Consumer Behaviour

.
 Why study Consumer Behaviour
Pay for 3 pieces of ‘Liril’ and get the 4th free !!!
Buy one ‘Harpic’ and get an ‘Odonil’ free !!!
Exchange your Maruti Alto for a Maruti Swift at a Rs
40,000/= discount !!!
Buy ‘Fast Track’ watches and get 5 different colored
wrist-bands free !!!
New LG Television with unique ‘Child Lock’
feature !!!
Will such offers result into a change in your behaviour?

.
 Why study Consumer Behaviour

‘Dar ke aage jeet hai’ ….. Mountain Dew

‘Pappu Pass ho gaya’ ….. Cadbury’s
‘We also make steel’ …… Tata Steel
‘Filmi sitaron ka saundarya sabun’ …….. Lux
‘Jaago India Jaago’ …….. Tata Tea
‘Desh ki Dhadkan’ ……… Hero Honda
‘An Idea can change your life’ ……. Idea

.
 Few findings which motivated
study of Consumer Behavior
 Of all the products launched every year, only 55% survive
five years later.
e.g. FIAT launched Uno, Palio, Sienna etc but the could
not survive profitably.
 Of the various new product concepts offered by over 100
leading companies, only 8% reached the market and out of
this 8% only 17% achieved the marketing objectives.
e.g. HUL launched pre-cooked ready-to-eat rice, in line
with Nestle’s Maggi, but failed miserably.

4
.
 Definition: Consumer
 In economics , consumers are individuals
or households that "consume" goods
and services generated within the
economy.
 Typically when business people talk of
"consumers" they are talking about
person-as-consumer, who usually are
making a purchase for the purpose of
their personal consumption.
 So, one who makes a purchase with an
aim of consumption is a consumer.
.
 Definition: Behaviour

 Behaviour refers to the actions

or reactions of an object or
organism, usually in relation to
the environment .

.
 Definitions: Consumer
behaviour
-Consumer behavior is defined as the decision making
process and physical activity individuals engage in when
evaluating, acquiring, using and disposing of goods and
services

-Involves the process by which people determine whether,

what, when, where, how, from whom, and how often to
purchase goods and services.

-Study of how people behave when obtaining, using, and

disposing of products (and services).

.
 Consumer Organisational
influences influences

Obtaining Consuming Disposing

Consumer behavior
.
Consumer Organisational
influences influences
Culture Brand
Personality Product features
Family Advertising
Life-stage Word of mouth
Values Promotions
Income Retail displays
Available resources Price
Attitudes Quality
Opinions Service
Feelings Store ambiance
Motivations Convenience
Past experiences Loyalty programs
Peer groups Packaging
Knowledge Product availability

.
Obtaining Consuming Disposing

How you decide How you use the How you get rid of
you want to buy product remaining product

Other products How you store the How much you

you consider product in your throw away after
buying home use

Where you buy Who uses the If you resell items
product yourself or
How you pay for through a
product How much you consignment
consume store
How you
transport How product How you recycle
product home compares with some products
expectations

.
 Model of Consumer Behavior
•Product •Economic
Marketing and
•Price Other Stimuli •Technological
•Place •Political
•Promotion •Cultural

Buyer’s Black Box Characteristics

Buyer’s Decision affecting consumer
Process behavior

•Product Choice • Purchase

Buyer’s Response Timing
•Brand Choice
• Purchase
•Dealer Choice Amount
11
.
Satisfying the consumer’s need is
more important than the
expectations of the management.

For survival, there is not option before the

companies but to understand and adapt to
consumer motivation and behavior.

12
.
 The Marketing Challenge:
Environmental factors
Extent of gap between the supply and demand of the valid
products/services. e.g. LPG cylinders are often sold at a
‘premium’ due to demand-supply gap.
Speed and accuracy of communication with/from
customers. e.g. Most PSU Banks lost their market share to
Private Banks because of speed & accuracy of communication.
Efficient and multiple distribution channels. e.g. sales of
telephone connections increased after mobile service providers
started appointing dealers, contrary to MTNL & BSNL.
Marketers power to influence and induce channel partners
to comply with overall marketing strategy. e.g. certain Dish
Antenna companies offer certain channels free.
National & Global Economic growth.

13
.
 Why study CB ?
 Consumer Buying Behavior refers to the buying
behavior of the ultimate consumer. A firm needs to
analyze buying behavior for:
 Buyers reactions to a firms marketing strategy has a
great impact on the firms success.
 The marketing concept stresses that a firm should
create a Marketing Mix (MM) that satisfies (gives
utility to) customers, therefore need to analyze the
what, where, when and how consumers buy.
 Marketers can better predict how consumers will
respond to marketing strategies.

