UNIT I
INTRODUCTION
LESSON 1:
INTRODUCTION TO CONSUMER
BEHAVIOUR
Introduction
As a consumer we are all unique and this uniqueness is reflected
in the consumption pattern and process of purchase. The study
of consumer behaviour provides us with reasons why consum-
ers differ from one another in buying using products and
services. We receive stimuli from the environment and the
specifics of the marketing strategies of different products and
services, and responds to these stimuli in terms of either
buying or not buying product. In between the stage of receiving
the stimuli and responding to it, the consumer goes through
the process of making his decision.
Objectives
After reading this lesson you should be able to:
• Understand the development of the marketing concept.
• Define customer value, satisfaction, and retention.
• Exploring the link between marketing and Customer
orientation
• Definition, role and importance of consumer behavior for
a marketer
• Identify the major factors that influence a consumer’s
purchase decision and behavior
• A simplified model of the consumer decision-making
framework
• Define consumer behavior.
• Describe the societal marketing concept.
1. Marketing and Customer Orientation
To introduce you to the concept of consumer behaviour, let us
first understand about the discipline of consumer behaviour in
relation to marketing.
1.1 What is Marketing?
Marketing on the one hand is a business philosophy and on the
other an action oriented process. The philosophy - also termed
as marketing concept - has its roots in market economy. There
are four critical ideas that form the foundation of such an
economy:
• Individuals pursue their self-interest to seek rewarding
experience
• Their choices determine as to what would constitute such
experience, the choices themselves being shaped by
personal (taste) and external (cultural) influences.
• Consumers enjoy the freedom to choose; they are
sovereign.
• This freedom ensures free and competitive exchange
between “buyers and sellers”.
Marketing in turn is based on these four principles.
Thus Marketing can be defined as a
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11.623.3
CHAPTER 1:
THE STUDY OF CONSUMER BEHAVIOUR
‘Process that aims at satisfying individual and organiza-
CONSUMER BEHAVIOUR
tional needs by creating, offering and exchanging
competitively made products that provide value to the
buyers’
Today our focus is on customer. Objectives like revenue, profit,
market share, etc. Re important, but they will flow only by
acquiring customer competence. In our country particularly the
customer, even as late as in 1980s, was bereft of alternatives; he
would uncomplainingly buy whatever the seller dished out. Not
any more. Today’s choice empowered customer, supported by a
competitive environment, global quality, and new economic
realities, decides the fate of the marketer.
So let’s define Marketing once more: “It is a total business
philosophy aimed at identifying the needs of each customer
group, then designing and producing product / service package
so as to serve the groups more effectively than the competi-
tors”.
This definition reveals three key dimensions of marketing:
• It seeks to identify customer needs: Many manufacturers
would know all there is to know about relevant production
technology, but nothing about their customers’ wants.
They may design products with fancy features without
considering the perceived value of such features to their
buyers. Then they wonder why their sales staff fails to
push the product in the market.
• Marketing attempts to select customer groups for
which it can develop a competitive edge: Companies
taking a shotgun approach - meaning all things to all
people - inevitably end up with sackful of unsold product
inventories. Those companies which concentrate their
limited resources on meeting specific needs of the
customer have better chances of succeeding.
• It designs and produces the right product packages:
when a company attempts to sell a Mercedes while the
customer is demanding a Zen sized car, failure will greet it
with open arms.
1.2 Major Concepts in Marketing
A course in Consumer Behaviour uses certain terms repeatedly.
It would be desirable therefore that you learn their meaning
from the beginning itself.
Needs and Wants
The satisfaction of buyers’ needs is at the heart of a market
economy, and is the core theme of Marketing. To put it more
simply, a need is a feeling of being deprived of something
desirable.
You may be in a state in which you are not feeling satisfied (say
you are feeling hungry). So you visualize—a more desirable (but
unattained, yet) state, that of having a full stomach. Hence there
1
 is a gap between your current state (hunger) and desirable state among the sellers, and consequent excess of supply over
CONSUMER BEHAVIOUR

