Consumer Behavior

Instructor:
Dr. Ravi Shanker

Course: Marketing Management

 Objectives
1. Understand basic model of CB
2. Understand decision making process
3. Appreciate risk, choice criteria, satisfaction,
dissonance
4. Recognize influence of individual factors
5. Understand role of culture & subculture
6. Identify social class influences
7. Recognize influence of reference groups
8. Key aspects of joint decision making
 Consumer Buying Behavior
 Consumer Buying Behavior refers to the
buying behavior of final consumers -
individuals & households who buy
goods and services for personal
consumption.

 The central question for marketers is:

“How do consumers respond to various
marketing efforts the company might
use?”
 Initiator

User Buying
Influencer
Decision

Buyer Decider
 Model of Buyer Behavior
Environmental Marketing Stimuli
Stimuli Environmental
Environmental && Product
Marketing
Marketing Stimuli
Stimuli
Economic Price
Technological Place
Political Promotion
Cultural
Buying Decision
Buyer Process
Characteristics Problem Recognition
Cultural
Buyer’s
Buyer’s Black
Black Box
Box Information Search
Social Evaluation
Personal Decision
Psychological Post purchase
behavior

Product Choice Purchase

Buyer’s
Buyer’s Response
Response Timing
Brand Choice
Purchase
Dealer Choice Amount
 Decision Making Process

Problem
recognition
 The Decision Making Process

Problem Information
recognition search

 Level of perceived risk

– Performance risk
– Financial risk
– Physical risk
– Social risk
– Time-loss risk
 The Decision Making Process

Problem Information
recognition search

 Information Search
– Internal search
– External search
 Time
 Effort
 Money
 Decision Making Process

Problem Information Alternative

recognition search evaluation
Lots of storage

Performance
– Choice criteria
– Features
– Complexity

Safety
Variety of
colors
 Decision Making Process

Post-purchase
Problem Information Alternative Purchase consumption &
recognition search evaluation decision evaluation

 Purchase satisfaction
and dissatisfaction
 Cognitive dissonance
 Five - Stage Model of the Buying Process

Problem Information Evaluation of Purchase Post purchase

recognitio search alternative decision behavior
n
1. Personal 1. Post purchase
a. Friends Purchase
intention satisfaction
b. Family 2. Post purchase
2. Commercial action
3. Public Media, a. Handling
Fairs etc Attitudes Unanticipateddissatisfaction
4. Experimental of others situational b. Post Purchase
(Handling, Using, variables use and Disposa
Examining)
 INVOLVEMENT

PRICE HIGH LOW

LOW INV. HIGH INV. LOW

PRICE LOW PRICE LOW

HIGH INV. HIGH ?

PRICE HIGH INV. LOW
PRICE HIGH
Decision Making: Situations

Routine
Routine Limited
Limited Extensive
Extensive
Response
Response Decision
Decision Decision
Decision
Behavior
Behavior Making
Making Making
Making

Less More
Involvement Involvement
 ROUTINE LIMITED EXTENSIVE
RESPONSE PROBLEM PROBLEM
BEHAVIOUR SLOVING SOLVING

Low Cost Products----------------------more Expensive Products

Frequent Purchase----------------------infrequent Purchase
Low Consu8mer Involvement--------high Consumer Involvement
Familiar Product Class/Brand----unfamiliar Product
Class/Brand
Little Thought, Search & Time Given To Purchase-----extensive Thought
Search & Time Given To Purchase.
Buyers Are Fully Aware Of The Product Class But Are Not Familiar With
All The Brands & Their Features

TYPES OF BUYING DECISION BEHAVIOUR

 Decision Making: Problem
Recognition & Involvement

High Involvement No buy:

Stop/Restart
Problem Info
Eval Choice
id search Buy:
Consume/Eval

Low Involvement
Consume
Problem Limited
Choice Limited
id search
Eval
 Involvement and Learning:
Influence on Consumption

Passive
Low Involvement Purchase Brand
Decision
Evaluation
Making
Not related to self- image
Lower risk of visibility

Active
High Involvement Brand Purchase
Decision
Making Evaluation
Related to self-image
Higher risk of
visibility
 Factors
Factors Influencing
Influencing Consumer
Consumer Behavior
Behavior

Cultural
Social
Personal
Age and Psycho-
Culture Reference logical
groups life-cycle
Occupation Motivation
Sub- Economic Perception Buyer
culture Family situation Learning
Lifestyle Beliefs and
Roles attitudes
Social Personality
class and and
status self-concept
CULTURE :
As a child grows he acquires from his environment a set of
beliefs, values & customs _ which constitutes culture.

