CONSUMER BEHAVIOR (AN OVERVIEW)

Who is a Consumer?
Any individual who purchases goods and services from the market for his/her end-use is called
a consumer. In simpler words a consumer is one who consumes goods and services available in
the market.
What is consumer Interest?
Every customer shows inclination towards particular products and services. Consumer interest
is nothing but willingness of consumers to purchase products and services as per their taste,
need and of course pocket.
Meaning of Behavior- A response of an individual or group to an action, environment, person,
or stimulus. It is a mirror in which everyone shows his or her image. Behavior is the process of
responding to a thing or event.
DEFINITIONS:
In the words of Kotler, Consumer Behavior is the study of people of how people buy, what
they buy, when they buy, and why they buy, ".
Consumer behavior can be defined as the activities and the actions of people and organization
that purchase and use economic goods and services, including the influence on these activities
and actions. JF Engel
Consumer buying behavior refers to the buying behavior of final consumers individuals and
households who buy goods and services for personal consumption. Kotler and Armstrong
Consumer behavior consists of the acts of individuals in obtaining, using and disposing of
economic goods and services, including the decision processes that precede and determine these
acts. Kurtz
Consumer behavior may be defined as the behavior that consumers display in searching for,
purchasing, using, evaluating and disposing of produces, services and ideas which they expect
will satisfy their needs. Schiffman and Kanuk
Thus, the study of consumer behavior is the study of how individuals make decisions to spend
their available resources-money, time and effort-on consumption-related items.
Consumer behavior focuses on how individuals make decisions to spend their available
resources (time, money, effort) on consumption-related items that includes what they buy, why
they buy, when they buy it, where they buy it, how often they buy it, how often they use it, how
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they evaluate it after the purchase and the impact of such evaluations on future purchases, and
how they dispose of it.
TWO DIFFERENT KINDS OF CONSUMING ENTITIES: the personal consumer and the
organizational consumer.
Personal Consumer -Buys goods and services for his or her own use, for the use of the
household or as a gift for a friend. The products are bought for final use by individuals, who are
referred to as end users or ultimate consumers.
Organizational Consumer - Includes profit and non-profit businesses, government agencies
(local, state, national) and institutional (e.g. schools, hospitals, and prisons), all of which buy
products, equipment, and services in order to run their organizations.
IMPORTANCE OF STUDYING CONSUMER BEHAVIOR:
The field of consumer behavior studies deal with how individuals, groups and organizations
select, buy, use and dispose of products and services to satisfy their needs and desires. Thus,
according to Webster, Buyer behavior is all psychological, social and physical behavior of
potential customers as they become aware of, evaluate, purchase, consume and tell other people
about products and services.
As a matter of fact, customer is the pivot around which the whole industrial of nowadays
revolves. The economists call the customer a king. He is just like a voter in democracy. His
selection of goods or services determines the fate of products/services. Therefore, in order to
attract him more and more, the marketers should know their customers well so that they could
treat them in the way they like to be treated, present the goods in the way; they will appreciate
and close a sale in such a way that consumer satisfaction is created.
The study of consumer behavior is very useful in determining the form, style, packaging, brand,
trademark etc., of the product. The whole aspect of buying behavior determines the durability,
price policy and utility aspect in goods. The consumer or buyer behavior is extremely important
for an effective marketing planning.
The success or failure of marketing depends largely on target consumers individual and group
reaction that manifest in the buying patterns. The buyer behavior is concerned with the study of
factors that influence a person to buy or not to buy. Its concept lies in understanding the
consumer and his motives and therefore, involves seeking answers to pertinent questions like:
Why a buyer buys or does not buy a particular brand or product?
Does a buyer devote much time and study to comprehend the benefits of a product and its
services? Does a buyer buy due emotion or impulse? Does a buyer imitate others? What factors
does a buyer take into consideration in the buying decision?
THE STUDY OF CONSUMER BEHAVIOUR EXPLAINS AS TO:
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-Why and why not a consumer buys a product?

-When a consumer buys a product?
-How a consumer buys a product?
In a laymans language consumer behavior deals with the buying behavior of individuals.
The main catalyst which triggers the buying decision of an individual is need for a particular
product/service. Consumers purchase products and services as and when need arises.
According to Belch and Belch, whenever need arises; a consumer searches for several
information which would help him in his purchase.
FOLLOWING ARE THE SOURCES OF INFORMATION:
-Personal Sources
-Commercial Sources
-Public Sources
-Personal Experience
Perception also plays an important role in influencing the buying decision of consumers.
BUYING DECISIONS OF CONSUMERS ALSO DEPEND ON THE FOLLOWING
FACTORS:
Messages, advertisements, promotional materials, a consumer goes through also called selective
exposure.
Not all promotional materials and advertisements excite a consumer. A consumer does not pay
attention to everything he sees. He is interested in only what he wants to see. Such behavior is
called selective attention.
Consumer interpretation refers to how an individual perceives a particular message.
A consumer would certainly buy something which appeals him the most. He would remember
the most relevant and meaningful message also called as selective retention. He would
obviously not remember something which has nothing to do with his need.
STAGES IN CONSUMER DECISION MAKING PROCESS
An individual who purchases products and services from the market for his/her own personal
consumption is called as consumer