(satiated palate). This gap leads to a need being felt. existing demand, the buyer rules over the seller. On the other
To take another example, if you had been happy with your hand, in a seller’s market competition is restricted for any
already attained qualifications, you would not have enrolled for number of reasons. So the buyer is at the mercy of the seller.
this course! Pause For Thought #
Wants are somewhat different. While needs are basic to human Can you say why people brush their teeth? Answer seems
beings, (since nobody ever needs to tell us that we need to feel simple. But now check against the following: Those who are
hungry, thirsty, etc.) wants are not. Later in our life when we hypochondriacs are concerned about germs and are swayed by a
become part of various informal and formal groups (family, ‘decay prevention’ appeal. Another group, mostly extroverts,
friends, school, club, workplace, etc) we develop the concepts of brushes teeth to give them brightness and shine. But a majority
friendship social approval, beauty, and so on. These are our just want a tingling, fresh sensation as a part of their ritual of
acquired needs. The product concept that adequately satisfies starting a day fresh. Such research makes the marketers better
our biogenic or acquired needs becomes successful. Infact the prepared to meet the needs of various categories of customers.
job of the marketer is to identify unfulfilled / inadequately
fulfilled / partially fulfilled need. But then today a need can be 1.4. Consumer Focused Marketing
met in a number of alternative ways. A variety of products can Once a marketer identifies an unfulfilled need, or partially
satisfy the same need. Wants exist for those objects that can fulfilled one, he has an opportunity to exploit. To this end he
potentially satisfy a need. A visually impaired person can either has to determine the appropriate marketing mix. According to
wear spectacles, contact lenses, or now he can go in for corrective Stanton: “Marketing Mix is the term used to describe the
surgery. combination of the four inputs that constitute the core of a
At this point we must also note that a consumer’s behaviour is company’s marketing system: the product, the price structure
conditioned by the perception about a marketer’s offering. This the promotional activities, and the placement system”. The
perception may or may not match reality. For example, in India marketer has to track the consumer behaviour constantly and
a common perception is that ready to eat food items lack that adjudge an optimal combination of these marketing mix
home touch; they are cold and clinical. Home
made foods in contrast are warm and live unless PRODUCT PRICE PROMOTION PLACEMENT
this perception is changed, acceptance of such • Basic product • Basic • Personal • Channels of
products is likely to be limited. and its features. price, selling; sales distribution:
Product / Service • Design, quality, discounts, force types of
If we use marketing parlance a product is anything model, style, rebates. characteristics intermediaries.
that can satisfy our needs and wants. That is, it could appearance, size • Payment • Advertising, • Physical
be a physical object, or a service, or an idea which • Packaging and terms, media, and distribution,
can be offered to a potential user for adoption / labeling installmen message warehousing,
practice / consumption. By studying consumer • Branding and t facilities choices etc.
buying behaviour companies can identify needs trademark • Price • Sale
that can be met by offering a suitable product. • Service: Pre, fixation; promotion,
Incidentally, a customized product is one, which during, post sale. free or displays,
is made according to individual customer’s administer contests, etc.
specifications. ed price • Publicity and
public
Exchange relations.
A marketer makes an offer because he hopes that
the buyer will accept it. And in turn the buyer will factors so that best sales are generated. Any mistake or delay can
give something of value to the marketer. Whether or not an cost a marketer dear.
exchange will take place would therefore depend on a match/
Figure –1.1: marketing mix variable
mismatch between the gain (the satisfaction receivable) and the
sacrifice (the price payable) in customer perception. Product
We as customers view a product as a ‘bundle of satisfaction’
1.3. Customer Focus and not merely the physical object. We gives importance to both
In India marketing as a discipline has evolved at a leisurely place, the tangible and intangible attributes of a product. Intangibles
dictated of course by circumstantial factors. Most markets being provide psychological and social benefits for the buyer. If
seller’s markets (i.e. where seller dominates over the customer) product attributes don’t benefit a customer, they have no
until recently, marketing philosophy was an alien concept for an significance for him. That is why during 2000-2001 midsize cars
Indian seller. In a broad sense all the markets can be divided had a better sales growth rate than smaller cars; Maruti-800 sales
into two categories: seller’s market and buyer’s market. A buyer’s actually declined.
market is one where due to prevailing intense competition

