Introduction to Consumer Behaviour
Consumer Behaviour Notes B.Com 5th Sem CBCS Pattern
Meaning of Consumer and Consumer Behaviour
Consumer: Any individual who purchases goods and
services from the market for his/her end-use is called a consumer. In simpler
words a consumer is one who consumes goods and services available in the
market. In other words, consumer is an ultimate user of a product or service.
According to International Dictionary of Management, “consumers
are purchasers of goods and services for immediate use and consumption”.
Consumer Behaviour (CB): Human being differs from one to
another. It is not easy to predict the human behaviour. Human being differs in
their taste, needs, wants and preferences. But one constant thing is that we
all are consumers. CB is a vast and complex subject. Understanding CB and
“knowing consumers’ are not that simple.
Consumer behaviour explains the reasons and logic that underlie
purchasing decisions and consumption patterns; it explains the processes
through which buyers make decisions. Consumer Behaviour may be defined as “the
interplay of forces that takes place during a consumption process, within a
consumers’ self and his environment. This interaction takes place between three
elements viz. knowledge, affect and behaviour; it continues through
pre-purchase activity to the post purchase experience; it includes the stages
of evaluating, acquiring, using and disposing of goods and services”. The
“consumer” includes both personal consumers and
business/industrial/organizational consumers.
Definitions of CB
In the words of Kotler, ”Consumer
behaviour is the study
of how people buy, what they
buy, when they buy and why they buy.”
In the words of Solomon,” Consumer behaviour is the
study of the processes involved when individuals or groups select, purchase,
use, or dispose of products, services, ideas, or experiences to satisfy needs
and desires”
In the words of Professor Bearden and Associates, ”Consumer
behaviour is the mental and emotional process and the physical activities of
people who purchase and use goods and services to satisfy needs and wants.”
By analysing the above definition, it reveals that the study
includes within its purview, the interplay between cognition, affect and
behaviour that goes on within a consumer during the consumption process:
selecting, using and disposing off goods and services.
Nature/Characteristics of
consumer behavior are:
a) Consumer
behavior is the part of human behavior. This cannot be separated. Human
behavior decides what to buy, when to buy etc. This is unpredictable in
nature. Based on the past behavioral pattern one can at least estimate like the
past he might behave.
b) Learning
the consumer is difficult and complex as it involves the study of human beings.
Each individual behaves differently when he is placed at different
situations. Every day is a lesson from each and every individual while we
learn the consumer behavior. Today one may purchase a product because of its
smell, tomorrow it may vary and he will purchase another due to some another
reason.
c) Consumer
behavior is dynamic. A consumer’s behavior is always changing in nature. The
taste and preference of the people vary. According to that consumers behave
differently. As the modern world changes the consumer’s behaving pattern
also changes.
d) Consumer
behavior is influenced by psychological, social and physical factors. A
consumer may be loyal with a product due to its status values. Another may
stick with a product due to its economy in price. Understanding these
factors by a marketer is crucial before placing the product to the consumers.
e) Study
of consumer behavior is crucial for marketers. Before producing a product or
launching a product, he has to go through a clear analysis of the consumer
behavior. If the people or prospects reject the product, he has to modify it.
f) Consumer
behavior is a continuous process as it involves the process starts before the
buying and continuing after purchasing. Before buying there will be high
confusions and expectations about the product. After buying it, if the buyer is
satisfied with the product he shows a positive behavior, otherwise
negative.
👉👉Consumer Behaviour Notes
Importance of Consumer Behaviour
The consumer is the focus of marketing efforts. The modern
concept spells out the real significance of buyer’s Behaviour. The modern marketing
management tries to solve the basic problems of consumers in the area of
consumption. To survive in the market, a firm has to be constantly innovating
and understand the latest consumer needs and tastes. It will be extremely
useful in exploiting marketing opportunities and in meeting the challenges that
the Indian market offers. It is important for the marketers to understand the
buyer behaviour due to the following reasons.
