CONSUMER BEHAVIOUR

MEANING OF CONSUMER BEHAVIOR

• Consumer behaviour is the study of how individual customers,

groups or organizations select, buy, use, and dispose ideas,
goods, and services to satisfy their needs and wants.
• It refers to the actions of the consumers in the marketplace
and the underlying motives for those actions.
• Marketers expect that by understanding what causes the
consumers to buy particular goods and services, they will be
able to determine—which products are needed in the
marketplace, which are obsolete, and how best to present the
goods to the consumers.
DEFINITATION OF CONSUMER BEHAVIOUR

According to Engel, Blackwell, and Mansard,

‘consumer behavior is the actions and decision
processes of people who purchase goods and
services for personal consumption’.
NATURE OF CONSUMER
BEHAVIOUR
 1. Influenced by various factors
• a. Marketing factors such as product design, price,
promotion, packaging, positioning and dis­tribution.
• b. Personal factors such as age, gender, education and
income level.
• c. Psychological factors such as buying motives,
perception of the product and attitudes towards the
product.
• d. Situational factors such as physical surroundings at
the time of purchase, social surroundings and time
factor.
 2. Undergoes a constant change
• Consumer behavior is not static.
• It undergoes a change over a period of time depending
on the nature of products.
• For example, kids prefer colorful and fancy footwear,
but as they grow up as teenagers and young adults,
they prefer trendy footwear, and as middle-aged and
senior citizens they prefer more sober footwear.
• The change in buying behavior may take place due to
several other factors such as increase in income level,
education level and marketing factors.
 3. Varies from consumer to consumer

