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Consumer behavior all material Prepared by karventhan

  2. 2. Consumer Behaviour  The term Consumer Behavior, individual buyer behavior, end user and consumer buying behavior all stands for the same.  It includes the study of what they buy, why they buy it, when they buy it, where they buy it, how often they buy it, and how often they use it.
  3. 3. Consumer behaviour refers to the actions of consumers in the market place& underlying motives for those actions.  Marketers need to understand why customer buy a particular goods & services they will be able to determine-  Which products are needed in the market place,  How best to present the goods to the consumers. product  It attempts to understand the buyer decision making process, both individually and in groups. It also tries to assess influences on the consumer from groups such as family, friends, reference groups, and society in general.
  4. 4. Consumer Behaviour
  5. 5. Consumer Behaviour
  6. 6. Consumer Behaviour
  7. 7. Concept of Consumer Behavior  Consumer Behaviour is the study of the following elements: Why and why not a consumer buys product? When a consumer buys a product? How a consumer buys a product?  The people do or do not buy a product.
  8. 8. Difference between Consumer and customer  Generally, a consumer refers to individuals who buy for themselves or their family (hence the term 'consumerism' in economics and politics), whereas a customer can also mean the retailer or person who buys from the manufacturer, etc. for ultimate sale to others. The one who buys the product is called a customer and the who uses the product is called a consumer.  A consumer is anyone who typically engages in any one or all of the activities mentioned in the definition. Traditionally, consumers have been defined very strictly in terms of economic goods and services wherein a monetary exchange is involved. This concept, over a period of time, has been broadened. Some scholars also include goods and services where a monetary transaction is not involved and thus the users of the services of voluntary organisations are also thought of as consumers. This means that organisations such as UNICEF, CRY, or political groups can view their public as "consumers".
  9. 9. Definition  “Consumer Behavior is the process and activities people engage in when searching for, selecting, purchasing, using, evaluating, and disposing of products and services so as to satisfy their needs and desires.” Belch and Belch
  10. 10. Characteristics of Consumer Behavior.  Information search  Brand Loyalty  Price Elasticity of Demand.
  11. 11. Scope of Consumer Behavior  ‘What’ the consumers buy: goods and services  ‘Why’ they buy it: need and want  ‘When’ do they buy it: time: day, week, month, year, occasions etc.  ‘Where’ they buy it: place  ‘How often they buy’ it: time interval  - ‘How often they use’ it: frequency of use .
  12. 12. Significance of Consumer Behavior. The Study of Consumers’ Behavior is vital in framing production policies, price policies, decisions regarding channels of distribution and decisions regarding sales promotion.  Production Policies  Price Policies  Decision regarding channels of distribution  Decision regarding sales promotion  Exploiting Marketing Opportunities of competitors  Consumer do not always act or react Predictably  Consumer preference are changing and becoming highly diversified.  Rapid Introduction of New Products  Implementing the “Marketing Concepts”
  13. 13. Dimensions of Consumer Behavior who buy when they buy how they buywhere they buy why they buy
  14. 14. Factors affecting consumer behavior 1. Psychological factors 2. Sociological factor 3. Economic factor
  15. 15. 1. Psychological Factor a) Motivation – motivation is a willing to achieve a certain goal, motivation could be effected because of consumer financial circumstances. b) Perception - what perception consumer have about a certain product c)Knowledge & Education Level - Every consumer takes decision according to their knowledge and education level so consumer behavior can change if they feel new information about a product. So knowledge and education is an important factor for consumer to buy a product or hiring services d) Attitude - consumer attitude suggest how they are motivated towards a product e)Life Style – how consumer give value of their life and what way life they spending. f) Culture – culture is an external influence, how we live and what we consume. g)Group Membership – another external influence factors , often consumer belong to many other groups which may affect consumer decision making
  16. 16. 2. Sociological factor - A lot of sociological factor could affect consumer behaviour like Family life, age, education level, good and bad sociological influences. 3. Economic Factor - Economic factor is a significant factor in consumer behavior , a lot of consumer can suffer because of poor economic conditions.
