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CONSUMER BEHAVIOUR

Why Study Consumer Behaviour ?


• "Consumers" or "Customers" People who finally BUY the goods & services
Organizations / firm always on the move to make them buy, to earn
revenue.
• Study of Consumer Behaviour (CB) is crucial for both.
• Customers' point of view:
• Customers today are in a tough spot : Highly developed & technologically
advanced society; Many choices & options (and often very close &
competing)
• All the 4 ‘P’s of Marketing mix come in to play. How to decide, where to
give loyalty:
• 1st P - Product 2nd P – Price 3rd P – Place
4th P - Promotion
• Marketers' point of view:
• Basic principle : Sell more for more money to make more profit. Can't be
achieved by force, aggression or plain alluring from more informed, more
knowledgeable, more demanding, more discerning customers. Further
many Marketers. Marketers have to earn them or win them over.
Study of consumer behavior (CB)
• Global marketplace is study in diversity, diversity among consumers, producers,
marketers, retailers, advertising media, cultures, and customs and of course the
individual or psychological behavior (many similarities among prevailing diversity).
• CB Study provide:
• Conceptual and technical tools to enable the marketer to apply them to marketing
practice, both profit & non-profit.
• Enable to understand and predict buying behavior of consumers (not limited to
what, when, where how they buy, but also how they consume it & dispose it.
• Methodology used is Consumer research. Cover every phase of consumption
process: before purchase, during purchase & after purchase. Two different buyers
buy same product for different reasons, pay different prices, use in different ways,
have different emotional attachments and so on.
• “Consumer Behaviour is one of the most important in business education,
because the purpose of a business is to create and keep customers” Professor
Theodore Levitt, Harvard Business School.
• Quality of marketing strategies depends on knowing, serving, and influencing
consumers. Knowledge & information about consumers is critical for developing
successful marketing strategies - challenges marketers to think & analyze the
relationship between the consumers & marketers, and the consumer behaviour &
the marketing strategy.
Consumer Behavior: The Basics
• Misconception: CB is for sophisticated & bigger
corporations. Nothing could be farther from the truth. CB
teach companies of all sizes about consumption patterns of
consumers & internal/external influences that affect
customers. Target is to motivate customers to purchase.
• CB represents the study of individuals & activities to satisfy
their realized needs. Satisfaction comes from processes
used in selecting, securing, and using products/ services,
when benefits received meet or exceed consumers’
expectations. When an individual identify his need,
psychological process start to find ways to fulfill the need
(thoughts, feelings, and behavior). When process is
complete, he will take action to fulfill the need.
Consumer Behavior: The Basics
Definition :
• It's the behaviour displayed by the consumers during the acquisition, consumption
and disposition of products, services, time and ideas by decision making units.

CB answers the following questions:

• ✓ Why do consumers buy? reinforce self-concepts: maintain lifestyles: become


part of a group or gain acceptance in a group; cultural identity

• ✓ What internal and external factors influence their purchases? Consumer is


influenced internally by his own attitudes, self-concepts, personality, perceptions
& emotions and externally deal with household structure, group association &
cultural beliefs.

• ✓ Who do they buy from? from businesses that fulfill psychological needs by
making them feel welcome, understood, important, and comfortable.

• ✓ When do they buy? Consumers buy based on their consumption patterns,


determined by their family life cycles and household structures.
Consumer Behavior: The Basics
• How do they purchase? Consumers go through a decision-making process
that guides them for purchases. This process takes into account both
internal and external influences of the consumer. CB provides a wealth of
information about the individuals that purchase products and services.
When you understand a consumer, you can speak directly to him and his
needs. This special communication not only increases the consumer’s
ability to understand the value in your product, but it also increases sales.
Consumers buy what they understand and what they see value in.

