Consumer Psychology Assignment (MAPSY305)

SRN NO – 202100337
MA Psychology SEM 3
Date – 7.09.2022

Q1. Explain the development of consumer psychology.

ANS. Consumer psychology is the study of individuals and groups and the procedures they
use to find, buy, use, evaluate, and dispose of items and services that meet their requirements.
Understanding customer behavior is critical in today's competitive market for developing and
implementing marketing strategies.
Walter Dill Scott and his early 1900s research are responsible for much of the relationship
between psychology and consumerism. As the head of Northwestern's Psychological
Laboratory, Scott was approached by an advertising executive wanting to better his
marketing efforts. Scott published The Psychology of Advertising in Theory and Practice in
1903, and he continued to focus on the use of scientific knowledge in economic difficulties.
Scott spent the last portion of his career studying social control and human motivation.
In the 1940s and 1950s, consumer behavior and psychology continued to develop as a
separate discipline of marketing. At the end of the 1950s, two significant investigations
chastised marketing for lacking scientific rigor, particularly for failing to use behavioral
science research methodologies with a mathematical orientation.
Beginning in the 1950s, conventional marketing started to rely more on other disciplines and
less on economics. Notably, these includes behavioral disciplines like clinical psychology,
anthropology, and sociology. This combination resulted in a new focus being placed on the
customer as an analytical unit. As a result, the marketing discipline gained fresh, substantial
information. This covered concepts like brand loyalty, opinion leadership, and reference
groups.
Additionally popular was market segmentation, particularly demographic segmentation based
on the socioeconomic status index and family life-cycle. The marketing discipline showed
growing scientific complexity in terms of the methods used to create and evaluate consumer
psychology ideas with the addition of consumer behavior and psychology. A new set of tools,
including ethnography, photo-elicitation methods, and phenomenological interviewing, have
lately been contributed by researchers.
Consumer behavior is now recognized as an essential marketing topic and is covered in
virtually all introductory marketing programmed as a unit of study.
Q. Explain the key difference between consumer and customer with examples.
ANS. We define consumer as the individual who uses the product. The term "consumer" is
derived from the word "consuming," which meaning "to use." In this context, a consumer is
someone who buys a product or service for his or her personal use or consumption.
A customer is someone who buys products or services and pays the price for them. The term
customer is derived from the phrase 'custom,' which meaning 'practice,' therefore a client is
an individual or institution who buys goods or services from a vendor on a regular basis. It is
also known as a customer or a buyer.
The following are the key distinctions between customer and consumer:
1.The Customer is the individual who purchases products or services from a seller. A
Consumer is someone who buys or utilizes products or services.
2.The customer is sometimes referred to as the buyer or client, whereas the consumer is the
final user of the goods.
3.A customer is an individual or a corporate entity, whereas a consumer is an individual, a
family, or a group of individuals.
4.The customer pays the price of the product or service, but he may recover it from the other
party if he purchased it on behalf of someone else. In contrast, the consumer does not always
pay the whole price of the product, as in the case of gifts or purchases made by the parents of
a kid.
5.The customer buys the things for resale or to add value, for personal use, or on behalf of
another person. In contrast to the Consumer, who acquires products only for the sake of
consumption.
A consumer is a person who utilizes items and services, whereas a customer is the one who
buys the goods and services. A consumer will not sell a product or service but will utilize it,
whereas a customer may be able to sell it for a profit. It is important to remember that a
consumer does not have to execute a monetary transaction to obtain the goods or service, but
a customer must complete that transaction.

Q2. Write a short note on utility of Maslow’s theory of need to study consumer behavior.
ANS. The hierarchy of needs model was created by Abraham Maslow in 1954, and it may be
used to better understand human motivation. Basic (or deficient) requirements (such as
physiological, safety, love, and end-growth needs) can be categorized within the hierarchy
(cognitive, aesthetics and self-actualization).