  17. 17.  The Internal Influences of CB  1)Psychological factors  a=> Motivation  b =>Perception  c=>Learning  d =>Beliefs and Attitude  2)Personal factors  a=>Age and Life Cycle Stage  b=>Occupation and Economic  c=>Circumstances  d =>Personality  e =>Life style  f =>Self image
  18. 18. State the External Influences of CB 1. Socio-cultural Influences  culture  Sub culture  cross culture 2 Social class  Upper class  Middle class  Working class  Lower class. 3 Family 4. Reference Group 5. Roles and Status
  19. 19. Applications of knowledge of consumer behavior in marketing decisions  Analyzing market opportunity  Selecting the target market  Determining the marketing mix  Product ( ex : Maggi)  Package  Price  Promotion • Use in Non-profit and Social Marketing
  20. 20. Attractive packing to attract the customers
  21. 21. Pricing Strategy
  22. 22. Industrial and individual consumer behavior models
  23. 23. INDUSTRIAL CONSUMER BEHAVIOUR An organizational buying is a process by which a company/organization establishes a need for purchasing products and choose among competing brands and suppliers. Reason to buy product:  In production of another product  To sell  Rented  supplied to others
  24. 24. CONSUMER BUYING BEHAVIOUR The process by which individuals search for select, purchase, use and dispose of goods and services, in satisfaction of their needs and wants. A firm needs to analyze buying behavior for:  Buyer’s reactions to a firms marketing strategy has a great impact on the firm’s success.  The marketing concept stresses that a firm should create a Marketing Mix (MM) that satisfies (gives utility to) customers, therefore need to analyze the what, where, when and how consumers buy.  Marketers can better predict how consumers will respond to marketing strategies.
  25. 25. VARIOUS STAGES OF THE CONSUMER BUYING PROCESS Problem recognition (Awareness of need): *Difference between the desired state and the actual condition. Deficit in assortment of products. * Hunger--Food. Hunger stimulates your need to eat. Information search:  Internal search, memory.  External search if you need more information. Friends and relatives (word of mouth). Marketer dominated sources; comparison shopping; public sources etc.
  26. 26. Evaluation of Alternatives: - Need to establish criteria for evaluation, features the buyer wants or does not want.  Purchase decision: Choose buying alternative, includes product, package, store, method of purchase etc . Purchase: May differ from decision, time lapse between 4 & 5, product availability. Post-Purchase Evaluation: Outcome: satisfaction or dissatisfaction. Cognitive dissonance, have you made the right decision. This can be reduced by warranties, after sales communication etc
  27. 27. Perceptual FilterBy learning we mean how someone changes what they know, which in turn may affect how they act. There are many theories of learning, a discussion of which is beyond the scope of this tutorial, however, suffice to say that people are likely to learn in different ways. For instance, one person may be able to focus very strongly on a certain advertisement and be able to retain the information after being exposed only one time while another person may need to be exposed to the same advertisement many times before he/she even recognizes what it is. Consumers are also more likely to retain information if a person has a strong interest in the stimuli. If a person is in need of new car they are more likely to pay attention to a new advertisement for a car while someone who does not need a car may need to see the advertisement many times before they recognize the brand of automobile.
  28. 28.  Impulse purchase(lip moisturizer, magazines and gum)  Routine purchase(milk, eggs and cheese)  Limited Decision Making(hair colour)  Extensive Decision Making (tv,car,a home,computer)
  29. 29. Models of consumer behavior   
  30. 30.
  31. 31. Models   
  32. 32. Howard-Sheth model (1969)   
  33. 33. Howard-Sheth model (1969)   
  34. 34. Extensive problem solving  
  35. 35. Limited problem solving   .