• All consumers do not behave in the same

manner.
• Differ­ent consumers behave differently.
• The differences in consumer behavior are due
to individual factors such as the nature of the
consumers, lifestyle and culture.
4. Varies from region to region and country
to county
• The consumer behaviour varies across states,
regions and countries.
• For example, the behaviour of the urban
consumers is different from that of the rural
consumers.
• A good number of rural consumers are
conservative in their buying behaviour.
 6. Leads to purchase decision
• A positive consumer behaviour leads to a
purchase decision.
• A consumer may take the decision of buying a
product on the basis of different buying motives.
• The purchase decision leads to higher demand,
and the sales of the marketers increase.
Therefore, marketers need to influence consumer
behaviour to increase their purchases.
 7. Varies from product to product
• Consumer behaviour is different for different products.
• There are some consumers who may buy more
quantity of certain items and very low or no quantity
of other items.
• For example, teenagers may spend heavily on products
such as cell phones and branded wears, but may not
spend on general and academic reading.
• A middle- aged person may spend less on clothing, but
may invest money in savings, insurance schemes,
pension schemes, and so on.
Determinants of consumer
buying behaviour
 CONT…
• The buying behavior of consumer is affected
by a number of factors which are generally
uncontrollable.
• These factors are also known as determinants
of consumer buying behavior.
• All these factors affect the buying behavior of
consumer differently.
 1. CULTUTAL FACTORS
1) Culture: culture affects a lot the consumer buying
behavior. It is the family values, beliefs, perceptions
and preferences affect the consumer buying
behaviour.
2) Subculture: the culture includes subculture in it
include nationality, religious group, and communities
etc. which affect the consumer behaviour.
3) Social class: it means to divide the society in
different social classes, the members of different
social class has different likings.
 2. SOCIAL FACTORS
1) Family: the members of family also affect the buying behavior of
consumer. Family includes of:-
•   Influencer- The person who senses the need to buy a product.
•   Decider- The person who takes final decision to buy the product.
• User- the person who finally uses the product.
2) Reference group: family alone does not affect the consumer buying
behavior but also the group outside the family also affects the consumer
behavior. It includes the persons with whom we interact like friends,
neighbors, co- workers etc.
3) Role and status: role played by the person in the society are so many. Like
a person plays the role of son, husband, brother, father, businessman etc.
in his life. So the consumer buying behavior depends upon the role played
by him.
 3. PERSONAL FACTORS
1) Age and life style: the consumer buying behavior changes
with the change in the age. Like very small child need toys to
play with them and when they grow they need games,
computer etc. thus, liking of consumer changes with the age.
2) Occupation: occupation also affects the consumer behavior
to buy the goods. Like an worker needs simple clothes while
his boss needs expensive designer suits to wear.
3) Income: the income also affects the consumer buying
behavior because if the person is rich he can buy anything
which he wants to buy but for a poor person it is not be easy
to buy the things which are beyond his pocket.
 CONT…
4) Life style: it is the way of living of the
person. Like some people like luxury livings
while some in simple living.
5) Personality: personality includes extrovert or
introvert which also affects the consumer
buying behavior.
 4. PHYCHOLOGICAL FACTORS
1) Motivation: when the buyer’s need is raised to a particular
level they become the motives which mean “I want to achieve
this” which ultimately affect the consumer buying behavior.
2) Perception: this is how the consumer receives, selects and
organizes the information which helps him in buying the goods.
3) Learning: learning experience is helpful in affecting
consumer buying behavior.
4) Beliefs and attitude: belief means the opinion or mind set
relating to a particular object; attitude means the feeling of
buyer towards the object. So the marketer should keep in mind
the beliefs and attitude of the consumer.
CONSUMER’S PURCHASE
DECISION PROCESS
STEPS INVOLVE IN CONSUMER’S PURCHASE
DECISION PROCESS
1. Need recognition.
2.Information search.
3.Evaluation of alternatives.
4. Purchase decision.
5. Post purchase behavior.
 1. Need recognition
•  Consumer buying decision process  starts with
need recognition.
• The marketer must recognize the needs of the
consumer as well as how these needs can be
satisfied.
• For example if a person is hungry then food is
desired or if it is a matter of thirst than water is
desirable.
 2.Information search
• In consumer buying decision process
information search comes at second number.
• In this stage consumer searches the
information about the product either from
family, friends, neighborhood, advertisements,
whole seller, retailers, dealers, or by
examining or using the product.
 3.Evaluation of alternatives
• After getting the required knowledge about
the product the consumer evaluate the
various alternatives on the basis of it’s want
satisfying power, quality and it’s features.
 4. Purchase decision
• After evaluating the alternatives the buyer buys
the suitable product.
• But there are also the chances to postpone the
purchase decision due to some reasons.
• In that case the marketer must try to find out
the reasons and try to remove them either by
providing sufficient information to the
consumers or by giving them guarantee
regarding the product to the consumer.
 5. Post purchase behavior
• After buying the product consumer will either be
satisfied or dissatisfied.
• If the consumer is not satisfied in that case he will
be disappointed otherwise If he is satisfied than
he will be delighted.
• It is usually said that a satisfy consumer tell about
the product to 3 people and a dissatisfy consumer
tell about the product to 11 people. Therefore it is
the duty of the marketer to satisfy the consumer.
 Market Segmentation
• Market Segmentation is a process of dividing
the market of potential customers into
different groups and segments on the basis of
certain characteristics.
• The member of these groups share similar
characteristics and usually have one or more
than one aspect common among them.
 Cont…….
• Present-day market segmentation exists
basically to solve one major problem of
marketers; more conversions.
• More conversion is possible through
personalized marketing campaigns which
require marketers to segment market and draft
better product and communication strategies
according to the needs of the segment.
 Bases for market segmentation
1. Geographic Segmentation
2.Demographic Segmentation
3. Psychographic Segmentation
4. Behavioral Segmentation
 1. Geographic Segmentation
• Geographic segmentation is the market
segmentation strategy in which the market is divided
on the basis of regions or geographies.
• Geographic segmentation can be classified by
parameters like countries, states, cities, villages,
urban / rural, climatic conditions, density of
population.
• This type of segmentation helps to reach out to
customers living in a similar region or area and have
identical needs.
 Geographic Segmentation Parameters

