Consumer behaviour

1. UNIT- 2
Understanding Consumer Behaviour

2. Consumer Behaviour
• Philip Kotler defines Consumer behaviour as “the study of how individual,
groups and organisation select, buy, use and dispose of goods and
services, ideas or experiences to satisfy their needs and wants.”
• Consumer buying behaviour is the study of individuals, groups, or
organizations and the processes they use to select, secure, use, and
dispose of products, services, experiences, or ideas to satisfy needs and
the impacts that these processes have on the consumer and society.

3. Need for studying consumer
behaviour
The study of consumer behavior helps the
marketer to-
• Satisfy need of customers
• Understand consumer psychology
• Understand consumer motives
• Understand consumer choices
• Understand consumer preferences

4. 1. To satisfy need of customers-Consumers respond favorably while evaluating the products
that best satisfy their needs. A marketer studies how consumers spend their available
resources on the consumption of related items. It includes the study of what they buy,
when they buy it, where they buy it and how often they use it. So, a knowledge of
consumer behavior will be of immense help to the marketer which will help to satisfy
their needs. He can understand the consumer’s reaction to a firm’s marketing strategies.
It would help in planning and implementing marketing strategies.
2.Helps to understand consumer psychology-The study of consumer behavior enables the
marketer to understand the psychology of consumers. Consumer psychology is based on
his knowledge, attitude, intention and motive. The psychology of customer develops on
the basis of knowledge he has. Sales promotion plays an important role to provide the
knowledge of the product to consumers. Attitude is a state of mind or feeling. Attitude
explains behavior. Intention means a desire to do something. A marketing programme is
formulated only after understanding the intention of consumers. Motive is the integral
state which directs the behavior of a person.
3. Helps to understand consumer motives-A study of the behavior of a consumer is
essential to understand his/her buying motives. A motive is an urge for which an
individual seeks satisfaction. In the words of R.S. Davar a motive is an inner urge that
moves or prompts a person to action. Consumers have several motives. All these
motives may not have the same intensity of purchase. Only a few motives prompt the
consumer to buy a product or service. The study of consumer behavior involves both
motives and purchases.

5. 4. Helps to understand consumer choices- It is important for the marketer to
understand how consumers make their choices. Human beings are usually
very rational. They make systematic use of information available to them
before they buy. A marketer studies the behavior of the customer and
accordingly alter his presentation, enticing the customer to go for the
product.
5. Helps to understand consumer preferences-A business firm which is
ignorant of consumer preferences cannot succeed in the market place.
According to Peter F. Drucker “It is the consumer who determines what a
business is” Adam Smith has stated that consumption is the sole end and
purpose of all production. So, a firm must plan its production and
distribution to suit the needs of consumers. Thus, the extent of consumer
understanding determines the effectiveness of marketing mechanism.

6. Types of Consumer Buying Behaviour

7. 1. Complex buying behavior
• Complex buying behavior is encountered particularly when consumers are
buying an expensive product. In this infrequent transaction, consumers are
highly involved in the purchase decision. Consumers will
research thoroughly before committing to invest.
• Consumer behaves very differently when buying an expensive product or a
product that is unfamiliar to them. When the risk of buying a product is very
high, a consumer consults friends, family, and experts before making the
decision.
• For example, when a consumer is buying a car for the first time, it’s a big
decision as it involves high economic risk. There is a lot of thought on how it
looks, how his friends and family will react, how will his social status change
after buying the car, and so on.
• In complex buying behavior, the buyer will pass through a learning process. He
will first develop beliefs about the product, then attitudes, and then make a
thoughtful purchase choice.
• For complex buying behavior customers, marketers should have a deep
understanding of the products. It is expected that they help the consumer to
understand their product. It is important to create an advertising message in a
way that influences the buyer’s beliefs and attitudes.

8. 2. Dissonance-reducing buying behavior
• In dissonance-reducing buying behavior, consumer involvement is very
high. This might be due to high prices and infrequent purchases. In
addition, there is low availability of choices with fewer significant
differences among brands. In this type, a consumer buys a product that is
easily available.
• Consumers will be forced to buy goods that do not have too many choices
and therefore consumers will be left with limited decision making. Based
on the products available, time limitations, or budget limitations,
consumers buy certain products without a lot of research.
• For example, a consumer who is looking for a new collapsible table that
can be taken for camping quickly decides on the product based on a few
brands available. The main criteria here will be the use and the feature of
the collapsible table and the budget available to him.
• Marketers should run after-sale service camps that deliver focused
messaging. These campaigns should aim to support consumers and
convince them to continue with the choice of their brand. These marketing
campaigns should focus on building repeat purchases and referrals by
offering discounts and incentives.