• CB also provides you with insight on how to create an effective marketing


strategy. Remember evaluation and understanding of CB should always
come before the development of a marketing strategy or plan. When you
understand your consumers better than your competitor, you have a
greater chance of winning their business. When you’re equipped to speak
and market directly to consumers and the needs they’re facing, you can
help walk them through the decision-making processes and counteract
any negative influences they may encounter in the process.
Consumer Decision Making Process

• Example: You go to nearby retail store to buy a laptop. See all models and
select one. You are consumer and the laptop is the product you wanted to
purchase.
• Why you went to the nearby store to purchase a new laptop? Your need
took you to store. Your need could be due to any of the following reasons:
• Old laptop was giving him problems.
• Wanted a new laptop to check personal mails at home.
• Wanted to gift a new laptop to his wife.
• Needed a new laptop to start own business.
• Store manager showed you all samples available with him and explained
the features and specifications of each model. This is called information.
You checked few other options also. The information can come from
various other sources such as newspaper, websites, magazines,
advertisements, billboards etc. This explains the consumer buying decision
process.
• A consumer goes through several stages before purchasing a product or
service
Stages in Consumer Decision Making Process
• NEED

INFORMATION GATHERING/SEARCH

EVALUATION OF ALTERNATIVES

PURCHASE OF PRODUCT/SERVICE

POST PURCHASE EVALUATION
• Step 1 - Need most important factor is like catalyst which triggers the buying
decision of individuals.
• Step 2 - When an individual recognizes his need, he tries to gather as much
information as he can. Many sources, like Personal, Commercial, public &
Experiential sources - Individual’s own experience.
• Step 3 - To evaluate the various available alternatives and choose the best option
available as per his need, taste and pocket.
• Step 4 - Customer finally purchases the product.
• Step 5 - Post purchase evaluation i.e. whether the product was useful or not, or it
fulfilled the need or not?
Many factors can influence the individual throughout this process. By
understanding CB, you can help consumer through this process smoothly, even you
can influence the entire process and not just the purchasing decision.
Types of Consumer Buying Behavior (CBB)
Types of CBB are determined by:
• Level of Involvement in purchase decision. Importance and intensity of
interest in a product in a particular situation.
• Buyers level of involvement determines why he/she is motivated to seek
information about a certain products and brands but virtually ignores
others.
• Higher the risk the higher the involvement. Types of risk include, Personal
risk, Social risk & Economic risk

Four type of CBB:


• Routine Response/Programmed Behavior
• Limited Decision Making
• Extensive Decision Making/Complex high involvement
• Impulse buying- no conscious planning.
The purchase of the same product does not always elicit the same CBB, it
can shift to other category.
Recognizing Factors that Influence the
Purchase Decision
• Many factors play a part. There are two categories of
influence regarding the purchase decision:
• ✓ Internal influences: These influences include
perceptions, attitude, lifestyle, and roles.
• ✓ External influences: These influences include
cultures, subcultures, household structures, and groups
that have an effect on the individual.

• Every situation and influence is different.

• Internal influences come from inside the consumer.


Personal Factors affecting Consumer
Behaviour
1. Occupation
2. Age
3. Economic Condition -The buying tendency of
an individual is directly proportional to his
income/earnings per month
Psychological Factors affecting
Consumer Behaviour
• Motivation and emotion
• Example : You go to a nearby restaurant and ordered pizza.
• Why did You buy pizza ? You felt hungry and wanted to eat
something.
• Here Hunger was the motivating factor. Recognition and self esteem
also influence the buying decision of individuals.
• Why do people wear branded clothes ?
• Motivation and emotions serve as the emerging forces within
consumers that activate certain behaviors. Motivation is the
persistent need that stirs up and stimulates long-term goals within a
consumer. Emotions are temporary states that reflect current
changes in motivation. They also often trigger changes in behavior.
Perception

Individuals with the same needs might not purchase similar products
due to difference in perception. Individuals perceive similar
situation differently due to difference in the way they interpret
information.
1. There are three different processes which lead to difference in
perception:
2. Selective Attention - Individuals pay attention to information that
is of use to them or their immediate family members.
3. Selective Distortion - Consumers tend to perceive information in a
way which would be in line to their existing thoughts and beliefs.
4. Selective Retention - Consumers remember information which
would be useful to them.
Perception is representative of how a consumer processes and
interprets information.
Attitude

• Attitude is that lasting general evaluation of something. It


represents how consumers feel about products, services,
and companies. Attitudes can tell you a lot about your
consumers and how well you’re accepted in the
marketplace. Remember consumers easily screen
information that conflicts with their own attitudes.

