CONSUMER BEHAVIOUR – UNIT -1

The term consumer behaviour, individual buyer behaviour, end user behaviour and consumer buying
behaviour all stands for the study of how individuals, groups and Organisation select, buy, use and
dispose of goods and services, ideas or experiences to satisfy their needs and wants.

• According to Phillip Kotler “Consumer behavior is the study of how people buy, what
they buy, when they buy and why they buy.
• According to Schiffman consumer behavior refers to “the behavior that consumers display in
searching for, purchasing, using, evaluating, and disposing of products and services that they expect
will satisfy their needs”
• According to Solomon et al “Consumer Behavior is the study “of the processes involved when
individuals or groups select, purchase, use, or dispose of products, services, ideas, or experiences to
satisfy needs and desires”

According to Belch and Belch "consumer behavior is the process and activities people engage in when
searching for, selecting, purchasing, using, evaluating and disposing of products and services so as to
satisfy their needs and desires".

Every activity revolves around the ultimate consumer , to gauge their behavior, specifically focusing on:

Who buys products and services?

How do they buy them?
Where do they buy them?
How often do they buy them?
When do they buy them?
How often do they use them?

It is believed that consumers make decisions on the basis of receipt of a small number of selectively
chosen pieces of information. Hence it is very important to understand what and how much info is needed
by customer to help him evaluate the goods and services being offered.

E.g. Even a simple action like Going out for dinner need too many decisions to be taken regarding the
venue, what to eat, depending upon occasion on the part of the consumer.

Concept of Consumer Behavior

Consumer behaviour is the study of how individual customers, groups or organizations select, buy, use,
and dispose ideas, goods, and services to satisfy their needs and wants. It refers to the actions of the
consumers in the marketplace and the underlying motives for those actions.

Consumer behavior is studied more in sectors which are very concentrated and competitive.
FMCG(cosmetics, beverages, baked goods, office supplies), consumer durables, retail and e commerce
are such sectors where many people are employed just to analyse consumer behavior and influence it.

There are various reasons due to which a consumer is buying a product.

1. Impulse – Chocolates, ice cream.

2. Need, Wants or Demands – Depending on the status of the person.
3. Lifestyle – Depending upon his way of life. Also connected to needs or wants.
4. Necessity – A medical emergency, an insurance requirement.
So if you look at it, when the consumer himself is buying several products for various reasons, then you
need to study his behavior so that you can fit the purchase environment with the mindset of the customer.

Taking a retail example, lets understand the same-

1. Impulse – If it is an impulsive purchase, you need to be as close to the entry or exit counter as
possible. You need to analyse the customer’s impulsive behavior and ensure you take advantage of
it. How many of you have purchased things online impulsively?
2. Needs wants and demands – If it is a need, than you can be carefree, but if it is a demand, then the
product needs to be marketed in such a manner that the premium crowd can purchase it.
3. Lifestyle – Mountaineering products are the best examples of lifestyle purchases. How many of us
go hiking regularly? Not many. So these products are specifically targeted to people who are wild
life lovers and hence the way they buy the product is important. Similarly, there can be other lifestyle
products.
4. Necessity – Emergencies can come any time in life and hence the importance of consumer buying
behavior lies in the fact, that how do consumers behave in such panic situations, and what can you
do to make them behave the way you want them to?

The above examples are only a few in the complete canvas of consumer buying behavior. Each sector is
different, and the way to find out how the consumer is going to behave is important.

Feature/ Nature of Consumer Behavior:

Systematic process: Consumer Behavior is a systematic process relating to buying decisions of the
customers. The buying process consists of the following steps:

• Need identification to buy the product

• Information search relating to the product
• Listing and evaluating the alternative
• Purchase decision
• Post purchase evaluation

Influenced by various factors : Consumer Behavior is influenced by a number of factors the factors that
influence consumers include marketing, personal, psychological, situational, social and cultural etc.

