1 INTRODUCTION TO CONSUMER BEHAVIOR

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Consumer behavior is a rapidly growing discipline of study. It means more than just how a
person buys products. It is a complex and multidimensional process and reflects the totality of
consumers’ decisions concerning the acquisition, consumption, and disposal activities. We, as
consumers, exhibit very significant differences in our buying behavior and play an important role
in local, national, or international economic conditions. One of the very few aspects common to
all of us is that we are all consumers and the reason for a business firm to come into being in the
presence of consumers who have unfulfilled, or partially fulfilled needs and wants. Our
consumption-related behavior influences the development of technology and the introduction of
new and improved products and services.

To succeed in a dynamic marketing environment, marketers have an urgent need to learn

and anticipate whatever they can about consumers. The better they know and understand
consumers, the more advantageous it would prove in accomplishing their organizational
objectives. Marketers want to know what consumers think, what they want, how they work, how
they entertain themselves, how they play etc. They also need to comprehend personal and group
influences that have a significant impact on the consumer decision-making process.

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1.1 DEFINITIONS OF CONSUMER BEHAVIOR
Some selected definitions of consumer behavior are as follows:

1. According to Engel, Blackwell, and Mansard, ‘consumer behavior is the actions and
who purchase goods and services for personal
consumption’.

2. According to Louden and Bitta,

‘consumer behavior is the decision process
and physical activity, which individuals
engage in when evaluating, acquiring, using
or disposing of goods and services’.

3. In the book Marketing Principles and

Perspectives by Bearden et.al, Consumer behavior refers to “the mental and emotional
processes and the physical activities of people who purchase and use goods and services to
satisfy particular needs and wants.”

1.2 CONSUMER AND CUSTOMER

A consumer is anyone who typically engages in any one or all of the activities mentioned
in the definition. Traditionally, consumers have been defined very strictly in terms of economic
goods and services wherein a monetary exchange is involved. This concept, over some time, has
been broadened. Some scholars also include goods and services where a monetary transaction is
not involved and thus the users of the services of voluntary organizations are also thought of as
consumers.

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 The term consumer is used for both personal consumers and organizational consumers
and represents two different kinds of consuming entities. The personal consumer buys goods and
services for her or his personal use (such as facemask, lipstick), or household consumption (such
as sugar, furniture), or for just one member of the family (such as a pair of shoes for the son), or
a birthday present for a friend (such as a pen set). In all these instances, the goods are bought for
final use, referred to as “end users” or “ultimate consumers.”
The other category of a consumer is the organizational consumer, which includes profit
and not-for-profit organizations. Government agencies and institutions (such as local or state
government, schools, hospitals, etc.) buy products, equipment, and services required for running
these organizations. Manufacturing firms buy raw materials to produce and sell their goods.
They buy advertising services to communicate with their customers. Similarly, advertising
service companies buy equipment to provide the services they sell. Government agencies buy
office products needed for everyday operations. The focus of this book is on studying behaviors
of individual consumers, groups, and organizations who buy products, services, ideas, or
experiences, etc. for personal, household, or organizational use to satisfy their needs.
Anyone who regularly makes purchases from a store or a company is termed as a
“customer” of that store or the company. Thus a customer is typically defined in terms of a
specific store or company.

1.3 BUYERS AND USERS

The person who buys a particular product may not necessarily be the user or the only user
of this product. Likewise, it is also true that the person who purchases the product may not be the
decision-maker. For example, the father buys a bicycle for his school-going son (the son is the
user), or he buys a pack of toothpaste (used by the entire family), or the mother is the decision-
maker when she buys a dress for her three-year-old daughter. The husband and wife together
may buy a car (both share the decision). It is clear that in all cases buyers are not necessarily the
users of products they buy. They also may not be the persons who make the product selection
decisions.

Whenever consumer behavior occurs in the context of a multi-person household, several

different tasks or roles as mentioned in the table below may be performed in acquiring and
consuming a product or service.

Learning Task#1 Contemplate and give your insight or opinion on the question below.
Write your answer in your notebook or immediately send your answer to your
professor/instructor through a social media link as provided.

TASK #1
Whom should marketers’ target- Buyers of Users? Does the decision depend on the
type of products? Exemplify

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 INSIGHTS
Different household members can perform each of the roles singly or
collectively. For example, in deciding which videocassette to rent for entertainment,
parents might decide on the movie but children may play a role directly by making
their preferences known, or indirectly when parents keep the children’s likes in mind.
One parent may go to the store to get the video, but the entire family may watch it.