  36. 36. Habitual response behavior
  37. 37. The model has four major components:    
  38. 38. Input variables   
  39. 39. Hypothetical construction   
  40. 40.   
  41. 41. Output variable     
  42. 42. Exogenous variable       
  43. 43. The Nicosia model This model focuses on the relationship between the firm and its potential consumers. The firm communicates with consumers through its marketing messages (advertising), and the consumers react to these messages by purchasing response. Looking to the model we will find that the firm and the consumer are connected with each other, the firm tries to influence the consumer and the consumer is influencing the firm by his decision.
  44. 44. Source: Nicosia, (1976). The Nicosia model is divided into four major fields:  Field 1: The consumer attitude based on the firms’ messages.  Field 2:search and evolution  Field 3:act of purchase  Field 4:Feedback
  45. 45. Webster and Wind Model  This is a complex model developed by F.E.Webster and Y. Wind as an attempt to explain the multifaceted nature of organization buying behavior  Refers to the environmental , organizational , interpersonal and individual buying determinants which influences the organizational buyer’s
  46. 46. Unit-III
  47. 47. PSYCHOLOGICAL INFLUENCES ON CONSUMER BEHAVIOR Concepts such as motivation and personality; perception; learning; values, beliefs and attitudes; and lifestyle are useful for interpreting buying processes and directing marketing efforts.
  48. 48. Motivation Motivation is the energizing force that causes behaviour that satisfies a need. An individual consumer may purchase an item that they believe will further the own goals or will satisfy a need they have. For example, a shopper may stop at the mall food court because they are hungry, and may select a salad to eat because they believe it will help them achieve weight loss or a healthier lifestyle
  49. 49. Define Motivation  Motivation can be defined as the processes that account for an individual’s intensity, direction, and persistence of effort toward attaining a goal.  The following are the three key elements in this definitions : Key Elements 1. Intensity: how hard a person tries 2. Direction: toward beneficial goal 3. Persistence: how long a person tries
  50. 50. Consumer Motivation Motivation is an inner drive that reflects goal- directed arousal. In a consumer behaviour context, the result is a desire for a product, service, or experience. It is the drive to satisfy needs and wants, both physiological and psychological, through the purchase and use of products and services Five stages of the motivation process: Need Drive (force) Want or desire Goal (purpose) Behaviour(action)
  51. 51. Behavioural Models of Motivation Abraham Maslow’s “Need Hierarchy Theory”:
  52. 52. Maslow’s Hierarchy of Needs Self- actualization Esteem Belongingness Security PhysiologyFood Achievement Status Friendship Stability Job Friends Pension Base NEEDS General Examples Organizational Examples jobChallenging title at work plan salary
  53. 53. Types of Motivation  Positive Motivation(Financial and non Financial )  Negative motivation
  54. 54. The Dynamic Nature of Motivation  Needs are never fully satisfied  New needs emerge as old needs are satisfied  People who achieve their goals set new and higher goals for themselves
  55. 55. Arousal of Motives  The arousal of any particular set of needs at a specific moment in time may be caused by internal stimuli found in the individual’s physiological condition, by emotional or cognitive processes or by stimuli in outside environment.  Physiological arousal  Emotional arousal  Cognitive arousal  Environmental arousal
  56. 56. Perception  Perception is the process through which the information from outside environment is selected, received, organized and interpreted to make it meaningful to us.  According to S.P. Robbins, “Perception may be defined as a process by which individuals organize and interpret their sensory impressions in order to give meaning to their environment.”
  57. 57. Factors that influence perception: 1) Factors in the perceiver Attitudes Motives Interests Experience Expectations 2) Factors in the situation Time Work setting Social setting 3)Factors in the target Novelty (innovation) Sounds Size Background Proximity(closeness) Similarity
  58. 58. Learning Define Learning Learning may be defined as “The process of acquiring the ability to respond adequately to a situation which may or may not have been previously encountered, the favourable modification of response tendencies consequent upon previous experience; the process of acquiring insight into situation.” According to E.R.Hilgar, “Learning is a relatively permanent change in behavior that occurs as a result of prior experience.”
