CONSUMER BEHAVIOUR NOTES

LEARNING OUTCOME 1; (LO 1)

DEFINING CONSUMER BEHAVIOUR

Consumer behavior is comparatively a new field of study which evolved just after the Second World War.

The seller’s market has disappeared and buyers market has come up. This has led to paradigm shift of the manufacturer’s attention from product to consumer

and specially focused on the consumer behavior. The evaluation of marketing concept from mere selling concept to consumer-oriented

marketing has resulted in buyer behavior becoming an independent discipline. The growth of consumerism and consumer legislation emphasizes the importance that is

given to the consumer.

The heterogeneity among people makes understanding consumer behavior a challenging task to marketers. Hence marketers felt the need to obtain an in-depth knowledge of consumers buying behavior. Finally this knowledge acted as an imperative tool in the hands of marketers to forecast the future buying behavior of customers and devise four marketing strategies in order to create long term customer relationship.

Consumer Behavior: Definition

It is broadly the study of individuals, or organizations and the processes consumers use to search, select, use and dispose of products, services, experience, or ideas to satisfy needs and study of its impact on the consumer and society.

Consumer behavior is a study of how individuals make decision to spend their available resources (time, money and effort) or consumption related aspects (What they buy? When they buy?, How they buy? etc.).

Customers versus Consumers

The term ‘customer’ is specific in terms of brand, company, or shop. It refers to person who customarily or regularly purchases particular brand, purchases particular company’s product, or purchases from particular

The importance of studying consumer behaviour

The following reasons highlight the importance of studying consumer behavior as a discipline.

The study of consumer behavior helps everybody as all are consumers.

It is essential for marketers to understand consumers to survive and succeed in this competitive marketing environment.

The reason to study consumer behavior is because of the role it plays in the lives of humans. Most of the free time is spent in the market place, shopping or engaging in other activities. The extra time is usually passed in knowing and thinking about products and services, discussing with friends about them, and watching advertisements related to them. The usage of them significantly reveals our life styles. All these reasons suggest the need for study. However, the purpose may be to attend immediate and tangible reasons.

Consumer behavior is an applied discipline as some decisions are significantly affected by their behavior or expected actions. The two perspectives that seek application of its knowledge are micro and societal perspectives.

The micro perspectives involve understanding consumer for the purpose of helping a firm or organization to achieve its objectives. The people involved in this field try to understand consumers in order to be more effective at their tasks.

Whereas the societal or macro perspective applies knowledge of consumers to aggregate- level faced by mass or society as a whole. The behavior of consumer has significant influence on the quality and level of the standard of living

The role of consumer behaviour in the marketing of goods and services

Importance of Consumer Behaviour to business managers

The main purpose behind marketing a product is to satisfy demands and wants of the Consumers. Study of consumer behaviour helps to achieve this purpose. As consumers are the most important person for marketer or sales person, therefore it is important for them to consider the likes and dislikes the consumers so that they can provide them with the goods and services accordingly (Solomon, 2009). The more careful analysis helps in more exact prediction about the behaviour of consumers of any product or services. The study of consumer behaviours helps business manager, sales person and marketers in the following way.

To design the best possible product or service that fully satisfies consumer’s needs and demands.

To decide where the service or product would be made available for easy access of consumers.

To decide the price at which the consumers would be ready to buy that product or service.

To find out the best method of promotion that will prove to be effective to attract customers to buy a product.

To understand why, when, how, what and other factors that influence buying decision of the consumers.

Importance of Consumer Behaviour to Marketers

It is important for marketers to study consumer behaviour. It is important for them to know consumers as individual or groups opt for, purchase, consumer or dispose products and services and how they share their experience to satisfy their wants or needs. This helps marketers to investigate and understand the way in which consumers behave so that they can position their products to specific group of people or targeted individuals.

In regard to the marketer’s view point, they assume that the basic purpose of marketing is to sell goods and services to more people so that more profit could be made. This principle of making profits is heavily applied by almost all marketers. Earlier, the marketers were successful in accomplishing their purpose. However, today, as the consumers are more aware about the use of product and other information of the product, it is not easy to sell or attract customer to buy the product. Thus, in order to sell a product or service or to convince consumers to buy product, the marketers have to undergo through proper research to win them over.

The following are some of the points discussed that explains the value to marketers of understanding and applying consumer behaviour concepts and theories.

1. To understand Buying Behaviour of consumers

2. To create and retain customers though online stores

3. To Understand the factors influencing Consumer’s buying Behaviour

4. To understand the consumer’s decision to dispose a product or services

5. To increase the knowledge of sales person influence consumer to buy product

6. To help marketers to sale of product and create focused marketing strategies

LEARNING OUTCOME 2 (LO 2)

Importance of Consumer Behaviour to business managers

The main purpose behind marketing a product is to satisfy demands and wants of the Consumers. Study of consumer behaviour helps to achieve this purpose. As consumers are the most important person for marketer or sales person, therefore it is important for them to consider the likes and dislikes the consumers so that they can provide them with the goods and services accordingly. The more careful analysis helps in more exact prediction about the behaviour of consumers of any product or services. The study of consumer behaviours helps business manager, sales person and marketers in the following way.

To design the best possible product or service that fully satisfies consumer’s needs and demands.

To decide where the service or product would be made available for easy access of consumers.

To decide the price at which the consumers would be ready to buy that product or service.

To find out the best method of promotion that will prove to be effective to attract customers to buy a product.

To understand why, when, how, what and other factors that influence buying decision of the consumers.

Importance of Consumer Behaviour to Marketers

It is important for marketers to study consumer behaviour. It is important for them to know consumers as individual or groups opt for, purchase, consumer or dispose products and services and how they share their experience to satisfy their wants or needs. This helps marketers to investigate and understand the way in which consumers behave so that they can position their products to specific group of people or targeted individuals.

In regard to the marketer’s view point, they assume that the basic purpose of marketing is to sell goods and services to more people so that more profit could be made. This principle of making profits is heavily applied by almost all marketers. Earlier, the marketers were successful in accomplishing their purpose. However, today, as the consumers are more aware about the use of product and other information of the product, it is not easy to sell or attract customer to buy the product. Thus, in order to sell a product or service or to convince consumers to buy product, the marketers have to undergo through proper research to win them over.

The following are some of the points discussed that explains the value to marketers of understanding and applying consumer behaviour concepts and theories.

1. To understand Buying Behaviour of consumers

2. To create and retain customers though online stores

3. To Understand the factors influencing Consumer’s buying Behaviour

4. To understand the consumer’s decision to dispose a product or services

5. To increase the knowledge of sales person influence consumer to buy product

6. To help marketers to sale of product and create focused marketing strategies

WHY MANAGERS NEED TO UNDERSTAND CONSUMER BEHAVIOUR

1. To understand Buying Behaviour of consumers

The study of consumer behaviour helps marketers to recognize and forecast the purchase behaviour of the consumers while they are purchasing a product. The study of consumer behaviour helps the marketers not only to understand what consumer’s purchase, but helps to understand why they purchase it. Moreover, other questions like how, where and when they purchase it are also answered. The consumption and the reasons behind disposition of that particular product or services help marketers to be fully aware of the product that is marketed. The consumer behaviour studies also help marketers to understand the post purchase behaviour of the consumers. Thus, the marketers become fully aware about every phase of consumption process i.e., pre-purchase behaviour, behaviour during purchase and post purchase behaviour. Many studies in the past shows that each consumer behaves differently for a product i.e., they buy the product for different reasons, pays different prices, used the product differently and have different emotional attachments with the product.

2. To create and retain customers though online stores

Professor Theodore Levitt says that consumer behaviour is of most importance to marketers in business studies as the main aim is to create and retain customers. If the consumers are satisfied with the product, he or she will buy the same product again. Therefore, the product should be marketed by markers in such a way that convince customer to buy the product. Thus, creating customer and the retaining those customers are important. These can be done through understanding and paying close attention towards the consumer’s behaviour while making purchase decision or buying a product in market place. Moreover, the information published on the websites largely influence the customer’s buying behaviour. Such information on published sources arouse consumer to buy a product or service. Moreover, updating such information will help the consumer to retain to a product or re try the product if the product has dissatisfied them.