The consumer decision-making process consists of five steps, which are need recognition,
information search, evaluations of alternatives, purchase and post-purchase behavior. These
steps can be a guide for marketers to understand consumers communicate effectively to them.
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One note is that consumers do not always move in the exact order through the process; it can
depend on the type of product, the buying stage of the consumer and even financial status.
A consumer goes through several stages before purchasing a product or service.
NEED

INFORMATION GATHERING/SEARCH

EVALUATION OF ALTERNATIVES

PURCHASE OF PRODUCT/SERVICE

POST PURCHASE/EVALUATION
Step 1 - Need is the most important factor which leads to buying of products and services. Need
in fact is the catalyst which triggers the buying decision of individuals.
An individual who buys cold drink or a bottle of mineral water identifies his/her need as thirst.
However in such cases steps such as information search and evaluation of alternatives are
generally missing. These two steps are important when an individual purchases expensive
products/services such as laptop, cars, and mobile phones and so on.
Step 2 - When an individual recognizes his need for a particular product/service he tries to
gather as much information as he can.
An individual can acquire information through any of the following sources:
Personal Sources - He might discuss his need with his friends, family members, co-workers and
other acquaintances.
Commercial sources - Advertisements, sales people, packaging of a particular product in many
cases prompt individuals to buy the same, displays (Props, Mannequins etc.)
Public sources - Newspaper, Radio, Magazine
Experiential sources - Individuals own experience, prior handling of a particular product (You
would definitely purchase a Dell laptop again if he had already used one)
Step 3 - The next step is to evaluate the various alternatives available in the market. An
individual after gathering relevant information tries to choose the best option available as per
his need, taste and pocket.
Step 4 - After going through all the above stages, customer finally purchases the product.
Step 5 - The purchase of the product is followed by post purchase evaluation. Post purchase
evaluation refers to a customers analysis whether the product was useful to him or not, whether
the product fulfilled his need or not?
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CHARACTERISTICS OF CONSUMER BEHAVIOR ARE:

Consumer behavior is the part of human behavior. This cannot be separated. Human
behavior decides what to buy, when to buy, etc. This is unpredictable in nature. Based on the
past behavioral pattern one can at least estimate like the past he might behave.
Learning the consumer is difficult and complex as it involves the study of human beings.
Each individual behaves differently when he is placed at different situations. Everyday is a
lesson from each and every individual while we learn the consumer behavior. Today one may
purchase a product because of its smell , tomorrow it may vary and he will purchase another
due to some another reason.
Consumer behavior is dynamic. A consumers behavior is always changing in nature. The
taste and preference of the people vary. According to that consumers behave differently. As the
modern world changes the consumers behaving pattern also changes.
Consumer behavior is influenced by psychological, social and physical factors. A consumer
may be loyal with a product due to its status values. Another may stick with a product due to its
economy in price. Understanding these factors by a marketer is crucial before placing the
product to the consumers.
Study of Consumer behavior is crucial for marketers. Before producing a product or
launching a product, he has to go through a clear analysis of the consumer behavior. If the
people or prospects reject the product, he has to modify it.
Consumer behavior is a continuous process starts before the buying and continuing after
purchasing. Before buying there will be high confusions and expectations about the product.
After buying it, if the buyer is satisfied with the product he shows a positive behavior, otherwise
negative.
TOP 5 IMPORTANT FACTORS INFLUENCING CONSUMER BEHAVIOUR
Some of the most important factors influencing consumer behavior are as follows:
A. Marketing Mix Factors
B. Cultural Factors
C. Social Factors
D. Personal Factors
E. Psychological Factors
The study of consumer behavior indicates how individuals, groups and organizations select,
buy, use and dispose goods, services, ideas, or experiences to satisfy their needs and desires.
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Consumer behavior is affected by several factors. Marketers need to have a good knowledge of
the factors affecting the consumer behavior.
ECONOMIC FACTORS THAT AFFECT CONSUMER BEHAVIOR
The success or failure of a nation's economy can greatly affect consumer behavior based on a
variety of economic factors. If the economy is strong, consumers have more purchasing power
and money is pumped into the thriving economy. If the economy is struggling, the reverse is
true. A struggling economy affects factors such as employment and interest rates, and the people
may lose consumer confidence.
-Supply and Demand
The law of supply and demand demonstrates the relationship between supply, demand and
prices. As demand drives upward, so do the prices. This relationship attracts more suppliers,
serving to not only stabilize the prices but also to keep the demand at healthy consumer levels.
Supply and demand affect consumer behavior because if a product is too expensive, consumer
demand for that product will decrease.
-Interest Rates
Interest rate fluctuations affect consumer spending because when rates are high, consumers are
less inclined to borrow money from the banks to purchase big-ticket items such as a house or a
car. Interest rates determine a consumer's purchasing power.
-Inflation
An increase in inflation means an increase in prices. This affects whether or not a consumer is
able to afford the higher price. Inflation especially affects consumer behavior when wages do
not increase to accommodate the increase in prices.
-Unemployment
Unemployment affects consumer behavior because if a person is without a steady income, his
purchasing power decreases considerably.
DEVELOPMENT OF THE MARKETING CONCEPT AND THE DISCIPLINE OF
CONSUMER BEHAVIOUR:
MARKETING CONCEPT, A BUSINESS ORIENTATION
-The field of consumer behavior is rooted in the marketing concept, a business orientation that
evolved in the 1950s through several alternative approaches toward doing business referred to
respectively:
1) The Production Concept -Consumers prefer products that are widely available and
inexpensive. The production concept is more operations oriented than any other concept.
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2) The Product Concept - Consumers favor products that offer the most quality,
performance, or innovative features.
3) The Selling Concept- Consumers will buy products only if the company aggressively
promotes or sells these products.
4) The Marketing Concept- Focuses on needs/wants of target markets & delivering value
better than competitors.
5) The Societal Marketing Concept- Focuses on needs / wants of target markets & delivering
value better than competitors that preserves the consumers and societys well-being.