1. Analyze the environment: The knowledge of consumer
behaviour can be applied to help identify opportunities and fight threats. The
opportunities could be in terms of newer customers, newer markets, unfulfilled
needs and wants. The threats could be fought by developing and implementing
appropriate marketing strategies to best fit the environment.
2.
Take better marketing decisions: It helps marketers to understand consumer
buying behaviour and make better marketing decisions.
3. Future Prediction: The size of the consumer market is constantly expanding and
their preferences were also changing and becoming highly diversified. So
without studying it, marketers cannot predict the future of their business.
4. Economic Stability: It is significant for
regulating consumption of goods and thereby maintaining economic stability.
5. Effective utilisation of marketing resources: It is useful in developing
ways for the more efficient utilisation of resources of marketing. It also
helps in solving marketing management problems in more effective manner.
6. Consumers Preference: Today consumers give more importance on environment friendly
products. They are concerned about health, hygiene and fitness. They prefer
natural products. Hence detailed study on upcoming groups of consumers is
essential for any firm.
7. Consumer Protection: The growth of consumer protection movement has created an
urgent need to understand how consumers make their consumption and buying
decision.
8. Formulation of production policy: Consumers’ tastes and preferences are ever changing. Study
of consumer behaviour gives information regarding colour, design, size etc.
which consumers want. In short, consumer behaviour helps in formulating of
production policy.
9. Market segmentation: For effective market segmentation and target marketing, it
is essential to have an understanding of consumers and their behaviour.
10. Positivists: Marketing managers regarded consumer behaviour discipline as
an applied marketing science, if they could predict consumer behaviour, they
could influence it. This approach has come to be known as positivism and the
consumer researcher who are primarily concerned with predicting consumer behaviour
are known as positivists.
As the marketing research
began to study the buying behaviour of consumers, they soon realized that many
consumers rebelled at using the identical products everyone else used, for
example in case of purchase of house, interiors, car, and dress material etc.
people prefers unique products. Consumer preferred differential products that
they felt reflected their own special needs, personalities and lifestyles.
Factors affecting consumer behaviour
The study of consumer behaviour indicates how individuals, groups,
and organisations select, buy, use of dispose goods, services, ideas or
experiences to satisfy their needs and desires. The various factors influencing
buyer behaviour are as following:
I. Marketing Factors: Each element of the market mix –
product, pricing, promotion and place (distribution) – has the potential to
affect the buying process at various stages.
A. Product: The uniqueness of the product, the physical
appearance and packaging can influence buying decision of a consumer.
B. Pricing: Pricing strategy does affect buying behaviour
of consumers. Marketers must consider the price sensitivity of the target
customers while fixing prices.
C. Promotion: The various elements of promotion such as
advertising, publicity, public relations, personal selling, and sales promotion
affect buying behaviour of consumers. Marketers select the promotion mix after
considering the nature of customers.
D. Place: The channels of distribution, and the place of
distribution affects buying behaviour of consumers. Marketers make an attempt
to select the right channel and distribute the products at the right place.
II. Personal Factors: The personal factors of a consumer
may affect the buying decisions. The personal factors include:
A. Age Factor: The age factor greatly influences the buying
behaviour. For instance, teenagers may prefer trendy clothes, whereas, office-
executives may prefer sober and formal clothing.
B. Gender: The consumer behaviour varies across gender.
For instance, girls may prefer certain feminine colours such as pink, purple,
peach, whereas, boys may go for blue, black, brown, and so on.
C. Education: Highly educated persons may spend on books,
personal care products, and so on. But a person with low or no education may spend
less on personal grooming products, general reading books, and so on.
D. Income Level: Normally, higher the income level,
higher is the level of spending and viceversa. But this may not be always the
case in developing countries, especially in the rural areas.
E. Status’ in the Society: Persons enjoying higher status in the
society do spend a good amount of money on luxury items such as luxury cars,
luxury watches, premium brands of clothing, jewellery, perfumes, etc.
F. Other Personal Factors: The other personal factors such as
personality, lifestyle, family size, etc., influence consumer behaviour.