3. To understand the factors influencing Consumer’s buying Behaviour

It is important for marketers to consider the factors that affect the buying behaviour of consumer before entering the market. There are many factors that can influence the purchase decision of consumers such as social influence, cultural influences, psychological factors and personal

factors. Understanding these factors helps marketers to market the product on right time to the right consumers. For example, if marketer is marketing a product which is Halal. The marketers first consider all the factors that can influence consumers to buy Halal products, where they can target specific areas where Halal food is more sold.

The marketers need to pay attention to cultural influences such as religion, values and norms of the people or societies targeted and lifestyle of the targeted consumers. The marketers can propose different strategies that convince the targeted consumers to buy marketed products or services.

Moreover, the marketers should be ascertain the factors that influence and affects purchase decision of consumers. If the marketers failed to understand the factors that might influence consumers, they will fail to convince the consumer to purchase that product or will fail to meet the demands of consumers. Some variables cannot be directly observed. In such case, thorough understanding of concepts and theories of consumer behaviour helps marketers to predict the consumer’s buying behaviour to a reasonable extent. Thus, understanding consumer’s behaviour to buy a product is complex and requires marketers to continuously understand and apply various concepts and theories for successful marketing.

4. To increase the knowledge of sales person influence consumer to buy product

All the products and services marketed revolve around the behaviour of consumers that how they will respond to them. Effective marketing of a product by sales people may help to deliver right product to right people. Consumer behaviour deals with the knowledge of what the consumers need and want to buy and what goods and services are available to satisfy their needs. Thus, consumer behaviour deals with particularly with the behaviour of people i.e., consumers.  It is important for sales person to be fully aware of the customer’s requirement so that he or she could clearly communicate the benefits of the product to the customers. Moreover, the sales person by understanding consumer’s demand and need for a product can sell goods that are most closely related to their requirement. Besides understanding consumer behaviour, the sales person should also have command over their spoken language. This is because any miscommunication could harm brand reputation. Moreover, if the consumers have more knowledge about the product than the sales person, the sales might fail to meet their targets. Thus, analysing consumer’s behaviour and knowledge for effective marketing of products by sales people are important. The sales people must be fully aware of the consumer’s behaviour in different situations so that they could help them in meeting their demands and satisfaction.

5. To understand the consumer’s decision to dispose a product or services

Disposal of product involves throwing away of products by the consumers. This behaviour of consumer is very complex and requires more importance by the marketers. Understanding the consumer’s behaviour about how and when consumers dispose a product, the marketers or the companies can position themselves so that this behaviour could be limited.

If the product or services that have failed to deliver required or expected satisfaction by the consumers, the product is disposed by the customers. For this, some marketers track the follow

up from the consumers so that they can gauge the reason behind failure of the product. Moreover, in order to retain customers, some marketers or organizations offer customers with services like exchange of product, money back guarantee etc. Although, these tools are helpful to influence post purchase behaviour of consumers to some extent.

The method of disposition varies transversely from product to product. Some of the factors that lead to consumer’s behaviour to dispose a product include psychological characteristics, situational factors or the intrinsic factors of product. The psychological characteristics include attitude, mood, emotion, social class, social conscience, perception etc. The situational factors such as urgency, functional use, fashion change etc. and intrinsic factors such as product style, durability, reliability, adaptability, replacement cost, colour, size etc. can lead to consumer’s decision to dispose a product.

For example, the personal computers sold previously were largely demanded by consumers. However, due to change in size, advancing technology, affordability, convenience; most people have switched to laptops and mobiles with operating systems have disposed personal computers to a greater extent.

6. To help marketers to optimize sale of product and create focused marketing strategies

The theories and concepts of Consumer behaviour help marketers to optimize their sales and to create efficient marketing strategies. Moreover, these theories provides marketers with information on the consumer’s behaviour to spend money, likely causes that incline them to spend more money on a product, and these two information help to plan strategies that should be practiced by the marketers for successful marketing of a product. Studying different consumer behaviour theories helps to understand the different choices that consumers make to buy a product. There are some factors that need to be carefully analysed by the marketers which help them to increase their sales and develop effective marketing strategies. These factors are discussed as follows:

Consumer’s rational behaviour: It is foremost important for a marketer to understand the situations where consumers behave rationally. Many consumer behaviour theories suggest that the consumers want to get maximum benefit and satisfaction from the product by spending minimum amount of money. This shows that consumers do not spend all their money to buy a product and keeps a certain amount of money as their savings. However, on the other hand, the consumers having limited money spend all their money on purchase of their basic needs such as shelter, food and clothing. Thus, the marketer must carefully analyse these two situations of consumers before marketing a product or services).

Consumer’s taste and preferences: Understanding consumer taste and preferences helps marketers to revamp their product so that they could meet customer satisfaction. These factors may change from time to time. The change in consumer’s behaviour affecting by these factors should be carefully monitored. The marketers need carefully understand the consumer’s interest in the products by breaking down the targeted consumers into demographics, like age, occupation and location as they contribute investigating information about consumer preferences.

Price of Products: Prices of products are a widely discussed factor in consumer behavior theories. The theories suggest that marketers should keep their prices low without affecting the quality to attract consumers. This is because consumers go mostly for products that are of low price but satisfies their demand.

Features of Product: Increased number of features offered by the product tends to increase the price of products. In such case, consumers go for added features in a product at affordable price. Therefore, the markers design their products in such a way that the product gives maximum value or features to consumers at affordable price.

Consumer’s knowledge about a product: The marketer must know to what extent the consumers have knowledge about a product. Mostly, consumers select products with which they are familiar with. For example, if the consumers are aware of the health effects of eating high fat food or fast food, marketing of such a product to health conscious consumer will end up in failure.

LO2 Consumer Research

Research signifies the practice of gathering new or existing information to enhance one’s knowledge. Consumer Research is a form of applied sociology that is concerned with understanding the behaviors of consumers in a market-based economy.

The Importance of Consumer Research

Establish viability

Even the best business ideas can fail if conditions are not right. The fact is, no matter how good an idea for a product or service is, the market has to be

ready for it and there must be a gap in the market. This is one reason why consumer research is so important.

It gives you a chance to see whether real people would be prepared to hand over their hard-earned money for your offerings.

Getting negative feedback can be disappointing, but it may save the business money. After all, it may prevent the manager from making the potentially costly mistake of launching a business based on an idea that is likely to fail.

Identify your target market

Consumer research can also help the business to identify its market. By finding out exactly who is interested in their products, what makes them tick and how

much they are willing to spend, you will be in a better position to tailor their brand and to establish the precise direction you want to move in.

Hone your product

Finding out what people think about your goods will also help you to hone them. You can get feedback on the aspects of your products people like best and what they would want you to change. In turn, you can use this valuable information to tweak your offerings to perfection. This should help you to sell your goods once you launch them for real. Ultimately, this is good news for your bottom line.

Not just a one-off

Of course, consumer research shouldn’t be seen simply as a one-off activity. As well as proving invaluable to start-ups, this type of intelligence gathering plays an important ongoing role in established companies. You can use it to get feedback whenever you change your products or introduce new ones, and this research can help you to stay up-to-date with the latest consumer trends and tastes.

Market Segmentation Variables & Characteristics

Developing market segments is a key step in marketing and understanding consumers.

Market segmentation is the process of breaking your total target audience into separate groups of customers with similar traits or interests. The characteristics used in segmenting relate to your segmentation strategy or approach. Within your chosen strategy, certain variables contribute to the development of specific segments of customers with similar qualities.

The following are the 4 ways of segmenting consumer markets

1. Demographics

Demographics segmentation is a common strategy where you identify market segments based on shared demographic or personality qualities. Specific characteristics often used in demographics segmentation include age, gender, race, marital status, income, education and occupation. An ICT device technical provider might target a market of male consumers age 18 to 24 who are in college or who have a college degree and a salary ranging from $35,000 to $60,000.

