Unit 4 – Consumer Behaviour

By

Assistant Prof. Rajit Panickar

 Meaning of Consumer Behaviour

“Consumer behavior is the actions and the decision processes of people who
purchase goods and services for personal consumption” – according to Engel,
Blackwell, and Mansard.

Consumer buying behavior refers to the study of customers and how they behave
while deciding to buy a product that satisfies their needs.

It is a study of the actions of the consumers that drive them to buy and use
certain products.

"Your most unhappy customers are your greatest source of learning."- Bill Gates
 Importance of Consumer Behaviour
1. Consumer Differentiation
In marketing, consumer differentiation is a way to distinguish a consumer from
several other consumers.

This helps to make a target group of consumers with the same or similar
behavior.

Consumer differentiation will help to tailor your strategies to the needs of

varying customer groups.

When consumer differentiation is done, you can expand the width and breadth of
your services.

You will be able to effectively serve a wider group of people.

 Importance of Consumer Behaviour

2. Retention of Consumers
“Consumer behavior is of most importance to marketers in business studies as
the main aim is to create and retain customers,” says Professor Theodore Levitt.

When a customer is happy about a particular product, he/she will repeat the
purchase.

It is very important to retain your customers and you can do so by understanding

their buying behavior.
 Importance of Consumer Behaviour

3. Design a Relevant Marketing Program

Understanding consumer behavior allows you to create effective marketing
campaigns.

Each campaign can speak specifically to a separate group of consumers based on

their behavior.

 You will need to take different messaging approaches for different consumer
groups.

A study of consumer behavior enables marketers to understand what motivates

consumers to make purchases.
 Importance of Consumer Behaviour

4. Predicting Market Trends

Consumer behavior analysis will be the first to indicate a shift in market trends.

For example,  the recent trend of consumers is towards environment friendliness

and healthy food. 

This changing market trend was observed by many brands including McDonalds.

Based on consumer behavior, McDonalds brought healthy food options. 

By conducting a consumer behavior study, a company saves a lot of resources that

might otherwise be allocated to produce a product that will not be sold in the
market.
 Importance of Consumer Behaviour

5. Competition
One of the most important reasons to study consumer behavior is to find out
answers to some of the questions:
• Is the customer buying from your competitor?
• Why is a consumer buying from your competitor?
• What features attract a consumer to your competitor products?
• What gaps are your consumers identifying in your products when compared to
your competitors? 
Studying consumer behavior facilitates in understanding and facing competition.
Based on consumers’ expectations, your brand can offer competitive advantages. 
 Importance of Consumer Behaviour

6. Innovate New Products

Companies consistently strive hard to improve the success rate of their new
products or new ideas.

The sad truth is that most new products and new ideas end up in failure. 

There is an estimate of new product failures – they range from 33% to 90%

based on the kind of industry.

One of the most important ways is to conduct a sound and thoughtful consumer
behavior study. 
 Importance of Consumer Behaviour

7. Stay Relevant in the Market

When the world is changing as rapidly as it is happening today, the biggest
challenge we all face is staying relevant to our target market.

Today’s consumers have greater choices and opportunities, which means they
can easily switch to a company that offers better products and services.

Losing relevance will only cost the company its market share.
 Importance of Consumer Behaviour

8. Improve Customer Service

Consumers require different levels of customer service, and understanding the
differences within your customer base will help you provide the most appropriate
service for individual needs.
 Difference between Consumer Buying Behavior and
Organizational Buying Behavior

1. Purpose of Buying
Individual consumers buy goods and services for ultimate use or to satisfy their
needs.

The buying purpose of such consumers is not to earn profit by reselling the
goods and services.

Organizations buy goods and services for their business needs.

The buying purpose of them is to earn profit by using and reselling the goods and
services.
 Difference between Consumer Buying Behavior and
Organizational Buying Behavior
2. Quantity
Although consumers buy various kinds of goods, the quantity of goods remains
small.

We buy only the necessary quantity of goods, which we need for regular use.

Organizational buying is done in large quantities.

There are several reasons why organizations must buy the goods they need in
bulk.

In the first place, they use large quantities of each item and must maintain
inventories at a level high enough that they will not run out of stock.

Secondly, it is cheaper and more efficient to make large-volume purchases.

 Difference between Organizational Buying Behavior and
Consumer Buying Behavior

3. Purchase Decision
Consumer buying takes decisions by themselves, sometimes they can consult
with family members and friends.

They need not fulfill any formality like organizational buying.

Organizational purchasing is a rational process because the purchasing behavior

of organizations is guided by objective factors having to do with production and
distribution.

It takes a long time than consumer buying.

 Difference between Organizational Buying Behavior and
Consumer Buying Behavior
4. Market Knowledge
Most of the consumers may not have adequate knowledge and information about
the market situation, available goods, services, etc.