Different for different customers : All consumers do not behave in the same manner. Different
consumers behave differently. The difference in consumer Behavior is due to individual factors such as
nature of the consumer's lifestyle, culture etc.

Different for different products : Consumer Behavior is different for different products. There are
some consumers who may buy more quantity of certain items and very less quantity of some other items.

Vary across regions: The consumer Behavior varies across States, regions and countries. For instance,
the Behavior of urban consumers is different from that of rural consumers. normally rural consumers are
conservative (traditional) in their buying Behavior.

Vital for marketers: Marketers need to have a good knowledge of consumer Behavior they and to study
the various factors that influence consumer Behavior of the target customers. The knowledge of consumer
Behavior enables marketers to take appropriate marketing decisions.

Brand loyalty : Brand loyalty is another characteristic of consumer Behavior. Brand loyalty is the
tendency of a consumer to buy products or services from a certain company that one likes or equates with
having high quality goods and services. For example, if Naina's first car was a Honda as a teenager and
the car lasted 200,000 miles, she might have a tendency to buy hondas again in the future due to her
previous positive experience. This brand loyalty may be so strong that she forgoes the information search
all together when considering for next purchase.

Reflect status : Consumer buying Behavior is not only influenced by status of a consumer coma but it
also reflect it. Those consumers who owned luxury cars, watches and other items are considered by others
as persons of higher status.

Result in spread effect : Consumer Behavior as a spread effect. The buying Behavior of one person may
influence the buying Behavior of another person. For instance, a customer may always prefer to buy
premium brands of clothing, watches and other items etc. This may influence some of his friends,
neighbours and colleagues. This is one of the reasons why marketers use celebrities like Shahrukh Khan,
sachin to endorse their brands.

Undergoes a change : The consumer Behavior undergoes a change over a period of time depending upon
changes in age , education and income level etc, for example, kids may prefer colourful dresses but as the
.;y grow up as teenagers and young adults, they may prefer trendy clothes.

Information search : Search for information is a common consumer Behavior. Consumers cannot
purchase goods and services if they are unaware that a good or service exists. When a consumer decides
to buy a certain item, his decision must be based on the information he has gathered about what products
our services are available to fulfill his needs. There might be a product available that would be better
suited to the consumers needs, but if he is an aware of product, he will not buy it.

Bargaining : A trend of bargaining is often found in the behaviour of buyers. They prefer buying
goods by reducing the price as told by the seller. Indian buyers too do not frame uniform price
policy. The trend of bargaining is still in vogue in the Indian markets.

Quality vs. Price : Buyers focus on price instead of the variety of the goods. They therefore,
prefer high price goods. A little bit change has come now because the consumers have now
begun purchase of quality goods on higher price.

Changing Consumption Patterns : Owing to widespread education, increase in income and

standard of living as also desire of more comforts, the pattern of consumption is now being
changed. The low income group and high income group are increasingly buying fridge, tape
recorder, cooler, sewing machines etc.

Credit and Guarantee : New motives for purchase are getting their way rapidly because of
having credit and guarantee facility available in the market. Such facilities are developing the
trade and commerce.

Consumer Research

Consumer research is the research done on consumers’ preferences, attitudes, loyalty, usage and behavior
in a market. It helps in understanding customers so that the marketing campaigns can be designed
accordingly.
The initial thrust on studying consumer behavior by marketers was done for two reasons:
• To determine as to why consumers made the purchase decision
• To understand how consumers would react to promotional messages.
Consumer research is a part of marketing research.

Market Research deals with processes to understand customers and end consumers which helps the
marketer to build market strategy. It helps in analyzing the market using porter’s five forces which deals
with the market condition. The strengths, weakness, opportunities and threats are analyzed. They help in
defining the marketing goals, generate and define marketing activities, monitor them and improve
performance and understanding of the market and consumers. The market research also guides the
company in addressing the issues by conducting surveys and get customer opinions.