2. Lifestyles and Psychographic segmentation

Lifestyles and psychographics segmentation is an approach that places emphasis on the shared activities, interests and behaviors of particular customers. Along with activities, lifestyle segmentation is driven by characteristics such as shared interests, opinions, attitudes and values of customers. A fishing hunting materials shop would likely target customers based on their similar interests and attitudes toward fishing, for instance. This approach makes more sense given widespread demographic traits among fishing and outdoor enthusiasts.

3. Geographic segmentation

One of the simplest and most common segmentation strategies for small businesses is based on geography. If you have a broad customer base congregated in a local, regional, national or international location, it makes sense to invest in geographic marketing. Size, population density and climate factors are traits of geographic segmentation, along with region or location. Targeting a rural market of 10,000 customers is much different than targeting an urban market of 100,000 customers, for instance.

4. Behavioral segmentation

With a behavioral segmentation strategy, you target customers based on their interest or experience with your company or products. With this strategy, your market segments have shared familiarity with your products. Benefits sought, usage, loyalty, prospect or customer status are common characteristics. Car companies often use benefits segmentation to target a broad market looking for different benefits, such as economy, performance, luxury or status. Targeting new prospects is also distinct from targeting brand-loyal customers.

Importance of segmentation

Why Segmentation? – its importance

Segmentation is all about reaching the right customer at the right time, whether it’s during a busy downpour or a lifestyle change that necessitates purchasing new goods or services. Doing so offers distinct benefits to any organization willing to gain better insight into customers, their lifestyles, and their habits.

Targeting - Segmentation makes it possible for marketers to target the groups that are interested in their product with suitable products and services and they can also target appropriate audiences with promotional advertisements.

Marketing Budgets. One of the most obvious benefits of segmentation is reserving the marketing budget for those who are most likely to become customers. Without segmentation, a tire company might waste money sending direct mail ads to a family who takes the bus. Instead, defining the ideal customer profile and then marketing to those who fit means saving money while increasing the chances of a sale.

Pricing and Product Development. The average stuck-in-the-rain commuter wants a cheap, disposable umbrella. Proper segmentation highlights not only what customers want, but what they’re willing to pay for those desired features. This type of segmentation-driven product development allows for safe expansion with the confidence that the target consumer represents the high propensity for profits.

Customer Retention. Customers want to feel like more than just a number to organizations, and segmentation allows for a modicum of personalization in marketing. While you probably can’t afford to send every prospective customer a personalized greeting, you can target ads so that they’re relevant to that customer’s lifestyle, family, habits, and location. This creates a feeling a brand loyalty for customers who feel like they’re being catered to and heard.

CONSUMER RESEARCH DETAILED

Prana summarises the purposes of consumer research

The purpose of consumer research:

To help companies make better business decisions and gain advantages against their competitors.

To help marketing managers or executives make numerous strategic and tactical decisions in the process of identifying and satisfying customer needs.

To remove some of the uncertainty by providing relevant information about the marketing variables, environment, and consumers. In the absence of relevant information, the consumer response to marketing programs cannot be predicted reliably or accurately

To provide insights that help guide the creation of a business plan, launch a new product or service, optimize existing products and services, and guide expansion into new markets

To determine which portion of the population will be most likely to purchase a product or service, based on variables such as age, gender, location, and income level

To reveal characteristics of a target market

To understand how consumers talk about the products in the market

To identify which consumer needs are important and whether these needs are being met by current products

With effective market research, your company can gain invaluable information about your competitors, economic shifts, demographics, the current market trends and the spending traits of your customers.

THE CONSUMER RESEARCH PROCESS

Companies conduct marketing research with consumers to better understand their needs and determine customer satisfaction levels. Consumer research is particularly crucial when a company decides to market a new product. The company must determine the potential success of the product by asking consumers for their opinions. After conducting focus groups and surveys, marketing managers must analyze the consumer data and make recommendations based on the survey results.

Product Idea Development

The consumer research process usually starts with an idea to create or market a particular product. A small company may hold a meeting between marketing, advertising, engineering and finance managers to develop a product concept. Subsequently, a company may develop a prototype of the product and manufacture some units for demonstration. The product may be demonstrated at trade shows or used as a model during the selling process. Some companies may just write out a description of the product in lieu of a prototype, waiting to confirm the product's potential success before producing it.

Secondary Research

Secondary Data

Secondary data is the data that have been already collected by and readily available from other sources. Such data are cheaper and more quickly obtainable than the primary data and also may be available when primary data can not be obtained at all.

Advantages of Secondary data

1. It is economical. It saves efforts and expenses.

2. It is time saving.

3. It helps to make primary data collection more specific since with the help of secondary data, we are able to make out what are the gaps and deficiencies and what additional information needs to be collected.

4. It helps to improve the understanding of the problem.

5. It provides a basis for comparison for the data that is collected by the researcher.

Disadvantages of Secondary Data

1. Secondary data is something that seldom fits in the framework of the marketing research factors. Reasons for its non-fitting are:-

a. Unit of secondary data collection-Suppose you want information on disposable income, but the data is available on gross income. The information may not be same as we require.

b. Class Boundaries may be different when units are same. 

Before 5 Years After 5 Years

2500-5000 5000-6000

5001-7500 6001-7000

7500-10000 7001-10000

c. Thus the data collected earlier is of no use to you.

2. Accuracy of secondary data is not known.

3. Data may be outdated.

Evaluation of Secondary Data

Because of the above mentioned disadvantages of secondary data, we will lead to evaluation of secondary data. Evaluation means the following four requirements must be satisfied:-

1. Availability- It has to be seen that the kind of data you want is available or not. If it is not available then you have to go for primary data.

2. Relevance- It should be meeting the requirements of the problem. For this we have two criterion:-

a. Units of measurement should be the same.

b. Concepts used must be same and currency of data should not be outdated.

3. Accuracy- In order to find how accurate the data is, the following points must be considered: -

a. Specification and methodology used;

b. Margin of error should be examined;

c. The dependability of the source must be seen.

4. Sufficiency- Adequate data should be available.

Robert W Joselyn has classified the above discussion into eight steps. These eight steps are sub classified into three categories. He has given a detailed procedure for evaluating secondary data.

1. Applicability of research objective.

2. Cost of acquisition.

3. Accuracy of data.

Analysis and Product Introduction

Data is usually coded and submitted to marketing research managers in data tables, especially when outside marketing research agencies conduct the research. The research manager or owner must then analyze the data and extract key findings from the research. For example, 80 percent of the survey respondents may say that they would use a small company's cleaning product daily, based on the description. This would further support that company's decision to market the product. The company or business owner would then decide how to best introduce the product to the market, either through direct selling or advertising.

CONSUMER RESEARCH METHODS

Best research approaches to understand customers

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.

The following are some of the methods usually used to understand consumers. However the best method depends on what the marketer is researching:

Usually what it is noticed that, consumers generally hesitate to reveal the basic reason behind purchasing a particular product. Here, researchers use two different types of research methodologies to study consumer behaviors:

Quantitative Research Qualitative Research

According to the traditional business approaches, researchers thought that consumers are logical and they act rationally to take calculative decisions and maximize their benefits. They thought consumers purchase the most beneficial product at the lowest possible cost. Researchers have recently realized that, consumers are not always rational and are not always aware of the decisions they make.

Quantitative ResearchQuantitative research is the application of quantitative research techniques while carrying out the research process. This method is used to predict the consumer behavior and is descriptive in nature. It consists of experiments, survey techniques, and observation. It typically involves the construction of questionnaires and scales. Respondents are asked to complete the survey. Marketers use the obtained information to understand the needs of individuals in the marketplace, and to create strategies and marketing plans.

To analyze data and draw conclusions, both descriptive and inferential statistical techniques can be used. It may include hypotheses, or random sampling techniques to enable inference from the sample to the population.

