Consumer Behavior in Changing Business Scenario in Globalization

KKIMRC IJRHRM Vol-1, No-2 Dec-Feb 2011-2012 - ISSN: 2277 -1190

Consumer Behavior in Changing Business Scenario in Globalization

Consumer Behavior in Changing BusinessScenario in Globalization

Pradeep shuklaHead of Department, MBA, IET, Alwar (Rajasthan)

[email protected]: 8233849905

Bhuwan GuptaHead of Department, BBA, IET, Alwar (Rajasthan)

[email protected]: 9950842922

Abstract-In this era of competition,understanding the consumer is a necessity formarketers. Consumer needs and preferences arecontinuously changing, given the changes infactors like demographics and lifestyles. Thesechanges can become great businessopportunities for alert marketers and threats formarketers who fail to adapt. Consumersacquire, consume, and dispose off the productsand services created by organizations. They gothrough several cognitive and behavioralprocesses while making their purchase andconsumption decisions. The knowledge of howthey decide on one brand instead of another andwhat factors influence their decision-making iscrucial for marketers, not only to cater to theexisting needs of their consumers but also toprepare for their future needs. This knowledge isalso essential to make various businessdecisions related to product development,packaging, pricing, distribution, promotions,communication, etc. This work paper focuses onconsumer behaviour in changing businessscenario in the era of globalization.

Key words:

Introduction:-Consumer behaviour referred to as the study ofwhen, why, how, where and what people do ordo not buy products. It blends elements frompsychology, sociology,social, anthropology and

economics. It attempts to understand the buyerdecision making process, both individually andin groups.It studies characteristics of individual consumerssuch as demographics and behavioural variablesin an attempt to understand people's wants. Italso tries to assess influences on the consumerfrom groups such as family, friends, referencegroups, and society in general.Customerbehaviour study is based on consumer buyingbehaviour, with the customer playing the threedistinct roles of user, payer and buyer.Relationship marketing is an influential asset forcustomer behaviour analysis as it has a keeninterest in the re-discovery of the true meaningof marketing through the re-affirmation of theimportance of the customer or buyer.A greater importance is also placed on consumerretention, customer relationship management,personalisation, customisation and one-to-onemarketing. Social functions can be categorizedinto social choice and welfare functions.Eachmethod for vote counting is assumed as a socialfunction but if Arrow’s possibility theorem isused for a social function, social welfarefunction is achieved. Some specifications of thesocial functions are decisiveness, neutrality,anonymity, monotonocity, unanimity,homogeneity and weak and strong Paretooptimality. No social choice function meetsthese requirements in an ordinal scalesimultaneously.The most important characteristic of a socialfunction is identification of the interactive effect



of alternatives and creating a logical relationwith the ranks. Marketing provides services inorder to satisfy customers. With that in mind, theproductive system is considered from itsbeginning at the production level, to the end ofthe cycle, the consumer Belch define consumerbehaviour as 'the process and activities peopleengage in when searching for, selecting,purchasing, using, evaluating, and disposing ofproducts and services so as to satisfy their needsand desires'.Consumer behavior is "The study of individuals,groups, or organizations and the processes theyuse to select, secure, use, and dispose ofproducts, services, experiences, or ideas tosatisfy needs and the impacts that theseprocesses have on the consumer and society."

i. Behavior occurs either for theindividual, or in the context of agroup (e.g., friends influence whatkinds of clothes a person wears) oran organization (people on the jobmake decisions as to which productsthe firm should use).

ii. Consumer behavior involves the useand disposal of products as well asthe study of how they are purchased.Product use is often of great interestto the marketer, because this mayinfluence how a product is bestpositioned or how we can encourageincreased consumption. Since manyenvironmental problems result fromproduct disposal (e.g., motor oilbeing sent into sewage systems tosave the recycling fee, or garbagepiling up at landfills) this is also anarea of interest.

iii. Consumer behavior involvesservices and ideas as well astangible products.

iv. The impact of consumer behavioron society is also of relevance. Forexample, aggressive marketing ofhigh fat foods, or aggressivemarketing of easy credit, may haveserious repercussions for thenational health and economy.

