Nueva Ecija University of Science and Technology

COLLEGE OF MANAGEMENT AND BUSINESS TECHNOLOGY

ELECTIVE 6 – CONSUMER BEHAVIOR

(Developed for educational and classroom discussion purposes only.)

By:
Camille D. Binajbaj, MBA
Isagani F. Pascua, MBA
Noemi C. Vega, MBA

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What is this module about?

This course introduces the theory of consumer behavior and relates it to the practice of
marketing. The student will explore how perceptions, learning, memory, personality, and attitudes
influence consumption behavior, how consumption changes during one’s life cycle, and how
powerful cultural and subcultural influences are on consumers.
Consumer buying behavior studies about the various situations such as what do consumers
buy, why do they buy, when do they buy, how often do consumers buy, for what reason do they
buy, and much more. Due to the changing fashion, technology, trends, living style, disposable
income, and similar other factors, consumer behavior also changes. A marketer has to understand
the factors that are changing so that the marketing efforts can be aligned accordingly.
Understanding consumer behavior is essential for a business to find success for its current
products as well as new product launches. Every consumer has a different thought process and
attitude towards buying a particular product. If a company fails to understand the reaction of a
consumer towards a product, there are high chances of product failure.
By understanding how consumers decide on a product they can fill in the gap in the market
and identify the products that are needed and the products that are obsolete. Understanding
consumer buying behavior is the key secret to reaching and engaging your clients and convert
them to purchase from you.

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 How to use this module?

This module has nine (9) lessons. Each lesson has the following parts:
• Learning Outcomes
• Overview of the Lesson
• Reference Learning Materials/Resources
• Self-assessment Tests/Learning Activities

To get the most from this module, you need to do the following:
1. Begin by reading and understanding the Learning Outcomes. These will tell you
what you should know and be able to do at the end of this module.

2. Study well the given materials and resources for each lesson. If the lesson
requires you to watch a video and/or read an article, copy the link provided to
your search engine/browser.

3. Do the required self-assessment tests. Test yourself on how much you have
learned by means of the self-check tests. This will ensure your mastery of basic
information.

4. Demonstrate what you learned by doing what the learning activities directs you
to do.

5. You must be able to apply what you have learned in another activity or in a real
situation.

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 TABLE OF CONTENTS

Course Description ………………………………………………………………………6

Course Goals and Objectives …………………………………………………………...6
Learning Outcomes ……………………………………………………………………...6
Course Introduction …………………………………………………………………….6

Unit 1: Overview of Consumer Behavior ………………………………………………. 7

Main Application of Consumer Behavior
Consumer Behavior Model
Personal Characteristics affecting Consumer Behavior
Unit 2: Consumer Decision Buying Process…………………………………………….15
The Consumer
Stages of Purchase Decision Process
Problem Awareness, Information Search, Post-Purchase Behavior
Types of Decision Process
General Model of Hierarchy of Effects
Unit 3: Cultural and Environmental Influences on Consumer ………………………… 23
Meaning of Culture
Characteristics, Changes, and Types of Culture
Hofstede’s Dimensions of Culture
Cultural Influences, Subcultures and Consumer Behavior
Unit 4: Social Factors Affecting Consumer Behavior…………………………………..30
Family
Reference Groups
Role in the Society
Social Status
Unit 5: Personal Factors Affecting Consumer Behavior………………………………. 37
Age
Income/Economic Condition
Occupation
Lifestyle
Personality
Unit 6: Psychological Factors Affecting Consumer Behavior ………………………….43
Motivation
Perception
Learning
Beliefs and Attitudes
Unit 7: Consumer Behavior and Marketing Strategy…………………………………... 52
Marketing Strategy, Regulatory Policy, Social Marketing and Customer Value
Market Analysis Components
Market Segmentation
Consumer Behavior Audit
Unit 8: Situational Influences ………………………...................................................... 63
Situations Influencing Consumers Behavior Model
Types of Situations
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 Dimensions of Situational and Ritual Influences
Unit 9: Consumerism and Consumer Behavior ……………………………………….. 71
Motives of Consumerism
Rights and Protection of Consumers

References ……………………………………………………………………………... 77

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Course Description

This course explores consumer behavior from determining consumer needs and wants, the
process by which they are satisfied, and the environment in which the behavior occurs. It studies
consumer behavior from a marketing perspective. Learners will become familiar with consumer
behavior models of decision-making, taking a closer look at how consumers process information,
develop preferences, and make choices. It will also tackle how different marketing tactics and
strategies are used by business/organizations to influence consumers.

Course Goals and Objectives

• Explain fundamental consumer behavior concepts.

• Interpret consumer behavior concepts and their ability to make you become a better
consumer.
• Apply consumer behavior concepts to real world marketing problems and develop better
marketing programs and strategies to influence those behaviors.
• Analyze the current trends in consumer behavior and apply them to the marketing of an
actual product or service.
• Examine theories and research on how consumers make decisions, process information,
develop preferences and make choices.

Learning Outcomes

• Identify the major influences in consumer behavior.

• Distinguish between different consumer behavior influences and their relationships.
• Assess and evaluate the factors, internally and externally, through which we understand
consumer behavior.
• Determine the relevance of consumer behavior theories and concepts to marketing
decisions.
• Apply relevant consumer behavior theories in understanding the impact of marketing
strategies.

Course Introduction

Long-term sales stability is not just about having a great product. It is about meeting
consumers' needs, understanding what makes them tick, and speaking to them in the ways that
make them want to engage. In order to do this, marketers turn to a variety of reports, surveys,
and tools to understand one thing - consumer behavior.
In general terms, consumer behavior is a psychologically based study of how individuals
make buying decisions and what motivates them to make a purchase. Multiple factors exist that
determine buyer behavior, such as social factors, psychological factors, and even simply personal
factors.
Consumer behavior plays an important role in marketing management. It provides
information to the marketer on the basis of which the marketer can design its marketing mix
strategies and modify it in future as per the situation. For the marketer it is important to know how
consumers will react to marketing program in order to serve them effectively.

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 UNIT 1
Overview of Consumer Behavior

Learning Outcomes:
• Identify the major influences in consumer behavior.
• Demonstrate how knowledge of consumer behavior can be applied to marketing.
• Establish the relevance of consumer behavior theories and concepts to marketing
decisions.

Overview
Marketers can make a better marketing decision if he/she is fully aware of the
importance of consumer behavior. Adapting the marketing concept begins with identifying
the needs of the consumer, and this will be better achieved through study of consumer
behavior.

Learning Materials/Resources

Definition of Consumer Behavior

• Consumer behavior is about the behavior of consumers in different situations. However,

there are various definitions of consumer behavior.
• Consumer behavior are those actions directly involved in obtaining, consuming, and
disposing of products and services, including the decision process that precede and
follow these actions.
• Consumer behavior can be thought of as the actions, reactions, and consequences that
take place as the consumer goes through a decision-making process, reaches a decision,
and then puts the product to use.
• Another definition of consumer behavior is the study of individuals, groups, or
organizations and the processes they use to select, secure, use, and dispose of products,
services, experiences, or ides to satisfy needs and the impacts that these processes have
on the consumer and society.
• It is also defined as 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.

Based on the definitions, consumer behavior reveals two central themes:

1. it is a process of actions covering purchase, usage and/or disposal; and

2. it involves individual or group consumers in goods, services, ideas, and experiences.

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Importance of Consumer Behavior

Studying consumer behavior is important to help the marketers understand what

influences consumer’s buying decisions. By understanding how consumers decide on a
product, they can fill-in the gap in the market and identify the products that are needed and
that are obsolete. It also helps marketers to decide how to present their products in a way
that generates maximum impact on consumers.

The following are several importance of consumer buying behavior:

1. Consumer Differentiation
In marketing, consumer differentiation is a way to distinguish a consumer from
several other consumers. This helps to make a target group of consumers with the same or
similar behavior. Though you have a targeted customer demographic in your business, you
can still have variations between individual customers. Each group of consumers are
different and their needs and wants differ from other groups. When a marketer is
knowledgeable about differentiation of each group of consumers, he can design separate
marketing programs.
Consumer differentiation will help to tailor your strategies to the needs of varying
customer groups. When consumer differentiation is done, you can expand the width and
breadth of your services. You will be able to effectively serve a wider group of people.

2. Retention of Consumers
“Consumer behavior is of most importance to marketers in business studies as the
main aim is to create and retain customers” says Professor Theodore Levitt (Kumar, 2004).
Consumer behavior is not just important to attract new customers, but it is very
important to attract new customers, but it is very important to retain existing customers as
well. When a customer is happy about a particular product, he/she will repeat the purchase.
Therefore, marketing the products should be done in such a way that it will convince
customers to buy the product again and again.
Thus, it is very evident that creating customer and retaining them is very important.
This can be done only by understanding and paying attention towards the consumer’s
buying behavior.

3. Design Relevant Marketing Program

Understanding consumer behavior allows you to create effective marketing
campaigns. Each campaign can speak specifically to the separate group of consumers based
on their behavior.
For example, when targeting kids’ market, you may have to look out for venues
such as TV ads, school programs and blogs targeting young mothers. You will need to take
different messaging approaches for different consumer groups.
A study of consumer behavior enables the marketers to understand what motives
consumers to make purchases. Furthermore, the same motive can be utilized in advertising
media to stir the desire to make a purchase. Moreover, marketers should take decisions
regarding the brand logo, coupons, packing and gifts on the basis of consumer behavior.