Quantitative research methods used in consumer Research are

a) Call Centers

Call centers are another less obvious method for customer research.

Call centers are the source for all things related to the company.

A customer may call to find out information, report a product problem or get tech support. Almost all calls from call centers are recorded.

The calls are sorted and categorized by type and this gives companies a good idea of what customers are saying.

For example if the call center is being bombarded with calls regarding how to use a new product then the company knows that the instructions for the new product are inadequate.

Companies monitor call center activity and relay information back to the appropriate divisions in their firm.

b) User Opinion Surveys (questionnaires)

User opinion surveys are found inside retail outlets, on the company website and sometimes mailed out as questionnaires to customers on the company mailing list.

This method allows customers to anonymously submit their opinions to the company in writing.

Often there will be specific questions regarding satisfaction of products and customer service. These surveys are then gathered and analyzed by the marketing department and changes are made based on the responses of consumers. Following are the qualities of a good questionnaire.

Characteristics of a good questionnaire

The length of questionnaire should be proper one.

The language used should be easy and simple.

The term used are explained properly.

The questions should be arranged in a proper way.

The questions should be in logical manner.

The questions should be in analytical form.

Complex questions should be broken into filter questions.

The questions should be described precisely and correctly.

The questionnaire should be constructed for a specific period of time.

The questions should be moving around the theme of the investigator.

The answers should be short and simple.

These answers should be accurate.

The answers should be direct one.

The answers should be relevant to the problem.

The answers should be understand able to everyone of respondent

c) Website Metrics

Most companies have a website and a website can provide a lot of information about its visitors to a company.

Most websites are tied to a tool that analyzes their traffic, one free tool that does this is Google Analytics.

These tools provide information about the site's visitors and their behavior.

For example most website performance metric tools allow companies to see, where in the world visitors are coming from, what content is most popular, where visitors go on their website and how this links to current promotions and sales.

d) Observational Techniques in Marketing Research One of the oldest techniques used in marketing research is the observational method. Through direct observation of people, marketing specialists are able to identify actions

and watch how subjects respond to various stimuli. For a small business, observational marketing research is one of the most simple ways

that one can find out many things about their customers and clients.

Observational Technique Definition

Observational marketing research is a qualitative method of collecting and analyzing information obtained through directly or indirectly watching and observing others in natural or planned environments. It is often the first, and sometimes only, step in developing a marketing plan or project. Social research techniques, observational research methods may be done covertly or overtly to obtain the best, most efficient results. Additionally, researches may participate in the experience to provide a more informed report.

Advantages of Observational Techniques

There are many advantages to utilizing observational techniques when conducing marketing research for your small business.

During observation only, subjects often behave more naturally and do not purport to demonstrate their "ideal selves" instead of their true actions.

Recall error is not a problem when conducting observational research. In clinical settings, behaviors are reported in relationship to activities or other stimuli. In observational research done in natural settings, subjects are reported as doing exactly

as what was observed. Observational research can be modified to obtain the best results possible, if necessary.

For instance, if one cannot see clearly enough from a particular location, he may choose to move to a closer observing spot.

Observational techniques often provide the only way to conduct certain research, such as determining the number of shoppers visiting a store or the behavior of children.

Disadvantages of Observational Techniques

While observational techniques have many advantages, they also have some faults, too.

Researchers have no control over the situations and environments typically used in observational research.

Additionally, observational research is time consuming. One must have patience and time to devote to watching a set number of individuals or settings to obtain the information necessary.

Researchers may also become distracted while observing, which can taint the results of the research.

Examples of Observational Techniques

Several common examples of observational marketing techniques exist and are used frequently. Perhaps, one of the most common ways researchers use observational techniques is through cookies on computers, used to track users' web views and visits. Focus groups utilize observational techniques, as does the Nielson ratings used to track popular viewing habits of television programs. Transportation departments use observational research to conduct traffic counts and usage patterns. Many retail marketers use observational techniques when they count license plates in parking lots, record purchasing behavior through bar-coded transactions and observe package scrutiny and preference.

Qualitative research techniquesQualitative research involves an in-depth understanding of consumer behavior and the reasons that govern that behavior. Qualitative research largely relies on the reasons behind various aspects of behavior.

The methods include techniques such as in-depth interviews, focus groups, metaphor analysis, and projective techniques. In this method, the sample sizes are small, so it can’t be generalized to the larger population. This method investigates the why and how of decision-making, as compared to what, where and when of quantitative research. As quantitative research depends exclusively on the analysis of numerical or quantifiable data, qualitative research comes in many mediums, including text, sound, still images, and moving images.

In this method, responses are verbal and not in numbers and the respondent is asked to rate the answer in his own words. This approach allows the researcher to discover the consumption motives, attitudes, opinions, perceptions, preferences, experiences, actions, etc. of the consumers.

Qualitative research techniques used in consumer behaviour are:

a) Focus Groups

Focus groups are the ultimate in consumer research.

A focus group gives companies an in depth detailed view into consumers' minds and how they view and interact with the product.

A focus group consists of a day long (or even longer) meeting of individuals with appropriate characteristics, usually around 10 in total.

A facilitator will talk with consumers, have them interact with the product, ask questions and get feedback regarding the product.

The whole focus group is usually observed and recorded by company executives who view the proceedings behind a two way mirror. Companies typically hold focus groups when researching a new product.

Objectives of Focus Group

1. To gather primary information for research project;

2. To help developing questionnaires in terms of survey research;

3. To understand reason behind a particular phenomenon:

4. To see how people interpret certain phenomenon;

5. To test primarily ideas or plan

Steps involved in conducting Focus group

1. Define the problem

2. Select a sample

3. Determine the number of groups necessary(minimum number should be two)

4. Prepare the study mechanics. Arrange the respondents place where the focus group is to be assembled.

5. Select moderators and brief them.

6. Prepare the focus group material.

7. Conduct the session.

8. Analyze the data and prepare summary report.

Advantages of Focus Group

1. It is used to collect primary information and therefore it can conduct a pilot study also.

2. Relative cost is not much.

3. It can be conducted quickly.

4. It has flexibility.

5. Moderator can detect the opinion and certificates of those who cannot speak well by facial expression and other non verbal behaviour.

6. We can get the questionnaire filled up either before or after the discussion.

Disadvantages of Focus Group

1. It is inappropriate for gathering quantitative data.

2. Self appointed group leader may impose his /her opinion on other members. Moderators can restrict people.

3. t depends heavily on skills of moderator.

4. Respondents in the focus group may or may not represent the population from which they are drawn.

5. Recording equipments are likely to restrict respondents. Location of recording equipment is very important.

b) Personal Interview Survey

The Face-to-Face Method

A personal interview survey, also called as a face-to-face survey, is a survey method that is utilized when a specific target population is involved. The purpose of conducting a personal interview survey is to explore the responses of the people to gather more and deeper information.

Personal interview surveys are used to probe the answers of the respondents and at the same time, to observe the behavior of the respondents, either individually or as a group. The personal interview method is preferred by researchers for a couple of advantages. But before choosing this method for your own survey, you also have to read about the disadvantages of conducting personal interview surveys. In addition, you must be able to understand the types of personal or face-to-face surveys.

Advantages of Personal Interview Survey

High Response Rates

One of the main reasons why researchers achieve good response rates through this method is the face-to-face nature of the personal interview survey. Unlike administering questionnaires, people

are more likely to readily answer live questions about the subject (for instance, a product) simply because they can actually see, touch, feel or even taste the product.

Tolerable Longer Interviews

If you wish to probe the answers of the respondents, you may do so using a personal interview approach. Open-ended questions are more tolerated through interviews due to the fact that the respondents would be more convenient at expressing their long answers orally than in writing.

Better Observation of Behavior

Market researchers can benefit from personal interview survey because it presents a greater opportunity to observe the attitude and behavior of the respondents / consumers toward a product.

Disadvantages of Personal Interview Survey

High Costs

Face-to-face interview surveys are considerably more expensive than paper-and-pencil questionnaire surveys, online surveys and other types of surveys.