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2 11.623.3
Branding
A firm brands its product to provide it a distinct identity. A
brand carries brand equity, i.e., reputation. Losing brand equity
means losing sales. For example, this happened to Limca at the
time of the BVO controversy.
Packaging
For the customer packaging is both a protective and a promo-
tional device: Package is the message, as it is called. Packaging
facilitates brand identification and may even motivate a person
to buy a product (like perfume). It serves as a critical reminder at
that critical moment when the customer is choosing from
among several competing brands. Infact whenever a customer
visualizes about a product, its packaging is the first thing that he
sees in his mental eyes.
As a test, just think about Pepsi or Coke right now. The first
thing you will do is visualizing the distinctive shape of the
bottle!
Product Life Cycle
Like us human beings, products also take birth through
introduction, develop (grow), age (mature), and eventually
decline (die). In the first phase, a newly developed product is
introduced in the market, which finds relatively few customers.
If it is an innovative product (say a perfumed fabric) then the
marketer stimulates primary demand by educating the cus-
tomer. In the growth stage, more and more customers start
buying. But new brands also enter the market. Hence the
marketer has to talk about differentiating features of his brand.
In maturity the brand competes with other successful brands
for selling in a stagnant market. So price cuts, exchange offers or
add-ons are used to woo the customers.
Communication is image based attempting to perfect and
reinforce the brand loyalty. Finally, many products face a phase
of obsolescence. Some products may of course have a cyclical
demand pattern. They bounce back after a gap. For example, in
2001 larger frame sunglasses have comeback. The marketer may
even reformulate/reposition a product to begin a new life like
Dabur Honey or Milkmaid. On the other hand some products
have a ‘stillborn’ fate or may die an infantile death, like Real
Value Vacuumizer.
Pricing
Price has to be fixed in such a manner as on one hand it is lower
or equal to the value delivered by the product, and on the other
hand it should cover at least all manufacturing and post
manufacturing (transportation, warehousing, promotional)
costs plus the targeted level of profit margin. Actual price fixing
of course depends on the functional features of the product
and the image of the brand. Then there is the degree of
competition that dictates the price of a brand vis-à-vis its
competing brands-. That is why you would find Pepsi and
Coke priced at same level.
Price can also act as a communication tool. For example price
package may give the message of affordability, exclusiveness, etc.
Cartier watches, for example.
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Placement
CONSUMER BEHAVIOUR
Physical distribution is the third dimension of marketing
activity. Place convenience is needed to make purchase. A
marketer has to decide about two things: Keeping in mind
customer’s requirements, first, what will be the channel of
distribution; and, second, how will the goods be actually
distributed.
Physical distribution activities are related to the movement of
products from the production site to purchase point. While the
buyer must get it in right shape and at right time, the sender
should be able to ensure availability at minimum cost to him.
The marketer can either sell directly to the customers or through
middlemen. A typical distribution chain could include move-
ment of product from manufacturer to wholesaler to retailer to
customer.
Promotion
Promotion is also called marketing communication. It aims at
informing and persuading the customer to buy whatever the
marketer is offering. Since a customer can be reached through a
number of channels, companies undertake integrated commu-
nication, which is a combination of personal selling,
advertising, public relations, and sales promotion.
1.5. Emerging Imperatives
Customer of today is the arbiter of corporate destiny. He is
unrelenting, demanding, and finicky. He wishes to fulfil his
needs in the most cost effective manner. Consumer spendings
are rising rapidly, while savings rate in India is falling. Alyque
Padamsee says: “This is the land of Karma, where everything is
worked out for you, your destiny your kismet. But the Genera-
tion Now feels ‘The hell with waiting for reincarnation!’ They
are breaking the Karma handcuffs. They are deciding that what
they want is a better life now. If they have money they want to
spend it now. But they are spending, intelligently, not indis-
criminately. What are the today’s realities?
• Today’s customer is exposed to international quality,
thanks to the entry of more players - from within India
and abroad - in the market in post liberalized India.
• So he dictates specifications, quality standards, and even
chargeable price.
• He wants everything here and now.
• Both budget shoppers and high spenders are demanding
better return for the money they spend.
This in turn has several lessons for the marketers:
• A marketer has to act like a long-term investor.
• He has to be prepared to accept wafer thin profit margins.
• Hence all the planning processes and the people of the
organization have to be configured around the central
character, viz., and the customer.
• Marketing effort has to be directed at meeting customer
needs, and not earning profits, or building markets. The
latter will of course be a fall out of the customer focus.
• In the competitive world, the marketer has to strategize to
deliver customer value greater than that provided by his
competitors.
3
 In brief there has to be a paradigm shift. The corporation has to exist for the customer; the company has to customerize itself. Such
CONSUMER BEHAVIOUR

an organization will have to establish a link between itself and the customers in the following manner:

Customer needs assessment

Develop Manufacture Market Deliver

• Keep customer needs in
focus.
• Reduce development
cycle time
• Develop customer-
oriented products.
• Redesign the factory to
meet customer needs.
• Reduce manufacturing
cycle time
• Produce at the lowest
cost, but no quality
compromise.
• Identify and target the • Deliver to the
customers. targeted customers.
• Process the demand in • Reduce delivery
double quick time. cycle time.
• Market customized • Deliver ‘more
products. value for same
money’ products

