Unit I

Importance of Studying Consumer Behaviour

• Case Study Discussed
Defining consumer behaviour
• We define consumer behaviour as the behaviour that consumers display in
searching for, purchasing, using, evaluating, and disposing of products and
services that they satisfy their needs.
• Broadly, consumer behaviour describes two different kinds of consuming
entities : the personal consumer and the organizational consumer.
• The personal consumer buys goods and services for his or her own use, for
the household, or as a gift for friend.
• Organisational consumer- includes profit and not-for –profit business,
government agencies (local, state, and national) and institutions (e.g
schools, hospitals) all of which must buy products, equipment, and services
in order run their organizations.
Defining consumer behaviour
• The decision process and physical activity individuals engage in when
evaluating, acquiring, using, or disposing of goods and services.
Some aspects
• Customers and consumers: customer who regularly purchases from a
particular store or company. Consumer are potential purchasers of
products and services offered for sale.
• The ultimate consumer: those individuals who purchase for the
purpose of individuals or household consumption.
• The individual Buyer: people jointly involved in a purchase decision.
Consumer Behaviour Role
Role Description
Initiator The individual who determines that some need or
want is not being met and authorize a purchase to
rectify the situation.
Influencer A person who by some intentional or unintentional
word or action influences the purchase decision, the
actual purchase, and /or the use of the product or
service.
Buyer The individual who actually makes the purchase
decision.
User The person who directly involved in the consumption
or use of the purchase
Defining
• The Decision Process
Consumer behaviour involves a mental decision process as well as
physical activity.
Example : Photographer
CB-A subset of Human Behaviour
• Internal influences such as learning and motives, as well as external
factors such as social expectations and constraints, affect us in our
role consumers as well as in other capacities.
 Evolution of Consumer Behavior

Supply Chain:
all the organizations involved in taking a product from
inception to final consumption
- Manufacturers
- Wholesalers
- Retailers
- Facilitating Organizations
Consumers’ Increased Influence on Business
 Evolution of Consumer Behavior

Wholesaler Manufacturer Retailer Consumer

Manufacturing Selling Marketing Consumer

Orientation Orientation Orientation Orientation

U.S. 1750-1850 1850-WWII 1970-2000 2000+

Europe 1750-1850 1760-WWII 1970-2000 2000+

Evolution
• From Manufacturing to selling
• From Selling to marketing
• From Marketing to consumer Orientation
 Consumer Orientation

Beyond a marketing focus

How all organizations in a demand chain adapt to changing consumer lifestyles and
behaviors bringing product design, logistics, manufacturing, and retailing together

Role of consumers in shaping many aspects of life—society, government, social

programs, health cares, and other areas
Orientations
• Manufacturing Orientation
• Selling Orientation
• Marketing Orientation
• - Motivation research:
• - Positivism : process of using rigorous empirical techniques to
discover generalizable explanations and law.
• - Postmodernism: uses qualitative and other research methods
to understand consumer behavior.
Consumer Orientation
Why study CB?
• Significance in daily Lives
• Application to Decision making
1. Micro Perspective: involves understanding consumers for the
purpose of helping a firm or organization accomplish its objective.
2. Societal Perspective : on macro level, consumers collectively
influence economic and social conditions within an entire society.
Study of CB
Dimensions of CB
Consumer behavior is multidimensional in nature and it is influenced by the following subjects.

• Psychology is a discipline that deals with the study of mind and behavior. It helps in understanding
individuals and groups by establishing general principles and researching specific cases.
Psychology plays a vital role in understanding how consumers behave while making a purchase.
• Sociology is the study of groups. When individuals form groups, their actions are sometimes
relatively different from the actions of those individuals when they are operating individually.
• Social Psychology is a combination of sociology and psychology. It explains how an individual
operates in a group. Group dynamics play an important role in purchasing decisions. Opinions of
peers, reference groups, their families and opinion leaders influence individuals in their behavior.
• Cultural Anthropology is the study of human beings in society. It explores the development of
central beliefs, values and customs that individuals inherit from their parents, which influence their
purchasing patterns.
 CONSUMER RESEARCH
• The field of consumer research developed as an extension of the
marketing research.
• Methodology used to study consumer behavior is called consumer
research.
• Consumer research is a unique subset of marketing research, which
merits the utilization of specialized research methods that collect
customer data and also enhance the company’s relationship with its
customer.
Steps
• The major steps (6) in the consumer research process include
1. Defining the objectives of the research
2. Collecting and evaluating secondary data
3. Designing a primary research study
4. Collecting primary data
5. Analysing the data
6. Preparing a report on the findings
DEVELOPING RESEARCH
OBJECTIVES
• The first step in the consumer research process is to carefully define
the objectives of the study.
• It is important for the marketing manager and the researcher to agree
at the outset on the purposes and objectives of the study to ensure
that the research design is appropriate.
• A carefully thought out statement of objectives helps to define the
type and level of information needed
COLLECTING SECONDARY DATA
• Secondary information is any data originally generated for some
purpose other than the present research objectives
• It includes findings based on research done by outside organizations,
data generated in house for earlier studies, even customer
information collected by the firms sales or credit department.
• Locating secondary data is called secondary research.
Types of secondary data