Ill. Psychological Factors: An individual’s buying decisions are
further influenced by psychological factors: perception, motivation, learning
and attitudes. These factors are what consumers use to interact with their
world. They are the tools consumers use to recognize their feelings, gather and
analyze information, formulate thoughts and opinions and take action.
A.
Perception: Perception is the process of selecting, organizing and
interpreting information inputs to produce meaning. A person receives
information through the senses: sight, taste, hearing, smell and touch. How and
what consumers perceive strongly affect their behaviour toward products,
prices, package designs, salespeople, stores, advertisements and manufacturers.
B.
Motivation: Motivation involves the positive or negative needs, goals and
desires that impel a person to or away from certain actions, objects or
situations. By identifying and appealing to people’s motives – the reasons for
behaviour – a firm can produce positive motivation. Each person has distinct
motives for purchases, and these change by situation and over time. Consumers
often combine economic and emotional motives when making purchases.
C.
Learning: Learning consists of changes in a person’s behaviour that are
caused by information and experience. Variations in behaviour that result from
psychological conditions such as hunger, fatigue, physical growth, or
deterioration are not considered learning. Learning refers to the effects of
direct and indirect experiences on future behaviour. Consumers learn about
products directly by experiencing them.
D.
Attitudes: Attitude is a predisposition to feel or act in a given manner
towards a specific person, group, object, institution or idea. Customer
attitudes, understanding and awareness of the product are intimately related. A
preference for a particular brand indicates the customer’s attitude towards it.
IV. Situational Influences: Major situational influences include
the physical surroundings, social surroundings, time, the nature of the task,
and monetary moods and conditions.
A. Physical Surroundings: The physical surroundings at the place
of purchase affects buying behaviour. For instance, when a customer is shopping
in a store, the features that affects buying behaviour would include the
location of the store, the decor, the layout of the store, the noise level, the
way merchandise is displayed, and so on.
B. Social Surroundings: The social surroundings of a situation
involve the other people with the customer that can influence buying decision
at the point of purchase. For instance, a bargain hunter shopping with an
impatient friend may do quick purchases, and may not haggle over the price, so
as to please the impatient friend.
C. Time Factor: Customers may make different decisions based
on when they purchase – the hour of the day, the day of the week, or the season
of the year. For instance, a consumer who has received a pay cheque on a
particular day may shop more items, than at the end of the month when he is
short of funds.
D. Task: A customer may make a different buying
decision depending upon the task to be performed by the product. For instance,
if the product is meant as a gift rather than for personal use, then the
customer may buy a different brand/product depending upon to whom the gift is purchased.
E. Momentary Conditions: The moods and condition of the
customer at the time of purchase may also affect the buying decision. A
customer who is very happy would make a different buying decision, as compared
to when he is not in a happy mood
V. Social Factors: The social factors such as reference
groups, family, and social and status affect the buying behaviour:
A. Reference Groups: A reference group is a small group of
people such as colleagues at work place, club members, friends circle,
neighbours, family members, and so on.
B. Family: The family is the main reference group that
may influence the consumer behaviour. Nowadays, children are well informed
about goods and services through media or friend circles, and other sources.
Therefore, they influence considerably in buying decisions both FMCG products and
durables.
C. Roles and Status: A person performs certain roles in a
particular group such as family, club, organisation, and so on. For instance, a
person may perform the role of senior executive in a firm and another person
may perform the role of a junior executive. The senior executive may enjoy higher
status in the organisation, as compared to junior executive. People may
purchase the products that conform to their roles and status, especially in the
case of branded clothes, luxury watches, luxury cars, and so on.
VI. Cultural Factors: Culture includes race and religion,
tradition, caste, moral values, etc. Culture also include subcultures such
sub-caste, religious Sects, language, etc.
A. Culture: It influences consumer behaviour to a great
extent. Cultural values and elements are passed from one generation to another
through family, educational institutions, religious bodies, social environment,
etc. Cultural diversity influences food habits, clothing, customs and
traditions, etc. For instance, consuming alcohol and meat in certain religious
communities is not restricted, but in certain communities, consumption of
alcohol and meat is prohibited.