1.4 ORIGIN & DEVELOPMENT IN THE FIELD OF CONSUMER BEHAVIOUR

For a variety of reasons, the study of consumer behavior has developed as an important
and separate branch in the marketing discipline. Scholars of marketing had observed that
consumers did not always behave as suggested by economic theory. The size of the consumer
market in all the developed and rapidly developing economies of the world was extensive. A
huge population of consumers was spending large sums of money on goods and services.
Besides this, consumer preferences were shifting and becoming highly diversified. Even in the
case of industrial markets, where the need for goods and services is generally more homogenous,
buyers’ preferences were becoming diversified and they too were exhibiting less predictable
purchase behavior.
Marketing researchers involved in studying the buying behavior of consumers soon
appreciated the fact that though there were many similarities, consumers were not all alike. Some
used products currently in vogue while many consumers did not like using “me too” types of
products and showed a preference for highly differentiated products that they felt met their
special needs and reflected their personalities and lifestyles.
These findings led to the development of the market segmentation concept, which
required dividing the total heterogeneous but potential market into relatively smaller
homogenous groups or segments for which they could design a specific marketing mix. They
also used positioning techniques and developed promotional programs to vary the image of their
products so that they were perceived as a better means of satisfying the specific needs of certain
segments of consumers.
Other important factors that contributed to the development of consumer behavior as a
marketing discipline include shorter product life cycles, increased environmental concerns,
interest in consumer protection, growth of services marketing, opening up of international
markets and the development of computers and sophisticated techniques of statistical analysis

1.4.1 Development of Marketing Concept

The marketing concept that evolved in the late 1950s and the field of consumer behavior
is deeply rooted in this concept. After World War II, there was a demand for almost all sorts of
products and the marketing philosophy was to produce cheap goods and make them available at
as many places as possible.
This approach suited the marketers because demand exceeded supply and consumers
were more interested in obtaining the product rather than in any specific features. This approach
is called a production orientation and is based on the assumption that consumers will buy what
is available and would not wait for what they want. The marketer does not care to know what
consumer preferences are.
The next stage has been product orientation, which assumes that consumers will buy the
product that offers them the highest quality in terms of performance and features. The company
makes all efforts to improve product quality. The focus is on the product rather than on what the
consumers need or want. Professor Levitt has called this excessive focus on product quality as
“marketing myopia.” This we see happen in highly competitive markets where some companies
keep on adding unnecessary features, passing their cost on to the consumers, in hopes of
attracting them.

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 Selling orientation evolved as a natural consequence of production orientation and
product orientation. The marketer is primarily focused on selling the product that it unilaterally
decided to produce. This approach assumes that consumers would not buy enough of this
product unless they are actively and aggressively persuaded to do so. This approach is known as
“hard-sell” and consumers are induced to buy what they do not want or need. The problem with
this approach is that it does not take consumer satisfaction into account. This often leads to
dissatisfaction and unhappiness in consumers and is likely to be communicated by word-of-
mouth to other potential consumers, discouraging them to buy the product.
Soon marketers realized that they could easily sell more goods if they produced only
those goods that they had first confirmed consumers would buy. Thus, consumer needs and
wants to become the marketer’s primary focus. This consumer-oriented marketing approach
came to be called the marketing concept. The important assumption underlying marketing
concept is that a company must determine the needs and wants of its target markets and deliver
the desired satisfactions more efficiently and effectively than the competition. This is the key to
successful marketing.

1.4.2 Disciplines involved in the Study of Consumer Behaviour

Consumer behavior was a relatively new field of study during the second half of the
1960s without a history of research of its own. It is a subset of human behavior and it is often
difficult to draw a distinct line between consumer-related behavior and other aspects of human
behavior. The discipline of consumer behavior has borrowed heavily from concepts developed in
other disciplines of study such as psychology, sociology, social psychology, cultural
anthropology, and economics.
1. Psychology is the study of the individual which includes motivation, perception,
attitudes, personality, and learning theories. All these factors are critical to an
understanding of consumer behavior and help us to comprehend consumption related needs of
individuals, their actions and responses to different promotional messages and products, and the
way their experiences and personality characteristics influence product choices.
2. Sociology is the study of groups. When individuals form or create groups their actions
are sometimes quite different from the actions of those very individuals when they are operating
alone. The influences of group memberships, family, and social class on consumer behavior are
important for the study of consumer behavior.
3. Social psychology is a combination of sociology and psychology and studies how an
individual operates a group. It also studies how those whose opinions they respect such as peers,
reference groups, their families, and opinion leaders influence individuals in their consumption
behavior.
4. Cultural anthropology is the study of human beings in society. It explores the
development of core beliefs, values, and customs that individuals inherit from their parents and
grandparents, which influence their purchase and consumption behavior. It also studies
subcultures and helps compare consumers of different nationalities and cultures.
5. Economics: An important aspect of the study of economics is the study of how
consumers spend their funds, how they evaluate alternatives, and how they make decisions to get
maximum satisfaction from their purchases.
Although consumer behavior, as a field of study, is relative of recent origin, it has grown
enormously and has become a full-blown discipline of its own and is used in the study of most
programs of marketing study.
The marketing concept was accepted and adopted by a large number of companies in the
developed countries, particularly the United States and this provided an impetus to the study of
consumer behavior. Companies had to engage in extensive marketing research to identify
unsatisfied consumer needs. In this process, marketers learned that consumers were highly
complex as individuals had very different psychological and social needs, quite apart from their