VALUE ADDED PRODUCT

Fig 1.2 essence of customer orientation.
Changes in Consumer Behaviour
2. Diversity in Market Place 1980s 1990s 2003
We as consumers differ in age, gender, education, occupation, Conspicuous Frugal consumer, Suspicious but
marital status, activities & interests, preferences, opinions, foods consumer becoming more generally well-of
they eat and products we buy. well-off consumer
There is diversity among marketers; not only among producers Image-driven Value- and Highly eclectic
but also sellers. Traditional retailers, mass merchandisers, quality-driven
discount stores, and off-price stores. But there has been a shift Trusting Skeptical and A “prove it”
cynical attitude
from mass marketing to niche marketing to direct marketing,
Brand loyal Does not exhibit Believe that there is
from custom catalogs to television shopping to cyber shopping. loyalty always something
There is a great diversity in advertising media. In addition to the better
traditional broadcast and print media, we have ethnic media Emotional buyer Informed buyer Highly informed
within a great variety of alternative media. and specialized
buyer
Recognizing the high degree of diversity among us, consumer Dreamers Escapists Focused on
research seeks to identify the constants that exist among the personal needs
people of the world. Overindulgent Health- and Health, wellness,
Figure 1.3 below shows us how consumers have changed over wellness- and some
three decades. In fact, you can see in your own family, if you conscious overindulgence,
take your parents as buyers and yourself as a buyer and then see without expectation
of costs or
the difference in your behaviour. consequences
Overworked Burned out, Reliant on
stressed out, and technology and
placing telecommunications
tremendous to save time in
values on making purchasing
convenience and decisions
time
Industrious baby Responsible baby Unconvinced
boomers boomer generation Xer

Fig 1.3 Changes in consumer Behaviour;

Source: Adopted from Principles of Marketing, Kotler,
Adam, Brown and Armstrong
The commonality of need constitute a market segment,
enabling the marketer to design specific products or promo-
tional appeals to satisfy the needs of that segment

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4 11.623.3
To match the varying consumer tastes and behaviour, marketers • Public policy concerns

CONSUMER BEHAVIOUR
have also adopted strategies like stressing on value pricing i.e., • Environmental concerns
high quality at a reasonable lower price and relationship
• The opening of national markets throughout the world.
marketing which in simple words would mean servicing to add
to customer delight which can in the long run result in brand or Let us now look at the scope of Consumer Behavior. The
store loyalty). scope covers:
They have also taken steps by moving away from the traditional • What they buy
distribution channels, to customized designed channels and • Why they buy
now to direct marketing or to selling directly to the customers. • When they buy
Some changes in the major segments of life we can identify • Where they buy it
are as follows:
• How often they buy it
• Primary needs- health, hygiene, basic foods and clothing.
• How do they buy it
• Living styles- expressed in products such as jeans, fun
foods, CD’s. Activity 1
Given the geographical characteristics of Indian consumer
• Imitation of the affluent and ego based life styles market, analyse five important implications that will be faced by
expressed in expensive watches, luxury cars. an all-India distribution company dealing in consumer durables
• High technology to match global competitiveness- such as refrigerators, televisions and music systems:
faxes, e-mail, Internet, photocopying machines along with
CAD, CAM and imaging.
• The challenge before the marketer is to determine the
appropriate marketing channels and consumer
psychographics to have a better understanding of the
behavour aspects of target market.
• In spite of being surrounded by diverse goods and
services, and the freedom to choose the desired
product or service, there are also many similarities
found among consumers.
Caselet #1
During 1996-1999 Ford Escort sold only 13,000 units since
customers perceived in it real and imaginary problems. It
earned the ill reputation of being a stogy car. Through it was
a failed model, and has been withdrawn now, the company
used it as a learning experience for developing a car exclu-
sively for the Indian market, the IKON. First of all it A well-developed and tested model of buyer behaviour is
decided to understand the customer, abandoning the known as the stimulus-response model, which is summarised
conventional demographic route and decided to focus on in the diagram below:
psychographics. It asked the all-important question about
Indian attitude towards life and role of car in it. It identified
six distinctive customer clusters out of which it decided to
address two: the affluent ‘puppy’ (young upwardly mobile
professional Punjabi), and the ‘full of life’. The former and
the latter perhaps own a popular car already, are party
animals, and enjoy fast and flashy lifestyle. Further, this
company decided to focus more on second i.e., ‘full of life’
segment since this category partly subsumes the first one.
The car was named the ‘josh’ machine. It turned out to be a
great success. So we learn the lesson.

If we look at consumer Behaviour as a discipline, we can

say that:
• We as consumers did not always act or react as marketing
theory suggested they would. Fig 1.4 The Stimulus –response model of Buying
• Accelerated rate of new product development behaviour
• The consumer movement