B. Sub-Culture: Each culture consists of smaller sub-cultures
that provide specific identity to its members. Subcultures include sub-caste,
religious sects (Roman Catholics, Syrian Catholics, Protestant Christians,
etc), geographic regions (South Indians, North Indians), language (Marathi, Malayali,
Tamilian, Guajarati) etc. The behaviour of people belong to various
sub-cultures is different. Therefore, marketers may adopt multicultural
marketing approach, i.e., designing and marketing goods and services that cater
to the tastes and preferences of consumers belonging to different sub-cultures.
Economic Factors and Its Impact on Consumer Behaviour
Economic Factors: Consumer
behaviour is influenced largely by economic factors. Economic factors that
influence consumer behaviour are:
a) Personal
Income,
b) Family income,
c) Income
expectations,
d) Savings,
e) Liquid assets
of the Consumer,
f) Consumer
credit,
g) Other economic
factors.
a) Personal Income: The personal income of a person is determinant
of his buying behaviour. The gross personal income of a person consists of
disposable income and discretionary income. The disposable personal income
refers to the actual income (i.e. money balance) remaining at the disposal of a
person after deducting taxes and compulsorily deductible items from the gross
income. An increase in the disposable income leads to an increase in the
expenditure on various items. A fall in the disposable income, on the other
hand, leads to a fall in the expenditure on various items.
The discretionary
personal income refers to the balance remaining after meeting basic necessaries
of life. This income is available for the purchase of shopping goods, durable
goods and luxuries. An increase in the discretionary income leads to an
increase in the expenditure on shopping goods, luxuries etc. which improves the
standard of living of a person.
b) Family income: Family income refers to the aggregate income
of all the members of a family. Family income influences the buying
behaviour of the family. The surplus family income, remaining after the
expenditure on the basic needs of the family, is made available for buying
shopping goods, durables and luxuries.
c) Income Expectations: Income expectations are one of the important
determinants of the buying behaviour of an individual. If he expects any
increase in his income, he is tempted to spend more on shopping goods, durable
goods and luxuries. On the other hand, if he expects any fall in his future
income, he will curtail his expenditure on comforts and luxuries and restrict
his expenditure to bare necessities.
d) Savings: Savings also influence the buying behaviour of
an individual. A change in the amount of savings leads to a change in the
expenditure of an individual. If a person decides to save more out of his
present income, he will spend less on comforts and luxuries.
e) Liquid assets: Liquid assets refer to those assets, which can
be converted into cash quickly without any loss. Liquid assets include cash in
hand, bank balance, marketable securities etc If an individual has more liquid
assets, he goes in for buying comforts and luxuries. On the other hand, if he
has less liquid assets, he cannot spend more on buying comforts and luxuries.
f) Consumer credit: Consumer credit refers to the credit facility
available to the consumers desirous of purchasing durable comforts and
luxuries. It is made available by the sellers, either directly or indirectlу through
banks and other financial institutions. Hire purchase, installment purchase,
direct bank loans etc are the ways by which credit is made available to the
consumers.
Consumer credit
influences consumer behaviour. If more consumer credit is available on liberal
terms, expenditure on comforts and luxuries increases, as it induces consumers
to purchase these goods, and raise their living standard.
g) Other economic factor: Other
economic factors like business cycles, inflation, etc. also influence the consumer
behaviour.
Consumers Decision Making Process
Marketers are interested in consumers’ purchase behaviours,
i.e., the decision making process. The consumers’ decision making is a choice
amongst various alternatives that address problematic issues like:
- What to buy;
- Where to buy;
- When to buy;
- How to buy;
- How much to buy.
