Consumer Behaviour

Dr. Poonam Madan

Consumer Behavior

Course Description

Consumer behavior is a fascinating interdisciplinary field of study that focuses on the behavior that consumers display in searching for, purchasing, using, evaluating and disposing of products and services that they expect will satisfy their needs and desires.

Consumer behavior focuses on how individuals make decisions to spend their available resources including time, money and effort on consumption-related items.

For marketers to be successful in today’s dynamic and rapidly evolving marketplace, they need to know everything they can about consumers including the personal and group influences that affect consumer decisions and how these decisions are made. That involves what consumers buy, why they buy it, when they buy it, where they buy it, how often they buy it, how they evaluate it after the purchase and the impact of such evaluations on future purchases.

“Remember Me?”“Remember Me?”

I'm the fellow who goes into a restaurant, sits down and patiently waits while the waitresses do everything but take my order. I'm the fellow who goes into a department store and stands quietly while the sales clerks finish their little chitchat. I'm the man who drives into a gasoline station and never blows his horn, but waits patiently while the attendant finishes reading his comic book.

"Yes, you might say, I'm a good guy. But do you know who else I am? I am the fellow who never comes back, and it amuses me to see you spending thousands of dollars every year to get me back into your store, when I was there in the first place, and all you had to do to keep me was to give me a little service; show me a little courtesy."

Source: From a Better Business Bureau bulletin submitted by An Arkansas Reader to Dear Abby

Introduction

Consumer psychology needs a special attention in the present highly competitive and consumer-oriented marketing system.Consumer is the cause & purpose of all

production and marketing activities.

Think about this:

• Why does one consumer buy Brand X and another purchase Brand Y?

• Why do some consumers use money off coupons and others do not?

• Why will some people pay a high price for a product although others will only buy the same product if it is on sale?

Why Consumer Behaviour?

Activity:

• Think back to a purchase decision you have made (for example for a computer). Map out the decision steps that you took.

Your Behaviour

• Consumer behaviour is the process individuals or groups go through to select, purchase, use, and dispose of goods, services, ideas, or experiences to satisfy their needs and desires. (Salmon)

• “Buying behaviour is never simple. It is affected by many different factors, and yet understanding it is the essential.”

(KBM, 2006:197).

Decisions Decisions

This study draws on concepts from various other disciplinesPsychologySociologyAnthropologyEconomicsMarketing

Consumer Behavior

Consumer behavior focuses primarily on buyers and buying.

But, often you buy for others (significant others, spouses, friends, children)

To buy, you have to engage in activities other than buying e.g., searching, learning to search, using, knowing how to use, and disposing.

… so buyer behavior cannot be the whole story

Meaning of Consumer/Buyer BehaviorConsumer is the most important person in business. His

attitude, behavior, needs and reactions play an important role in regard to marketing plans and policies of companies.

Companies study the behaviours of consumers constantly for their benefits.

Consumer behavior is comparatively new area within the scope of business management.

The purpose of study of consumer behavior is to understand human actions and reactions (consumer behaviour) in the best possible manner.

Concept of Consumer Behavior

Individuals or groups acquiring, using and disposing of products, services, ideas, or experiences

Includes search for information and actual purchase

Includes an understanding of consumer thoughts, feelings, and actions

Acquisition, Consumption and DisposalAcquisition

ReceivingFinding InheritingProducingpurchasing

ConsumptionCollectingNurturingCleaningPreparingDisplayingStoringWearingSharing

Acquisition, Consumption, Disposal

DisposalGivingThrowing awayRecyclingdepleting

Consumption and Consumer BehaviorConsumption

Activities, thoughts and feelings (of individuals and groups) directed toward achieving satisfaction (often using market offerings).

ConsumersThose who engage in consumption activities

Consumer Behavior (Brief definition)How consumers go about achieving satisfaction.

What Does it Mean to Study Consumer Behavior?It is a study of the feelings, thoughts, and

behaviors of consumers.

Specifically, from a managerial point of view, it is a study of how people respond to marketing entities such as products, advertisements, promotion, price etc.

Consumer Behavior

referred to as the study of when, why, how, where and what people do or do not buy products.

It blends elements from psychology, sociology, social psychology, anthropology and economics.

It attempts to understand the buyer decision making process, both individually and in groups.

Consumer Behavior

It studies characteristics of individual consumers such as demographics and behavioural variables in an attempt to understand people's wants.

It also tries to assess influences on the consumer from groups such as family, friends, reference groups, and society in general.

