Module 3: Consumer Behaviour

Determinants of buyer behaviour, buying process, stages in buyer decision process,

market segmentation strategies.

CONSUMER AND CUSTOMER

Eg: Father Chocolate to Son

Customer (Buys the chocolate) Consumer (eats the chocolate)

Definition of Consumer Behaviour: “The process whereby individuals decide

whether what, when, how and from whom to purchase goods and services” In this
process the consumer deliberates within himself before finally making a move

First and foremost he has to decide whether to spend money or to save it. Once the
decision is taken to spend money, he has to decide what to buy because needs are
multiple and resources are scarce, needs are to be ranked according to ones order of
priority. The subsequent consumption problems relate to the place from where to buy,
quantity to buy, cash or credit purchases etc.

The entire consumption behaviour consists of both physical as well as mental

activities. The physical activities involve visiting the place, examining the product
being sold, selecting the product and consuming it. Mental activities involve
deliberations within the mind of the consumer, forming of attitudes, absorbing
communication about the product (advertising material) and learning to prefer a
particular brand.

Importance of Consumer Behaviour: The concept of understanding consumer

behaviour is rooted in the modern marketing concept. In order to put this concept into
action, the management must develop an understanding of consumer behaviour,
buying process and factors influencing the process.

Person’s buying process is influenced by social class, culture, lifestyle and other
factors. Buying behaviour is not simple but understanding it is the most important
task of marketing management

Compiled by Dr.Lily David and Ms. Veenu Joy

Consumers vary tremendously by age, education level, income and taste. Marketer’s
have found it worthwhile to distinguish consumer groups according and develop
products and services for their needs.

The company that really understands consumer responses to different products,

features, prices and advertising appeals has a big advantage over its competitors.

Consumer Behavior Roles

i. Initiator: Is the individual who ascertains some need. That individuals
want is not satisfied and authorizes a purchase to correct the situation.
ii. Gatekeeper: • Influences the family’s information processing. • Gatekeeper
has the expertise in obtaining and evaluating information
iii. Influencer: • Intentionally or otherwise, by word or action, influences the
purchase decision, actual purchase or use of the product or service.
iv. Decider: • The person or persons who actually decides which product or
service will be chosen
v. Buyer: Any individual who actually makes the final purchase transaction.
vi. User(s) : • Person most directly involved in the use or consumption of the
purchased product

Model of Consumer Behaviour:

Marketing Other stimuli Buyers Black Box Buyer’s Response

Stimuli
Product Economic Buyer’s Product Choice
Characteristics
Price Technological Buyer’s decision Brand and Dealer
making process Choice
Place Political Purchase Timing
Promotion Cultural Purchase Amount

Marketing stimuli consists of the 4P’s: Product, Price, Place and Promotion. Other
factors include political, legal, cultural, economic and technological forces that affect
the buyer’s environment. The buyer’s black box is where they are turned into a set of
observable buyer responses such as choice of product, brands, dealer, purchase timing
and purchase amount.

Compiled by Dr.Lily David and Ms. Veenu Joy

The buyer’s black box has two components. The first is the buyer’s characteristics that
influences how he/she reacts to the stimuli and second the buyer’s decision making
process itself that influences the outcome. It is a marketer’s job to understand how
these stimuli are transformed into responses inside the consumer’s black box.

Consumer behaviour is a dynamic process. It is necessary to continuously study,

analyse, understand and monitor it so that effective decisions can be taken in respect
of product, prices, promotion and distribution.

Major Factors that Influence Consumer Behaviour: Consumer’s do not make

decisions without a basis. The purchases are strongly influenced by cultural, social,
personal and psychological factors. These factors are not controllable by the marketer
but must be taken into account.

Cultural Social Personal Psychological

Culture Reference Age and family Motivation
Groups occupation
Sub Culture Family Lifestyle, Perception
personality,
self concept BUYER
Social Class Roles and Other Learning
Status circumstances
Beliefs and
Attitudes

1.Cultural Factors

Culture: “Lower cultures are governed by instinct but human behaviour is largely
learnt” A child growing up in society learns a basic set of values, preferences and
behaviour through a process of socialization involving family and other key
institutions. Thus culture is the most fundamental determinant of a person’s wants
and behaviour.

Marketer’s spot cultural preferences in order to think of new products that might be
wanted. The aspects of Indian culture are relevant to marketing include the joint
family system, customs, food eaten and festivals celebrated.

