CH #4 Consumer Decision Making

WELCOME TO
CONSUMER BEHAVIOR COURSE
Hajvery University (HU)

Chapter # 4
Consumer Decision Making I:
The
Process
Consumer Behaviour
Canadian Edition
Schiffman/Kanuk/Da
s
Copyright © 2006
Pearson Education Canada Inc.
Levels of Consumer Decision
Making
Extensive Problem
Solving
Limited Problem
Solving
Routine Response
Behaviour
Copyright © 2006 Pearson 14-3

Education Canada Inc.
Factors That Affect the Type of
Decision Making Process Used
 Importance of the decision
 Extent of previous experience
 Existence of well-established decision
criteria
 Amount of information at hand about each
alternative
 The number of alternatives available
 Model of consumption being followed

Consumer Decision Making – The
Process
 Need Recognition
 Pre-purchase Search
 Evaluation of Alternatives

Need or Problem Recognition
•  The realization that there is a difference

between actual and desired states
• – The higher the gap, the stronger the need (or
bigger the problem)

Types of
Problems
 Active Versus Inactive problems
– Active: those you are aware of
– Inactive: those that you are not yet aware of
(but exist)
 Those that require immediate solutions
and those that do not require immediate
solutions

Problem Recognition and
Marketing Strategy
 Identify existing consumer problems and find
solutions for these
 Lower the actual state
 Increase the desired state
 Increase the importance of the gap between actual
and desired states
 Convert inactive problems to active problems
 Convert problems into ones requiring an
immediate solution

Pre-Purchase
Search
 Types of Information Sources
 Types of Information Sought
 Factors Affecting Extent of Information
Search
Copyright © 2006 Pearson 14-

Figure 14-3: Types of
Information Sources
PERSONAL IMPERSONAL
Friends Newspaper articles

Neighbors Magazine articles
Relatives Consumer Reports
Co-workers Direct-mail brochures
Computer salespeople Information from product
Calling the advertisements
electronics store Internal web site

Types of Information
Sought
 Brands or alternatives available
 Evaluative criteria to be used
– Generally, product features
 Ratings of brands on evaluative criteria

Factors that Increase the Level of
Pre-purchase Search
 Product Factors: Higher search when
– It is a long-lasting or infrequently used
product
– There are frequent changes in product
styling
– Large volume is purchased
– The price is high
– There are many alternative brands
– There is much variation in features
continued
Copyright ©»2006 Pearson 14-14
Pre-purchase Search
 Situational Factors: Higher search when:
– Experience is lower
– Previous experience was unsatisfactory
 Social Acceptability: Higher search when:
– Purchase is a gift
– Product is socially visible in use
» continued

Pre-purchase Search
 Value-Related Factors: Higher search
when:
– Purchase is discretionary
– All alternatives have both positive and
negative qualities
– No agreement among users exists
– Conflicting information is available
– Other considerations exist
» continued

Pre-purchase Search
 Consumer Factors: Higher search when:
– Consumers are well-educated, have higher
income levels and are younger
– Consumers are low in dogmatism and risk
perception
– Level of involvement is high
– Shopping is seen as an enjoyable activity
» continued

Evaluation of Alternatives – Types
of Consumer Choice Processes
 Affective choices
– More holistic; an overall evaluation
– based on how one feels about a purchase
 Attribute-based choices
– Have pre-determined evaluative criteria
– May require both external and internal search
– Complicated decision rules may be used

Nature of Evaluative Criteria
 Can be tangible or intangible

 Include surrogate indicators
– Attributes that are used as indicators of another
attribute
 Are often ranked in order of importance

Consumer Decision Rules
 Procedures used by consumers to facilitate

brand or other consumption-related
choices

Consumer Decision Rules
 Compensatory
– Brands evaluated in terms of each relevant
criteria and the best brand (or one with
the highest score) is chosen
 Non-compensatory
– Positive evaluations do not compensate for
negative evaluations

Non-Compensatory Consumer
Decision Rules
 Conjunctive Decision Rule
– Product attributes are identified
– a minimally acceptable cutoff point is
established for each attribute
– brands that fall below the cutoff point on
any one attribute are eliminated from
further consideration.
» continued

Decision Rules
 Disjunctive Decision Rule
– consumers identify product attributes
– establish a minimally acceptable cutoff
point for each attribute
– accept the brand that meets or
exceeds the cutoff for any one
attribute
» continued
Decision Rules
 Lexicographic Decision Rule
– Product attributes are identified
– Product attributes are ranked in terms of
importance
– brands are compared in terms of the attribute
considered most important
– Brand that scores highest on the first attribute is
chosen
– If there is a tie, the scores on the next attribute
are considered