Time-consuming

Personal interview surveys are not usually time-bounded, so the gathering of data from the respondents can take a longer time. Another thing that makes this method time-consuming is when there is a need to travel and meet the respondents at either single or different locations.

Types of Personal Interview Survey

Basically, there are two-types of personal interview survey according to how the interviewer approaches the respondents: intercept and door-to-door interviews. In an intercept approach, the interviewer usually conducts a short but concise survey by means of getting the sample from public places such as malls, theaters, food courts, or tourist spots. On the other hand, a door-to-door interview survey involves going directly to the house of the respondent and conduct the interview either on-the-spot or at a scheduled date.

c) Ethnographics

Ethnographic is a more in-depth look at consumer behavior. Ethnography looks at a consumer's lifestyle and daily activities. A product or service may be only one small part of a person's life. An ethnographer spends extended time with study subjects and assesses their habits and attitudes. This kind of consumer behavior research is expensive and time-consuming and may be intrusive. It requires the researcher to interpret non-verbal and well as verbal communication.

d) Panels

Panels also operate long term, even for years. Researchers survey panel members regularly, and the resulting data provides a picture of consumer habits over time. Examples of panels include Neilsen ratings and Arbitron. With panels, companies can assess the effect of different advertising campaigns, packaging or other changes.

d) Projective Techniques

Projective Techniques are indirect and unstructured methods of investigation which have been developed by the psychologists and use projection of respondents for inferring about underline motives, urges or intentions which cannot be secure through direct questioning as the respondent either resists to reveal them or is unable to figure out himself. These techniques are useful in giving respondents opportunities to express their attitudes without personal embarrassment. These techniques helps the respondents to project his own attitude and feelings unconsciously on the subject under study. Thus Projective Techniques play a important role in motivational researches or in attitude surveys.

Important Projective Techniques

1. Word Association Test.

2. Completion Test.

3. Construction Techniques

4. Expression Techniques

1. Word Association Test: An individual is given a clue or hint and asked to respond to the first thing that comes to mind. The association can take the shape of a picture or a word. There can be many interpretations of the same thing. A list of words is given and you don’t know in which word they are most interested. The interviewer records the responses which reveal the inner feeling of the respondents. The frequency with which any word is given a response and the amount of time that elapses before the response is given are important for the researcher. For eg: Out of 50 respondents 20 people associate the word “ Fair” with “Complexion”.

2. Completion Test: In this the respondents are asked to complete an incomplete sentence or story. The completion will reflect their attitude and state of mind.

3. Construction Test: This is more or less like completion test. They can give you a picture and you are asked to write a story about it. The initial structure is limited and not detailed like the completion test. For eg: 2 cartoons are given and a dialogue is to written.

4. Expression Techniques: In this the people are asked to express the feeling or attitude of other people.

Disadvantages of Projective Techniques

1. Highly trained interviewers and skilled interpreters are needed.

2. Interpreters bias can be there.

3. It is a costly method.

4. The respondent selected may not be representative of the entire population.

3rd Party Research

There are many third party research companies that provide very valuable consumer research data to companies.

These companies usually compile very large industry based surveys that would be too time consuming and costly for a single company to do.

The market research company can afford to do this because it sells the final report to all the companies in that industry.

These reports are usually very in depth and involve a wide range of demographic information and customer feedback.

Developing Research ObjectivesThe first step in the consumer research process is developing the research objectives which involves defining the purposes and objectives to ensure an appropriate design. A statement of objective helps to define the type and level of information needed.

Collect Secondary Data

There are two distinct sources of secondary data – internal and external. Always seek internal sources first. Most go straight to Google without considering the fact that data might exist within the organization itself. This can sometimes be in the ‘heads’ of the personnel.

External Sources

External sources are numerous. Consumer Generated Media (CGM), especially, has grown in importance as a data source. The key is to avoid spending too much time following ‘blind alleys’. This is where the time and cost can escalate sharply.

Directories Country information Published marketing research reports News sources CGM (Newsgroups, blogs, groups) Internet – single search engines, and multiple search engines

KEY ISSUES FOUND ABOUT CONSUMERS

Consumers rarely weigh up all the costs and benefits of choices.

Instead, purchasing decisions may be made automatically, habitually, or be heavily influenced by an individual’s emotions or the behaviour of others. This also means that consumers tend not to use all of the information available to them when shopping. Instead, people are more likely to read information when they perceive a benefit from doing so.

Consumers use mental short-cuts to help speed up decision-making.

These short-cuts can distort consumers’ decisions. Short-cuts can include relying on labels or brand names that are recognised, and being influenced by the way in which information is presented and the context in which a decision is made.

Consumers respond more to losses than gains.

This means people are more reluctant to give something up or suffer loss than they are motivated by benefits of equal value. This aversion to loss has a significant impact on the way in which people interpret information and can lead to consumers avoiding making choices altogether.

Consumers value products much more once they own them.

In addition, the value placed on a product is inconsistent. It can vary over time, and can be affected by the previous cost of the product and the emotional attachment someone places on a product. This makes people reluctant to trade in old products, even when it would be cost-effective to replace them.

Consumers place a greater value on the immediate future

They also heavily discount future savings. This impacts on the way in which consumers value the efficiency and lifetime costs of appliances.

Too much choice can be overwhelming to consumers,

This makes decision-making difficult. As choice increases, consumers may consider fewer choices, process less overall information and evaluate information differently. When choice is particularly excessive, consumers may actually avoid making a choice altogether.

Consumers are heavily influenced by other people.

This might take the form of an indirect influence, for example from seeing neighbours or friends buying a product, or a more direct, explicit influence, for example when a salesperson persuades someone to buy a certain product. Nearly all consumption choices are subject to some kind of social influence.

Consumers use products to make a statement about themselves.

Products meet far more than just a functional need; they make a statement about a person’s identity and about the type of person they are and would like to be. One of the most important lessons from marketing is that people buy products for very different reasons; for example, while some people may be motivated by concern for the environment, many others will not.

Key research findings: implications for product policy

In light of these findings, the project identified a number of opportunities andimplications for the design of more effective product policy:

Reconsider the impact of price.

The impact that price has on consumer behaviour can be influenced by in-store marketing, such as special offers, by the prices of similar products and by consumer perceptions of changes in price. Policy should work with retailers to encourage price promotions on environmentally-preferable products. Although price incentives may initially cause consumers to react to price changes, consumer valuations of prices tend to change over time. This means that as consumers adapt to higher prices, initial changes to consumer behaviour may not be maintained. Financial levers that increase over time can overcome this problem.

Help consumers consider long-term costs.

Consumers have a tendency to overvalue the short-term and undervalue the future so tend not to consider the long-term running costs associated with products. Policy could work with retailers to ensure that the long-term costs of products, rather than just the purchasing price, are highlighted to consumers.

Recognise the importance of recognition.

Consumer choice is often driven by recognition of products, brands or labels. Labels need to be consistent and easily recognisable, something which the current colour-coding system used within the European energy label will aid. Future labelling schemes should take advantage of the fact that consumers may already recognise ‘A’ rated products as the most energy efficient. A ‘frontrunner’ approach, whereby classes are updated periodically so that the most energy efficient products are always awarded an a label, would help to maintain this existing recognition.

Reconsider information provision.

The way in which messages are framed plays an enormous part in the way in which consumers interpret that information. Information is also much more likely to be taken notice of by a consumer if perceived as beneficial. Present information in ways that appeal to consumers, recognising that this may differ according to consumers and products. Policymakers need to also recognise that product information reaches consumers through numerous routes: consider the role of intermediaries (like salespersons) and new Internet-based information sources on consumer behaviour.

LO 3-4 Determinants/Factors affecting individual consumer Behaviour

A. SOCIAL FACTORS AFFECTING CONSUMER BEHAVIOUR

Consumer Behaviour is an effort to study and understand the buying tendencies of consumers for their end use.

