Unit 1

CONSUMER BEHAVIOUR
Meaning: Consumer behavior is the process and act of decision-making of people involved in
buying and use products. It refers to human behaviours which go in making purchase decisions.
When consumers make decisions, they are engaged in problem-solving talks, that is, satisfying a
perceived need. It is called Consumer Behaviour.
Walter and Paul, “Consumer behaviour is the process whereby individuals decide whether, what,
when, where, how and from whom to purchase goods and services.”
Kotler: Consumer behaviour is the study of individuals, groups & organizations select, buy, use
& dispose of goods, services, ideas, & experiences to satisfy their needs & wants.
Nature of Consumer Behaviour:
1. Influenced by various factors: The various factors that influence consumer behaviour:
a) Marketing factors such as product design, price, promotion, packaging, and distribution.
b) Personal factors such as age, gender, education and income level.
c) Psychological factors buying motives, perception & attitudes towards the product.
d) Social factors such as social status, reference groups and family.
e) Cultural factors, such as religion, social class—caste and sub-castes.
2. Undergoes a constant change: Consumer behaviour is not static. It undergoes a change over a
period of time depending on the nature of products. Example, kids prefer colourful & fancy
footwear, but as they grow up as teenagers & adults, they prefer trendy footwear, & as middle-
aged & senior citizens prefer sober footwear. The change in buying behaviour may take place
due to several factors such as increase in income level, education level & marketing factors.
3. Varies from consumer to consumer: All consumers do not behave in the same manner.
Different consumers behave differently. The differences in consumer behaviour are due to
individual factors such as the nature of the consumers, lifestyle and culture. For example, some
consumers are technoholics. They borrow money from friends, relatives, banks, and at times
even adopt unethical means to spend on shopping of advance technologies.
4. Varies from region to region & country to county: The consumer behaviour varies across
states, regions and countries. Example, the behaviour of the urban consumers is different from
that of the rural consumers. The rich rural consumers may think twice to spend on luxuries
despite having sufficient funds, whereas the urban consumers may even take bank loans to buy
luxury items. The consumer behaviour may also varies across the states, regions and countries.
5. Information on consumer behaviour is important to the marketers: Marketers need to have
a good knowledge of the consumer behaviour. They need to study the various factors that
influence the consumer behaviour of their target customers. The knowledge of consumer
behaviour take appropriate marketing decisions by following factors:
a) Product design/model
b) Pricing of the product
c) Promotion of the product
d) Packaging
e) Place of distribution
6. Leads to purchase decision: Positive consumer behaviour leads to a purchase decision. A
consumer may take the decision of buying a product on the basis of different buying motives.
The purchase decision leads to higher demand & sales of marketers increase. Therefore,
marketers need to influence consumer behaviour to increase their purchases.
7. Varies from product to product: Consumer behaviour is different for different products.
There are some consumers who may buy more quantity of certain items and very low or no
quantity of other items. For example, teenagers may spend heavily on products such as cell
phones and branded wears, but may not spend on saving. A middle- aged person may spend
less on clothing, but may invest money in savings, insurance, pension schemes, & so on.
8. Improves standard of living: The buying behaviour of the consumers may lead to higher stan-
dard of living. The more a person buys the goods and services, the higher is the standard of
living. But if a person spends less on goods and services, despite having a good income, they
deprive themselves of higher standard of living.
Importance of study of consumer behaviour
1. Achievement of Goals: The key to a company’s survival, profitability, and growth in a highly
competitive marketing environment is ability to identify & satisfy unfulfilled consumer needs
better than the competitors. Thus, consumer behaviour helps in achieving marketing goals.
2. Useful for Dealers & Salesmen: The study of consumer behaviour is not useful for the
company. Knowledge of consumer is equally useful for middlemen & salesmen to perform
their tasks effectively in meeting consumers needs & wants successfully.
3. More Relevant Marketing Programme: Marketing programme, consisting of product, price,
promotion, and distribution decisions, can be prepared more objectively. The programme can
be more relevant if it is based on the study of consumer behaviour.
4. Consumer Differentiation: Market exhibits considerable differentiations. Each segment needs
different products. For every segment a separate marketing programme is needed. Knowledge
of consumer differentiation is a key to fit marking offers with different groups of buyers.
5. Creation & Retention of Consumers: Marketers offerings on recognition of consumer needs
find a ready market for their products. The company study of consumer behaviour and meet
changing expectations of the buyers can retain its consumers for a long period.
6. Competition: Consumer behaviour study assists in facing competition. Based on consumers’
expectations, more competitive advantages can be offered. It is useful in improving competitive
strengths of the company.
7. Developing New Products: New product is developed in respect of needs & wants of the
target market. In order to develop the best-fit product, a marketer must know about the market.
Study of consumer behaviour is the base for developing a new product successfully.
