Amity Business School

MBA (M&S) Class of 2015, Semester II
Consumer Behaviour
Module-I (Introduction)

Ruchika Nayyar
rnayyar@amity.edu

1

CONSUMER BEHAVIOR
The study of individuals, groups or organizations and the processes they use
to select, secure, use and dispose of products, services, experiences, or idea to
satisfy needs and the impact that these processes on the consumer and the
society.
……..the decision process and physical activity individuals engage in when
evaluating, acquiring, using or disposing of goods and services.
CUSTOMERS Someone who regularly purchase from a regular company/
store.
CONSUMERS Someone who is directly involved in various stages of
consumption.

Personal Consumer
The individual who buys goods and services for his or her own use,
for household use, for the use of a family member, or for a friend.

Organizational Consumer
A business, government agency, or other institution (profit or
nonprofit) that buys the goods, services, and/or equipment
necessary for the organization to function.

What Is Consumer Behavior?
Activities people undertake
when obtaining (Searching
and Purchasing), consuming
(Using and Evaluating), and
disposing of products and
services

Successful Relationships Customer Value Customer Satisfaction Customer Retention .

Consumer Influences Organizational Influences .

Organization al Influences Consumer Influences Obtaining Consumin g Consumer Behavior Disposing .

Consumer Influences Culture Ethnicity Personality Family Life-stage Values Income Available Resources Attitudes Opinions Feelings Motivations Past Experiences Peer Groups Knowledge Organizational Influences Brand Product Features Advertising Word of Mouth Promotions Retail Displays Price Quality Service Store Ambiance Convenience Loyalty Programs Packaging Product Availability .

Consumer Influences Obtaining Organizationa l Influences Consumin g Consumer Behavior Disposing .

Obtaining Consuming Disposing How you decide you want to buy How you use the product How you get rid of remaining product Other products you consider buying How you store the product in your home How much you throw away after use Where you buy Who uses the product If you resell items yourself or through a consignment store How you pay for product How you transport product home How much you consume How product compares with expectations How you recycle some products .

CONSUMER INFLUENCES Culture Ethnicity Personality Family Life-stage Values Income Available Resources Attitudes Opinions Motivations Past Experiences Feelings Peer Groups Knowledge OBTAINING How you decide you want to buy Other products you consider buying Where you buy How you pay for product How you transport product home ORGANIZATIONAL INFLUENCES Brand Product Features Advertising Word of Mouth Promotions Retail Displays Price Quality Service Store Ambiance Convenience Loyalty Programs Packaging Product Availability CONSUMING How you use the product How you store the product in your home Who uses the product How much you consume How product compares with expectations Consumer Behavior DISPOSING How you get rid of remaining product How much you throw away after use If you resell items yourself or through a consignment store How you recycle some products .

and disposing of products and services A field of study that focuses on consumer activities Scope goes beyond just why and how people buy to include consumption analysis .What Is Consumer Behavior? Activities people undertake when obtaining. consuming.

Consumption Analysis Why and how people use products in addition to why and how they buy .

Why Study Consumer Behavior? Consumer Behavior Determines the Economic Health of a Nation Consumer Behavior Determines the Success of Marketing Programs .

Consumer Behavior Determines the Success of Marketing MarketingPrograms can be used to influence brand choice and purchase. while Demarketing can influence people to stop harmful consumption “The Customer is King” Organization influenced by consumer needs and wants .

Consumer Behavior Determines the Success of Marketing Programs Organizations that are Customer-centric use a total marketing approach to focus their resources on satisfying customers Marketing Process of transforming or changing an organization to have what people will buy .

Consumer Behavior Determines the Economic Health of Everyone The individual’s decisions as a consumer determine their economic health by making more effective consumption decisions while avoiding deceptive practices harmful to them .

Understanding the power of Reference Groups Household Consumption Behaviour – Family Decision Making & Consumption Related Roles 18 .Group Influence .

• A symbolic group is one in which an individual is not likely to receive membership despite acting like a member. .Group • Two or more people who interact to accomplish either individual or mutual goals. • A membership group is one to which a person either belongs or would qualify for membership.

