Unit I

INTRODUCTION TO CONSUMER BEHAVIOUR

A. Introduction

The existence of any business is due to unfulfilled needs and wants of the consumer. To
fulfill needs of consumer, products/services are introduced in the market by business
organization. So, a thorough knowledge of consumers and understanding of their
behaviour is must for a meaningful existence of any organization. The growth in the size
of companies and markets has given birth to the marketing research and consumer
behaviour that has become one of the focal point of marketing.

B. Definition
Consumer Behaviour can be defined as a process of decisions & actions of individuals and
house-holds in discovering, evaluating, acquiring, consuming and disposing of products and
services so as to satisfy once needs and wants.

The above definition can be explained as following:

Firstly the above definition takes into consideration decisions & actions of people which
means it deals with what the people thinks and what they do.

Secondly the above definition takes into consideration individuals and house-holds
purchasing which means it deals with the purchasing related with an individual i.e. for oneself
as well as purchasing related with the house-hold i.e. father or mother purchasing for their
children.

Thirdly the above definition takes into consideration of discovering, evaluating, acquiring,
consuming and disposing products and services which mean as follows:

a. Discovering mean the first person to be aware of products and services.

b. Evaluating mean to analyze the worth of products and services.
c. Acquiring mean to capture the products and services.
d. Consuming mean to use the products and services.
e. Disposal means to get rid of something.

Fourthly the above definition takes into consideration of needs and wants which mean to
satisfy the requirements and the desires of the people which are acting as consumers related
with the market.

C. Importance of Consumer Behaviour

 To know the needs and wants of the consumers

This means that the importance of Consumer Behaviour is to know the requirements of the
consumers related with the products & services. The other importance of Consumer
Behaviour is to know the desires of the consumers related with the products & services.
  To know the consumer awareness
This means that the importance of Consumer Behaviour is to know the awareness level of the
consumers related with the products & services.

 To know the demand of the consumers

This means that the importance of Consumer Behaviour is to know the demand of the
consumers related with the products & services.

 To know the consumer cyclic process

This means that the importance of Consumer Behaviour is to know the consumer cyclic
process related with the products & services.

 To know the factors influencing the consumers

This means that the importance of Consumer Behaviour is to know the factors influencing the
consumers related with the products & services.

 To know the bargaining power of the consumers

This means that the importance of Consumer Behaviour is to know the bargaining power of
the consumers related with the products & services.

 To know the population profile of the urban as well as rural areas

This means that the importance of Consumer Behaviour is to know the population profile of
the urban as well as rural areas of the consumers related with the products & services.

D. Indian Consumer Characteristics

India is one of the fastest growing consumer markets in the world. It is being said that the
urban as well as the rural market is growing rapidly. The data varies but generally the top
consumption markets in the world are U.S., China, Japan, India, Germany, United Kingdom &
Russia. The different Indian Consumer Characteristics can be as follows:

 Love towards Education

The present Indian consumer characteristic is that they have love towards education i.e. they
are respecting education and their children are becoming educated.

 Health concern
The present Indian consumer characteristic is that they are health concerned i.e. they are
looking towards company’s services as good for health.

 Technology oriented
The present Indian consumer characteristic is that they are technology oriented i.e. they are
using technology for their benefit and for making their life easy.

 Liking towards organized retail

The present Indian consumer characteristic is that they like organized retail i.e. they prefer
organized retail for purchasing as compare to un- organized retail.
  Strengthen the house-hold income
The present Indian consumer characteristic is that they want to strengthen their house-hold
income i.e. prefer to purchase the products which are cheaper and lead to saving hence
strengthening their house-hold income.

 Liking towards well established electronic as well as automobile goods

The present Indian consumer characteristic is that they like well established electronic as well
as automobile goods i.e. those electronic and automobile goods which are advance and own
multi-facilities as features.

 Financial investment efficient

The present Indian consumer characteristic is that they prefer to be financial investment
efficient i.e. they want those financial institutions or group of financial institutions which are
giving good returns.

 Movement towards the densely populated areas

The present Indian consumer characteristic is that they want to migrate to the densely
populated areas i.e. those areas which are business oriented and have easy and comfortable
life.

E. Achieving Consumer Satisfaction & Delight

The factors involved in Consumer Satisfaction as well as in Consumer Delight can be
as follows:

 Attributes
When attributes are in balance to the cost then the consumers are satisfied and when the
attributes are more in balance to the cost then the consumers feel delight.

