CONSUMER BEHAVIOUR

A Journey into the Psyche of

Consumers
 CONSUMER BEHAVIOUR

Behaviour that consumers display in searching for,

purchasing, using, evaluating and disposing of
products and services that they expect will satisfy their
needs

In order to analyze consumers, marketers need answers to the

following questions:

 Who Buys?
What is their demographic, geographic, psychographic or
behavioral orientation?
 What is Bought?
Is it a core service, augmented
service, etc.
 CONSUMER BEHAVIOUR
 Why is the Purchase Made?
Influences on purchasing – family, culture, friends,
marketers, age, social status, etc.
 How Often is the Service Availed?
Frequency of purchase, number of purchases, etc.
 Where is the Service Availed?
Location, convenience, online, offline, etc.
 When is the Service Availed?
Time, season, occasion, etc.
 How is the Service Availed?
Decision making process
Consumer Behavior Is Interdisciplinary
 Psychology
 Social psychology
 Sociology
 Anthropology
 Economics
SUCCESSFUL RELATIONSHIPS

Customer Customer
Value Retention

Customer
Satisfaction
 SUCCESSFUL RELATIONSHIPS

Customer Value
 Defined as the ratio between the customer’s perceived
benefits and the resources used to obtain those benefits
 Perceived value is relative and subjective
 Developing a value proposition is critical
 SUCCESSFUL RELATIONSHIPS

Customer Satisfaction
 The individual's perception of the performance of the
product or service in relation to his or her expectations.
 Customers identified based on loyalty include loyalists,
apostles, defectors, terrorists and hostages
SUCCESSFUL RELATIONSHIPS

Customer Retention
 The objective of providing value is to retain highly
satisfied customers.
 Loyal customers are key
 They buy more products
 They are less price sensitive
 They pay less attention to competitors’ advertising
 Servicing them is cheaper
 They spread positive word of mouth
 ROLES PLAYED BY THE FAMILY
MEMBERS

 Initiators
 Gatekeepers
 Influencers
 Decision makers/Decider
 Purchasers/ Buyer
 Users
Consumer Decision Making Model
Characteristics Affecting Consumer Behaviour

Culture
Social
Personal
Psychological
Buyer
Buyer
 CULTURE

Most
Mostbasic
basiccause
causeof
ofaaperson's
person'swants
wantsand
andbehavior.
behavior.
Values
Values
Perceptions
Perceptions

Subculture
Subculture Social
SocialClass
Class
••Groups
Groupsofofpeople
peoplewith
withshared ••People
shared Peoplewithin
withinaasocial
socialclass
class
value
valuesystems
systemsbased
basedon
oncommon
common tend
tendto
toexhibit
exhibitsimilar
similarbuying
buying
life
lifeexperiences.
experiences. behavior.
behavior.
••Religions
Religions ••Occupation
Occupation
••Racial
RacialGroups
Groups ••Income
Income
••Nationalities
Nationalities ••Education
Education
••Geographic
Geographicregions
regions ••Wealth
Wealth
 SOCIAL FACTORS

•• Reference
Reference Groups
Groups
•• Membership,Aspirational
Membership,Aspirational
•• Dissociative
Dissociative
Opinion
Opinion Leaders
Leaders

Family
Family Social
Social Factors
Factors
••Husband,
Husband,wife,
wife,kids
kids
••Influencer,
Influencer,buyer,
buyer,user
user

Roles
Roles and
and Status
Status
 PERSONAL FACTORS
Personal
Personal Influences
Influences

Age
Ageand
andFamily
FamilyLife
LifeCycle
Cycle Occupation
Stage Occupation
Stage

Economic
EconomicSituation
Situation Personality
Personality&&Self-Concept
Self-Concept

Lifestyle
Lifestyle Identification
Identification

Activities
Activities Opinions
Opinions

Interests
Interests
 PSYCHOLOGICAL FACTORS

Motivation

Psychological
Memory Factors Perception

Learning
 Purchase Process for Services
Need Recognition

Information search Pre Purchase Stage

Evaluation of Alternative Service Providers

Review Documentation
Consult Others
Visit possible service suppliers

Request Service from Chosen Supplier/Self Service

Service
Encounter
Service Delivery

Evaluation of Service Performance

Post
Purchase
Future intentions
 Pre-purchase Stage
• Problem Recognition
– Actual state Vs. Desired state of affairs
– Greater the difference between the two, greater that need
to act, i.e., purchase.
– PR can be influenced
• Internal stimuli such as hunger, feelings, or other stages
of the Maslow’s Need Hierarchy, etc.,
• External stimuli such as friends, family, marketers, etc.,
or a combination of the two stimuli.
 Pre-purchase Stage
• Information Seeking or Search
– The rational reason for searching for information before a
purchase is to reduce the risk of making the wrong purchase.
The type of search (internal vs. external) depends on a host of
factors
Internal Search Situations External Search
Situations
High Confidence Level Low Confidence Level
Frequently Bought Item Infrequently Bought
Product/service Unchanged Item/service
Low Risk, Low Priced Item Rapidly Changing
Products
Hi Risk, Hi Priced
Product
 Pre-purchase Stage
• Evaluation of alternative products, brands, and purchase
outlets.
– Consumer identifies potential suppliers& than weighs the
benefits & risks of each option

– In this case, consumer try to match anticipated performance

with certain evaluative criteria such as quality, price, brand
name, brand loyalty, etc.

