CONSUMER BEHAVIOUR

What products and services do we buy? Why do we buy? How often do we buy? From where do we buy etc? Are the issues which are dealt with in the discipline of consumer behavior

DEFINATION:Consumer behavior can be defined as these acts of individuals (consumers) directly involved in obtaining, using and disposing of economic goods and services including the decision processes that precede and determine these acts.

IMPORTANCE OF CONSUMER BEHAVIOUR FOR MARKETERS

1.

Consumer behavior is helpful in understanding the purchase behavior and preferences of different consumers. As consumers we differ in terms of our sex, age, education, income, occupation, family set-up, religion, nationality, social status. To successfully market to different market segments, the market needs appropriate marketing strategies which we can design only when he understands the factors which account for these differences in consumer behavior and tastes. In todays world of rapidly changing technology, consumer tastes are also characterized by fast changes. Consumer behavior provides invaluable clues and guidelines for

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marketers on new technological frontiers which they should explore. For example- CTV in lieu of B/W TV
4.

Consumer behavior is a process and purchase forms one part of this process. There are various psychological and environmental factors which influence this process, to the extent that the marketer can understand and manipulate the influencing factors, he can predict the behavior of consumers.

Thus the importance of consumer behavior lies in the fact that the behavior can be understood and influenced to ensure a positive purchase decision. The marketing managers interest lies exactly here i.e. to ensure that his marketing strategy results in purchase of the product.

TYPES OF CONSUMERS
All consumers can be classified as Personal Organizational All individuals fall into the category of personal consumer. All business organizations, government agencies and bodies, non business organizations such as hospitals, temples, and trusts are organizational consumers of goods and services purchased for running the organizations.

BUYER VERSUS USER

Often the person who purchases the product is not the person who actually consumers or uses the product. Question Who should be the subject of study in consumer behavior? Should we study buyer or consumer?

Many companies play safe and focus their promotion at both the user and the buyer. For example- Maggi Noodles- Mother and Children

A SIMPLE MODEL OF CONSUMER BEHAVIOUR

I N P U T External Influences Marketing Stimuli Stimuli Product Economic Price -Technological Promotion -Political Channel of distribution Consumer Decision Making Buyer Characteristics Buyer Decision Psychological Personal & -Process Cultural characteristics Consumer Decisions & Actions Product choice Brand choice Dealer choice Purchase timing Other -

-Social

Proces s

O U T P U T

 Purchase amount

EXAMPLE- A SIMPLE MODEL OF CONSUMER BEHAVIOUR

You are on your way home from work after a hot, long, tiring day. On the way you see a hoarding/ kiosk for a cola drink which promises to be cool, refreshing and tasteful. This hoarding/kiosk provides you a stimulus to stop at the nearest cold drink shop and drink a cola. All three brands (Pepsi, Coke and Thums Up) are available at the shop at a certain price.

You can recall some association with each of the three brands from the advertisements. You have seen on media viz T.V., hoardings, newspapers, magazines. You buy a particular brand of cola and consume.

The initial stimulus for this purchase and consumption was provided by the hoarding. This was further backed-up by other stimuli such as product display in the shop, watching other consumers buy a particular brand, a pop material, earlier satisfaction with a given brand etc. Your response to these stimuli results in the purchase of a particular brand. In between the process of receiving these stimuli and responding to them, you went through a decision making process.

 The stimuli, the process of decision making and response constitute a simple model of consumer behavior.

DETAILED MODEL OF FACTORS INFLUENCING CONSUMER BEHAVIOUR

Cultural Social Culture Reference Groups Psychological Sub-culture Motivation Family Perception Social Class Learning Role & Statuses Beliefs & Buyer Personality Attitudes Income Lifestyle stage Occupation Personal Age & Life cycle

MOTIVE When a need is sufficiently pressing, it directs the person to seek its satisfaction, it is known as motive. Primary Needs or motives

These are physiological needs which we are born with. For example- need for air, water, clothing & shelter.

Secondary Needs These are our acquired needs, which we have developed in response to the society & environment we live in. for exampleneed for power, prestige, esteem, affection, learning, status etc.

