School of Distance Education

PET ENGINEERING COLLEGE

An ISO 9001:2015 Certified Institution
Accredited by NAAC, Approved by AICTE, Recognized by Government of Tamil Nadu and
Affiliated to Anna University

DEPARTMENT OF MANAGEMENT STUDIES

UNIT - I

CLASS : II MBA

SUBJECT CODE : BA4009

SUBJECT NAME : CONSUMER BEHAVIOUR

REGULATION : 2021

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MODULE 1
CONSUMER BEHAVIOUR

Consumer is the reason why business exists. Without them no company can survive or
thrive. In their absence, an organisation doesn’t have a business or purpose. The main purpose of a
company is to satisfy customer’s needs and wants. Though similar, consumers are unique in
themselves; they have needs and want which are varied and diverse from one another; and they
have different consumption patterns and consumption behaviour. The marketer helps satisfy these
needs and wants through product and service offerings. For a firm to survive, compete and grow, it
is essential that the marketer identifies these needs and wants, and provides product offerings more
effectively and efficiently than other competitors. A comprehensive yet meticulous knowledge of
consumers and their consumption behaviour is essential for a firm to succeed. Herein, lays the
essence of Consumer Behaviour, an interdisciplinary subject, which emerged as a separate field of
study in the 1960s. Peter Drucker, a leading management expert, once stated that the aim of
marketing is to know and understand the consumer so well that the product or service fits him and
sells itself. Ideally, marketing should result in a consumer who is ready to buy. All that should be
needed then is to make the product or service available. In short consumer or customer satisfaction
is the key to an organisational success.

Consumer

Any individual who purchases goods and services from the market for his/her end-use is
called a consumer. In simpler words a consumer is one who consumes goods and services available
in the market. In other words, consumer is an ultimate user of a product or service.

According to International Dictionary of Management, “consumers are purchasers of goods and

services for immediate use and consumption”.

Consumer Behaviour

Human being differs from one to another. It is not easy to predict the human behaviour.
Human being differs in their taste, needs, wants and preferences. But one constant thing is that we
all are consumers. CB is a vast and complex subject. Understanding CB and “knowing consumers’
are not that simple. It is almost impossible to predict with one hundred per cent accuracy, how
consumer(s) will behave in a given situation. Marketers are interested in watching people shopping,
flirting, parading, playing, entertaining, as they are keenly interested in the wide variety of
behaviours they display. The efforts of all marketers are to influence the behaviour of consumers in
a desired manner. The success or failure in this pursuit determines the difference between success
and failure of marketing efforts or even the business itself.

Consumer behaviour explains the reasons and logic that underlie purchasing decisions and
consumption patterns; it explains the processes through which buyers make decisions. Consumer
Behaviour 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

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elements viz. knowledge, affect and behaviour; 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”. The “consumer” includes both personal consumers and
business/industrial/organizational consumers.

Definitions

1. “The behaviour that consumers display in searching for, purchasing, using, evaluating and
disposing of products and services that they expect will satisfy their needs.”- Schiffman and Kanuk

2. “…..the decision process and physical activity engaged in when evaluating, acquiring, using or
disposing of goods and services." - Loudon and Bitta

3. “The study of consumers as they exchange something of value for a product or service that
satisfies their needs”- Wells and Prensky

4. “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

5. “The dynamic interaction of effect and cognition, behaviour and the environment by which
human beings conduct the exchange aspects of their lives” - American Marketing Association

By analysing the above definition, it reveals that the study includes within its purview, the
interplay between cognition, affect and behaviour that goes on within a consumer during the
consumption process: selecting, using and disposing off goods and services.

i. 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.

ii. Affect:

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

iii. Behaviour:

This is the “visible” part. In our case, this could be the purchase activity: to buy or not to buy (again
specific to a product or service offering, a brand or even related to any of the 4 Ps).