Issues in Alternative Evaluation
 Lifestyles as a Consumer Decision Strategy

 Incomplete Information
 Non-comparable Alternatives
 Series of Decisions
 Consumption Vision
– Mental picture of the consequences of using a
particular product

Coping with Missing Information
 Delay decision until missing information is

obtained
 Ignore missing information and use
available information
 Change the decision strategy to one that
better accommodates for the missing
information
 Infer the missing information

Information Search and
Marketing Strategy
 Get products into consumers’ evoked set
 Limit information search if your brand is

the preferred brand
 Increase information search if your
alternative is not the preferred brand
 Use point-of-purchase advertising
effectively
Alternative Evaluation and
Marketing Strategy
 Identify decision rule used by target market and
use suitable promotional messages
 Influence the choice of evaluative criteria
 Influence the rating of your product on evaluative

criteria used
 Use surrogate indicators effectively
 Use ‘consumption vision’

Quiz
• https://forms.gle/15NufggF5Bs8Hfsb8
CONSUMER
BEHAVIOUR
Consumer Behaviour
 Consumer Behavior is the study of when, why, how
and where people do or do not buy a product. It
basically depends on the psychology of the
consumer. It attempts to understand the buyer
decision making process both individually & in
groups. It studies the individual consumers such as
demographics & behavioural aspects to
understand the people’s wants.
 In the study of Consumer Behaviour main focus is
the customer satisfaction because customer is the
only person with whose presence businesses
actually exists
Types of consumer
Consumer
Ultimate
Buyer Customer
Consumer
Institutional
Buyer
 Consumer: According to International Dictionary of
Management “Consumer is a purchaser of goods
and services for immediate use or consumption”.
 Buyer: He is the person who purchase goods either
for resale or for use in production or for use of
somebody else.
 Customer: He is the one who purchases goods for
his own use or for the use of others or else he is
regular customer of a particular product and he
is a regular customer of particular shop.
 Institutional buyer: These are either govt. institutions
or private organizations.
Characteristics of consumer
behaviour
 It is a process where consumer decide what to buy, when to
buy, how to buy, where to buy & how much to buy.
 It comprises of both mental and physical activities of
 consumer.
Consumer behaviour is very complex and dynamic which
 keeps on changing constantly.
Individual buying behaviour is affected by various internal
factors like his needs, wants, attitudes & motives and also by
external factors like social groups, culture , status,
 environmental factors etc.
Consumer behaviour starts before buying and even after
buying.
Importance/Need of study of
consumer behaviour
 To make better strategies for increasing profits.

 To take into consideration customer’s health,
hygiene & fitness.
 To know the buying decisions and how
consumer make consumption.
 Consistent change in Consumer’s tastes or
preferences.
 Consumer behavior study is necessary to make
pricing policies.
 To avoid future market failures.
Types of Consumer
Behaviour
Dissonance
Complex Variety seeking
Reducing
Habitual
Buying Motives
•According to D.J.Ducan, “Buying

Motives are those influences or
considerations which provide the
impulse to buy, induce action or
determine choice in the purchase of
goods and services”.
Types of Buying Motives
• Product & Patronage Motives

• Emotional & Rational Motives
• Inherent & Learned motives
• Physiological & Social buying Motives
Types of Buying Motives
A. Product & Patronage Motives
1.Product Motives
 Primary
 Secondary
2. Patronage
 Motives
 Price
 Quality
 Location

 Services
Variety
B. Emotional & Rational Motives
1. Emotional Motives
 Love of others
 Social acceptance motive
 Vanity Motive
 Recreational motive
 Emulate motive
 Comfort &
convenience
2. Rational motive
Motives
 Monetary gain
 Efficiency in operation
 Dependability
C. Inherent & Learned motives
1. Inherent motives are those which come from
physiological & basic needs such as hunger,
thirst, sleep etc. If these motives are not
satisfied then consumer feels dissatisfied and
feels mental tension.
2. Learned motives are those which are
learned or acquired by a person from
environment and education like social status,
acceptance, fear, security etc.
D. Physiological & Social buying
Motives
1. Physiological motives are those which are

driven by learning, perception or attitude.
2. Social buying motives are those which are
influenced by the society in which the
consumers live.
CONSUMER DECISIONS:
Theory and Reality in Consumer Buying
PROBLEM
RECOGNITION/ IDENTIFICATION OF
Recognition of ALTERNATIVE/
unsatisfied INFORMATION
need SEARCH
EVALUATION OF
ALTERNATIVES
PURCHASE
POSTPURCHASE
EVALUATION/
BEHAVIORS
Factors influencing consumer
behaviour
 Psychological factors  Social Factors

