Consumer

Behavior
 The Consumer

 One that consumes, especially one that

acquires goods or services for direct use
or ownership rather than for resale or
use in production and manufacturing.

 Concern over the best interests of

consumers has spawned much activism,
though it is still very rudimentary in
countries like ours.
Definition of Consumer Behavior
 Consumer Behavior is individuals or groups
acquiring, using, and disposing of products,
services, ideas, or experiences
 Consumer behavior also includes the
acquisition and use of information
 Acts of individuals directly involved in
obtaining and using economic goods and
services, including the decision processes that
precede and determine, and follow these
acts.
 Development of
Consumer Behavior
 Impact of the marketing concept
 Pace of new products (launches)
 Shorter PLCs
 Growth of segmentation
 Interest in consumer protection and the
environment
 Consumerism
 The equation of personal happiness
with consumption and the purchase of
material possessions.

 “The promotion of the consumer's interests"

or alternately "the theory that an increasing
consumption of goods is economically
desirable".

 Anti-consumerism is the socio-political

movement against consumerism.
 Types of Consumers
Personal Consumer
Is the individual who buys goods for his or
her own use.

Household Consumer
Is the individual or group of individuals that
buy goods for the household or family unit.

Organisational Consumer
Includes private businesses, government
departments and agencies, and institutions.
 Seven Keys to Consumer Behavior
KEY I Consumer behavior is motivated
KEY II Consumer behavior includes many activities
KEY III Consumer behavior is a process
KEY IV Consumer behavior varies in timing and
complexity
KEY V Consumer behavior involves different roles
KEY VI Consumer behavior is influenced by external
factors
KEY VII Consumer behavior differs for different people
Consumer behaviour

knowledge is...
the ‘engine’ of marketing

strategy
Consumer
Decision
Process
 Contributions of
Behavioral Scientists
 Many authorities with expertise in different disciplines have
tried to explain consumer behavior, which is a complex
combination of factors.

 The goal of marketers is to put all of these explanations of

consumer behavior together and add substantially to
available behavioral theories in order to understand it.

 Slowly and gradually the picture puzzle begins to make more

sense… profound thinkers such as Alfred Marshall, Ivan
Pavlov, Sigmund Freud, and Thorstein Veblen have
formulated the foundation on which other behavioral
scientists must build.
 Marshallian Economic Model
 Higher price  lower sales

 Lower price of  higher sales

complementary
products

 Lower price of  lower sales

substitutes

 Higher real income  higher sales

 Marshallian Economic Model
 Consumers are assumed to be rational and deliberative
individuals.

 Their desire for product information is high, but time

limits the amount of information that can be gathered.

 The role of advertising is to inform and to persuade.

 Acute need factor: The consumers are driven by an

acute need to buy a product.
 Economics & the Consumer
 In economics, consumers are individuals or
households that "consume" goods and services
generated within the economy.
 Typically when businesspeople and economists talk of
"consumers" they are talking about an aggregated
commodity item with little individuality other than that
expressed in the buy/not buy decision.
 In standard microeconomic theory, a consumer is
assumed to have a budget which can be spent on a
range of goods and services available on the market.

 Under the assumption of rationality, the budget

allocation is chosen according to the preference of the
consumer, i.e., to maximize his or her utility.
 Pavlovian Learning Model

 Drive

 Cue

 Response

 Reinforcement
 PAVLOVIAN LEARNNG MODEL
 The Pavlovian model proposes that learning is an
associative process that contains four central
concepts: drive, cue, response and
reinforcement.
 Pavlovian theory emphasizes the desirability of
repetition in advertising, and that strong cues are
essential in markets with strong brand loyalties.
 Marketers have been able to develop a
substantial number of insights concerning brand
habit and in how to use promotional cues that
stimulate strong drives.
 Behavioural Learning:
Instrumental Conditioning

 Conditioning is the learning that results from exposure to

relationships

 Behaviour is explained in terms of an individual’s learning

history and the kinds of responses he or she has performed
and their reinforcing and punishing consequences

 Reinforcers are consequences that increase the rate at which

a response is performed in similar circumstances

 Punishers are consequences which reduce the rate of

response (B.F. Skinner)
 Learning and Marketing
 Consumers store information in memory in form of
associations, e.g., brand names linked to other
attributes like price, colour, size, quality, etc.

 These associations form the information base used by

consumers when making purchase and use decisions

 Success can depend on

• how well are we able to adapt messages, etc. to
learning of individuals
• finding best ways to communicate such that learning
takes place
Freudian Psychoanalytic Model
Topographical model of the mind

 The Unconscious - consists of drives and instincts

that are beyond awareness but motivate many of
our behaviors. Unconscious does not mean
dormant.

 The Preconscious - contains all elements that are

not in awareness, but that can become conscious
either easily or with some level of difficulty.