Consumer Behavior

Consumer behaviour study is based on consumer buying behaviour, with the customer playing the three distinct roles of user, payer and buyer.

Relationship marketing is an influential asset for customer behaviour analysis as it has a keen interest in the re-discovery of the true meaning of marketing through the re-affirmation of the importance of the customer or buyer.

What is Consumer Behaviour?

Those activities directly involved in obtaining , consuming and

disposing of products and services, including the decision

processes that precede and follow these actions

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

Consumer Behavior

Consumer Behavior may be defined as “the interplay of forces that takes place during a consumption process, within a consumers’ self and his environment. - this interaction takes place between three

elements viz. knowledge, affect and behavior; - it continues through pre-purchase activity to

the post purchase experience; - it includes the stages of evaluating, acquiring,

using and disposing of goods and services”.

Consumer Behavior

Consumer behavior explains the reasons and logic that underlie purchasing decisions and consumption patterns;

it explains the processes through which buyers make decisions.

The study includes within its purview, the interplay between cognition, affect and behavior that goes on within a consumer during the consumption process: selecting, using and disposing off goods and services.

Consumer BehaviorWhat do we study?

Primarily, three aspectsAffect/Cognition:

Feelings (“I love the restaurant”) Thoughts (Rs. 250 for a bowl of soup? Why is it so expensive?”)

Behavior: Action (Going to the restaurant)

Environment: Context (The lighting in the restaurant)

In other words, we will be examining consumers’ affective/cognitive and behavioral responses in the environmental context.

CB is study of interplay between cognition, affect and behavior Cognition: This includes within its ambit the “knowledge, information

processing and thinking” part; It includes the mental processes involved in processing of information, thinking and interpretation of stimuli (people, objects, things, places and events). In our case, stimuli would be product or service offering; it could be a brand or even anything to do with the 4Ps.

Affect: This is the “ feelings” part. It includes the favorable or unfavorable feelings and corresponding emotions towards a stimuli (eg. towards a product or service offering or a brand). These vary in direction, intensity and persistence.

Behavior: This is the “visible” part. In our case, this could be the

purchase activity: to buy or not a buy (again specific to a product or service offering, a brand or even related to any of the 4 Ps).

The interaction is reciprocal between each of the three towards each other and

with the environment.

What is Consumer Behavior?

Consumer Behavior:The study of the processes involved when individuals or

groups select, purchase, use, or dispose of products, services ideas, or experiences to satisfy needs and desires

Role Theory: Identifies consumers as actors on the marketplace

stageConsumer Behavior is a Process:

Exchange: A transaction in which two or more organizations give and receive something of value

“MEET THE NEW CONSUMERand 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.”-Fortune Editor

Consumer Behavior InvolvesMany Different Actors

Consumer:A person who identifies a need or desire,

makes a purchase, and then disposes of the productMany people may be involved in this sequence

of events.• Purchaser / User / Influencer

Consumers may take the form of organizations or groups.

Consumer

The “consumer” includes both personal consumers and business/ industrial/ organizational consumers.

Types of Buyers/Consumers

1. Friendly/co-operative buyer.

2. Timid/reserved/shy buyer.3. Silent buyer.4. Undecided buyer.5. Price or quality conscious

buyer.6. Argumentative buyer.

7. Suspicious buyer.

8. Impatient buyer.9. Bargain buyer.10. Impulsive buyer.11.Over-cautious

buyer.12.Slow-thinking buyer13.Rude/ill-mannered

buyer.14.Clever/intelligent

buyer.

Consumer Types

Personal consumer Organizational Consumer

Buys for individual Consumption. Buying decisions are influenced by Cognitive, Personal, cultural ,socialInfluence, Situational factors

Buying for organizational consumptionBuying decisions are influenced by Quality , service , attitude of the suppliersFinancial considerations etc . Besides this , Environmental , organizational, interpersonalFactors influence the decisions.

The buying decision involves four decision Makers. End User, Influencer, Decision makers ( management ) & commercial Buyer. Satisfaction of all our groups is essential

Consumer types according to loyalty

Solus Users Dual users Flirts

Degree of commitment towards product or service brands.

High Medium Low

Personal consumer & Business Consumer

The Global Consumer

American products like Levi jeans are indemand around the world.

Consumer Buying Behavior Consumer Buying Behavior refers to the buying behavior of final consumers -individuals & households who buy goods and services for personal consumption.

The central question for marketers is:

““How do consumers respond to various How do consumers respond to various marketing efforts the company might use?” marketing efforts the company might use?”