The joint family system is a typical Indian social institution where members of a family
live together. Of late with the increase in the level of education, occupational mobility
and impact of western culture it is on the decline. Nevertheless it’s on hold in rural
and remote parts of India. From the marketing point of view two things are relevant
concerning this system

Compiled by Dr.Lily David and Ms. Veenu Joy

 1. Decision making regarding the family purchases is done by the head of the
family.
2. It is the income of the family of the whole and not the individual that shapes
the composition of the family purchases

In India the clothing worn and then food consumed is largely affected by the
climate, nature and the economic situation in India. E.g. Ragi is mainly
consumed by the lower class whereas rice and wheat is consumed by the upper
class. On account of climatic conditions and economic situation it is not possible
for meat to be staple or the primary source of food, but it is used as a substitute
to vegetable dishes.

From the marketing point of view, by understanding food habits, appropriate

product mixes are possible. E.g. The development of instant idly and dosa
mixes by M/S Gild Foods of Bombay.
Many of the festivals celebrated in India owe their origin to myths and legends
while having religious overtones, while others mark the change of seasonal
harvest time. Often most of these festivals are occasions for celebrations and
public holidays. From the marketing point of view festivals are important
because at such times people have both the ability and also the willingness to
spend money. An understanding of this aspect of Indian culture helps
marketer’s to appropriately plan the introduction of new products, time
communication messages and ensure physical distribution of products at
festival times.
Marketer’s try to spot cultural preferences in order to think of new products
that might be wanted e.g. these days people are more concerned about their
health, thus look at products related to health, physical fitness and natural
foods. Time saving devices such as microwaves, vacuum cleaners, washing
machines etc. are in demand because people want more leisure time to spend
on sports vacationing or camping. The acceptance of women going out to work
in Indian culture has also continued to the demand for these products.

Sub-Culture: Each culture contains smaller groups or sub-cultures that provide more
specific identification.

Nationality Groups: Such as Indians, Africans, and Chinese etc. One found within one
community will tend to display distinct ethnic tastes.

Religious Groups: Such as Christians, Hindus, Muslims etc. represent sub cultures
with specific preferences and beliefs.

Compiled by Dr.Lily David and Ms. Veenu Joy

Racial Groups: Such as Orientals, Caucasians have distinct culture, styles and
attitudes.

A buyer’s nationality, religion, race and geographical background will have an

influence on his/her preference for food, clothing, recreation and career.

Cross-culture influences

Cross-culture influences are norms and values of consumers in foreign markets that
influence strategies of multinational organizations marketing their products and
services abroad.

Sub-cultural influences that concern differences in values among different groups

within a country that distinguish them from society as a whole.
Levi Strauss closely follows both cross-cultural and sub-cultural trends. The basic
principle it follows is “think globally but act locally.” The company recognizes that
tastes in fashion, music and technology etc, are becoming increasingly similar across
most countries of the world because of global reach of media such as MTV, the Internet
and greater facilities for travel.
Marketers often make the strategic error of assuming that since domestic consumers
like a product, consumers in other countries would naturally like it. Such a view is
often referred to as a “culturally myopic view”. Companies have generally been
successful in marketing abroad by recognizing local differences in consumer needs
and customs. To accomplish this, such companies had to learn cross-cultural
acculturation, which means thoroughly orienting themselves to the values, beliefs,
customs, language and demographics of the new country.
Most multinational companies in India are adapting their advertisements to local
cultural conditions. For example, Pepsi and Coke are using models wearing Indian
dresses and the music and songs too portray Indian cultural.

Social Class: Social Class is indicated by a combination of multiple factors such as

occupation, wealth and other variables. People are ranked as occupying inferior or
superior positions according to their social class

Marketers are interested in social class because people within a given a social class
tend to exhibit similar buying behaviour. Social classes show distinct product and
brand preferences and some marketer’s may want to focus on their effort on one social
class. Social classes also differ in their media exposure with the higher social class
having more exposure to magazine’s and tv’s.

Social Factors:

Reference Groups: These are groups that have a direct (face to face) or indirect
influence on an individual’s attitudes or behaviour. Groups that have a direct
influence on a person’s attitude are called membership groups and these are groups
which a person belongs and interacts. Some are primary groups consisting of family
Compiled by Dr.Lily David and Ms. Veenu Joy
and friends, neighbours etc., secondary groups are more formal and have occasional
interaction such are religious groups, trade unions, professional associations. People
are also influenced by groups to which they do not belong e.g. A teenage cricket player
may spire to become a national team player. He identifies with this group though
there’s no direct face to face contact.