• The good news is that you can influence attitudes. In fact,


when you combine knowledge with a positive or negative
attitude about a specific object or product, you drive the
perception of that consumer. Example – negative
perception for Reliance and positive perception for TATA
Self-concept and lifestyle

• An individual’s personality also affects his buying behavior. A fitness freak


would always look for fitness equipments whereas a music lover would
happily spend on musical instruments, CDs, concerts, musical shows etc. A
self-concept represents how an individual sees herself. Four self-concepts
typically impact individuals and their consumer behavior:

• ✓ Actual self, which is reflective of how the individual actually is today


• ✓ Ideal self, which represents how the individual would like to be
• ✓ Private self, which is the self that’s intentionally hidden from others
• ✓ Public self, which is the self that’s exposed to the public

• Self-concepts explain why consumers wear certain fashions, purchase


particular products, and drive specific cars. They determine a consumer’s
behavior, because they represent how a consumer sees herself and how
she thinks other people see her. When you understand the roles of self-
concepts, you can use them to better target your marketing message and
advertising to reach potential customers
• Lifestyle, a term proposed by Austrian psychologist Alfred Adler in
1929, refers to the way an individual stays in the society. It is really
important for some people to wear branded clothes whereas some
individuals are really not brand conscious. An individual staying in a
posh locality needs to maintain his status and image. An individual’s
lifestyle is something to do with his style, attitude, perception, his
social relations and immediate surroundings. Lifestyle also
represents a consumer’s income level, culture, social class, and
buying power. It help you to gain a greater grasp of the lifestyles of
your consumers, you can target promotional plans to those
consumers. You also can identify market opportunities.
• Learning comes only through experience. An individual comes to
know about a product and service only after he/she uses the same.
An individual who is satisfied with a particular product/service will
show a strong inclination towards buying the same product again.
Beliefs and Attitude

• Beliefs and attitude play an essential role in


influencing the buying decision of consumers.
Individuals create a certain image of every
product or service available in the market.
Every brand has an image attached to it, also
called its brand image.
• A product might be really good but if the
consumer feels it is useless, he would never
buy it.
External influences

• Consumers are faced with many external


influences, including an individual’s culture,
subculture, household structure, and groups
that he associates with (external influences
because the source of the influence comes
from outside the person rather than from
inside). Can call them sociocultural influences.
Culture and subculture

• The culture of an individual shapes his/her values, beliefs, attitudes,


and opinions, which in turn shape her attitude toward products and
buying decisions. Cultural factors comprise of set of values and
ideologies of a particular community or group of individuals. What
an individual learns from his parents and relatives as a child
becomes his culture.
• Example - In India, people still value joint family system and family
ties.
• Cultural factors have a significant effect on an individual’s buying
decision. Every individual has different sets of habits, beliefs and
principles which he/she develops from his family status and
background. What they see from their childhood becomes their
culture.
• Example- Females in West Bengal or Assam would prefer buying
sarees as compared to Westerns
Culture and subculture

• Each culture further comprises of various subcultures such


as religion, age, geographical location, gender
(male/female), status etc.
• Religion (Christianity, Hindu, Muslim, Sikhism, Jainism etc)
• A Hindu bride wears red, maroon or a bright color lehanga
or saree whereas a Christian bride wears a white gown on
her wedding day. It is against Hindu culture to wear white
on auspicious occasions. Muslims on the other hand prefer
to wear green on important occasions.
• A sixty year old individual would not like something which
is too bright and colorful. He would prefer something which
is more sophisticated and simple. On the other hand a
teenager would prefer funky dresses and loud colors.
Culture and subculture
• Status (Upper Class, Middle class and Lower Class)
• Gender (Male/Female)
• People generally make fun of males buying fairness creams as in our culture only
females are expected to buy and use beauty products. Males are perceived to be
strong and tough who look good just the way they are.
• In fact, culture can create a consumer need, influence the satisfaction of needs,
and dictate how an individual meets that need. Products and services that
resonate with the priorities of a specific culture have a much better chance of
being accepted by consumers. Cultural values are transmitted through the family,
religious organizations, and education institutions. You can use this information to
gain a better understanding of the values that specific cultures teach.