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11.623.3 5
 In the above model (fig 1.4), marketing and other stimuli enter
CONSUMER BEHAVIOUR
the customers “black box” and produce certain responses.
We must try to work out what goes on the in the mind of the
customer or the “black box”.
The Buyer’s characteristics influence how he or she perceives the
stimuli; the decision-making process determines what buying
behaviour is undertaken.
2. Factors Influencing Buyer Behaviour
Whenever we buy anything our final decision, as a consumer
will definitely be affected by certain factors. Some of these major
factors are as given below:
1. Cultural
2. Social
3. Personal
4. Psychological
The first stage of understanding buyer behaviour is to focus on
the factors that determine he “buyer characteristics” in the “black
box”. These can be summarised as follows:
Fig 1.5 Factors affecting Buyer behaviour
Each of these factors is discussed in more detail in our other
revision notes on buyer behaviour.
The marketer must be aware of these factors in order to
develop an appropriate marketing mix for its target market.
Now lets take a brief look at the various factors that we have
mentioned above.
2.1 Cultural Factors
Culture is the most fundamental determinant of a person’s
want and behaviour. The growing child acquires a set of values;
perceptions, preferences and behaviour through a process of
socialization involving the family and other key institutions.
Cultural factors have a significant impact on customer
behaviour. Marketing are always trying to spot “cultural shifts”
which might point to new products that might be wanted by
customers or to increased demand.
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6 11.623.3
For example, today there seems to be a cultural shift towards
greater concern about health and fitness and that has created
opportunities, now even industries, servicing customers who
wish to buy products like:
• Health foods
• Fitness club memberships
• Exercise equipment
• Activity or health-related holidays etc.
Similarly our increased desire for “leisure time” has resulted in
increased demand for convenience products and services such as
microwave ovens, washing machines, ready-to-eat meals and
direct marketing service businesses such as telephone banking
and insurance.
Each culture contains “sub-cultures” – groups of people,
which share values. Sub-cultures can include nationalities,
religions, racial groups, or groups of people sharing the same
geographical location. Sometimes a sub-culture will create a
substantial and distinctive market segment of its own.
For example, the “youth culture” or “club culture” has quite
distinct values and buying characteristics from the much older
“grey generation”
Similarly, differences in social class can create customer groups.
In fact, the social classes are widely used to profile and predict
different customer behaviour. Social class is not just determined
by income. It is measured as a combination of occupation,
income, education, wealth and other variables. Social Classes are
relatively homogeneous and enduring divisions in a society
which are hierarchically ordered and whose members have
similar values, interests and behaviour.
Social scientists have identified seven social classes shown
in Figure 1.6
Social Class Characteristics
Upper-Uppers are the social elite who live
on inherited wealth and have well-known
families. They maintain more than one
home and send their children to the best
schools. They are in the market for jewelry,
Upper- Upper
antiques, homes, and foreign vacations.
While small as group they serve as a
reference group to others to the extent that
other social classes imitate their
consumption decisions.
Lower Uppers are persons who have earned
high income or wealth through exceptional
ability in their profession or business. They
usually come from the middle-class. They
tend to be active in social and civic affairs
and seek to buy the symbols of social status
Lower-Uppers
for themselves and their children, such as
expensive cars, homes and schooling. Their
ambition is to be accepted n the upper-
upper status, a status that is more likely to
be achieved by their children than
themselves.

Social Class Characteristics
Upper Middles possess neither family status
nor unusual wealth. The primarily
concerned with “career”. They have attained
positions as professionals, independent
businesspersons, and corporate managers.
Upper -Middles They believe in education and want their
children to develop professional or
administrative skills so that they will not
drop into the lower stratum. They are civic
minded and are a quality market for good
clothes, homes, furniture and appliances.
The middle class is average paid white and
blue-collar workers who try to do the proper
things. Often they will buy products to
“keep up with the trends”. The middle class
Middle Class
believes in spending more money on
“worth-while experiences” for their children
and aiming them towards professional
colleges.
Working class consists of “average pay blue
collar workers and those who lead a
“working class life-style”, whatever income,
school or job they have. The working class
depends heavily on relatives for economic
Working Class and emotional support, for tips on job
opportunities, advice on purchase, and for
assistance in times of trouble. The working
class maintains a sharp sex-role division and
stereotyping. They are found to have larger
families than the higher classes.
Upper Lowers are working, though their
living standard is just above the poverty line.
They perform unskilled work and are poorly
Upper Lowers paid. Often they are educationally deficient.
Although they fall near the poverty line, they
manage to maintain some level of
cleanliness.
Lower Lowers are visibly poverty-stricken
and usually out of work. Some are not
interested in finding permanent jobs and
Lower Lowers
most are dependent in charity for income.
Their homes and possessions are “dirty,
ragged, and broken-down”.
Fig 1.6: Adapted from Richard P. Coleman “The Significance of
Social class to Marketing”. Journal of Consumer Research,
December 1983, pp 265-80
2.2 Social Factors
A customer’s buying behaviour is also influenced by social
factors, such as the groups to which the customer belongs and
social status. In a group, several individuals may interact to
influence the purchase decision. The typical roles in such a group
decision can be summarised as follows:
Initiator
The person who first suggests or thinks of the idea of buying a
particular product or service
Influencer
A person whose view or advice influences the buying decision
Decider
The individual with the power and/or financial authority to
make the ultimate choice regarding which product to buy
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11.623.3
Buyer
CONSUMER BEHAVIOUR
The person who concludes the transaction
User
The one who actually uses the product or service.
The family unit is usually considered to be the most important
“buying” organisation in society. It has been researched
extensively. Marketers are particularly interested in the roles and
relative influence of the husband, wife and children on the
purchase of a large variety of products and services.
There is evidence that the traditional husband-wife buying roles
are changing. Almost everywhere in the world, the wife is
traditionally the main buyer for the family, especially in the areas
of food, household products and clothing. However, with
increasing numbers of women in full-time work and many men
becoming “home workers” (or “telecommuting”) the tradi-
tional roles are reversing.
The challenge for a marketer is to understand how this might
affect demand for products and services and how the promo-
tional mix needs to be changed to attract male rather than
female buyers.
Consumer wants, learning, motives etc. are influenced by
opinion leaders, person’s family, reference groups, social class
and culture.
2.3 Personal
Personal factors are those factors, which are unique to a
particular person including demographic factors, Sex, Race, and
Age etc.
Personal factors also include who in the family is responsible for
the decision-making.
2.4 Psychological Factors
Psychological factors include:
• Motives—A motive is an internal energizing force that
orients a person’s activities toward satisfying a need or
achieving a goal.
Actions are effected by a set of motives, not just one. If
marketers can identify motives then they can better develop
a marketing mix.
MASLOW hierarchy of needs is the theory, which explains
concept of motivation through unfulfilled needs which
could be any of the following:
• Physiological
• Safety
• Love and Belonging
• Esteem
• Self Actualization
• Need to determine what level of the hierarchy the
consumers are at to determine what motivates their
purchases.
7