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4. Predicting Market Trend
Consumer behavior analysis will be the first to indicate a shift in market trend. For
example, the recent trend of consumers is towards environment friendliness and healthy
food. This changing market trend was observed by many brands including McDonalds.
Based on the consumer behavior, McDonald’s brought healthy food options.
By conducting consumer behavior study, a company saves a lot of resources that
might otherwise be allocated to produce a product that will not be sold in the market. For
example, in summer, a brand will not waste its resources for producing a product that will
not sell in summer. Based on consumer behavior, the company decides on production
strategy which will save on warehouse costs and marketing costs.

5. Competition
One of the most important reasons to study consumer behavior is to find out
answers to some of the questions:

• Is the consumer buying from your competitor?

• Why is a consumer buying from your competitor?
• What features attracts a consumer to your competitor products?
• What gaps are your consumers identifying in your products when compared
to your competitors?

Studying consumer behavior facilitates in understanding and facing competition.

Based on consumers’ expectations, your brand can offer competitive advantages.

6. Innovate New Products

We all know some of the big names such as New Coke, Crystal Pepsi, Colgate
Kitchen Entrees, Earring Magic Ken Doll, and Wheatles Dunk-a-Balls Cereal. These
products have failed. The sad truth is that most new products and new ideas end up in
failure. There is an estimate of new product failures- they range from 33% to 90% on the
kind of industry.
Companies consistently strive hard to improve the success rate of their new
products or new ideas. One of the most important ways is to conduct sound and thoughtful
consumer behavior study.

7. Stay Relevant in the Market

When the world is changing as rapidly as it is happening today, the biggest
challenge we all face is staying relevant to our target market. And do you know the main
reason behind the rapid changes? It is the ever-changing behavior of the consumers.
Today’s consumers have greater choices and opportunities, which means they can
easily switch to a company that offers better products and services.

8. Improve Customer Service

Consumers require different levels of customer service, and understanding the
differences within your customer base will help you provide the most appropriate service
for individual needs.
For example, if you own an electronics store, high school or college students who
buy a new laptop are more likely to understand the features they are looking for than a
person buying his first computer. With the first demographic, your service goal will be to
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provide information about the latest trends in technology, while with the second
demographic, you will need to spend more time educating the customer, finding out what
his specific needs are, and even teaching him how to use the features of his new electronic
device.

Model of Consumer Behavior

Through research and observation, several models have been developed that help
further explain why consumers make decisions.
Black-box model is based on external stimulus-response, meaning something
triggers the consumer to make buying decisions that are influenced by many factors,
including marketing messages, sampling, product availability, promotions, and price.
When influenced by the personal-variable model, consumers make decisions
based on internal factors. These internal factors may include personal opinions, belief
systems, values, traditions, goals, or any other internal motivator.
The third consumer behavior model is the complex model. It considers both
internal and external variables.

Factors Affecting Consumer Behavior

Consumer behavior refers to the selection, purchase, and consumption of goods and
services for the satisfaction of their wants. There are different processes involved in the
consumer behavior. Initially, the consumer tries to find what commodities he would like to
consume, then he selects only those commodities that promise greater utility. After
selecting the commodities, the consumer makes an estimate of the available money which
he can spend. Lastly, the consumer analyzes the prevailing prices of commodities and takes
the decision about the commodities he should consume. Meanwhile, there are various
factors influencing the purchases of consumers such as social, cultural, personal, and
psychological.

Cultural Factors
Consumer behavior is deeply influenced by cultural factors such as: buyer culture,
subculture, and social class.

Culture. Basically, culture is the part of every society and is the important cause of person
wants and behavior. The influence of culture on buying behavior varies from country to
country therefore marketers have to be very careful in analyzing the culture of different
groups, regions or even countries.

Subculture. Each culture contains different subcultures such as religions, nationalities,

geographic regions, racial groups, etc. Marketers can use these groups by segmenting the
market into various small portions. For example, marketers can design products according
to the needs of a particular geographic group.

Social Class. Every society possesses some form of social class which is important to the
marketers because the buying behavior of people in a given social class is similar. In this
way, marketing activities could be adapted according to different social classes. It should
be noted that social class is not only determined by income but there are various other
factors such as: wealth, education, occupation, etc.
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Social Factors
Social factors also impact the buying behavior of consumers. The important social
factors are reference groups, family, role, and status.

Reference group. Reference groups have potential in forming a person attitude or

behavior. The impact of reference groups varies across products and brands. For example:
if the product is visible such as dress, shoes, car, etc. then the influence of reference groups
will be high. Reference groups also include opinion leader (a person who influences other
because of his special skill, knowledge, or other characteristics).

Family. Buyer behavior is strongly influenced by the member of a family. Therefore,

marketers are trying to find the roles and influence of the husband, wife, and children. If
the buying decision of a particular product is influenced by wife, then the marketers will
try to target the women in their advertisement. It should be noted that buying roles change
with change in consumer lifestyles.

Roles and Status. Each person possesses different roles and status in the society depending
upon the groups, clubs, family, organization, etc. to which he belongs. For example: a
woman is working in an organization as a finance manager – she is playing two roles, one
of finance manager and other of mother. Therefore, her buying decisions will be influenced
by her role and status.

Personal Factors
Personal factors can also affect the consumer behavior. Some of the important
personal factors that influence the buying behavior are lifestyle, economic situation,
occupation, age, personality, and self-concept.

Age. Age and lifecycle have potential impact on the consumer buying behavior. It is
obvious that the consumers change the purchase of goods and services with the passage of
time. Family lifecycle consists of different stages such young singles, married couples,
unmarried couples, etc. which help marketers to develop appropriate products for each
stage.

Occupation. The occupation of a person has significant impact on his buying behavior.
For example, a marketing manager of an organization will try to purchase business suits,
whereas a low-level worker in the same organization will purchase rugged work clothes.

Economic situation. Consumer economic situation has great influence on his buying
behavior. If the income and savings of a customer is high, then he will purchase more
expensive products. On the other hand, a person with low income and savings will purchase
inexpensive products.

Lifestyle. Lifestyle of customers is another important factor affecting the consumer buying
behavior. Lifestyle refers to the way a person lives in a society and is expresses by
the things in his/her surroundings. It is determined by customer interests, opinions,
activities, etc. and shapes his whole pattern of acting and interacting in the world.

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Personality. Personality changes from person to person, time to time and place to place.
Therefore, it can greatly influence the buying behavior of customers. Personality is not
what one wears, rather it is the totality of behavior of a man in different circumstances.
It has different characteristics such as dominance, aggressiveness, self-confidence, etc.
which can be useful to determine the consumer behavior for particular product or service.

Psychological Factors
There are four important psychological factors affecting the consumer buying
behavior. These are:

Motivation. The level of motivation also affects the buying behavior of customers. Every
person has different needs such as physiological needs, biological needs, social needs, etc.
The nature of the needs is that some of them are most persuasive while others are least
persuasive. Therefore, a need becomes a motive when it is more persuasive to direct the
person to seek satisfaction.

Perception. Selecting, organizing, and interpreting information in a way to produce a

meaningful experience of the world is called perception. There are three different
perceptual processes which are selective attention, selective distortion, and
selective retention. In case of selective attention, marketers try to attract the
customer’s attention. Whereas, in case of selective distortion, customers try to interpret the
information in a way that will support what the customers already believe. Similarly, in
case of selective retention, marketers try to retain information that supports their beliefs.

Beliefs and Attitudes. Customer possesses specific belief and attitude towards various
products. Since such beliefs and attitudes make up brand image and affect consumer buying
behavior therefore, marketers are interested in them. Marketers can change the beliefs and
attitudes of customers by launching special campaigns in this regard.

Search and Open Resource:

If you have access to the internet, watch the video of the learning resources below to better
understand the topic:

Consumer Behavior
https://www.youtube.com/watch?v=60eRK7AwgwM

Why Consumer Behavior is Vital for Success in Marketing

https://www.youtube.com/watch?v=PSLpdM6EYTQ

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 Self-Assessment Test:
Let us do some self-check questions!

Directions: On a separate paper (you can use notebook), answer the

following questions to evaluate your understanding and mastery of the lesson.

--------------------------------------------------------------------------------------------------------------
Name: ________________________________________ Date:________________
Course/Year/Section: _____________________ Score: ______________

Activity 1-1

1. What are the four major factors that influence consumer behavior? Explain each by
providing examples.

2. As a consumer, which among the four major factors is the most influential to you as a
consumer. Based your answer on your own experience.

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Name: ________________________________________ Date:________________
Course/Year/Section: _____________________ Score: ______________

Activity 1-2

Directions: Identify the word/s that will satisfy each statement below. Write your answer in
the space provided before each number.

_________________________1. The actions directly involved in obtaining, consuming, and

disposing of products and services, including the decision-making process, precede, and follow
these actions.
_________________________2. Study of individuals, groups, or organizations and the processes
they use to select, secure, use, and dispose of products, services, experiences, or ideas to meet the
needs and impacts of these processes on the consumer and society.
_________________________3. In this model, consumers decide based on internal factors such
as personal opinions, belief systems, values, traditions, objectives, or any other internal motivator.
__________________________4. This model is based on external stimulus-response, which
means that consumers need to make purchasing decisions that are influenced by many factors,
including marketing messages, sampling, availability of products, promotions, and prices.
__________________________5. It refers to the selection, purchase, and consumption of goods
and services for the satisfaction of their wants.
__________________________6. It is a part of every society and an important cause of human
desire and behavior.
__________________________7. It includes religions, nationalities, geographical regions, racial
groups.
__________________________8. It concerns income and various other factors such as wealth,
education, occupation, etc.
__________________________9. It is a person who influences others because of his particular
skill, knowledge, or other characteristics.
__________________________10. If the customer's income and savings are high, they will
purchase more expensive products; on the other hand, a person with low income and savings will
purchase cheaper products.
__________________________11. It is determined by the interests of the customer, opinions,
activities, etc., and shapes his entire pattern of acting and interacting in the world.
__________________________12. It consists of different stages, such as young singles, married
couples, unmarried couples, etc., which help marketers develop appropriate products for each
stage.
__________________________13. It involves the biological, emotional, social, and cognitive
forces that activate behavior.
__________________________14. It involves the biological, emotional, social, and cognitive
forces that activate behavior.
__________________________15. It is an idea that a person holds as being true.