1. Country- Certain companies make products or services which

are specific to only a country. This type of geographic
segmentation helps target people from a specific country.
2. City- Cities offer a huge potential market to companies. Hence
companies often select specific cities for their products or
services
3. Villages- Some villages can be identified by companies which
give the best set of customers to companies to their business
with.
4. Urban/ Rural- Certain products or services can be offered only
to the urban population and certain products are rural area
specific.
 Cont…
5. Climate and weather- Companies use this type of
geographic segmentation and identify customers of
a region with similar climatic conditions. Areas
based on climate can be hot, cold, humid etc and
based on weather can be snowfall, rainfall, desert
etc regions
6. Population density- Depending upon the number
of people in an area or region, companies can use
density of population as a parameter to effectively
segment the market.
 2.Demographic Segmentation
• Demographic segmentation is defined as a
market segmentation method based on
variables such as age, gender, income etc.
• This segmentation helps organizations
understand consumer behavior accurately that
in turn helps them perform better.
• Demographic attributes like age, sex, gender,
religion, and educational qualification, play an
important role in research..
 Cont….
• Whether it’s with a purpose of launching a new
product or introducing changes or implementing
new services, businesses need to stay on board
and up to date with this ever-changing market
• Therefore, the study of how population based
on demographic segmentation behave towards
changes in products or services is essential to
know. This one aspect helps businesses stay
ahead of their competitors and perform better.
 Demographic Segmentation Variables

(a) Age: Teenagers, adults, retired.

(b) Sex: Male and female.
(c) Occupation: Agriculture, industry, trade,
students, service sector, house-holds, institutions.
(i) Industrial sector: Large, small, tiny.
(ii) Trade: Wholesale, retail, exporters.
(iii) Services: Professionals and non-professionals.
(iv) Institutions: Educational, religions, clubs.
 Cont…
(d) Income Level:
Above Rs. 1 lakh per annum, Rs. 50,000 to Rs. 1 lakh,
Rs. 25,000 to Rs. 50,000 per annum, i.e., higher,
middle and lower.
(e) Family Life-cycle:
Young single, young married no children, young
married youngest child under six, young married
youngest child over six, older married with children,
older married no children under eighteen, older
single, etc.
 3. Psychographic Segmentation
• Under this method consumers are classified
into market segments on the basis of their
psychological attributes, i.e., personality,
attitude and lifestyle.
• According to attitude towards life, people may
be classified as traditionalists, achievers, etc.
 Cont…
Rogers has identified five groups of consumer
personalities according to the way they adopt
new products.
(а) Innovators
(b) Early Adopters
(c) Early Majority
(d) Late Majority
(e) Laggards
 Cont….
(а) Innovators:
These are cosmopolitan people who are eager to try new ideas. They are
highly venturesome and willing to assume the risk of an occasional bad
experience with a new product.
(b) Early Adopters:
These are influential people with whom the average person checks out an
innovation.
(c) Early Majority:
This group tends to deliberate before adopting a new product. Its members
are important in legitimizing an innovation but they are seldom leaders.
(d) Late Majority:
This group is cautious and adopts new ideas after an innovation has
received public confidence.
 Cont..
(e) Laggards:
• These are past-oriented people. They are suspicious of change and
innovations. By the time they adopt a product, it may already have been
replaced by a new one.
• Understanding of psychographic of consumers enables marketers to better
select potential markets and match the product image with the type of
consumer using it. For example, women making heavy use of bank credit
cards are said to lead an active lifestyle and are concerned with their
appearance. They tend to be liberated and are willing to try new things.
• Psychographic classification may, however, be an oversimplification of
consumer personalities and purchase behaviour. So many factors influence
consumers that an early adopter of one product might well be a laggard for
some other product and vice versa
 Behavioral Segmentation

• Behavioral segmentation is defined as the process of

dividing the total market into smaller homogeneous
groups based on customer buying behavior.
• Behavioral segmentation is done by organizations on
the basis of buying patterns of customers like usage
frequency, brand loyalty, benefits needed during
any occasion etc.
• It is done keeping in mind the needs and wants of a
customer based on the behavior that they show.
 Behavioral segmentation parameters

