CONSUMER BEHAVIOUR

Prepared By:Mrs. Gurpreet K Chhabra

Astt. Prof. MERI

Overview of

Consumer Behavior

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Learning Objectives1. To Understand What Consumer Behavior Is and the

Different Types of Consumers.2. To Understand the Relationship Between Consumer

Behavior and the Marketing Concept, the Societal Marketing Concept, as Well as Segmentation, Targeting, and Positioning.

3. To Understand the Relationship Between Consumer Behavior and Customer Value, Satisfaction, Trust, and Retention.

4. To Understand How New Technologies Are Enabling Marketers to Better Satisfy the Needs and Wants of Consumers.

Chapter One Slide

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Overview of Consumer BehaviorDefinition 1: Consumer behavior: The study of how individuals make decisions:

On how to spend their:• Available resources( time, money effort) On various consumption- related items.

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Overview of Consumer BehaviorDefinition 2: Consumer behavior• The behavior that consumers

display in :• Searching for,• Purchasing, • Using,• Evaluating, • And disposing of products and

services• That they expect will satisfy their

needs.

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Type of ConsumersPersonal Consumer :The individual who buys goods and services for his or her own use, for household use, for the use of a family member, or for a friend.

Organizational Consumer :A business, government agency, or other institution (profit or nonprofit) that buys the goods, services, and/or equipment necessary for the organization to function.

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Why do we need to study Consumer Behavior?

Because no longer can we take the customer/consumer for

granted.

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Relevance of Consumer BehaviorThe study of consumer behavior is very relevant for marketers because:

• Information and knowledge of buyer motives and habits will enable them to draft suitable marketing programmes accordingly.

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Consumer Behavior & Decision Making interdisciplinary

Consumer behavior as a new discipline borrowed concepts from other scientific disciplines such as:•Anthropology•Psychology•Economics•History and geography•Socio-psychology

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Anthropology• The influence of the

culture (within and across) & society on the individuals.

• Emphasis on cross-cultural differences

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Psychology• Study of human thinking

and behavior• Some issues

– Personality– Personal development– Cognition (thinking),

perception– Attention and its limitations– “Learning”—e.g., acquired

tastes

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Economics• Basic economic issues

– Supply and demand– Rational decision making– Perfect information

• Emphasis on predicting behavior• Complications in real life• Behavioral economics—e.g., “mental accounting”

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History and Geography• Origins of behavior,

perspectives, and traditions

• Impact of geography on individuals– Isolation– Language development– Climate

• Geographic determinism

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Socio- Psychology• Is the study of how persons

are influenced by groups.• Cultural and interpersonal

influences on consumption—e.g.,– Fads, fashions– Diffusion of innovation– Popular culture

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Dynamic Consumer Behavior• Thinking, feelings, and actions of individual

consumers, targeted consumer groups, and society at large are constantly changing.

• Requires ongoing consumer research and analysis of important trends.

• Makes development of marketing strategies difficult and exciting– Shorter product life-cycle increases importance of

constant innovation

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Production concept Product concept Selling concept Marketing concept Societal concept

Marketing concepts

Shift of focus to better serve consumers for major reasons

– Increased consumer interest in world markets.

– Dramatic increase in the quality of consumer and marketing research.

• Use of technology to identify and know customers personally• Ability to track consumer reactions

– Development of the Internet as a marketing tool.• E-marketing potential• Increased importance of consumer behavior research• Ability to conduct marketing research studies

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Successful Relationships

Customer Satisfaction

Customer Retention

Customer Value

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Impact of Digital Technologies

• Consumers have more power and access to information.

• Marketers can gather more information about consumers .

• The exchange between marketer and customers is interactive and instantaneous and goes beyond the PC.

• Marketers must offer more products and services.

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Consumer Research

• Consumer research has developed as an extension to the field of marketing research with emphasis on consumer behavioral aspects.