CONSUMER BEHAVIOUR
Caselet #1 Nutrament
Nutrament, a product marketed by Bristol-Myers Squibb
originally was targeted at consumers that needed to receive
additional energy from their drinks after exercise etc., a fitness
drink. It was therefore targeted at consumers whose needs
were for either love and Belonging or esteem. The product was
not selling well, and was almost terminated. Upon extensive
research it was determined that the product did sell well in
inner-city convenience stores. It was determined that the
consumers for the product were actually drug addicts who
couldn’t digest a regular meal. They would purchase
Nutrament as a substitute for a meal. Their motivation to
purchase was completely different to the motivation that B-
MS had originally thought. These consumers were at the
Physiological level of the hierarchy. BM-S therefore had to
redesign its marketing mix to better meet the needs of this
target market.
Motives often operate at a subconscious level therefore are
difficult to measure.
• Perception
What do you see??
Perception is the process of selecting, organizing and interpret-
ing information inputs to produce meaning. This means we
chose what info we pay attention to, organize it and interpret it.
Information inputs are the sensations received through sight,
taste, hearing, smell and touch.
Selective Exposure- This means we tend to select inputs to be
exposed to our awareness. This is more likely if it is linked to
an event, and/or satisfies current needs.
Selective Distortion- This happens when we change or twist
current received information, which is inconsistent with our
beliefs.
Selective Retention- In this case we remember only those inputs
that support our beliefs, and forget those that don’t.
For instance, an average supermarket shopper is exposed to
17,000 products in a shopping visit lasting 30 minutes-60% of
purchases are unplanned and is also exposed to 1,500 advertise-
ment per day. Hence they cannot be expected to be aware of all
these inputs, and certainly will not retain many.
Interpreting information is based on what is already familiar, on
knowledge that is stored in the memory.
• Ability and Knowledge
Learning can be said to be changes in a person’s behavior caused
by information and experience. Therefore to change consumers’
behavior about your product, you need to give them new
information regarding the product like free sample etc.
When making buying decisions, buyers must process informa-
tion. Knowledge is the familiarity with the product and expertise.
Inexperience buyers often use prices as an indicator of quality
more than those who have knowledge of a product.
Non-alcoholic Beer example: consumers chose the most
expensive six-pack, because they assume that the greater price
indicates greater quality.
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8 11.623.3
Learning is the process through which a relatively permanent
change in behavior results from the consequences of past
behavior.
• Attitudes
we can say that attitudes are knowledge and positive and
negative feelings about an object or activity. It maybe tangible or
intangible, and living or non- living. Generally it seen that
attitudes drive perceptions
We learn attitudes through experience and interaction with other
people. Consumer attitudes toward a firm and its products
greatly influence the success or failure of the firm’s marketing
strategy.
For instance, Honda says, “You meet the nicest people on a
Honda”, dispelling the unsavory image of a motorbike rider, in
the late 1950s. Changing market of the 1990s, baby boomers
aging, and Hondas market returning to hard core. To change
this they have a new slogan “Come ride with us”.
Attitudes and attitude change are influenced by consumer’s
personality and lifestyle.
Again, we tend to screen information that conflicts with their
attitudes and distort information to make it consistent and
selectively retain information that reinforces our attitudes. But,
bear in mind that there is a difference between attitude and
intention to buy i.e., ability to buy.
• Personality
One way of explaining personality is all those internal traits and
behaviors that make a person unique, keeping in mind the fact
that uniqueness arrives from a person’s heredity and personal
experience. Examples include:
• Workaholism
• Compulsiveness
• Self confidence
• Friendliness
• Adaptability
• Ambitiousness
• Dogmatism
• Authoritarianism
• Introversion
• Extroversion
• Aggressiveness
• Competitiveness.
Traits affect the way people behave. Marketers try to match the
store image to the perceived image of their customers.
• Lifestyles
You may have observed that recently trends in lifestyles are
shifting towards personal independence and individualism and
a preference for a healthy, natural lifestyle.
Lifestyles are the consistent patterns people follow in their lives.
For Example you buy healthy foods to maintain a healthy
lifestyle.
• Opinion Leaders