9. 3. Habitual buying behavior
• Habitual Buying Behavior is depicted when a consumer has low involvement in
a purchase decision. In this case, the consumer is perceiving only a few
significant differences between brands.
• When consumers are buying products that they use for their daily routine,
they do not put a lot of thought. They either buy their favorite brand or the
one that they use regularly – or the one available in the store or the one that
costs the least.
• For example, when a consumer buys an energy drink, he tends to buy the
flavor/taste that he likes without actually putting in a lot of research and
time. Many products fit into this category. Products such as chocolates, cakes,
juices, etc., all fit into this product category.
• Consumers just go for it and buy it – there is no brand loyalty. Consumers do
not research or need information regarding the purchase of such products.
• Habitual buying behavior is influenced by radio, television, and print media.
Moreover, consumers are buying based on brand familiarity. Hence marketers
must use repetitive advertisements to build brand familiarity. Further to
initiate product trial, marketers should use tactics like price drop promotions
and sales promotions.
• Marketers should attract consumers using visual symbols and imagery in their
advertising. Consumers can easily remember visual advertisements and can
associate with a brand.

10. 4. Variety seeking buying behavior
• In variety-seeking consumer behavior, consumer involvement is low. There
are significant differences between brands. Here consumers often do a lot
of brand switching. The cost of switching products is low, and hence
consumers might want to try out new products just out of curiosity or
boredom. Consumers here, generally buy different products not because
of dissatisfaction but mainly with an urge to seek variety.
• For example, a consumer likes to buy a cookie and choose a brand without
putting much thought into it. Next time, the same consumer might choose
a different brand out of a wish for a different taste. Brand switching occurs
often and without intention.
• Brands have to adopt different strategies for such types of consumer
behavior. The market leader will persuade habitual buying behavior by
influencing the shelf space. The shelf will display a large number of related
but different product versions.
• Marketers avoid out-of-stock conditions, sponsor frequent advertising,
offer lower prices, discounts, deals, coupons, and free samples
to attract consumers.

11. Stages in Consumer Buying Decision
Process

12. Factors Influencing Consumer Buying Decisions
Here are 5 major factors that influence consumer behavior:
Psychological Factors
Social Factors
Cultural Factors
Personal Factors
Economic Factors
1. Psychological Factors
• Human psychology is a major determinant of consumer behavior. These
factors are difficult to measure but are powerful enough to influence a
buying decision.Some of the important psychological factors are:

13. i. Motivation
• When a person is motivated enough, it influences the buying behavior of the person. A person has many
needs such as social needs, basic needs, security needs, esteem needs, and self-actualization needs. Out of
all these needs, the basic needs and security needs take a position above all other needs. Hence basic
needs and security needs have the power to motivate a consumer to buy products and services.
ii. Perception
• Consumer perception is a major factor that influences consumer behavior. Customer perception is a
process where a customer collects information about a product and interprets the information to make a
meaningful image of a particular product.
• When a customer sees advertisements, promotions, customer reviews, social media feedback, etc. relating
to a product, they develop an impression about the product. Hence consumer perception becomes a great
influence on the buying decision of consumers.
iii. Learning
• When a person buys a product, he/she gets to learn something more about the product. Learning comes
over a period of time through experience. A consumer’s learning depends on skills and knowledge. While
skill can be gained through practice, knowledge can be acquired only through experience.
• Learning can be either conditional or cognitive. In conditional learning the consumer is exposed to a
situation repeatedly, thereby making a consumer to develop a response towards it.
• Whereas in cognitive learning, the consumer will apply his knowledge and skills to find satisfaction and a
solution from the product that he buys.
iv. Attitudes and Beliefs
• Consumers have certain attitudes and beliefs which influence the buying decisions of a consumer. Based
on this attitude, the consumer behaves in a particular way towards a product. This attitude plays a
significant role in defining the brand image of a product. Hence, marketers try hard to understand the
attitude of a consumer to design their marketing campaigns.

14. 2. Social Factors
• Humans are social beings and they live around many people who influence
their buying behavior. Humans try to imitate other humans and also wish to
be socially accepted in the society. Hence their buying behavior is influenced
by other people around them. These factors are considered as social factors.
Some of the social factors are:
i. Family
• Family plays a significant role in shaping the buying behavior of a person. A
person develops preferences from his childhood by watching family buy
products and continues to buy the same products even when they grow up.
ii. Reference Groups
• A reference group is a group of people with whom a person associates
himself. Generally, all the people in the reference group have common buying
behavior and influence each other.
iii. Roles and status
• A person is influenced by the role that he holds in the society. If a person is in
a high position, his buying behavior will be influenced largely by his status. A
person who is a Chief Executive Officer in a company will buy according to his
status while a staff or an employee of the same company will have different
buying pattern.