• The initial thrust on studying CB by marketers was done for two reasons:– To determine as to why consumers made the

purchase decisions.– To understand how consumers would react to

promotional messages. 20

Model of Consumer BehaviorMarketing andOther Stimuli

Buyer’s Black Box

Buyer’s Response

ProductPricePlacePromotion

EconomicTechnologicalPoliticalCultural

Characteristics Affecting Consumer Behavior

Buyer’s Decision Process

Product ChoiceBrand ChoiceDealer Choice

Purchase TimingPurchase Amount

The Buyer Decision Process

Need Recognition

Information Search

Evaluation of Alternatives

Purchase Decision

Postpurchase Behavior

The Buyer Decision ProcessStep 1. Need Recognition

External Stimuli

• TV advertising

• Magazine ad

• Radio slogan

•Stimuli in the environment

Internal Stimuli

• Hunger

• Thirst

• A person’s normal needs

Need RecognitionDifference between an actual state and a desired state

The Buyer Decision Process

Step 2. Information Search•Family, friends, neighbors•Most influential source of information

•Advertising, salespeople•Receives most information

from these sources

•Mass Media•Consumer-rating groups

•Handling the product•Examining the product•Using the product

Personal Sources

Commercial Sources

Public Sources

Experiential Sources

The Buyer Decision ProcessStep 3. Evaluation of Alternatives

Product AttributesEvaluation of Quality, Price, & Features

Degree of ImportanceWhich attributes matter most to me?

Brand BeliefsWhat do I believe about each available brand?

Total Product SatisfactionBased on what I’m looking for, how satisfied

would I be with each product?

Evaluation ProceduresChoosing a product (and brand) based on one

or more attributes.

The Buyer Decision Process

Step 4. Purchase DecisionPurchase IntentionDesire to buy the most preferred brand

Purchase Decision

Attitudes of others

Unexpected situational factors

The Buyer Decision ProcessStep 5. Postpurchase Behavior

Consumer’s Expectations of Product’s Performance

Dissatisfied Customer

Satisfied Customer!

Product’s Perceived Performance

Cognitive Dissonance

CONSUMER DECISION RULES

• Compensatory decision rule- On the basis of this decision rule, a shopper evaluates store or brand alternatives in respect of each salient attribute and assigns weight for each store or brand in a consideration set .The computed value reflects the store’s relative edge as a potential purchase choice . The proposition is that the shopper will select the store or brand that scores the highest among the options evaluated. This rule is characterized by allowing a positive evaluation of a store or brand on one attribute to compensate or make for a negative evaluation on some other attribute.

• Non- compensatory decision rule - on the basis of this rules consumers do not balance positive assessment of store on one dimension against a negative evaluation on other dimensions:

~ Conjunctive rule - Here the shopper establishes a specific, minimal acceptable level as a cut off point for each dimension. If a particular prospective store falls below the cut off point on any dimension (evaluative criteria), it is dropped from the consideration set.

~ Disjunctive rule – Here a shopper sets up a specific ,minimal acceptable level as a cut off point for each dimension . Acceptability of a store depends if the store meets or exceeds the limit established for any one dimension considered most important by the customer.

~ Lexicographic decision rule – Here the shopper first ranks the dimensions in terms of their perceived salience or importance .The shopper then compares the various brand alternatives in terms of a single attribute that is considered most important. If one brand scores sufficiently high on this top-ranked dimension (regardless of the scores on any other attributes) ,it is selected & process ends , else process continues with next highest alternative.

FISK’S CONCEPTUAL MODEL OF DEPARTMENT STORE IMAGE

DIMENSION DETERMINANTSLocational convenience 1) Access route

2) Traffic barrier3) Travelling time4) Parking availability

Merchandise suitability 1) Number of brands stocked2) Quality of line3) Breadth of assortment4) Depth of assortment5) Number of outstanding departments in the store

Value for price 1) Price of a particular item in a particular store2) Price of same item in another store3) Price of another item in the same store4) Price of same item in the substitute store5) Trading stamps & discounts

Sales effort and store services

1) Courtesy of sales clerks2) Helpfulness of sales clerks3) Reliability and usefulness of

advertising4) Billing procedures5) Adequacy of credit arrangements6) Delivery promptness and care7) Eating facilities

Congeniality1) Store layout2) Store décor3) Merchandise displays4) Class of customers5) Store traffic and congestion

Post-transaction satisfaction

1) Satisfaction with good in use2) Satisfaction with returns and

adjustments3) Satisfaction with price paid4) Satisfaction with accessibility to

store

CUSTOMER VALUECustomers are value maximisers,and they tend to take

rational purchase decisionsConcept of customer Delivered value/customer perceived value-it is the difference between prospective custmer’s

evaluation of all the costs of an offering and the alternatives.