IMPLEMENTING THE MARKETING CONCEPT:

-To identify unsatisfied consumer need, companies had to engage in extensive marketing
research. The marketing concept underscored the importance of consumer research.
- The strategic tools that are used to implement the marketing concept include segmentation,
targeting, positioning and the marketing mix.
THE ROLE OF CONSUMER RESEARCH:
Consumer research is an important part of any company. Most large corporations allocate large
budgets to consumer research because they know how valuable the information gained from
listening to consumers is. However, large corporations are not the only companies that can
benefit from consumer research. Even a small one location business could benefit tremendously
by asking its customers for feedback. Consumer research helps companies improve their
products and generate new ideas based on consumer demand.
Consumer Research -describes the process and tools used to study consumer behavior.
Marketing Mix Factors:
Each component of the market mixproduct, pricing, promotion and place of distributionhas
a direct or indirect impact on the buying process of the consumers.
1. Product:
The special characteristics of the product, the physical appearance and the packaging can
influence the buying decision of a consumer.
2. Pricing:
The price charged on the product or services consumed by the consumer affect the buying
behavior of the consumers. Marketers must consider the price sensitivity of the target customers
while fixing prices.
3. Promotion:

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The variables of promotion mix such as advertising, publicity; public relations, personal selling
and sales promotion affect the buying behavior of the consumers. Marketers select the
promotion mix after considering the nature of the target audience.

4. Place:
The channels of distribution and the place of distribution affect the buying behavior of the
consumers. The marketers make an attempt to select the right channel and distribute the
products at the right place.
CUSTOMER VALUE, SATISFACTION, AND RETENTION:
Savvy marketers today realize that in order to outperform competitors they must achieve the full
profit potential from each and every customer. The three drivers of successful relationship
between marketers and customers are customer value, high levels of customer satisfaction, and
building a structure for customer retention.
1) PROVIDING CUSTOMER VALUE:
Customer value is defined as the ratio between the customers perceived benefits (economic,
functional and psychological) and the resources (monetary, time, effort, psychological) used to
obtain those benefits. Perceived value is relative and subjective.
Example: McDonalds Corporation to deliver the companys four core standards; quality,
service, cleanliness, and value.
WHY FOCUS CUSTOMER VALUE?
A customer is the most important visitor on our premises. He is not dependent on us. We are
dependent on him. He is not an interruption of our work. He is the purpose of it. He is not an
outsider of our business. He is part of it. We are not doing him a favor by serving him. He is
doing us a favor by giving us the opportunity to do so.
-Mahatma Gandhi
This is a philosophy well worth absorbing and putting at the heart of all customer interactions.
2) CUSTOMER SATISFACTION:
Customer satisfaction is the individuals perception of the performance of the product or service
in relation to his or her expectations.
3) CUSTOMER RETENTION:
Customer retention makes it in the best interest of customers to stay with the company rather
than switch to another firm.
- Loyal customers buy more products.
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- Loyal customers are fewer prices sensitive and pay less attention to competitors advertising.
- Servicing existing customers, who are familiar with the firms offerings and processes, is
cheaper.
- Loyal customers spread positive word of mouth and refer other customer.

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