CONSUMER BEHAVIOR AND MARKETING STRATEGY

Concept of Consumer Behavior

Nature of Consumer Behavior
Application of Consumer Behavior Knowledge in Marketing
Loudon, D.L & Della Bitta, A.J., Consumer Behavior, McGraw Hill, New
Delhi Page 4-19 Lecture Hours 3
Case/Project
Interview the Bhatbhattani manager and enquire which is the highest
sold item?
What marketing Strategy do they adopt?
Suman Poudel
 Concept of Consumer Behavior
• The field of buyer behavior studies how individuals, groups and
organizations buy products to satisfy their needs and desires.
• Buying behavior is the decision process and acts of people involved
in buying and using products.
• Consumer behavior refers to the buying behavior of ultimate
consumers, those people who purchase products for personal or
household use.
• Organizational buying behavior refers to buying by business
organizations, social institutions and government.
 Formal Definitions of Consumer Behavior
• According to J. C. Mowen "consumer behavior is the study of the
decision-making units and processes involved in acquiring, consuming
and disposing of goods, services, experiences and ideas.”

• According to Leon G. Schiffman and Leslie L. Kanuk "the term

consumer behavior refers to the behavior that consumers display in
searching for, purchasing, using, evaluating, and disposing of products
and services that they expect will satisfy their needs”.

• David L. Loudon and Albert J. D. Bitta views consumer behavior as

“the decision process and physical activity individual engage in when
evaluating, acquiring, using, or disposing of goods and services”.
 Aspects Covered by the Definitions
• Acquiring: It analyses the factors that influence the product choice of
consumers. It includes the study of the process through which
consumers become aware of their needs and products that can satisfy
the needs, evaluation of the products in terms of end benefits and
purchase actions.
• Consumption: It analyses how consumers actually use a product and
the experiences the consumers obtain from such use. It includes the
study of the post-purchase satisfaction from the product's use.
• Disposition: It studies what consumers do with the product once they
have completed its use .
 Nature of Consumer Behavior Analysis
• Subset of Human Behavior: Consumer behavior is a subset of
the larger human behavior.
• Consumer Behavior is a Process: Consumer behavior is an
ongoing process that starts from the need (problem)
identification stage through information search, evaluation,
purchase, post-purchase behavior to the final disposition of the
product after its use.
• Several Factors Influence Consumer Behavior: The
consumer’s buying and consuming process is influenced by
several demographic, psychological, socio-cultural, and
situational factors.
 Nature of Consumer Behavior Analysis
• Many People’s Involvement: Beside an individual consumer
several people are involved in a consumer’s purchase decision
process.
• Applied Discipline: Consumer behavior is an applied
discipline that seeks to implement the knowledge and
understanding of the purchase decision process in marketing
programs.
• Multidisciplinary: Consumer behavior analysis is based on
several other disciplines - economics, psychology, sociology,
socio-psychology, and cultural anthropology.
Importance of Consumer Behavior Analysis
1. Significance in Daily Lives
• Most developed and developing societies are known as
consumption societies.
• Individuals spend more time in consumption than in other
activities.
• A large part of an individual’s time is spent on thinking about
products and services, talking to friends about them, paying
attention to advertisements, visiting stores and purchasing them.
• Knowledge of consumer behavior enhances individuals’
understanding of the forces that influence purchase and
consumption of products and services.
 Reasons for the Study of Consumer Behavior

2. Public Policy Decisions

• Governments often design and implement regulatory
policy on product quality, pricing, advertising, and labels
on the basis of consumers’ actions and reactions.
• The consumer movement has gained much from the
understanding of consumer behavior in order to protest,
file law suits, and force governments to take actions in the
interests of consumers.
 Reasons for the Study of Consumer
Behavior
3. Business Decisions
• The major role of consumer behavior lies in the area of
business decisions.
• The study and understanding of consumer behavior has
given business organizations unprecedented power to
mold and modify consumers’ thinking and behavior
related process.
 Reasons for the Study of Consumer
Behavior
4. Social Marketing
• Non-profit organizations are very successful in using the
knowledge of consumer behavior.
• They have launched social marketing programs targeted
at anti-smoking, environment protection, literacy and
many other social issues by using knowledge of
consumer behavior.
 Application Areas of Consumer Behavior in
Marketing
1. Efficient use of marketing resources
• The main objective of understanding consumer behavior is to
develop efficient use of marketing resources.
• The goal of marketing is to understand, meet and satisfy target
customers' needs and wants.
• It is important for the marketing executives to find answers to such
questions such as why consumers buy a product and how they
respond to marketing inputs such as price, quality, service,
availability, styles, images etc.
• Consumer behavior analysis helps the marketing executive to find
answers to these important questions.
 Application Areas of Consumer Behavior in
Marketing
2. Location of new marketing opportunities
• The study of consumer behavior helps the business
organizations to locate consuming groups with unmet and
unsatisfied needs and desires.
• An organization can effectively and profitably meet new
consumer needs arising in the market due to a change in per
capita income, geographic, social, and psychological
mobility of people and cross cultural exchanges.
 Application Areas of Consumer Behavior in
Marketing
3. Selection of market segments
• Consumer behavior analysis helps to identify and categorize
the need and desire clusters in a market in terms of
geographic, demographic, psychographic and behavioral
variables thus giving an organization well demarcated
market segments.
• The organization can select the market segments based on
their size, growth and profit factors.
 Application Areas of Consumer Behavior in
Marketing
4. Product positioning
• Product positioning is the process of presenting the product to
consumers in such a manner that they would perceive meaningful
differences between the firm’s brand and competing brands.
• The differentiated brand has higher competitive advantage
because it is recognized by consumers as different from other
brands.
• Consumer behavior helps an organization to study how
consumers perceive different brands of products sold in the
market.
• Once consumers' images of the brands are studied and profiled,
the organization can select an appropriate position for its brand.
 Application Areas of Consumer Behavior in
Marketing
5. Market research
• Market research analyzes consumer and markets and provides
information feed-back to the marketing decision makers.
• Market research is also used for predicting the behavior of
consumers.
• Market research cannot be conducted without the knowledge
of consumer behavior principles.
 Application Areas of Consumer Behavior in
Marketing
6. Improving the marketing strategy Knowledge of consumer
behavior places a firm in a strong position in a competitive
market.
• It gives valuable information feedback to the firm on the
changes in consumer needs and preferences and their buying
power.
• This information can be effectively utilized by the firm to
design appropriate marketing strategy to deal effectively with
the changes.