 The Conscious - the only level of mental life

directly available to us.
 Three-part structural model of
the mind: Provinces

 The Id

 The Ego

 The Superego
 Three-part structural model of
the mind: Provinces
 A. The Id
 At the core of personality and completely
unconscious to the individual is the psychical
region called the id.
 The id serves as the pleasure principle,
seeking constant and immediate satisfaction of
instinctual needs
 Operates through the primary process (basic
and instinctual).
 Three-part structural model of
the mind: Provinces
B. The Ego
 The ego, or secondary process, is
responsible for reconciling the unrealistic
demands of both the id and the superego with
the demands of the real world.
 Functions according to the reality principle.
 While the id provides energy, the ego must
provide control.
 Three-part structural model of
the mind: Provinces
C. The Superego
 The superego is the moral or ethical
province of personality and serves as the
idealistic principle.
 Has two subsystems: the conscience and
the ego-ideal.
• The conscience results from punishment for
improper behavior
• The ego-ideal stems from rewards for socially
acceptable behavior
The Dynamics of Personality
Motives
Unconscious motivations are
available to consciousness in a
disguised form. Dreams and
slips of the tongue, for instance,
are concealed examples of
unconscious content not
confronted directly.
 The Dynamics of Personality
Two forces that motivate people…
A. Instincts (urges)
 Sex (Eros or libido) – pleasure through the erogenous zones
 Destructive instinct (Thanatos) - ordinarily directed against
other people in the form of aggression

B. Anxiety
 an aversive inner state that people seek to avoid or escape.
 Humans seek to reduce anxiety through defense mechanisms
 Only the ego feels anxiety, but the id, superego, and outside
world can each be a source of anxiety.
 Veblenian Social Model
 Subculture
Pockets or segments of culture which (while reflecting the
dominant aspects of the main culture) show different customs,
norms, and values, due to certain differences

 Social Class
Social classes are the hierarchical arrangements of people in
society as economic or cultural groups.

 Reference Group
People whose attitudes, behavior, beliefs, opinions,
preferences, and values are used by an individual as the basis
for his or her judgment. One does not have to be a member of
an aspirational, membership, or dissociative reference group
to be negatively or positively influenced by its characteristics.
 Veblenian Social Model
 Emotional needs are fulfilled by brands that are
visible to others.

 Appeal can be directed to gaining social approval

through product consumption.

 Sensory factor: Products provide consumers with

‘moments of pleasure’ based on any of the five
senses: taste, sight, hearing, touch or smell.

 The strategy that considers pleasure to be the

sole end of life, seems apt in this segment.
 Veblenian Social Model
 The Veblenian model has made marketers aware of
the importance of social influences on individual
tastes and preferences. Essentially, the impact of
present group memberships and aspired group
memberships is stressed.

 Conspicuous consumption operates in the purchase of

clothes, cars, and houses. Marketers have been able
to expand on this theory through sociology, cultural
anthropology, and social psychology.

 Consumers and their purchasing behavior are

influenced by culture, subcultures, social class,
reference groups, and face-to-face groups. Marketers
still need to define which of these social influences
are most important in purchasing specific products.
Maslow's Hierarchy of Needs

Self
actualization
needs
(self-development
and realization

Esteem needs
(self-esteem, recognition,
status)

Social needs (sense of belonging, love)

Safety needs (safety, protection)

Physiological Needs (food, water, shelter)

 Frederick Herzberg’s
Motivation and Hygiene Factors
 Man has two sets of needs; one as an animal to
avoid pain, and two as a human being to grow
psychologically

 Certain factors truly motivate ('motivators'),

whereas others tend to lead to dissatisfaction
('hygiene factors').

 Herzberg's research proved that people will

strive to achieve hygiene needs because they
are unhappy without them, but once satisfied,
the effect soon wears off - satisfaction is
temporary.
 Types of Buying Behavior
HIGH LOW
INVOLVEMENT INVOLVEMENT
SIGNIFICANT Variety-
Complex
DIFFERENCES Seeking
Buying
AMONG Buying
Behavior
BRANDS Behavior
FEW
DIFFERENCES Dissonance- Habitual
AMONG Reducing Buying
BRANDS Buying Behavior
Behavior
 CONSUMER BUYING ROLES
 Initiator: The person who first suggests or thinks of
the idea of buying a particular product.

 Influencer: A person whose views or advice

influences the buying decision.

 Decider: The person who ultimately makes a buying

decision or any part of it - to buy, how to buy, or
where to buy.

 Buyer: The person who makes an actual purchase.

 User: The person who consumes or uses a product.

 Loyalty Status
A: Hard-core Loyals:
 Consumers who buy one brand all the time. Thus a
buying patterns of A, A, A, A, A, A might represent a
consumer with undivided loyalty to brand A.

B: Split Loyals:
 Consumers who are loyal to two or three brands. The
buying pattern A, A, B, A, B, A, B represents a
consumer with a divided loyalty between A and B.

 This group of people is rapidly increasing. More people

now buy from a small set of acceptable brands that
are equivalent in their minds.
 Loyalty Status
C: Shifting Loyals / Other Brand Loyals (OBL):
 Consumers who shift from favoring one brand to
another. The buying pattern A, A, A, B, B, B would
suggest a consumer who has shifted brand loyalty
from A to B.

D: Switchers:
 Consumers who show no loyalty to any brand. The
buying pattern A, C, E, B, D, B would suggest a non-
loyal consumer who is either deal prone (buys the
brand on sale) or variety prone (wants something
different each time).
 Perceived Risk

Is the level of uncertainty a

consumer believes exists with
regard to the outcome of a purchase
decision; this belief may, or not, be
correct.
 Types of Perceived Risk
 Functional: risk that a product will not perform
adequately.
risk that a product will be harmful.
 Physical:
risk that a product will not be worth
 Economic: its cost.
risk that a product will cause
embarrassment.
 Social:
risk that one’s ego will be bruised.
risk that the time spent purchasing
 Psychological: will be wasted if the product does not
 Time: perform as expected before others.
How Customers Handle Dissatisfaction
Ralph L. Day and E. Laird Landon, Jr.
Seeks redress
directly
Take some
from firms
form
of public Take legal action
Take action to obtain redress
some
action Complain to firm,
or private, or
governmental
Dissatisfaction
agencies
occurs

Decide to stop
buying product or
Take no
boycott seller
action
Take some
form
of private Warn friends
action about the
product and / or
seller