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survival needs. They also discovered that the needs and priorities of different consumer segments
differed significantly. They realized that to design products and develop suitable marketing
strategies that would satisfy consumer needs, they had to first study consumers and the
consumption-related behavior in depth. In this manner, market segmentation and marketing
concept paved the way for the application of consumer behavior principles to marketing strategy.
Learning Task#2: Record your observations daily within 5 consecutive days. You may also
interview your parents or the decider and buyer of the household purchases. Create a table or any
graphical presentation or in any way, you will be able to present your observation. Communicate
with your instructor or professor if you would want to present online on social media platform or
you want to submit your paper privately.

Task#2
Observe how your parents spend their money on purchases? Do you observe any
pattern? What does it show about their behavior?

1.5 STRATEGIC APPLICATIONS OF CONSUMER BEHAVIOUR

Consumer behavior principles are applied in many areas of marketing as discussed

below:
1. Analysing market opportunity: Consumer behavior study helps in identifying the unfulfilled
needs and wants of consumers. This requires examining the trends and conditions operating in
the marketplace, consumers’ lifestyles, income levels, and emerging influences. This may reveal
unsatisfied needs and wants. The trend towards the increasing number of dual-income
households and greater emphasis on convenience and leisure has led to emerging needs for
household gadgets such as washing machines, mixer grinder, vacuum cleaner, and childcare
centers, etc. Mosquito repellents have been marketed in response to a genuine and unfulfilled
consumer need.
2. Selecting the target market: A review of market opportunities often helps in identifying
distinct consumer segments with very distinct and unique wants and needs.
Identifying these groups, learning how they behave and how they make purchase
decisions enables Notes the marketer to design and market products or services particularly
suited to their wants and needs. For example, consumer studies revealed that many existing and
potential shampoo users did not want to buy shampoo packs priced at 60 or more and would
rather prefer a low priced sachet containing enough quantity for one or two washes. This finding
led companies to introduce the shampoo sachet which became a good seller.
3. Marketing-mix decisions: Once unsatisfied needs and wants are identified, the marketer has
to determine the right mix of product, price, distribution, and promotion. Here too, consumer
behavior study is very helpful in finding answers to many perplexing
questions
(a) Product: The marketer designs the product or service that would satisfy unfulfilled
needs or wants. Further decisions regarding the product concerning the size, shape, and features.
The marketer has also to decide about packaging, important aspects of service, warranties and
accessories, etc.
Example: Nestle first introduced Maggi noodles in chicken and beef
flavors. Subsequently, keeping in view the consumer preferences in some regions, the company
introduced chili, calamansi, and other flavors.
(b) Price: The second important component of the marketing mix is the price. Marketers
must decide what price to charge for the product or service. These decisions will influence the

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flow of revenue to the company. Should the marketer charge the same, higher, or lower price in
comparison to the competition? Is the consumer price-sensitive and would a lower price
stimulate sales? Should there be any price discounts? Do consumers perceive the lower
price as being indicative of poor quality?

To answer such questions, the marketer must understand the way the company’s product
is perceived by consumers, the importance of price as a purchase decision variable, and how
different price levels would affect sales. It is only through consumer behavior study in actual
buying situations that the marketer can hope to find answers to these important issues.

(c) Distribution: The next decision relates to the distribution channel, that is, where and
how to offer products and services for sale. Should the products be sold through all the retail
outlets or only through selected ones? Should the marketer use only the existing outlets, which
also sell competing brands, or should new exclusive outlets selling only the marketer’s brands be
created? Is the location of retail outlets important from the consumers’ point of view? Should the
company think of direct marketing? The answers to these questions are furnished by the
consumer.
(d) Promotion: Promotion is concerned with marketing communications to consumers.
The more important promotion methods are advertising, personal selling, sales promotion,
publicity, and direct marketing. The marketer has to decide which method would be most
suitable to effectively reach the consumers. Should it be advertising alone or should it be
combined with sales promotion? The company has to know the target consumers, their location,
what media do they have access to, and what are their media preferences, etc.
In most cases of industrial products, there is very little or no advertising. Brochures
containing technical specifications are often posted to clients and the salespeople make follow-up
visits. Consumer products get the maximum share of advertising. The pharmaceutical industry
exclusively uses personal selling for prescription drugs. Insurance companies use both
advertising and personal selling.
4. Use in social and non-profits marketing: Consumer behavior studies are useful to design
marketing strategies by social, governmental, and not-for-profit organizations to make their
programs such as family planning, awareness about AIDS, a crime against women, safe driving,
environmental concerns, and others more effective. UNICEF(greeting cards), Red Cross and
CRY, etc. make use of consumer behavior understanding to sell their services and products and
also try to motivate people to support these institutions.