Factors affecting consumer behaviour:
A. Marketing Mix Factors:
 Product: The special characteristics of the product, the physical appearance and the packaging
can influence the buying decision of a consumer.
 Pricing: The price charged on the product consumed by the consumer affect the buying
behaviour. Marketers must think the price sensitivity of target customers while fixing prices.
 Place: The place affects the buying behaviour of the consumers. The marketers make an
attempt to select the right channel and distribute the products at the right place.
 Promotion: The variables of promotion mix like advertising, publicity; public relations,
personal selling & sales promotion affect the buying behaviour of the consumers.
B. Personal Factors:
 Age factor: The age factor greatly influences the buying behaviour. Example, teenagers prefer
trendy clothes, whereas office executives prefer sober and formal clothing.
 Gender: The consumer behaviour varies across gender. Example, girls prefer certain feminine
colors like pink, purple & peach, whereas boys go for blue, black & brown.
 Education: Highly educated persons may spend on books & personal care products. A person
with low education may spend less on books & more on personal care products.
 Income level: The higher the income level, the higher is the level of spending & vice versa.
But this may not be the case in developing countries, especially in the rural areas.
 Status: Persons enjoying higher status in the society spend a good amount of money on luxury
items like cars, watches, & premium brands of clothing, jewellery & perfumes.
C. Psychological Factors: A psychological factors such as the following:
 Learning: It refers to changes in individual behaviour that are caused by information and
experience. Example, when a customer buys a new brand of apparels & is satisfied by its use.
Learning, people acquire beliefs & attitudes, which in turn influence the buying behaviour.
 Attitude: It is human tendency to respond in a given manner to a particular situation or object
or idea. Consumers may develop a positive, or a negative, or a neutral attitude towards certain
products or brands, which in turn affects their buying behaviour.
 Beliefs: A belief is a descriptive thought that a person holds about certain things. It may be
based on knowledge, trust & confidence. People may hold certain beliefs of certain
brands/products. Beliefs develop brand images, which can affect the buying behaviour.
D. Social Factors:
 Reference groups: A reference group is a small group of people such as colleagues at
workplace, club members, friends, neighbours, & family. They expose members to new
behaviours and lifestyles. They create pressure to choose certain products or brands.
 Family: The family influences the consumer behaviour. Nowadays children are well informed
about goods & services by media and friends. They influence considerably in the decisions of
buying both fast moving consumer goods & durable items.
 Roles & status: A person performs certain roles in a particular group such as family, club, &
organization. People may purchase the products that conform to their roles and status,
especially in the case of branded clothes, luxury watches, luxury cars, and so on.
E. Cultural Factors: Cultural factors include race and religion, tradition, caste and moral values.
Culture also includes subcultures, sub-castes, religious sects and languages.
 Culture: Cultural are passed from one generation to another through family, educational
institutions, & religious bodies. The cultural diversity influences food habits, clothing, customs
and traditions. Example, consuming alcohol and meat in certain religious communities is not
restricted, but in certain communities, consumption of alcohol and meat is prohibited.
 Subculture: Each culture consists of smaller subcultures that provide specific identity to its
members. Subcultures include sub-castes, religious sects (Roman Catholics, Christians, etc.),
geographic regions (South Indians, North Indians) and language (Marathi, Malayali, Gujarati).
Different buying roles of consumer behaviour:
1. Maintainer: Members who service or repair the product so that it will provide continued
satisfaction is a maintainer.
2. User: The user is the person who actually uses or consumes the services or products. In most of
the grocery product purchase, the entire family uses the product.
3. Buyer: The buyer is the person who actually purchases & pays for the purchase. In a family the
father plays the role of the buyer who involved in the transaction process.
4. Decider: A decider is a person who finally determines the whole of the buying decision, All
quantity likes whether, what, how, when, or where to buy are considered. In the event of buying
baby products, the mother plays the role of the decider.
5. Influencer: An influence is a person who directly or indirectly has some influence on the final
buying decision. The parents play the role in the purchase process of chocolate.
6. Initiator: An initiator is a person who first gets the thought or gives the suggestion/idea of
buying a particular product. A child plays role in the purchase process of chocolate.
7. Disposer: The disposer is the person who finally disposes of the package of the product.
Example the mother plays role of a disposer after the product is consumed by the family.
Consumer and Customer
Customer: By Customer, we mean a person who buys the goods or services and pays the price
thereof. The word customer is derived from the term ‘custom’ which means ‘practice’, so the
word customer means the individual or entity who purchases product or services from a seller at
regular intervals. It can also be known as client or buyer.
Consumer: We define consumer, as a person who is the end user of the product. The word
consumer is made from the word ‘consume’ which means ‘to use’. The word consumer means a
person who purchases the product or service for his own use or consumption.