• Internal Data
• • Data generated in-house , May include analysis of customer files
• • Useful
• External Sources
• • Directories
• • Country information
• • Published marketing research reports
• • News sources
• • CGM (Newsgroups, blogs, groups)
• • Internet – single search engines, and multiple
• search enginesl for calculating customer lifetime value
DESIGNING PRIMARY RESEARCH
• Quantitative Research Designs : A quantitative research study is
comprised of research design, the data collection methods,
instruments to be used, and the sample design. It includes
Observational Research, Experimentation, surveys
• • Qualitative Research Designs: in depth interviews, focus group,
Projective techniques
Sampling and Data Collection
• Samples are a subset of the population used
• to estimate characteristics of the entire population.
• • A sampling plan addresses:
• – Whom to survey
• – How many to survey
• – How to select them
• • Researcher must choose probability or
• Non probabililty sample
DATA ANAYSIS AND REPORTING
RESEARCH FINDINGS
• Open-ended questions are coded and quantified.
• All responses are tabulated and analyzed.
• Final report includes executive summary, body, tables, and graphs
Marketing Concept
• The process of planning and executing the conception, pricing,
promotion, and distribution of ideas, goods, and services to
create exchanges that satisfy individual and organizational
objectives
• Satisfaction with an exchange depends on satisfaction with
consumption of product and the exchange of money
Concepts of Motivation
Case study discussed
Notes
Personality
Definition
• Personality can be defined as those 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: many individuals will be
similar in terms of a single personality characteristic but not in terms of
others.
• Personality is consistent and enduring:
• Personality can change: major life events such as marriage, the birth of
a child, death of a parent, or a change of job and/ or profession.
Theories of Personality
Three major theories of personality
1. Freudian Theory: built on the premise that unconscious needs or drives
especially biological drives are at the heart of human motivation and
personality. Human personality consists of three interacting systems:
ID : basic psychological needs such as thirst, hunger –for which individuals seek
immediate satisfaction.
Superego: individual’s internal expression of society’s moral and ethical codes
of conduct.
Ego: individual’s conscious control. It functions as an internal monitor that
attempts to balance the impulsive demands of the id and the socio-cultural
constraints of the superego.
Snack Food and Personality Traits
Snack Food Personality Traits
Potato Chips Ambitious, Successful, high achiever, impatient
Snack Crackers rational., logical, shy, prefers time alone
Popcorn Takes charge, pitches in often, modest, self-confident
Nuts Easy-going, empathetic, understanding, calm and even
tempered.
Neo-Freudian Personality Theory
They believe that social relationships are fundamental to the formation and
development of personality.
Horney proposed individuals be classified into three personality groups:
• Complaint: individuals are those who move toward others (desired to be
loved, wanted and appreciated)
• Aggressive: individuals are those who move against others (they desire to
excel and win admiration)
• Detached: individuals are those who move away from others (they desire
independence, self-reliance, and individualism or freedom from obligation)
CAD personality test
Trait Theory
• It is defined as “any distinguishing, relatively enduring way in which
one individual differs from another”.
• The trait which measures just one trait, such as self-confidence, the
personality tests measure such traits as consumer innovativeness,
consumer materialism and consumer ethnocentrism, the explanation
for this are
• Consumer innovativeness: The degree to which consumers are
receptive to new products, new services, or new practices.
Personality traits that are used to differentiate between innovators and
non innovators include
Trait Theory - Consumer innovativeness
• Dogmatism: A personality trait that reflects the degree of rigidity a person displays toward the unfamiliar
and toward information that is contrary to his or her own established beliefs. Ex. McDonald asks potential
consumers to “Be open to new possibilities”.

• Social character: It has its origins in sociological research, which focuses on the identification and
classification of individuals into distinct sociocultural types. The personality trait ranges on a series from
inner-directedness to other-directedness.