– Certain heuristics are also employed by consumers to simplify

and speed up the decision making process. Even though high
price might be a negative factor, he or she is likely to expect the
high quality of the brand to compensate for it.
 Pre-purchase Stage
• Type of Risk
 Functional (unsatisfactory performance outcomes)
 Financial (monetary loss, unexpected cost)
 Temporal (Wasting time, delays)
 Physical (Physical injury or damage)
 Psychological (Personal fears or emotions)
 Social (How others think & react)
 Sensory (unwanted impact on any of the five senses)
 Pre-purchase Stage
• The choice of the product, brand, or outlet

– The decision to purchase a specific brand is a complicated one.

Consumers sometimes tend to procrastinate the actual purchase
for various reasons.
– In other words, buying intentions do not always translate into
actual purchases. For instance, situational influences such as
illness, losing a job, changes in family status, etc. can halt the
purchasing process.
– Marketers, on the other hand, try to offer certain incentives to
buy now than later.
– In this networked economy, consumers are also confronted with
a choice of buying either offline or online.
 Service Encounter Stage
• Begins with submitting the application, requesting a
reservation or placing an order
• Contacts may take the form of personal exchanges between
the customer & service provider or impersonal interactions
• In high contact services, customers may become actively
involved with one or more service processes
• Experience a variety of elements during service delivery
which provide clues for service quality
 Types of Service Encounters
• As the level of customer contact with the service operation
increases, there are likely to be long & more service
encounters (eg. Traditional banking, person to person
telephone banking & internet banking)
• High Contact Services:
– Involves personal visit of the customer to the service facility,
active involvement with the service organization & its personnel
during service delivery
• Low Contact Services
– Involve little, if any physical contact between the customer &
service providers. Contact takes place through medium of
physical distribution channel- mail, telephone , internet etc.
 Service Marketing System

 Represents all the ways in which the customer may

encounter or learn about the organization in question
 Because services are experiential each of these elements
offers clues about the nature & quality of the service
product
 Inconsistency between the various elements may weaken
the organization’s credibility in the customer’s eyes
 Service marketing System for High Contact Service
Service Operation Service Delivery System
Other Contact Points
System

Other Advertising
Interior & Exterior
Facilities customers
Sales Calls

Technical Marketing research

Core Equipments The Billing
Customer
Mails, Phone calls

Chance Encounters
Service People Other

Back Stage Customers Word of Mouth

(Invisible)
Front Stage
(Visible)
 Services marketing System for Low Contact Service
Service Operation Service Delivery System
Other Contact Points
System

Mail
Advertising

Self Service Marketing research

Technical Equipment
Core The Billing
Customer
Random Exposures to
facility
Phone, Fax,
Websites Word of Mouth

Back Stage
(Invisible) Front Stage
(Visible)
 Customer Expectations

Components of Customer Expectations

 Desired Service Levels: “Wished for” level- the type of service
the customers hope to receive based on what they believe can &
should be delivered in text of their personal needs.

 Adequate Service Level: Minimum level of service that the

customer will accept without being dissatisfied. It is dependent
upon situational factors, level of service that might be
anticipated from alternative suppliers.

 Predicted Service Level: Anticipated Service

Anticipated service level Adequate level will be
higher
 Customer Expectations

Zone of Tolerance
 The inherent nature of services makes consistent service delivery
difficult across employees,
 The extent to which the customers are willing to accept this
variation is the Zone of Tolerance

Personal needs Explicit & Implicit

Desired Services Service Promises
WOM
Belief of what is Past Experiences
possible
Zone of
Tolerance
Perceived Service
Alterations
Adequate Services Predicted Services
Situational Factors
 Post-purchase Stage
Generally there are three outcomes at the end of the
process:
– Performance/service quality equals expectations leading to
satisfaction with the brand
– Performance/service quality greater than expectations leading
to positive feelings about the brand
– Performance/service quality lower than expectations leading to
dissatisfaction with the brand.
• In all three situations, the result is likely to be internalized by
consumers, stored in memory and retrieved later.