These beliefs, values & customs go deeper & deeper as the

child grows-culture is learned as a part of social experience
SUBCULTURE:
The various sub-categories within a culture can be
identified based on religion, age, sex, occupation, social
class, geographical location etc.
Each culture consist of smaller subcultures providing
specific identification & socialization:
Eg.,
-Nationality groups
-Geographical groups
-Religious groups
-Racial groups
SOCIAL CLASS:
People donot live with uniformly equal status. Every
society is stratified into different levels of social
status, and it is these different levels, or social classes,
which give rise to many of our social motivations.
In USA, Six categorizations based on occupation,
education, housing, sources & amount of income:
 REFERENCE GROUPS :
Reference groups : a reference group is any
aggregation of people who influence an individual’s
attitude & behaviors.
A person’s reference groups consists of all the
groups that have a direct (face-to-face) or indirect
influence.

PRIMARY
CONTINUOUS INTERACTION-
INFORMAL FAMILY,FRIENDS,COWORKERS,NEIGHBOURS)
SECONDARY
(LESS CONTINUOUS INTERACTION -
FORMAL PROFESSIONAL, TRADE UNION/RELIGIOUS
GROUPS)
ASPIRATIONAL GROUPS
GROUPS DISASSOCIATIVE GROUPS
 FAMILY
1. Family orientation : from parents one acquires an
orientation towards religion, politics, economics, personal
ambition, self-worth and love.

2. Family domination : (for various products)

- Husband dominant (lnsurance, automobile, etc)

- Wife dominant ( kitchenware, etc.)
- Equal ( vacation, outside entertainment)
 ROLES & STATUSES
A person participates in many groups family, social system, work
place.

A person’s position in each group can be defined in terms of roles

& status

A role consists of the activities that a person is expected to perform

according to the persons around him/her.

Each role carries a status reflecting the general esteem accorded to

it by society.

People choose products that communicate their role and status in

society.
AGE & FAMILY LIFE CYCLE STAGE
O CHILDHOOD
I BACHELORHOOD
II HONEYMOONERS
III PARENTHOOD
IV FOST PARENT HOOD
V DISSOLUTION
LIFESTYLE:
DIFFERENT FROM SOCIAL CLASS & PERSONALITY
•IT’S THE PATTERN OF LIVING
•EXPRESSED IN HIS ACTIVITIES, INTERESTS &
OPINIONS (AIO)
A=Work, Hobbies, Entertainment, Shopping Vacation
I=Family, Home, Job, Fashion
O=Themselves, special issues
 PERSONALITY
The dynamic organization within the individual
of those psychological systems that determine
his unique adjustment to his environment.
- Alport (Gordon)

Personality is the sum total of ways in which an

individual reacts & interacts with others. (This
is most often described in terms of measurable
personality traits that a person exhibits.)
PERSONALITY
All of an individuals’ characteristics (physical, emotional,
intellectual etc) as they appear to othrs

COMPULSIVENESS COMPULSIVE NON COMPULSIVE

GREGARIOUSNESS EXPROVERT INTROVERT
AUTONOMY DEPENDENT INDEPENDENT
NEUROTICISM NEUROTIC STABLE
LEADERSHIP LEADER FOLLOWER
AMBITIOUSNESS HIGH LOW ACHIEVER
ACHIEVER
SELF CONCEPT:
Self image: all of us carry a complex mental picture
of ourselves
Actual self concept: how one views oneself
Ideal self concept: how one would like to view
oneself
Others self concept: how one thinks others see
him/her
MOTIVATION:
It is the driving force within individuals that compel them
to action
This driving force is subconscious and the outcome of
certain unfulfilled needs.
 Consumer Motivation
conflict

TYPE DECSRIPTION SAMPLE SITUATION

Toothpaste
Approach-Approach Two objectives
desired, but the Sex appeal with
Health with breath
consumer cannot have
fluoride freshener
both

Avoidance-Avoidance The consumer must Muffler repair

choose between two
undesirable Depleted Bothersome
alternatives savings exhaust noise

Approach-Avoidance College education

The consumers’ goal
feature both positive Hard work Greater earning
and negative aspects and expense opportunities
Individual Factors: Needs

Self-Actualization

Esteem

Social

Safety

Physiological
 Simple model of motivated
behavior

acts creating
Stimulus Basic need Motive
upon
causing

Response resulting in Goal-directed

behavior search for
incentive

yielding

Satisfaction Dissatisfaction
PERCEPTION:
It is the process by which buyers select, organize &
interpret information into a meaningful impressions in
their mind.

Perception is also selective in which a small part is

perceived out of the total……” what is perceptible”
 Individual Factors: Perception
 Selective perception
 Selective exposure
 Selective attention
 Selective interpretation
 Stimulus factor
 Context
 Individual factor
That fish was at least 8 pounds
LEARNING:
When people act they learn
Learning describes changes in an individuals
behavior arising from experience.
Most human behavior is learnt behavior
BELIEF:

A belief is a descriptive thought that a person holds

about something.
ATTITUDES:
An attitude is a learned predisposition to respond in a
consistently favorable or unfavorable manner, with
respect to a given object.
Attitude is a dispositional term indicating that attitudes
manifest themselves in behavior only under certain
conditions:
An attitude describes a person’s enduring favorable or
unfavorable cognitive evaluations, emotional feelings &
action tendencies towards some object or idea.
 Attitudes: 3 Stages of Readiness
Cognitive: does a Affective: does that
product have a consumer like a
particular attribute the particular attribute?
consumer wants?