1. Consumer needs & 1. Reference group
motivation (Maslow’s need 2. Role and status
hierarchy theory
3. Family
2. Perception  Personal factors
3. Learning
1. Age
4. Beliefs & attitudes
2. Stages in life cycle
 Cultural factors
3. Occupation in economic
1. Culture
status
2. Sub culture 4. Life style
3. Social class 5. Personality
 Economic factors  Environmental
1.Personal income Factors
2.Family income 1.Political situation
3.Income expectations 2.Legal forces
4.Savings 3.Technological
5.Liquidity position advancement
6.Consumer 4.Ethical
credit considerations
Market Segmentation
 Segmentation is essentially an identification of the subsets

of buyers within a market that share a similar needs and
demonstrates similar buyer behaviour. The world is made
up of billion buyers with there own set of needs and
behaviour. Segmentation made to match different group of
buyers with different set of needs & buyer behaviour.
Such a group is known as “segment.”
A customer is allocated  Examples of characteristics
used for segmentation:
to one market segment
 Gender
by the customer's
 Price
individual
 Interests
characteristics.

 Location

 Religion
Income
Size of
Househ
Process of Market Segmentation
The org must clearly state its segmentation strategy

Establish overall
strategy in consistent to its mission n objectives as well as
its current situation- its strengths , weaknesses,
opportunities n threats.
Decide the basis Any marketer should do segmentation on basis of differe

For factors may be demographic or psychographic, he shoul
segmentation have the idea of market characteristics of consumer and
buying behaviour.
Select After selecting bases of segmentation, segmentation

segmentation Variables like in demographic, age, income, occupation
variables etc should taken into consideration.
After segmenting the market, marketers has to analyze
Profile the
his customers in those segments, like what type
of customers are there in that market.
segments
Evaluation is done on the basis of estimating the profit

Evaluate contribution by each sector. most importantly he’ll see the
segment demand potential of customers from each segment, and
attractiveness the revenue earned out of each segment & expenditure
incurred. Other criteria like measurability, accessibility,
Responsiveness, risk etc.
Every marketer can consider only one segment at a time
even if the other segments are profitable. ultimately he
Select segment
will select the most profitable segment, this is called targe
marketing.
Objectives of Market Segmentation
 To understand the needs, wants, desires and buying

habits of customers.
 To formulate marketing programs for each consumer
groups according to their nature.
 To develop new products according to consumer’s
changing needs.
 To expand market & market share.
 To provide satisfaction to consumers.
 To make the marketing strategies and policies
consumer oriented.
Product Differentiation
 It is the process of distinguishing a product or offering from others, to make

it more attractive to a particular target market.
 This involves differentiating it from competitors' products as well as a firm's
own product offerings.
Difference between market segmentation & product differentiation
Market Segmentation
Product differentiation
• Consumer oriented
•Production oriented
•Focuses on group of customers
•Focuses on product differences
•Attempt to match the supply
•Attempt to match demand with supply
•With demand.
•Aims at facing intense comp
• Aims at increasing sales
•Concentrate on large mkt.
•Concentrates on a limited mkt
•It helps to win the competition.
Criteria for successful
segmentation
Segment must be large
Substantiality
SSububststan enough to warrant a special
anttiialaliittyy marketing
marketing mix.
mix.
Identifiability
IIdendenttiiffii Segments must be identifiable
Measurability
ababiilliittyy and their size measurable.
MMeasueasur Members of targeted segments
Accessibility
rA Accessi
ababiilliittcce
yy must be reachable with
ssibibilliittyy marketing
marketing mix. mix.
Unless segment responds to a
Responsiveness
RReesspoponsin marketing mix differently, no
sivenvenessess separate treatment
separate is needed.
treatment is
Customers in one particular Segment
needed.
Homogeneity should be similar in terms of their responses
There should be sufficient demand

Profitability for goods in the segment
Advantages of Market
Segmentation
A. Advantages to firms
 Increase in sales volume.
 Helps to prepare effective marketing plans.
 Enables to take decisions
 Helps to understands needs of consumers.
 Helps to win competition.
 Makes best use of resources.
 Achieve marketing goals
 Specialized marketing
 Creates innovations
 Higher market share.
B. Advantages to Consumers
 Customer oriented
 Quality products at reasonable prices
 Other benefits (discounts, buy 1 get 1 free
offer, customers become the winner)
Reasons for development of
market segmentation
 Rapid change in technology