Why we study of CB: (Importance of CB)

The term CB is defined as the behaviour that consumers’ display in searching for, purchasing,
using, evaluating and disposing of products and services that they expect will satisfy their needs.
CB focuses on how individuals make decisions to spend their available resources (time, money,
effort) on consumption related items. The term CB describes two different kinds of consuming
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entities: the personal consumer and the organizational consumers. The Personal consumer buys
goods and services for his or her own use, for the use of the household or as a gift for a friend. In
each of these contexts, individuals, who are referred to as end users or ultimate consumers, buy the
products for fine use. The second category of consumer- the organizational consumer- includes
profit and not-for-profit businesses, government agencies (local, state, and national), and
institutions (e.g. Schools, hospitals, and prisons), all of which must buy products, equipments and
services in order to run their organization.

The subject of Consumer Behaviour is viewed as the edifice of the marketing concept, an important
orientation in marketing management. The knowledge of Consumer Behaviour helps the marketer
understand and predict the consumption patterns and consumption behaviours of people. It helps
them gain insights as to why a consumer behaves differently to another consumer; as well as, why a
consumer behaves differently in different times and buying situations. The study helps them
understand the internal (individual determinants) and external (environmental factors) forces that
impel people to act out different consumption patterns and behaviours. The study helps the
marketer in:

a) Analyzing the environment: identifying opportunities and fighting threats.

b) Segmenting, targeting and positioning.

c) Designing the marketing-mix.

d) Designing the marketing strategy.

e) Governmental and Non-profit Organization and Social Marketing.

Nature of Consumer Behaviour

1. Process: -Consumer behaviour is a systematic process relating to buying decisions of the

customers. The buying process consists of the following steps;

1) Need identification to buy the product

2) Information search relating to the product.

3) Listing of alternative brands.

4) Evaluating the alternative (cost-benefit analysis)

5) Purchase decision.

6) Post-purchase evaluation by the marketer.

2. Influenced by various factors: -Consumer behaviour is influenced by a number of factors.

The factors that influenced consumer are as follow; marketing, personal, psychological, situational,
social, cultural etc.

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3. Different for different customers: -All consumers do not behave in the same manner.
Different consumers behave differently. The difference in consumer behaviour is due to individual
factors such as nature of the consumer’s life style, culture, etc.

4. Different for different products: -Consumer behaviour is different for different products.
There are some consumers who may buy more quantity of certain items and very low/no quantity
of some other items.

5. Varies across regions: -The consumer behaviour vary across states, regions and countries.
For instance, the behaviour of urban consumers is different from that of rural consumers. Normally,
rural consumers are conservative (traditional) in their buying behaviour.

6. Vital for marketers: -Marketers need to have a good knowledge of consumer behaviour.
They need to study the various factors that influence consumer behaviour of their target customers.
The knowledge of consumer behaviour enables marketers to take appropriate marketing decisions.

7. Reflects Status: -Consumers buying behaviour is not only influenced by status of a

consumer, but it also reflects it. Those consumers who own luxury cars, watches and other items
are considered by others as persons of higher status.

8. Result in spread-effect: -Consumer behaviour has a spread effect. The buying behaviour of
one person may influence the buying behaviour of another person. For instance, a customer may
always prefer to buy premium brands of clothing, watches and other items etc. this may influence
some of his friends, neighbours, colleagues. This is one of the reasons why marketers use
celebrities like Sharuk khan, Sachin Tendulkar to endorse their brands.

9. Improves Standard of Living: -Consumer buying behaviour may lead to higher standard of
living. The more a person buys the goods and services, the higher is the standard of living.

10. Undergoes a change: - The consumer’s behaviour undergoes a change over a period of time
depending upon changes in age, education and income level. Etc, for instance,, kids may prefer
colourful dresses, but as they grow up as teenagers and young adults, they may prefer trendy
clothes.

Scope of Consumer Behaviour:

The study of consumer behaviour deals with understanding consumption patterns and behaviour. 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

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 ‘How often they use’ it: frequency of use

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

Basic Components:

i) Decision making (Cognitive and Affect):

-this includes the stages of decision making: Need recognition, Information search, Evaluation of
alternatives, Purchase activity, Post purchase behaviour.

ii) Actual purchase (Behaviour):

-this includes the visible physical activity of buying of goods and/or service. It is the result of the
interplay of many individual and environmental determinants which are invisible.

iii) Individual determinants and environmental influences: The environmental factors affect the
decision process indirectly, through way of affecting individual determinants.

iv) Buying roles: Actual Buyer vis a vis other users. There are five buying roles, viz., Initiator,
Influencer, Decider, User, and Buyer. The initiator is the person who identifies that there exists a
need or want; the influencer is the one who influences the purchase decision, the actual purchase
activity and/or the use of the product or service; the decider is the one who decides whether to buy,
what to buy, when to buy, from where to buy, and how to buy; the buyer is the one who makes the
actual purchase; and, the user is the person (s) who use the product or service. These five roles may
be played by one person or by different persons. A person may assume one or more of these roles.
This would depend on the product or service in question.