  59. 59. Leaning theories  Classical conditioning-(e.g. Dog , bell, time,etc)  Operant conditioning ((e.g. if you insert a coin in coffee machine you can get coffee. You leant from past experience how to cause the environment to deliver a cup of coffee)  Social conditioning (the ability of individual by observing others. i.e. can leant from parents, peers, boss, etc.people gain elf confident when someone else do it than are simply told what to do)  Cognitive conditioning(people draw on their experience and use past learning as the basis for present experience)
  60. 60. What are the various Elements of Learning  Motivation  Cues(indicator e.g.“ first step is the best step” and base on time it varies)  Response(choice of behaviour)  Reinforcement(consequence i.e. support,back up)) How learning Influences on Consumer Behavior.  Recognition and Recall  Cognitive Responses to Advertising  Attitudinal and Behavioural Measures of Brand Loyalty
  61. 61. Define Personality  The term Personality has been derived from Latin word “Personare” which means ‘to speak through’.  Personality is an individual’s characteristics response tendencies across similar situations.  According to Schiffman and Kanuk, “Personality can be defined as those inner psychological characteristics that both determine and reflect how a person responds to his or her environment.”
  62. 62. The Nature of Personality  Impact (force)Behaviours and Actions  Psychological and physiological(shaped by environment i.e. life experience and our parents genetic)  Personality reflects Individual Differences  Personality is consistent(steady) and enduring(long term)  Personality can change
  63. 63. Personality Framework
  64. 64. Significance of Personality  Differential Features  Differential Emotional Reactions  Differential Stress Handling
  65. 65. Theories of Personality 1) Type (individual are categorised depending on their physical characteristics e.g. age) 2)Trait(factor analysis and rating scale used, he will be describe himself about his attitude, feeling , etc and asked with other person to evaluate from what he knows about individual) 3)Psychoanalytic (comprises id, ego and super ego) (a hunger man can (relax) experience partial gratification of his hunger by imagining a delicious meal- id, ego- man cannot satisfy his hunger by eating image, reality must considered, super ego- judge whether an action is right or Wrong according to the standard of society, 4) Social learning (stresses on the change of behaviour through learning from several sources i.e. the person action in given situation according to specific characteristics of situation) 5) Humanistic (behaviour depends on how an individual perceives the world)
  66. 66. ATTITUDE Definition Attitude is defined as a mental, emotional or rational predisposition with regard to a fact, state, person or an object. In the context of consumer behaviour we are studying the attitude of buyers towards all the relevant attributes of a product or services as well as the marketer and market. It is feeling or beliefs of an individual or groups of people.
  67. 67. Characteristics of Attitude The attitudes that have significant influence on an individual’s behaviour & personality have certain characteristics. Attitude is formed on the basis of learning, knowledge, information, upbringing (education), thinking, lifestyle, experience, predispos ition (tendency), belief, faith, outlook, communication, ob servation, etc. It can be good or bad, optimistic or pessimistic, positive or negative, broad or narrow friendly or unfriendly & so on. It may be consistent, may change with several external factors like time or environment, may be influenced or even can influence another attitude
  68. 68. Three components of attitude ABC MODEL 1. Affective (feelings, sentiments and emotions about some idea, person, event) 2. Behaviour (predisposition (tendency) to get on a favourable or unfavourable evaluation of something) 3. Cognitive (beliefs, opinion, knowledge, or information held by individual)
  69. 69. Self and Self-Image  Self-image A person’s perceptions of his/her self  People have multiple selves Different selves in different situations
  70. 70. Different Self Images  Actual Self-Image How you see your self  Ideal Self-Image How you would like to see yourself  Social Self-Image How you think others see you  Ideal Social Self-Image How you would like others to see you  Expected Self-Image How you expect to be in the future  “Ought-to” Self The qualities that you think you should possess