Five main categories of human needs are arranged hierarchically:
The physiological needs are on the first level (water, sleep, food). After these requirements
are met, the person may concentrate on meeting their third-level belongingness needs, such as
love, friendship, and acceptance, as well as their safety needs (shelter, security, and
protection). When these requirements are met, the person can move on to the ego needs.
Among the inwardly focused ego wants are those for independence, self-worth, and success.
In contrast, status, reputation, and social approval fall under the heading of externally focused
ego wants. The urge for self-actualization is at the top of the list. This involves working to
reach your full potential through education, travel, hobbies, involvement in environmental
and social concerns, etc.
1. Physiological needs - First-level physiological needs include access to food, clothes, air,
and shelter. They are referred to as the fundamental requirements or basic demands.
2. Safety or security needs - Needs for safety or security After their basic needs are met,
customers advance to the next stage. The demands for security include physical safety,
security, stability, and protection.
3. Social needs - Consumers anticipate companionship, connection, and attachment if their
safety requirements are met. They must retain their social standing and work to fit in.
4. Esteem Needs -Next are esteem needs like prestige, status, and self-esteem. People in this
stage strive to achieve the average level in comparison to others in order to feel mentally
satisfied.
5. Self-actualization - The final step in the hierarchy is self-actualization. Everyone in this
place strives to be the best in their profession and raise their level of success. The term "self-
actualizer" applies to them.
Higher growth requirements must first be met in order to move on to lower -level
fundamental needs. Everyone aspires to go up the ladder, according to Maslow, and everyone
is capable of doing so. A person may move back and forth between levels of the hierarchy as
a result of life-changing events like divorce and job loss since lower-level demands are
frequently not met, which is unfortunate. Because our culture rewards motivation that is
largely focused on esteem, love, and other social needs, Maslow observed that only one in
one hundred persons achieve full self-actualization.
The primary goal of marketing is to interact with people, therefore a fundamental component
of the job is to comprehend human nature, including demands, responses, and top priorities.
This is where Maslow's Hierarchy of Needs may be quite helpful. Because of this, marketing
and psychology frequently intersect. Because of this, a skilled marketer is aware that
knowing a company's target market is essential before creating a marketing plan. By using
psychology to do this, we may better understand potential clients by learning about their likes
and dislikes, how language impacts them, and other things. Your marketing methods will
have a stronger impact the better you comprehend your target market.
When buyer personas and Maslow's hierarchy of requirements are combined, there are
countless opportunities to reach new clients. You may more accurately identify your
consumers' demands and put your company in a better position to meet them by combining
the data from the two sources. This may help you adjust to — and even anticipate — shifting
tastes and trends, making your company more responsive to what customers need when they
need it. In the end, considering Maslow's hierarchy of needs may help you create better buyer
personas and grow your firm. Maslow's hierarchy of needs, a well-known psychological
theory, may therefore be a very helpful guide to comprehending consumer purchasing
behavior.
Q3. Define consumer behavior. Explain with examples the factors affecting consumer
behavior.
ANS. Consumer behavior is the study of what customers do while they are looking for,
acquiring, using, assessing, and disposing of things and services that they believe will meet
their needs. It aids marketers in comprehending the customer decision-making process.
Consumer behavior is described as "actions consumers engage in when acquiring,
consuming, and disposing of items and services."
Consumer behavior is defined as "the dynamic combination of cognition, behavior, and
environmental events through which humans perform the trade part of their life." (American
Marketing Association (AMA) 
Consumer behavior refers to the activities and decision-making processes of people who buy
products and services for their own use.
(Dictionary of Marketing Terms, 2nd ed., Peter D. Bennett, 1995)
Consumer behavior is defined as "the mental and emotional processes and observable
behavior of customers throughout the search for, purchase, and post-purchase of a product or
service."