Family: Members of the buyer’s family can have an influence on the buyer’s
behaviour. Marketers are interested in the roles and the relative influence of the
husband, wife and children on the purchase of a large variety of products.

E.g. The wife has been the main agent in purchasing food, clothing, and other sundry
items for the household. But in the case of expensive products there are more joint
decisions made by both husband and wife. In order to choose the right advertising
media and message the marketer’s needs to be determine which member normally
has a greater influence on the purchase of the product.

Roles and Status: A role consists of the activities a person is expected to perform
according to the people around him. E.g. with his parents a man has to play the role
of a son, with the family he has to play the role of a husband or father and in his office
the role of a marketing manager, each role carries a status reflecting the general
importance given to it by society. The role of a marketing manager has more status
than that of a son. People often choose products to communicate their status in
society, thus company presidents may drive a Mercedes and a wear a finely tailored
suits. Marketer’s are aware of the potential for being status symbols.

3. Personal Factors:

Age and Life Cycle: Peoples tastes in clothes, furniture and recreation is age
related, Consumption is also related to the stage of the family life cycle. Each stage
of the family life cycle has its own financial situation and typical product interests.
Marketer’s often define their target markets in terms of life cycle stage and develop
appropriate products and marketing plans.

Occupation: A person’s occupation has an influence on the goods and services

bought. A factory worker will buy work clothes, work shoes and the necessities of
life while an executive will buy expensive clothes, air travel and club membership.
A marketer must try to identify the occupational groups that have an above
average interest in his product and services.

Economic Circumstances: A persons economic circumstances consist of his

spendable income. Savings and assets, borrowing power and attitude toward
spending vs saving money. Marketers of expensive goods have to spend close

Compiled by Dr.Lily David and Ms. Veenu Joy

 attention to trends in personal income saving and interest. If there’s a recession
marketer’s have to take steps to reposition the, redesign and re-price their product.

Life Style: A person’s lifestyle refers to the person’s pattern of living in the world
as expressed in his activities, interests and opinions. In preparing a marketing
strategy for a product the marketer searches for relationships between product, or
brand and life style groups

Personality and Self Concept: Each person has a unique personality that will
influence their buying behaviour. By personality we mean the persons
distinguishing psychological characteristics such as self-confidence, sociability etc.
It has been found that personality types can be classified and strong correlations
may exist between personality types and product or brand choice. An
advertisement for a watch maybe aimed at achievers or time conscious people or
disciplined people.

Almost all of us carry complex, mental pictures of ourselves which is called a

person’s self concept. Marketer’s should try to develop brand images that match the
image of the target market.

4. Psychological Factors:

Motivation: A person has multiple needs at any point of time. Most of these needs
will not be intense enough to motivate the person to act. A need becomes a motive
when a person is sufficiently interested to seek satisfaction of the need. Among all the
different theories of human motivation Sigmund Freud and Abraham Maslow’s
Theories, which are the most popular carry different implication for consumer
analysis and marketing. According to Freud’s Theory people are largely unconscious
about the real psychological forces controlling their behaviour. A person may not fully
understand what is motivating him to buy a product. E.g. A middle aged man buying
an expensive camera may describe his motive as wanting a hobby. At a deeper level
he may be purchasing the camera to impress others with his talent. And at a deeper
level he may be buying the camera to fulfil his self-development needs.

According to Maslow’s theory of Motivation human needs are arranged in a hierarchy

according to how they are to a person, as illustrated in the diagram below.

Compiled by Dr.Lily David and Ms. Veenu Joy

According to their order of importance there are physiological, safety, social, self-
esteem and self-actualization needs. When a person succeeds in satisfying an
important need, it will cease to motivate him and the person will be motivated to
satisfy the next important need. Thus when a person wants to buy a camera he has
satisfied his physiological, safety and social needs and his motivation to purchase the
camera might come from a need for more esteem from others or it might come from a
need for self-actualization.

Perception: Two people maybe in the same motivated state of mind but may act
differently because they perceive the same situation differently. E.g. one person may
consider a fast talking salesperson as aggressive and insincere another buyer may
consider the same salesperson as intelligent and helpful. The way each person
perceives the product would influence the buyer’s behaviour.

Learning: Learning describes the changes in the behaviour arising from experience.
When a person uses a product from which he derives satisfaction, his rewarding
experience is rewarding and his response to the product will be reinforced. Marketer’s
use this to build up demand for their product.