Opinion leaders basically play the role of spokesperson etc.
Marketers try to attract opinion leaders...they actually use (pay)
spokespeople to market their products. Say, for example Sachin
Tendulkar (Pepsi, Visa , Biscuit, Adidas etc.)
• Roles and Family Influences
Roles are things you should do based on the expectations of
you from your position within a group.
People have many roles.
Husband, father, employer/ee. Individuals role are continuing
to change therefore marketers must continue to update
information.
Family is the most basic group a person belongs to. Marketers
must understand:
• that many family decisions are made by the family unit
• consumer behavior starts in the family unit
• family roles and preferences are the model for children’s
future family (can reject/alter/etc)
• family buying decisions are a mixture of family interactions
and individual decision making
• family acts an interpreter of social and cultural values for
the individual.
The Family life cycle: families go through stages, each stage
creates different consumer demands:
• bachelor stage
• newly married, young, no children...me
• full nest I, youngest child under 6
• full nest II, youngest child 6 or over
• full nest III, older married couples with dependant
children
• empty nest I, older married couples with no children living
with them, head in labor force
• empty nest II, older married couples, no children living at
home, head retired
• solitary survivor, in labor force
• solitary survivor, retired
• Modernized life cycle includes divorced and no children.
Two Income Marriages Are Now the Norm
Because 2 income families are becoming more common, the
decision maker within the family unit is changing...also,
family has less time for children, and therefore tends to let
them influence purchase decisions in order to alleviate some
of the guilt. Children also have more money to spend
themselves.
• Reference Groups
Individual identifies with the group to the extent that he takes
on many of the values, attitudes or behaviors of the group
members.
Families, friends, sororities, civic and professional organiza-
tions.
Any group that has a positive or negative influence on a
person’s attitude and behavior.
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11.623.3
Membership groups (belong to)
CONSUMER BEHAVIOUR
Affinity marketing is focused on the desires of consumers that
belong to reference groups. Marketers get the groups to approve
the product and communicate that approval to its members.
Credit Cards etc.!!
Aspiration groups (want to belong to)
Disassociate groups (do not want to belong to)
Honda, tries to disassociate from the “biker” group.
The degree to which a reference group will affect a purchase
decision depends on an individuals susceptibility to reference
group influence and the strength of his/her involvement with
the group.
• Social Class
An open group of individuals who have similar social rank. US
is not a classless society. US criteria; occupation, education,
income, wealth, race, ethnic groups and possessions. Social class
determines to some extent, the types, quality, quantity of
products that a person buys or uses.
Lower class people tend to stay close to home when shopping,
do not engage in much prepurchase information gathering.
Stores project definite class images.
Family, reference groups and social classes are all social influences
on consumer behavior. All operate within a larger culture.
• Culture and Sub-culture
Culture refers to the set of values, ideas, and attitudes that are
accepted by a homogenous group of people and transmitted to
the next generation.
Culture also determines what is acceptable with product
advertising. Culture determines what people wear, eat, reside
and travel. Cultural values in India are good health, education,
individualism and freedom. In today’s culture time scarcity is a
growing problem. So as a result there is a change in meals.
Different society, different levels of needs, different cultural
values.
Culture can be divided into subcultures:
• Geographic regions
• Human characteristics such as age and ethnic background.
Culture effects what people buy, how they buy and when they
buy.
Case on Customer Behavior
Modernizing Sales Outlets
Mr. Harish Panjwani was a refugee when he started his small
grocery business about 40 years back. Initially, he hawked his
good door to door and soon developed a sizeable number of
steady customers. This was largely due to his sober tempera-
ment, reliable dealings and his amiable nature. His extrovert
nature helped him develop many friends and well-wishers.
Over a period of time, Mr Panjwani became a socially promi-
nent person with good acquaintances from many walks of life.
He expanded the range of his business activities and he now
own several shops dealing in consumer durables, dairy products
and also has a general store besides a large medical shop. Being
9
 of a conservative frame of mind, he feels emotionally attached Opinion leaders
CONSUMER BEHAVIOUR