1. Occasion oriented: When a product is used or purchased for a

particular occasion only. The occasion can be repetitive or can be once
in a lifetime occasion. This is also known as occasion segmentation.
2. Usage oriented: The grouping can be on the basis of how much a
product is being used/consumed by the customer.
Accordingly, we call them heavy user or light user groups. Hence the
usage frequency is considered as a part of behavioral segmentation
3. Loyalty oriented: Markets are segmented based on the retention
rates of the consumers which is a fair indication of brand loyalty among
them.
A brand commanding a high degree of loyalty has a very high retention
rate and does not need to worry too much about acquiring new
customers.  
 Cont…
4. Benefits sought: This is also known as benefit
segmentation. Consumer segmentation is also done
on the basis of the different benefits perceived by
different consumers.
There are certain benefits that a person is seeking
from a product.
Many such products are available which have
different variety, price etc which fulfill the needs of a
customer. But a customer opts for only those which
gives him or her the maximum benefit.
 Target marketing
• Target marketing involves breaking a market into
segments and then concentrating your marketing efforts
on one or a few key segments consisting of the customers
whose needs and desires most closely match your
product or service offerings. 
• It can be the key to attracting new business, increasing
sales, and making your business a success.
• Targeted marketing is the process of identifying customers
and promoting products and services via mediums that
are likely to reach those potential customers.
Target market is defined in terms of-

1. Geographic Segmentation
2.Demographic Segmentation
3. Psychographic Segmentation
4. Behavioral Segmentation
 Target market strategies
1.Concentrated/ Single-segment strategy
2.Differentiated/Selective specialization strategy.
3. Product specialization strategy
4. Market specialization
5. Full market coverage
 Concentrated strategy

• It is also called single segment strategy.

• Focus on one market segment(not the entire
market)
• A single segment approach often is the
strategy of choice for smaller companies with
limited resources.
 Differentiated strategy

• It is selective specialization or multiple-

segment strategy.
• Different marketing mixes are offered to
different segments.
• The product itself may or may not br different-
in many cases only the promotional message
or distribution channels vary.
 Product specialization strategy
• The firm specialized in a particular product
and tailors it into different market segments.
 Market specialization-
• The firm specializes in serving a particular
market segment and offers that segment an
array of different products.
 Full market coverage
• The firm attempts to serve the entire market.
• This coverage can be achieved by means of
either a mass market strategy in which a single
undifferentiated marketing mix is offered to
the entire market, or by a differentiated
strategy in which a separate marketing mix is
offered to each segment.
 Differentiation
• Kotler defines differentiation as the process of
adding meaningful and valued differences to
distinguish the product from the competition.
• There are a number of differentiation
dimensions and strategies for their
accomplishment.
 Differentiation Dimensions
A firm can differentiate along 5 dimensions:
• Product
• Services
• Personnel
• Channel
• Image
 Product Differentiation
• The Internet differentiates itself by providing a
limitless assortment of products.
• Differentiation may include customization,
bundling and attractive pricing of products.
• Internet sales may not rely as heavily on
product packaging as do traditional retailers.
• Packaging minimization will reduce waste and
costs.
 Service Differentiation
• Customer service can be enhanced by 24 hour
customer feedback through e-mail.
• Home delivery of groceries and online banking
and securities trading are becoming
increasingly popular.
• Today such services supplement traditional
services, but may someday replace them.
 Channel Differentiation
• The Internet is a location-free, time-free
distribution and communication channel.
• The Internet serves as a transaction and
distribution channel.
• The Internet provides highly specialized
personal services and “do it yourself”
websites.
 Image Differentiation
• A company can differentiate itself by creating
a unique experience online, called “experience
branding.”
• The Internet’s interactivity allows companies
to respond more quickly to customer
requests.
-Faster communication.
-Retain current customers and attract new ones
 Market Positioning

• This is the act of designing a company’s offering and

image to occupy a distinctive place in the target
market’s mind.
• I.e. The act of creating a difference between a
company’s offer from those of competitors.
• Positioning is the process of establishing and
maintaining a distinctive place in the market for the
organizations’ product or brands. 
• Positioning starts with the product, but positioning is
not what you do to a product.
 Cont..
• Positioning is what you do to the mind of the
customer.
• Marketers should concentrate on the perception
of the customer and not the reality of the product.
• Positioning then is how the product is perceived
and evaluated by the target market, relative to
competing products. 
• Marketers who attain a superior position in
customers’ minds have won the marketing battle.
 Positioning strategies