Examples: Let us take an example.

A child goes to a kindergarten school. She comes back home and asks her parents to buy her a set
of colour pencils and crayons. Now the roles played are:

1. Initiator: the child in nursery school

2. Influencer: a fellow classmate

3. Decider: the father or the mother

4. Buyer: the father or the mother

5. User: the child

Application of Consumer Behaviour:

An understanding of consumer behaviour is necessary for long term success and survival of a firm.
It is viewed as the edifice of the marketing concept, an important orientation in marketing
management.

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According to the marketing concept, the marketer should be able to determine needs and wants of
the target segment and provide product and service offerings more effectively and efficiently than
competitors. It is essentially a customer-centred philosophy, which aims at understanding customer
needs and wants, providing the right product and service, and deriving customer satisfaction; “make
what you can sell” rather than “sell what you make.”

An understanding of the study of consumer behaviour helps formulate appropriate marketing

strategies for a firm keeping in view the consumer and his environment. It has a number of
applications; the main application bases are as follows:

1. Analyze the environment:

The knowledge of consumer behaviour can be applied to help identify opportunities and fight
threats. The opportunities could be in terms of newer customers, newer markets, unfulfilled needs
and wants (through a study of consumer individual determinants and other environmental
influences). The threats could be fought by developing and implementing appropriate marketing
strategies to best fit the environment.

The marketing strategies need to be dynamic and constantly evolving keeping in view the
uncertainty in the environment; Environmental uncertainty is a function of complexity and
dynamism. Complexity is defined in terms of the number, strength and interrelatedness of the
various factors in the environment that a firm has to deal with. Dynamism relates to how quickly
the changes take place in the environment.

2. Segmentation, targeting and positioning:

The study of consumer behaviour may be applied to segment the market, select the target market
and position the product or service offering. Identifying the target segment, understanding their
needs, providing the right product and service offering and communicating about the offering – all
of these help a marketer succeed in the long term and ensure his survival and success in a changing
environment.
a) Segment the market: The marketer needs to identify distinct customer groups with needs and
wants, classify them on basis of descriptive characteristics and behavioural dimensions.

The descriptive characteristics may take forms of age, gender, income, occupation, education,
family size, family life cycle, gender, lifestyle, personality, religion, generation, geography,
nationality, and social class. The behavioural dimensions take forms of benefits, uses, use occasion,
usage rates, and loyalty status.

b) Select target market: The marketer then selects one or more markets to enter. The segment(s)
that should be targeted should be viable; there should be a fit between the market attractiveness and
the company’s objectives and resources. The marketer would be able to assess the viability of a
segment on the basis of the following criteria, viz., measurability, substantial ability, accessibility,
differentiability, and actionability.

c) Position: the product offering in the mind of the customers: The marketers should be able to
communicate the distinct and/or unique product characteristics.

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3. Designing the Marketing Strategy:

There exists an interrelation between the Consumer, the Environment and the Marketing strategy.
a) Consumer: The consumer has his needs and wants as well as product preferences; Thus, there
exists an interplay of Cognition (knowledge about products and alternatives), Affect (feelings of
favourableness and unfavourableness) and Behaviour (action: buy or not to buy).

b) Environment: This refers to forces in the environment, which make the environment complex
and dynamic.
c) Marketing strategies: This implies setting up of goals and then achieving them through the
design of an appropriate marketing mix.

The Marketing Strategy should be designed to influence consumers (Cognition, Affect and
Behaviour) and be influenced by them. It should be flexible and ever evolving with changes in the
customer needs and wants; as well as, changes in the environment in which it operates. The
knowledge of consumer behaviour can be applied to develop a “best fit” between consumer needs
and wants, the environment in which the firm operates; and, the firms’ goals and objectives.