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 UNIT 2
Consumer Decision Buying Process

Learning Outcomes:
• Describe the decision-making process.
• Understand how to influence different stages of the consumer decision-making
process.

Overview
This unit will present the stages by which the consumer undertakes when deciding
which product or service to buy. Also included in this unit is the discussion of the
different types of consumer behavior and what marketers must do to understand the
consumers ‘buying process.

Learning Materials/Resources

Consumer Classification
Understanding human needs is critical for effective marketing. However, these
needs are not always easily detectable. People are not aware of their own underlying
motivations or of the forces that determine their own behavior.
When it comes to marketing, there is one aspect every business should be aware of:
not all consumers are created equal. Just like there are different types of goods, services,
and products, there are different types of consumers. They have different motivations for
purchasing, different modes of engaging and different mindsets. In order to market a brand
successfully, a business needs to understand the different type of consumer and how to
adapt effective marketing strategy for them

Loyal Consumers
Loyal consumers are likely to comprise a small segment of your consumer base.
However, because of their loyalty, they are valuable to every business. Once they have found
the right company to do business with, they will remain loyal, often becoming a promoter of
the brand by sharing their experience with their friends, family and extended social network.
According to recent study, only between 12 and 15 percent of consumers are loyal
to a single retailer. However, that small group tends to generate between 55 to 70 percent of
brand sales. How can a brand successfully market to a loyal consumer? The keys are
personalization, individualized attention, and repeated marketing contact. These kinds of
marketing strategies will yield the biggest return on investment.

Discount Consumers
Discount consumers are always on the hunt for discounts. Like loyal consumers,
they also have a tendency to frequent patronize the same organizations and brands. However,
they only make purchases when there is some kind of sale or discount. To market to the
discount consumer, the company need to advertise their offers and specials. Social media is
a great way to share sales and ongoing promotions, as are personalized emails or brochures.

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Impulsive Consumers
Impulse consumers are the most difficult when it comes to maximizing marketing
strategies. These consumers often do not shop with a specific product or service in mind.
Rather, they may purchase unpredictably, buying when something strikes their fancy.
Considering the unusual nature of impulsive consumer purchasing habits, vast majority of
purchases are actually impulse purchases.
When brands figure out how to effectively market to impulse consumers, they can
drive up their sales. Keep in mind that impulse buying tends to be emotionally driven as
opposed to logically driven. This is distinct from more rationally driven consumer types,
such as discount consumers (driven by a desire to save money), and loyal consumers (driven
by loyalty to a specific brand). The key is to tap into the impulsive consumer’s emotions.

Need-Based Consumers
Need-based consumers purchase to fulfill a need. Maybe they have run into
financial trouble and need advice. Perhaps they are going on vacation and need a new set of
luggage. They could be approaching a milestone in their life and are seeking legal advice. In
order to market to a need-based consumer, your marketing strategy needs to anticipate these
needs effectively. That means utility-centric marketing, across multiple channels, including
print, online and social media. You need to segment your consumers by needs and adapt a
marketing strategy to each of those needs, outlining how you can help in a particular situation
or promoting a specific service.

Consumer Decision Process

The buying behavior model is one method used by marketers for identifying and
tracing the decision-making process of a customer from the start to the end. The process is
categorized into five different stages.

Five Stages of Purchase Decision Process

Need Recognition

Need recognition occurs when a consumer exactly determines their needs. Consumers may
feel like they are missing out something and needs to address this issue so as to fill in the
gap. When businesses are able to determine when their target market starts developing these
needs or wants, they can avail the ideal opportunity to advertise their brands.

Information Search

The information search stage in the buyer decision process tends to change continually as
consumers require obtaining more and more information about products which can satisfy
their needs. Information can also be obtained through recommendations from people having
previous experiences with products.

At this level, consumers tend to consider risk management and prepare a list of the features
of a particular brand. This is done so because most people do not want to regret their buying
decision. Information for products and services can be obtained through several sources like:

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Commercial sources: advertisements, promotional campaigns, salespeople, or packaging
of a particular product

Personal sources: The needs are discussed with family and friends who provided product
recommendations

Public sources: Radio, newspaper, and magazines

Experiential sources: The own experience of a customer of using a particular brand

Evaluation of Alternatives

This step involves evaluating different alternatives that are available in the market along
with the product lifecycle. Once it has been determined by the customer what can satisfy
their need, they will start seeking out the best option available. This evaluation can be based
upon different factors like quality, price or any other factor which are important for
customers. They may compare prices or read reviews and then select a product which
satisfies their parameters the most.

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Purchase Decision

When all the above stages have been passed, the customer has now finally decided to make
a purchasing decision. At this stage, the consumer has evaluated all facts and has arrived
at a logical conclusion which is either based upon the influence from marketing campaigns
or upon emotional connections or personal experiences or a combination of both.

Post Purchase Behavior

The purchase of the product is followed by post-purchase evaluation which refers to

analyzing as to whether the product was useful for the consumer or not. If the product has
matched the expectations of the customer, they will serve as a brand ambassador who can
influence other potential consumers which will increase the customer base of that particular
brand. The same is true for negative experiences, however, it can halt the journey of
potential customers towards the product.

Types of Consumer Behavior

A consumer’s buying decision depends on the type of products that they need to
buy. The behavior of a consumer while buying a coffee is a lot different while buying a
car. Consumer buying behavior is determined by the level of involvement that a consumer
shows towards a purchase decision. The amount of risk involved in a purchase also
determines the buying behavior. Higher priced goods tend to high higher risk, thereby
seeking higher involvement in buying decisions.

There are four main types of consumer buying behavior:

Complex Buying Behavior

This type of behavior is encountered particularly when consumers are buying an

expensive, infrequently bought product. They are highly involved in the purchase process
and consumer’s research thoroughly before committing to invest. Consumer behaves very
different when buying an expensive product or a product that is unfamiliar to him. When
the risk of buying a product is very high, a consumer consults friends, family, and experts
before making the decision.
An example is when a consumer buys a car for the first time. It is a big decision as
it involves high economic risk. There is a lot of thought on how it looks, how his friends
and family will react, how his social status will change after buying the car, and so on.
In complex buying behavior, the buyer will pass through a learning process. He will
first develop beliefs about the product, then attitudes, and then making a thoughtful
purchase choice. For complex buying behavior customers, marketers should have a deep
understanding of the products. It is important to create advertising message in a way that
influences the buyer’s beliefs and attitudes.

Dissonance-reducing Buying Behavior

The consumer is highly involved in the purchase process which might be due to
high price and infrequent purchase. In addition, there is a low availability of choices with
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less significance differences among brand. Consumers will be forced to buy goods that do
not have too many choices and therefore consumers will be left with limited decision
making. Based on the products available, time limitation or the budget limitation,
consumers buy certain products without a lot of research.
Dissonance can occur when the consumer worries that they will regret their choice.
For example, a consumer who is looking for a new collapsible table that can be taken in a
camping, quickly decides on the product based on few brands available. The main criteria
will be based on price and convenience, but after the purchase the consumer will seek
confirmation that he has made the right choice.
Marketers should run after-sale service camps that deliver focused messaging.
These campaigns should aim to support consumers and convince them to continue with
their choice of their brand. These marketing campaigns should focus on building repeat
purchases and referrals by offering discounts and incentives.

Habitual Buying Behavior

Habitual purchases are characterized by the fact that the consumer has very little
involvement in the product or brand category. In this case, the consumer is perceiving only
a few significant differences between brands. When consumers are buying products that
they use for daily routine, they do not put a lot of thought. They either buy their favorite
brand or the one that they use regularly- or the one available in the store or the one that
costs the least.
For example, while a consumer buys a loaf of bread, he tends to buy the brand that
he is familiar with without actually putting a lot of research and time. Products such as salt,
sugar, biscuits, toilet paper, black pepper, and other everyday use products all fit into this
product category. Consumers just go for it – there is no brand loyalty. Consumers do not
research or need information regarding purchase of such products.
Habitual buying behavior is influenced by radio, television, and print media.
Moreover, consumers are buying based on brand familiarity. Hence marketers must use
repetitive advertisements to build brand familiarity. Further to initiate product trial,
marketers should use tactics like price drop promotions and sales promotions.
Marketers should attract consumers using visual symbols and imagery in their
advertising. Consumers can easily remember visual advertisements and can associate with
a brand.

Variety Seeking Behavior

In this situation, a consumer purchases different product not because they were not
satisfied with the previous one, but because they seek variety. Here, consumers often do a
lot of brand switching. The cost of switching products is low, and hence consumers might
want to try out new products just out of curiosity or boredom.
For example, a consumer likes to buy a cookie and choose a brand without putting
much thought to it. Next time, the same consumer might choose a different brand out of
wish for a different taste. Brand switching occurs often and without intention.
Brands have to adopt different strategies for such type of consumer behavior. The
market leader will persuade habitual buying behavior by influencing the shelf space. The
shelf will display a large number of related but different product versions. Marketers avoid
out-of-stock conditions, sponsor frequent advertising, offer lower prices, discounts, deals,
coupons, and free samples to attract consumers.