Consumer decision making involves a continuous flow of
interactions among environmental factors, cognitive and affective processes and
behavioural actions. Consumer’s decisions are based on knowledge, affect and
behaviour related to the marketing mix. The consumer decision making
process involves series of related and sequential stages of activities. The
process begins with the discovery and recognition of an unsatisfied need or
want. It becomes a drive. Consumer begins search for information. This search
gives rise to various alternatives and finally the purchase decision is made.
Then buyer evaluates the post purchase behavior to know the level of
satisfaction.
Stages in Consumer Decision Making Process: There are
five stages in the consumer decision making process. These are
1.
Need Recognition: When a person has an unsatisfied
need, the buying process begins to satisfy the needs. The need may be activated
by internal or external factors. The intensity of the want will indicate the
speed with which a person will move to fulfill the want. On the basis of need
and its urgency, the order of priority is decided. Marketers should provide
required information of selling points.
2.
Information Search: Identified needs can be satisfied
only when desired product is known and also easily available. Different
products are available in the market, but consumer must know which product or
brand gives him maximum satisfaction. And the person has to search out for
relevant information of the product, brand or location. Consumers can use many
sources e.g., neighbors, friends and family. Marketers also provide relevant
information through advertisements, retailers, dealers, packaging and sales promotion,
and window displaying. Mass media like news papers, radio, and television
provide information. Nowadays internet has become an important and reliable
source of information. Marketers are expected to provide latest, reliable and
adequate information.
3.
Evaluation of Alternatives: This is a critical stage in the
process of buying. Following are important elements in the process of
alternatives evaluation
a. A product is viewed as a bundle of attributes.
These attributes or features are used for evaluating products or brands. For
example, in washing machine consumer considers price, capacity, technology,
quality, model and size.
b. Factors like company, brand image, country, and
distribution network and after-sales service also become critical in
evaluation.
c. Marketers should understand the importance of these
factors with regards to the consumers while manufacturing and marketing their
products.
4.
Purchase Decision: Outcome of the evaluation
develops likes and dislikes about alternative products or brands in consumers.
This attitude towards the brand influences a decision as to buy or not to buy.
Thus the prospective buyer heads towards final selection. In addition to all
the above factors, situational factors like finance options, dealer terms,
falling prices etc., are also considered.
5.
Post- Purchase Behavior: Post-purchase behavior of
consumer is more important as far as marketer is concerned. Consumer gets brand
preference only when that brand lives up to his expectation. This brand
preference naturally repeats sales of marketer. A satisfied buyer is a silent
advertisement. But, if the used brand does not yield desired satisfaction,
negative feeling will occur and that will lead to the formation of negative
attitude towards brand. This phenomenon is called cognitive dissonance.
Marketers try to use this phenomenon to attract users of other brands to their
brands. Different promotional-mix elements can help marketers to retain his
customers as well as to attract new customers.
Various participants of Consumer buying process
1. Agitator: The person
who raises the idea of buying at the beginning is called Agitator.
2. Consumer: The person who uses the product or services is called
consumer.
3. Influential: It is a person or group of persons
advice greatly affect the purchasing decision.
4. The owner of the money: The
person who owns the money and he has absolute freedom to say "no, We can
not afford this expense."
5. The buyer: The person who buys and pays money to get the product,
in the areas of commercial transactions between companies, these are people who
were checking contracts and examining the possibility of dealing with the
long-term supplier.
6. Stakeholder: The person or persons who do not have any influence on
the purchase decision. But they want to purchase to take place.
Levels of Consumer Decision Making
The consumer decision making process is complex with
varying degree. All purchase decisions do not require extensive effort. On
continuum of effort ranging from very high to very low, it can be distinguished
into three specific levels of consumer decision making:
1 Extensive Problem Solving (EPS)
2. Limited Problem Solving (LPS)
3. Routine Problem Solving (RPS)
1. Extensive Problem Solving (EPS): When consumers buy
a new or unfamiliar product it usually involves the need to obtain substantial
information and a long time to choose. They must form the concept of a new
product category and determine the criteria to be used in choosing the product
or brand.
2. Limited Problem Solving (LPS): Sometimes consumers
are familiar with both product category and various brands in that category,
but they have not fully established brand preferences. They search for
additional information which helps them to discriminate among various brands.