There are some main applications of consumerbehavior:

i. The most obvious is for marketingstrategy—i.e., for making bettermarketing campaigns. For example, byunderstanding that consumers are morereceptive to food advertising when theyare hungry, we learn to schedule snackadvertisements late in the afternoon. Byunderstanding that new products areusually initially adopted by a fewconsumers and only spread later, andthen only gradually, to the rest of thepopulation, we learn that (1) companiesthat introduce new products must bewell financed so that they can stay afloatuntil their products become acommercial success and (2) it isimportant to please initial customers,since they will in turn influence manysubsequent customers’ brand choices.

ii. A second application is public policy.In the 1980s, Accutane, a near miraclecure for acne, was introduced.Unfortunately, Accutane resulted insevere birth defects if taken by pregnantwomen. Although physicians wereinstructed to warn their female patientsof this, a number still became pregnantwhile taking the drug. To getconsumers’ attention, the Federal DrugAdministration (FDA) took the step ofrequiring that very graphic pictures ofdeformed babies be shown on themedicine containers.

iii. A Social marketing involves gettingideas across to consumers rather thanselling something. Marty Fishbein, amarketing professor, went on sabbaticalto work for the Centers for DiseaseControl trying to reduce the incidence oftransmission of diseases through illegaldrug use. The best solution, obviously,would be if we could get illegal drugusers to stop. This, however, wasdeemed to be infeasible. It was alsodetermined that the practice of sharingneedles was too ingrained in the drug



culture to be stopped. As a result, usingknowledge of consumer attitudes, Dr.Fishbein created a campaign thatencouraged the cleaning of needles inbleach before sharing them, a goal thatwas believed to be more realistic.

iv. As a final benefit, Studying consumerbehavior should make us betterconsumers. Common sense suggests, forexample, that if you buy a 64 liquidounce bottle of laundry detergent, youshould pay less per ounce than if youbought two 32 ounce bottles. In practice,however, you often pay a size premiumby buying the larger quantity. In otherwords, in this case, knowing this factwill sensitize you to the need to checkthe unit cost labels to determine if youare really getting a bargain.

There are several units in the market that can beanalyzed. Our main thrust in this course is theconsumer. However, we will also need toanalyze our own firm’s strengths andweaknesses and those of competing firms.Suppose, for example, that we make a productaimed at older consumers, a growing segment. Acompeting firm that targets babies, a shrinkingmarket, is likely to consider repositioningtoward our market. To assess a competing firm’spotential threat, we need to examine its assets(e.g., technology, patents, market knowledge,and awareness of its brands) against pressures itfaces from the market. Finally, we need to assessconditions (the marketing environment). Forexample, although we may have developed aproduct that offers great appeal for consumers, arecession may cut demand dramatically.Information Search and Decision MakingProblem Recognition. One model of consumerdecision making involves several steps. The firstone is problem recognition—you realize thatsomething is not as it should be. Perhaps, forexample, your car is getting more difficult tostart and is not accelerating well. The secondstep is information search—what are somealternative ways of solving the problem? Youmight buy a new car, buy a used car, take your

car in for repair, ride the bus, ride a taxi, or ridea skateboard to work.The third step involves evaluation of

alternatives. A skateboard is inexpensive, butmay be ill-suited for long distances and for rainydays. Finally, we have the purchase stage, andsometimes a post-purchase stage (e.g., youreturn a product to the store because you did notfind it satisfactory). In reality, people may goback and forth between the stages. For example,a person may resume alternative identificationduring while evaluating already knownalternatives.

Consumer involvement will tend to varydramatically depending on the type of product.In general, consumer involvement will be higherfor products that are very expensive (e.g., ahome, a car) or are highly significant in theconsumer’s life in some other way (e.g., a wordprocessing program or acne medication).It is important to consider the consumer’smotivation for buying products. To achieve thisgoal, we can use the Means-End chain, whereinwe consider a logical progression ofconsequences of product use that eventually leadto desired end benefit. Thus, for example, aconsumer may see that a car has a large engine,leading to fast acceleration, leading to a feelingof performance, leading to a feeling of power,which ultimately improves the consumer’s self-esteem. A handgun may aim bullets withprecision, which enables the user to kill an



