GEN 207: Industrial Psychology

Chapter 9: Consumer Psychology

Md. Shaheen Mollah

Adjunct Faculty
Department of Social Relations
East West University
shaheen.mollah@ewubd.edu
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 Contents

➢Basic Terminology

➢Meaning of Consumer Behavior

➢Consumer Buying Process

➢Scope of Consumer Behavior Field

➢Why Study Consumer Behavior

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 Basic Terminologies
❖ Sales determine profit, and consumers’ actions
determine sales.

❖ Market consists of people with money to spend

and the willingness and ability to spend it.

❖ The difficulty surroundings consumer’s willingness

and ability lie at the heart of buying behavior
process.

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 Basic Terminologies (Cont’d)
Customer versus Consumer
Customer
▪ Customer refers to someone who regularly purchases
from a particular store or company.
▪ For example, a person who shops at ARANG is viewed
as a customer of the firm.
Consumer
▪ Consumer is everyone who buys and uses any item.
▪ Consumer refers to anyone engaging in evaluating,
acquiring, using, or disposing of goods and services.

❖ Therefore, a customer is defined in terms of a specific

firm while a consumer is not. 4
 Basic Terminologies (Cont’d)
Consuming versus Purchasing
❖ Purchasing refers to the act of obtaining any market
item from the channel of distribution.
❖ Consuming means utilizing the product for satisfying
motive(s) arise out of either biological or secondary
need(s).
Consumer versus Buyer
❖ Buyers are those who carry out the formal
arrangements for purchase, service, delivery, and
financial terms. Buyers are not always deciders.
❖ Consumers are those people who actually put a
purchased product to work or who uses it to satisfy his
physical /social/psychological need(s).
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 Definition of Consumer Behavior
❖ Consumer behavior involves the purchasing, and other
consumption related activities of people engaging in the
exchange process.
❖ Behavior of consumer is motivated or purposive.
❖ Consumer behavior is the activities (acts, processes,
and social relationships) exhibited by people
(individuals, groups, and organizations) in the
obtainment, use of, and consequent experience with
product, services, and other resources.
❖ Consumer behavior is the behavior that consumers
display in searching for, purchasing, using, evaluating,
and disposing of products and services that they expect
will satisfy their needs (Schiffman, Kanuk, & Kumar,
2010). 6
 Types of Consumer
Personal/Ultimate Consumer
❖ Personal consumer buys goods and services for his or
her own use, for the use of households, 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.
Industrial/Organizational Consumer
❖ Organizational consumer, the second category of
consumer, includes profit and not-for-profit businesses,
government agencies (local, state, and national), and
institutions (e.g., schools, hospitals, and prisons), all of
which must buy products, equipments, and services in
order to run their organizations.
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Consumer Buying Process

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 Consumer Buying Process
Step 1: Recognition of Need
❖ The first step of the consumer decision process is recognizing that
there is a problem–or unmet need–and that this need warrants some
action.
❖ Whether we act to resolve a particular problem depends upon two
factors:
(1) the magnitude of the difference between what we have and
what we need, and
(2) the importance of the problem
❖ Marketers get involved in the need recognition state at three points:
1. Knowing what problems consumers are facing
2. Activating problem recognition, in order to trigger the start of the
purchasing process
3. Shaping how consumers define the need or problem, in order to
influence their wants as they look for a solution 9
 Consumer Buying Process (Cont’d)
Step 2: Information Search
❖ After recognizing a need, the prospective consumer may
seek information to help identify and evaluate alternative
products, services, experiences, and outlets that will meet
that need.
❖ Information may come from any number of sources: family
and friends, search engines, personal
observation, Consumer Reports, salespeople, product
samples, and so forth.
❖ Which sources are most important depends on the
individual and the type of purchase he or she is considering.

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 Consumer Buying Process (Cont’d)
Step 3: Evaluation of Alternatives
❖ As a consumer finds and processes information about the
problem she is trying to solve, she identifies the alternative
products, services, and outlets that are viable options.
❖ The next step is to evaluate these alternatives and make a
choice, assuming a choice is possible that meets the
consumer’s financial and psychological requirements.
❖ Evaluation criteria vary from consumer to consumer and
from purchase to purchase, just as the needs and
information sources vary.
❖ One consumer may consider price most important while
another puts more weight on quality or convenience.

