building a relationship with the consumers through the channels of marketing
communication. Some of the popular promotion techniques include advertising, personal selling, sales
promotion, publicity, and direct marketing and selling. The marketer has to decide which method would
be most suitable to effectively reach the consumers. Should it be advertising alone or should it be
 combined with sales promotion techniques? The company has to know its target consumers, their
location, their taste and preferences, which media they have access to, lifestyles, etc.

LEARNING MEMORY AND PRODUCT POSITIONING - CONSUMER BEHAVIOUR

1. Learning.
All organizations are interested in highlighting the features of their products and services.
They make the consumer aware to know about these features so that their behaviour can
be influenced. It is through learning that the attitudes, beliefs, values, and feelings are
influenced. We learn a lot from our culture social class, and family influences and all these
also reflect on our lifestyle. Learning can be described as any change in the content or
organization of long-term memory. It is a result of information processing. Learning is the
key to consumer behaviour. We learn through and from our culture, subculture, social class,
and family friends, and utilise our personal experience, advertising and mass media as
shown. These in turn influence our purchase decision as shown in the Figure below.
learning is defined as a permanent change in behaviour occurring as a result of experience.
It is a permanent behaviour change. Behaviour is both a non-observable activity as well as
overt or open behaviour which can be observed. Learning is relatively a permanent change.
Learning stresses our experience.
1. Learning
Learning can be done under a high involvement or low involvement situation. In a high
involvement learning situation, the consumer is motivated to learn. If a person wants to buy
a gadget, he tries to learn about it and is motivated. If a person wants to buy a camera, he
learns about cameras. In a low learning situation, there is no motivation to learn about the
product. Learning situations are of degrees and, depend on situations as well. In low
involvement learning, consumers do not have any focused attention on the advertisements
like cigarette Ads, one only glances at the advertisements.
The strength of learning can be intensively influenced by four factors which are,
importance, reinforcement, repetition and imagery.
2. Importance
By this, we mean how important is learning for the consumers about the product. If it is
important for you to learn about cameras before you buy one, it reflects a high involvement
situation.
3. Reinforcement
Reinforcement is something that increases the likelihood of a response to be repeated in
future.
Reinforcement can be positive or negative. By positive reinforcement, we mean the desired
consequence. One feels happy after buying the product. One uses a product, feels happy,
and repeats the procedure. An imaginary response removes the unpleasant consequence. If
a tablet relieves you from a headache you will continue using it because of the negative
 enforcement. Punishment is the opposite of reinforcement. It is a consequence that
decreases the likelihood of the response being repeated in the future, e.g., if one deposits
money with a company and does not get good returns this will not be repeated in future.
4. Repetition
Repetition increases the speed of learning. If a TV commercial is flashed several times, it will
register more in the minds of consumers. The exposure must carry important and
interesting information.
5. Imagery
By this, we mean whether the advertisement is substantiated or accompanied by images.
We have brand symbols, names, etc. We have messages substantiated by pictures. The
pictures along with the images have a greater impact and can be registered more intensely.
The script in which the name is written also gets registered in the mind. The M of
McDonald’s, the script of Bata, the symbol of Tata. Omega, a symbol of Nike, Reebok, etc.
are some of the examples which get deeply registered in the consumer’s mind.

nature of Motivation in Organisational behaviour

 Nature of Motivation is Related to Needs

Needs are deficiencies which are created whenever there is a physiological or psychological
imbalance. To motivate a person, we have to understand his needs that call for satisfaction.

 Motivation Produces Goal-Directed Behaviour

Goals are anything which will alleviate a need and reduce a drive. An individual's behaviour is directed
towards a goal.

 Motivation can be either Positive or Negative

Positive or incentive motivation is generally based on reward. According to Flippo -"positive motivation
is a process of attempting to influence others to do your will through the possibility of gain or reward".

Negative or fear motivation is based on force and fear. Fear causes persons to act uncertainly because
they are afraid of the consequences if they don't.