19
 Self-Assessment Test:
Let us do some self-check questions!

Directions: On a separate paper (you can use notebook), answer the

following questions to evaluate your understanding and mastery of the lesson.
--------------------------------------------------------------------------------------------------------------
Name: ________________________________________ Date:________________
Course/Year/Section: _____________________ Score: ______________

Activity 2-1

Direction: Identify what type of consumer behavior is being described in each of the
statements below. Write your answer on the space provided before the number.

_________________________1. Consumers are highly involved in the purchase process

_________________________2. Consumers will be forced to buy goods that do not have
too many choices.
_________________________3. Consumers often do a lot of brand switching
_________________________4. Consumers are buying products that they use for daily
routine .
_________________________5. Marketers avoid out-of-stock conditions
_________________________6. Low availability of choices with less significance
differences among brand
_________________________7. The buyer will pass through a learning process
_________________________8. Consumers do not research or need information
regarding purchase of such products .
_________________________9. Marketing campaigns should focus on building repeat
purchases and referrals by offering discounts and incentives.
_________________________10. Create advertising message in a way that influences the
buyer’s beliefs and attitudes.

20
Name: ________________________________________ Date:________________
Course/Year/Section: _____________________ Score: ______________

Activity 2-2

Directions: Identify the steps in decision making process described in each of the
statements below. Write your answer in the space provided before the number.

_________________________1. Consumers tend to prepare a list of the features of a

particular brand.
_________________________2. Analyzing whether the product was useful for the
consumer or not.
_________________________3. Consumer has evaluated all the available facts
_________________________4. Consumer compare prices
_________________________5. Consumers needs to address this issue so as to fill in the
gap.
_________________________6. Product has matched the expectations of the customer
_________________________7. Consumer arrived at a logical conclusion which is
based upon the influence from marketing campaigns
_________________________8. Consumer read reviews and then select a product which
satisfies their parameters the most.
_________________________9. Recommendations from people having previous
experiences with products.
_________________________10. Businesses determine their needs or wants

21
Name: ________________________________________ Date:________________
Course/Year/Section: _____________________ Score: ______________

Activity 2-3

Directions: Answer the following based on your experience as a consumer.

• Explain the steps of the consumer decision-making process.

• Specify one product that you have recently purchased in which you applied the
consumer decision-making process.

22
 UNIT 3
Cultural and Environmental Influences on Consumer

Learning Outcomes:
• Understand the concept of culture and how it influence consumer behavior.
• Understand how environmental forces affect consumer behavior.

Overview
This unit provides the students the importance of culture, sub-culture and social
class in understanding the consumer behavior.

Learning Materials/Resources

Meaning of Culture
For the purpose of studying consumer behavior, culture can be defined as the sum
total of learned beliefs, values and customs that serve to guide and direct the consumer
behavior of all members of that society.
Howard and Sheth have defined culture as “A selective, man-made way of
responding to experience, a set of behavioral patterns”. Thus, culture consists of traditional
ideas and in particular the values, which are attached to these ideas. It includes knowledge,
belief, art, morale, law, customs, and all other habits acquired by man as a member of society.
An accepted concept about culture is that it includes a set of learned beliefs, values, attitudes,
habits, and forms of behavior that are shared by a society and are transmitted from generation
to generation within that society.

Characteristics of Culture

1. Culture is learned. It is not biological; we do not inherit it. Much of learning culture is
unconscious. We learn culture from families, peers, institutions, and media. The process of
learning culture is known as enculturation. While all humans have basic biological need
such as food, and sleep, the way we fulfill those needs varies cross-culturally.

Culture is learned through the following ways:

a. Formal learning. Parents and elders teach children the proper way to behave. For
instance, you have been taught that you need to study to be successful and happy in
life. This learning may influence your response both as a student and individual towards
education.
b. Informal learning. We learn by imitating the behavior of our parents, friends, or by
watching television and film actors in action.
c. Technical learning. Instructions are given about the specific method by which certain
things to done such as painting, dancing, singing, etc.

23
2. Culture is shared. Because we share culture with other members of our group, we are able
to act in socially appropriate ways as well as predict how others will act. Despite the shared
nature of culture, that does not mean that culture is homogeneous (the same).

3. Culture is based on symbols. A symbol is something that stands for something else.
Symbols vary cross-culturally and are arbitrary. They only have meaning when people in
a culture agree on their use. Language, money, and art are all symbols. Language is the
most important symbolic component of culture.

4. Culture is integrated. This is known as holism, or the various parts of a culture being
interconnected. All aspects of a culture are related to one another and to truly understand a
culture, one must learn about all of its parts, not only a few.

5. Culture is dynamic. This simply means that cultures interact and change. Because most
cultures are in contact with other cultures, they exchange ideas and symbols. All cultures
change, otherwise, they would have problems adapting to changing environments. And
because cultures are integrated, if one component in the system changes, it is likely that the
entire system must adjust.

Elements of Culture

1. Social organization – the family patters and social classes of culture

2. Customs and traditions – way people act, wear, that they eat, and their laws
3. Language – communication by word of mouth
4. Religion – a system of beliefs that answers questions about the meaning of life
5. Art and literature – ways the people entertain themselves. The stories they tell and how
they dance. It is also the music they listen to and their artwork.
6. Forms of government – the people or group(s) that control the people and provide/enforce
the laws
7. Economic systems – the method used by a society to produce and distribute goods and
services

Hofstede’s Five Dimensions of Culture

Hofstede’s Cultural Dimensions Theory developed by Geert Hofstede, is a

framework used to understand the differences in culture across countries and to discern the
ways that business is done across different cultures. In other words, the framework is used to
distinguish between different national cultures, the dimensions of culture, and assess their
impact on a business setting.

(see figure of Five Dimensions of Culture on the next page)

24
Power Distance Index
The power distance index considers the extent to which inequality and power are
tolerated. In this dimension, inequality and power are viewed from the viewpoint of the
followers – the lower level.
High power distance index indicates that a culture accepts inequity and power
differences, encourages bureaucracy, and shows high respect for rank and authority.
Low power distance index indicates that a culture encourages organizational structures
that are flat and feature decentralized decision-making responsibility, participative style of
management, and place emphasis on power distribution.

Individualism vs. Collectivism

The individualism vs collectivism dimension considers the degree to which societies
are integrated into groups and their perceived obligations and dependence on groups.
Individualism indicates that there is a greater importance placed on attaining personal
goals. A person’s self-image in this category is defined as “I”.
Collectivism indicates that there is a greater importance placed on the goals and well-
being of the group. A person’s self-image in this category is defined as “We”.

Uncertainty Avoidance Index

The uncertainty avoidance index considers the extent to which uncertainty and
ambiguity are tolerated. This dimension considers how unknown situations and unexpected
events are dealt with.
A high uncertainty avoidance index indicates a low tolerance for uncertainty,
ambiguity, and risk-taking. The unknown is minimized through strict rules, regulations, etc.
A low uncertainty avoidance index indicates a high tolerance for uncertainty,
ambiguity, and risk-taking. The unknown is more openly accepted, and there are lax rules,
regulations, etc.

25
Masculinity vs Femininity
The masculinity vs femininity dimension is also referred to as “tough vs. tender,” and
considers the preference of society for achievement, attitude towards sexuality, equality,
behavior, etc.
Masculinity comes with the following characteristics: distinct gender roles, assertive,
and concentrated on material achievements and wealth-building.
Femininity comes with the following characteristics: fluid gender roles, modest,
nurturing, and concerned with the quality of life.

Long-Term Orientation vs. Short-Term Orientation

The long-term orientation vs. short-term orientation dimension considers the extent to
which society views its time horizon.
Long-term orientation shows focus on the future and involves delaying short=term
success or gratification in order to achieve long-term success. Long-term orientation
emphasizes persistence, perseverance, and long-term growth.
Short-term orientation shows focus on the near future, involves delivering short-term
success or gratification, and places a stronger emphasis on the present than the future. Short-
term orientation emphasizes quick results and respect for tradition.

Indulgence vs. Restraint

The indulgence vs. restraint dimension considers the extent and tendency for a society
to fulfill its desires. In other words, this dimension revolves around how societies can control
their impulses and desires.
Indulgence indicates that a society allows relatively free gratification related to
enjoying life and having fun.
Restraint indicates that a society suppresses gratification of needs and regulates it
through social norms.

Cultural Influences

Cultural influences involve a collection of principles and philosophies in a given

culture or group. It is an individual’s culture that decides his/her way of behaving. These
influences are composed of values, beliefs, or preferences of one person which can be handed
over from generation to generation.

Subcultures and Consumer Behavior

Culture can be divided into subcultures. A subculture is an identifiable distinct,

cultural group, which, while following the dominant cultural values of the overall society also
has its own belief, values and customs that set them apart from other members of the same
society. Some of the diversity we see across subcultures is based on class, race, ethnicity, age,
and gender. Social stratification is often the result of our recognition of these worlds as
different and a belief that they are somehow inferior to our own or to the larger culture.
Class is a social category based on people’s economic position in society. Not all
societies exhibit class differences; ones who do not are called egalitarian. Class societies are
hierarchical, with one class having more access to resources than others. Class is a recent
feature of culture, as all early humans lived in egalitarian bands or tribes.

26
 Race is the socially constructed meanings assigned to the perceived differences
between people based on physical traits (skin color, facial features, and hair types). What
differences we recognize and the meanings we assign those differences are all culturally
determined and not biologically created. These physical features do not determine a person’s
actions or explain their behavior.