intruder, which means that the intruder will notbe able to harm the consumer’s family, whichachieves the desired end-state of security. Inadvertising, it is important to portray the desiredend-states. Focusing on the large motor will doless good than portraying a successful persondriving the car.Internal search involves the consumeridentifying alternatives from his or her memory.For certain low involvement products, it is veryimportant that marketing programs achieve “topof mind” awareness. For example, few peoplewill search the Yellow Pages for fast foodrestaurants; thus, the consumer must be able toretrieve one’s restaurant from memory before itwill be considered. For high involvementproducts, consumers are more likely to use anexternal search. Before buying a car, forexample, the consumer may ask friends’opinions, read reviews in Consumer Reports,consult several web sites, and visit severaldealerships. Thus, firms that make products thatare selected predominantly through externalsearch must invest in having informationavailable to the consumer in need—e.g., throughbrochures, web sites, or news coverage.A compensatory decision involves the consumer“trading off” good and bad attributes of aproduct. For example, a car may have a lowprice and good gas mileage but slowacceleration. If the price is sufficientlyinexpensive and gas efficient, the consumer maythen select it over a car with better accelerationthat costs more and uses more gas.Occasionally, a decision will involve a non-compensatory strategy. For example, a parentmay reject all soft drinks that contain artificialsweeteners. Here, other good features such astaste and low calories cannot overcome this one“non-negotiable” attribute.The amount of effort a consumer puts intosearching depends on a number of factors suchas the market (how many competitors are there,and how great are differences between brandsexpected to be?), product characteristics (howimportant is this product? How complex is theproduct? How obvious are indications ofquality?), consumer characteristics (how

interested is a consumer, generally, in analyzingproduct characteristics and making the bestpossible deal?), and situational characteristics(as previously discussed).Two interesting issues in decisions are: Variety seeking (where consumers seek

to try new brands not because thesebrands are expected to be “better” in anyway, but rather because the consumerwants a “change of pace,” and

“Impulse” purchases—unplanned buys.This represents a somewhat “fuzzy”group. For example, a shopper mayplan to buy vegetables but only decidein the store to actually buy broccoli andcorn. Alternatively, a person may buyan item which is currently on sale, orone that he or she remembers that isneeded only once inside the store.

Factors influencing consumer choicesA number of factors involve consumer choices.In some cases, consumers will be moremotivated. For example, one may be morecareful choosing a gift for an in-law than whenbuying the same thing for one self. Someconsumers are also more motivated tocomparison shop for the best prices, while othersare more convenience oriented. Personalityimpacts decisions. Some like variety more thanothers, and some are more receptive tostimulation and excitement in trying new stores.Perception influences decisions. Some people,for example, can taste the difference betweengeneric and name brand foods while manycannot.Selective perception occurs when a person is

paying attention only to information of interest.For example, when looking for a new car, theconsumer may pay more attention to car adsthan when this is not in the horizon. Someconsumers are put off by perceived risk. Thus,many marketers offer a money back guarantee.Consumers will tend to change their behaviorthrough learning—e.g., they will avoidrestaurants they have found to be crowded andwill settle on brands that best meet their tastes.Consumers differ in the values they hold (e.g.,some people are more committed to recycling



than others who will not want to go through thehassle).Generally, there are two main themes in theFamily Life Cycle, subject to significantexceptions: As a person gets older, he or she tends

to advance in his or her career and tendsto get greater income (exceptions:maternity leave, divorce, retirement).

Unfortunately, obligations also tend toincrease with time (at least until one’smortgage has been paid off). Childrenand paying for one’s house are two ofthe greatest expenses.

Note that although a single person may have alower income than a married couple, the singlemay be able to buy more discretionary items.

Family Decision Making. Individual membersof families often serve different roles indecisions that ultimately draw on shared familyresources. Some individuals are informationgatherers/holders, who seek out informationabout products of relevance. These individualsoften have a great deal of power because theymay selectively pass on information that favorstheir chosen alternatives.Influencers do not ultimately have the powerdecide between alternatives, but they may maketheir wishes known by asking for specificproducts or causing embarrassing situations iftheir demands are not met. The decisionmaker(s) have the power to determine issuessuch as: Whether to buy; Which product to buy Which brand to buy; Where to buy it; and When to buy.

Note, however, that the role of the decisionmaker is separate from that of the purchaser.From the point of view of the marketer, thisintroduces some problems since the purchasercan be targeted by point-of-purchase (POP)marketing efforts that cannot be aimed at thedecision maker. Also note that the distinctionbetween the purchaser and decision maker maybe somewhat blurred:

The decision maker may specify whatkind of product to buy, but not whichbrand;

The purchaser may have to make asubstitution if the desired brand is not instock;

The purchaser may disregardinstructions (by error or deliberately).