Consumer Behavior - Motivation

Needs are the core of the marketing concept. The study of Motivation refers to all the
processes that drive a person to perceive a need and pursue a definite course of action to
fulfil that need.
 What are Needs − Every individual has needs that are required to be fulfilled. Primary needs
are food, clothing, and shelter and secondary needs are society, culture etc.
 What are Wants − Needs are the necessities, but wants are something more in addition to
the needs. For example, food is a need and the type of food is our want.
 What are Goals − Goals are the objectives that have to be fulfilled. Goals are generic and
product-specific. Generic goals are general, whereas product-specific goals are desires of a
specific nature.
Needs and fulfilment are the basis of motivation. Change takes place due to both internal as
well as external factors. Sometimes needs are satisfied and sometimes they are not due to
an individual’s personal, social, cultural or financial needs.
Theories of Motivation
Maslow’s Theory of Need Hierarchy
Based on the notion of a universal hierarchy of human needs Dr Abraham Maslow, a clinical
psychologist formulated a widely accepted theory of human motivation. This identifies five
basic levels of human need which rank in order of importance from lower level needs to
higher-level needs.
This theory signifies the importance of satisfying the lower level needs before higher-level
needs arise. According to this theory, dissatisfaction motivates the consumer.
Following are the levels of human needs −

Maslow’s Need Hierarchy Theory

1. Physiological Needs − Food, clothing, air, and shelter are the first level needs. They are
known as the necessities or primary needs.
2. Safety or Security Needs − Once the first level needs are satisfied, consumers move to the
next level. Physical safety, security, stability and protection are the security needs.
3. Social Needs − After the safety needs are satisfied, consumers expect friendship, belonging,
and attachment. They need to maintain themselves in society and try to be accepted.
4. Esteem Needs − Then comes esteem needs such as self-esteem, status, and prestige.
Individuals here in this stage want to rise above the general level as compared to others to
achieve mental satisfaction.
5. Self-Actualization − This is the highest stage of the hierarchy. People here, try to excel in
their field and improve their level of achievement. They are known as self-actualizes.
 Motivational Theory and Marketing Strategies
Marketers have to understand the motives of their potential customers to enjoy good sales.
A buyer has several motives and each change with various elements. In such cases, the
marketers can readily help their customers by changing their marketing strategy so that the
conflict is resolved. Following are the major conflicts that may arise −
 Approach Conflict − This conflict arises when a consumer has two different choices of
similar products or services. He gives equal importance to them but is unable to choose one
over the other.
 Approach Avoidance Conflict − This type of conflict happens when the consumer decides in
favour of a product, but is unhappy with a particular feature of the product and wants to
avoid it. Under such circumstances, the marketer may come up with a few modifications to
the existing product and make it suitable for the consumer.