MASLOWS HIERARCHY OF NEEDS

Self Actualization Self Fulfillment Ego Needs, Prestige, Status, Success, Self respect Social Needs, Affection, Friendship, Belonging etc Safety & Security Needs, Protection, Stability etc Physiological Needs Food, water, Air, Shelter, Sex etc

Same product- Many segments- example- Bicycle One- for community Second- Recreational/Leisure Need Third- Need of a health aid

Fourth- for converting into rickshaw/cart Example- Generally consumers tend to perceive the quality of perfumes on the basis of Package Brand name Price & Manufacturers image PERCEPTION It can be described as how we see the world around us The different sights, sounds, smells, tastes & sensations that we feel are known as stimuli. Each person recognizes, selects, organizes & interprets these stimuli in his own individual manner based on his needs, values & expectations and this is known as perception since each individuals needs, motives and expectations are unique. Therefore each individual perception is unique. Perception helps to explain the phenomenon of why different individuals respond differently to the same stimulus under the same condition. As a marketing manager you are providing stimulus to your consumers through the physical shape, color, size, fragrance, feel, product taste, packaging, ads/commercials. But we all have an in built, screening system which helps us to select & recognize only the relevant stimuli & ignore all the others. There are three aspects of perception: Selective exposure Selective distortion

 Selective retention

SELECTIVE EXPOSURE People are more likely to notice stimuli which relate to their immediate needs. For the marketer, the implication is that he has to carefully and accurately identify his potential customers since other customers are not at all likely to notice the stimuli having identified the potential customers, the marketer has to ensure that the stimuli are interesting enough to attract and hold their attention. For example- Washing machines (Punjab), hair dye (goatRajasthan), Refrigerator (for storing goods & services) SELECTIVE DISTORTION When you attempt to fit information to suit your own ideas or personal meaning the process is known as Selective Distortion. Thus a marketer may find that his message is often not received in the intended manner but it is twisted in different ways by different consumers. SELECTIVE RETENTION People forget much of the stimuli which they receive and only retain that information which reinforces their values and decision. LEARNING New Born- instinctive behavior Adult- learned behavior For example- housewife has need for cutting down cooking timePressure Cooker Influencing stimuli-

 Various advertisements Positive feedback (friend) Window display Discount She buys and is satisfied with its performance her response to pressure cooker is reinforced. Satisfied housewife may settle for another product of same company (say oven) i.e. generalization of response. Consumers can be made to learn the desired behavior through an interplay of motives, stimuli cues, responses and reinforcements. BELIEFS AND ATTITUDES A persons belief- cooking oil X has lowest fat content. Belief based on real facts or notion or opinion- the person has. A belief is a descriptive thought that a person has about something. The belief that the customer has about a brand is important. Therefore it determine his behavior towards buying and using the belief constitute the brand image and if the customer has the wrong belief he is likely to generate negative image about the brand. The marketer must ensure that consumer have all relevant and correct information about the brand to facilitate formation of a positive image.

DETAILED MODEL OF FACTORS INFLUENCING CONSUMER BEHAVIOUR PERSONAL FACTORS

DEMOGRAPHIC FACTORS AND LIFESTYLE STAGE Age influences and buyers decision the need for different products and services changes with age. Babies and children need product like milk powder, baby foods and toys.

Young adults need- clothes, recreational and educational facilities, transportation and a host of other age and fashion related products.

The first factor influencing a buyers decision is his age need for different products changes with age. There are certain physiological differences between men and women which result in their having different consumption needs. For example:- women need certain specialized medical facilities, clothes and cosmetics. Their requirement is different from that of men. Consumption behavior is also influenced by the specific stage of the family life cycle.

DEMOGRAPHIC FACTORS AND LIFECYCLE STAGE

STAGE IN LIFE CYCLE

Single stage- young, unmarried people, living away from home

BUYING/BEHAVIOUR PATTERN
Few financial burdens. Spend on rent, food very basic kitchen equipment/furniture stereo systems etc Better off financially now, wife is usually working, highest purchase rate, spend on furniture, durables such as refrigerator, gas stoves, vacation etc. Spend maximum on home purchases, interested in new products, influence by advertising. Buy T.V., baby foods, cough, medications, toys etc Some wives return to work, better financial position, buy large sized packs, education, bicycles, house purchasing Financial position still better, spend on education, better furniture, cars, appliances etc. Spend on travel, recreation, health care, self improvement,