 Price
When price are in balance to the cost & profit then the consumers are satisfied and when the
price are less in balance to the cost & profit then the consumers feel delight.

 Service
When service are in balance to the cost then the consumers are satisfied and when the
service are more in balance to the cost then the consumers feel delight.

The factors involved in Consumer Satisfaction can be as follows:

 Listen to consumers
The consumers feel satisfied when they are being listened by the company person.

 Training of employees
The consumers feel satisfied when they are being properly treated by the company person for
which they are being trained.

 Responsiveness
The consumers feel satisfied when in time they are being responded by the company person.
  Historical focus
The consumers feel satisfied when the company person informs them about the history of the
company. The information related with the history generates the feeling of the satisfaction
among the consumers.

 Experience
The consumers feel satisfied when the company person is experienced enough in handlying
the grievances of the consumers.

 Effective talk
The consumers feel satisfied when there is an effective talk between the company people and
the consumers related with product query, product service and the product price.

Levels of Consumer Satisfaction & Consumer Response

The levels of consumer satisfaction & consumer response can be as follows:
S. Consumer Satisfaction Levels Consumer Response
No.
1. Completely satisfied Very loyal
2. Satisfied Switch to the competitor
3. Dis-satisfied Very dis-loyal

The factors involved in Consumer Delight can be as follows:

 Giving more for less

The consumers feel delight when they feel that they are paying less for more being given by
the company person through their products and services.

 Innovation
The consumers feel delight when there is innovation by the company person through their
products and services.

 Company Growth
The consumers feel delight when there is company growth through their products and
services because it will ultimately lead to the growth of the consumers.

 Un-profitable relations
The consumers feel delight when there is an un-profitable relationship between the company
and the consumers i.e. some un-commercial activities by the company people.

 Consumer power to choice

The consumers feel delight when the consumers feel that they have been given the power to
choose among the variety of the products through the company.

 Above expectation (hidden SP)

The consumers feel delight when the consumers feel that they have been given above the
expectation by the products through the company.

Frame-work for Consumer Delight

 Expectation

Existing Expectation No-prior Expectation

Satisfaction Delight
Positive
Performance Dis-satisfaction Pain
Negative

Source: Berman, 2005

F. Developing Consumer Value

Consumer value is the satisfaction a consumer feels after making a purchase for goods or
services relative to what the consumer must give up to receive them. Consumer value
consists of the sum total of benefits which a company promises a consumer will receive in
return for the consumer’s associated payment. Consumer value can be understood as below
where consumer value is considered as cost subtracted from the benefit.
Consumer value=Benefit-Cost
There are three ways a company can establish consumer value:
1. Provide the consumer with the best cost
Companies can choose to focus their efforts on providing a reliable product at a reasonable
price. The low price helps to increase the value of their offering to the consumers.
2. Provide the consumer with the best product
Companies that offer top-quality products increase the consumer value of their offerings to
their consumers by providing a high benefit, which exceeds the cost.
3. Provide the consumer with the best service
Companies that provide a high level of service to their consumers increase their consumer
value of their services by providing a high benefit, which exceeds the cost for many
consumers. Consumers who buy from these companies are willing to pay more to be treated
with exceptional service.

The other ways by which the companies can establish consumer value are as follows:
 Honesty
The companies can establish consumer value by being honest with the consumers. Honesty
can be by truly informing consumers about their products & services.

 Respect
The companies can establish consumer value by showing respect to the consumers. Respect
can be by listening consumer’s complaints about their products & services.

 Fairness
The companies can establish consumer value by showing fairness to the consumers.
Fairness can be by charging the actual cost from the consumers related with their products &
services.
 Integrity
The companies can establish consumer value by developing integrity with the consumers.
Integrity can be developed by developing associations between the consumers and the
companies through their products & services.

 Purpose
The companies can establish consumer value by developing purpose with the consumers.
Purpose can be developed by helping the consumers in meeting their purpose through
owning the products & services.

 Trust
The companies can establish consumer value by developing trust with the consumers. Trust
can be developed by helping the consumers in developing faith related with the products &
services.

 Responsibility
The companies can establish consumer value by showing responsibility to the consumers.
Responsibility can be developed by helping the consumers in getting the information related
with products & services and listening them.