Personality
 Understanding a buyer’s needs and converting them into customers is the main purpose of
the consumer behaviour study. To understand buyer habits and priorities, it is required to
understand and know the personality of the buyer.
 Personality signifies the inner psychological characteristics that reflect how a person reacts
to his environment. Personality shows individual choices for various products and brands. It
helps the marketers in deciding when and how to promote the product. Personality can be
categorized based on individual traits, likes, dislikes, etc.
 Though personality is static, it can change due to major events such as death, birth or
marriage and can also change gradually with time. By connecting with the personality
characteristics of an individual, a marketer can conveniently formulate marketing strategies.
We will discuss in this chapter the various theories of personality.
Trait Theory
Traits are the features of an individual or tendencies of an individual in a particular manner.
Traits help in defining the behaviour of consumers. According to the Trait theorists, an
individual’s personality makeup stems from the traits that he possesses, and the
identification of traits is important. Following are a few of the most common traits −
 Outgoing
 Sad
 Stable
 Serious
 Happy go lucky
 Relaxed
 Self-assured
 Practical
 Imaginative
 Trait theory is representative of multi-personality theories. Trait theory is based on certain
assumptions, such as traits that are certainly stable in nature and a limited number of traits
are common to most people.
 According to the Trait theorists, an individual’s personality makeup stems from the traits
that he possesses, and the identification of traits is important. The trait theories can be of
two broad categories, viz., Simple trait theories, and general trait theories.
Self-Concept
 Self-concept is defined as the way, in which we think, our preferences, our beliefs, our
attitudes, and our opinions are arranged systematically, as also how we should behave and
react in various roles of life. Self-concept is a complex subject as we know that
understanding someone’s psychology, traits, and abilities sometimes are really difficult.
Consumers buy and use products and services and patronize retailers whose personalities
or images relate in some way or other to their self-images
 Traditionally, individuals are considered to be having a single self-image which they
normally exhibit. Such types of consumers are interested in those products and services
which match or satisfy these single selves. However, as the world became more and more
complex, it has become more appropriate to think of consumers as having multiple selves.
Below are some of the major aspects of Self-concept
Self-Concept is Organized
We all have various views about ourselves. We all may think we are kind, calm, patient,
selfish, rude and whatnot. It doesn’t matter what perception you have about yourself, but
the one perception that facilitates all these insights is an organized self-concept. When a
person believes in something that matches his self-concept he sticks to his view and does
not agree to change the same and even if it does, it takes a lot of time.
Self Concept is Learned
It is believed that self-concept is learned and no person is born with a self-concept. It
develops as and when we grow old. Our self-concept is built when we meet people socially
and interact with them. We are the ones who shape or alter our self-concept and it’s quite
natural that we may have a self-concept different for ourselves as compared to what people
think about us.
For example − If an individual thinks, he is very generous and helpful, it may not necessarily
be the case with others. Others may see him as a selfish person.
Self Concept is Dynamic
Our self-concept in life is not constant and it may change with instances that take place in
our lives. When we face different situations and new challenges in life, our insight towards
things may change. We see and behave according to things and situations.
 Thus, it is observed that self-concept is a continuous development where we let go of things
that don’t match our self-concept and hold on to those things that we think help build our
favourable perception.
Self-concept is the composite of ideas, feelings, emotions, and attitudes that a person has
about their identity and capabilities.
Lifestyle
Another aspect of social identity is a lifestyle. Your lifestyle is simply your way of living,
including how you spend your time and money. Some factors that affect your lifestyle are as
follows:
 Internal
 Motivations
 Needs
 Wants
 External
 Culture
 Family
 Social Class

 Lifestyles are extremely valuable to marketers as they can predict consumer purchase
patterns. Marketers use psychographics, or quantitative data to investigate and develop
consumer lifestyle profiles. One data collection method is AIO, which generates
psychographic profiles from survey questions.  This information gives marketers insight into
consumers’ activities, interests, and opinions.
 Marketers may elect to define their lifestyle segments, or they can opt to use a lifestyle
segmenting tool. Two popular lifestyle segmenting tools include VALS and PRIZM. VALS
divides consumers based on resources and consumer behaviour motivations. In contrast,
PRIZM combines consumer expenditure data with socioeconomic variables with geographic
information to identify similarities in household consumption patterns in various regions.
 Having taken both these assessments personally, I can honestly say that although they do
not hit the mark exactly (you will not fit me into a box!!) the broad generalizations are fairly
accurate. Therefore, both VALS and PRIZM have proven to be useful tools to use for lifestyle
segmenting.
 Lifestyle segmenting allows marketers to narrow in on their target audience, figure out
what motivates them, where to find them and determine their demographics and interests.
Marketers use this information to construct and deliver the right marketing mix to the right
target at the right place and time.
Consumer attitude may be defined as a feeling of favourableness or unfavourableness that
an individual has towards an object. As we, all know that an individual with a positive
attitude is more likely to buy a product and this results in the possibility of liking or disliking
a product.
 COMPONENTS OF ATTITUDE
Psychologists such as Rosenberg, Eagley and Hovland have given a three components model
of Attitude. According to this model, an attitude has the following three components:
 Cognitive Component
 Affective Component
 Behavioral Component