• Subculture represents a group of individuals within a culture that have unifying


characteristics. A subculture is often representative of a particular nationality,
religion, racial group, or geographic group. You can use these unifying
characteristics to market directly to a subculture. You can target consumers more
directly with your marketing and create messages that are more appealing and
enticing when you understand the subcultures of consumers.
Groups

• Groups represent two or more individuals who share a set


of norms, values, or beliefs. Examples include peer
groups, school groups, business groups, and clubs. You
market to the mass of a group by using the leader’s
endorsement.
• Reference Groups
• Every individual has some people around who influence
him/her in any way. Reference groups comprise of people
that individuals compare themselves with. Every individual
knows some people in the society who become their idols
in due course of time.
• Co workers, family members, relatives, neighbors, friends,
seniors at workplace often form reference groups.
Groups
– Primary Group -
• Friends
• Family Members
• Relatives
• Co Workers
• We tend to pick up products our friends recommend.
• Every individual goes through the various stages and shows a different
buying need in each stage:
• Bachelorhood: Alcohol, Beer, Bike, Mobile Handsets (Spends Lavishly)
• Newly Married: Tend to purchase a new house, car, household furnishings. (Spends
sensibly)
• Family with Children: Purchases products to secure his as well as his family’s future.
• Empty nest (Children getting married)/Retirement/Old Age: Medicines, Health
Products, and Necessary Items.
• Secondary Groups - Secondary groups share indirect relationship with the
consumer. These groups are more formal and individuals do not interact
with them on a regular basis, Example - Religious Associations, Political
Parties, Clubs etc.
Role in the Society

• Each individual plays a dual role in the


society depending on the group he belongs
to. An individual working as Chief Executive
Officer with a reputed firm is also someone’s
husband and father at home. The buying
tendency of individuals depends on the role
he plays in the society.
Social Status

• An individual from an upper middle class


would spend on luxurious items whereas an
individual from middle to lower income group
would buy items required for his/her survival.
Household structures
• Household structure represents how many live in a home, what the ages of
the occupants are, and what the household income is. Household
structure is important to consumer behavior because the structure affects
the consumption and purchasing patterns of the individuals within the
home. Each member of the household structure also has a role in the
decision-making process, and when you understand those roles, you can
be more effective in helping those
• It’s also important to understand the difference between traditional and
non-traditional households. Doing so helps you determine each
household’s needs, thereby marketing to those needs in a way that’s
appealing to the consumers. Finally, you need to take into account family
life cycles, because they too have an effect on consumers and their
consumption patterns and needs. Marketing to families isn’t as easy as it
use to be, because there are a variety of situations and changing roles that
need to be considered. However, consideration of these issues puts you
ahead of your competitors and enables you to gain sales that you may be
missing out on.
How Consumer Behavior Can Guide
Your Marketing Strategy
• CB refers to the study of buying tendencies of
consumers. An individual who goes for shopping does
not necessarily end up buying products. There are
several stages a consumer goes through before he
finally picks up things available in the market. Various
factors, be it cultural, social, personal or psychological
influence the buying decision of individuals.
• Marketers need to understand the CBB for their
products to do well. It is really important for
marketers to understand what prompts a consumer
to purchase a particular product and what stops him
from buying.
What marketers need to understand ?
• The psychology of consumers (what they feel about a particular product
and their brand on the whole).
• What a consumer thinks when he goes out for shopping ?
• A marketer needs to first identify his target consumers and understand
their lifestyles, psychologies, income, spending capabilities, mentalities to
offer them the right product.
• Individuals from lower income group would never be interested in buying
expensive and luxurious products like Mercedes or a Rado watch.
• It is really essential for the marketers to understand the needs of
consumers. Find out what they are actually looking for? There are ideally
two different ways which enable marketers to understand their
consumers.
• Primary Research
• Secondary Research
Primary & Secondary Research