4. Designing the Marketing Mix:

4-Ps The study of consumer behaviour may be applied to design the 4 Ps.

a) Product: The term product includes both tangible products and intangible services. The issues to
address consist of name (brand), size, shape, features, labelling, packaging, accessories and
supplementary products, terms of sale and services, after sales etc.

b) Price: This includes the pricing of the product offering. The major components include, form of
payment, terms and conditions of payment, discounts, price sensitivity, differential prices and
customer reaction, imagery (price increase and customer reaction, price decrease and customer
reaction).
c) Place and Distribution: This includes the marketing channel, and comprises decisions regarding
choice of channel (direct or indirect), location, accessibility and availability of product offering,
wholesaling, retailing, logistics etc.

d) Promotion: This includes marketing communication, and the major issues comprise decisions
on communication/promotion mix, the message and media strategy (the content, appeal and
context).

5. Application in Governmental and Non-profit Organizations and Social Marketing:

The knowledge of consumer behaviour finds relevance even in Governmental and Non-profit
Organizations and Social Marketing. Governmental and Non-profit Organizations have the society
as its customers and need to understand them so as to be able to serve them better.

Social marketing involves propagation of ideas; attempts at such circulation and spread of ideas for
moral and social upliftment can be more successful if there is a proper understanding of the these
consumers (i.e., the public and society)

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The Interdisciplinary Nature of Consumer Behaviour:

As an interdisciplinary area of study, the subject borrows heavily from psychology, sociology;
social psychology; anthropology and, economics.

1. Psychology: This includes the study of the individual as well as the individual determinants in
buying behaviour, viz., consumer perception, learning and memory, attitude, self-concept and
personality, motivation and involvement, attitudes and attitudinal change and, decision making.

2. Sociology: This includes the study of groups as well as the group dynamics in buying behaviour,
viz., family influences, lifestyles and values, and social group influences.

3. Social psychology: This includes the study of how an individual operates in group/groups and its
effects on buying behaviour viz, reference groups and social class influences.

4. Anthropology: This is the influence of society on the individual viz., cultural and cross-cultural
issues in buying behaviour, national and regional cultures etc.

5. Economics: This is the study of income and purchasing power, and its impact on consumer
behaviour. The underlying premise is that consumers make rational choices while making purchase
decisions. While resources are limited and needs and want many, consumers collect information,
and evaluate the various alternatives to finally make a rational decision.

As discussed before, consumers are unique in themselves. A comprehensive yet meticulous

knowledge of consumers and their consumption behaviour is essential for a firm to succeed. In
order to understand and predict consumption patterns and behaviours within segment (s), market
research becomes essential.

Market Research and Consumer Behaviour:

Consumers are different and heterogeneous. However, like-minded clusters of customers do exist;
they are homogenous within such clusters and heterogeneous outside; these are referred to as
segments. Marketers identify segments and target one or few of these segments, and thereby fulfil
the qualifications of the marketing concept; first, marketers identify customer needs and wants; and
then, deliver product and service offerings so as to satisfy the customers more efficiently and
effectively than the competitors. In order to understand and predict consumption patterns and
behaviours within segment (s), market research becomes essential.

Market research may be defined as: - an organized effort to gather information about the market
and the customers.

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- Systematic collection, analysis and interpretation of data related to the market and the
surrounding environment.

The environment surrounding a Company may be grouped as the “micro-environment” and the
“macro environment”. The micro-environment comprises forces in the environment that is close to
the company and affects the company directly; for example, the company’s internal environment,
the founder/leader and his vision and mission, the customers, competitors, suppliers, and channel
intermediaries. The macro- environment on the other hand, comprises forces in the environment
that first affect the micro environment and through that they affect the company; in other words
they affect the company indirectly; examples are the demographic factors, socio-economic factors,
political factors, technological factors, cultural factors, natural factors etc. The forces in the macro
environment affect all the companies operating in a same industry in a similar manner.

The micro-environment is studied in terms of strengths (S) and weaknesses (W), while the macro-
environment is studied in terms of opportunities (O) and threats (T). The analysis of both of these
put together comprises the SWOT analysis.