1. Cognitive Component: Cognitive component is the set of information, ideas, facts and

knowledge about an object.
2. Affective Component: This component consists of emotions and feelings towards an object.
It can be emotions of liking or disliking, favouring or disfavoring, or positive or negative
evaluation of the object.
3. Behavioral Component: It is the tendency to behave towards the object – e.g. how the
individual acts towards the object depending upon cognitive (facts about the object) and
affective (emotions towards the object) components.
CHARACTERISTICS OF ATTITUDE
The characteristics of Attitude are as follows:
1. Attitude has an object: An attitude has an object, which is liked or disliked, favoured or
disfavoured; or evaluated as negative or positive. The object can be a thing, an idea, a
person, or a situation.
2. Attitudes are learnt: Attitude is not an inborn phenomenon. Attitudes are learnt through
social interactions and experiences. We interact with others, experience many things and
acquire information about things, which leads to the formation of our negative or positive
attitudes towards different things.
3. Attitudes are predispositions: An attitude is a predisposition – a prior determined or learnt
view of a thing or tendency to act in a specific way towards a thing. An individual has a view
which is already formed in his mind.
4. Attitudes are relatively stable phenomena: An attitude is not a momentary feeling but a
long-held view of something. Though attitudes can be changed from time to time It is a
relatively stable phenomenon that persists for some time.
5. Attitude has an emotional component: It has an emotional aspect of liking or disliking an
object.
6. Attitudes influence human behaviour: A positive attitude towards a thing will influence
human behaviour towards the thing favourably. Similarly, a negative attitude influences
human behaviour towards a thing unfavourably. For instance, a vegetarian person would
avoid eating beef due to his negative attitude towards beef consumption.
 Strategies of Attitude change
Attitudes are influenced by personal experience and other sources of information, and
personality.
Altering consumer attitudes is a key strategy for marketers.  Marketers have to create a
positive attitude in consumer mind to attract them in comparison with the competitor’s
products.  Below are the attitude change strategies :
1). Changing the consumer’s basic motivational function
2). Associating the product with an admired group or event,
3). Resolving two conflicting attitudes
4). Altering components of the multi attributes model
5). Changing consumer beliefs about competitors’ brands
1). Changing the consumer’s basic motivational function: the consumer attitudes towards a
product or brand can be changed by making a particular need important. The approach
which is used to change motivation is functional. According to this approach, attitudes can
be classified in terms of four functions:
 Utilitarian Function
 Ego-defensive function
 Value expressive function
 Knowledge Function

 Utilitarian Function: Consumers value a particular brand because of its utility function.