Market research does not delve deep into consumer psyche to understand his different behavioral aspect.
The study has been a prerogative of psychologists, sociologists, cultural anthropologists and economists.
The discipline has been studying consumers in his Economic, Psychological, Sociological and Cultural
relationships and influences including the following scientific fields-

1. Psychology
2. Sociology
3. Cultural Anthropology
4. Economics

Consumer Research Process

Analysing
Models of Consumer Behaviour

Traditional Models:

The early or traditional models were developed by economists with a view to understand
economic systems. Economics helps to understand how scarce resources are allocated
among unlimited wants and needs. The first four Models give a general view in terms of
the Economic model, Learning model, Psychoanalytic model and the Sociological model.
They are also called classical models of CB. These are as follows:

1. Economic model
2. Learning model
3. Psychoanalytic model
4. Sociological model

1 Economic Model:

Under economics, it is assumed that man is a rational human being, who will evaluate all
the alternatives in terms of cost and value received and select that product which gives
him/her maximum satisfaction (utility). All human being expect a greater utility return on
their scarce resources, the resources being time, effort and money. Consumers are
assumed to follow the principle of maximum utility based on the law of diminishing
marginal utility(Marginal Utility: change in utility from an increase in consumption of that
good or service) . It is assumed that with limited purchasing power, and a set of needs and
tastes, a consumer will allocate his/her expenditure over different products at given prices
so as to maximize utility.

Economic model of consumer behaviour is unidimensional. This means that buying

decisions of a person are governed by the concept of utility. Being a rational man he will
make his purchase decisions with the intention of maximizing the utility/benefits.Value
utility for human beings is more important than anything else. In spite of all kinds of
motivations, if the expected returnable value utility is lesser than the effort spent he is
unlikely to buy the product. He is likely to purchase the products that give him the
maximum utility return.

Economic model is based on certain predictions of buying behaviour.

1. Price effect – Lesser the price of the product, more will be the quantity purchased.

2. Substitution effect – Lesser the price of the substitute product, lesser will be the
quantity of the original product bought.

3. Income effect – More the purchasing power, more will be the quantity purchased
The assumption about the rational behaviour of human beings has been challenged by the
behavioralscientists. They are of the opinion that while the predictions are useful, the
model only explains how a consumer ought to behave, it does not throw light on how
does the consumer actually behave. Behavioural scientists feel the economic model is
incomplete. They feel that Economics is assuming the market to be homogeneous where
all the buyers will think and act alike and also focuses only on one aspect of the product
i.e., income.It has been argued upon that man is a complex entity and hence the need to
adopt a multidisciplinary approach to understand consumer behaviour. Whereas, the
model has ignored all vital aspects such as perception, motivation, learning, attitude,
personality and socio- cultural factors. Behaviour scientists have opined those broader
perspectives need to be adopted while analysing the buyer behaviour. So apart from
economics, even the role played by needs, motives, personality, selfconcept and the socio-
cultural factors have to be considered for understanding the buyer responses to various
stimuli, which in turn could influence their buying behaviour.

2. Learning Model:

The theory of learning is based on the cognitive process of learning i.e. seeing will affect
many cognitive processes in human behavior e.g. building up of attitude, formation of
values, strengthening of beliefs and arising of motivation. Due to this, this model is also
called stimulus to response model or SR model. Unlike the economists, classical
psychologists have been interested in the formation and satisfaction of needs and tastes.

They argued that living beings were influenced by both innate needs such as the primary
needs of hunger, thirst, shelter and learned needs like fear and guilt. A drive (internal
stimulus) which when directed towards a drive reducing object becomes a motive. The
learning model is totally based on an individual’s capability to learn, overlook and
differentiate. The entire thought process behind this model works on Pavlov’s stimulus
response that states that in order to bring a change in the buyer’s behavior, one must
change the drives, Stimuli and responses as per the buyer’s attitudes and perceptions.
Pavlov conducted a psychological experiment on his dog.