 Caring
The companies can establish consumer value by caring the consumers. Caring can be by
informing the consumers & looking after the consumers.
 Citizenship
The companies can establish consumer value by developing the sense of citizenship among
the consumers. The sense of citizenship can be developed when both the consumers & the
companies shows the respect to their country.

 Listen
The companies can establish consumer value by listening the consumers. Listening means to
hear the consumer’s grievances about their products & services.

 Ethics
The companies can establish consumer value by showing ethics to the consumers. Ethics
means to be right with the consumers about their products & services.

 Brotherhood
The companies can establish consumer value by showing brotherhood with the consumers.
Brotherhood means to show brotherly love to the consumers through their products &
services.

G. Consumer Decision Making Process

Consumer decision making may be defined as a process of gathering and processing
information, evaluating it and selecting the best possible option so as to solve a problem or
make a buying choice.

Consumer decision making process consists of the following stages:

Need Recognition & Problem Information Evaluation of Choice &

Awareness Search Alternatives Purchase

Post purchase
Evaluation

Continuation Dis-
of purchase continuation of
purchase

Explanation of the above stages of the Consumer Decision Making Process

Stage I: Need Recognition & Problem Awareness

Need Recognition & Problem Awareness mean un-satisfied needs or wants of the consumers.
The consumers have ideal and actual states related with the products and services which
lead to Need Recognition & Problem Awareness.

Stage II: Information Search

Information Search means to find the information related with the products and services.
Information Search can be internal search or external search. Internal search means to scan
the memory i.e. to recall the past and the present experiences related with the purchase of
the products and availing of the services. External search means to collect the information
through personal sources, commercial sources, public sources & personal experiences.

Stage III: Evaluation of Alternatives

Evaluation of Alternatives means to compare the different informations related with the
products and services.

Stage IV: Choice & Purchase

Choice & Purchase means to select any single information related with the product and
service and should go for the purchase of that particular product and service.

Stage V: Post purchase Evaluation

Post purchase Evaluation means to share the experiences after the purchase of the products
and availing of the services.

Stage V: Continuation of purchase & Dis-continuation of purchase

Continuation of purchase & Dis-continuation of purchase means to decide whether to
continue the purchase or to dis-continue the purchase related with the product and service.

Psychological Consumer Decision Making Process

This process works simultaneously with the Consumer Decision Making Process.

Motivation Perception Attitude Integration Learning

Formation

H. Diffusion of Innovation

Meaning
Diffusion is a process by which a new product information spreads and is accepted by market.

Innovation is a product, idea or practice perceived to be new by an individual or group.

Diffusion of Innovation is a process by which the information of innovative, new product or

idea or practice is spread by communication and is accepted by members of social system
over a period of time.

Types of Diffusion of Innovation

There are following types of Diffusion of Innovation:

Fast Innovation: Fast Innovation means quick diffusion of information of new product or
service.

Typical Innovation: Typical Innovation means neither quick nor slow diffusion of information of
new product or service.

Slow Innovation: Slow Innovation means lot of time in diffusion of information of new product
or service.

Factors influencing Diffusion of Innovation

There are following factors influencing Diffusion of Innovation:

 Type of group
Diffusion of Innovation depends upon the nature of the group of the consumers.

 Perceived risk
Diffusion of Innovation depends upon the risk associated with the product.

 Type of decision making

Diffusion of Innovation depends upon the length of decision making by the consumers.

 Marketing effort
Diffusion of Innovation depends upon the marketing activities performed by the company for
the consumers.
  Trial
Diffusion of Innovation depends upon the facility of actual using and experiencing the product.

 Need
Diffusion of Innovation depends upon the availability of the need of the consumer.

 Compatibility
Diffusion of Innovation depends upon the suitability of the product.

 Relevant advantage
Diffusion of Innovation depends upon the advantage associated with the product.

 Complexion
Diffusion of Innovation depends upon the complexity associated with the product.

 Observation
Diffusion of Innovation depends upon the level of observation made by the consumers.

Classification of Adopters

 Innovators: Risk takers

 Early adopters: Calculate risk in terms of advantages and dis- advantages.

 Early majority: Product purchase when Innovators & Early adopters are satisfied.

 Late majority: Doubtful about innovation.

 Laggards: Traditional and try other market for business.