("Consumer Behavior," by James F. Engel, Roger D. Blackwell, and Paul W. Miniard (1990)
Many distinct aspects influence consumer behavior. Here are the five most important factors
that determine customer behavior:
1. Psychological Aspects
Consumer behavior is heavily influenced by human psychology. These characteristics are
difficult to quantify but have the potential to affect a purchasing decision. Among the critical
psychological factors are:
i. Motivation
When a person is sufficiently driven, it effects the individual's purchasing behavior. A person
has various needs, including social, fundamental, and security requirements, as well as
esteem and self-actualization wants. Among all of these demands, basic necessities and
security needs take precedence over all others. As a result, basic necessities and security
needs have the ability to inspire a customer to purchase goods and services.
For example, the iconic "Be All You Can Be" motto and advertising campaigns of the United
States Army urged young adults to join the army (self-actualization).
ii. Perception
Consumer perception is a key influencer of consumer behaviour. Consumer perception is the
process through which a customer gathers information about a product and interprets that
information in order to construct a meaningful image of that product.
When a customer reads commercials, promotions, customer reviews, social media comments,
and so on about a product, they form an opinion about it. As a result, customer perception has
a significant impact on consumer purchasing decisions.
iii. Learning
When a person purchases a product, he or she gains knowledge about the product. Learning
occurs throughout time as a result of experience. The learning of a customer is dependent on
his or her abilities and expertise. While talent may be developed via practice, knowledge can
only be obtained through experience.
Learning can be conditional or cognitive in nature. Conditional learning is continually
exposing a customer to a circumstance, causing the consumer to build a reaction to it.
In cognitive learning, the consumer will use his knowledge and abilities to obtain satisfaction
and a solution from the thing he purchases.
For example, we all seek resources through nonexperiential learning when we read book and
product evaluations on platforms like Amazon.
iv. Beliefs and Attitudes
Consumers have specific attitudes and ideas that impact their purchasing decisions. The
consumer acts in a specific way toward a product based on this mindset. This mindset is very
important in developing a product's brand image. As a result, marketers work hard to
understand customer attitudes in order to build marketing initiatives.
2. Social Aspects
Humans are social beings who are surrounded by numerous individuals who impact their
purchasing habits. Humans want to emulate other humans and also want to be socially
acceptable. As a result, their purchasing behaviour is impacted by others around them. These
are referred to as social factors. Some of the social factors are as follows:
i. Family 
A person's purchasing habit is heavily influenced by his or her family. A person develops
preferences as a youngster by observing his family buy things and continues to buy the same
products as an adult.
For example, if our family members prefer Dominos, we may unconsciously prefer Dominos
over, say, Pizza Hut.
ii.Groups of Reference
A reference group is a group of persons with whom a person has a personal relationship. In
general, everyone in the reference group has similar purchasing habits and influences one
another.
iii. Roles and status
The role that a person plays in society has an impact on him. If a person is in a high position,
his purchasing habit will be heavily impacted by his position. A Chief Executive Officer at a
firm will buy according to his standing, however a staff or employee in the same company
will buy differently.
3. Cultural considerations
A group of individuals is connected with a set of community-specific values and ideals.
When a person originates from a certain community, the culture associated with that group
has a strong impact on his or her conduct. Some cultural elements include:
i. Culture
Cultural factors have a significant impact on consumer purchasing behaviour. Cultural
Factors are the fundamental beliefs, needs, desires, preferences, perceptions, and behaviours
that a consumer observes and learns from close family members and other key individuals in
their lives.
As an example, consider McDonald's India. India has a large client base, and McDonald's has
tailored its menu to the tastes and preferences of the local population in which it operates. For
example, because cows are revered and highly adored in India, chicken has been substituted
for beef. In India, the fast-food firm launched the McCurry Pan, a baked menu item made out
of curried veggies.
ii. Subculture 
There are several subcultures within a cultural group. These subcultural groupings hold
similar views and values. People from various religions, castes, regions, and ethnicities can
form subcultures. These subcultures constitute a client group in and of themselves.
We've used Burger King as an example here. In its advertising campaign, the site wished its
users "Ramadan Kareem," signifying a blessed Ramadan.Burger King has responded to
Muslim culture by creating a Ramadan-themed advertising featuring a partially eaten burger
in the shape of a crescent moon.
iii. Social Status
Every civilization on the planet has some type of social class. The social class is defined not
just by wealth, but also by employment, family history, education, and home area. Consumer
behavior is influenced by social class.