It should be noted that family decisions are oftensubject to a great deal of conflict. The reality isthat few families are wealthy enough to avoid astrong tension between demands on the family’sresources. Conflicting pressures are especiallylikely in families with children and/or when onlyone spouse works outside the home. Note thatmany decisions inherently come down to values,and that there is frequently no "objective" wayto arbitrate differences. One spouse may believethat it is important to save for the children’sfuture; the other may value spending now (onprivate schools and computer equipment) to helpprepare the children for the future. Who is right?There is no clear answer here. The situationbecomes even more complex when moreparties—such as children or other relatives—areinvolved.Some family members may resort to variousstrategies to get their way. One is bargaining—one member will give up something in return forsomeone else. For example, the wife says thather husband can take an expensive course ingourmet cooking if she can buy a new pickuptruck. Alternatively, a child may promise towalk it every day if he or she can have ahippopotamus. Another strategy is reasoning—trying to get the other person(s) to accept one’sview through logical argumentation. Note thateven when this is done with a sincere intent, itspotential is limited by legitimate differences invalues illustrated above. Also note thatindividuals may simply try to "wear down" theother party by endless talking in the guise ofreasoning (this is a case of negativereinforcement as we will see subsequently).

Group Influences Humans are inherently social animals,

and individuals greatly influence each



other. A useful framework of analysis ofgroup influence on the individual is theso called reference group—the termcomes about because an individual usesa relevant group as a standard ofreference against which oneself iscompared.

Reference groups come with various degrees ofinfluence. Primary reference groups come with agreat deal of influence—e.g., members of afraternity/sorority. Secondary reference groupstend to have somewhat less influence—e.g.,members of a boating club that one encounteronly during week-ends are likely to have theirinfluence limited to consumption during thattime period.Another typology divides reference groups intothe informational kind (influence is based almostentirely on members’ knowledge), normative(members influence what is perceived to be"right," "proper," "responsible," or "cool"), oridentification. The difference between the lattertwo categories involves the individual’smotivation for compliance. In case of thenormative reference group, the individual tendsto comply largely for utilitarian reasons—dressing according to company standards islikely to help your career, but there is no realmotivation to dress that way outside the job. Incontrast, people comply with identificationgroups’ standards for the sake of belonging—forexample, a member of a religious group maywear a symbol even outside the house ofworship because the religion is a part of theperson’s identity.Consumer attitudes are a composite of aconsumer’s (1) beliefs about, (2) feelings about,(3) and behavioral intentions toward someobject--within the context of marketing, usuallya brand or retail store. These components areviewed together since they are highlyinterdependent and together represent forces thatinfluence how the consumer will react to theobject.

Changing affect in Consumer BehaviourOne approach is to try to change affect, whichmay or may not involve getting consumers tochange their beliefs. One strategy uses theapproach of classical conditioning try to “pair”the product with a liked stimulus. For example,we “pair” a car with a beautiful woman.Alternatively, we can try to get people to like theadvertisement and hope that this liking will“spill over” into the purchase of a product. Forexample, the Pillsbury Doughboy does not reallyemphasize the conveyance of much informationto the consumer; instead, it attempts to create awarm, fuzzy image. Although Energizer Bunnyads try to get people to believe that theirbatteries last longer, the main emphasis is on thelikeable bunny. Finally, products which arebetter known, through the mere exposure effect,tend to be better liked--that is, the more aproduct is advertised and seen in stores, themore it will generally be liked, even ifconsumers to do not develop any specific beliefsabout the product.Changing behaviourPeople like to believe that their behavior isrational; thus, once they use our products,chances are that they will continue unlesssomeone is able to get them to switch. One wayto get people to switch to our brand is to usetemporary price discounts and coupons;however, when consumers buy a product ondeal, they may justify the purchase based on thatdeal (i.e., the low price) and may then switch toother brands on deal later. A better way to get



people to switch to our brand is to at leasttemporarily obtain better shelf space so that theproduct is more convenient. Consumers are lesslikely to use this availability as a rationale fortheir purchase and may continue to buy theproduct even when the product is lessconveniently located. (Notice, by the way, thatthis represents a case of shaping).Changing beliefsAlthough attempting to change beliefs is the

obvious way to attempt attitude change,particularly when consumers hold unfavorableor inaccurate ones, this is often difficult toachieve because consumers tend to resist.Several approaches to belief change exist:

1. Change currently held beliefs. It isgenerally very difficult to attempt tochange beliefs that people hold,particularly those that are strongly held,even if they are inaccurate. Forexample, the petroleum industryadvertised for a long time that its profitswere lower than were commonlybelieved, and provided extensive factualevidence in its advertising to supportthis reality. Consumers were suspiciousand rejected this information, however.

