Unit III: Understanding Consumers

Question 21: Discuss the concept of consumer behavior and explain in brief the factors
influencing consumer buying behavior.
Consumer behavior is the study of how individuals, groups, or organizations select, buy, use,
and dispose of goods, services, ideas, or experiences to satisfy their needs and wants. It
involves understanding the psychological, social, and cultural factors that influence purchasing
decisions.
Factors influencing consumer buying behavior:
● Psychological factors: These include perception, motivation, learning, attitude,
personality, and lifestyle.
● Social factors: These include family, reference groups, social classes, and culture.
● Cultural factors: These include subcultures, social class, and cultural values.
● Personal factors: These include age, life cycle stage, occupation, economic situation,
lifestyle, and personality.
● Situational factors: These include physical surroundings, social surroundings, time,
mood, and buying purpose.
Question 22: What do you mean by consumer behavior? Briefly explain the important
stages of consumer buying decision making process.
Consumer behavior is defined above.
Stages of consumer buying decision making process:
1. Problem recognition: The buyer recognizes a need or want.
2. Information search: The buyer seeks information about potential solutions to the
problem.
3. Evaluation of alternatives: The buyer evaluates the available options based on their
attributes.
4. Purchase decision: The buyer makes a purchase decision.
5. Post-purchase behavior: The buyer evaluates the purchase and decides whether to
repurchase.
Question 23: Explain the consumer buying behavior model (Systems model). Highlight
the importance of studying this model from a systems-perspective.
The systems model of consumer behavior views the consumer as a part of a larger system,
influenced by various inputs and outputs. These inputs include stimuli (marketing,
environmental, and personal), which affect the consumer's decision-making process. The
outputs are the consumer's responses, such as purchase behavior or word-of-mouth
recommendations.
Importance of studying the model from a systems perspective:
● Holistic view: It provides a comprehensive understanding of consumer behavior by
considering the interplay of various factors.
● Interconnectedness: It highlights the interconnectedness between different elements of
the system, allowing for a more nuanced analysis.
● Dynamic nature: It recognizes the dynamic nature of consumer behavior, as factors can
change over time.
● Strategic implications: It provides valuable insights for marketers to develop effective
strategies.
Question 24: Mention the salient features of Industrial buying behavior. Briefly explain
the types of business purchase decisions.
Salient features of Industrial buying behavior:
● Multiple decision-makers: Often involves multiple people within an organization.
 ● Professional buying: Purchase decisions are made based on professional criteria.
● Derived demand: Demand for industrial products is derived from the demand for
consumer goods.
● Reciprocity: Buying relationships may be influenced by reciprocity agreements.
● Fewer buyers but larger orders: There are fewer buyers in the industrial market, but
they place larger orders.
Types of business purchase decisions:
● Straight rebuy: Routine purchase of items that have been bought before.
● Modified rebuy: Purchase of a product that has been bought before, but with some
changes.
● New task: Purchase of a product for the first time.
Question 25: Discuss the major types of consumers buying behavior. Prepare a buying
matrix of consumers to discuss related products with real-life examples.
Major types of consumers buying behavior:
● Complex buying behavior: High involvement and high perceived differences between
brands.
● Dissonance-reducing buying behavior: High involvement but low perceived differences
between brands.
● Habitual buying behavior: Low involvement and low perceived differences between
brands.
● Variety-seeking buying behavior: Low involvement but high perceived differences
between brands.
Buying matrix of consumers:
Consumer Type Involvement Perceived Differences Example
Complex High High Cars, computers
Dissonance-reducing High Low Insurance, appliances
Habitual Low Low Toothpaste, milk
Variety-seeking Low High Snacks, candy
Question 26: Define consumer behavior. Differentiate between consumer buying and
industrial buying.
Consumer behavior is defined above.
Differences between consumer buying and industrial buying:
● Purpose: Consumer buying is for personal use, while industrial buying is for business
use.
● Decision-makers: Consumer buying is typically made by individuals, while industrial
buying involves multiple decision-makers.
● Buying criteria: Consumer buying is often influenced by emotional factors, while
industrial buying is based on rational criteria.
● Purchase volume: Industrial buying typically involves larger quantities than consumer
buying.
Question 27: Define market segmentation. Discuss the criterion and basis of successful
market segmentation.
Market segmentation is the process of dividing a market into distinct groups of customers with
similar needs, wants, or characteristics.
Criteria for successful market segmentation:
● Measurable: The segments should be measurable in terms of size, purchasing power,
and other relevant factors.
 ● Accessible: The segments should be accessible through marketing channels.
● Substantial: The segments should be large enough to be profitable.
● Differentiable: The segments should have distinct needs, wants, or behaviors.
● Actionable: Effective marketing programs can be developed to target each segment.
Basis of successful market segmentation:
● Demographic segmentation: Based on age, gender, income, occupation, education,
religion, etc.
● Geographic segmentation: Based on region, country, city, climate, etc.
● Psychographic segmentation: Based on personality, lifestyle, values, interests, etc.
● Behavioral segmentation: Based on usage rate, loyalty, benefits sought, etc.
Question 28: What do you mean by market segmentation? Discuss the segmentation,
targeting, and positioning process for competitive advantage.
Market segmentation is defined above.
Segmentation, targeting, and positioning process:
1. Segmentation: Identify potential market segments based on the criteria mentioned
above.
2. Targeting: Select the target market(s) that the company wants to serve.
3. Positioning: Develop a unique value proposition for the target market.
Positioning involves creating a distinct image of the product or brand in the minds of
consumers. It helps to differentiate the product from competitors and position it in a favorable
way.
Question 29: What is positioning of product? Discuss in brief the presumptions of
positioning and various positioning strategies.
Positioning is defined above.
Presumptions of positioning:
● Consumers perceive products as bundles of attributes.
● Consumers can only process a limited amount of information.
● Consumers evaluate products based on their perceived similarities and differences.
Positioning strategies:
● Product-based positioning: Positioning based on product attributes or benefits.
● Price-based positioning: Positioning based on price.
● User-based positioning: Positioning based on the target market.
● Competitor-based positioning: Positioning relative to competitors.
● Value-based positioning: Positioning based on the value offered to customers.
Question 30: Write short notes on:
● (A) Advantages of targeting
● (B) Effect of consumer behavior on market segmentation
Advantages of targeting:
● Increased efficiency: Allows for more focused marketing efforts.
● Better resource allocation: Helps allocate resources to the most promising segments.
● Enhanced customer satisfaction: Tailored marketing can better meet customer needs.
● Competitive advantage: Can create a competitive advantage by serving specific
segments effectively.
Effect of consumer behavior on market segmentation:
● Changing consumer preferences: Market segmentation needs to be updated to reflect
changing consumer tastes and preferences.
● Emerging trends: New trends and technologies can create new segments or alter
existing ones.
● Cultural factors: Cultural differences can influence consumer behavior and
segmentation.
● Economic conditions: Economic factors can affect consumer purchasing power and
segmentation.
● https://ahsankhaneco.blogspot.com/2024/01/consumer-decision-making_7.html
● https://www.sherpadesk.com/blog/how-to-create-a-successful-msp-marketing-plan