Pavlovian theory is a learning procedure that involves pairing a stimulus with a conditioned
response. In the famous experiments that Ivan Pavlov conducted with his dogs, Pavlov
found that objects or events could trigger a conditioned response. The experiments began
with Pavlov demonstrating how the presence of a bowl of dog food (stimulus) would
trigger an unconditioned response (salivation). But Pavlov noticed that the dogs started to
associate his lab assistant with food, creating a learned and conditioned response. This was
an important scientific discovery. Pavlov then designed an experiment using a bell as a
neutral stimulus. As he gave food to the dogs, he rang the bell. Then, after repeating this
procedure, he tried ringing the bell without providing food to the dogs. On its own, an
increase in salivation occurred. The result of the experiment was a new conditioned
response in the dogs.
Pavlov’s theory later developed into classical conditioning, which refers to learning that
associates an unconditioned stimulus that already results in a response (such as a reflex)
with a new, conditioned stimulus. As a result, the new stimulus brings about the same
response. A simple application of Pavlovian theory is the response that some consumers
have when they hear the word “sale.” It can generate an urge to shop, even if people have
no specific need at the time. The various products or services will act as stimuli to satisfy
drives. For instance, a hungry person will be driven towards food, which after consumption
will reduce the drive and also provide satisfaction. According to learning theorists, this
response of satisfaction (feeling) reinforces the relationship between drive and the drive
reducing stimulus object as well as the related cues. Further, when consumers learn to
associate connection between stimulus and response, it becomes a habit. There are certain
cognitive theorists, who have advocated that human beings not only learn to link stimulus
with response (S-R) but also about the formation of other cognitive processes such as,
attitudes, values, beliefs, motivation etc. In marketing context, ‘learning’ will help marketers
to understand how consumers learn to respond in new marketing situations, or how they
have learned and responded in the past in similar situations. Very often it is observed that
consumer’s experience with one product from an organisation is likely to be generalised to
the other products of the firm. Conversely, consumers also learn to discriminate and this
information will be useful in working out different marketing strategies. Simply stated this
learning model will help marketers to promote associations of products with strong drives
and cues and positive re-enforcements from the consumers.

3. Psychoanalytical Model: Learning model of CB does not throw much light on the
personality of humans. Having realized the drawback, some psychologist devised a model
that could define the inbuilt personality factors of a human being in relation to the society
around him, based on the psychoanalytical definition of the human personality by
SIDMUND FREUD. Freud was the first to discuss the unconscious mind and its role in
human behavior. He believed that human behavior is an outcome of conscious and
subconscious levels of human cerebral process. He stated that there were three levels of
consciousness. First is the unconscious mind that exists outside your awareness at all times.
Next is preconscious mind that contains all information that you are not currently aware of
but that can be recalled (memories, stored knowledge). Finally the conscious mind is your
current state of awareness (Thoughts, perceptions). According to him human behavior or
personality is the outcome of id, ego and super ego.

(a) ‘id’ – Id is the biological component of the personality that operates on instinct. It is
the source of all psychic energy which drives to act. It is always selfish and needy. It
operates according to pleasure principle that is of the idea that all your needs must be met
immediately.

(b) ‘super ego’ – Super ego exists in all three levels of consciousness. The internal
representation of what is approved by the society. Super ego pushes a person to do what
is right and ideal as well as permitted by his conscience(view of what is wrong)

(c) ‘ego’ – Ego operates in the preconscious and the conscious mind. It is the part of
personality that makes your decisions. Ego operates as per the reality principle which
states that the desires of th id must be satisfied in a manner that is both socially
appropriate and realistic.

Thus, we can say that human behaviour is directed by a complex set of deep-seated
motives which drive him towards specific buying behavior and socially acceptable
decisions. A marketer can influence the buying actions of individuals by appealing to his
desires and longings. They have been using this approach to generate ideas for developing
products-design, features, advertising and other promotional techniques.

4. The Sociological Model:

1. According to this model the individual buyer is a part of the institution called
society. Since he is living in a society, he gets influenced by it and in turn also
influences it in its path of development.

