Consumer Behaviour

CB is routed in Marketing concept, which emerged around 1950s.

Earlier,
o Production concept : assumes that, consumers are mostly
interested in product availability at low prices and marketing
objectives should be cheap, efficient production and intensive
distribution.
o

Product Concept : Consumers will buy the product that offers

them the highest quality, best performance and most features
Product orientation leads to strive for improving product quality
and add features which are technically feasible, without knowing
whether consumers want it.
This too much focus on product is termed as marketing myopia,
concept by Levitt.
Marketing myopia causes a company to ignore crucial changes in
the market place, because it causes the marketers to look in the
mirror rather than through the window.
Examples :
People do not buy PDAs they buy the ways to organize their data.
People do not buy drill bits , they buy ways to make holes.

Selling Concept : was a natural evolution of production and

product concept. It believes that, consumers are unlikely to buy
the firms products unless they are aggressively persuaded to do
so.

Marketing Concept : Consumers needs and wants as primary

focus
Implementation of marketing concept is based on three pillars
Market segmentation
Targeting
Positioning Developing distinct image through USP
(value proposition)

Customer value, satisfaction and retention

Customer value is the ratio of perceived benefits to perceived

cost. Benefits include economic, functional or psychological
benefits. Costs include money, time, effort, psychological.
Perception differs from customer to customer. Customer is
satisfied if customer value exceeds customer expectations.
Many companies control customer expectations for assured
satisfaction through standard product offering

Example : McDonalds offers standard product across world i.e.

quality, service, cleanliness and value

Winning new customers requires 10 times more expenditure than

retaining existing customers.
Loyal customers buy more, are less price sensitive, pay less
attention to competitors campaign, servicing them is cheaper and
they spread positive word of mouth.
Firms maintain selective relationship with customers. Examples
o Share brokers
o Banking services
o Credit card companies
o Companies selling multiple consumer durables.
Customer life-time value (CLV) is taken into consideration as every
interaction with consumer is viewed not as a part of transaction but
as a part of customer relationship.

Model of Consumer Behaviour

It is a three stages model of input, process and output as follows Input (external influences)
Firms marketing efforts
Product
Price
Place
Promotion

Socio Cultural Environment

Family
Informal Sources
Non Commercial Sources
Social Class
Culture and subculture

Process
Need Recognition
Information Search
Evaluation of Alternatives

Psychological Field
Motivation
Perception
Learning
Personality
Attitude

Experience
Output (Purchase decision and post-purchase behavior)
Purchase
Trial
Repeat Purchase

Post Purchase Evaluation

Satisfaction/Dissatisfaction
Disposal of product

Cultural factors

Culture at three levels

o Supra national Regional (European, asian)
o National Spanish, Indian
o Group Level
(subculture) Maharashtrian, Bengali, asianamerican

Social Classes : Relatively homogeneous and enduring divisions in a

society, which are hierarchically ordered and whose members share
similar values, interests and behaviours.

Social Class = Social status. It depends on purchasing power or

material possession.

Aspiration of higher social class leads to conspicuous consumption.

Psychological Factors

Motivation is the driving force within individuals that impels them to

action
Unfulfilled needs leading to tension Drive Behaviour Need Fulfillment
Cycle continues till needs are fulfilled or tension reduces to zero.
Motivation can be positive or negative.

Personality

Those inner psychological traits that determines how a person

responds to his environment.
Consumers could be profiled based on personality. Eg. Identifying
characteristics of chicken soup lovers.

Brand personality is developed to take it closer to targeted customers.

Eg. Nike athlete in you, BMW performance driven, Toyota Quality,
Emami mens cream
Brand personality could be associated to gender. Eg. Emami mens
cream, Pulser male, fair and lovely feminine.
Personality and colour Coca cola Excitement Red, Yellow
novelty, Black sophistication

Types of CB

Based on two parameters involvement in purchase (High, low) on X

axis, Perceived differences in available brands (High, Low) on Y axis.
Leads to a matrix of four zones
(Low, Low) Habitual buying behavior eg salt, oil
(Low, High) Variety seeking eg apparels, restaurants
(High, Low) Dissonance reducing eg Television
(High, High) Complex behavior eg house, car

Buying Roles

Initiator
Influencer
Decider
Buyer
User

Reference Groups
Any person or group that serves as point of comparison (reference) for an
individual in forming general or specific attitude, values or behavior.
Reference group forms frame of reference for purchase decisions.
Reference groups are

Family
Friendship groups
Shopping group
Work group
Virtual groups or communities
Brand communities (Nike, Apple, Samsung mobile)

Industrial Buying Business Markets Vs. Consumer markets

Fewer buyers
Large buyers
Close supplier-customer relationship
Geographically concentrated buyers
Derived demand
Inelastic demand
Fluctuating demand
Professional Purchasing
Direct purchasing
Reciprocity of Demand
Leasing