Ethnic group refers to people who identify themselves as a distinct group based on
cultural features such as common origins, language, customs, and beliefs. Ethnic groups can
be historically constituted (a group of people who shared a territory, language, or religion) or
they can be more recently claimed (African Americans). Just because people choose to see
themselves as members of a specific ethnic group does not mean that all members of that
group are the same or share beliefs and values. Ethnicity, because it is a marker of group
membership, can be used to discriminate.

Indigenous people are groups who have a long-standing connection with some
territory that predates colonial or outside societies prevailing in the territory. Indigenous
peoples are groups that were in a territory before Europeans or colonists arrived, thus Native
Americans are an indigenous group. They are frequently called First Peoples, and often suffer
from discrimination.

Gender refers to the cultural meanings assigned to the biological differences between
the sexes. Most societies only have masculine or feminine cultural roles, but some have a
third, or even a blended, gender. Gender roles vary widely cross-culturally. Closely tied to
gender roles are issues relating to homosexuality. In many cultures around the world, there is
discrimination based on gender and sexual orientation.

Age is both a biological fact as well as being culturally constructed. While we can
reckon how many years old an individual is, what that means in terms of rights and
responsibilities is culturally constructed. Most societies have obligations and responsibilities
that are assigned based on individuals reaching specific ages, examples are driving, drinking,
and voting.

Subcultural analysis enables marketers to segment their markets to meet the specific
needs, motivations, perceptions, and attitudes shared by members of a specific subcultural
group. Example, Chinese-Filipino as a sub-culture. Differentiates itself from the mainstream
Filipino culture when they avoid wearing the color black or all white during important
celebrations, as these colors are associated with mourning.

Search and Open Resource:

If you have access to the internet, watch the video of the learning resource below to better
understand the topic:

Cultural and Social Factors affecting Consumer Behavior

https://www.youtube.com/watch?v=m-x9KXKg7bE

27
 Self-Assessment Test:
Let us do some self-check questions!

Directions: On a separate paper (you can use notebook), answer the

following questions to evaluate your understanding and mastery of the lesson.

---------------------------------------------------------------------------------------------------------------------

Name: ________________________________________ Date:________________

Course/Year/Section: _____________________ Score: ______________

Activity 3-1

Direction: Match the idea/concept in column A with its closest description in column B.
Write the letter of your answer on the space provided before each number.
Column A Column B

_______1. Culture is learned a. concentrated on material achievements

_______2. Culture is based on symbols b. society allows relatively free gratification

_______3. Culture is integrated c. groups that were in a territory before the

colonists arrived.
_______4. Culture is dynamic d. group of people who shared a territory,
language or religion
_______5. Individualism e. identifiable distinct cultural group,

_______6. Collectivism f. It is not biological; we do not inherit it

_______7. Masculinity g. various parts of a culture being interconnected

h. grouping of humans based on shared physical

or social qualities into categories generally
______8. Feminity viewed as distinct by society
i. emphasize the needs and goals of the group as
a whole over the needs and desires of each
_______9. Indulgence individual
_______10. Restraint j. rights and interests of the individual are
emphasized
_______11. Sub-culture k. language is the most important symbolic
component
_______12. Race l. concerned with the quality of life

_______13. Class m. suppresses gratification of needs

_______14. Ethnic group n. cultures interact and change

_______15. Indigenous people o. people’s economic position in society

p. culture is homogeneous

q. focus on the future

28
Name: ________________________________________ Date:________________
Course/Year/Section: _____________________ Score: ______________

Activity 3-2
Search/look at least two articles on the internet showing how companies adjust their
marketing strategy to adapt to a specific country's existing culture. What is your reaction
regarding this matter?

29
 UNIT 4
Social Factors Affecting Consumer Behavior

Learning Outcomes:
• Identify and understand the social factors that affect consumer buying decisions.
• Describe the different types of consumer roles.
• Explain how culture, subcultures, social classes, families, and reference groups
affect consumers’ buying behavior.

Overview
This unit provides the students how social factors such as groups, and family plays an
important role in the buying decisions of consumers.

Learning Materials/Resources

Social Factors
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 better solutions and ideas. We all live in a society and it is really important for
individuals to adhere to laws and regulations of society.

Social factors influencing consumer buying decision can be classified as:

1. Reference groups
Every 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, neighbors, 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. This
includes friends, family members, relatives, and co-workers who influence the buying
decisions of consumers due to the 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

b. Secondary Groups – share indirect relationship with the consumer. These groups are
more formal and individuals do not interact with them on a regular basis. Examples: religious
associations, political parties, clubs

30
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 Status
An 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.

Role of Family in Consumer Behavior

No two individuals have same buying preferences. The buying tendencies of
individuals vary as per their age, need, income, lifestyle, geographical location, willingness to
spend, family status, and so on.
An individual’s family members play an essential role in influencing his/her buying
behavior. There are two levels of family: the nuclear family which comprise of a husband,
wife, and children; and the extended family which includes grandparents or other relatives
who live under the same roof as the nuclear family.
A family whose members live in close contact with one another for years gradually
develops fixed behavior and consumption patterns. Most children acquire their consumer
behavior norms through observation of their parents who function as role models.
An individual tends to discuss with his immediate family members before purchasing
a particular product or service. Family members might support an individual’s decision to buy
a particular product, stop him for purchasing it or suggest few other options.

Buying Roles of a Family

There are five distinct roles played by members of a family while making a purchase
decision. A look at these provides further insight into how family members interact in their
various consumption-related roles.

The initiator. This is the first person to suggest that a specific product should be bought. This
is also the one who collects information about the product or service. Teenagers often act as
initiators.

The influencer. The family member or family members who influences the final decision
either explicitly or implicitly in the sense that his/her suggestions and wishes are reflected in
the family’s decision.

The decision maker. The one who takes the actual decision and makes the final choices
between alternatives.

The purchaser. The one who buys the products. Some purchasers are forced to carry out the
instructions of the decision maker, whereas others have the authority to choose for family
members and thus assert their preferences.

The user. The family member who actually uses or consumes the product.

31
 Marketers are inclined to direct their marketing messages exclusively at women as
though they alone are responsible for the purchasing decision and dominate family decision
making. However, there are indications that men play an increasingly important role in family
decision making and that they even act as purchasers of items previously regarded as
exclusively in the female domain. Modern children are very knowledgeable and it is generally
accepted that they too have a role to play in family decision-making.

Family Role Structures

Family influence on consumer behavior exists due to the relationship dynamics

between family members. The buying behavior of a family and its members basically depend
upon the dynamics of husband-wife in decision-making. The following types of decisions are
distinguished:

Wife-dominant, where the wife decides what should be bought. Example: grocery, food,
home decoration.

Husband-dominant, where the husband dominates the decision such as purchasing phones,
cars, insurance.

Joint Decisions or Syncratic, where decisions are usually made jointly by husband and wife.
With the changing role of women, this type of decision has become prominent. Example, in
deciding the schools for children, vacations.

Autonomic or Unilateral decisions. Based on research, decisions tended to be autonomic

when there is greater competence of one partner, preference for dividing responsibilities in
household management, greater importance of the decision to one of the spouse, being too
busy to decide together, and peer group norms (Sheth and Cosmas).

Family Life Cycle Stages

The buying behavior of a family member is also influenced by his position in the
family life cycle stage. Different stages in the life cycle show family influence on consumer
behavior with respect to a family member’s position in the life cycle stage. The family life
cycle stages and consumption patterns pf each stage can be understood with the table below:

Family Life Cycle Stage Characteristics of Consumption Interests

Members
Bachelorhood Young singles Games, toys, sports, fashion,
clothing, recreation, and
entertainment
Honeymooners Young married with no Life insurance, home
children furnishings, home
appliances, vacations,
consumer durables

32
Parenthood-Full nest 1 Young married with Baby food, clothing and
children furniture, real estate, medical
services, automobiles, bank
loans
Parenthood-Full nest 2 Middle-aged with Children education,
dependent children increased spending on food,
clothing, recreation and
entertainment, child
insurance
Post Parenthood-Full nest 3 Old parents with dependent Servants and helpers, higher
children education, luxury products,
international vacations,
social contributions
Empty nest Old parents with Healthcare services, home
independent children security services, basic
necessities, value for money
products
Solitary Survivor Old and retired singles Legal services, old age
homes, easy to use
appliances, increased
expenses on health and
security

Search and Open Resource:

If you have access to the internet, watch the video of the learning resource below to better
understand the topic:

Cultural and Social Factors affecting Consumer Behavior

https://www.youtube.com/watch?v=m-x9KXKg7bE

33
 Self-Assessment Test:
Let us do some self-check questions!

Directions: On a separate paper (you can use notebook), answer the

following questions to evaluate your understanding and mastery of the lesson.

---------------------------------------------------------------------------------------------------------------------

Name: ________________________________________ Date:________________

Course/Year/Section: _____________________ Score: ______________

Activity 4-1

Directions: Identify the concept/idea being described in each of the following statements. Write
your answer on the space provided before each number.

__________________________1. It is a collection of people we use as a benchmark for ourselves,

regardless of whether we are part of that group.
__________________________2. Typically, it is a small social group whose members have close,
personal, enduring relationships.
__________________________3. A person who first proposes the idea of buying a particular
product or service
__________________________4. A person who consumes or uses the product or service.
__________________________5. A person whose opinion or advice has an influence on the
decision
__________________________6. Groups characterized by limited interaction between members.
__________________________7. Defined as the expected behavior of an individual in a society
__________________________8. The one who takes the actual decision and makes the final
choice between the alternatives.
__________________________9. They have a consumption interest in vacation, home
appliances, and home furnishings.
__________________________10. They have consumption interest in healthcare services, home
security services, necessities, value for money products

34
Name: ________________________________________ Date:________________
Course/Year/Section: _____________________ Score: ______________

Activity 4-2

Directions. Answer the following questions:

1. Why there is a need for a marketer/company to identify family members' role in buying
behavior?

2. What is the importance of knowing the main participants and their roles in a buying
decision?

35
 Name: ________________________________________ Date:________________
Course/Year/Section: _____________________ Score: ______________

Activity 4-3

Directions: Identifying the buying roles in your family. Using the concept learned in
buying roles of a family, you are going to identify who among your family members play
the following roles:
The initiator: ___________________________________________
The influencer: _________________________________________
The decision maker: ___________________________________
The purchaser. __________________________________________
The user: _________________________________________________

Identify what kind of purchase do these roles occur.