When a consumer is having an experience of using a product in past, he will tend to have a
positive opinion about it. Therefore the marketer can change the attitude of the consumer
by focusing on the utilitarian function of which the consumers are not aware. Eg: Hit which
can be used to kill mosquitoes and cockroaches.
 The ego-defensive Function:  Naturally, most consumer wants to protect their self-images
and they want to feel secure and safe about the product which they are going to buy. Many
advertisements help the consumer to feel secure and confident by which the marketer tries
to change the attitude by offering reassurance to the consumer’s self-concept. Eg: Bolero
advertisement.
 The value–expressive function: Attitudes are an expression or reflection of the consumer’s
general values, lifestyles, and outlook. If a consumer segment generally holds a positive
attitude toward owning the latest designer jeans, then their attitudes toward new brands of
designer jeans are likely to reflect that orientation. Thus by knowing target consumers’
attitudes, marketers can better anticipate their values, lifestyles or outlook and can reflect
these characteristics in their advertising and direct marketing efforts.
 The Knowledge Function: Customers always have the urge of knowing more about the
products. This “need to know” is considered to be important while positioning the product.
 Indeed, many products and brands’ positioning are an attempt to satisfy the need to know
and to improve consumers’ attitudes toward the brand by emphasizing its advantages over
competitive brands.
 Combining Several Functions: The customer’s likes or dislikes are different for different
products and services. If three consumers are having positive attitudes toward  Suave hair
care products.  However, one may be responding solely to the fact that the products work
well (the utilitarian function); the second may have thinner confidence to agree with the
point “when you know beautiful hair doesn’t have to cost a fortune”( an ego defensive
function). The third consumer’s favourable attitudes might reflect the realization that Suave
has for many years stressed value(equal or better products for less) – the knowledge
function.
2). Associating the product with an admired group or event: 
 Attitudes are related, at least in part, to certain groups, social events or causes. It is possible
to alter attitudes toward companies and their products, services and brands by pointing out
their relationships to particular social groups, events, or causes.
 Companies regularly include a mention in their advertising of the civic and public acts that
they sponsor to let the public know about the good that they are trying to do. For example,
Crest Sponsors is a program that promotes good oral care to children through the Boys and
Girls Clubs of America.
 Recent research into brand-cause alliances has investigated the relationship between the
“cause and the “sponsor”. For instance, one study found that while both the brand and the
cause benefit from such alliances, a low familiar cause benefited more from this association
with a positive brand than did a highly familiar cause.  This finding seems to indicate that it
is likely to be a good idea for a sponsor to reveal to target consumers the reasoning behind
their sponsorship so that consumers know the sponsor’s motives rather than their own
potentially inaccurate or negative motives.
3). Resolving two conflicting attitudes: 
Attitude change strategies can sometimes resolve the actual or potential conflicts between
two attitudes. Specifically, if consumers can be made to see that their negative attitude
toward a product, a specific product, a specific brand or its attributes is not in conflict with
another attitude, they may be induced to change their evaluation of the brand.
4). Altering components of the multi attributes model : 
Multi attitude models have implications for attitude change strategies; specifically, they
provide us with additional insights as to how to bring about attitude change:
 Changing the relative evaluation of attributes: The overall market for many product
categories is often set out so that different consumer segments are offered different brands
with different features or benefits. For instance, within a product category such as
dishwashing liquids, there are brands such as Dawn that stress potency and brands such as
Dove that stress gentleness. These two brands of dishwashing liquids have historically
 appealed to different segments of the overall dishwashing liquid market.  Similarly when it
comes to coffee, or when it comes to headache remedies, there is a division between
aspirin and
 Changing brand beliefs: A second cognitive oriented strategy for changing attitudes is
changing beliefs or perceptions about the brand itself. Advertising helps us to find out what
a particular product has “more” or is “better” or “best” in terms of some important product
attribute. As a variation on this theme of “more” ads for Palmolive dishwashing gentleness
by suggesting that it be used for hand washing of fine clothing items.
 Adding an Attitude:  This can be accomplished either by adding an attribute that previously
has been ignored or one that represents an improvement or technological innovation.
 Changing the overall brand rating: Another strategy consists of attempting to alter
consumers’ overall assessment of the brand directly, without attempting to improve or
change their evaluation of any single brand attribute. Such a strategy frequently relies on
some form of a global statement that “this is the largest selling brand” or “ the one all
others try to initiate” or a similar claim that sets the brand apart from all its competitors.