Customer delivered value=total customer value-total customer cost.

Total customer value-is the percieved monetary value of the bundle of the bundle of economic,functional &

psychological benefits that customer expect from a given market offering.

Total customer cost-is the bundle of costs,customers expect to incur in evaluating,obtaining,using&disposing

off,the given market offering.Customer satisfaction-S=P-E

S=SATISFACTION LEVELP=PERFORMANCE AS PERCIEVED BY CUSTOMER

E=PERFORMANCE AS ALREADY EXPECTED BY THE CUSTOMER.Therefore,P<E, P=E, P>E.

Consumer Buying Decision Process

Who Makes the Buying DecisionWho Makes the Buying Decision

Types of Buying DecisionsTypes of Buying Decisions

Stages in the Buying ProcessStages in the Buying Process

Marketers Must Identify and Understand:

CONSUMER BUYING BEHAVIOR

• BUYING ROLES:– initiator--a person who first suggests the idea of

buying the product or service– influencer--a person whose views or advice

influences the decision– decider--a person who decides on any component of

a buying decision– buyer--the person who makes the actual purchase– user--a person who consumes the product/service.

Types of Buying Decisions

ComplexBuying

BehaviorDissonance-

Reducing BuyingBehavior

Variety-SeekingBehavior

HabitualBuying

Behavior

HighInvolvement

Significantdifferences

betweenbrands

Fewdifferences

betweenbrands

LowInvolvement

VARIOUS TYPES OF BUYING SITUATIONS

• Complex buying situation-purchasing a car, computer, house etc.stress is on pre-purchase councelling.Involvement on marketer’s part is very high because brands differ widely.

• Habitual buying situation-purchasing grocery items, low involvement because brands differ marginally marketers job is to make it available easily.

• Dissonance-reducing buying situation-purchasing carpets, I-tech electric devices, personal computers etc.High involment is required at post purchase level so as to reduce post purchase dissonance of customers.

• Variety-seeking buying situation-purchasing cookies,perfumes,cosmetics products,clothes,shoes etc.Low involvement.stress is on attracting retailers& customers through attractive offers, prompting them to ‘switch’ brands.

Levels of Consumer Decision Making

Extensive Problem Solving

Limited Problem Solving

Routine Response Behavior

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Levels of Consumer Decision Making

• Extensive Problem Solving– A lot of information needed– Must establish a set of criteria for

evaluation• Limited Problem Solving

– Criteria for evaluation established– Fine tuning with additional information

• Routinized Response Behavior– Usually review what they already know

39 Chapter Fifteen Slide

Extensive Extensive Problem Problem SolvingSolving

•A search by the consumer to establish the necessary product criteria to evaluate knowledgeably the most suitable product to fulfill a need.

•Problem solving occurs when

•buyers purchase more expensive important or technically complicated product/service for the first time.

•less frequently purchased products in an unfamiliar product category requiring information search & evaluation

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Limited Limited Problem Problem SolvingSolving

•A limited search by a consumer for a product that will satisfy his or her basic criteria from among a selected group of brands.

•Problem solving occurs when buyers are confronted with an unfamiliar brand in a familiar product category.

•Often occurs when consumer purchasing new, updated version of something already purchased before.

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Routinized Routinized Response Response BehaviorBehavior

•At this level, consumers have experience with the product category and a well-established set of criteria to evaluate the brands is considered.

•Response behavior occurs when buyers purchase low cost, low risk, brand loyal, frequently purchased, low personal identification or relevance, items with which they are familiar.

