CONSUMER BEHAVIOUR

“A customer is the most important visitor on our premises. He is not dependent on us.
We are dependent on him. He is not an interruption on our work. He is the purpose of it
and not an outsider on our premises. He is a part of it. We are not doing him a favour by
serving him. He is doing us a favour by giving us the opportunity to do so.”

- Mahatma Gandhi
Customer Vs Consumer
The term ‘customer’ and ‘consumer’ have been used synonymously most of the
time. The term customer refers to the purchaser of a product or service whereas the term
consumer refers to the end user of a product or service. The customer may or may not be
a consumer. Similarly the consumer may or may not be the customer.

Definitions
“Consumer behaviour is defined as activities people undertake when obtaining,
consuming, and disposing of products and services.”
- Roger D. Blackwell, Paul W. Miniard and James F. Engel

Simply it can be stated that consumer behaviour is the study of “why people buy.”
“Consumer behaviour has been referred to as the psychological, social and physical
behaviour of all potential consumers as they become aware of, evaluate, purchase and
consume and tell others about products and services.”
- Suja R. Nair

Obtaining: refers to the activities involved in purchase of a product. The activities

include searching for information regarding product features, evaluating the alternatives,
and purchasing. It also includes the place of purchase (shopping malls/nearest grocery
stores), the mode of purchase (cash/credit card), etc.

Consuming: refers to how, where, when and under what circumstances consumers use
products. How – as side dish or main dish; Where – place (home, office or restaurant),
When – time (morning or afternoon or evening) and under what circumstances (happiest
moments or with friends or when alone).

Disposing: refers to how they get rid of products and packaging. Whether they resell it
or give it to children or use it for different purpose.

“Consumer behaviour can be said to be the study of how individuals make decisions on
how to spend their available resources (time, money, effort) on various consumption-
related items.”
- Suja R. Nair

The above definition talks about various activities surrounding the ultimate
consumer and helps the marketer to gauge the consumer behaviour specifically focusing
on:

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  Who buys the products or services?
 How do they buy products or services?
 Where do they buy them?
 How often do they buy them?
 When do they buy them?
 Why do they buy them? And
 How often do they use them?
These questions will help in understanding better what factors influence the
decision making process of the consumers.

Consumer Behaviour – for Whom?

It has been said that the field of consumer behaviour holds for various categories
of people such as consumers, marketers and students of marketing.

Consumers: All the firms have started considering ‘customer’ as the ‘king’ or ‘queen’.
Interestingly, after liberalization of India’s economy, the market place is flooded with
many new players including the MNCs’ resulting in the availability of more number of
brands in every segment of the market. On account of this, the customer has started
being choicy about what to buy. Thus all firms are becoming not only customer focused
but are also trying to build relationship with them. This is done by continuously updating
knowledge, information and understanding of the customer needs and expectations.

Awareness of such devotion from the firm has made consumers to take more
interest into their own consumption related decisions. They are keen to gain more
knowledge about taking various decisions related to products and the promotional
influences that persuade them to buy. Thus the study of consumer behaviour will enable
them to become better and wiser consumers.

Marketers: have woken up to the reality that exist in a competitive environment and
hence they have to be more focused. The marketers have observed that the choice
empowered customer cannot be taken for granted. This is particularly true because of the
rapidly rising consumer earnings, sharp drop in the savings rate and increase in earnings
resulting in a huge amount of disposable income that are spent lavishly. Simultaneously,
there are changes occurring in the personal, social and influences making consumer more
individualistic, conscious (about the products or services to fulfill their needs). So, the
study of consumer behaviour will help marketers to assess the consumers’ needs and
wants, and make better strategic marketing decisions.

Students: As students of marketing, one will be more concerned with the study of
consumer behaviour. Such a study will help to gauge into the consumer’s mind and
understand the various consumption related aspects of individuals (consumers). As
students of marketing, understanding of consumer behaviour will make the study of
‘marketing management’ more interesting, understandable and increase awareness of its
practical implications.

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Development of Consumer Behaviour as a Field of Study

Consumer behaviour as a separate field of study gained attention from the 1960s.
In the absence of a history or a separate research of its own, this new discipline drew/or
borrowed concepts from other scientific disciplines such as –

 Psychology (the study of individuals)

 Sociology (the study of groups)
 Socio-psychology (the study of how persons are influenced by groups)
 Cultural anthropology (the influence of the culture and society on the individual)
 Economics (the relationship between demand and supply in the flow of marketing
activity)

Positivism: Initially, the study of consumer research was emphasizing from a managerial
perspective. In that, if the marketing manager could obtain consumption related
behaviour i.e., if they are able to predict consumer behaviour, then they could influence
it. This type of consumer behaviour approach came to be known as ‘positivism’.