  71. 71. Consumer Expectation.  Consumer Expectation may be defined as the desires or wants of the consumer. These expectations are in most instances, different from what the customer gets in a real-life situation from the organization
  72. 72. Consumer Expectations and Satisfactions  Consumer expectations and satisfaction also impact purchase decisions.  Expectations are defined as beliefs about a product’s or service’s attributes or performance at sometime in the future and are a key determinant of satisfaction.  Consumer Expectation + Lower customer service = Dissatisfaction.  Consumer Expectation+ Equal customer service= Satisfaction  Consumer Expectation + Higher customer service= Delighted Satisfaction
  73. 73. The Issues relating to Consumer Expectation.  Knowledge and Expectation of Consumer.  Level of Expectation  Customer Satisfaction  Performance Significantly below Expectations  Exceeding Expectations  Components of Expectations
  74. 74. Define Consumer Satisfaction Customer Satisfaction is the attitude-like feeling of a customer towards a product or service after it has been used. It is generally described as the full meeting of one’s expectation The Factors Influencing Consumer Satisfaction  Product  Sales Activity  After-Sales  Culture Various Benefits of Consumer Satisfaction  Loyalty  Repeat Purchase  Referrals  Retention(survey)  Reduced Costs  Premium Prices
  75. 75. Managing Consumer Satisfaction There are several things that marketers can to manage customer satisfaction and leverage it in their marketing efforts.  Understand what can Go Wrong  Focus on Controllable Issues  Manage Customer Expectations  Offer Satisfaction Guarantees  Make it Easy for customers to complain  Create relationship programs
  76. 76. Unit-IV
  77. 77. Socio-Cultural Socio-cultural environment refers to influence exercised by certain social and cultural factor on the purchase behavior of consumer. Such factors include culture , Social class , family and reference group etc. Socio –Cultural environment is interaction of social environment with cultural environment , etc . social environment refers to influence exercised by certain social institutions and social system, like family reference group etc . Cultural environment refers to influence exercised by cultural factor , viz ., customs , value system , habit , preferences , education , language, traditions , etc . .
  78. 78. Culture Consumer purchasing decisions are often affected by factors that are outside of their control but have direct or indirect impact on how we live and what we consume. One example of this are cultural factors
  79. 79. Culture is defined as the patterns of behavior and social relations that characterize a society and separate it from others. Culture conveys values, ideals, and attitudes that help individuals communicate with each other and evaluate situations An individual’s culture provides a frame of reference concerning acceptable behaviors, and as such, culture is a learned set of arbitrary values
  80. 80. Culture represents the behavior, beliefs and, in many cases, the way we act learned by interacting or observing other members of society. In this way much of what we do is shared behavior, passed along from one member of society to another. Yet culture is a broad concept that, while of interest to marketers, is not nearly as important as understanding what occurs within smaller groups or Sub-Cultures to which we may also belong. Sub-cultures also have shared values but this occurs within smaller groups. For instance, sub-cultures exist where groups share similar values in terms of ethnicity, religious beliefs, geographic location, special interests and many others.
  81. 81. Cultural Influences Culture is defined as the complex, sum total of knowledge, belief, traditions, customs, art, morals, law and any other habits acquired by people as members of a society. Culture of one society differs from that of another. Many of our actions and behavior as consumers stem from our cultural background.  MAGGI has now become an integral part of consumers preferring fast food. The societal culture has now drastically changed. Women, who were earlier considered as homemakers only have now stepped out of their homes and are engrossed with hectic schedules. They largely opt for such alternatives that are less time consuming and even healthy for their family.