4. Personal Factors
Consumer purchasing behavior is influenced by personal factors. These personal variables
vary from person to person, resulting in varying views and consumer behavior.
Personal factors include the following:
i. Age
Age is a significant element that determines purchasing behaviour. The purchasing habits of
young individuals differ from those of middle-aged persons. The purchasing habits of the
elderly are very different. Teenagers will be more interested in purchasing brightly coloured
clothing and cosmetic items. Middle-aged people are concerned about the family's home,
property, and automobile.
ii. Income
A person's purchasing habit might be influenced by their income. Consumers with greater
incomes have more purchasing power. When a consumer has more discretionary money, he
or she has more opportunities to spend on lavish things. Whereas low- and middle-income
customers spend the majority of their income on necessities such as groceries and clothing.
iii. Occupation
A consumer's occupation effects his or her purchasing habits. A person prefers to acquire
items that are related to his or her work. A doctor, for example, would dress appropriately for
his career, but a professor would dress differently.
iv. Lifestyle
A lifestyle is an attitude and a way of life that an individual maintains in society. A
consumer's lifestyle has a significant impact on their purchasing habits. When a customer
follows a healthy lifestyle, for example, the things he purchases will be related to healthy
alternatives to junk food.
5. Economic Factors
Consumer purchasing habits and decisions are heavily influenced by a country's or market's
economic state. When a country is rich, its economy is robust, resulting in a larger money
supply in the market and better purchasing power for consumers. When customers feel a
pleasant economic climate, they are more likely to spend money on purchasing goods.
A weak economy, on the other hand, depicts a failing market that is afflicted by
unemployment and decreasing purchasing power.
Economic factors have a considerable impact on a consumer's purchasing decision. Among
the most important economic factors are:
i. Personal Income
When a person's disposable income rises, so does his or her purchasing power. The money
left over after meeting a person's fundamental necessities is referred to as disposable income.
Increased spending power leads to increased spending on a variety of things. However, when
disposable income declines, so does expenditure on a variety of products.
ii. Family Income
The total income of all family members is referred to as family income. When more
individuals work in the family, there is more money available for essential requirements and
indulgences. Higher family income motivates family members to buy more. When a family
has more money, the inclination is to acquire additional luxury products that they would not
have been able to afford otherwise.
 iii. Consumer Credit
When a customer is given cheap credit to purchase products, it encourages more spending.
Sellers make it simple for customers to obtain credit in the form of credit cards, easy
payments, bank loans, hire buy, and a variety of other credit choices. When customers have
more credit accessible to them, they are more likely to buy comfort and luxury things.
iv. Liquid Assets
Consumers with available cash are more likely to spend on comfort and pleasures. Liquid
assets are ones that can be quickly transformed into cash. Liquid assets include cash on hand,
bank savings, and securities. When a customer has more liquid funds, he is more likely to
purchase luxury products.
v. Financial Gains
A customer is heavily impacted by the amount of money he or she intends to set away from
his or her earnings. If a customer decides to save more, his purchasing power decreases. If a
customer want to save more, the majority of his money will be spent on purchasing goods.

REFERENCES
https://biq.cloud/blog/consumer-vs-customer/
https://www.yourarticlelibrary.com/marketing/market-segmentation/consumer-behaviour-
meaningdefinition-and-nature-of-consumer-behaviour/32301
https://www.analyticssteps.com/blogs/5-factors-influencing-consumer-behavior
Handbook of Consumer Psychology  Paul M. Herr, Curtis P. Haugtvedt, Frank R. Kardes,
2008.
https://profiletree.com/maslows-hierarchy-of-needs/
Consumer Psychology: Catherine V. Jansson-Boyd, McGraw Hill Education ISBN-13: 978-
0-33-522928-4 (pb) 978-0-33-522927-7 (hb) ISBN-10: 033522928X (pb) 0335229271 (hb)