Theories of Situational Factors That Influence Customers
Situational factors influencing customers are external factors usually outside of the control
of marketers, manufacturers and, sometimes even retailers. In general, the situation affects
how consumers encounter and interact with a product, informing their opinion at that
moment in time. Just like the pricing, advertising, quality and reputation of any given
product, situational factors can hold sway over purchase behaviour.
1. Environmental Implications of Products
Environmental factors such as lighting, music, noise and aroma can either encourage or
discourage the purchase of a product. A study by North, Hargreaves and McKendrick is a
perfect example of how the choice of music affects purchase behaviour. When French
music was played in a store, the retailer saw a spike in the sale of French wine. Switching to
German music saw sales increase for German wine. But atmospheric elements in the retail
environment aren’t the only environmental influencers. Spatial factors also play a role. For
example, how a product is displayed can make it more desirable, while a crowded store or a
long line at checkout can suddenly make that same product less compelling.
2. Social Aspects of Shopping
The social aspect of purchase also involves situational influencers. Consumers unconsciously
adjust their behaviour to conform to the behaviour of those in their company, and
marketers have no way of changing this situation. A consumer is more apt to stop to look at
certain products when in the company of a friend as opposed to a parent, thereby
influencing the potential of a purchase. Social aspects also can alter price points. A
consumer may be persuaded to purchase a more expensive product when in the company
of a colleague or potential partner than he would when with a friend or spouse.
3. Purpose for Shopping Trip
The goal of a shopping trip is yet another theory involving situational influencers. A
consumer searching for a birthday present, for instance, is in a store for a different purpose
than someone casually shopping for a new outfit. The reason for shopping dictates the
types of products customers are willing to interact with at that time and may cause them to
bypass certain products they would normally interact with on another shopping trip. The
same can be said for a trip to the grocery store. A customer out of milk will interact with
different products than someone on her weekly shopping trip.
4. Timing of Purchases
Much like the purpose of a purchase, timing also can influence consumer behaviour.
Someone in a rush will inevitably interact with fewer products than a consumer with hours
to shop. Even if the two people are looking for the same type of product, the one in a hurry
may end up with the most accessible product, while the leisurely shopper has time to
interact with more products, giving her time to weigh the price and quality of the offerings.
5. State of Mind at Time of Interaction
Another situational factor known to influence behaviour is a state of mind. Someone feeling
sad interacts differently with products than a shopper feeling happy. The interaction
inevitably affects the opinion on a product and, in turn, the purchase behaviour. But the
state of mind goes beyond mood or emotion and can entail personal conditions. Someone
who’s sick interacts with different products than someone healthy. The same can be said for
someone who’s fatigued versus someone full of energy.
Types of Consumer Decision Making
The following are the types of decision-making methods which can be used to analyze
consumer behaviour −
1. Extensive Problem Solving
In extensive decision making, the consumers have no established or set criteria for
evaluating a product in a particular category. Here the consumers have not narrowed the
number of brands from which they would like to consider and so their decision-making
efforts can be classified as extensive problem-solving. In this particular set problem-solving
phase, the consumer needs a lot of information to set criteria based on which specific
brands could be judged.
2. Limited Problem Solving
In limited problem solving, the consumers have already set the basic criteria or standard for
evaluating the products. However, they have not fully set the established preferences and
they search for additional information to discriminate among other products or brands.
3. Routinized Response Behaviour
Here, in routinized response behaviour, consumers have experience with the product and
they have set the criteria for which they tend to evaluate the brands they are considering.
In some situations, they may want to collect a small amount of additional information,
while in others they may simply review what they are aware of. In extensive problem
solving, the consumer seeks more information to make a choice, in limited problem-solving
consumers have the basic idea or the criteria set for evaluation, whereas in routinized
response behaviour consumers need only little additional information.
Views of Consumer Decision Making
4. An Economic View
Consumers have generally been assumed to make rational decisions. The economic view of
consumer decision making is being criticized by researchers because a consumer is assumed
to possess the following traits to behave rationally −
 Firstly, they need to be aware of all the alternatives present in the market
 Secondly, they must be able to efficiently rank the products as per their benefits.
 Lastly, they must also know the best alternative that suits them as per their requirements.
 In the world of perfect competition, consumers rarely have all the information to make the
so-called ‘perfect decision.’
5. A Passive View