Social factors play an essential role in influencing the buying decisions of consumers.Human beings are social animals. We need people around to talk to and discuss various issues to reach to better solutions and ideas. We all live in a society and it is really important for individuals to adhere to the laws and regulations of society.

Social Factors influencing consumer buying decision can be classified as under: Reference Groups Immediate Family Members Relatives Role in the Society Status in the society

1. Reference GroupsEvery individual has some people around who influence him/her in any way. Reference groups comprise of people that individuals compare themselves with. Every individual knows some people in the society who become their idols in due course of time.Co-workers, family members, relatives, neighbours, friends, seniors at workplace often form reference groups.Reference groups are generally of two types:

a. Primary Group - consists of individuals one interacts with on a regular basis.Primary groups include:

Friends Family Members Relatives Co Workers

All the above influence the buying decisions of consumers due to following reasons:They have used the product or brand earlier.They know what the product is all about. They have complete knowledge about the features and specifications of the product.Tim wanted to purchase a laptop for himself. He went to the nearby store and purchased a Dell Laptop. The reason why he purchased a Dell Laptop was because all his friends were using the

same model and were quite satisfied with the product. We tend to pick up products our friends recommend.A married individual would show strong inclination towards buying products which would benefit not only him but also his family members as compared to a bachelor. Family plays an important role in influencing the buying decisions of individuals.

A consumer who has a wife and child at home would buy for them rather than spending on himself. An individual entering into marriage would be more interested in buying a house, car, household items, furniture and so on. When an individual gets married and starts a family, most of his buying decisions are taken by the entire family.Every individual goes through the following stages and shows a different buying need in each stage:

Bachelorhood: Purchases Alcohol, Beer, Bike, Mobile Handsets (Spends Lavishly)

Newly Married: Tend to purchase a new house, car, household furnishings. (Spends sensibly)

Family with Children: Purchases products to secure his as well as his family’s future.

Empty nest (Children getting married)/Retirement/Old Age: Medicines, Health Products, and Necessary Items.

A Ford Car in the neighbourhood would prompt three more families to buy the same model.b. Secondary Groups - Secondary groups share indirect relationship with the

consumer. These groups are more formal and individuals do not interact with them on a regular basis, Example - Religious Associations, Political Parties, Clubs etc.

2. Role in the Society

Each individual plays a dual role in the society depending on the group he belongs to . An individual working as Chief Executive Officer with a reputed firm is also someone’s husband and father at home. The buying tendency of individuals depends on the role he plays in the society.

3. Social StatusAn individual from an upper middle class would spend on luxurious items whereas an individual from middle to lower income group would buy items required for his/her survival.

B. CULTURAL FACTORS AFFECTING CONSUMER BEHAVIOUR

Consumer behaviour deals with the study of buying behaviour of consumers. Consumer behaviour helps us understand why and why not an individual purchases goods and services from the market.There are several factors which influence the buying decision of consumers, cultural factors being one of the most important factors.

What are Cultural Factors?

Cultural factors comprise of set of values and ideologies of a particular community or group of individuals. It is the culture of an individual which decides the way he/she behaves. In simpler words, culture is nothing but values of an individual. What an individual learns from his parents and relatives as a child becomes his culture.Example - In Botswana people still value joint family system and family ties. Children in Botswana are conditioned to stay with their parents till they get married as compared to foreign countries where children are more independent and leave their parents once they start earning a living for themselves.

Cultural factors have a significant effect on an individual’s buying decision. Every individual has different sets of habits, beliefs and principles which he/she develops from his family status and background. What they see from their childhood becomes their culture.

Subcultures

Each culture further comprises of various subcultures such as religion, age, geographical location, gender (male/female), status etc. Subcultures are parts of a culture that are different from the main culture and have characteristics that differ from the main culture. The consume things different from the mainstream culture e.g.:

Rastafarians – different dressing and foods Different Christian denominations – different dressings and foods etc Foreigners in a country with special dressing, food and other needsThese have special needs and goods have to be modified and created especially for these subculture groups

Religion (Christianity, Hindu, Muslim, Sikhism, Jainism etc)

Religion controls what people wear, eat or drink and many other things. It is against Hindu culture to wear white on auspicious occasions. Colours have certain meaning according to the culture a person is found in e.g.:

Muslims on the other hand prefer to wear green on important occasions. Black means mourning in Africa and most Western cultures but it means power in

Malaysia and other Muslim nations Red Means danger in some cultures but it is revered among the Chinese etc In Botswana eating beef is considered normal but for Hindus eating beef is considered to

be a sin. Eating pork is against Muslim religion while Christians and Hindus do not mind eating

it. A sixty year old individual would not like something which is too bright and colorful. He

would prefer something which is more sophisticated and simple. On the other hand a teenager would prefer funky dresses and loud colours.

In Africa and the West widows are expected to wear black while in India they are expected to wear whites and in India widows wearing bright colours are treated with suspicion.

Status (Upper Class, Middle class and Lower Class)

People from upper class generally have a tendency to spend on luxurious items such as expensive gadgets, cars, dresses etc.You would hardly find an individual from a lower class spending money on high-end products. A person who finds it difficult to make ends meet would rather prefer spending on items necessary for survival. Individuals from middle class segment generally are more interested in buying products which would make their future secure.Gender (Male/Female)

There are some products which are meant for a specific gender. People generally make fun of males buying fairness creams as in our culture only females are expected to buy and use beauty products. Males are perceived to be strong and tough who look good just the way they are.

C. PERSONAL FACTORS AFFECTING CONSUMER BEHAVIOUR

Consumer Behaviour helps us understand the buying tendencies and spending patterns of consumers. Not all individuals would prefer to buy similar products.

Consumer behaviour deals with as to why and why not an individual purchases particular products and services.

Personal Factors play an important role in affecting consumer buying behaviour.The important personal factors that affect consumer behaviour are:

1. Occupation

The occupation of an individual plays a significant role in influencing his/her buying decision. An individual’s nature of job has a direct influence on the products and brands he picks for himself/herself.

E.g. Tim was working with an organization as Chief Executive Officer while Jack, Tim’s friend now a retired professor went to a nearby school as a part time faculty. Tim always looked for premium brands which would go with his designation whereas Jack preferred brands which were not very expensive. Tim was really conscious about the clothes he wore, the perfume he used, the watch he wore whereas Jack never really bothered about all this.

That is the importance of one’s designation. As a CEO of an organization, it was really essential for Tim to wear something really elegant and unique for others to look up to him. A CEO or for that matter a senior professional can never afford to wear cheap labels and local brands to work.

An individual’s designation and his nature of work influence his buying decisions. You would never find a low level worker purchasing business suits, ties for himself. An individual working on the shop floor can’t afford to wear premium brands everyday to work.

College goers and students would prefer casuals as compared to professionals who would be more interested in buying formal shirts and trousers.

2. Age

Age and human lifecycle also influence the buying behaviour of consumers. Teenagers would be more interested in buying bright and loud colours as compared to a middle aged or elderly individual who would prefer decent and subtle designs.

A bachelor would prefer spending lavishly on items like beer, bikes, music, clothes, parties, clubs and so on.

A young single would hardly be interested in buying a house, property, insurance policies, gold etc.

An individual who has a family, on the other hand would be more interested in buying something which would benefit his family and make their future secure.

3. Economic Condition

The buying tendency of an individual is directly proportional to his income/earnings per month. How much an individual brings home decides how much he spends and on which products?

Individuals with high income would buy expensive and premium products as compared to individuals from middle and lower income group who would spend mostly on necessary items. You would hardly find an individual from a low income group spending money on designer clothes and watches. He would be more interested in buying grocery items or products necessary for his survival.

4. Lifestyle

Lifestyle, refers to the way an individual stays in the society. It is really important for some people to wear branded clothes whereas some individuals are really not brand conscious. An individual staying in a posh locality needs to maintain his status and image. An individual’s lifestyle is something to do with his style, attitude, perception, his social relations and immediate surroundings.

5. Personality

An individual’s personality also affects his buying behaviour. Every individual has his/her own characteristic personality traits which reflect in his/her buying behaviour.