 Adoption of cost reducing techniques.
 Implementation of marketing programs &
marketing mix.
 Introduction of new products.
 Cut- throat competition in the market.
Patterns for segmentation or
Market strategies
1. Undifferentiated marketing: In this marketing only one mix is
used for all customers. For eg: soft drinks.
2. Differentiated marketing: In this, different marketing mix is used
for each set of segment. Eg; consumer products.
3. Concentrated marketing: In this, all the marketing mix are
concentrated and applied at each segment.
4. Customized or personalized marketing: When marketer see
each customer as separate segment and apply marketing strategy
as per the requirements of customer. For eg: Interior designers,
civil engineering firms design roads as per the requirement of
customers.
LEVELS OF MARKET
SEGMENTATION
 Segment Marketing: Consists of group of
customers who share similar set of needs
and wants. can offer better price, design and
can fine tune the marketing activities. For
eg: Air Deccan.
 Niche marketing: more narrowly defined
customer group seeking a distinctive mix of
benefits. For eg: some companies make
clothes for oversized customers.
 Local marketing: Tailored to the needs & wants of
local consumers in trading areas, neighborhoods and
even individual stores. For eg: matrimonial websites
like Bharat matrimony who are further offering other
websites for each n every community say Punjabi,
Bengali, Muslim, Sikh etc.
 Individual marketing: Designing the product &
service offerings of individual choices. For eg Asian
paints, in which you can mix desired colour n
quantities of their own choice as per the
requirement.
Bases of Market Segmentation
Demographic
variables
Behavioral Geographic
variables variables
Psychographic
variable
Geographical Segmentation
 In this type of segmentation market is divided into different
geographical units like:
 Regions (by country, nation, state, neighborhood)
 Population Density (Urban, suburban, rural)
 City size (Size of area, population size and growth rate)
 Climate (Regions having similar climate pattern)
 A company, either serving a few or all geographic segments,
needs to put attention on variability of geographic needs
and wants.
 After segmenting consumer market on geographic bases,
companies localize their marketing efforts (product, advertising,
promotion and sales efforts)
Demographic Segmentation
 In , market is divided into small segments based on demographic
variables like:
 Age
 Gender
 Income
 Occupation
 Education
 Family size
 Family life cycle
 Religion
 Demographic factors are most important factors for segmenting the
customers groups. Consumer needs, wants, usage rate these all
depend upon demographic variables. So, considering demographic
factors, while defining marketing strategy, is crucial.
Psychographic Segmentation
 In this type of segmentation, segments are defined on the basis
of social class, lifestyle and personality characteristics.
Psychographic variables include:
 Interests
 Opinions
 Personality
 Self
 Image
 Activities
 Values
 Attitudes
A segment having demographically grouped consumers may
have different psychographic characteristics.
Behavioral Segmentation
 In this segmentation market is divided into segments based on

consumer knowledge, attitude, use or response to product.
Behavioral variables include:
 Product segmentation.
 Product benefits segmentation.
 Brand Loyalty segmentation
 Occasions segmentation (holidays like mother’s day, New Year
and Eid)
 User Status (First Time, Regular or Potential)
 Behavioral segmentation is considered most favorable
segmentation tool as it uses those variables that are closely
related to the product itself.
Limitations of Market
Segmentation
 High cost of production.
 High advertising & promotional costs.
 High working capital & storage expenses
required.
 High administration expenses.
 Difficult to choose variable segments.
 Difficulty in getting skilled & experianced
workers.
TARGET MARKETING
 A target market is a group of customers at whom

entire marketing efforts are directed. In target
marketing ,marketer identifies some parts of market,
selects one or more of them and develop suitable
products & other elements (price ,place, promotion)
for each target market selected.
 For e.g.: Mercedes target high status consumers,
.whereas Hyundai target sensitive customers
Approaches for selecting target
 Total
market
market approach: in this company develops a
single marketing mix and direct it t the entire market
for a particular product.
 Concentration approach: in this organisation
approach a single marketing segment through a
single market mix, total market consists of many
segments but this will select only one segment as
target mkt.
 Multi segment approach: In this organisation
targets two or more segments by
developing marketing mix for each
segment. Eg: P7 G. toyota.
Advantages of target marketing
 It enables the firm to tap marketing opportunities

better.
 Firm can offer suitable product to each target mkt,
thus they can serve better nad also could
develop loyal customers.
 It can expand the market share
 Possible to build up company image in the
market.
 It is suitable in case of services.
Product positioning
 Consumers will position the product in there minds

because they find some unique features in the
product as compare to other products.
 The act of creating an image about the product in the
minds of the customers is known as Product
positioning.
 For eg; Close up has looked upon by consumers as
mouth freshener than teeth cleaner and pepsodent is
looked upon as a germ killer in consumer’s mind.
Steps in Product positioning
 Identifying potential competitve advantages.