Young children newly married. No children

Full Nest- Youngest child under-6

Full Nest- Youngest child over-6

Full Nest- Old married couple with dependent children Empty Nest-

Older married couples, no children at home, have head still working Empty Nest- Older married, no children at home, head retired Solitary survivor Working

home improvement etc

Drastic reduction in income, buy medical appliances, Medicare products for health Likely to sell home, but income still good Reduced income, spend on medical products

EDUCATION AND OCCUPATION

Education widens a persons horizons, refines his tastes and makes his outlook more cosmopolitan. Occupation also shapes the consumption needs people following specialized occupations such as- photography, music, carpentry etc need special tools and equipment. Further the status and role of a person within an organization affects his occupation behavior. For example- chief executive buys 3 piece suits of best fabric; handmade leather briefcase junior manager in same organization may also buy similar thingsbut compromises on quality.

INCOME
The income which a person earns is an extremely important influence on his consumption behavior. He may aspire to buy certain goods and services but his income may become a constraint. Persons attitude towards spending vs saving and his borrowing power are also important.

 Small size packaging in sachets is meant for LIG customers. Luxury products are more income sensitive than necessities.

PERSONALITY
Personality is sum total of an individuals psychological traits, characteristics, motives, habits, attitudes, beliefs and outlooks. Personality is the very essence of individual differences in consumer behavior. Personality is defined as those inner psychological characteristics that both determine and reflect how a person responds to his environmental stimuli. Personality is enduring and ensures that a persons responses are consistent over time. Different types of personalities can be classified and each type responds differently to the same stimuli and personality can be used to identify and predict that response. For example- Charms cigarettes used by young, modern, carefree personality. Potential marketer segment students and other young people. Surfs Lalitaji- A middle class traditional forthright and objective housewife for appeal to a potential customer of surf.

LIFESTYLE
Lifestyles are defined as patterns in which people live; as expressed by the manner in which they spend money and time on various activities and interests. Lifestyle is a function of our motivations learning, attitudes, beliefs and opinion, social class, demographic factors, personality etc. Life style is measured by a technique known as psychographics. It involves measuring consumers responses to activities, interests and opinions (AIO) along with collecting information on demographic factors.

LIFESTYLE DIMENSIONS

ACTIVITIES Work Hobbies Social Vacation Entertainment Club Membership Community Shopping Sports

INTERESTS Family Home Job Community Recreation Fashion Food Media Achievements

OPINIONS Themselves Social issues Politics Business Economics Education Products Future Culture

DEMOGRAPH ICS Age Education Income Occupation Family Size Dwelling Geography City Size Stage in life cycle

Garden Vareli, Raymonds, Vimal textiles have based their promotional strategies on lifestyles.

DETAILED MODEL OF FACTORS INFLUENCING CONSUMER BEHAVIOUR CULTURAL FACTORS CultureThe study of culture encompasses all aspects of a society such as its religion, knowledge, language, laws, customs, traditions, music, art, technology, work patterns, products etc. All these factors makeup the unique distinctive personality of each society.

1.Formal learning

In which parents and elders teach children the proper way to behave. 2. Informal Learning In which we learn by imitating the behavior of our parents, friends, film actors/ artists in action. 3. Learning In which instructions are given about the specific method by which certain things have to be done such as printing, dancing, singing etc. Through a marketer can influence all the 3 types of learning through his companys advertising strategy. It is informal learning which is most amenable to such influences. The kind of products and advertising appeals that can work effectively in a society depend largely on its cultural background. For Eg:- In American society, individualism, freedom, achievement, success, material, confort, efficiency and practically are the values/products/services which fulfill thes e values are successfully marketed in America. In Indian society- conformity, spiritualism, respect for elders, tradionalism and education are few dominant cultural values. However our society is undergoing a cultural metamorphosis, some major cultural shifts have far reaching consequences for the introduction of a vast variety of new products and services. Some of these changes are Convenience Education

 Physical appearance

Materialis m

Convenience
With more women joining the work force there is an increasing demand for products like gas stoves, mixies, washing machine, precooked food, fast food outlets etc.

Education
People in our society today wish to acquire relevant education and skills that would help improve their career prospects , so many professional/ career oriented centres are coming up.