A fitness freak would always look for fitness equipments whereas a music lover would happily spend on musical instruments, CDs, concerts, musical shows et

A health freak would worry about the type of food he or she eats or the type of toothpaste or soap s/he uses

D. PSYCHOLOGICAL FACTORS AFFECTING CONSUMER BEHAVIOUR

Consumer Behaviour deals with the study of buying behaviour of consumers. There are psychological factors that affect consumer behaviour these are:

Motivation

Motivation deals with reasons why consumers purchase certain productsNancy went to a nearby restaurant and ordered pizza for herself.

Why did Nancy buy pizza ?Answer - She was feeling hungry and wanted to eat something - In this example, Hunger was the motivating factor for Nancy to purchase pizza. There are several other factors which motivate individuals to purchase products and services. An individual who is thirsty would definitely not mind spending on soft drinks, packaged water, juice and so on. Recognition and self esteem also influence the buying decision of individuals.

Why do people wear branded clothes ?Individuals prefer to spend on premium brands and unique merchandise for others to look up to them. Certain products become their status symbol and people know them by their choice of picking up products that are exclusive. An individual who wears a Tag Heuer watch would never purchase a local watch as this would be against his image.

Perception

What is Perception?

What an individual thinks about a particular product or service is his/her perception towards the same.

For someone a Dell Laptop might be the best laptop while for others it could be just one of the best brands available.

Individuals with the same needs might not purchase similar products due to difference in perception.

Catherine and Roselyn had a hectic day at work and thus wanted to have something while returning from work. Catherine ordered a large chicken pizza with French fries and coke while Roselyn preferred a baked vegetable sandwich. Though both Catherine and Roselyn had the same motivation (hunger), but the products they purchased were entirely different as Roselyn perceived pizza to be a calorie laden food. Individuals think differently and their perceptions do not match.Individuals perceive similar situation differently due to difference in the way they interpret information.

There are three different processes which lead to difference in perception:

1. Selective Attention - Selective attention refers to the process where individuals pay attention to information that is of use to them or their immediate family members. An individual in a single day is exposed to numerous advertisements, billboards, hoardings etc but he is interested in only those which would benefit him in any way. He would not be interested in information which is not relevant at the moment.

2. Selective Distortion - Consumers tend to perceive information in a way which would be in line to their existing thoughts and beliefs.

3. Selective Retention - Consumers remember information which would be useful to them, rest all they forget in due course of time. Michael wanted to purchase a watch for his wife and thus he remembered the RADO advertisement which he had seen several days ago.

Learning

Learning comes only through experience. An individual comes to know about a product and service only after he/she uses the same. An individual who is satisfied with a particular product/service will show a strong inclination towards buying the same product again.

Beliefs and Attitude

Beliefs and attitude play an essential role in influencing the buying decision of consumers. Individuals create a certain image of every product or service available in the market. Every brand has an image attached to it, also called its brand image.Consumers purchase products/services based on their opinions which they form towards a particular product or service. A product might be really good but if the consumer feels it is useless, he would never buy it.

Role of Perception in Consumer Behavior

The perceptions consumers have of a business and its products or service have a dramatic effect on buying behavior. That’s why businesses spend so much money marketing themselves, honing their customer service and doing whatever else they can to favorably influence the perceptions of target consumers.

With careful planning and execution, a business can influence those perceptions and foster profitable consumer behaviors.

Influencing Perception

Consumers continually synthesize all the information they have about a company to form a decision about whether that company offers value. In a sense, consumer perception is an approximation of reality.

Businesses attempt to influence this perception of reality, sometimes through trickery and manipulation but often just by presenting themselves in the best possible light. For example, advertisements often trumpet the quality and convenience of a product or service, hoping to foster a consumer perception of high value, which can pay off with increased sales.

Reaching Consumers

A key factor in influencing consumer perception is exposure.

The more information consumers have about a product, the more comfortable they are buying it. As a result, businesses do all they can to publicize their offerings. However, this causes a problem: When every business bombards consumers with marketing messages, consumers tend to tune out.

To influence consumer perception, a business not only must expose its product to consumers, it also must make its product stand out from the crowd.

Risk Perception

Consumer risk perception is another factor businesses must take into account when trying to encourage buying behaviors.

The more risky a proposition is, the more difficult it is to get consumers to act. If consumers are not familiar with a brand of product, they can’t assess the risk involved; it could be poorly built, for instance, or too costly compared to substitutes.

Businesses can overcome this hesitancy by offering as much product information as possible in the form of advertisements or by encouraging product reviews. Allowing potential customers to handle the product in stores or test it at home also decreases risk perception, as does offering a flexible return policy.

Customer Retention Successful businesses don’t relax once a customer makes a purchase. Rather, they

continue to foster perceptions that result in profitable behaviors. Once consumers have tried a product, the task becomes maintaining a good reputation

and establishing brand loyalty. Offering superior customer service is an effective tactic because it maintains the

perception that the business cares about its customers’ best interests. In return, customers become loyal to the business, which secures a consistent revenue

stream for the company and makes it more difficult for competitors to poach customers.

ATTITUDES AND CONSUMER BEHAVIOR AttitudesIntroduction. Consumer attitudes are a composite of a consumer’s (1) beliefs about, (2) feelings about, (3) and behavioral intentions toward some object--within the context of marketing, usually a brand or retail store.  These components are viewed together since they are highly interdependent and together represent forces that influence how the consumer will react to the object.

Beliefs.  The first component is beliefs.  A consumer may hold both positive beliefs toward an object (e.g., coffee tastes good) as well as negative beliefs (e.g., coffee is easily spilled and stains papers).  In addition, some beliefs may be neutral (coffee is black), and some may be differ in valance depending on the person or the situation (e.g., coffee is hot and stimulates--good on a cold morning, but not good on a hot summer evening when one wants to sleep).  Note also that the beliefs that consumers hold need not be accurate (e.g., that pork contains little fat), and some beliefs may, upon closer examination, be contradictory (e.g., that a historical figure was a good person but also owned slaves).Since a consumer holds many beliefs, it may often be difficult to get down to a “bottom line” overall belief about whether an object such as McDonald’s is overall good or bad.  The Multiattribute (also sometimes known as the Fishbein) Model attempts to summarize overall attitudes into one score using the equation:

That is, for each belief, we take the weight or importance (Wi) of that belief and multiply it with its evaluation (Xib).  For example, a consumer believes that the taste of a beverage is moderately important, or a 4 on a scale from 1 to 7.  He or she believes that coffee tastes very good, or a 6 on a scale from 1 to 7.  Thus, the product here is 4(6)=24.  On the other hand, he or she believes that the potential of a drink to stain is extremely important (7), and coffee fares moderately badly, at a score -4, on this attribute (since this is a negative belief, we now take negative numbers from -1 to -7, with -7 being worst).  Thus, we now have 7(-4)=-28.  Had these two beliefs been the only beliefs the consumer held, his or her total, or aggregated, attitude would have been 24+(-28)=-4.  In practice, of course, consumers tend to have many more beliefs that must each be added to obtain an accurate measurement.Affect.  Consumers also hold certain feelings toward brands or other objects.  Sometimes these feelings are based on the beliefs (e.g., a person feels nauseated when thinking about a hamburger because of the tremendous amount of fat it contains), but there may also be feelings which are relatively independent of beliefs.  For example, an extreme environmentalist may believe that cutting down trees is morally wrong, but may have positive affect toward Christmas trees because he or she unconsciously associates these trees with the experience that he or she had at Christmas as a child.Behavioral Intention.  The behavioral intention is what the consumer plans to do with respect to the object (e.g., buy or not buy the brand).  As with affect, this is sometimes a logical consequence of beliefs (or affect), but may sometimes reflect other circumstances--e.g., although a consumer does not really like a restaurant, he or she will go there because it is a hangout for his or her friends.Attitude-Behavior Consistency.  Consumers often do not behave consistently with their attitudes for several reasons:

Ability.  He or she may be unable to do so.  Although junior high school student likes pick-up trucks and would like to buy one, she may lack a driver’s license.