Interpretism: A group of academicians who are interested in the study of consumer

behaviour and are more interested in knowing consumption behaviour going by the
influence of the various disciplines on the consumer behaviour. This approach of
studying the consumer behaviour with a view on understanding consumption behaviour
and the interpretations of such behaviour is known as ‘interpretivism or post-
modernism.’

These interpretivists have included many subjective aspects of consumer

behaviour such as the effect of moods, emotions, type of situations etc. These
interpretivists have also treated each purchase experience as unique because of the many
variables which influence the behaviour at that particular moment of time. On account of
its focus on the consumption experience, the interpretive approach is also referred to as
‘experientalism’.

Consumer Behaviour and Marketing

Broadly, buyers can be classified into two major categories:

 Consumers (in the household sector, who buy goods or services for personal
consumption)
 Industrial buyers (who purchase goods and services for carrying out activities in
the various industrial units).
In this age of information explosion, and internet marketing becoming a reality, it
is all the more necessary that they (marketers) go for the creation of appropriate database
which can help them to go for ‘tailor made’ products to suit individual tastes, preferences
and buying behaviour.

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 The industrial or organizational markets consist of buyers who buy goods and
services needed in the process of furthering their industrial and institutionlal activities.
The behavioural differences between the domestic consumers and industrial buyers can
be done on the basis of the ultimate objective sought by them. While the domestic
consumers seek need satisfaction and value added by the purchase of the product, the
industrial buyers seek profit or measurement of improved operational efficiency. The
latter’s behaviour, thus, will be influenced by the objectives of the organization they
serve. Accordingly there is also a difference in the buying process adopted by both the
domestic consumer and industrial buyer.

A major implication of the differences in the consumer and industrial behaviour

for marketers is the relative emphasis to be placed on the various marketing mixes to be
adopted by the concerned marketer. Understanding of the consumer behaviour will
enable marketers to design effective marketing strategy and programmes.

Consumer Modelling
Model: “A physical, visual or mathematical ….. Simplified representation of a complex
system.”
A model is very often referred to as an abstract representation of a process or
relationship. We (human beings) hold various models in our minds which allow us to
make sense of the world and also help to predict the likely course of events. Simply
stated models help us in the following way:
They help in the development of theories
They help to understand complex relationships
They provide the framework for discussions and research work
The primary concern is to use the models to understand consumer behaviour.
Consumer behaviourists as well as marketers are interested in understanding how and
why certain decisions are made. The discussions have been about some of the important
models of consumer behaviour, which attempts to give a comprehensive view of all those
aspects of the buying situations which are deemed to be significant by their creators.

Models of Consumer Behaviour

Economic Model
Under economics, it is assumed that man is a rational human being, who will
evaluate all the alternatives in terms of cost and value received and select that
product/service which gives him/her maximum satisfaction (utility). Consumers are
assumed to follow the principle of maximum utility based on the law of diminishing
marginal utility. It is assumed that with limited purchasing power, and a set of needs and
tastes, a consumer will allocate his/her expenditure over different products at given prices
so as to maximize utility. Being a rational creature man will make his purchase decisions
with the intention of maximizing the utility/benefits.

Economic model is based on certain predictions of buying behaviour

i. Lsser the price of the product, more will be the quantity purchased (price effect)
ii. Lesser the price of substitute, lesser will be quantity of the original product
bought (substitution effect)

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 iii. More the purchasing power, more will be the quantity purchased (income effect)

Learning Model
Unlike the economists, classical psychologists have been interested in the
formation and satisfaction of needs and tastes. They argued that living beings were
influenced by both innate needs such as the primary needs of hunger, thirst, sex, shelter
and learned needs like fear & guilt. A drive (internal stimulus) which when directed
towards a drive reducing object becomes a motive. The various products or services will
act as a stimuli to satisfy drives. For instance, a hungry person will be driven towards
food, which after consumption will reduce the drive and provide satisfaction. According
to learning theorists, this response of satisfaction (feeling) reinforces the relationship
between drive and the drive reducing stimulus object as well as the related cues. Further,
when consumers learn to associate connection between stimulus and response, it becomes
a habit. There are certain cognitive theorists, who have advocated that human beings not
only learn to link stimulus with response (S-R) but also results in the formation of other
cognitive processes such as attitudes, values, beliefs, motivation etc.