BASIS CUSTOMER CONSUMER

Meaning The purchaser of goods or services The end user of goods or services is
is known as the Customer. known as a Consumer.

Resell A customer can be a business entity, No

who can purchase it for the purpose
of resale.
 BASIS CUSTOMER CONSUMER

Purchase of Yes Not necessary

goods

Purpose Resale or Consumption Consumption

Price Paid by the customer May not be paid by the consumer

Person Individual or Organization Individual, Family or Group of people

Applications of Consumer Behaviour knowledge in Marketing

Consumer Behaviour in the Contemporary Environment

Consumerism is a social force to make business more honest & responsible towards consumers. It
makes the consumers aware of their rights & also pressurizes the government to adopt the
necessary measures to protect consumer interests. Consumerism may be defined as a social
movement of seeking redress, restitution & remedy for dissatisfaction that they have accumulated
in the purchase of products / service & their performance.
Features of Consumerism:
1. Protection of Rights: Consumerism helps in building business communities and institutions to
protect their rights from unfair practices.
2. Prevention of Malpractices: Consumerism prevents unfair practices within the business
community, such as hoarding, adulteration, black marketing, profiteering, etc.
3. Unity among Consumers: Consumerism aims at creating knowledge and harmony among
consumers and to take group measures on issues like consumer laws, supply of information
about marketing malpractices, misleading and restrictive trade practices.
4. Consumer Rights: Consumerism aims at applying the four rights of consumers which are
Right to Safety, Right to be Informed, Right to Choose, and Right to Redress.
Advertising and technology are the two driving forces of consumerism −
 The first driving force of consumerism is advertising. Here, it is connected with the ideas
and thoughts through which the product is made & the consumer buys the product. Through
advertising, we get the information about the product we have to buy.
 Technology is upgrading very fast. It is necessary to check the environment on a daily basis
as the environment is dynamic in nature. Product should be manufactured using new
technology to satisfy the consumers. Old and outdated technology won’t help product
manufacturers to sustain their business in the long run.
STAGES OF CONSUMER BUYING PROCESS
Consumer buying process
1. Problem Identification: This step is recognizing of unmet need. The need is a source or force
of buying behaviour. Buying problem arises only when there is unmet need or problem is
recognized. Need or problem impels an individual to act or to buy the product. The need can be
triggered by internal or external stimuli. Internal stimuli include basic needs – hunger, thirst;
while external stimuli include for instance, when an individual watch a new brand car, he
desires to buy it. Marketer must identify the circumstances that trigger a particular need.
2. Information Search: Interested consumer will try to seek information. Now, he will read
newspapers and magazines, watch television, visit showroom or dealer, contact salesman,
discuss with friends and relatives, and try all the possible sources of information. The consumer
can try one or more of following sources of information.
 Personal Sources: They may include family members, friends, colleagues, & relatives.
 Commercial Sources: Advertising, salesmen, dealers, trade show, display & exhibition.
 Public Sources: Mass media (radio, TV, newspapers, magazines, cinema, etc.).
3. Evaluation of Alternatives: In the former stage, the consumer has collected information about
certain brands. Now, he undergoes evaluation of brands. He cannot buy all of them. Normally,
he selects the best one, the brand that offers maximum satisfaction. Evaluation calls for
evaluating various alternatives with certain choice criteria. Following criteria are considered
while evaluating alternatives:
 Benefits offered by the brands
 Qualities, features or attributes, and performance