Educated customers may be aware and have knowledge about the market and
goods.

Organizational buyers usually have fewer brands to choose from than individuals,
and their purchases must be evaluated on the basis of criteria that are specific to the
overall needs of the organization.

The organizational buyers have full knowledge of the market and suppliers.
 Difference between Organizational Buying Behavior and
Consumer Buying Behavior

5. Effect
Consumer buying behavior is affected by age, occupation, income level, education,
gender, etc. of consumers.

Many individuals are involved in the organizational buying process.

Within large organizations, rarely any one individual is solely responsible for the
purchase of products or services.

Instead, many individuals and departments may be involved in the buying process.
 Difference between Organizational Buying Behavior and
Consumer Buying Behavior

7. Buying Process
The consumer buying process is very simple.

No need to fulfill any formality, and there is also no need to maintain extensive
contact with sellers.

Buyers and sellers in the organizational market must maintain extensive contact
with sellers.
 Difference between Organizational Buying Behavior and
Consumer Buying Behavior

6. Types of Goods
Consumers buy many goods to use to satisfy personal or family needs.

Organizational buyers buy limited goods to use to conduct business.

Buying Roles
 Buying Roles
1. Initiator
The initiator first identifies the need to buy a particular product or service to
solve a problem.

2. Influencer
Their views influence the buying center's buyers and deciders.

This is where the children come into play, and place huge pressure on their
parents, through the desire to secure a toy and to gain acceptance and equality
with their peers.

3. Decider
Ultimately approves all or any part of the entire buying decision, whether to buy,
what to buy, how to buy, and where to buy. 
 Buying Roles

4. Buyer
Holds the formal authority to select the supplier and to arrange terms of
conditions.

5. User
Consumes or uses the product or service.

6. Gatekeeper
Controls information or access (or both) to decision-makers and influencers. This
is where the government comes into action.

Equally responsible are the Advertising Federations that take the government’s
self-regulation requirement and display information accordingly.
Five Steps Consumer Buyer Decision Process
Problem
Recognitio
n

Informatio
n Search

Evaluation
of
Alternative
s

Purchase
Decision

Post-
Purchase
Evaluation
 Five Steps Consumer Buyer Decision Process
1. Problem Recognition
Problem recognition is the beginning stage of the customer buying process.

The customer identifies with a problem when they perceive their current reality
as different from where they desire to be.

Whether or not this problem exists, it provides an opportunity for marketing

professionals to show how their products or services can solve the perceived
problem.

At this point, it is required to ask questions to pull the potential customer into the
buying process.

This type of information generates curiosity among customers to explore these

solutions.
 Five Steps Consumer Buyer Decision Process

2. Information Search
Now that a customer has identified their problem, they are ready to look for ways
how to solve it.

They begin to search for more information, this is an opportunity for marketers
to show that they are an industry leader and that their product/service is the
solution.

Create credibility and trust by advertising partnerships and sponsors prominently.

Additionally, testimonials and success stories demonstrate your experience and

customer satisfaction and make a lasting impression in a customer's mind.
 Five Steps Consumer Buyer Decision Process

3. Evaluation of Alternatives
The access to information makes it easier for customers to do in-depth research
as they do not want to make a purchase unless it is well thought out.

They are going to look at your competition as well and compare their findings.

You can take the example of how companies use this stage as an opportunity to
keep their customers on their site by showing their competitors rates alongside
theirs, even if the competition is cheaper, this not only simplifies the process, it
establishes a trusting customer relationship, especially during the evaluation of
alternatives stage.
 Five Steps Consumer Buyer Decision Process

4. Purchase Decision
At this point, the customer has explored multiple options, understand pricing and
payment options and they are deciding whether to move forward with the
purchase or not.

5. Post-Purchase Evaluation
The process then concludes with a post-purchase evaluation.

The customer will then decide if they liked your product or not, if they are
dissatisfied, they may ask for a return.
 Moment of Truth

A moment of truth (MOT) is marketing lingo for any opportunity a customer (or
potential customer) has to form an impression about a company, brand, product, or
service.

Marketers strive to use moments of truth to create positive, customer-centric

outcomes.

The concept itself is very simple - if every customer interaction has a positive
outcome, the business will be successful.

Although moments of truth can include mass communication, an MOT's power

comes from those interactions in which the communication is personalized. 
 Zero Moment of Truth

The zero moment of truth (ZMOT) refers to the discovery and awareness stage in
the buying cycle when the consumer researches a product, prior to the seller’s
knowledge. 

Buyers feel more empowered to get access to purchasing information, and if

they’re not satisfied, they won’t stick around and wait for you to provide it.

According to Think with Google, 53% of shoppers say they always do research

before they buy to ensure they are making the best possible choice.