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 Consumer Buying Process (Cont’d)
Step 4: Purchase Decision
❖ After much searching and evaluating (or perhaps very little),
consumers at some point have to decide whether they are
going to buy.
❖ Product pricing, labeling, and packaging can be hugely
influential at this stage of the process.
❖ Product sampling, coupons, and rebates may also give an
extra incentive to buy.
❖ Personal selling, product display, convenience, and ease of
finding the product may also lead the consumer to make
one choice over another.

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 Consumer Buying Process (Cont’d)
Step 5: Post-Purchase Evaluation
❖ A consumer’s feelings and evaluations after the sale are
also significant to a marketer, because they can influence
repeat sales and what the customer tells others about the
product or brand.
❖ It is normal for consumers to experience some post-
purchase anxiety after any significant or nonroutine
purchase. This anxiety reflects a phenomenon
called cognitive dissonance.
▪ According to this theory, people strive for consistency
among their cognitions (knowledge, attitudes, beliefs, and
values).
▪ When there are inconsistencies, dissonance arises, which
people try to eliminate. 13
 Consumer Buying Process (Cont’d)
Step 5: Post-Purchase Evaluation
❖ Marketers may take specific steps to reduce post-purchase
dissonance.
▪ One obvious way is to help ensure delivery of a quality
solution that will satisfy customers.
▪ Another step is to develop advertising and new-customer
communications that stress the many positive attributes or
confirm the popularity of the product.
▪ Providing personal reinforcement has proven effective
with big-ticket items such as automobiles and major
appliances.
▪ Salespeople in these areas may send cards or even make
personal calls in order to reassure customers about their
purchase. 14
 Scope of Consumer Behavior
❖ In examining and focusing on various aspects of consumer
behavior, this discipline borrows findings from a quite
number of disciplines. That is why this discipline is termed
as a multidisciplinary field of study.
❖ The behavioral science disciplines that have most
contributed to our understanding of consumers are:
Discipline Description
Psychology Study of personal characteristics such as learning, perception,
motivation, personality, beliefs, values, images, attitudes etc.
Sociology Study of the collective behavior of people in different social
groups such as family, social class etc.
Social Study of how individuals influence and are influenced by groups.
Psychology
Anthropology Study of people in relation to their culture or sub-culture.
Economics Study of people’s production, exchange, and consumption of
goods and services.
Marketing Study of product itself, advertisements, and promotional
Research activities. 15
 Why We Study Consumer Behavior
❖ Understanding the reasons for studying a discipline
enables one to better appreciate its contributions. The
reasons are:
1. The most important reason for studying consumer
behavior is the significant role it plays in our lives.
i. Much of our time is spent directly in the marketplace,
shopping or engaging in other activities.
ii. A large amount of additional time is spent thinking
about products and services, talking to friends about
them, and seeing or hearing advertisements about
them.
iii. The goods we purchase and the manner in which we
use them significantly influence how we live our daily
lives.
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 Why Study Consumer Behavior (Cont’d)
2. The better the firm understand its consumers, the more
likely it becomes successful in the marketplace. A
knowledge of consumer behavior would render
immense help for planning and implementing marketing
strategies.
3. The proof of establishing consumer orientation in the
marketing concept of the firm depends on how
marketing mix adopted satisfies the consumers.
4. By gaining a better understanding of the factors that
affect consumer behavior, marketers are in a better
position to predict how consumers will respond to
marketing strategies.

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 Why Study Consumer Behavior (Cont’d)
5. The study of consumer behavior helps in developing the
strategies mentioned below:
a) Selection and segmentation of target markets;
b) Devising appropriate market strategies;
c) Evaluation of marketing programs and strategies
d) Assessing the trends of change and preparing the
marketing plans to suit the future changes.
6. Consumer is the principal priority of a business.
✓ A business community that is ignorant of consumer
preferences cannot possibly fulfill its obligations in a
meaningful and responsive manner.
✓ In order to survive in the face of today’s extreme
competition, you must serve and satisfy your consumers
(also called prince/princess) in a way better than yours
competitors do. 18