In marketing context, ‘learning’ help marketers to understand how consumers

learn to respond in new marketing situations, or how they have learned and responded in
the past in similar situations. Very often it is observed that consumer’s experience with
one product from a firm is likely to be generalized to the other products of the firm.
Conversely, consumers also learn to discriminate and this information will be useful in
working out different marketing strategies. Simply stated this learning model will help
markters to promote associations of products with strong drives and cues and positive re-
inforcements.

Psychoanalytic Model
This model is based on the work of psychologists who were concerned with
personality. They were of the view that human needs and motives operated at the
conscious as well as subconscious levels. This theory was developed by Sigmund Freud.
According to him human behaviour (personality) is the outcome of
(a) ‘id’ – the source of all psychic energy which drives us as action
(b) ‘super ego’ – the internal representation of what is approved by the society
(c) ‘ego’ – the conscious directing ‘id’ impulses to find gratification in a socially
accepted manner. Thus, we can say that human behaviour is directed by a
complex set of deep seated motives.
From marketing point of view this means that buyers will be influenced by
symbolic factors in buying product. Motivational research has been involved in
investigating motives of consumer behaviour so as to develop suitable marketing
implications accordingly. Marketers have been using this approach to generate ideas for
developing product – design, features, advertising and other promotional techniques.

Sociological Model
According to this model the individual buyer is a part of the institution called
society. Since he is living in a society, he gets influenced by it and in turn also influences
it in its path of development. He is playing many roles as a part of various formal and

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informal associations or organizations i.e., as a family member, as an employee of a firm,
as a member of a professional forum and as an active member of an informal cultural
organization. Such interactions leave some impressions on him and may play a role in
influencing his buying behaviour.
Intimate groups comprising of family, friend and close colleagues exercise a
strong influence on the life style and the buying behaviour of an individual member. The
peer group plays a very important role in acting as an influencing factor especially in
adopting particular life styles and buying behaviour patterns. The group generally has an
informal opinion leader, whose views are respected by the group. This leader is able to
influence the members life style and buying decisions. The marketers through a process
of market segmentation can work out on the common behaviour patterns of a specific
class and group buyers and try to influence their buying pattern.

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The Howard Sheth Model of Buying Behaviour
This model basically serves two purposes:
i. It indicates how complex the whole question of consumer behaviour really is.
ii. It provides the frame work for including various concepts like learning,
perception, attitudes etc., which play a role in influencing consumer
behaviour.

Inputs: In the Howard – Sheth theory, the most significant stimulus affecting the buying
behaviour are the information cues about the characteristics of the product. These cues
may be significative if it comes to the buyer from the product itself when he is involved
in a shopping activity. A similar set of cues, which are symbolic in nature may also act as
information sources.

Both these significative and symbolic information cues represent the firms marketing
efforts. The product or broad characteristics acting as information cues are quality, price,
distinctiveness, service and availability. There are impersonal sources like mass media
communication and advertising, over which the firm has no control. However, the
information sources also include sales and service personnel who can add and help the
marketing efforts of the firm. The third source is social information cues which could
affect buying behaviour towards the product or brand and these include family, friends or
other members of the groups with whom buyer comes into contact or to which he aspires
to be in. This social source is personal and the company/marketer has no control over
this source.

Personal (Social) Impersonal

Commercial (a) Salesmen (a) Product (Significative)
(b) Service personnel (b) Advertising (Symbolic)
Non Commercial (a) Family (a) Print media (New Stories)
(b) Reference groups (b) Independent Testing such
(c) Social class as consumer reports

Perceptual Constructs
This refers to all the complex states or psychological processes (perception) and
how the individual deals with the information cues received from various sources. It can
be seen that all information available is not attended to (attention) and may not always be
crystal clear in its meanings (stimulus ambiguity). Although the individual may be
engaged in an overt search for information, sometimes he/she may be bombarded with
unwanted information. Moreover, any information cues to which the individual may
attend may be distorted (perceptual bias) as a result of his own frame of reference.