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Types of consumer involvement and decision making

Routine Limited Extensive

Involvement Short Low to moderate

High

Time Low Short to moderate

Long

Cost Short Low to moderate

High

Information Search

Internal only Mostly internal

Internal & external

Number of alternatives

one few many

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• Motivation is the driving force within individuals that impels them to action.

• Needs are the essence of the marketing concept. Marketers do not create needs but can make consumers aware of needs.

• Innate Needs– Physiological (or biogenic) needs that are

considered primary needs or motives

• Acquired Needs– Learned in response to our culture or

environment. Are generally psychological and considered secondary needs

• The sought-after results of motivated behavior

• Generic goals are general categories of goals that consumers see as a way to fulfill their needs

• Product-specific goals are specifically branded products or services that consumers select as their goals

Is a body spray an innate or

acquired need?

• Rationality implies that consumers select goals based on totally objective criteria, such as size, weight, price, or miles per gallon

• Emotional motives imply the selection of goals according to personal or subjective criteria

• What products might be purchased using rational and emotional motives?

• What marketing strategies are effective when there are combined motives?

• Needs are never fully satisfied• New needs emerge as old needs are

satisfied• People who achieve their goals set new

and higher goals for themselves

• Are used when a consumer cannot attain a specific goal he/she anticipates will satisfy a need

• The substitute goal will dispel tension• Substitute goals may actually replace the

primary goal over time

• Failure to achieve a goal may result in frustration.

• Some adapt; others adopt defense mechanisms to protect their ego.

• Methods by which people mentally redefine frustrating situations to protect their self-images and their self-esteem

Construct ItemsAggression In response to frustration, individuals may resort to aggressive

behaviorin attempting to protect their self-esteem. The tennis prowho slams his tennis racket to the ground when disappointed withhis game or the baseball player who physically intimidates an umpirefor his call are examples of such conduct. So are consumerboycotts of companies or stores.

Rationalization People sometimes resolve frustration by inventing plausible reasonsfor being unable to attain their goals (e.g., not having enoughtime to practice) or deciding that the goal is not really worth pursuing(e.g., how important is it to achieve a high bowling score?).

Regression An individual may react to a frustrating situation with childish orimmature behavior. A shopper attending a bargain sale, for example,may fight over merchandise and even rip a garment that anothershopper will not relinquish rather than allow the otherperson to have it.

Withdrawal Frustration may be resolved by simply withdrawing from the situation.For instance, a person who has difficulty achieving officerstatus in an organization may decide he can use his time moreconstructively in other activities and simply quit that organization.

Construct ItemsProjection An individual may redefine a frustrating situation by projecting

blame for his or her own failures and inabilities on other objects/persons. Thus the golfer who misses a stroke may blame his golf clubs .

Daydreaming Daydreaming or fantasizing enables the individual to attain imaginary gratification of unfulfilled needs.

Identification People resolve feelings of frustration by subconsciously identifying with other persons or situations that they consider relevant. For e.g. if the individual experiences frustration, he overcomes the frustration by using the advertised product.

Repression Another way that individuals avoid the tension arising from frustration is by repressing the unsatisfied need. Thus individuals may “force” the need out of their conscious awareness.

What type of defense

mechanism is this

spokesperson using in this

ad?

• Physiological arousal• Emotional arousal• Cognitive arousal• Environmental arousal

58Chapter Four Slide

• Behaviorist School– Behavior is response to stimulus– Elements of conscious thoughts are to be ignored– Consumer does not act, but reacts

• Cognitive School– Behavior is directed at goal achievement– Needs and past experiences are reasoned,

categorized, and transformed into attitudes and beliefs

59Chapter Four Slide

• Researchers rely on a combination of techniques

• Qualitative research is widely used

• Projective techniques are often very successful in identifying motives.

60Chapter Four Slide

• Term coined in the 1950s by Dr. Ernest Dichter

• Based on premise that consumers are not always aware of their motivations

• Identifies underlying feelings, attitudes, and emotions