2. He is playing many roles as a part of various formal and informal associations or

organisations such as a family member, as an employee of a firm, as a member of a
professional forum and as an active member of an informal cultural organisation.

3. Such interactions leave some impressions on him and may play a role in influencing
his buying behaviour. Intimate groups comprising of family, friends and close
colleagues can exercise a strong influence on the lifestyle and the buying behaviour
of an individual member.

4. The peer group plays a very important role in acting as an influencing factor
especially in adopting particular lifestyles and buying behaviour patterns.

5. The group generally has an informal opinion leader, whose views are respected by
the group. This leader is able to influence the individual member’s lifestyle and
buying decisions.

6. Similarly, depending on the income, occupation and place of residence etc., each
individual member is recognised as belonging to a certain social class. As a member
of a particular class, he may enjoy certain status and prestige.

7. Further, each class has its own standards of lifestyle and buying behaviour pattern.
So an individual member will adopt the role suitable to conform to the style and
behavioural pattern of the social class to which he/she belongs.

8. The marketers, through a process of market segmentation can work out on the
common behaviour patterns of a specific class or group of buyers and try to
influence their= buying decision .
Contemporary Models

1) Nicosia Model

2) Howard Sheth Model

3) Engel-Kollat-Blackwell Model

1. Nicosia Model of Consumer Behavior was developed in 1966, by Professor Francesco

M. Nicosia, an expert in consumer motivation and behavior. This model focuses on the
relationship between the firm and its potential consumers. The model suggests that
messages from the firm (advertisements) first influences the predisposition of the
consumer towards the product or service. Based on the situation, the consumer will have
a certain attitude towards the product. This may result in a search for the product or an
evaluation of the product attributes by the consumer. If the above step satisfies the
consumer, it may result in a positive response, with a decision to buy the product
otherwise the reverse may occur. Looking to the model we will find that the firm and the
consumer are connected with each other, the firm tries to influence the consumer and the
consumer is influencing the firm by his decision.

The Nicosia model of Consumer Behavior is divided into four major fields:

1. Field 1: The firm’s attributes and the consumer’s attributes. The first field is
divided into two subfields. The first subfield deals with the firm’s marketing
environment and communication efforts that affect consumer attitudes, the
competitive environment, and characteristics of target market. Subfield two specifies
the consumer characteristics e.g., experience, personality, and how he perceives the
promotional idea toward the product in this stage the consumer forms his attitude
toward the firm’s product based on his interpretation of the message.
2. Field 2: Search and evaluation. The consumer will start to search for other firm’s
brand and evaluate the firm’s brand in comparison with alternate brands. In this
case the firm motivates the consumer to purchase its brands.
3. Field 3: The act of the purchase. The result of motivation will arise by convincing
the consumer to purchase the firm products from a specific retailer.
 4. Field 4: Feed back of sales results. This model analyses the feedback of both the
firm and the consumer after purchasing the product. The firm will benefit from its
sales data as a feedback, and the consumer will use his experience with the product
affects the individuals attitude and predisposition’s concerning future messages
from the firm.

2. Howard Sheth Model

John Howard and Jagadish Sheth put forward the Howard Sheth model of consumer
behavior in 1969, in their publication entitled, ‘The Theory of buyer Behaviour’.

The Howard Sheth Model is a sophisticated integration of the various social,

psychological, and marketing influences on consumer choice into a coherent sequence of
information processing. It aims not only to explain consumer behavior in terms of cognitive
functioning but to provide an empirically testable depiction of such behavior and its
outcomes (Howard 1977).