The passive view is opposite to the economic view. Here, it is assumed that consumers are
impulsive and irrational while making a purchase. The main limitation of this view is that
consumers also seek information about the alternatives available and make rational or wise
decisions and purchase the products or services that provide the greatest satisfaction.
6. A Cognitive View
The cognitive model helps individuals to focus on the processes through which they can get
information about selected brands. In the framework of the cognitive view, the consumer
very actively searches for products or services that can fulfil all their requirements.
7. An Emotional View
Consumers are associated with deep feelings or emotions such as fear, love, hope etc.
These emotions are likely to be highly involving.
What is Customer Analytics?
Customer Analytics is a process of collecting, gathering and analysing customer data across
a wide range of channels, interactions, and funnels and helps businesses make better
business decisions. Customer analytics help businesses make better strategies, build better
products, and provide better services to the customers. Important steps in the customer
 analytics process are data collection, data segmentation, visualization, modelling etc.
Companies can use customer analytics for Direct marketing, better brand positioning and
better customer relationship management. With proper analysis, one can provide a better
experience to the customers, and make them stick to the brand. The likes and dislikes of the
majority of customers can make or break a brand/ product. So, knowing customer habits
are important and a well-implemented Customer Analytics strategy helps in predicting
customer behaviour.
What is the importance of customer analytics?
Customer analytics can help in numerous ways. An overview of customer habits can help in
many ways. A well-defined strategy will help in customer acquisition, retention and active
engagement with customers.
1. Customer Acquisition
Gaining new customers is a vital part of any business, without customers there will be no
business. Effective marketing and sales strategies can help in gaining new customers.
Creating personalized and viral marketing campaigns are easy with the correct data and
insights.
2. Customer Satisfaction and Retention
Retaining customers is very important. By studying and understanding customer behaviour,
we can perform predictive customer analytics. Techniques can be developed to engage with
the retained customers and improve their satisfaction.
3. Lower costs and Improve Revenue
Better customer analytics can help lower acquisition costs and operating costs. Increased
sales can also help in increased revenues. Consumers nowadays are very much price-
conscious, informed, and selective. So brands and companies need to focus on selective
targeting.
Neuromarketing is taking the world by storm and has been utilized by almost every major
company and university in some way or form. Despite such a widespread influence on the
marketing world, many people do not know exactly what neuromarketing is, or how it
can be used effectively. The following articles outline 15 fascinating examples of
neuromarketing in action.
1. The Importance of Eye Gaze
It is old news that ads that include people are much more effective than those that do not.
In particular, images and videos that include babies tend to attract longer and more focused
attention from potential customers. Advertisers have long attempted to boost sales for
baby products using close-ups of adorable baby faces – with the help of eye-tracking they
have identified that this alone is not enough.
2. Using Effective Packaging
We all know the feeling of being drawn to the particularly striking or attractive packaging.
Advertisers have always known that it’s not always what’s inside that counts,
but neuroimaging has managed to take this to a whole new level. Brands such as Campbell’s
and Frito-Lay have used neuroimaging to reimagine their packaging. In studies, customers
were shown packaging with their responses recorded as positive, negative or neutral. In
addition, they were interviewed extensively about colour, text and imagery. 
3. Colour is Key
When selecting colours, bear in mind that you may be influencing how potential customers
feel. Colours can evoke a wide range of emotions, with studies consistently showing a link
between certain colours and certain emotions.
Utilizing colour effectively can be a powerful marketing tool. One of the most infamous
examples is Coca Cola’s ubiquitous use of the colour red, but there are many more
companies who have also used colour to great effect. Neuromarketing experts specializing
in colour and advertising have divided colours into subgroups as a guide to how they may
be used effectively. Cool blues, for example, are the go-to colour if you wish to attract
professional
4. Ad Efficiency
For many years brain imaging was purely the reserve of the academic or the
scientific. Neuromarketing, however, has tapped into the incredible potential of fMRI
imaging to grant us insights into human behaviour and consumer habits.
One example of how neuromarketing has made use of fMRI is to compare advertising
campaigns before releasing them to the general public. In one particular study, three
different ads for the National Cancer Institute’s telephone hotline were viewed by
participants. The ad campaign that elicited the highest amount of brain activity in a
particular region, led to significantly higher calls to the hotline. This novel approach is a new
avenue for identifying ad campaigns that will genuinely engage the public.
5. Decision Paralysis
Sometimes, consumer behaviour research goes against what we may have previously