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Learning Constructs
The second set of hypothetical constructs in this theory are more complex and
numerous. ‘Motives’ refers to the goals the individual attempts to achieve through
his/her buying behaviour. These goals are derived from the various drives (needs) which
may be acting as a cue for his/her motive.
More closely related to the buyers intention is his attitude towards the
product/brand. Whether he/she has formed a positive attitude and if not will there be a
change in the attitude etc., are some of the factors which may affect the attitude an
individual has towards the product/brand.
Other learning constructs include ‘brand comprehension’ i.e.,
knowledge/awareness about the brand characteristic features that forms the basis for the
buyers evoked set of alternatives; choice criteria, and the confidence the individual has
about his/her brand comprehensions, attitudes or intentions. Finally, the model includes a
construct, ‘satisfaction’. This refers to “feedback” mechanism, i.e., the post purchase and
post use evaluation of the output of the process.

Exogeneous Variables:
This theory also includes a number of variables which are not explained but have
a bearing on some or all of the constructs discussed above and indirectly influences the
output or consumer response.

i. Social and Organisational Setting: Man is basically a social animal. Because of his
interactions with various groups and society, they look to each other for guidance
regarding what to buy, how to buy/dress etc.

ii. Social class: In order to conform to the norms of the social class to which he/she
belongs, the individual will be engaged in a behaviour which will be acceptable to the
social class to which he belongs.

iii. Culture: refers to the shared, somewhat consistent pattern of behaviour of a group of
people. Each culture has a set of beliefs, values, etc. So the pattern of buyer behaviour
will be based on a pattern of behaviour shared in a specific subset of larger culture – a
subculture trait.

iv. Purchasing power/Financial status: The money/income available for purchasing

goods and services during some specified time period also plays a role in influencing the
consumption pattern and thereby his buying behaviour.

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The Niocosia Model
In the last recent years marketing scholars have build behaviour models taking the
marketing man’s point of view. The Nicosia model is one such buyer behaviour model.
It also is said to be a systems model, because the human being is analysed as a system,
with stimuli as the input to the system and the human behaviour as an output of the
system.
This model was developed in 1966, by Francesco Nicossia, an expert in consumer
motivation and behaviour. The Nicossia model tries to explain buyer behaviour by
establishing a link between the organization and its (prospective) consumer. The model
suggests that messages from the firm first influences the predisposition of the consumer
towards the product or service. Based on the situation, the consumer will have a certain
attitude towards the product. This may result in a search for the product or an evaluation
of the product attributes by the consumer. If the above step satisfies the consumer, it may
result in a positive response, with a decision to buy the product otherwise the reverse may
occur. This is in brief about the activity explanations in the above model.
The Nicosia model, groups the above activity explanations into four basic areas –
Field one has two sub areas – the consumers attribute and the firm’s attributes. The
advertising message sent from the company will reach the consumer’s attributes.
Depending on the way, the message is received by the consumer, a certain attribute may
develop. This newly developed attribute becomes the input for Area two.
The second area or area two – is related to the search and evaluation, undertaken by the
consumer, of the advertised product and also to verify if other alternatives are available.
In case the above step results in a motivation to buy the product/service, it becomes the
input for third area.
The third area explains how the consumer actually buys the product.

And area four is related to the uses of the purchased items. This fourth area can also be
used as an output to receive feedback on sales results to the firm.

Webster and Wind Model of Organisational Buying Behaviour

This is a complex model developed by F.E. Webster and Y. Wind, as an attempt
to explain the multifaceted nature of organizational buying behaviour. This model refers
to the environmental, organizational, interpersonal and individual buying determinants
which influences the organizational buyer(s). These determinants influences both the
individual and group decision making processes and consequently the final buying
decisions. The organizational determinant is based on Harold Leavitt’s four elements of
organization buying viz., people, technology, structure and task.
An individual engaged in buying for organizations may be involved in one or
more of the following buying roles:
Users: The ultimate users who often initiate the buying process and help in defining
specifications.
Influencers: They may or may not be directly connected with the decision. But their
views or judgements of a product or a supplier carry a lot of weightage.
Buyers: Those people who negotiate the purchase.
Deciders: The people who take the actual decision (they may be formal or informal
decision makers)

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Gate Keeper: The person who regulates the flow of information.
This model is a valuable contribution and helps in revealing the whole range of
direct and indirect influences which affect the organizational buying behaviour.
However, the limitation is that this model provides a static representation of a dynamic
situation.

The Engel – Kollat – Blackwell Model

This model talks of consumer behaviour as a decision making process in the form
of five step (activities) which occur over a period of time. Apart from these basic core
steps, the model also includes a number of other related variables grouped into five
categories.