• Need for uniqueness: Consumers who avoid appearing to conform to expectations or standards of others

• Optimum stimulation level: A personality trait that measures the level or amount of novelty or
complexity that individuals seek in their personal experiences

• Variety-novelty seeking: Measures a consumer’s degree of variety seeking

Cognitive personality factors
Consumer researchers have been increasingly interested in how cognitive personality factors
influence various aspects of consumer behavior. In particular, two cognitive personality traits
i.e. need for cognition and visualizers versus verbalizers—have been useful in understanding
selected aspects of consumer behavior.
Need for cognition (NC)
Cognition measures a person's craving for or enjoyment of thinking, researchers suggests that
consumers who are high in NC are more likely to be responsive to the part of an ad that is rich in
product-related information or description; consumers who are relatively low in NC are more likely
to be attracted to the background or peripheral aspects of an ad, such as an attractive model or
well-known celebrity.
Visualizers versus verbalizers
People who are open to and prefer the written word as a way of obtaining information are
visualizers, and the people who are more likely to respond to and prefer visual images or messages
as source of information.
Trait Theory- Consumer materialism
• Materialism is a personality like trait which distinguishes between individuals who
regard possessions as essential to their identities and their lives those for whom
possessions are secondary. Researchers have found some characteristics of
materialistic people, they are:

•  -they value acquire and showoff possessions.

•  -they are self centered and selfish people

•  -they seek lifestyle full of possession

• -they are not satisfied with their possessions.

Trait Theory- Consumer Ethnocentrism
• Consumers who are highly ethnocentric are likely to feel that it is
inappropriate or wrong to purchase foreign made products because
of resulting economic impact on the domestic economy.
Brand personality
• Its defined as “Brand image or identity expressed in terms of human
characteristics. Distinguishing and identifiable characteristics which
offer consistent, enduring and predictable messages and perceptions.
What people associate the brand with”.

• Brand personality is a set off human characteristic associated with a

brand.
Brand Personality Framework
Product Personality Issues
Gender

Often used for brand personalities

Some product perceived as masculine (coffee and toothpaste) while others as

feminine (bath soap and shampoo)

-Geography

Actual locations like banarasi saree and Arizona iced tea

Fictitious names also used such as Hidden Valley and Bear Creek

-Color

Color combinations in packaging and products denote personality.