Physical Appearance
Physical fitness, good health and smart appearance are on a premium today so slimming centres and beauty parlors are mushrooming in major cities.

Sub Culture
A sub culture is an identifiable distinct, cultural group which while following the dominant cultural values of the overall society also has its own beliefs, values and customs that set them apart from other members of the same society. Sub cultural category Nationality Religion Race Age Sex Illustrative sub culture Indian, Pakistani, Sri Lankan Hinduism, Sikhism, Islam, Christianity Black, white, Asian Young, middle aged, elderly Female, male

Occupation Social class Geographic location

Farmer, teacher, doctor LIG,MIG,HIG South, north, eastern, western India

These subcultures o ffer readymade market segments to the marketer who can position his products to meet the specific needs, motivation, perceptions and attitudes of each sub culture. However the marketer may need to modify both his product and advertising appeal to suit their specialized needs. Each member of a society is a member of several groups( such as elderly, keralite, Christian, female, teacher.)

Social Class
Social classes can be defined as relatively permanent and homogeneous divisions in a society which individuals or families sharing same values, life styles, interests and behavior can be categorized. Social class is a concept based on distribution of status and the categories are usually ranked in a hierarchial order ranging from low to high status. Social status is an idea basis for segmenting the market.

Major social classes and their dominant characteristics and buying behavior patterns

Social class

Distinguishing characteristics
Elite of society, aristocrats, or top industrialists, inherited wealth; well known family background; spend money lavishly but in discreet, conservative taste. Top professionals, businessman who have earned rather than inherited money, style and taste is conspicuous and flamboyant, they seek professions which will reflect their status Professional careerists coming from middle class values of respectable buying conformity, emphasis is on good education, style is gracious & careful l.

Dominant consumption patterns

Upper Upper

Spend on property, homes, best education for children, frequent foreign vacations, antiques, jewellery, custom made cars Spend on large homes with flashy and expensive dcor, best education for children, imported cars, latest household gadgets, 5star hotels. Spend on buying quality products, irrespective of the category of product it is quality which is the most important feature, color TV, VCR, Maruti car are some of the products associated with this class. Spend a great deal of time shopping around for best bargain, they buy refrigerator, B/W TV, scooter, motor cycle etc B/W TV, gas stove, ceiling or table fan are bought but largely on hire purchase basis, if available

Lower Upper

Upper Middle

Lower Middle

White collar workers such as office workers, small businessman, traders, value neatness and cleanliness and want their home and professions to reflect this Poorly educated, semi- skilled factory workers, they comprise the largest social class segment. Their major motivation is security, purchase decision, often impulsive about exhibits a high degree of brand loyalty Often uneducated, at the bottom of the society and working as unskilled

Upper Lower

Lower Lower

Buy only the basic necessities of life

labor , live from day to day basis with little planning for future.

usually buy loose and unbranded products have no comprehension and value of brands.

SOCIAL FACTORS
Reference Groups The consumers decision to purchase and use certain products and services is influenced not only by psychological factors, his personality and life style, but also by the people around him with whom he interacts and various social groups he belongs to . A group is defined as two or more people who interact to achieve individual or common goals. The 3 categories of groups are

Primary & Secondary groups- A primary group is one with which an individual interacts on a regular basis and whose opinion is of importance to him. For eg:- family, neighbours, close friends, collegues and co-workers Secondary groups are those with which an individual interacts only occasionally and does not consider their opinion very important.

Formal & Informal groups- Rotary, lions, Jaycees are well known social groups in our society. A formal group has a highly defined structure, specific roles and authority positions and specific goals. An informal group is loosely defined and may have no specified roles and goals. For eg- meeting neighbours over lunch once in a month, for friendly exchange of news.

