Chapter one

Overview of Consumer Behavior and Their Decision

Making Process

1. What is consumer?
2. What is Behavior?
3. What is Consumer Behavior?

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 Introduction
Marketers spend millions of dollars trying to understand
why people buy products and services.

Sometimes it seems that there is no reason for a

purchase, but in reality there is always a reasons.

Many factors are involved in a customers' buying

decision, any one of which can become the deciding.

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 However, the most challenging concept in marketers:
understanding why buyers do what they do (or
don’t do).
 But such knowledge is critical for marketers since
having a strong understanding of buyer behavior will
help shed light on what is important to the customer
and also suggest the important influences on
customer decision-making.
 By using this information, marketers can create
marketing programs that they believe will be of interest
to customers.
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 Definition Consumer Behavior
Consumer buying behavior refers to the buying
behavior of the ultimate consumer.
 A firm needs to analyze buying behavior and
their reaction the customers.

Therefore, firm should create marketing strategies

that satisfies (gives utility to) customers and
analyze the what, where, when and how consumers
buy.
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Why Do we study consumer Behavior?

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 1.2.Why Do we study consumer Behavior?

:
The study of consumer behavior is important to at least four key
parts:
a) Marketing Managers
b) Ethicists & Advocacy Groups,
c) Public Policy Makers and Regulators, and
d) Consumers

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1. Marketing Managers

Understanding consumer behavior helps marketing managers to make

critical decisions in the following areas.
i)Market Segmentation
 It is unlikely that all consumers in a market
have the same needs and wants.

 Consumer behavior helps marketers to

segment the market into different cluster
groups.

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 By understanding consumer behavior,

marketers can also determine how big various
segments are.
 Consumer behavior can also help marketers'
identify underserved segments of consumers
who have clearly identifiable needs, but
whose needs are not being met.

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iii) Targeting and Positioning

 One of the key goals of marketing strategy is to position a
product or service in consumers' minds.
 In other words, marketers attempt to fill the product with a
certain image-an image that both reflects what the product
is and how it is different from the competitions.
 Slogans like B MWs " the Ultimate Driving Marching and
UPS's " Moving at the speed of business" reflect the
image these companies would like consumers to have of
their products and services.
 Understanding consumer behavior also helps marketers to
reposition existing products.
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iv) Product Or Service Decisions

 Developing products and services that satisfy consumers'
wants and needs is a critical marketing decision.
 An understanding or consumer behavior can provide
useful information about several product decisions.
 offering that contains
First, marketers need to design an
the benefits target consumers desire.
 Consumer behavior helps marketers to develop products
and services that satisfy consumer needs and wants.
 Second, marketers often do considerable consumer research to
determine whether consumers are currently satisfied with
aspects of a product.

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 Third, understanding consumer behavior also helps marketers

know when products must be modified or tailored to meet the
needs of new groups.
 Fourth, knowledge of consumer behavior aids in the development
of new product or services.
 By recognizing needs or wants that are not
currently being fulfilled, new product ideas
can be identified.
 Finally, an understanding of consumer behavior aids in
decisions about, other aspects of the product mix -such as
the brand name, package, logo, and aspects of the
extended product like warranties and guarantees.

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v) Pricing Decision

 The price of a product or services is one of the most

important variables influencing consumer decision
making.
 It is very important for marketers to understand how
consumers react to pricing decisions.

 In some cases, consumers are very price sensitive,

whereas in other cases they are not.
 Consumers' reactions to prices are varying complex
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vi) Distribution Decisions

 Another important marketing decision involves the manner
in which products or services are distributed.
 Consumer research has clearly shown that different
distribution alternatives (e.g. Telephones sales, direct mail,
fact-to-face selling) have different images and that these
images will affect consumers' perceptions of the offering.
 Consumer behavior also helps us understand patterns of
shopping behavior (who goes to what store and why).
 Knowledge of consumer behavior can also help marketers
design retail or other distribution environments with the
most appropriate type of colors, aisle space music etc.

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vii) Promotion Decision

 Marketing decision making also involves the use of a variety of promotional
tools, such as advertising, sales promotions (premiums, contests,
sweepstakes, free samples, coupons , and rebates), personal selling, and
public relation.