1.6 GENERAL MODEL OF CONSUMER BEHAVIOUR

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 The Black Box Model as shown in Fig. 1.1 above is also known as Input-Processing-
Output Model. The consumer decision process is a series of activities and steps of decision-
making leading to a purchase function. It represents a problem-solving approach. This is the
simplest model to explain the consumer decision-making process. The mechanism is the same as
in any processing activity in which there are three factors namely inputs, processing, and outputs.
The inputs in the form of product, price, place, and promotion parts of a marketing program are
fed into the consumer information-processing box (called 'black box') and it leads to a set of
outputs.
During the last few decades, numerous models of consumer behavior depicting the
buying process have been developed. All these models treat the consumer as a decision-maker
who comes to the market place to solve his consumption problems and to achieve the satisfaction
of his needs. The simplest model given is composed of three stages - 'Input, Processing, and
Output'. Input is a set of stimulus factors that the consumer receives in the market. It is
provided by two sets of stimulus variables, namely, the firm's marketing efforts or marketing
mixes and the social environment. The firm's marketing efforts are designed to positively
expose, inform, and influence consumers. These efforts include product/service itself,
advertising, price strategies, and distribution network, and all marketing functions. For example,
when a company introduces a new brand of detergent powder or a television set, it may run a
series of radio commercials along with supporting press advertisements. The social environment
serves as a non-commercial source of consumer information and influence, which is not under
the direct control of the firm. It includes reference groups and individuals, members of the
family, social class and castes, culture, and the like. Both of these stimuli variables influence
consumers and their buying process.
Consumers receive the input factors and process input information through a deep
psychological process of information processing, evaluation of alternative information inputs,
comparison of each input's attributes with the expected consumer benefits that leads them to
finally make a decision. The decision is a mental rule used in favor of solving a confronting
consumption problem. We will discuss the stages of information processing in the subsequent
section of the chapter. Consumers also retrieve available information from their memory box and
use this information with the collected information from the external sources to process
information for solving a consumption problem. Due to the ability to capture, analyzing,
retrieving, and using a mental rule to arrive at a decision, a consumer's mind is called a black
box.
The output factors are the result of the information processing stage. These can be in the
form of creating positive word of mouth among potential consumers, leading to a trial of the
brand or final adoption of the brand for every purchase situation. The effectiveness of a
marketing program is evaluated by measuring the output results.

1.7 SUMMARY

 Our consumption-related behavior influences new product development and the

success and failures of business.
 Consumer Behaviour refers to the observable behavior of consumers during
searching, purchasing, and post-consumption of products or services
 . There are two important groups of consumers: personal consumer and
organizational consumers.
 The study of consumer behavior involves the interplay of some variables that are
not visible to an observer. The study of consumer behavior involves what they

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 buy, how they buy it, when they buy it, where they buy it, and what are the post-
purchase activities.
 The study of consumer behavior is deeply rooted in the marketing concept.
Consumer behavior activities can help unearth much information to help
marketers segment markets, selection of the target segments, developing the
positioning strategy, and develop appropriate marketing mixes for different
markets.

1.8 KEYWORDS
Consumer behavior: How consumers make purchasing decisions with available resources.

Consumer: Anyone who is engaged in the purchasing process.

Cultural anthropology: Study of humans in a society.

Customer: This is a regular purchaser from a specific store or company.

Marketing concept: Consumer-oriented marketing approach.

Organizational consumer: Buys goods and services for-profit and non-profit organizations.

Personal consumer: Buys goods and services for personal use.

1.10 DISCUSSION/REVIEW QUESTIONS

1. "It has become important for marketers to understand the psyche of the consumer." Comment.

2. "Consumer decision-making process is an interplay of various complex variables which are

not visible to the marketers." Substantiate.

3. “Production, product and selling concept does not take into account consumer's preferences”.
Do you agree? Give reasons.

4. Is it important to consider the behavior of consumers while deciding on the marketing mix of
the company? Why? Explain with suitable examples.

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5. What is the thin line that differentiates between a customer and a consumer? Explain with
examples.

1.11 REFERENCES

BOOKS & Internet Links

Hawkins, D.L
McGraw Hill, Loudon, D.L & Delta Bitta, A.J, Consumer Behaviour, Tata
McGraw Hill
www.customerpsychologist.com
www.customerbehavior.net
www.indiraidea.com/images

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