Behavioral: is the
consumer likely to buy
the product?
 RESPONSE HIERARCHY
ACTION
BEHAVIOURAL ACT

CONVICTION

PREFERENCE
AFFECTIVE FEEL

LIKING

COGNITIVE KNOW KNOWLEDGE

AWARE

UNAWARE
SOCIAL CHARACTER IS A PERSONALITY TRAIT
THAT RANGES FROM:
INNER DIRECTEDNESS TO OUTER DIECTEDNESS.

Inner directed tends to rely on their own inner values and

standards in evaluating new products & are more likely to
be innovators.
Category with : tolerance for error

Optimum stimulates level

: Simple, calm uncluttered environment
: Complex, unusual novel environment
 Review
 Understand basic model of CB
 Understand decision making process
 Appreciate risk, choice criteria, satisfaction,
dissonance
 Recognize influence of individual factors
 Understand role of culture & subculture
 Identify social class influences
 Recognize influence of reference groups
 Key aspects of joint decision making
Analyzing Business Markets
and Business Buying Behavior
 Objectives
 Six questions:
– What is the business market, and how does it
differ from the consumer market?
– What buying situations do organizational buyers
face?
– Who participates in the business buying
process?
– What are the major influences on
organizational buyers?
– How do business buyers make their decisions?
– How do institutions and government agencies
do their buying?
 What is Organizational Buying?
– Organizational buying
 The business market versus the
consumer market
– Business market
 Fewer buyers
 Larger buyers
 Close supplier-customer relationship
 Geographically concentrated buyers
What is Organizational Buying?
 Derived demand
 Inelastic demand
 Fluctuating demand
 Professional purchasing
What is Organizational Buying?
 Several buying influences
 Multiple sales calls
 Directed purchasing
 Reciprocity
 Leasing
What is Organizational Buying?
 Buying Situations
– Straight rebuy
– Modified rebuy
– New Task
 Systems Buying and Selling
– Systems buying
– Turnkey solution
– Systems selling
Participants in the Business
Buying Process
 The Buying Center
– Initiators
– Users
– Influencers
– Deciders
– Approvers
– Buyers
– Gatekeepers
 Key buying influencers
 Multilevel in-depth selling
 Major Influences on
Industrial Buying Behavior
 Major Influences on Buying
Decisions
 Environmental Factors
 Organizational Factors
– Purchasing-Department Upgrading
– Cross-Functional Roles
– Centralized Purchasing
– Decentralized Purchasing of Small-Ticket
Items
– Internet Purchasing
 Major Influences on Buying
Decisions
– Other Organizational Factors
 Long-Term Contracts
– Vendor-managed inventory
– Continuous replenishment programs
 Purchasing-Performance Evaluation and
Buyers’ Professional Development
 Improved Supply Chain Management
 Lean Production
– Just-in-time
 Major Influences on Buying
Decisions
 Interpersonal and Individual Factors
 Cultural Factors
– France
– Germany
– Japan
– Korea
– Latin America
The Purchasing/ Procurement
Process
 Incentive to purchase
– Three Company Purchasing Orientations
 Buying Orientation
– Commoditization
– Multisourcing
 Procurement Orientation
– Materials requirement planning (MRP)
 Supply Chain Management Orientation
The Purchasing/ Procurement
Process
 Types of Purchasing Processes
– Routine products
– Leverage products
– Strategic products
– Bottleneck products
The Purchasing/ Procurement
Process
 Stages in the Buying Process
– Problem Recognition
– General Need Description and
Product Specification
 Product value analysis
– Supplier Search
 Vertical hubs
 Functional hubs
 Direct external links to major suppliers
 Buying alliances
– Company buying sites
– Request for proposals (RFPs)
The Purchasing/ Procurement
Process
– General Need Description and
Product Specification
 Product value analysis
– Supplier Search
 Vertical hubs
 Functional hubs
 Direct extranet links to
major suppliers
 Buying alliances
– Company buying sites
– Request for proposals (RFPs)
The Purchasing/ Procurement
Process
– Proposal Solicitation
– Supplier Selection
 An Example of Vendor Analysis

Attributes Rating Scale

Importance Poor Fair Good Excellent
Weights (1) (2) (3) (4)
Price .30 x

Supplier reputation .20 x

Product reliability .30 x

Service reliability .10 x

Supplier Flexibility .10 x

Total score: .30(4) + .20(3) + .30(4) + .10(2) + .10(3) = 3.5

The Purchasing/ Procurement
Process
 Customer value assessment
 Routine-order products
 Procedural-problem products
 Political-problem products
– Order-Routine Specification
 Blanket contract
 Stockless purchase plans
– Performance Review
 Buyflow map
 Major Influences on
Industrial Buying Behavior
Institutional and Government
Markets
 Institutional market