 Price changed by various brands
 Product-related services such as after-sales services, warrantee, & free installation
4. Purchase Decision: This is the stage when the consumer prefers one, the most promising
brand, out of several brands. The former stage helps consumers evaluate various brands in the
choice set. The brand that offers maximum benefits or satisfaction is preferred. Now, consumer
makes up his mind to purchase the most preferred brand.
5. Post-purchase Decisions: Consumer buys the product with certain expectations. Though he
decides very systematically, there is no guarantee of a complete satisfaction. There is always
possibility of variation between the expected level of satisfaction and the actual satisfaction.
a) Post-purchase Satisfaction: Actual satisfaction may not be equal to the expected one. It is the
matter of interest for marketer to know whether consumer is highly satisfied, somewhat
satisfied, or dissatisfied. Consumer’s satisfaction is the function of the relationship between
expected/perceived performance (expectations) and actual performance.
b) Post-purchase Action: Obviously, level of the consumer’s satisfaction with the product
affects his subsequent behaviour/action. If he is satisfied reasonably, he purchases the product
again, and talks favourably to family members, friends, relatives, and co-workers. That is why
marketer says: Our best advertisement is a satisfied consumer.

Diffusion of Innovation
The diffusion of innovation is the process by which new products are adopted (or not) by their
intended audiences. It allows designers and marketers to examine why it is that some inferior
products are successful when some superior products are not.
Strategies of Diffusion of Innovation
1. Knowledge: Consumer is exposed to the innovations existence and gains some understanding
of how it functions. In this stage, consumers are aware of the product but have made no
judgment concerning the relevance of the product to a problem or recognized need. Knowledge
of a new product is considered to be result selective perception and is more likely to occur
through the mass media than in late stages which are more influenced by opinion leaders.
2. Persuasion: In this stage, usually attitude formation takes place that is consumer forms
favorable or unfavorable attitudes toward the innovation. A person may seek out new stories,
pay particular attention to advertising for the product, subscribe to product rating services, talk
to experts in that product category etc. Example – marketer can show the advantages ones
present solutions of hair problems.
3. Decision: Consumer engages in activities that lead to a choice to adopt or reject the innovation
(i.e., adoption or rejection). Adoption can be defined as a decision to make full use of an
innovation as the best course of action. This means continued use of the product unless
situational variables (lack of availability, or money etc.) prevent usage. Rejection means not to
adopt an innovation. There may be some persons who first consider adopting an innovation or
at least give a trial, but then deciding not to adopt it. This is called an active rejection. Others
never consider the use of the innovation, known as passive rejection.
4. Implementation: Implementation means consumer, puts the innovation into use. Until this
stage, the process is a mental exercise, but in this stage behavioral change is required Marketing
plan is the determinant of whether a good product has been communicated effectively.
Marketing mix planned should be such that purchase is made easy. This means proper
coordination of the channels of distribution with new products & their communication process.
5. Confirmation: Consumer seeks approval/reinforcement for the innovation decision, but may
reverse this decision if exposed to conflicting messages about the product. This stage is also
influenced by communication sources and consumers evaluate their purchase experiences.
After evaluating, they try to support their behaviour and later decide to continue or discontinue
using the product.