1) Attribute positioning -A company positions itself

on an attribute e.g. size, number of years in
existence.
2) Benefit positioning -The product is positioned as
the leader in a certain benefit.
3) Use or application positioning -Positioning a
product as the best for some use or application.
4) User positioning -Positioning a product the best
for some user group e.g. food for consumption.
 Cont…
5) Competitor positioning -The product claims to
be better in some way then a named competitor.
6) Product category positioning -The product is
positioned as the leader in a certain product
category
7) Quality or price positioning.-The product is
positioned as offering the best value.
 MARKETING RESEARCH

Research:
• The systematic investigation into and study of materials and
sources in order to establish facts and reach new conclusions
OR investigate systematically.
• Research always starts with a question or a problem.
• Its purpose is to find answers to questions through the
application of the scientific method.
• It is a systematic and intensive study directed towards a more
complete knowledge of the subject studied.
• Research can be classified into two broad categories:
(i) basic research, and (ii) applied research
 Cont….
Applied research -
• Refers to scientific study and research that seeks to solve practical
problems.
• Applied research is used to find solutions to everyday problems,
cure illness, and develop innovative technologies. 
Basic research-
• It is also called pure research or fundamental research, is scientific
research aimed to improve scientific theories for improved
understanding or prediction of natural or other phenomena.
• Applied research uses scientific theories to develop technology or
techniques to  alter natural or other phenomena
 Marketing Research Meaning
• The action or activity of gathering information
about consumers' needs and preferences.
Objectives of Marketing Research
1) To Provide Basis For Proper Planning:
Marketing and sales forecast research provides sound basis for the formulation of all
marketing plans, policies, programmes and procedures.

(2) To Reduce Marketing Costs:

Marketing research provides ways and means to reduce marketing costs like selling,
advertisement and distribution etc.

(3) To Find Out New Markets for The Product:

Marketing research aims at exploring new markets for the product and maintaining the
existing ones.

(4) To Determine Proper Price Policy:

Marketing research is considered helpful in the formulation of proper price policy with
regard to the products.
 Cont….
(5) To Study in Detail Likes and Dislikes of the Consumers:
Marketing research tries to find out what the consumers, (the men and women who
constitute the market) think and want. It keeps us in touch with the consumers, minds and to
study their likes and dislikes.

(6) To Know The Market Competition:

Marketing research also aims at knowing the quantum of competition prevalent in the
market about the product in question. The company may need reliable information about
competitor’s moves and strategies which are of immense significance for further planning.

(7) To Study The External Forces and Their Impact:

Marketing research provides valuable information by studying the impact of external forces
on the organization. External forces may include conditions developing in foreign markets,
govt, policies and regulations, consumer incomes and spending habits, new products entering
in the market and their impact on the company’s products.
 
 Marketing Research Process
1.Defining the Problem or Need.
2.Determining who will do the research.
3.Picking out the appropriate methodology.
4.Data Collection Process.
5.Data Preparation, tabulation and analysis of
results.
6.Presentation and report generation.
 1.Defining the Problem or Need
• The starting phase is always identifying the reason or
problem for which research is to be conducted.
• This includes collecting of relevant initial information
and how this information will affect decision making
process.
• It also includes defining problems after discussing with
decision makers of the organization.
• Once the problem is defined precisely and the need of
research is discussed, the further process could be
conducted in an efficient manner.
 2.Determining who will do the research