• Primary Research - Refers to a research methodology


where marketers interact with consumers directly and
gather as much information as they can. Information is
generally collected through surveys, questionnaires,
feedback forms, interviews etc.
• Secondary Research - Secondary Research often refers to
relying on information which has been collected by others
at some point of time.
• It is also important to give complete information to end-
users. Do not hide anything from them. It is not ethical. All
tobacco products come with a warning. Individuals should
be familiar with not only the benefits but also the side
effects of the products.
Marketers must also take into
account
• Age group of consumers
• Geographical location
• Lifestyle of consumers
• Social Status of consumers

Funky designs, loud colours would be a hit among teenagers whereas


middle aged and elderly people would prefer subtle colours and
sophisticated designs.
Salwar Suits are extremely popular in North India whereas females prefer
saris and skirt blouses in eastern and southern parts of India.
Individuals from posh localities and good jobs would show keen interest
towards buying exclusive and unique products as compared to individuals
who do not come from an affluent background.
Many components come into play with consumer behavior, but the power
is in knowing how to understand and influence that behavior. The
knowledge of consumer behavior actually allows you to improve your
marketing strategy.
Researching the market to find
commonalities
• Market research is the key to understand your consumers
and their behavior. It’s the systematic collection, recording,
analyzing, and distributing of marketing data. It ensures
that you produce what your consumers really want and
need — not just what you think they need. Market
research is the function that links the consumer and the
public to the marketer. You use the information that you
gather in research to identify marketing opportunities as
well as problems.

• Finally, we must understand the process of market research


from defining a problem to analyzing your findings and
presenting them in a report.
Breaking the overall market into the
segments you’ll target
• Segments are market groups within the total market that
are made up of people who have similar needs. When you
can recognize a segmented group, your marketing
opportunities increase and you gain the highest return on
your marketing. That’s because segmenting enables you to
focus on the customers that are most likely to purchase
your products or services — those individuals that are most
interested in what you have to offer.

• Segmenting, which is cost-effective and makes your


marketing easier, allows you to delve into the behavior of
consumers. It also assists you in identifying their needs. In
turn, you can position your product in a way that shows
them how you fulfill an unmet need that they have
Uncovering the untapped markets

• Determining new marketing opportunities and


identifying untapped markets can help you grow
your business. Untapped markets represent
markets that you haven’t yet entered and that
your competitors may not be aware of. When you
get into untapped markets, you identify new ways
to grow your business by opening up doors for
consumers who may not be familiar with you yet.
You can identify untapped markets by taking the
time to examine your consumer base and
understand your market.
Creating a Consumer-Driven
Marketing Plan
• Marketing isn’t just about flashy advertisements and fancy commercials. And it
isn’t just about creating awareness; it’s about gaining new customers. The only
way that you gain new customers is by creating a marketing plan that’s
intentionally consumer driven. With a consumer-driven marketing plan, you do all
the following:

✓ Listen and speak directly to consumers and tell them that you understand their needs.
✓ Position your products in a way that shows them that you fulfill their unmet needs.
✓ Gain their attention by providing them with the education they need to make good purchasing
decisions.
✓ Share with them the reasons they should adopt new products and accept the changes that you
make to existing products.
✓ Gain their committed loyalty and make them want to be a customer for life.