Relationship between Marketing Research and Consumer Research

Marketing research → Consumer Research

(From Market Research, evolved the subset Consumer Research)

Marketing research Consumer Research

Objective Objective
- To study the marketing environment and the - To study consumers as individuals or
customers who are a part of it. as groups

Focus
- To establish trends, and identify opportunities and Focus
threats in the environment.- To study the market - To understand consumption behaviour
and forecast potential- To predict buying patterns and consumption patterns
based on modeling and simulation

End result End result

-Customer connect with company - Individual -Customer connect with company -
marketing and customization Individual marketing and customization

Approaches to Consumer Behaviour Research:

Broadly speaking there are two approaches towards consumer behaviour research. These are (a)
Traditional approach (b) Current approach. These can be further divided into sub approaches.

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(a) Traditional approach: This is further divided into two approaches, Positivist and Interpretivist.
i) Positivist approach:

This approach also referred to as “modernism”, is the earliest approach to studying consumer
behaviour and treats the study as an applied science; the paradigm lays emphasis on science as a
means of explaining behaviour. It lays emphasis on the causes of consumer behaviour and as per its
proponents; these causes are directly related to effects. Thus, it treats consumers as “rational”
human beings, who make purchase decisions after collecting information and weighing all
alternatives. The process of consumer decision making is looked upon as one of “rationality.”
“Rational decision is making and problem solving” is the key.

The approach is based on certain assumptions viz.,

 Consumer actions based on cause and effect relationship can be generalized; they can be
objectively measured and empirically tested;

 If a marketer/researcher could identify the reasons behind consumption behaviour; he would be

able to predict it; and if they could predict consumer behaviour, they could influence it.

 The focus lies on prediction of consumer behaviour. The methodology is essentially quantitative,
with techniques including surveys, observations, and, experiments. It aims at drawing conclusions
on large samples.

ii) Interpretivist approach:

This approach is also referred to as “post-modernism or experientialist.” Gradually there was a shift
in the approach towards the study of consumer behaviour and the positivist approach gave way to a
new approach that came to be called post-modernism. The approach lays emphasis on
understanding the customer better. It treats consumer decision making process as one which is
“subjective.” Thus while the approach is essentially subjective, the researchers following this
approach try to identify common patterns.

This approach is also based on certain assumptions viz.:

 Consumer actions are unique and different both, between two consumers, and/or within the same
consumer at different times and situations.
 A cause and effect relationship cannot be generalized; consumption patterns and behaviours are
unique; these are unpredictable.
 They cannot be objectively measured, empirically tested and generalized.
 The focus lies on the act of consumption rather than the act of purchase. The methodology is
essentially qualitative, with techniques including in depth interviews, focus group techniques, and
projective techniques. It aims at drawing conclusions on small samples.

(b) Current approach: ‘Dialectical’: The term ‘dialectics’ considers all forms of human
behaviour; thus the current approach to the study of consumer behaviour research is broader in
scope. This is further divided into four approaches, Materialism, Change, Totality and

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Contradiction.
i) Materialism:

This approach implies that consumer behaviour is shaped by the ‘material environment’ e.g.
money, possessions etc.

ii) Change:

Consumer behaviour is ‘dynamic’ in nature; it is always in a process of continuous motion,

transformation and change.

iii) Totality:

Consumption behaviour is ‘interconnected’ with other forms of human behaviour, like personal self
and the surrounding environment.

iv) Contradiction:

Views changes in consumer behaviour as arising from their internal contradictions, like moods,
emotions etc. The approach studies the consumer as a complex total whole and views consumer
purchase as well as consumption processes. The current approach to studying Consumer Behaviour
uses both the quantitative as well as qualitative approaches.

Research Perspectives on Consumer Behaviour:

There are three broad research perspectives in consumer behaviour. They are as follows: the
Decision-Making perspective, the experiential perspective, and Behavioural-Influence perspective.
1. The Decision-Making Perspective: According to the decision making perspective, the buying
process is a sequential in nature, with the consumer perceiving that there exists a problem and then
moving across a series of logical and rational steps to solve the problem; stages being problem
recognition, information search, evaluation of alternatives, purchase decision, and post purchase
behaviour. This perspective emphasizes the rational, logical and cognitive approach to consumer
decision making and purchase process.