Reference Group A person or group that serves as a point of comparison (or reference) for an individual in the formation of either general or specific values. or behavior. attitudes. .

Broad Categories of Reference Groups • Normative Reference Groups • Comparative Reference Groups .

Indirect Reference Groups Individuals or groups with whom a person identifies but does not have direct face-to-face contact. or TV personalities. political leaders. such as movie stars. sports heroes. .

Major Consume r Referenc e Groups Individual Family Friends Social Class Selected Subcultures One's Own Culture Other Cultures Reference Groups .

ASPIRATION Gr. .When Reference group exert influence 1. Nature of the group Cohesive Frequently Interacting exclusive Distinctive and 3. Nature of the product Visible products Exclusive products 4. 2. Attitudes towards the group As a credible source of information. Types of reference groups MEMBERSHIP Gr. Accepts the rewards and sanctions meted out of the group. Values the views and reactions of group members.

Membership Positive Non-membership + Aspiration group _ Attitude Negative CONTACT Disclaimant Dissociative Anticipatory NO CONTACT Attitude Types of Membership groups Informal PRIMARY Formal Family/ peer Office School / Business/ Secondary Shopping gr. Symbolic . Alumni groups / Tenant organi.

Reference Groups Influencing Consumers Nature of Influence Objectives Perceived Character of Source Types of Power Behaviour Informational Knowledge Credibility Expert Acceptance Comparative SelfMaintenance Enrichment Similarity Referent Identification Normative Reward Power or Coercion Reward Conformity .

Social Multiplier effect Rejection of Conformity A) Strength of individual ‘s value system B) Intensity of group pressures to conform. brand . Influence by product category vs. C) Commitment of the individual to the group D) Value placed on individuality.Conformity in Consumer Behaviour 1. Types of influence by product 2. INFORMATION or COMPARISON or CONFORMITY? 1.

Positive Influences on Conformity Group Characteristics • Attractiveness • Expertise • Credibility • Past Success • Clarity of Group Goals • • • • • Personal Characteristics Tendency to Conform Need for Affiliation Need to be Liked Desire for Control Fear of Negative Evaluation .

. • Legitimize the decision to use the same products as the group..Factors Encouraging Conformity: A Reference Group Must .. • Provide the individual with the opportunity to compare his or her own thinking with the attitudes and behavior of the group. • Inform or make the individual aware of a specific product or brand. • Influence the individual to adopt attitudes and behavior that are consistent with the norms of the group.

Selected Consumer-Related Reference Groups • • • • • Friendship groups Shopping groups Work groups Virtual groups or communities Consumer-action groups .

Reference Group Appeals • • • • Celebrities The expert The “common man” The executive and employee spokesperson • Trade or spokescharacters • Other reference group appeals .

Ashwariya Rai Bachan for Longines Abhishek Bachan for Idea telecommunications products . a celebrity attests to the quality of the product or service Celebrity lends his name and appears on behalf of a product or service with which he/she may not be an expert Celebrity presents a product or service as part of a character endorsement Celebrity represents the brand or company over an extended period of time EXAMPLE Mikha Singh for Kesari Jeevan Amitabh Bacchan for ICICI Bank .Types of Celebrity Appeals TYPE Testimonial Endorsement Actor Spokesperson DEFINITION Based on personal usage. Shahrukh Khan for TAG Heuer.

Self-Image.Personality. and Life Style .

ca .dove.Opening Vignette • Do you see yourself as beautiful? Only1% of all women see themselves as beautiful Most ads portray an ideal image that is unattainable Dove’s ‘Campaign for Real Beauty’ http://www.

.What Is Personality? The inner psychological characteristics that both determine and reflect how a person responds to his or her environment.

The Nature of Personality • Personality reflects individual differences • Personality is consistent and enduring • Personality can change .