 Consumer behavior helps marketers to design

promotional tools to influence consumers' acquisition,
consumption, or disposition decisions and behaviors.

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 Promotions can affect consumer decisions by revealing

that the offering fulfills a consumer need.
 Promotions can also be designed to influence
consumers' attitudes.
 Promotions can be used to influences consumers'
memories for brand names, product attributes, and
companies.

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 Repeating advertising message frequently and using

catchy brand names are additional ways of enhancing
consumer memory.
 Putting brand names in prominent places can also
reinforce brand name memory.
 Marketers can also use promotions to set consumers'
expectations and in this way influence consumers' post-
decision satisfaction judgments.

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b) Ethicists and Advocacy groups

 The behavior of marketers with respect to consumers

sometimes raises important ethical issues.
 Doctors, for example, are very important opinion
leaders who influence patients' use of medications.
 Drug companies therefore try very hard to get doctors
to prescribe certain drugs for appropriate patients.
 In their marketing activities, drug companies often
give doctors gifts.
 Some ethicists are concerned that some of these
practices lean toward bribes.

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c) Public Policy Makers And Regulators

 A constituent interested in consumer behavior is groups that

make laws and policy decisions to protect consumers from
unfair, unsafe, or inappropriate marketing practices.
 Generally consumers have four basic rights:
 The rights to safety,
 information, and
 choice, and
 the right to be heard.

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 Subsequently, the right to a clean

environment and protection for the poor
were added to the list.

 Consumer behavior research can provide

important information that affects the protection
of these rights.

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 d) Consumers

 Finally, an understanding of consumer behavior

can help to make a better environment for
consumers themselves.
 Specifically, research on consumer behavior has
been instrumental in developing environments
that help consumers make decisions.
 A fair amount of research has investigated the
impact of warning labels on consumer usage.

 
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 1.2. Consumer Decision Making

Meaning and Concepts

 Consumer decision is a careful evaluation of the attributes
of a set of products, brands, or services and rationally
selecting the one that solves a clearly recognized need for
the least cost.

 The customer’s decision to purchase a product or

service is an important moment for most marketers
that can signify whether a marketing strategy has
been wise, insightful, and effective, or whether it was
Chap- 1 Overview of consumer behavior
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 Consumer Decision Making

What Is A Decision?
 A decision is the selection of an portion form two or more
alternative choices.
 This definition implies that, for a person to make a
decision, a choice of alternatives must be available.
 When a person has a choice between making a purchase
and not making a purchase, a choice between brand X
and brand Y, or a choice of spending time doing A or B,
that person is in a position to make decision.
 Thus, there is almost always a choice that gives an
opportunity for consumers to make a decision.
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Model of Buyer Behavior

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• What is your understanding about the

model?

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 Factors Influencing Consumer Behaviour

Cultural

Social
Personal
Age and Psycho-
Culture Reference life-cycle logical
groups Motivation
Occupation
Sub- Economic Perception Buyer
culture Family situation Learning
Lifestyle Beliefs and
Roles attitudes
Social Personality
and and
class status self-concept

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 Levels of Consumer Decision-Making
 

All consumer decision-making situations do not

require the same degree of information search.
 Based on a continuum of effort that range from
very high to very low level of involvement in
searching information, We can distinguish three
levels of consumer decision making.
Habitual (Routinized) Response
 At this level of problem solving, consumers have
experience with the product category and a well
established set of criteria with which to evaluate the
brands they are considering.
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
Brand loyalty decisions whereby consumers have been highly involved
in selecting a product and used an expensive decision making
process.


Consumers are committed to that product because they believe that I
best meet their overall needs and formed and emotional attachment to
it.

Repeat purchase whereby customers believe that all brands are the
same and you may not attach much importance to the product category
or purchase.


Having tried the product and found satisfactory, customers purchase it
using habitual decision-making.
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 2. Limited Problem Solving

This is an intermediate type of decision-making between
habitual and extensive decision-making.


Consumers already have established the basic criteria for
evaluating the product category and already know the
various brands in this category but unfamiliar with the
exact brand, style, and price options that are currently
available.