.
 Situations of Consumer Buying
Name Frequency Consumer Brand Risk Interest
of Purchase Knowledge Loyalty

Routine High High Low Low Low

Response

Limited Moderate Moderate Moderate Moderate Moderate

Search
Extensive Low Low High High High
Search
Impulsive NA NA NA NA NA
Buying

.
 Types of Consumer Buying
 The four type of consumer buying situations :
 Routine Response/Programmed Behavior--buying
low involvement frequently purchased low cost
items; need very little search and decision effort;
purchased almost automatically. Examples include
soft drinks, snack foods, milk etc.
 Limited Decision Making--buying product
occasionally. When you need to obtain information
about unfamiliar brand in a familiar product
category, perhaps. Requires a moderate amount of
time for information gathering. Examples include
Clothes--know product class but not the brand.
.
 Types of Consumer Buying
 Extensive Decision Making/Complex high
involvement, unfamiliar, expensive and/or
infrequently bought products. High degree of
economic/performance/psychological risk. Examples
include cars, homes, computers, education. Spend a
lot of time seeking information and deciding.
Information from the companies MM; friends and
relatives, store personnel etc. Go through all the
stages of the buying process.
 Impulse buying, no conscious planning.

.
 Consumer Behavior

Consumer Involvement
Low High
Consumer
Decision Making
Passive Active

Psychological Societal &

Factors Social Factors
Motivation Culture
Perception Subculture
Learning Social class
Attitudes Reference groups
Info processing Family
.
 Determinants of Consumer
Behavior
What is culture?

.
Studying Consumer Behavior
External environmental variables : Culture

.
Studying Consumer Behavior
Culture :
Set of values norms, attitudes, and other
meaningful symbols that shape human
behavior and the artifacts, or products, of
that behavior as they are transmitted from
one generation to the next.
The patterns of what we wear, what we eat,
what we do in marriages etc… Every little
thing depends upon the culture we belong
to.

.
 Subculture
A homogeneous group of people
who share elements of the
overall culture as well as
unique elements of their own
group.

.
 Cultural Influences on
Buying Decisions
Values

Language

Myths

Customs

Rituals
Components of
Culture Laws

Material Artifacts

.
 Social Class

A group of people in a society who are

considered nearly equal in status or
community esteem, who regularly
socialize among themselves both formally
and informally, and who share
behavioral norms.

.
Social Class Measurements
Occupation
Income

Social Class Education

Measurements

Wealth
Other Variables

.
 Social Influences
Social Influences on
Buying Decisions

Reference Opinion Family

Groups Leaders Members

.
 Social Influences

Reference Group : A group in society

that influences an individual’s
purchasing behavior.
Opinion Leaders : An individual who
influences the opinion of others.

.
Opinion Leaders
Peer Groups

Group Referrals

Movie Stars

Sports Figures

Celebrities

.
 Individual Influences
Individual
Influences

Age Personality
Gender Family Life Self-Concept
Cycle Lifestyle

.
 Individual Influences

An orderly series of stages through which

consumers’ attitudes and behavioral
tendencies evolve through maturity,
experience, and changing income and
status.

.
 Family Life Cycle
Single

New Couple

Full Nest

Empty Nest

Sole Survivors

.
 Psychological Influences
Perception

Motivation

Learning
Psychological
Influences on
Buying Decisions Beliefs & Attitudes

.
 Psychological factors
 Psychological factors include:
 Motives--
 A motive is an internal energizing force that orients a person's
activities toward satisfying a need or achieving a goal.
Actions are effected by a set of motives, not just one. If
marketers can identify motives then they can better develop a
marketing mix.
MASLOW hierarchy of needs!!
 Physiological
 Safety
 Love and Belonging
 Esteem
 Self Actualization
 Need to determine what level of the hierarchy the consumers
are at to determine what motivates their purchases.

.
 Perception
 What do you see?? Perception is the process
of selecting, organizing and interpreting
information inputs to produce meaning. i.e we
chose what info we pay attention to, organize
it and interpret it.
Information inputs are the sensations
received through sight, taste, hearing, smell
and touch.