Theories of Personality
• Freudian Theory
– Unconscious needs or drives are at the
heart of human motivation
Three interacting systems
• Id: primitive and impulsive drives
• Superego: Individual’s internal
expression of society’s moral and
ethical codes of conduct
• Ego: Individual’s conscious control

Theories of Personality
• Neo-Freudian Personality Theory
– Social relationships are fundamental to
the formation and development of
personality
– e.g., CAD Theory

Horney’s CAD Theory
• Using the context of child-parent
relationships, individuals can be classified
into:
– Compliant Individuals
– Aggressive Individuals
– Detached Individuals

CAD Theory
• Compliant Personality
– One who desires to be loved, wanted, and
appreciated by others.

• Aggressive Personality
– One who moves against others (e.g.,
competes with others, desires to excel and
win admiration).

• Detached Personality
– One who moves away from others (e.g., who
desires independence, self-sufficiency, and
freedom from obligations).

Theories of Personality – Cont’d • Cognitive Theories of Personality – Personality as differences in cognitive processes (how consumers process and react to information) .

Need for Cognition (NC) • A person’s craving for enjoyment of thinking • High NC consumers are likely to: – – – – Relate better to written messages Want product-related information Spend more time processing print ads Enjoy using the internet to get information .

Visualizers Vs Verbalizers • A person’s preference for information presented visually or verbally. . • Verbalizers prefer written information. questionanswer format. • Visualizers require strong visual elements in ads. print ads.

. – Single-trait or multiple-trait theories.Theories of Personality – Cont’d • Trait Theory – Quantitative approach to personality as a set of psychological traits.

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Trait Theories – Cont’d • Consumer Materialism – The extent to which a person is considered “materialistic” • Fixed Consumption Behaviour – Consumers fixated on certain products or categories of products • Compulsive Consumption Behaviour – “Addicted” or “out-of-control” consumers .

new services or new practices.Consumer Innovativeness • The degree to which consumers are receptive to new products. • Consumer innovators are likely to: – Score lower on dogmatism – Score higher on need for uniqueness – Have higher optimum stimulation levels – Have higher need for sensation .

Consumer Materialism • Possessions seen as for one’s identity • Materialistic People – Value acquiring and showing-off possessions – Are particularly self-centered and selfish – Seek lifestyles full of possessions – Have many possessions that do not lead to greater happiness .

Consumer Ethnocentrism • Ethnocentric consumers feel it is wrong to purchase foreign-made products. . • They can be targeted by stressing nationalistic themes.

Research Insight: From Consumer Materialism to Compulsive Consumption – The extent to which a person is considered “materialistic” • Fixed Consumption Behaviour – Consumers fixated on certain products or categories of products • Compulsive Consumption Behaviour – “Addicted” or “out-of-control” consumers .

• Fixated Consumption Behaviour Consumers have – a deep interest in a particular object or product category – a willingness to go to considerable lengths to secure items in the category of interest – the dedication of a considerable amount of discretionary time and money to searching out the product • Examples: collectors. hobbyists .

4. while knowing I had very little money left. I have an irresistible urge to go into a shop to buy something. I have often bought a product that I did not need. 2. . 5. As soon as I enter a shopping center.Sample Items to Measure Compulsive Buying 1. When I have money. I am one of those people who often responds to direct mail offers. I cannot help but spend part or the whole of it. I am often impulsive in my buying behaviour. 3.

Brand Personality • Personality-like traits associated with brands • • • • • TATA .Dependable and Rugged .Safety Ambi Pure .The Athlete BMW .Performance Levi’s 501 .Freshness Nike .

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Figure 4-11 (continued) .

Personality and Marketing Strategy • Identify relevant personality traits • Target consumers with the relevant personality traits • Develop promotional messages that appeal to consumers with specific personality traits • Develop a personality for the brand .

Self and Self-Image • Self-image: A person’s perceptions of his/her self • People have multiple selves – Different selves in different situations .

Different SelfImages Actual SelfIdeal SelfImage Image Ideal Social Self-Image Social SelfImage Expected Self-Image .

Different Self-Images • Actual Self-Image – How you see your self • Ideal Self-Image – How you would like to see yourself • Social Self-Image – How you think others see you • Ideal Social Self-Image – How you would like others to see you .

Different Self-ImagesCont’d • Expected Self-Image – How you expect to be in the future • “Ought-to” Self – The qualities that you think you should possess .