36
 UNIT 5
Personal Factors Affecting Consumer Behavior

Learning Outcomes:
• Identify and understand the individual factors that affect consumer buying
decisions.
• Describe how these factors affect the consumer buying decision.

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

Learning Materials/Resources

PERSONAL FACTORS

Some of the important personal factors that influence the buying behavior are age, economic
condition, occupation, lifestyle, personality and self-concept.
Age
Age and lifecycle have potential impact on the consumer buying behavior. It is obvious that
the consumers change the purchase of goods and services with the passage of time. Family
lifecycle consists of different stages such young singles, married couples, unmarried couples,
and others which help marketers to develop appropriate products for each stage.
Example:
Teenagers would be more interested in buying bright and loud colors 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.

37
Economic Condition
Consumer economic situation has great influence on his buying behavior. 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?
Example:
Individuals with high income would buy expensive and premium products as compared to
individuals from middle-income 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.

38
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.
Example:
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 cannot afford to wear premium brands every day to
work.
College goers and students would prefer casuals as compared to professionals who would be
more interested in buying formal shirts and trousers.

Lifestyle
Lifestyle of customers is another import factor affecting the consumer buying behavior.
Lifestyle refers to the way a person lives in a society and is expressed by the things in his/her
surroundings. It is determined by customer interests, opinions, activities etc and shapes his
whole pattern of acting and interacting in the world.
Example:
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.

39
An individual’s lifestyle is something to do with his style, attitude, perception, his social
relations, and immediate surroundings.

Personality
Personality changes from person to person, time to time and place to place. Therefore, it can
greatly influence the buying behavior of customers. Actually, personality is not what one
wears; rather it is the totality of behavior of a man in different circumstances. It has different
characteristics such as: dominance, aggressiveness, self-confidence etc which can be useful
to determine the consumer behavior for particular product or service.
Example:
A fitness freak would always look for fitness equipment whereas a music lover would happily
spend on musical instruments, CDs, concerts, musical shows etc.

40
 Self-Assessment Test:
Let us do some self-check questions!

Directions: On a separate paper (you can use notebook), answer the

following questions to evaluate your understanding and mastery of the lesson.

---------------------------------------------------------------------------------------------------------------------

Name: _____________________________ Date:_______________

Course/Year/Section: _________________ Score: ______________

Activity 5-1

Direction: Answer the following questions honestly. You can use your personal
experiences to answer these questions.

How do the following personal factors affect your buying behavior as a consumer?

1. Age
2. Economic condition
3. Occupation
4. Lifestyle
5. Personality

41
Name: _____________________________ Date:_______________
Course/Year/Section: _________________ Score: ______________

Activity 5-2
Directions: Answer the question briefly.

1. How does age and lifecycle affect consumer behavior? ( Illustrate by giving personal
examples or experience within your home.)

42
 UNIT 6
Psychological Factors Affecting Consumer Behavior

Learning Outcomes:
• Identify and understand the psychological factors that affect consumer buying
decisions.
• Explain how these factors affect consumer behavior.

Overview
When we talk about psychological factors that influence consumer decisions, we
are referring to the workings of the mind or psyche: motivation, learning and socialization,
attitudes and beliefs. Psychological Factors are the factors that talk about the psychology of
an individual that drive his actions to seek satisfaction. Some of the important psychological
factors are motivation, perception, learning, beliefs and attitudes.

Learning Materials/Resources

PSYCHOLOGICAL FACTORS
1. Motivation
A motive is the inner drive or pressure to take action to satisfy a need. A highly
motivated person is a very goal-oriented individual. Whether goals are positive or negative,
some individuals tend to have a high level of goal orientation, while others tend to have a
lower level of goal orientation. People may display different levels of motivation in different
aspects of their lives.
The level of motivation influences the buying behavior of the consumers. It is very
well explained by Maslow through his need hierarchy theory comprising of basic needs,
security needs, social needs, esteem needs and self-actualization needs. Usually, the basic
needs and the security needs are more pressing needs than the other and hence, these needs
become a motive that directs the consumer behavior to seek satisfaction.
Motivation starts with an unmet need, as does all consumer problem solving. One of
the best-known theories about individual motivation is the work of A. H. Maslow, known as
the hierarchy of needs. Maslow developed a model that lays out five different levels of
human needs. These needs relate to one another other in a “need hierarchy,” with basic
survival-oriented needs at the lower levels of the hierarchy, building up to higher emotional
needs associated with love, self-esteem, and self-fulfillment. This hierarchy of needs is
shown in Figure 1 (on the next page).

43
 Physiological needs are at the first level of Maslow’s hierarchy: hunger, thirst, and other
basic drives. All living beings, regardless of their level of maturity, possess physiological needs.
Physiological needs are omnipresent and recur throughout nature.
Safety and security are second in Maslow’s hierarchy. Safety and security needs imply a
continued fulfillment of physiological needs, as well as the absence of the threat of physical harm.
Safety and security encompass both physical and financial security because financial security is
linked to a person’s ability to have her physiological needs met. Health and physical well-being
and protection from accidents are also associated with this level of need. This is considered an
extension of the more basic needs.
Love and belonging are third in Maslow’s hierarchy of needs. Love encompasses the needs
for belonging, friendship, human intimacy, and family. They involve a person’s interaction with
others and the need to feel accepted by social groups, large or small.
Esteem is the fourth level. Esteem includes the need to feel good about oneself, to be
respected and valued by others, and to have a positive self-image.
Self-actualization is the fifth and highest level in Maslow’s needs hierarchy. Also described
as self-fulfillment, this is the need humans feel to reach their full potential and to accomplish all
that they can with their talents and abilities. Different people may express this need in very
different ways: for one person, self-actualization might involve musical or artistic pursuits, for

44
another, it is parenting, and for a third the focus might be athletics. At different points in their lives,
individuals might express this need through different pursuits.
In his work, Maslow asserts that these five levels of needs operate on an unconscious level.
In other words, people may not even be aware that they are concentrating on one particular level
of need or an assortment of needs. Maslow’s theory suggests that lower levels of need must be met
before an individual can focus on the upper levels of needs. At the same time, a person may
experience several different needs simultaneously. How an individual is motivated to act depends
on the importance of each need.
For motivation to be useful in marketing practice, it is helpful for marketing managers to
understand how motivation plays into a specific purchasing situation—what triggers consumers to
set goals, take action, and solve their need-based problems.

Perception

Perception is how you interpret the world around you and make sense of it in your brain.
You do so via stimuli that affect your different senses—sight, hearing, touch, smell, and taste.
The consumer perception towards a particular product and the brand also influences his
buying decision. The perception is the process through which the individual selects, organize and
interpret the information to draw a meaningful conclusion. Such as, Apple iPhone is perceived as
a premium brand and consumers are motivated to buy it to get associated with the elite class of the
society.
Using different types of stimuli, marketing professionals try to make you more perceptive to
their products whether you need them or not. Consumers today are bombarded with all types of
marketing from every angle—television, radio, magazines, the Internet, and even bathroom walls.
It’s been estimated that the average consumer is exposed to about three thousand advertisements
per day.

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

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.

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

45
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.

The marketers lay emphasis on managing the perceptual processes: Selective Attention,
Selective Distortion, and Selective Retention. In selective attention, the marketer tries to gain the
attention of the customer towards his offerings. Different people have different perceptions about
the same product depending on their individual beliefs and attitudes which give rise to selective
distortion. Thus, the marketer should try to understand the attitudes and beliefs of individuals and
design the marketing campaigns to retain the consumers.

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.
Learning is an experience and practice that actually brings about changes in behavior. For
example, in order to learn to play tennis, you might learn about the rules of the game and the skills
tennis players need. You would practice the skills and participate in tennis games to gain
experience. Learning can also take place without actually participating in the physical experience.
You can learn about something conceptually, too. In other words, you could learn to play tennis
by observing experts and reading about how to play without actually doing it. This is called
nonexperiential learning.
Consumer decisions can be influenced by both experiential and nonexperiential learning.
Take an example of buying wine. Suppose you are at a winery and you are considering buying a
bottle of zinfandel, which you have never tried before. If you taste the wine and discover you don’t
care for the strong spicy flavor, you have learned experientially that you do not like zinfandel. On
the other hand, you could ask the tasting-room host about the flavor of zinfandel, and she might
say that it resembles strong ginger ale, in which case you might decide not to buy the wine because
you don’t like ginger ale. In this second case, you have learned about the product non-
experientially.
Marketing relies heavily on nonexperiential learning, using tactics like customer
testimonials, case studies, and blogger reviews to teach new customers through the experiences
and opinions of others. Consumers themselves seek out resources for nonexperiential learning
when they read book and product reviews on Amazon, film reviews on Rotten Tomatoes, and
restaurant reviews on Yelp.
Another characteristic of learning is that the changes may be immediate or anticipated. In
other words, learning may be taking place even if there is no evidence of it. We can store our
learning until it’s needed, and we do this often with purchasing decisions. For example, a person
might read up on product reviews for the latest set of tablet computers even though she doesn’t
expect to buy one soon. Eventually she may be in the market, and at that point she can put her
learning to use.