They must gather additional brand information to

discriminate among the
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1 Overview brands.
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 3. Extensive Problems Solving
When consumers have no established criteria for evaluating a
product category or have not narrowed the number of brands they
will consider to a small and manageable size, their decision-making
efforts can be classified as extensive problem solving.

 It is needed in response to a very high level of purchase

involvement.

 Since it is the most involved decision, it requires much effort, takes

a long time in gathering a great deal of information to establish a
set of criteria of which to judge specific brands, and is complex.
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 They must learn about important attributes and about which
brands offer what benefits and at what cost.

 Thus, extensive internal and external search for information

followed by a complex evaluation of multiple alternatives is
very essential.
 Relatively few consumer decisions reach this extreme level of
complexity.
 However, products such as buying home, choice of a
university, complex recreational items (sleeping bags and
tents), personal computers, and a car are frequently
purchased via extended decision making.
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 Consumer Decision Making Process

 Marketers have to focus on the entire continuum of

buying process.
There are five essentials stages of the consumer
decision process.
 Problem recognition,
 Information search,
 Alternative evaluation,
 Purchase decision, and
 Post purchase behavior or experience.

This section tries to discuss each stage of the

consumer decision-making process in detail.
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 Consumer Decision Making

1. Problem Recognition
 The decision process begins when a customer
recognizes problem to be solved or a need to be
satisfied and becomes highly motivated to solve that
problems.
For Example,
 When a customer notices that he or she is hungry and needs
to get some food, the light bulb has blown out and needs
replacement, the roof has began to leak and needs repairing,
the office copier has run out of paper, and errors in the report
that requires redoing, illustrate the existence of a problems

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Step
Step 1.
1. Need
Need Recognition
Recognition
Need
NeedRecognition
Recognition
Buyer
BuyerRecognizes
RecognizesaaProblem
ProblemororNeed
Need
Needs
Needscan
canbe
betriggered
triggeredby:
by:

Internal
InternalStimuli
Stimuli External
ExternalStimuli
Stimuli
••Hunger
Hunger ••TV
••Thirst TVadvertising
advertising
Thirst ••Magazine
••AAperson’s
person’snormal
normalneeds
needs Magazinead ad
••Radio
Radioslogan
slogan
••Stimuli
Stimuliininthe
theenvironment
environment

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 Step 2. Information Search

•Family, friends, neighbors

Sources
Personal Sources
Personal
•Most effective source of
information
•Advertising, salespeople
Sources
Commercial Sources
Commercial
•Receives most information
from these sources
•Mass Media
Sources
Public Sources
Public
•Consumer-rating groups

Sources
Experiential Sources
Experiential •Handling the product
•Examining the product
•Using the product
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 Step 3. Evaluation of Alternatives

Consumer
Consumer MayMay Use
Use Careful
Careful
Calculations
Calculations && Logical
Logical Thinking
Thinking
Consumers
Consumers May
May Make
Make Buying
Buying Decisions
Decisions
on
on Their
Their Own.
Own.

Consumers
Consumers May
May Make
Make Buying
Buying Decisions
Decisions
Only
Only After
After Consulting Others..
Consulting Others

Marketers Must Study Buyers to Find Out

How They Evaluate Brand Alternatives
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 4. Alternative Evaluation

 Consumers select one of the several alternatives (brands,

dealers, and so on) available to them.
 Researchers referred these specific processes and steps as
choice models or evaluate criteria.
 Evaluative criteria refer to product features or attributes
associated with either benefits desired by customers or
the costs that customers incur.
 They can differ in type, number, and importance.
 The criteria consumers use to evaluate the brands are
person in terms of important product attributes.
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 It varies from tangible cost and performance features to
intangible factors such as style, taste, prestige, and brand image.
 Equally important in may purchase decision is feelings and
emotions surrounding a brand, which are difficult for consumers
to articulate and form marketing mangers to measure or
manipulate.
 The number of evaluative criteria used depends on the type of
the product, the consumer, and the situation.
 For fairly simple products such as soap, cigarettes, or toothpaste,
the number of evaluative criteria used is few.
 Examples of product attribute that consumer’s use as criteria are
summarized below for eight products.