3. Routine Problem Solving (RPS): When consumers have
already purchased a product or brand, they require little or no information to
choose the product. Consumers involve in habitual and automatic purchases.
Meaning of Consumer Involvement
Consumer involvement is defined as a state of mind that
motivates consumers to identify with product/service offerings, their
consumption patterns and consumption behaviour. Involvement creates within
consumers an urge to look for and think about the product/service category and
the varying options before making decisions on brand preferences and the final
act of purchase. It is the amount of physical and mental effort that a consumer
puts into a purchase decision. It creates within a person a level of relevance
or personal importance to the product/service offering and this leads to an
urge within the former to collect and interpret information for present/future
decision making and use. Involvement affects the consumer decision process and
the sub processes of information search, information processing, and
information transmission.
Causes of
Consumer Involvement: The factors that influences consumer
involvement include personal, product
and situational.
1) Personal
Factors: Self-concept, needs, and values are the three personal factors that
influence the extent of consumer involvement in a product or service. The more
product image, the value symbolism inherent in it and the needs it serves are
fitting together with the consumer self- image, values and needs, the more
likely the consumer is to feel involved in it. Celebrities for example share a
certain self-image, certain values, and certain needs. They tend to use
products and services that reflect their life style. They get highly involved
in purchasing prestigious products like designer wear, imported cars, health
care products etc.
2) Product
Factors: The consumer involvement grows as the level of perceived risk in the
purchase of a good or service increases. It is likely that consumers will feel
more involved in the purchase of their house than in the purchase of tooth
paste, because it is a much riskier purchase.
Product differentiation affects involvement. The involvement
increases as the number of alternatives that they have to choose from,
increases. The pleasure one gets by using a product or service can also
influence involvement. Some products are a greater source of pleasure to the
consumer than others. Tea and coffee have a high level of hedonic (pleasure)
value compared to, say household cleaners. Hence the involvement is high.
Involvement increases when a product gains public attention. Any
product that is socially visible or that is consumed in public, demands high
involvement. For example, involvement in the purchase of car is more than the
purchase of household items.
3) Situational
Factors: The situation in which the product is bought or used can generate
emotional involvement. The reason for purchase or purchase occasion affects
involvement. For example, buying a pair of socks for oneself is far less
involved than buying a gift for a close friend.
Social pressure can significantly increase involvement. One is
likely to be more self conscious about the products and brands one looks at
when shopping with friends than when shopping alone.
The need to make a fast decision also influences involvement. A
consumer who needs a new refrigerator and sees a ‘one- day- only sale’ at an
appliances retailer does not have the time to shop around and compare different
brands and prices. The eminence of the decision heightens involvement. The
involvement is high when the decision is irrevocable, for example when the
retailer does not accept return or exchange on the sale items.
Thus involvement may be from outside the individual, as with
situational involvement or from with in the individual as with enduring
involvement. It can be induced by a host of personal-product-and situation
related factors, many of which can be controlled by the marketer. It affects
the ways in which consumers see, process, and send information to others.
Types of
Involvement: The two types of involvement are:
1) Situational
Involvement: Situational involvement is temporary and refers to emotional
feelings of a consumer, experiences in a particular situation when one thinks
of a specific product.
2) Enduring Involvement: Enduring involvement is persistent over
time and refers to feelings experienced toward a product category across
different situations. For example, holiday- makers renting a resort for their
trip are highly involved in their choice, but their involvement is temporary.
Whereas involvement of a person whose hobby is bike racing endures overtime and
affects his responses in any situation related to pre-purchase, purchase and
post-purchase of sport bikes. It is observed that involvement is triggered by
special situation in the case of holiday makers, but in the second case, it
comes from, and is a part of the consumer.
The contrast between situational and enduring involvement is
important. When marketers measure involvement they examine the extent to which
it can be induced by the product or selling situation. After noticing the type
of involvement they are facing, marketers work to control products or selling
situations.