.
 Perception
Process by which people select,
organize, and interpret stimuli
Selective Selective into meaningful and coherent
Exposure Distortion
picture.
Selective
Consumer notices certain
Retention Selective
stimuli
Exposure
and ignores others
Consumer changes or distorts
Selective
information that conflicts
Distortion
with feelings or beliefs
Consumer remembers only
Selective
that information that
Retention
supports personal beliefs

.
 Perception

Selective
Selective Selective Selective
Compre-
Exposure Attention Retention
hension

X
.
 Ability and Knowledge
 Need to understand individuals capacity to learn.
Learning, changes in a person's behavior caused by
information and experience. Therefore to change
consumers' behavior about your product, need to give
them new information eg: product...free sample etc.
 Knowledge is the familiarity with the product and
expertise.
 Inexperience buyers often use prices as an indicator of
quality more than those who have knowledge of a
product.
 Learning is the process through which a relatively
permanent change in behavior results from the
consequences of past behavior.
.
 Attitudes
 Individual learns attitudes through experience and
interaction with other people.
Consumer attitudes toward a firm and its products
greatly influence the success or failure of the firm's
marketing strategy.
 Attitudes and attitude change are influenced by
consumers personality and lifestyle.
 Consumers screen information that conflicts with
their attitudes. Distort information to make it
consistent and selectively retain information that
reinforces our attitudes. IE brand loyalty.

.
 Personality
 All the internal traits and behaviors that make a
person unique, uniqueness arrives from a person's
heredity and personal experience. Examples include:
 Workaholics
 Self confidence
 Friendliness
 Adaptability
 Ambitiousness
 Authoritarianism
 Introversion
 Extroversion
 Aggressiveness
 Competitiveness.

.
 Consumer
Decision-Making Process
Need Recognition

Information Search
Cultural, Social,
Individual and
Psychological Evaluation
Factors of Alternatives
affect
all steps Purchase

Postpurchase
Behavior
.
 Need Recognition
Result of an imbalance between actual and
desired states.
Marketing helps
consumers Internal Stimuli
recognize an and
imbalance between
External Stimuli
present status and
preferred state Preferred
State

Present
Status
.
 Stimulus
Any unit of input affecting one or more of the five
senses:
sight
smell
taste
touch
hearing

.
 Recognition of Unfulfilled
Wants
 When a current product isn’t performing
properly

 When the consumer is running

out of a product

 When another product seems superior to

the one currently used

.
 Information Searches

Internal Process of recalling past

information stored
in the memory.

Process of seeking information

External in the
outside environment.

.
 Information Search
Internal Information Search

 Recall information in memory

External Information search

 Seek information in outside

environment

 Non-marketing controlled
 Marketing controlled

.
 External Information
Searches
Need Less Need More
Information Information

Less Risk More Risk

More knowledge Less knowledge
More product experience Less product experience
Low level of interest High level of interest

.
 Evaluation
Evoked Set
Group of brands, resulting from an information search,
from which a buyer can choose.
Evoked Set
Analyze product attributes

Use cutoff criteria

Rank attributes by
importance
Purchase!
.
 Purchase

To buy
or not to buy...

Determines which attributes

are most important
in influencing a
consumer’s choice

.
 Postpurchase Behavior

?
Cognitive Dissonance

Can minimize through:

Effective Communication
Did I make a good decision? Follow-up
Guarantees
Did I buy the right product? Warranties

Did I get a good value?

.
 CONSUMER
vs
INDUSTRIAL / BUSINESS
BUYING

.
 Custom furniture
Installed components
Buildings
New Task Buying Weapon systems

New vehicles
Involved Decision Making

Elec. Equip
Consultants
Modified Rebuy Computer equip.

Utilities
Office Supplies
Bulk chemicals Straight Rebuy
.
 Business vs. Consumer
Markets
 Fewer buyers
 Size of purchase is larger
 Close supplier-customer relationship
 Geographically concentrated
 Derived demand
 Fluctuating demand

.
 Business vs. Consumer
Markets
 Professional purchasing
 Several buying influences
 Multiple sales calls
 Direct purchasing
 Reciprocity
 Leasing

.
Participants in the Business
Buying Process

Users

Initiators Influencers

Gatekeepers

Buyers Deciders

Approvers

.
 Need Problem Recognition
Recognition General Need Description

Info Product Specification

Search/ Supplier Search

Evaluation Proposal Solicitation

Purchase Supplier Selection

Order Routine Specification

Post Performance Review
Purchase
.
 Model of the Organizational Buying Process

 Stage 1: Anticipate or recognize a

problem/need/opportunity and a general
solution
 Stage 2: Determine the characteristics and
quantity of a needed good or service
 Stage 3: Describe characteristics and the
quantity of a needed good or service
 performance

.
 Model of the Organizational Buying
Process

 Stage 4: Search for and qualify

potential sources
 Stage 5: Acquire and analyze proposals
 Stage 6: Evaluate proposals and select
suppliers
 Stage 7: Select an order routine
 Stage 8: Obtain feedback and evaluate