to his original grocery business and continues to operate it with Lifestyles

enthusiasm. His business place has even come to be associated
Personality
with a meeting venue for people of his generation to meet.
Attitudes
His children are grown up and the eldest one, Rajesh, has just
returned from abroad after completing his management Learning
education there. Ambitious by nature, Rajesh would like to Ability and Knowledge
expand his business fast. He feels that he needs to be ‘profes- Selective Exposure
sional’ in his approach. In his option, his father’s way of
Selective Distortion
dealing with people is outdated. Many a times, he feels irritated
when his father’s old friends drop in at the shops and spend Selective Retention
time talking with him. Rajesh feels that this type of casual come Perception
together is a waste of time. He would prefer to be more Motives
‘business’ like. He would to deal with them as customers only,
Decider
serving them with precision and in a methodical manner. He
expects that his customer should appreciate this ‘modern’ way Buyer
of doing business. He has, however, broached his inner feelings User
only in an indirect way to his father, and he found that this Initiator
father believes in maintaining close personal links with his
Influencer
customers. Some of the customers have, anyhow, started
noticing the change in the way in which Rajesh deals with them.
They feel that the old ‘warmth’ of their relationship with the Points to Ponder
senior Panjwani is somehow missing and they are now less
welcome at the shops. Objectives of One-to-One
Questions Marketing
1. What do you think is the contribution of personal
relationship in such a business? n To attain customers
2. Do you agree with the approach adopted by Rajesh? Do n Sell them more products
you have any suggestion to make?
n Make a profit
Taken from the fourth semester examination question paper of
Pune University.

Key Terms
Customer needs
Customer focus
Needs and wants
Consumer focused marketing
Customer needs assessment
Primary needs
Stimulus-response model
Black box
Cultural
Social
Personal
Psychological
Sub-cultures
Social Class
Aspiration groups
Disassociate groups
Membership groups
Reference Groups
The Family life cycle

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10 11.623.3
 CONSUMER BEHAVIOUR
Changes in the Business Environment
Personal Consumer
n Increased n Access to customer
consumer power patterns and The individual who buys goods and
n Access to preferences services for his or her own use, for
information n Evolution to other - household use, for the use of a
n More products and Web connection
family member, or for a friend.
services – PDAs
n Interactive and – HDTV
instant exchanges – Mobile phones

Organizational Consumer
Consumer Behavior
A business, government agency, or
The behavior that consumers other institution (profit or nonprofit)
display in searching for,
that buys the goods, services,
purchasing, using, evaluating, and
and/or equipment necessary for the
disposing of products and services
organization to function.
that they expect will satisfy their
needs.

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11.623.3 11
CONSUMER BEHAVIOUR

Development of the Marketing

Concept The Marketing Concept
Production n Assumes that to be successful, a
Concept company must determine the needs and
wants of specific target markets and
Product Concept deliver the desired satisfactions better
than the competition
Selling Concept n Marketing objectives:

Marketing – Profits through customer satisfaction

Concept

The Selling Concept

The Marketing Concept
n Assumes that consumers are unlikely to A consumer-oriented philosophy
buy a product unless they are that suggests that satisfaction of
aggressively persuaded to do so consumer needs provides the focus
n Marketing objectives: for product development and
– Sell, sell, sell marketing strategy to enable the
n Lack of concern for customer needs and
firm to meet its own organizational
satisfaction
goals.

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 CONSUMER BEHAVIOUR
Implementing the Marketing Successful Relationships
Concept

n Consumer Research
Customer Customer
n Segmentation
Value Retention
n Targeting
n Positioning Customer
Satisfaction

Societal Marketing Concept

The Marketing Mix
n Product A revision of the traditional marketing concept
that suggests that marketers adhere to
n Price
principles of social responsibility in the
n Place marketing of their goods and services; that is,
n Promotion they must endeavor to satisfy the needs and
wants of their target markets in ways that
preserve and enhance the well-being of
consumers and society as a whole.

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11.623.3 13
CONSUMER BEHAVIOUR
Characteristics that affect customer behaviour

The Societal Marketing Concept

n All companies prosper when society
prospers.
n Companies, as well as individuals,
would be better off if social
responsibility was an integral
component of every marketing decision.
n Requires all marketers adhere to
principles of social responsibility.

Notes

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