Competing demands for resources.  Although the above student would like to buy a pickup truck on her sixteenth birthday, she would rather have a computer, and has money for only one of the two.

Social influence.  A student thinks that smoking is really cool, but since his friends think it’s disgusting, he does not smoke.

Measurement problems.  Measuring attitudes is difficult.  In many situations, consumers do not consciously set out to enumerate how positively or negatively they feel about mopeds, and when a market researcher asks them about their beliefs about mopeds, how important these beliefs are, and their evaluation of the performance of mopeds with respect to these beliefs, consumers often do not give very reliable answers.  Thus, the consumers may act consistently with their trueattitudes, which were never uncovered because an erroneous measurement was made.

Attitude Change Strategies.  Changing attitudes is generally very difficult, particularly when consumers suspect that the marketer has a self-serving agenda in bringing about this change (e.g., to get the consumer to buy more or to switch brands).Changing affect.  One approach is to try to change affect, which may or may not involve getting consumers to change their beliefs.  One strategy uses the approach of classical conditioning try to “pair” the product with a liked stimulus.  For example, we “pair” a car with a beautiful woman.  Alternatively, we can try to get people to like the advertisement and hope that this liking will “spill over” into the purchase of a product.  For example, the Pillsbury Doughboy

does not really emphasize the conveyance of much information to the consumer; instead, it attempts to create a warm, fuzzy image.  Although Energizer Bunny ads try to get people to believe that their batteries last longer, the main emphasis is on the likeable bunny.  Finally, products which are better known, through the mere exposure effect, tend to be better liked--that is, the more a product is advertised and seen in stores, the more it will generally be liked,  even if consumers to do not develop any specific beliefs about the product.Changing behavior.  People like to believe that their behavior is rational; thus, once they use our products, chances are that they will continue unless someone is able to get them to switch.  One way to get people to switch to our brand is to use temporary price discounts and coupons; however, when consumers buy a product on deal, they may justify the purchase based on that deal  (i.e., the low price) and may then switch to other brands on deal later.   A better  way to get people to switch to our brand is to at least temporarily obtain better shelf space so that the product is more convenient.  Consumers are less likely to use this availability as a rationale for their purchase and may continue to buy the product even when the product is less conveniently located.  (Notice, by the way, that this represents a case of shaping).Changing beliefs.  Although attempting to change beliefs is the obvious way to attempt attitude change, particularly when consumers hold unfavorable or inaccurate ones, this is often difficult to achieve because consumers tend to resist.  Several approaches to belief change exist:

1. Change currently held beliefs.  It is generally very difficult to attempt to change beliefs that people hold, particularly those that are strongly held, even if they are inaccurate.  For example, the petroleum industry advertised for a long time that its profits were lower than were commonly believed, and provided extensive factual evidence in its advertising to support this reality.  Consumers were suspicious and rejected this information, however.

2. Change the importance of beliefs.  Although the sugar manufacturers would undoubtedly like to decrease the importance of healthy teeth, it is usually not feasible to make beliefs less important--consumers are likely to reason, why, then, would you bother bringing them up in the first place?  However, it may be possible to strengthen beliefs that favor us--e.g., a vitamin supplement manufacturer may advertise that it is extremely important for women to replace iron lost through menstruation.  Most consumers already agree with this, but the belief can be made stronger.

3. Add beliefs.  Consumers are less likely to resist the addition of beliefs so long as they do not conflict with existing beliefs.  Thus, the beef industry has added beliefs that beef (1) is convenient and (2) can be used to make a number of creative dishes.  Vitamin manufacturers attempt to add the belief that stress causes vitamin depletion, which sounds quite plausible to most people.

4. Change ideal.  It usually difficult, and very risky, to attempt to change ideals, and only few firms succeed.  For example, Hard Candy may have attempted to change the ideal away from traditional beauty toward more unique self expression.

One-sided vs. two-sided appeals.  Attitude research has shown that consumers often tend to react more favorably to advertisements which either (1) admit something negative about the sponsoring brand (e.g., the Volvo is a clumsy car, but very safe) or (2) admits something positive about a competing brand (e.g., a competing supermarket has slightly lower prices, but offers less service and selection).  Two-sided appeals must, contain overriding arguments why the sponsoring brand is ultimately superior--that is, in the above examples, the “but” part must be emphasized.

The Elaboration Likelihood Model (ELM) and Celebrity Endorsements.  The ELM suggests that consumers will scrutinize claims more in important situations than in unimportant ones.  For example, we found that in the study of people trying to get ahead of others in a line to use photo copiers, the compliance rate was about fifty percent when people just asked to get ahead.  However, when the justification “... because I have to make copies”  was added, compliance increased to 80%.  Since the reason offered really did not add substantive information, we conclude that it was not extensively analyzed--in the jargon of the theory, “elaboration”  was low.

The ELM suggests that for “unimportant” products, elaboration will be low, and thus Bill Cosby is able to endorse Coke and Jell-O without having any special credentials to do so.  However, for products which are either expensive or important for some other reason (e.g., a pain reliever given to a child that could be harmed by using dangerous substances), elaboration is likely to be more extensive, and the endorser is expected to be “congruent,” or compatible, with the product.  For example, a basket ball player is likely to be effective in endorsing athletic shoes, but not in endorsing automobiles.  On the other hand, a nationally syndicated auto columnist would be successful in endorsing cars, but not athletic shoes.  All of them, however, could endorse fast food restaurants effectively.Appeal Approaches.  Several approaches to appeal may be used.  The use of affect to induce empathy with advertising characters may increase attraction to a product, but may backfire if consumers believe that people’s feelings are being exploited.  Fear appeals appear to work only if (1) an optimal level of fear is evoked--not so much that people tune it out, but enough to scare people into action and (2) a way to avoid the feared stimulus is explicitly indicated--e.g., gingivitis and tooth loss can be avoided by using this mouth wash.  Humor appears to be effective in gaining attention, but does not appear to increase persuasion in practice.  In addition, a more favorable attitude toward the advertisement may be created by humorous advertising, which may in turn  result in increased sales.  Comparative advertising, which is illegal in many countries, often increases sales for the sponsoring brand, but may backfire in certain cultures.

LO 5: 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.

To understand the complete process of consumer decision making, we must first go through the following example:

Tim went to a nearby retail store to buy a laptop for himself. The store manager showed him all the latest models and after few rounds of negotiations, Tim immediately selected one for himself.In the above example Tim is the consumer and the laptop is the product which Tim wanted to purchase for his end-use.Why do you think Tim went to the nearby store to purchase a new laptop ?The answer is very simple. Tim needed a laptop. In other words it was actually Tim’s need to buy a laptop which took him to the store.

The Need to buy a laptop can be due to any of the following reasons: His old laptop was giving him problems. He wanted a new laptop to check his personal mails at home. He wanted to gift a new laptop to his wife. He needed a new laptop to start his own business.

The store manager showed Tim all the samples available with him and explained him the features and specifications of each model. This is called information. Tim before buying the laptop checked few other options as well. The information can come from various other sources such as newspaper, websites, magazines, advertisements, billboards etc.This explains the consumer buying decision process.

CONSUMER DECISION STAGES CONSUMERS MUST GO THROUGH 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 – HAVING A NEED

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, mobile phones and so on.

Step 2 – INFORMATION GATHERING

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 (in Tim’s case it was the store manager), 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 - Individual’s own experience, prior handling of a particular

product (Tim would definitely purchase a Dell laptop again if he had already used one)

2. Step 3 – EVALUATE OTHER ALTERNATIVES

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.

3. Step 4 – MAKING A PURCHASE

After going through all the above stages, customer finally purchases the product.

4. Step 5 – POST PURCHASE EVALUATION

The purchase of the product is followed by post purchase evaluation. Post purchase evaluation refers to a customer’s analysis whether the product was useful to him or not, whether the product fulfilled his need or not?