 Identify the competitors positions.
 Choosing the right competitive advantage.
(may be in terms of technology, quality, costs
etc)
 Communicating the competitive advantage.
 Monitoring the position strategy.
Techniques of product positioning
 Positioning by corporate identity (eg: Tata , Sony, Godrej etc.)
 Positioning by brand endorsement.
 Positioning by product attributes and benefits. (Eg: Colgate
positioned itself on the basis of fresh breath, tooth decay)
 Positioning bye use occasion & time. Eg:Dettol for nicks n cuts,
vicks for children at night.
 Positioning by price and quality: Eg Nirma detergent powder.
 Positoning y product category: For eg & up earlier was
positioned as a fresh clean taste now it has been positioned as
soft drink.
 Positioning by product user: Eg: Farex.
 Positioning by competitor.
Quiz #1 link
• https://forms.gle/mb2CmFUixvjkNPCK9
AGENDA
• Share previous progress

• Discuss the proposed ONLINE events:
– Naat Khawani
– Debating Competition
– Etc?
• Discuss Video on: HU eLearning System
• Discuss the Social Media Campaigns
Online Events in May
Online Events in June
HU Videos
• HU intends to record videos explaining our eLearning System for all our
stakeholders. For that we need to generate ideas, script, reference videos,
and undertake the production.
• Videos which are already under progress, and need to be released:
– Fashion: Release by 09 May, 2020
– Pharmacy: Release by 15 May, 2020
– Any Other videos?
HU Social Media Campaigns
• HU intends to record videos explaining our eLearning System for all our
stakeholders. For that we need to generate ideas, script, reference videos,
and undertake the production.
• Videos which are already under progress, and need to be released:
– Fashion: Release by 09 May, 2020
– Pharmacy: Release by 15 May, 2020
– Any Other videos?
1. Thank you for Listening
2. Write any any questions
pertaining to this lecture on the
Google Classroom discussion board
3. <teacher may insert any
other guidelines>

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WELCOME TO

CONSUMER BEHAVIOR COURSE

Hajvery University (HU)

Copyright © 2006 Pearson 14-3

Copyright © 2006 Pearson 14-4

Copyright © 2006 Pearson 14-6

•  The realization that there is a difference

Copyright © 2006 Pearson 14-7

Copyright © 2006 Pearson 14-8

Copyright © 2006 Pearson 14-9

Copyright © 2006 Pearson 14-

Friends Newspaper articles

Copyright © 2006 Pearson 14-11

Copyright © 2006 Pearson 14-12

Copyright © 2006 Pearson 14-15

Copyright © 2006 Pearson 14-16

Copyright © 2006 Pearson 14-17

Copyright © 2006 Pearson 14-18

 Can be tangible or intangible

Copyright © 2006 Pearson 14-19

 Procedures used by consumers to facilitate

Copyright © 2006 Pearson 14-20

Copyright © 2006 Pearson 14-21

Copyright © 2006 Pearson 14-22

Copyright © 2006 Pearson 14-24

 Lifestyles as a Consumer Decision Strategy

Copyright © 2006 Pearson 14-26

 Delay decision until missing information is

Copyright © 2006 Pearson 14-27

 Limit information search if your brand is

 Influence the rating of your product on evaluative

Copyright © 2006 Pearson 14-29

 To make better strategies for increasing profits.

•According to D.J.Ducan, “Buying

• Product & Patronage Motives

1. Physiological motives are those which are

 Psychological factors  Social Factors

 Segmentation is essentially an identification of the subsets

The org must clearly state its segmentation strategy

Decide the basis Any marketer should do segmentation on basis of differe

Select After selecting bases of segmentation, segmentation

Evaluation is done on the basis of estimating the profit

 To understand the needs, wants, desires and buying

 It is the process of distinguishing a product or offering from others, to make

There should be sufficient demand

 Rapid change in technology

 In this segmentation market is divided into segments based on

 A target market is a group of customers at whom

 It enables the firm to tap marketing opportunities

 Consumers will position the product in there minds

 Identifying potential competitve advantages.

• Share previous progress

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