Consumer Buying Behavior

The Nature of Consumer Behavior and Decision MakingThe Nature of Consumer Behavior and Decision Making

Consumer Behavior:The mental and emotional processes and

physical activities people engage in when they select, purchase, use, and dispose of products or services to satisfy particular needs and desires.

Consumer Behavior:The mental and emotional processes and

physical activities people engage in when they select, purchase, use, and dispose of products or services to satisfy particular needs and desires.

Defining Consumer BehaviorDefining Consumer Behavior

Consumer Behavior is the Process Involved When Individuals or Groups Select, Use, or Dispose of Products,

Services, Ideas or Experiences (Exchange) to Satisfy Needs and

Desires.

Consumer Behaviour

Definition:

Study of individuals, groups or organisations and the processes they use to select, secure, use and dispose of products, services, experiences, or ideas to satisfy needs

Consumer Behaviour Defined

The American Marketing Association has defined consumer behaviour as, “The

dynamic interaction of affect and cognition, behaviour, and the environment by

which human beings conduct the exchange aspects of their lives.”

Peter D. Bennett, ed. Dictionary of Marketing Terms, 2nd ed. 1995.

“Consumer behaviour refers to the actions and decision processes of people

who purchase goods and services for personal consumption.”

James F. Engel, Roger D. Blackwell and Paul W. Miniard,

“Consumer Behaviour” (1990).

Consumer behaviour refers to “the mental and emotional processes and the

observable behaviour of consumers during searching for, purchasing and post

consumption of a product or service.” (Authors).

OTHER DEFINITIONS

“The behavior that consumers display in searching for, purchasing, using, evalauting and disposing of products and services that they expect will satisfy their needs.”

- Schiffman and Kanuk “…..the decision process and physical activity

engaged in when evaluating, acquiring, using or disposing of goods and services."

- Loudon and Bitta

10

Definitions of Consumer Behaviour (cont.)

Those behaviours performed by decision-making units in the purchase, usage and disposal of goods and services (Kotler & Levy)

11

Definitions of Consumer Behaviour (cont.) Those actions directly involved in

obtaining, consuming, and disposing of products and services, including the decision processes that precede and follow these actions

(Engel, Blackwell & Miniard)

“consumer behaviour…… is the study of the processes involved when individuals or groups select, purchase, use or dispose of products, services, ideas or experiences to satisfy needs and desires.”

Solomon,Bamossy . “the behavior that consumers display in

searching for, purchasing, using, evaluating, and disposing of products and services that they expect will satisfy their needs”

Schiffman ANDKanuk

Definition of Consumer/Buyer behaviourConsumer behavior is the process whereby

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

Walters and Paul

Buyer behaviour is all psychological, social and physical behaviour of potential customers as they become aware of, evaluate, purchase, consume and tell others about the products and services.

Webster

Nature of Consumer Behavior: The subject deals with issues related to cognition, affect and

behavior in consumption behaviors, against the backdrop of individual and environmental determinants. The individual determinants pertain to an individual’s internal self and include psychological components like personal motivation and involvement, perception, learning and memory, attitudes, self-concept and personality, and, decision making. The environmental determinants pertain to external influences surrounding an individual and include sociological, anthropological and economic components like the family, social groups, reference groups, social class, culture, sub-culture, cross-culture, and national and regional influences.

The subject can be studied at micro or macro levels depending upon whether it is analyzed at the individual level or at the group level.

Nature of Consumer Behavior (contd.)

• The subject is interdisciplinary. It has borrowed heavily from psychology (the study of the individual: individual determinants in buying behavior), sociology

(the study of groups: group dynamics in buying behavior), social psychology (the study of how an individual operates in group/groups and its effects on buying behavior), anthropology (the influence of society on the individual: cultural and cross-cultural issues in buying behavior), and economics (income and purchasing power).

Nature of Consumer Behavior (contd.)

Consumer behavior is dynamic and interacting in nature. The three components of cognition, affect and behavior of individuals alone or in groups keeps on changing; so does the environment. There is a continuous interplay or interaction between the three components themselves and with the environment. This impacts consumption pattern and behavior and it keeps on evolving and it is highly dynamic.

Nature of Consumer Behavior (contd.)

Consumer behavior involves the process of exchange between the buyer and the seller, mutually beneficial for both.

Nature of Consumer Behavior (contd.)

As a field of study it is descriptive and also analytical/ interpretive. It is descriptive as it explains consumer decision making and

behavior in the context of individual determinants and environmental influences.

It is analytical/ interpretive, as against a backdrop of theories borrowed from psychology, sociology, social psychology, anthropology and economics, the study analyzes consumption behavior of individuals alone and in groups.