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Beliefs and Attitudes

Beliefs and attitudes represent another psychological factor that influences

consumer behavior. A belief is a conviction a person holds about something, such as “dark
chocolate is bitter,” or “dark chocolate is delicious,” or “dark chocolate is good for baking.”
An attitude is a consistent view of something that encompasses the belief as well as an
emotional feeling and a related behavior. For example, an attitude about dark chocolate
might be expressed as a belief “dark chocolate is delicious”, a feeling “dark chocolate makes
me happy,” and a behavior “I eat dark chocolate every afternoon as an energy booster”.
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 will never buy it.
People have beliefs and attitudes about all sorts of things: food, family, politics,
places, holidays, religion, brands, and so on. Beliefs and attitudes may be positive, negative,
or neutral, and they may be based on opinion or fact. It is important for marketers to
understand how beliefs and attitudes may affect consumer behavior and decision making. If
an incorrect or detrimental belief exists among the general population or a target audience,
marketing efforts may be needed to change people’s minds.
When consumer attitudes present a major stumbling block, marketers have two
choices: either they can change consumers’ attitudes to become with their product, or they
can change the product to match attitudes. Often it is easier to change the product than to
change consumers’ attitudes. Attitudes can be very difficult to change, chiefly because they
are intertwined with a pattern of beliefs, emotions, and behaviors. Changing the attitude
requires changing the whole pattern. As a rule, it is easier for marketing to align with existing
attitudes rather than trying to alter them.
Marketers may also look for opportunities to reshape or create new attitudes in
moments when consumers may be more open-minded, as with a product redesign or a new
product introduction.

47
Search and Open Resource:
If you have access to the internet, watch the video of the learning resources below to better
understand the topic:

Psychological Factors Affecting Consumer Behavior

https://www.youtube.com/watch?v=X06k8YqC-Yc

Using Consumer Psychology to Understand Buyer Behavior - Coca-Cola Life

https://www.youtube.com/watch?v=aGfdubLAtY8

48
 Self-Assessment Test:
Let us do some self-check questions!

Directions: On a separate paper (you can use notebook), answer the

following questions to evaluate your understanding and mastery of the lesson.

---------------------------------------------------------------------------------------------------------------------

Name: _______________________________________ Date:________________

Course/Year/Section: _____________________ Score: ______________

Activity 6-1
Directions: Identify if the following statements are true or false. Write your answer on the space
provided before each number.
________________1. The level of motivation has an impact on the buying behavior of consumers.
________________2. People can demonstrate same levels of motivation in different aspects of
their lives.
________________3. A highly motivated person is a very objective individual.
________________4. People may not even be aware that they are concentrating on a specific level
of need.
________________5. Perception occurs through a variety of stimuli that affect the five senses.
________________6. Learning explains how an individual chooses, organizes, and interprets
information to reach a meaningful conclusion.
________________7. Different people have different perceptions of the same product in selective
attention, depending on their individual beliefs and attitudes
________________8. Learning can also take place without actually taking part in physical
experience.
________________9. As a rule, it is not easy for marketers to align themselves with existing
attitudes rather than alter them.
________________10. Marketing relies heavily on experiential learning, using tactics such as
customer testimonials, case studies, and blogger reviews to teach new customers the experiences
and opinions of others.

49
Name: _________________________________ Date:_____________
Course/Year/Section: _____________________ Score: ____________

Activity 6-2
Based on your experience as a consumer, how does motivation, perception, learning,
beliefs and attitude affect your decisions in buying goods or services? Illustrate your
answer by giving an example.

50
Name: _________________________________ Date:_____________
Course/Year/Section: _____________________ Score: ____________

Activity 6-3
Directions: Based on the psychological factors discussed, analyze the following situations, and
identify which of these factors has a close impact on the consumer's purchasing behavior.
__________________1. Buying a smartphone with telephoto or periscope camera for only
P6, 500.
__________________2. Dagupan bagoong "fish paste" for its creamy and thick sauce.
__________________3. A famous toothpaste company that maintains its leadership as a leading
toothpaste brand in the Philippines. Perception
__________________4. Kathryn Bernardo dubbed as the Queen of Box Office for her two top-
grossing films earning more than 800 million worldwide.
__________________5. Customer buying iPhone because of its superior quality.
__________________6. Red tag Sale
__________________7. Buying in Divisoria for its wide variety and low priced products.
__________________8. Costumer buying quality shoes made in Marikina.
__________________9. Purchasing a two-door inverter refrigerator with a 20% discount.
__________________10. Shampoo commercial featuring a collection of beautiful women such as
celebrities and fashion icons.

51
 UNIT 7
Consumer Behavior and Marketing Strategy

Learning Outcomes:
• Discuss the concept of marketing strategy.
• Explain the concepts of segmentation and targeting.
• Describe the role of marketing in building and managing customer relationships.
• Explain how marketing creates value for the consumer, the company, and society.
• Understand the process of designing and evaluating the marketing strategies based
on fundamentals of consumer buying behavior.

Overview
Long-term sales stability is not just about having a great product. It's about
meeting consumers' needs, understanding what makes them tick, and speaking to them in
the ways that make them want to engage.
According to a Salesforce report, 76% of consumers expect companies to
understand their needs and expectations. This means that if you don't understand what a
consumer wants before they can tell you, they're probably taking their business
elsewhere.
Successful organizations build their marketing strategies with consumer behavior
insights as the foundation. They're not generating products and marketing plans based on
their ideas alone; they are bringing external information into the fold to find out what
customers want and how they want it, then interacting with them accordingly. This is the
essence of creating a positive customer experience (CX), and CX means everything to
fostering a loyal customer-base.

Learning Materials/Resources

Marketing Strategy
Marketing strategies and tactics are normally based on explicit and implicit beliefs
about consumer behavior. Decisions based on explicit assumptions and sound theory and
research are more likely to be successful than the decisions based solely on implicit
intuition.
Knowledge of consumer behavior can be an important competitive advantage while
formulating marketing strategies. It can greatly reduce the odds of bad decisions and
market failures. The principles of consumer behavior are useful in many areas of
marketing, some of which are listed below:

1. Analyzing Market Opportunity

Consumer behavior helps in identifying the unfulfilled needs and wants of consumers. This
requires scanning the trends and conditions operating in the market area, customer’s
lifestyles, income levels and growing influences.

52
2. Selecting Target Market

The scanning and evaluating of market opportunities helps in identifying different

consumer segments with different and exceptional wants and needs. Identifying these
groups, learning how to make buying decisions enables the marketer to design products or
services as per the requirements.

Example
Consumer studies show that many existing and potential shampoo users did not want to
buy shampoo packs priced at P50 or more. They would rather prefer a low price
packet/sachet containing sufficient quantity for one or two washes. This resulted in
companies introducing shampoo sachets at a minimal price which has provided
unbelievable returns and the trick paid off wonderfully well.

3. Marketing-Mix Decisions

Once the unfulfilled needs and wants are identified, the marketer has to determine the
precise mix of four P’s, i.e., Product, Price, Place, and Promotion.

Product
A marketer needs to design products or services that would satisfy the unsatisfied needs or
wants of consumers. Decisions taken for the product are related to size, shape, and features.
The marketer also has to decide about packaging, important aspects of service, warranties,
conditions, and accessories.

Price
The second important component of marketing mix is price. Marketers must decide what
price to be charged for a product or service, to stay competitive in a tough market. These
decisions influence the flow of returns to the company.

Place
The next decision is related to the distribution channel, i.e., where and how to offer the
products and services at the final stage. The following decisions are taken regarding the
distribution mix:

• Are the products to be sold through all the retail outlets or only through the selected
ones?
• Should the marketer use only the existing outlets that sell the competing brands?
or, should they indulge in new elite outlets selling only the marketer’s brands?
• Is the location of the retail outlets important from the customers’ point of view?
• Should the company think of direct marketing and selling?

Promotion
Promotion deals with building a relationship with the consumers through the channels of
marketing communication. Some of the popular promotion techniques include advertising,
personal selling, sales promotion, publicity, and direct marketing and selling.
53
The marketer has to decide which method would be most suitable to effectively reach the
consumers. Should it be advertising alone, or should it be combined with sales promotion
techniques? The company has to know its target consumers, their location, their taste and
preferences, which media do they have access to, lifestyles, etc.

Regulatory Policy
State and local governments may even impose additional regulations. In fact, even
the start time of the game is regulated by the government because our time zones are
determined by our government. The government's restriction and control over business
practices is called its regulatory policy.
Regulatory policy is designed to achieve efficiency and equity, which requires the
government to intervene, for example, to maintain competitive trade practices (an
efficiency goal) and to protect vulnerable parties in economic transactions (an equity goal).
Many of the regulatory decisions of the federal government are also made largely in the
context of group politics. Business lobbies also have an especially strong influence on the
regulatory policies that affect them.

Social Marketing
Social marketing is marketing designed to create social change, not to directly
benefit a brand. Using traditional marketing techniques, it raises awareness of a given
problem or cause, and aims to convince an audience to change their behaviors.
Instead of selling a product, social marketing “sells” a behavior or lifestyle that
benefits society, in order to create the desired change. This benefit to the public good is
always the primary focus. And instead of showing how a product is better than competing
products, social marketing “competes” against undesirable thoughts, behaviors, or
actions.

Social marketing is commonly used for causes like:

1. Health and safety:

• Anti-smoking
• Anti-drug
• Promoting exercise and healthy eating
• Safe driving
• Railroad station safety

2. Environmental Causes:
• Anti-deforestation
• Anti-littering
• Endangered species awareness

3. Social activism:
• Illuminating struggles that people of color, people with disabilities, etc. face, then
inspiring people to fight against mechanisms that create inequality
• Anti-bullying
54
 • Fighting gender stereotypes

Who initiates these social marketing campaigns?