Attitudes and Beliefs: People carry certain beliefs about products and services. These
beliefs make up the product and brand images and people act on their beliefs. People’s
attitudes lead them to behave in a fairly consistent way towards a certain object. E.g.
a person may have the attitude that “The Japanese make the best electronic products

Compiled by Dr.Lily David and Ms. Veenu Joy

in the world” This affect his purchase behaviour and make him prefer Japanese
electronic goods always

Stages in Buyer’s Decision Process

Problem Recognition Information Search Evaluation of Alternatives

Purchase Decision Post Purchase Behaviour.

1. Personal

2. Commercial

3. Experiential.

The above diagram or chart illustrates that the buying process starts long before the
actual purchase. However consumers need not pass through all 5 stages for every
purchase that they make. For routine purchases involving a certain brand that is used
regularly the consumer may not go through information search and evaluation, but
for purchase of a new product especially expensive consumer durables the consumer
may through all 5 stages.

1. Problem Recognition: The buying process begins when the buyer recognizes a
problem or a need. He can become of his need by internal stimuli such as
hunger or thirst or by an external stimuli such as watching an advertisement
on the TV or admiring the neighbour’s car.
2. Information Search: For a well-known product which can be obtained easily
by the consumer may not undertake any search for information, but for
products involving extensive problem solving a consumer will undertake
active search for information. The major source of consumer information are:
Personal source e.g. family friends neighbours
Commercial sources e.g. advertisements salespersons
Experiential Sources handling examining and using the product
Generally consumers receive most information from commercial sources which
perform an informing function. However the most effective messages tend to
come from personal sources.

Compiled by Dr.Lily David and Ms. Veenu Joy

 As a result of gathering information the consumer increases his awareness of
brands out of a total set of brands available, Depending on the information
collected he may eliminate certain brands from his consideration and the
remaining brands be made from this set. The sets involved in the consumer
decision is illustrated below:

TOTAL SET AWARNESS SET CHOICE SET

Voltas Voltas Voltas
IFB National National
Videocon Whirlpool IFB
BPL IFB
National BPL
Whirlpool
Maharaja

A company must design its marketing mix in order to get into the customers
awareness set and choice set, otherwise it has lost its opportunity to sell to the
customer. The company must also know which other brands are in the consumer
choice set so that it knows its competitors and can plan its advertising appeals. The
marketer’s should also identify the consumer’s sources of information and the
importance of each source of information. This will help the marketer to prepare
effective communication to target markets.

3. Evaluation of Alternatives: The consumer has to choose among alternative

brands in the choice set and the marketer needs to know how the consumer
processes information to arrive at brand choice. A product is viewed as bundle
of attributes. It must be noted that these attributes are needed to evaluate
alternate brands. Buyers will compare different characteristics of competing
products like quality, price etc. to arrive at a decision, brand images can help
in the evaluation of alternatives.

4. Purchase Decision: Normally the customer will buy the most preferred brand,
but these factors can come between the purchase decision as illustrated below

Compiled by Dr.Lily David and Ms. Veenu Joy

 Steps between Evaluation of Alternatives and Purchase Decision

Evaluation of Alternative Purchase Intention Attitude of Others

Unanticipated Situational

Factors

Perceived Risk

Purchase

Decision

The attitude of the reference group members on whom the buyer relies on will affect
the purchase decision. Unexpected situational factors such as unexpected price rise,
loss of jobs etc may change the purchase intention. Higher priced products involve a
higher degree of risk, sophisticated products involve performance risks. Marketers
must provide support and information that will reduce the perceived risk.

5. Post Purchase Behaviour: If the performance of the product matches with the
consumer’s expectations of it, the consumer is satisfied. But if the product falls
short of his expectations then consumer is dissatisfied. Consumers base their
expectations on messages they receive for advertisements, sales-persons and
other sources of information. If a seller over exaggerates the performance of the
product, then consumers will experience dissatisfaction. The larger the gap
between the performance and expectations of the product greater the level of
dissatisfaction. Thus sellers must make honest claims about their products so
that buyers experience satisfaction.
A satisfied consumer is more likely to purchase the product the next time and
is likely to say good things about the product. According to marketer’s Ä
satisfied customer is our best advertisement” Post purchase communication to
buyers have shown to result in fewer product returns. In addition they also

Compiled by Dr.Lily David and Ms. Veenu Joy

 provide speedy channels for customer complaints and redress customer
grievances. This will help the company to stop and correct problems resulting
in post purchase satisfaction. Thus by understanding how buyer’s go through
problem recognition, information search, evaluation of alternatives, the
purchase decision and post purchase behaviour the marketer can pick up many
clues on meeting buyer’s needs.

Compiled by Dr.Lily David and Ms. Veenu Joy