The logic of the Howard Sheth model of consumer behavior summarizes like this. There are
inputs in the form of Stimuli. There are outputs beginning with attention to a given
stimulus and ending with purchase. In between the inputs and the outputs, there are
variables affecting perception and learning. These variables are termed ‘hypothetical’ since
they cannot be directly measured at the time of occurrence.
The Howard Sheth model of consumer behavior suggests three levels of decision
making:

1. The first level describes extensive problem-solving. At this level, the consumer
does not have any basic information or knowledge about the brand and he does
not have any preferences for any product. In this situation, the consumer will seek
information about all the different brands in the market before purchasing.
2. The second level is limited problem-solving. This situation exists for consumers
who have little knowledge about the market, or partial knowledge about what they
want to purchase. In order to arrive at a brand preference, some comparative brand
information is sought.
3. The third level is habitual response behavior. At this level, the consumer knows
very well about the different brands and he can differentiate between the different
characteristics of each product, and he already decides to purchase a particular
product.

According to the Howard Sheth model of consumer behavior, there are four major
sets of variables; namely:

1. Inputs: These input variables consist of three distinct types of stimuli (information
sources) in the consumer’s environment. The marketer in the form of product or
brand information furnishes physical brand characteristics (significative stimuli) and
verbal or visual product characteristics (symbolic stimuli). There are impersonal
sources like mass media communication and advertising, over which the firm has no
control. However, the information sources also include sales and service personnel
who can add and help the marketing efforts of the firm. The third type is provided
by the consumer’s social environment (family, reference group, and social class).
This social source is personal and the company/marketer has no control over this
source. All three types of stimuli provide inputs concerning the product class or
specific brands to the specific consumer.
2. Perceptual and Learning Constructs: The central part of the model deals with the
psychological variables involved when the consumer is contemplating a decision.
Some of the variables are perceptual in nature and are concerned with how the
consumer receives and understands the information from the input stimuli and
other parts of the model. For example, stimulus ambiguity happened when the
consumer does not understand the message from the environment. Perceptual bias
occurs if the consumer distorts the information received so that it fits his or her
established needs or experience. Learning constructs category, consumers’ goals,
information about brands, criteria for evaluation alternatives, preferences, and
buying intentions are all included. The proposed interaction In between the
different variables in the perceptual and learning constructs and other sets give the
model its distinctive advantage.
3. Outputs: The outputs are the results of the perceptual and learning variables and
how the consumers will respond to these variables (attention, brand
comprehension, attitudes, and intention).
 4. Exogenous(External) variables: Exogenous variables are not directly part of the
decision-making process. However, some relevant exogenous variables include the
importance of the purchase, consumer personality traits, religion, and time pressure.

3.Engel Kollat Blackwell Model

The Engel Kollat Blackwell Model of Consumer Behavior was created to describe the
increasing, fast-growing body of knowledge concerning consumer behavior. This model,
like in other models, has gone through many revisions to improve its descriptive ability of
the basic relationships between components and sub-components.

The Engel Kollat Blackwell Model of Consumer Behavior or consists of four distinct stages;

1. Information Input Stage: At this stage the consumer gets information from
marketing and non-marketing sources, which also influence the problem
recognition stage of the decision-making process. If the consumer still does not
arrive to a specific decision, the search for external information will be activated in
order to arrive to a choice or in some cases if the consumer experience dissonance
because the selected alternative is less satisfactory than expected.
2. Information Processing Stage: This stage consists of the consumer’s exposure,
attention, perception, acceptance, and retention of incoming information. The
consumer must first be exposed to the message, allocate space for this information,
interpret the stimuli, and retain the message by transferring the input to long-term
memory.
3. Decision Process Stage: The central focus of the model is on five basic decision-
process stages: Problem recognition, search for alternatives, alternate evaluation
(during which beliefs may lead to the formation of attitudes, which in turn may
result in a purchase intention) purchase, and outcomes. But it is not necessary for
every consumer to go through all these stages; it depends on whether it is an
extended or a routine problem-solving behavior.
4. Variables Influencing the Decision Process: This stage consists of individual and
environmental influences that affect all five stages of the decision process.
Individual characteristics include motives, values, lifestyle, and personality; the social
influences are culture, reference groups, and family. Situational influences, such as a
consumer’s financial condition, also influence the decision process.