•  Once the initial stage of defining the problem and the

need of research is done, it is important to determine
who will do the research and what will be the
approaches to resolve these problems.
• This involves creating a problem solving framework
and analytical models after discussing it organization
experts.
• In this sample case studies are created according to
the defined framework by enforcing the relevant
information and secondary data.
3.Picking out the appropriate methodology-
•  A specific methodology is entailed by the research professional after
identifying the specific needs and exploring the case studies.
• It may include a combination of specific approaches like telephone
survey, web or email survey, one-to-one interviews, secondary research
etc.
• This methodology acts as a blueprint of research process and following
basic steps:
– Methods for collecting and preparing quantitative information.
– Determining the need of this information.
– Scaling and measuring procedures.
– Designing sample Questionnaire.
– Formulating case studies and sampling process.
– Planning information analysis.
 4.Data Collection Process
• This process includes field work and desk work for
collecting all relevant data and information.
• Field work includes interviewing the personals by
interacting them face to face by visiting them in home
or offices or arranging group meetings at any preferred
place.
2 sources used for this:
• (i) Internal sources—existing within the firm itself, such
as accounting data, salesmen’s reports, etc.
• (ii) External sources—outside the firm.
 5.Data Preparation, tabulation and analysis of
results.
• After the data collecting stage the collected data is edited,
corrected if required and validated.
• This process is the most important process in the research as
the results are generated on the basis of data preparation.
• So it is required for an organization to verify the authenticity
of the collected data and edit or correct it if needed.
• The final data is then segmented according to the business
standards and inserted into the CRM database in a more
tabulated form so that search or combination could be made
easily.
 6.Presentation and report generation

• The entire process is properly documented

with respect to organizational standards so
that it can be referred in future for decision
making process or to change or modify any
specific process or module.
• This document contains overall architecture of
the project depicting all the processes with the
help of tables, graphs and figures to provoke
impact and clarity.
 Marketing Information System
• A marketing information system is a
management information system(MIS) designed to
support marketing decision making.
• It is a system in which marketing data is formally gathered,
stored, analyzed and distributed to managers in
accordance with their informational needs on a regular
basis.
• Marketing Information System (MIS) is a permanent
arrangement (system or setup) for provision of regular
availability of relevant, reliable, adequate, and timely
information for making marketing decisions.
 Cont……
• The system consists of people, equipment’s,
facilities, and procedures directed to gather,
analyze, evaluate, update, distribute, and preserve
the information to assist marketing decision-
making, i.e., analyzing, planning, implementing,
and controlling of marketing activities.
• While MR generates information, marketing
information system concentrates on the storage
and flow of information to marketing managers.
 Advantages of Marketing information
systems
• Organized Data collection – MkIS can help the managers to organize loads of
data collected from the market, thus results in an increment in the productivity.
• A broad perspective – With a proper MkIS in place, the complete organization
can be tracked which can be used to analyze independent processes. This helps
in establishing a broader perspective which helps us know which steps can be
taken to facilitate improvement.
• Storage of Important Data – The storage of important data is essential in
execution and thus proves again that MkIS is not important only for information
but also for execution.
• Avoidance of Crisis – The best way to analyze a stock (share market) is to see its
past performance. Top websites like money control thrive on MIS. Similarly MIS
helps you keep tracks of margins and profits. With an amazing information
system established, you can know where your organization is moving and
probably avert a crisis long before it has taken place.
 Cont…
• Co-ordination – Consumer durables and FMCG companies have huge
number of processes which needs to be co-ordinated. These companies
depend completely on MIS for the proper running of the organization.
• Analysis and Planning – MkIS plays a crucial role in the planning
process, considering the planning procedure requires information. For
planning, the first thing which is needed is the organizations
capabilities, then the business environment and finallycompetitor
analysis. In a proper MkIS, all these are present by default and are
continuously updated. Therefore, MkIS is very important for planning
and analysis.
• Control – Just like MkIS can help in a crisis, in normal times it provides
control as you have information of the various processes going on and
what is happening across the company.
 Limitations Of MIS
• Opportunities may be missed.
• There may be a lack of awareness of environmental changes
and competitors' actions.
• Data collection may be difficult to analyze over several time
periods.
• Marketing plans and decisions may not be properly reviewed.
• Data collection may be disjointed.
• Previous studies may not be stored in an easy to use format.
• Time lags may result if a new study is required.
• Actions may be reactionary rather than anticipatory.