2. The Experiential Perspective: The experiential perspective believes that not all buying may be
rational and logical; in some cases, buying results from a consumers’ desire for fun and fantasy,
hedonic pleasures, emotions and moods. The perspective emphasizes that consumers are “feelers”
as well as thinkers.

3. The Behavioural Influence Perspective: This perspective holds that forces in the environment
stimulate a consumer to make purchases without developing beliefs and attitudes about the product.

Research Paradigms in Consumer Behaviour:

The research paradigm in the study of consumer behaviour focuses on two approaches viz.,
Quantitative research, used by the positivists and, Qualitative research: used by the interpretivists.
The positivists and interpretivists as two schools of thought have already discussed. The current
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approach or the ‘dialectic’ approach to studying Consumer Behaviour makes use both the
approaches.
a) Quantitative Research in Consumer Behaviour:

As the name suggests, the approach makes application of quantitative research techniques to the
study of Consumer Behaviour. It comprises (i) research techniques that are used to
gather quantitative data over large samples randomly, and (ii) statistical tools and techniques,
inclusive of survey techniques, observation and experiments. This type of research
is descriptive and empirical in nature. It is primarily used by the positivists while studying
consumer behaviour, with a focus on prediction of consumer behaviour. The findings can be
generalized to marketing situations. As mentioned above, the quantitative techniques are also used
by “dialectics”.

b) Qualitative Research in Consumer Behaviour:

This approach makes application of qualitative research techniques to the study of Consumer
Behaviour. It comprises (i) research techniques that are used to gather qualitative data over small
samples randomly and, (ii) non-statistical tools and techniques, inclusive of depth interviews, focus
group, projective techniques and even observation. The type of study is subjective and non-
empirical in nature. It lays emphasis on the holistic “what, where, when, why and how” of human
behaviour”. The focus is on understanding consumption behaviour and consumption patterns. The
objective is to gain an understanding of consumer behaviour and the underlying causes that govern
such behaviour. The approach assumes that all marketing situations are unique; and, hence
the findings cannot be generalized to marketing situations. This approach is primarily used by
the interpretivists while studying consumer behaviour. However, as mentioned above, the
qualitative techniques are also used by “dialectics”.

c) Combining the two approaches:

Now a day, the two approaches are used in combination to study consumer behaviour. Qualitative
research is very often a prelude to quantitative research; the findings from qualitative research are
used to prepare scales for surveys and experiments.

Consumer Behaviour Audit

The consumer behaviour audit is a fundamental part of the marketing planning process. It is
conducted not only at the beginning of the process, but also at a series of points during the
implementation of the plan. The consumer behaviour audit considers both internal and external
influences on marketing planning, as well as a review of the plan itself.

There are a number of tools and audits that can be used, for example SWOT analysis for the
internal environment, as well as the external environment. Other examples include PEST and Five
Forces Analyses, which focus solely on the external environment.

In many ways the consumer behaviour audit clarifies opportunities and threats, and allows the
marketing manager to make alterations to the plan if necessary. This portion tells you the basics of
the consumer behaviour audit, and introduces a consumer behaviour audit checklist. The checklist

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is designed to answer the question, what is the current marketing situation? Let’s consider the
consumer behaviour audit under three key headings:

I. The Internal Marketing Environment.

II. The External Marketing Environment.

III. A Review of Our Current Marketing Plan

I. The Internal Marketing Environment.

In respect of internal marketing environment the following are the imporant elements of checklist;

 How is our marketing team organised?

 How efficient is our marketing team?

 How effective is our marketing team?

 How does our marketing team interface with other organisations and internal functions?

 How effective are we at Customer Relationship Management (CRM)?

 What is the state of our marketing planning process?

 Is our marketing planning information current and accurate?

 What is the current state of New Product Development? (Product)

 How profitable is our product portfolio? (Product)

 Are we pricing in the right way? (Price)

 How effective and efficient is distribution? (Place)

 Are we getting our marketing communications right? (Promotion)

 Do we have the right people facing our customers? (People)

 How effective are our customer facing processes? (Process)

 What is the state of our business's physical evidence? (Physical Evidence)

II. The External Marketing Environment.

As a market orientated organisation, the important areas we must analyse are;

 What is the nature of our 'customer?' Such as: Their needs and how we satisfy them. Their
buyer decision process and consumer behaviour. Their perception of our brand, and loyalty
to it. The nature of segmentation, targeting and positioning in our markets.