Membership & Symbolic groups- A membership group is one to which a person belongs or qualifies for membership. All workers in a factory qualify for membership to the labour union. Symbolic group is one in which an individual aspires to belong but is not likely to be recognized as a member. A head clerk in an office may act as if he belongs to the top management group by adopting their attitudes, values and modes of dress etc. Reference groups- are used in advertising to appeal to different market segments, group situation with which potential customers can identify are used to promote products and services. Hidden in this appeal in the subtle inducement to the customer to identify himself with the user of the product in question. The three types of reference group appeals are celebrities, experts and common man. celebrities experts Common man Film stars & sport Heroes Doctors, accountants, lawyers Lalitaji (surf)

Indirect reference groups comprise those individuals or groups with whom an individual does not have any direct face to face contact such as filmstars, TV stars, sportsmen, politician. Direct reference groups are ones which exert a significant influence on consumers purchase decision and behavior can be classified as Family Friendship groups

 Formal shopping groups Consumer action groups Work groups Family two families shape an individuals consumption behavior. 1. Family of orientation is the family in which an individual is born, consists of parents, brothers and sisters. 2. Family of procreation consists of consumers spouse and children. Within the family, different members play different roles, marketers want to find out exactly the role played by individual member. For egtraditionally wife purchases food, clothing and other household sundries, Husband plays a dominant role in the purchase of automobiles/insurance children are also beginning to exert their influence on family purchase decisions. TV, music system, personal computers etc. Roles An individual may participate in many groups has position within each group can be defined in terms of activities he is expected to perform. For eg:At workplace Individual Requires Reason manager 3 piece suit, tie, leather shoes To reflect status At home Spouse/parents Jeans/T-Shirt/ Kurta Pyjama Informal/comfort

Status

Each role a person plays has a status which is relative prestige according to society. People buy and use products which reflect their status. Group Norms The norms of a group are the implicit rules of conduct and behavior that are expected of its member. For eg:- multinational company in India Norm for office wear is shirt/tie even in summer Marketers need to identify the various groups to which potential consumers belong to market the products required. Conformity This implies that members of a group have adopted attitudes and behavior patterns that are consistent with the groups norms. In the context of consumer behavior it refers to the percentage of members who knowingly use the same brand of product. Opinion leaders Apart from family, a consumer is influenced by the advice he receives from his friends, neighbours, relatives and collegues about what products and services he should buy. This process of influencing is known as the opinion leadership process and is described as the process by which the opinion leaders normally influences the actions and attitudes of others. The advice of opinion leaders is sought in case of specific products. People who have acquired considerable knowledge and experience in a

particular field are considered as opinion leaders in that area. Advertisers/marketers are therefore concerned with reaching opinion leaders. Diffusion of Innovation The acceptance of new products, brands and ideas is known as the diffusion of innovation. Marketers are concerned with spread or diffusion of this innovation.

CONSUMER BEHAVIOR- DECISION

DECISION In between the stage of receiving the stimuli and responding to it, the consumer goes through the process of making his decision. A decision is the selection of an alternative out of the several number of alternatives available. LEVELS OF CONSUMER DECISIONS As a buyer are consumer, we are all the time making decisions such as

1. What product to buy 2. Which brand to buy 3. From where LEVELS OF PURCHASE RELATED CONSUMER DECISIONS FOR PERSONAL TRANSPORT ALTERNATIVE 2 wheel or 4 wheel vehicle POWER DRIVEN Scooter, motor cycle, moped, car, jeep Brand level Car Maruti, Chevrolet Motor cycle Jeep Yamaha, Hero Honda, Bajaj M&M, Tata Sumo Moped Kinetic, Luna etc Scooter Bajaj, Honda, Kinetic

Type of Retail Outlet Company showroom, exclusive brand dealer outlet Multinational brand dealer outlet Dealer outlet near home/recommended Dealer outlet with servicing facility

PROCESS OF DECISION MAKING Making a decision is a rational and conscious process in which the consumer evaluates each of the available alternatives to select the best amongst them. Each decision you make involves an elaborate mental thought process, a degree of active reasoning, though on the surface it may not always seen to be so. For eg:- Daily Bread- Decision variable, brand quantity, retail outlet Sofa set- Decision variable, far more in number Readymade/ made to order From shop/ to be built at home Type of material and design Three factors1. Involvement 2. Alternative differentiation 3. Time pressure Which influence the degree of active reasoning undertaken by the consumer in his process of decision making. INVOLVEMENT When a product is perceived to be of great personal importance to the customer, such as personal clothing, or its purchase involves a great deal of money or risk viz jewellery, car , home, company shares the level of involvement is likely to be very high the consumer is likely to spend a great deal of time before arriving at the final decision. In contrast when buying items which do not