believed. A study by Columbia University revealed that too many choices may be a
deterrent for potential customers. Using different types of setups, they found that displays
containing a wide array of options were less likely to get customers to stop.
6. Evaluating Satisfaction
Emotion Response Analysis (ERA) uses EEG imaging to identify the emotional response an
individual has to a product, advertisement etc.
Our level of engagement or emotional arousal about a product is invaluable to the
advertiser. If, for example, the consumer experiences high levels of frustration in response
to your product then there is a usability issue you may wish to address. EEG may be used to
evaluate consumer satisfaction. In one study EEG was used to evaluate satisfaction with a
dermatological treatment. They found that customer satisfaction correlated with activation
in the neural circuits involved in evaluating facial beauty.
7. Loss Aversion
One interesting finding utilized by neuromarketing is that people don’t want to lose out.
People are just as worried about what they might lose as what they might gain. For this
reason “buy before it’s gone” strategies are highly effective. When the alternative option is
posed as a loss, consumers are much more likely to buy. For this reason, a concept called
“framing” is highly important in neuromarketing. This technique is how advertisers present
decisions to consumers in a way that makes them more likely to splash the cash.
8. Anchoring
The first piece of information your customer receives is highly important. It can be the basis
for any subsequent decision making and set the tone for their behaviour. Neuroscientists
have discovered a flaw in the workings of the mind, and how it reaches decisions. As
individuals, we are rarely able to evaluate the value of something based on its intrinsic
worth, but instead, compare it with the surrounding options.
A valuable application of neuromarketing, therefore, is to take advantage of this “anchoring
effect”. If for example, you are looking at two hotel rooms which are priced similarly but
one offers a free coffee in the morning, you are much more likely to go with the free coffee.
You will more than likely not explore the quality of the rooms offered or any detailed
features.
9. The Need for Speed
Neuromarketing is useful for detecting customer trends. Whilst companies often seek to
portray a sense of safety and security, speed and efficiency may be what customers are
after. PayPal discovered this by conducting a study which found that the promise
of convenience activated the brain more than security. They used this information to
convert more shoppers to their online payment service by emphasizing their speedy
payment system.
How to Predict Consumer Behavior
research can help reveal consumer intentions, but penetrating the veil that protects actual
consumer motivations from scrutiny can be a tall order for even the best-designed research
project. With the advent of big data, marketers are accessing increasingly more
sophisticated predictive and analytic tools to forecast consumer behaviour. However,
certain "old school" predictive techniques can be equally effective.
Ways to predict consumer behaviour
Here are 5 methods that companies can use to predict consumer behaviour:
1. Listen to your customer
After becoming the CEO of the ailing Procter & Gamble in 2000, A.G. Lafley had a simple
mantra to revive his company, which was “The consumer is the boss.” Reiterating this
mantra to his employees, Lafley urged them to listen to what the consumers were saying
and what they wanted from the products, especially when they are unable to articulate
their needs. P&G was able to drive its business decisions, based on a complete
understanding of the customer wants.
2. Improving sales forecasts
Applying forecasting techniques to sales and business decisions can help companies predict
consumer behaviour. Use relevant data that focuses on the factors impacting the retail
business industry, such as consumer sentiment, available credit, employment factors, and
wages. Relevant indicators of future sales can help project the likely consumer behaviour.
For example, drop-in hourly earnings is an indicator of a likely drop in retail sales.
Forecasting must also be applied to real business decisions. Be it marketing, staffing, or
manufacturing decisions, accurate forecasting can help companies prepare for market
opportunities by identifying potential growth markets and product lines.
3. Use of Predictive Analytics for consumer prediction
behaviour patterns based on customer interactions and transactions are extremely
important in the digital era. Customer Experience Analytics, Consumption-based, spend
analytics, Channel analytics or digital footprints created by the user’s web browsing can be
vital predictor data for driving insightful engagements in retail.
4. Target non-buying customers
In addition to predicting buying behaviours of existing customers, companies must also pay
importance to how to make their products valuable for non-buying customers. Providing a
solution for customers whose needs were not addressed previously, can open a wide and
untapped market for retailers.
5. Create product promoters
According to the consultancy firm, Bain & company, consumer satisfaction and market
share are not the right predictors for consumer behaviour. Customer responses to simple
feedback questions such as, “How likely are you to recommend this product to your
friend?” on a scale rating of 1-10 are likely to produce more accurate results. Product
promoters with a rating of 9 or more, can be used as reliable sources of buying patterns.
Retailers need to develop a deeper understanding of these promoters, and also how to
convert more customers into promoters.