15. 3. Cultural factors
• A group of people is associated with a set of values and ideologies that belong
to a particular community. When a person comes from a particular
community, his/her behavior is highly influenced by the culture relating to
that particular community. Some of the cultural factors are:
i. Culture
• Cultural Factors have a strong influence on consumer buying
behavior. Cultural Factors include the basic values, needs, wants, preferences,
perceptions, and behaviors that are observed and learned by a consumer
from their near family members and other important people around them.
ii. Subculture
• Within a cultural group, there exists many subcultures. These subcultural
groups share the same set of beliefs and values. Subcultures can consist of
people from different religion, caste, geographies and nationalities. These
subcultures by itself form a customer segment.
iii. Social Class
• Each and every society across the globe has the form of social class. The social
class is not just determined by the income, but also other factors such as the
occupation, family background, education and residence location. Social class
is important to predict the consumer behavior.

16. 4. Personal Factors
• Factors that are personal to the consumers influence their buying behavior. These
personal factors differ from person to person, thereby producing different perceptions
and consumer behavior.
• Some of the personal factors are:
i. Age
• Age is a major factor that influences buying behavior. The buying choices of youth differ
from that of middle-aged people. Elderly people have a totally different buying behavior.
Teenagers will be more interested in buying colorful clothes and beauty products.
Middle-aged are focused on house, property and vehicle for the family.
ii. Income
• Income has the ability to influence the buying behavior of a person. Higher income gives
higher purchasing power to consumers. When a consumer has higher disposable income,
it gives more opportunity for the consumer to spend on luxurious products. Whereas
low-income or middle-income group consumers spend most of their income on basic
needs such as groceries and clothes.
iii. Occupation
• Occupation of a consumer influences the buying behavior. A person tends to buy things
that are appropriate to this/her profession. For example, a doctor would buy clothes
according to this profession while a professor will have different buying pattern.
iv. Lifestyle
• Lifestyle is an attitude, and a way in which an individual stay in the society. The buying
behavior is highly influenced by the lifestyle of a consumer. For example when a
consumer leads a healthy lifestyle, then the products he buys will relate to healthy
alternatives to junk food.

17. 5. Economic Factors
• The consumer buying habits and decisions greatly depend on the economic situation of a country or a market.
When a nation is prosperous, the economy is strong, which leads to the greater money supply in the market and
higher purchasing power for consumers. When consumers experience a positive economic environment, they are
more confident to spend on buying products.
• Whereas, a weak economy reflects a struggling market that is impacted by unemployment and lower purchasing
power.
• Economic factors bear a significant influence on the buying decision of a consumer. Some of the important
economic factors are:
i. Personal Income
• When a person has a higher disposable income, the purchasing power increases simultaneously. Disposable
income refers to the money that is left after spending towards the basic needs of a person.
• When there is an increase in disposable income, it leads to higher expenditure on various items. But when the
disposable income reduces, parallelly the spending on multiple items also reduced.
ii. Family Income
• Family income is the total income from all the members of a family. When more people are earning in the family,
there is more income available for shopping basic needs and luxuries. Higher family income influences the people
in the family to buy more. When there is a surplus income available for the family, the tendency is to buy more
luxury items which otherwise a person might not have been able to buy.
iii. Consumer Credit
• When a consumer is offered easy credit to purchase goods, it promotes higher spending. Sellers are making it easy
for the consumers to avail credit in the form of credit cards, easy installments, bank loans, hire purchase, and many
such other credit options. When there is higher credit available to consumers, the purchase of comfort and luxury
items increases.
iv. Liquid Assets
• Consumers who have liquid assets tend to spend more on comfort and luxuries. Liquid assets are those assets,
which can be converted into cash very easily. Cash in hand, bank savings and securities are some examples of
liquid assets. When a consumer has higher liquid assets, it gives him more confidence to buy luxury goods.
v. Savings
• A consumer is highly influenced by the amount of savings he/she wishes to set aside from his income. If a
consumer decided to save more, then his expenditure on buying reduces. Whereas if a consumer is interested in
saving more, then most of his income will go towards buying products.

18. The basic difference between needs and wants is that the wants are more
sophisticated and require more effort to obtain. Examples of human wants include
having money, having internet, having a Mercedes car, or being married. When
backed by buying power, want becomes a demand. Staying in star hotels, owning
multiple real estate properties, buying luxury cars like BMW or a Mercedes can be
considered as an example of demand. Demand is the force that helps society
progress. When demand is satisfied, people feel better about themselves and this
feeling increases their desire to work hard for what they want and that achieve
status symbol

19. Difference Between Consumer and Customer