Self and self-image
• Consumers have a variety of lasting image of themselves; these images are associated with
personality in that individual’s consumption relates to self-image.
• One or multiple selves: A consumer who acts differently in different situations or with
different people, for instance a person is likely to behave in different ways at home, at work
or with friends. It’s normal that a person is likely to display different personality in different
situations and social roles.
• Extended self: It is an interrelationship between consumers self image and their possession.
A consumer’s possession may extend their self image in number of ways- Actually,
Symbolically, Conferring status or rank, Bestowing feelings of immortality, Endowing with
magical powers.
• Altering the self: The consumers who try to modify their appearances to become a different
or improved self by using all kind of accessories, this is frequently done to express their
individualism or uniqueness by creating anew self and maintaining the existing self.
Perception
Definition
• It is defined as the process by which an individual selects, organizes,
and interprets stimuli into meaningful and coherent picture of the
world.
• Individuals act and recent on the basis of their perceptions, not on
the basis of objective reality. in reality is a totally personal
phenomenon, based on that persons need , want s, values, and
personal experiences. But for the marketer’s consumer perception is
more than the knowledge.
ELEMENTS OF PERCEPTION
• Sensation
Sensation Is the immediate and direct response of the sensory organs
to stimuli.
A stimulus may be any unit of input to any of these senses. Examples of
stimuli include products, packages, brand names, advertisements and
commercials.
Sensory receptors are the human organs that receive sensory inputs.
Their sensory functions are to see, hear, smell, taste and feel. All of
these functions are called into play, either singly or in combinations, in
the evaluation and use of most consumer products.
The absolute threshold
• The lowest level at which an individual can experience a sensation is
called the absolute threshold. The point at which a person can detect
a difference between “something” and “nothing” is that person’s
absolute threshold for that stimulus. Example: spot of billboards at
different times.
• Sensory Adaptation : is a problem that concerns many national
advertisers, which is why they try to change their advertising
campaigns regularly.
The differential threshold
• The minimal difference that can be detected between two similar stimuli is called
the differential threshold or the just noticeable difference (J.N.D).
• Weber’s Law: states that stronger the initial stimulus, the greater the additional
intensity needed for the second stimulus to be perceived as different. Ex. Price of
fresh orange juice
• Marketing Applications of J.N.D
Two reasons
(a) Negative changes(reduction in product quality, size or increase in product price
are not readily discernible to public.
(b) product improvements (improved packaging, lower price, larger size) are very
much apparent to consumers
Subliminal perception
• People are motivated below their level of conscious awareness.
People are also stimulated below their level of conscious awareness;
that is, they can perceive stimuli without being consciously aware that
they are doing so. Stimuli that are too weak or too brief to be
consciously seen or heard may nevertheless be strong enough to be
perceived by one or more receptor cells. This process is called
subliminal perception because the stimulus is beneath the threshold,
or “limen” of conscious awareness, though obviously not beneath the
absolute threshold of the receptors involved.
• Eat popcorn or drink coca cola
Three aspects of Perception
• Perceptual Selection: Consumers subconsciously exercise a great deal of
selectivity as to which aspects of the environment they perceive. An
individual may look at some things, ignore others, and turn away from
still others. In actually, people receive only a small fraction of the stimuli
to which they were expose. Example. A woman at a Whole Foods market.
• Nature of Stimulus: Marketing stimuli include an enormous number of
variables that affect the consumers perception, such as nature of the
product, its physical attributes,  the package design, the brand name, the
advertisements and commercials including copy claims, choice and sex of
model, size of ad, topography, the position of print ad or a commercial,
and the editorial environment.
Expectations
People usually see what they expect to see, and what they expect to see is usually based on
familiarity, . Previous experience, or preconditioned set. In a marketing context, people tend to
perceive products and product attributes according to their own expectations. Example. Student told
by his friends about a professor.
Motives
People tend to perceive the things they need or want; the stronger the need the greater the tendency
to ignore unrelated stimuli in the environment. In general, there is heightened awareness of stimuli
that are relevant to ones needs and interests and a decreased awareness of stimuli that are irrelevant
to those needs. Ex. Student looking for new cell phone
Selective perception
The consumers “selection” of stimuli from the environment is based on the interaction of expectations
and motives with the stimulus itself. These factors give rise to four important concepts concerning
perception
Selective Exposure
• Consumers actively seek out messages that they find pleasant or with which they are sympathetic. And they actively avoid
painful or threatening ones. They also selectively expose themselves to advertisements that reassure them of the wisdom
of their purchase decisions.
Selective attention
• Consumers exercise a great deal of selectivity in terms of the attention they give to commercial stimuli. They have a
heightened awareness of stimuli that meet their needs or interests and minimal awareness of stimuli irrelevant to their
needs. Thus, consumers are likely to note ads for products that would satisfy their needs and disregard those in which they
have no interest.
Perceptual Defense
• Consumers subconsciously screen out stimuli that they find psychologically threatening, even though exposure has already
taken place. Thus, threatening or otherwise damaging stimuli are less likely to be consciously perceived than are neutral
stimuli at the same level of exposure. Example. Smokers no longer pay attention to written warning labels.
Perceptual Blocking
• Consumers protect themselves from being bombarded with stimuli by simply “tuning out” – blocking such stimuli from
conscious awareness. They do so out of self – protecting because of the visually overwhelming nature of the world in
which we live. The popularity of such devices as TiVo and Replay TV, which enable viewers to skip over TV commercials
with great ease, is, in part, a result of perceptual blocking.
Consumer Behavior and its applications
The study of consumers helps firms and organizations improve their marketing strategies by
understanding issues such as how
1. The psychology of how consumers think, feel, reason, and select between different
alternatives (e.g., brands, products);
2. The psychology of how the consumer is influenced by his or her environment (e.g., culture,
family, signs, media);
3. The behavior of consumers while shopping or making other marketing decisions;
4. Limitations in consumer knowledge or information processing abilities influence decisions
and marketing outcome;
5. How consumer motivation and decision strategies differ between products that differ in their
level of importance or interest that they entail for the consumer; and
6. How marketers can adapt and improve their marketing campaigns and marketing strategies
to more effectively reach the consumer.
Applying Consumer Behaviour Knowledge
1. Consumer Behaviour and Marketing Management
Market-opportunity analysis: examining trend and conditions in market
place to identify needs and wants that are not being fully satisfied.
Target-market selection
Marketing-mix determination 4P’s
2. Consumer Behaviour and Non Profit and Social Marketing : sound
understanding of consumer decision process can assist in satisfying
want or need in society.
Applying Consumer Behaviour Knowledge
3. Consumer Behaviour and Government Decision Making
• Government policies that provide services to public or result in decisions that
influence consumer behaviour. Ex. Public Transportation
• design of legislation to protect consumers or to assist them in evaluating
products and services. Consumer protection (FDA, FTC)
4. Consumer Behaviour and Demarketing (refers to efforts to encourage
consumers to reduce their consumption of a particular product or service).
Example . Anti Smoking Campaigns
5. Consumer Behaviour and Consumer Education: educational programs
designed to improve consumers’ decision making regarding products and
services.
• Some topics are in notes