reflect much on the consumers personality or their purchase involves small amounts of money or the risk associated with them is not high, the degree of involvement of the consumer is likely to be low. For eg:- toilet soap, tooth brush. Biscuits, shoe polish etc. TIME PRESSURE When we are under pressure to make a decision quickly we cannot afford to spend a long time finding out about the various products or brands. We probably buy whichever is readily available For eg:- purchase of car tyre/tube under emergency on the road when it bursts and purchase when we need to buy tyres. DIFFERENTIATION When the consumer perceives that the various alternatives which are available are very different from one another in terms of their features and benefits offered, he is likely to spend more time in gathering information and evaluating these different features. On the other hand, in case of products which are not very different from one another either in terms of their features or benefits offered, the consumer is bound to perceive them as being almost the same and buy the first available product/brand which satisfies his minimum expectations. TYPES OF PURCHASE DECISION BEHAVIOR- THREE TYPES OF BUYING BEHAVIOR Routinised response behavior Limited problem solving Extended problem solving

ROUTINISED RESPONSE BEHAVIOR (RRB) this occurs when the consumer already has some experience of buying and using the product consumers do not give much thought or time. When buying such products and already have a preferred brand. The degree of involvement in buying such products is low. Frequently purchased and low cost products such as razor blades, coffee powder, tooth paste, soap, soft drinks etyc fall in this category. Marketers dealing in products involving RRB must ensure the satisfaction of existing customers by maintaining consistent quality service and value. LIMITED PROBLEM SOLVING (LPS) In this type of buying behavior, the consumer is familiar with the product and the various brands available, but has no established brand preferrance. The consumer would like to gather additional information about the brands to arrive at him brand decision. For eg:- Branded refined oils (shopkeepers view) LPS also takes place when a consumer encounters an unfamiliar brand in a known product category. For eg:Saffola The marketers task in a situation where he is introducing a new brand in a well known product category is to design a communication strategy that gives complete information on all the attributes of the brand thus increasing the consumers confidence and facilitating his/her purchase decision. EXTENSIVE PROBLEM SOLVING (EPS) EPS occurs when the consumer is encountering a new product category. He needs information on both the

product category as well as the various brands available in it. The marketing strategy for such buying behavior must be such that it facilitates the consumers information gathering/learning process about the product category and his own brand. The marketer must be able to provide his consumer with a very specific/unique set of positive attributes regarding his own brand so that the purchase decision is made in his favor. The concept of EPS is most applicable to new products. The product may be new at the generic product concept level (magi noodles) or it may be an established product concept but new for a particular consumer (tribal exposed to concept of toothpaste).

STAGES IN THE BUYER DECISION PROCESS

In making a purchase decision the consumer goes through the five stages of 1. Problem recognition 2. Pre-purchase information search 3. Evaluation of alternatives 4. Purchase decision 5. Post purchase behavior However, in case of routine purchases, the consumer may skip the second & third stages and straight away go the stage of purchase decision. Problem recognition- the buying process starts with the buyer recognizing a need or a problem Pre-purchase information search- External & Internal

Internal- refers to recalling relevant information stored in the memory. External- refers to deliberate and voluntary seeking of information, recognized the product/brand under consideration which can be from1. Personal sources- family, friends, collegues, neighbors 2. Commercial sources- advertisements, retailers, salesperson 3. Public sources- seeing others, consumer information centres EVALUATION OF ALTERNATIVES Commonly used criteria Product attribute Relative importance Brand image Attitudes towards the different brands/alternatives under consideration The stage of the buying decision process gives the marketer a chance to modify his product offering in keeping with the relative importance attached to each attribute by various consumer segments, altering beliefs and attitudes about his own brand and calling attention to neglected product attributes. PURCHASE DECISION Consumer end up buying a brand which is not his most preferred because of

Shopkeepers influence

 Preferred brand not available Attractive incentive on other brand POST PURCHASE BEHAVIOR After purchasing the product if consumer finds that its performance/utility matches up to his expectation, satisfaction occurs. Satisfaction will reinforce customers perceived favorable image of the brand which can get extended to the entire range of products manufactured by the company. Customer may also strongly recommend the brand to others. However if the product is not upto his expectationdissatisfaction results. The customer may decide to stop buying other products of the company and inform people known to him/her about the poor quality performance of the product.