  82. 82. Sub-Cultural Influences Sub-Cultural Influences Within a given culture, there are many groups or segments of people with distinct customs, tradition and behaviour, which set them apart from other people. All Indians share one common cultural heritage, but the Hindu Brahmins of Tamil Nadu are very different from the Hindu Bengalis of Calcutta in the same way as Kashmiri Hindus are different from the Hindus of Gujarat. Each of these people, within one cultural mainstream have uniquely distinct sub-cultures. They have their style of dress, food habits, religious traditions and rites(resources)all of which have implication for the marketer.Considering the local tastes and preferences that form a part of the subculture, MAGGI introduced its Rice Mania in Shahi Pulao for the North, Lemon Masala for the South and Chilli Chao for the Eastern parts of the country.
  83. 83. Characteristics of culture  Culture is invented  Culture is learned  Culture is socially shared  Cultures are similar but different  Culture is adaptive  Culture is organized and integrated
  84. 84. Cross Culture  Its dealing with or comparing two or more cultures  Cross-culture tries to bring together such relatively unrelated areas as cultural anthropology and established areas of communication. Its core is to establish and understand how people from different cultures communicate with each other and the culture of a society comprises the shared values, understandings, assumptions, and goals that are learned from earlier generations, imposed by the members of the present day society and passed on to the succeeding generations.
  85. 85. Cross culture values  Self oriented  Other oriented value  Environment oriented value Basic area for cross culture Analysis  Language  Different market segment opportunities  Difference in criteria for evaluating products and service  Difference in consumption pattern and perceived benefits of products and service
  86. 86. Social Class  Upper class categories  Middle class  Lower class  Working class
  87. 87. Group Meaning  A group consist of people who have a sense of relatedness as a result of interacting with each other .  An assemblage of persons or objects gathered or located together; an aggregation: a group of dinner guests; a group of buildings near the road.  Two or more figures that make up a unit or design, as in sculpture.  A number of individuals or things considered together because of similarities: a small group of supporters across the country.
  88. 88. Characteristics of group  More than one person  Sufficient interaction between member  Perception of themselves as a group  Allocation of certain roles to the members  Social relationship between member
  89. 89. Consumer relevant group  Family  Reference group
  90. 90. Family
  91. 91. Family  A group of people who are related to each other  A person's children  A group of related people including people who lived in the past  Two are more person related by blood , marriage etc
  92. 92. Characteristics of family  Culture  Sub-culture  Social class  Reference group  Geographic location  Children  Marriage
  93. 93. Reference Group Reference groups are used in order to evaluate and determine the nature of a given individual or other group's characteristics and sociological attributes. It is the group to which the individual relates or aspires to relate himself or herself psychologically. It becomes the individual's frame of reference and source for ordering his or her experiences, perceptions, cognition, and ideas of self. It is important for determining a person's self- identity, attitudes, and social ties. It becomes the basis of reference in making comparisons or contrasts and in evaluating one's appearance and performance.
  94. 94. Define Communication  Communication is the process by which information is transmitted between individuals or organization so that an understanding response results.  It is an important tool in the hand of marketing used by them to create a customer.  Communication can be defined as transmission of information and messages to consumer via the media of personal contact, mail, print tele/electronic means and broadcast The various Features of Communication  Communication is Unavoidable  Continuous process  Two-way Traffic  Role of Perception  Universal
  95. 95. How Communication Influence on Consumer Behaviour  Brand Switching: Some promotions encourage consumers to buy a different brand than the one they bought on an earlier purchase occasion, or had the intention of buying now.  Repeat Buying: Repeat purchase may result because of habit formation that may develop because the brand is bought more than once due to sales promotion.  Purchasing more or Accelerating Timing of Purchase: Purchasing more and accelerating (hurry) timing refers to those situations when consumers buy more than their immediate requirement or shift their purchase timing as a result of promotions.  Increasing Category Expansion and Consumption: Sales promotions are likely to stimulate demand by creating new occasions for purchase, or by increasing the consumption rate by consumers. How to Design an Effective Communication  Communication Strategy  Target Audience  Media Strategy  Message Strategy  Advertising Appeals
  96. 96. Communication process
  97. 97. Influence on consumer behavior