It makes use of qualitative and quantitative tools and techniques for research and analysis, with the objective is to understand and predict consumption behavior.

Nature of Consumer Behavior (contd.)

It is a science as well as an art. It uses both, theories borrowed from

social sciences to understand consumption behavior, and quantitative and qualitative tools and techniques to predict consumer behavior.

Scope of Consumer Behavior

The study of consumer behavior deals with understanding consumption patterns and behavior. It includes within its ambit the answers to the following: - ‘What’ the consumers buy: goods and services - ‘Why’ they buy it: need and want - ‘When’ do they buy it: time: day, week, month,

year, occasions etc. - ‘Where’ they buy it: place - ‘How often they buy’ it: time interval - ‘How often they use’ it: frequency of use

The scope of consumer behavior includes not only the actual buyer but also the various roles played by him/ different individuals.

The Wheel of Consumer Behavior

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

Why study consumer behaviour?

Better understanding of our own consumption behaviour

Why do we study CB?

Consumer behaviour: the process individuals or groups go through to select, purchase, and use goods, services, ideas or experiences to satisfy their needs and desires.

We want to understand why consumers make the decisions that they do, so that we will be able to predict what they will do in a given situation, so that ultimately, we will be able to influence that process.

Why do people buy? It relates to value, but that is getting

ahead of ourselves.

Understand

Predict

Influence

Consumer Behaviour &Research

Integrated Market Communication Plans & strategies

Build / Create Dominating or self expressive brands.

Why to study consumer behaviour?

CP=BP = Ever lasting brands

Why should Consumer Behavior be Studied ?

Suppose, your product is not selling well. Should you decrease the price, increase advertising, offer consumer promotions?

If you don’t know how consumers respond to these marketing actions, how can you make the decision?

Hence, for marketing strategies to be successful, understanding consumer behavior is absolutely important.

Reasons for Studying Consumer BehaviorTo stay in business by attracting and

retaining customersTo benefit from understanding consumer

problemsTo establish competitive advantage…because it is interesting!

Consumer’s behavior is studied from the point of view of :

1.Consumer as an individual :Consumer behavior study as in individual involves motivational drive ,its measurement , needs & wants & types of need . Self concept, attitude , perception, consumer imagery

2Consumer in his social & cultural setting : It involves cultural influence, sub culture , cross culture , ( nationality, religion , etc ) psychographic [ life style ] , Social group, reference group , geo demographic clustering etc.

Why is this important?

Out of 11000 products launched by 77 companies, only 56% are present five years later – Kuczmaski & Associates

Only 8% of new product concepts offered by 112 leading companies reached the market. Out of this 83% failed to reach marketing objectives – Group EFO Ltd., Marketing News, Feb 1, 1993, Pg 2

IMPORTANCE OF CUSTOMER BEHAVIOUR

Customer satisfaction

The marketing concept

Customer focus

Customer retention

Focus on needs

Serve needs of society

Long-term survival

The center of all business a “Consumer” has been transforming rapidly & have become more opaque .Consumer consistently demand value from the products & services .

The marketer believes that brand is most important to a consumer . A consumer is exposed to 600 market communication a day approximately. ( Research results )

A consumer looks beyond the basic functionality of products & services which he does not articulate.

Importance of Consumer Behaviour

Consumer behavior study help to probe the deep recesses of the consumer mind where the needs are still not articulated. It helps to get deeper in to the minds to get more insight & angles. It subliminally make the consumer like the product & services & creates a desire to buy the same. .

It helps to build a life time customer value for the organization, which is an intangible asset

Life time Customer = Profit X Frequency X Retention period

Value of Purchase

Importance of Consumer Behaviour

Groups Interested in Consumer Behavior

Consumers

Consumer activities

Marketing strategies

Public Policy

Government and political

organizations

Marketing organizations

Approaches to the Study of Consumer Behavior

Approach

Primary Objectives

Core Disciplines

Primary Methods

Interpretive

Cultural anthropology

Understand consumption and its meaning

Long interviews & focus groups

Approaches to the Study of Consumer Behavior (cont’d)

Approach

Primary Objectives

Core Disciplines

Primary Methods

Traditional

Psychology & Sociology

Explain consumer decision making and behavior

Experiments & Surveys

Approaches to the Study of Consumer Behavior (cont’d)

Approach

Primary Objectives

Core Disciplines

Primary Methods

Marketing Science

Economics & Statistics

Predict consumer choice and behavior

Math-modeling & Simulation