 What customers 'value' and how we provide that 'value?'

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 What is the nature of competition in our target markets? Our competitors' level of
profitability. Their number/concentration. The relative strengths and weaknesses of
competition. The marketing plans and strategies of our competition.

 What is the cultural nature of the environment(s)? Beliefs and religions. The standards and
average levels of education. The evolving lifestyles of our target consumers. The nature of
consumerism in our target markets.

 What is the demography of our consumers? Such as average age, levels of population,
gender make up, and so on.

 How does technology play a part? The level of adoption of mobile and Internet
technologies. The way in which goods are manufactured. Information systems. Marketing
communications uses of technology and media.

 Is the political and legal landscape changing in any way? Laws, for example, copyright and
patents. Levels of regulation such as quotas or tariffs. Labour/labour laws such as minimum
wage legislation.

III. Review of Our Current Marketing Plan

Under this heading marketer analysis are sniffed into the following questions:

 What are our current objectives for marketing?

 What are our current marketing strategies?

 How do we apply the marketing mix? (Including factors covered above in (a))

 Is the marketing process being controlled effectively?

 Are we achieving our marketing budget?

 Are we realising our SMART objectives?

 Are our marketing team implementing the marketing plan effectively?

 Levels of staffing. Staff training and development. Experience and learning.

Consumer behaviour audits are useful instruments in assessing all the features of decision making
in marketing including positioning, segmentation and other elements of the marketing mix.
Fundamentally, a consumer behaviour audit seeks to discover the attitudes of consumers
concerning a certain product, any necessary improvements, as well as their usage of the specific
products. The outline for auditing consumer behaviour has been simplified and generalized below,
but the execution of the process can be invaluable for identifying challenges and opportunities for
improving marketing strategy.

Marketing Decision Areas

Market segmentation – division of all possible product users (i.e., consumers) into groups with
similar needs to satisfy for product development and media selection.

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Product positioning – determination of a desirable product or brand position in the mind of the
consumer relative to competing brands.

Price – pricing policy consistent with the determined product position. The price is the all inclusive
set of consideration that the consumer must tender in exchange for the product or service, such as
time, patience, learning, and money.

Place (Distribution Strategy) – channel or distribution strategy, such as retail, wholesale, or

Internet, etc. consistent with the determined product position at which title to the product is
relinquished or the service is performed.

Promotion – advertising, visual packaging, publicity, promotion, website, telemarketing and direct
sales force activities.

Product – physical product characteristics or service to be experienced for each market segment.

Customer satisfaction – post-purchase policies to promoted customer use, loyalty, reference and
repeat purchases.

2. Customer Influences

External influences

 Culture, subculture, and values

 Demographics, income, and social class

 Reference groups and family / households

 Marketing activities by the company (e.g., product attributes, packaging,

advertisements, sales presentation, and retail outlet)

Internal influences

 Needs, motives, and emotions

 Perceptions, learning and memory

 Personality and lifestyle

 Attitudes

Situation influences

 Physical features

 Time perspective

 Social surroundings

 Task definition

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 Antecedent states and situations (e.g., product or offer communications,
purchase, use, ordefinition)

Decision process influences (i.e., stages)

 Problem recognition

 Information search

 Alternative evaluation

 Outlet selection

 Purchase

 Post-purchase processes (e.g., use, disposition, and evaluation)

By interweaving the decision areas with the relevant customer influences listed
above, it is possible to outline the areas in which data should be gathered in order to
construct a complete consumer behaviour audit template as follows:

 Step 1: Market segmentation (…) Identify customer influences

 Step 2: Product positioning (…) Identify customer influences

 Step 3: Price (…) Identify customer influences

 Step 4: Place (Distribution strategy) (…) Identify customer influences

 Step 5: Promotion (…) Identify customer influences

 Step 6: Product (…) Identify customer influences

 Step 7: Customer satisfaction (…) Identify customer influences

By completing the above steps and answering all the associated questions
regarding customer influences at each of the stages, the marketing manager should
have a thorough understanding of the influences on consumer behaviour and the
key decision areas in which the influences are activated.

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