Step 1: Problem Recognition: The consumer will recognize a difference between his or
her actual state and what the ideal state should be. This may occur on account of an
external stimuli, for example a young girl has seen an ad of an exhibition of American
Diamonds and may feel the desire to possess the same or seeing a beautiful dress
displayed in the show-room may make a youngster to feel the need for a new dress.

Step 2: Information Search: Initially the information available with the consumer may
be consistent to the beliefs and attitudes held by him or her. While being involved in an
information seeking or search stage, the consumer will try to gather more information
from various sources. These sources could be sales persons, personal or friends or
neighbours or mass communication media. The information processing takes place in
various stages. The individual gets exposure of the stimuli which may catch his or her
attention, be received and stored or retained in memory. This method of information
processing is selective in nature and the consumer will accept the information which is
conclusive to what is perceived by them.

Step 3: Alternative Evaluation: Now the individual will evaluate the alternative brands.
The methods used for evaluating the various products will be dependent on the
consumers underlying goals, motives and personality. The consumer also has certain
(predetermined) beliefs about the various brands in terms of the characteristics associated
with the different brands. Based on these beliefs the consumer will respond either
positively or negatively towards a particular brand.

Step 4: Choice: The consumer’s choice will depend on his or her intention and attitude.
The choice will also depend upon normative compliance (i.e., getting influenced by other
people like family members, friends etc.,) or by anticipated circumstances (i.e., the
person’s choice of the product can also be dependent on the sensitivity of the individual
to handle unanticipated circumstances like losing the job, funds diverted for another
urgent cause etc.)

Step 5: Outcome: The outcome may be either positive or negative. If the end result is
positive, the outcome will also be positive. Conversely, if there is dissonance, that is, a
feeling of doubt experienced by the consumer, about the choice made by him or her the

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outcome will not be positive. Now the consumer will search for more information to
support his or her choice.
The above mentioned model has taken into consideration a large number of
variables which influences the consumer. The model has also emphasized on the
conscious decision making process adopted by a consumer. The model is easy to
understand and is flexible, that is, it recognizes that a consumer may not go through all
the steps always. This is because in case of repeat purchases the consumer may bypass
some of the steps.

One limitation of this model is the inclusion of environmental variables and

general motivating influences but not specifying the effect of these on the buyer
behaviour.

Engel, Blackwell and Miniard (EBM) Model

This model is a development of the original Engel, Kollat and Blackwell model
first introduced in 1968. It shares certain things with the Howard-Sheth model. Both
have similar scope and have the same level of complexity. Primarily the core of the
EBM model is a decision process, which is augmented with inputs from information
processing and other influencing factors also.
The model has distinctive four sections, namely: Input, Information Processing,
Decision Process and Variables influencing decision process.

Information Input
Information from marketing and non marketing sources are fed into the
information processing section of the model. The model also suggests additional
information to be collected as a part of an external search especially when not enough
information is available from memory or when post-purchase dissonance occurs.

Information Processing
Before information can be used in the rest of the model, the consumer will first be
exposed to be the information processing. That is the consumer must get exposed to the
information, attend to it, comprehend or understand it, accept it and finally retain it in
memory. Any selective attention or exposure mechanisms (which may occur in post
purchase dissonance) would operate at this stage.

Decision Process: This process consists of five basic stages:

Need Recognition: This acknowledges the fact that there exists a problem. That is, the
individual is aware that there is a need to be satisfied.

Search: When enough information is available in memory to take a decision, then only
internal search will be required. If information is scarce, an external search for
information is undertaken.

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Alternative evaluation: Now an evaluation of the alternatives found during the search is
undertaken. We can see from the model, that this takes into account our attitudes and
beliefs also.

Purchase: A purchase is made based on the chosen alternative.

Outcomes: The outcome can be either positive or negative depending on whether the
purchase satisfies the original perceived need. Dissatisfaction can lead to post-purchase
dissonance.

Variables Influencing Decision Process

This section will consider the individual, social, and situational factors which
influence the decision processes.
The EBM model is very flexible and more coherent than the Howard Sheth model
of consumer behaviour. It also includes human processes like memory, information
processing and considers both the positive and negative purchase outcomes.
However the model has been criticized on two aspects. Firstly, one the somewhat
vague definition of the role of the influencing variables and secondly, it is felt that the
separation of information search and alternative evaluation is somewhat artificial.

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