• All of these tasks help you create a marketing plan that not only benefits your
business but benefits the consumer by creating an awareness that causes them to
want to purchase your product
Practicing integrity
• Marketing ethics impact both the consumer
and your business. When it comes to
marketing, you must build trust with your
consumers. Unethical marketing behavior
affects the emotions, attitudes, and
perceptions of consumers — whether it
happens to them directly or they just hear
about it. Your integrity is not only what gains
new customers; it’s also what helps you keep
them.
Inducing need awareness through
positioning
• Positioning is the act of creating a unique identity for whatever it is that
you’re selling and then targeting a segment of the broader market by
fitting your product or service to that segment’s wants and needs. In order
to get consumers to recognize that your product fits their needs, you must
figure out what the consumers in your target market need and want, what
you have to offer them, what your benefits are, and who your competitors
are (including how you’re different from them). You use this information
to create a positioning strategy and statement. These tools help you reach
out to your targeted consumers. They communicate, identify your
company, and differentiate it and its products from the competition.
When positioning your product or service, you proceed through two
separate steps. First you have to differentiate your product or service
from its competition, and then you address the consumer’s need or
desire. These steps form the basis for the articulation of what your
product does, which is also known as your positioning statement. Within
each of the two steps are three strategies you can use to reach out to your
target market
Engaging consumers’ attention and
leading them to purchase
• You must create value for your consumers to shape and
cultivate their perceptions. You create value by focusing on
what your consumers believe is essential. It isn’t enough to
get consumers to notice whatever you’re selling; you must
educate them about the value and benefits of your offering
in order to overcome any objections regarding the
purchase of it. The key is to present the benefits of your
product in a way that consumers understand. You also need
to develop a unique selling proposition (or USP). A USP is a
statement that sets you apart from the competition. It
paves the way for your positioning strategy and statement.
When you identify your USP, you find something
meaningful and unique to say about your product that
competitors either can’t or won’t say.
Convincing customers to adopt new
products and changes in terms
• Why so many new products fail? Well, the truth is that it’s often
because business owners don’t understand the adoption process.
They don’t know what it takes for a consumer to adopt a new
product. Consumers go through a series of evaluation steps when
adopting new products. This process often involves the give and
take. In other words, they determine what they have to give up in
order to take in the benefits of a new product. Consumers are
inundated with new products every day. So when trying to get
consumers to adopt a new product, it helps to understand the
product life cycle and to identify what phase your products are in.
You also need to be able to identify characteristics of the different
adopter categories that consumers fall into. This way you can speak
directly to any apprehensions they may have and gain a better
understanding of their readiness to purchase. Just remember that
you can influence new product adoption by simply understanding
the adoption process that consumers go through.
Convincing customers to adopt new
products and changes in terms
• Consumers also face a great deal of challenge when it comes to accepting
changes in the terms of your existing product. Term changes can be any
change that you make to your current products. Examples include a
change in benefits, a change in price, or a change in distribution. You can
help consumers in the transition of change. One way is to take into
account how your consumers will view the change and whether they will
see it as a “gain” or a “loss.” Then you can develop a marketing strategy
that speaks directly to the challenges the consumer may be feeling. This
strategy helps to increase the rate of adoption to the change and save you
the loss of customers who otherwise may stop buying your product. We
must understand what it takes to get consumers to adopt your new
products and how to overcome adoption challenges and the reasons that
consumers are apprehensive to adopt new products and what you can do
to soothe those concerns. Take a look at the challenges that consumers
face when being presented with changes to your current products and
how you can help them in the transition of accepting those changes
Encouraging customer loyalty

• Success is about getting consumers to continually buy from you,


because it’s easier to gain loyalty from a current customer than it is
to gain a new customer. You can gain consumer loyalty by
understanding how consumers learn and by using techniques that
help them remember you. Consumer loyalty really comes from
meeting the emotional needs of consumers. Those needs include
the need to be understood, feel important, feel welcomed, and feel
comfortable. You can meet these needs and encourage consumer
loyalty by providing consumers with expertise, attention,
friendliness, flexibility, patience, and superiority in your products
and your services. This is done by communicating and creating
relationships with consumers. Customers carry a great deal of value
when they’re loyal to you. So it’s important to be able to gauge and
nurture the relationship that you have with your consumers and to
be able to turn satisfied customers into loyal customers.