2. Change the importance of beliefs.Although the sugar manufacturerswould undoubtedly like to decrease theimportance of healthy teeth, it is usuallynot feasible to make beliefs lessimportant--consumers are likely toreason, why, then, would you botherbringing them up in the first place?However, it may be possible tostrengthen beliefs that favor us--e.g., avitamin supplement manufacturer mayadvertise that it is extremely importantfor women to replace iron lost throughmenstruation. Most consumers alreadyagree with this, but the belief can bemade stronger.

3. Add beliefs. Consumers are less likelyto resist the addition of beliefs so longas they do not conflict with existingbeliefs. Thus, the beef industry hasadded beliefs that beef (1) is convenient

and (2) can be used to make a number ofcreative dishes. Vitamin manufacturersattempt to add the belief that stresscauses vitamin depletion, which soundsquite plausible to most people.

4. Change ideal. It usually difficult, andvery risky, to attempt to change ideals,and only few firms succeed. Forexample, Hard Candy may haveattempted to change the ideal away fromtraditional beauty toward more uniqueself expression.

One-sided vs. two-sided appealsAttitude research has shown that consumers

often tend to react more favorably toadvertisements which either (1) admit somethingnegative about the sponsoring brand (e.g., theVolvo is a clumsy car, but very safe) or (2)admits something positive about a competingbrand (e.g., a competing supermarket hasslightly lower prices, but offers less service andselection). Two-sided appeals must, containoverriding arguments why the sponsoring brandis ultimately superior--that is, in the aboveexamples, the “but” part must be emphasized.Appeal Approaches.The use of affect to induce empathy withadvertising characters may increase attraction toa product, but may backfire if consumers believethat people’s feelings are being exploited. Fearappeals appear to work only if (1) an optimallevel of fear is evoked--not so much that peopletune it out, but enough to scare people intoaction and (2) a way to avoid the feared stimulusis explicitly indicated--e.g., gingivitis and toothloss can be avoided by using this mouth wash.Humor appears to be effective in gainingattention, but does not appear to increasepersuasion in practice. In addition, a morefavorable attitude toward the advertisement maybe created by humorous advertising, which mayin turn result in increased sales. Comparativeadvertising, which is illegal in many countries,often increases sales for the sponsoring brand,but may backfire in certain cultures.ConclusionOne of the best ways to influence consumerbehavior is to give buyers an acceptable motive.



This is somewhat related to the idea of askingwhat type of person would buy a certain productin evaluating consumer behavior. Consumerswant to feel they're doing something good, beinga good person, eating healthy, making contacts,keeping up appearances, or that they just deserveto be spoiled a little bit. If marketers canconvince consumers that they need a product orservice for some "legitimate" reason, customerswill be more likely to make a purchase.

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Author’s Profile

Pradeep Shukla Qualification:MBA, M Phil, Areas of Interest: MarketingManagement, Marketing of Services, Productionand Operation Management, StrategicManagement, Supply Chain Management,Managerial Economics, Marketing Research,Branding etc.Experience : Overall 24 Years ofExperience (18 years in industry+ 06 InAcademics).Research Work: Brand EquityManagement of Hospital at Hyderabad (atM.Phil Level)Seminars/ Conferences/workshopsHas attended and presented papers in more than35 National and 06 International Seminars invarious areas of management FDP/MDPHasparticipated in 06 FDP (Research andMarketing) and 04 MDP (02 International +02National)Books & Journals: Has got 06publication in National Journal and 10Internationalpapers in journals of repute, 28articles in National Seminars proceedings alsogot 04 articles and case studies published in



areas of Rural Marketing and Supply ChainManagement Other Assignment: Carried out anindependent research work for IIPC, Hyderabadto find out total water consumption by theindustries located at twin cities (Hyderabad andSecunderabad) with a sample size of 3500

Bhuwan Gupta, Qualification:MBA, M Phil, Areas of Interest: MarketingManagement, Marketing of Services, Productionand Operation Management, StrategicManagement, Supply Chain Management,Managerial Economics, Marketing Research,Branding etc.Experience : Overall 09 Years ofExperience (5years in industry+ 04InAcademics).Research Work: Impact of retailIndustry in India (at M.Phil Level)Seminars/Conferences/workshops Has attended andpresented papers in more than 02 NationalFDP/MDPHas participated in 01 FDP (Researchand Marketing) Other Assignment: Guided Morethan 50 students for Research project Reports ofMBA students (Rajasthan technical university)

Consumer Behavior in Changing Business Scenario in Globalization

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