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Personal Computers

 Processing speed

 Price
 Type of display

 Hard disc size

 Laptop or Desktop

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Telephones
Size
Warranty
Memory dialing

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Fountain Pens
 Hold button
 Cabinet style
 Balance
 Price
 Gold nip
 Smoothness
 Ink reserve

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Sneakers
 Styling
 Color
 Price
 Air-sole
 High top or low top purpose

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Wristwatch
 Watchband
 Alarm feature
 Price
 Water- resistance
 Quartz Movement
 Size of dial

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Cameras
 Auto focus

 Built-in flash
 Automatic film loading

 Lens type
 Size and weight

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 4. Purchase Decision

 Once the customer has evaluated the alternatives,

she or he makes the final transaction.

 In the evaluation stage, the consumer ranks

brands and forms purchase intentions based on
expected income, price of the product, and other
benefits.
 Then, the consumer must complete the
transaction.

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 5. Post Purchase Process

The customer’s decision process does not end with

the purchase.
Rather, the experience of buying and using the
product provides information that the customer will
use in future decision making.

The goal of the consumer’s decision lies in

consumption, and consumption occurs during the
post purchase phase.

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In some cases, the customers are pleased with
the purchase and continue to buy the product
from the same supplier.

In other cases, the customs might be

disappointed and any even return the product.

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 Post purchase processes enables consumers to take

further actions by evaluating their expectations and the
products perceived performance.
 At this stage, the customer asks questions such
as, “Did I make the right decision?”
 “Should I have done something? Else? After making a
relatively permanent decision.
 Doubt or anxiety of this type is referred to as
post purchase dissonance.

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The magnitude of post purchase dissonance is often

determined by some of the following factors.

1)The degree of commitment or irrevocability of the
decision. The easier to alter the decision, the less
likely the consumer is to experience dissonance.
2)The importance of the decision to the consumer.
The more importance the decision to the consumer,
the more likely the dissonance will result.

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3. The difficulty of choosing among alternatives. Decision
difficulty is determined by the number of alternatives
considered, the number of relevant attributes associated
with each alternative, and the extent to which each
alternative offers attributes not available with the other
alternatives. (When there is no option).

4. The individual’s tendency to experience anxiety. Some

individuals have a higher tendency to experience anxiety
than others.

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 How Do Consumer Respond To Dissatisfaction

There are five options:

 Do nothing,
 Avoid the seller or a brand in the future,
 Negative word of mouth to friends,
 Seek redress of problem from seller, or
 Complain to outside agency.

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• What is the market implication of
post purchase behavior

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 Marketing Implications of Post Purchase Behavior

1. It determines consumption amount: A products’

demand determines the average amount consumed and
pricing plans.
2. It determines consumption frequency: how often the
product is used can offer useful insights about the market.
Consumption of a few products and services continuous as
with housing, electricity, and insurance. For most products,
however, consumption is discontinuous. It occurs on
discrete occasions.
3. It determines consumption intervals: New opportunities
can arise between consumption occasion intervals. The
regularity of use a certain product is a good indicator of
pricing, promotion, design and other strategies.
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4. It helps to evaluate consumption purpose: This
is also a key dimension for positioning brands.
 There are various products that are
appropriate for different occasions and settings
such as baking soda for refrigerator, for freezer,
or for other new uses; cloth for beatifying, for
protecting from cold, or for covering the body;
and food for energy, for vitamins, or for building
the body.
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 Discussion Questions

1. Let us assume that this summer your are planning to spend

a month touring Europe and are therefore in need of a
good 35-mm camera ,
a) Develop a list of product attributes that you will
use as the purchase criteria in evaluating
various 35 mm cameras.
2. Discus the market implication of post purchase
behavior.

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 Summary question

Discussion Questions
1. Describe the interrelationship between the consumer
behavior discipline and the marketing concept.
2. Explain the difference (s) between organizational and
personal consumers. Discuss the difference involved in
marketing fax machines to personal consumers and to
organizational consumers.
3. How can the study of consumer behavior assist marketers
in segmenting markets and positioning products?
4. Compare the positivist and interpretivist perspectives to
the study and analysis of consumption behavior.
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• Thanks !!!

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