AMITY GLOBAL

BUSINESS SCHOOL Chandigarh

Consumer Behavior
An Introduction
Module I
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What is
Consumer Behavior?
Those activities directly involved
in obtaining , consuming and
disposing of products and
services, including the decision
processes that precede and follow
these actions
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This study draws on concepts

from various other disciplines
• Psychology
• Sociology
• Anthropology
• Economics
• Marketing
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Need to study ?
‘You cannot take the consumer for
granted any more’
Therefore a sound understanding of
consumer behaviour is essential for the
long run success of any marketing
program
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Perspectives

1. Understanding and predicting consumer

behavior
2. Cause and effect relationships that
govern persuasion and/or education
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Why is this important?

• Out of 11000 products launched by 77

companies, only 56% are present five
years later
• Only 8% of new product concepts offered
by 112 leading companies reached the
market. Out of this 83% failed to reach
marketing objectives
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“MEET THE NEW CONSUMER

and smile when you do because she is
your boss. It may not be the person you
thought you knew. Instead of choosing
from what you have to offer, she tells you
what she wants. You figure it out how to
give it to her.”
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A new product must satisfy

consumer needs, not the needs
and expectations of management.

Understanding and adapting to

consumer motivation and
behaviour is not an option – it
becomes a necessity for
competitive survival
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Consumer sovereignty presents a

formidable challenge but skilful marketing
can affect both motivation and behavior if
the product or service offered is designed to
meet consumer needs and expectations

A sales success occurs because

demand either exists already or is
latent and awaiting activation by the
right marketing offering
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Dominant forces shaping

Consumer Research

• Factors that move an economy from

Production-driven to Market-driven
• Level of sophistication with which human
behaviour is understood in psychology and
other behavioural sciences
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Environmental factors that affect

the marketing challenge
• Extent to which the supply of valid products and
services exceed consumer demand
• Ability to communicate with customers quickly
and accurately
• Existence of multiple avenues of distribution
quickly and economically
• Extent to which marketers can influence to
induce distributors to comply with overall
marketing strategy
• Economic growth, both nationally and globally
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All managers must become astute

analysts of Consumer motivation
and Behavior

Three foundations for marketing decisions

• Experience
• Intuition
• Research
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Enhancing Consumer Value-added

Marketers have to constantly innovate

after understanding their consumers to
strip out costs permanently by focusing
on what adds value for the customer
and eliminating what doesn’t.
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Variables involved in understanding

consumer behavior

• Stimulus – ads, products,

• Response – physical/mental reaction to the
stimulus
• Intervening variables – mood, knowledge,
attitude, values, situations, etc.
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Self
Actualization
(Self-development)

Esteem Needs
(self-esteem, status)
Social Needs
(sense of belonging, love)

Safety Needs
(security, protection)

Physiological Needs
(hunger, thirst)

Maslow’s Hierarchy of Needs

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Consumer Behavior
• Influences on
consumer behavior
– Psychological
• Decision making
• Attitudes and attitude
change
– Sociocultural
• Reference groups
• Family decision
making
• Culture and subculture
AMITY GLOBAL Overall Model of Consumer Behaviour
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External Influences Decision Processes

Culture
Subculture
Demographics Problem Recognition
Social status
Reference groups Information Search
Family
Marketing Activities Self-Concept
&
Alt Eval & Selection
Learning
Internal Influences
Perception Outlet select &
Learning Purchase
Memory
Motives Postpurchase
Personalit Processes
yEmotions
Attitude
s
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Other people often influence a consumers purchase decision. The
marketer needs to know which people are involved in the buying
decision and what role each person plays, so that marketing
strategies can also be aimed at these people. (Kotler et al, 1994).

• Initiator: the person who first suggests or thinks of the idea of buying a
particular product or service.

• Influencer: a person whose views or advice carry weight in making the

final buying decision

• Decider: the person who ultimately makes the final buying decision or any
part of it

• Buyer: the person who makes the actual purchase

• User: the person who consumes the product or service
Note: teens are increasingly assuming more of these roles

Think about your past purchase– who was in which role?

AMITY GLOBAL Factors affecting Consumer Behavior
BUSINESS SCHOOL Chandigarh

Culture
Social
Personal
Psychological
Buyer
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•Most Basic Cause of Person’s wants & behavior

•Values
•Perception

Subculture Social Class

• Groups of people with shared • People within a social class
value systems based on tend to exhibit similar buying
common life experiences. behavior.
• Hispanic Consumers • Occupation
• African American Consumers • Income
• Asian American Consumers • Education
• Mature Consumers • Wealth
AMITY GLOBAL Continued…
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Groups
• Membership
• Reference

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

Roles and Status

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Personal Influences

Age and Family Life Cycle

Occupation
Stage

Economic Situation Personality & Self-Concept

Lifestyle Identification

Activities Opinions

Interests
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Motivation

Beliefs and Psychological

Factors Perception
Attitudes

Learning
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Organizational Buyers

• Types • Characteristics
– Industrial – Greater involvement
– Reseller – Bureaucracy
– Government and non- – Long term
profit organizations relationships
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Market Segmentation
• Process of defining and sub-dividing a large
homogenous market into clearly identifiable segments
having similar needs, wants, or demand characteristics.
Its objective is to design a marketing mix that precisely
matches the expectations of customers in the targeted
segment..

• A marketing technique that targets a group of customers

with specific characteristics.
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Need for Market Segmentation

• Better understanding of customer

requirements
• Handling competition effectively
• Focusing customization
• Quality Enhancement
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Basis for Segmenting

Consumer Markets
• Geographic
• Demographic
• Psychographic
• Behavioralistic
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1. Geographic Segmentation
• Region: by continent, country, state, or even
neighborhood.
• Size of metropolitan area: segmented
according to size of population
• Population density: often classified as urban,
suburban, or rural
• Climate: according to weather patterns common
to certain geographic regions
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2. Demographic Segmentation
• Age
• Gender
• Family size
• Family lifecycle
• Income
• Occupation
• Education
• Nationality
• Religion
• Social class
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3. Psychographic Segmentation
• Activities
• Interests
• Opinions
• Attitudes
• Values
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4. Behavioralistic Segmentation

• Benefits sought
• Usage rate
• Brand loyalty
• User status: potential, first-time, regular, etc.
• Readiness to buy
• Occasions: holidays and events that stimulate
purchases