Possessions Act as SelfExtensions • By allowing the person to do things that otherwise would be very difficult • By making a person feel better • By conferring status or rank • By bestowing feelings of immortality .

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consumers may use products to alter their selves • Personality vanity: self interest or admiration for one’s own appearance/achievements .Altering Self Images • If actual and ideal self-images are different.

Internet Insight: Virtual Self • Online individuals have an opportunity to try on different personalities • Virtual personalities may result in different purchase behaviour .

interests and opinions • Psychographic-demographic profiles • Geodemographic segmentation .Life Style and Psychographics • Psychographic Segmentation – Segmenting consumers on the basis of their activities.

Life Styles and Marketing Strategy • Use life styles for segmentation and positioning • Develop media campaigns based on consumer life styles .

The Importance of Families and Households on Consumer Behavior .

The Importance of Families and Households on Consumer Behavior • Many products are purchased by a family unit • Individual’s buying decisions may be heavily influenced by other family members .

The Importance of Families and Households on Consumer Behavior How families make purchase decisions depends on the roles of the various members in the purchase. consumption. and influence of products .

.Families and Households Family: A group of two or more persons related by blood. mother. and child(ren) living together. or adoption who reside together. Nuclear family: Immediate group of father. marriage.

plus other relatives such as grandparents. Family of procreation: family established by marriage. Some families are extending these definitions to include pets. .Families and Households Extended family: nuclear family. cousins. Family of orientation: family into which one is born. uncles and aunts. and parentsin-law.

© AP/Wide World Photos Pets Are Family Members Too .

Families and Households Household: All persons. who occupy a housing unit . both related and unrelated.

Families and Households •Nonfamily households include: •Elderly persons living with nonfamily members •Persons of the opposite sex sharing living quarters •Friends living together •Same-sex couples .

Families and Households • Families are the largest single category of households • Rapid rise in the number of nontraditional families and non-family households • Any of these types of households may or may not include children • Buying behavior is best described by the term consumer unit (CU) or .

Structural variables affecting Families and Households •Age of head of household or family •Marital status •Presence of children •Employment status Marketers monitor these variables to predict changes in demand for specific products and categories .

critical to movement on the other two . role relationships.Families and Households Sociological variables affecting families and households: Cohesion: Emotional bonding between family members Adaptability: Ability of a family to change its power structure. and relationship rules in response to situational and developmental stress Communication: Facilitating dimension.

rituals.Families Celebrations and Gift Giving Marketers frequently refer to resilient families who emphasize time spent together through family traditions. and celebrations .

Families Celebrations and Gift Giving Gift giving and family holidays are increasing in importance Traditional holiday spending and promotions have shifted to other holidays throughout the year Physical movement of large gifts have become difficult leading to increase sales of gift certificates. gift cards. and Internet gift purchases .

performance. and other functions performed by group members (also known as functional or economic roles). .Who Determines What the Family Buys? Instrumental roles: Financial.

Who Determines What the Family Buys? Expressive roles: Involve supporting other family members in the decisionmaking process and expressing the family’s aesthetic or emotional needs including upholding family norms. .

Role Behavior Individual roles in family purchases .

Decider: Person with the financial authority or power to choose how the family’s money will be spent on which products and brands. .Role Behavior Individual roles in family purchases Initiator/gatekeeper: Initiator of family thinking about buying products and gathering information to aid decisions. Influencer: Individual whose opinions are sought concerning criteria and which products or brands most likely to fit those criteria.

Role Behavior Individual roles in family purchases Buyer: Person who acts as the purchasing agent by visiting the store. bringing products into the home and so on. writing checks. calling suppliers. User: Person or persons who use the product .

Role Behavior Different family members will assume different roles depending on the situation and product Children may be influencers and users for items (such as cereals and toys) while parents may be the decider and the buyer .

. including the relationship between purchaser and family consumer and between purchaser and purchase decision maker.Role Behavior Family marketing focuses on the relationships between family members based on the roles they assume.

Role Behavior Family marketing differentiates scenarios in which some purchases may have more than one decision maker from those that have more than one consumer .