Nonprofit organizations and charities run the majority of social marketing campaigns.
Government organizations, highway safety coalitions, and emergency services (police,
fire, ambulance) run them as well. But social marketing is not out of the question if you
are a commercial business. Commercial brands will sometimes run social marketing
campaigns for causes they are passionate about.

Customer Value

Customer value is the satisfaction the customer experiences (or expects to experience) by
taking a given action relative to the cost of that action.

“Marketing creates, communicates, and delivers value to customers.”

Your internal chain of sourcing, operations, processes, sales, marketing, and customer
service all contribute to the creation of value. All of these components affect your
customers directly or indirectly in some way, informing their perception of you. This leads
to the fundamental point: The results of your efforts to create value are measured in the
customers’ perception of that value. Customers compare their perceived value of similar
products when making a decision.

55
Consumers

It is not possible to anticipate and react to customers’ needs and desires without a complete
understanding of consumer behavior. Discovering customers’ needs is a complex process, but it
can often be accomplished by marketing research.

Company

A firm must fully understand its own ability to meet customers needs. This involves evaluating
all aspects of the firm including:
• financial condition
• general managerial skills
• production capabilities
• R&D capabilities
• technological sophistication
• reputation
• marketing skills

Competitors

It is not possible to consistently do a better job of meeting customer needs than the competition
without a thorough understanding of the competition’s capabilities and strategies. This requires
the same level of knowledge of a firm’s key competitors that is required on one’s own firm.

Conditions

The state of the economy, the physical environment, government regulations, and technological
developments affect consumer needs and expectations as well as company and competitor
capabilities.

56
Market Segmentation

A market segment is a group of people who share one or more common

characteristics, lumped together for marketing purposes. Each market segment is unique,
and marketers use various criteria to create a target market for their product or service.
Marketing professionals approach each segment differently, after fully understanding the
needs, lifestyles, demographics, and personality of the target consumer.
Market segmentation is a marketing term that refers to aggregating prospective
buyers into groups or segments with common needs and who respond similarly to a
marketing action. Market segmentation enables companies to target different categories of
consumers who perceive the full value of certain products and services differently from
one another.

Steps in Market Segmentation

Identifying product-related
need sets

Grouping customers with

similar need sets

Describing each group

Selecting an attractive
segment
57
1. Identifying product-related need sets
Organizations approach market segmentation with a set of current and potential
capabilities. The term need set is used to reflect the fact that most products in developed
economies satisfy more than one need.
Customer needs are not restricted to product features but also include types and
sources of product information, outlets where the product is available, product price, the
image of the product or firm, and even where and how the product is produced.

2. Grouping customers with similar need sets

The next step is to group consumers with similar need sets. These consumers can
be grouped into one segment as far as product features and perhaps even product image are
concerned despite sharply different demographics.

3. Describing each group

Once consumers with similar need sets are identified, they should be described in
terms of demographics, lifestyles, and media usage.
In order to design an effective marketing program, it is necessary to have a complete
understanding of the potential customers.

4. Selecting an attractive segment

Target market segment(s) pertains to the specific market on which we will focus
our market effort. This decision is based on our ability to provide the selected segment(s)
with superior customer value at a profit. Each market segment requires its own marketing
strategy.

Consumer Behavior Audit

The consumer behavior audit is a fundamental part of the marketing planning process.
It is conducted not only at the beginning of the process, but also at a series of points during
the implementation of the plan. The consumer behavior audit considers both internal and
external influences on marketing planning, as well as a review of the plan itself.
In many ways the consumer behavior audit clarifies opportunities and threats and
allows the marketing manager to make alterations to the plan if necessary.

Consumer Behavior Audit Checklist

The checklist is designed to answer the question, what is the current marketing situation?
Let us consider the consumer behavior audit under three key headings:

1. The Internal Marketing Environment

• How is our marketing team organized?
• How efficient is our marketing team?
• How effective is our marketing team?
• How does our marketing team interface with other organizations and internal
functions?
• How effective are we at Customer Relationship Management (CRM)?
• What is the state of our marketing planning process?
58
 • Is our marketing planning information current and accurate?
• What is the current state of New Product Development? (Product)
• How profitable is our product portfolio? (Product)
• Are we pricing in the right way? (Price)
• How effective and efficient is distribution? (Place)
• Are we getting our marketing communications right? (Promotion)
• Do we have the right people facing our customers? (People)
• How effective are our customer facing processes?
• What is the state of our business’s physical evidence?

2. The External Marketing Environment

As a market-oriented organization, we must start by asking – What is the nature of
our customer? Such as:
• Their needs and how we satisfy them
• Their buyer decision process and consumer behavior
• Their perception of our brand, and loyalty to it
• The nature of segmentation, targeting and positioning in our markets
• What customers ‘value’ and how we provide that value?
• What is the nature of competition in our target markets?
• Our competitors’ level of profitability
• Their number or concentration
• The relative strengths and weaknesses of competition
• The marketing plans and strategies of our competition
• What is the cultural nature of the environment?
• Beliefs and religion
• The standards and average levels of education
• The evolving lifestyles of our target consumers
• The nature of consumerism in our target markets
• The demography of consumers
• The level of adoption of mobile and Internet technologies
• The way in which goods are manufactured
• Information systems
• Marketing communications used
• Changes in political and legal landscape
• Laws, copyright and patents
• Levels of regulation such as quotas or tariffs
• Labor laws such as minimum wage legislation

3. Review of our Current Marketing Plan

• What are our current objectives for marketing?
• What are our current marketing strategies?
• How do we apply the marketing mix?
• Is the marketing process being controlled effectively?
• Are we realizing our SMART Objectives?
• Are our marketing team implementing the marketing plan effectively?
• Levels of staffing, staff training and development
59
 • Experience and learning

Search and Open Resource:

If you have access to the internet, watch the video of the learning resource below to better
understand the topic:

Why Consumer Behavior is Vital for Success in Marketing

https://www.youtube.com/watch?v=PSLpdM6EYTQ

60
 Self-Assessment Test:
Let us do some self-check questions!

Directions: On a separate paper (you can use notebook), answer the

following questions to evaluate your understanding and mastery of the lesson.

---------------------------------------------------------------------------------------------------------------------

Name: _________________________________ Date:_____________

Course/Year/Section: _____________________ Score: ____________

Activity 7-1
Market Segmentation Application. Identify one product that you want to offer in the market.
What specific segmentation are you going to use in providing this kind of product? Why?

61
Name: _________________________________ Date:_____________
Course/Year/Section: _____________________ Score: ____________

Activity 7-2
Using sources from the internet, list ten popular companies in the Philippines. Identify the type of
market segmentation that these companies have adopted.

62
 UNIT 8
Situational Influences

Learning Outcomes:
• Identify and discuss the four main types of situation.
• Discuss the dimensions of situational influence.
• Analyze how different situations affect consumer buying behavior.

Overview
Situational influences are temporary conditions that affect how buyers behave—
whether they actually buy your product, buy additional products, or buy nothing at all
from you. They include things like physical factors, social factors, time factors, the
reason for the buyer’s purchase, and the buyer’s mood. Consumers behave very differently
depending on the situation.

Learning Materials/Resources

Situations Influencing Consumers Behavior Model

63
Four Main Types of Situation

1. Communication Situation

2. Purchase Situation

64
3. Usage Situation

4. Disposition Situation

65
Dimensions of Situational Influences

1. Physical Surroundings
• Store location
• Interior décor
• Music
• Smell/aromas
• Temperature (air-conditioning or heating)
• Choice provided (by product category or across the categories)

Atmospherics is the sum of all the physical features of a retail environment. It influences
consumer judgments of the quality of the store and the store’s image. Atmosphere is referred to
as service scape when describing a business such as a hospital, bank, or restaurant.
Colors. Certain colors and color characteristics create feelings of excitement and arousal which
are related to attention. Brighter colors are more arousing than dull ones. Warm colors such as
reds and yellows are more arousing than cool colors as blues and grays.
Aromas. There is an increasing evidence that aroma can affect consumer shopping. Several
aroma studies have found the following:
• A scented environment produced a greater intent to revisit the store, higher purchase
intention for some items, and a reduced sense of time spent shopping.
• A pleasantly scented environment enhanced brand recall and evaluation particularly for
unfamiliar brands.

Music. It influences consumer’s moods, and in turn influences a variety of consumption behaviors.
Some firms have developed music programs to meet the unique needs of specific retailers. An
emerging trend is having music more in the foreground so it becomes part of the shopping
experience and drives store image.

Crowding. Most consumers find feeling of crowding to be unpleasant resulting in:

• Less time in the store and less buying

• Faster decisions and less use of information

Crowding can lead to less satisfactory purchases, unpleasant shopping, and reduced likelihood of
returning to the store. Marketers need to design outlets to reduce crowding perceptions.

2. Social Surroundings
Social surroundings are the other individuals present in the particular situation.
• Social influence is a significant force.
• Individuals tend to comply with group expectations, particularly when the behavior
is visible.
• Shopping is a highly visible activity.
• The use of many publicly consumed brands are subject to social influences.

66
Examples of social surroundings:
• Types of customers in the store
• Queues and crowding
• Whether the consumer is likely to be known by others/recognized
• Whether the product will be consumed privately or in the presence of others.

3. Temporal Perspectives
Temporal perspectives deal with the effect of time on consumer behavior. Limited purchase
time often limits search. Internet shopping is growing rapidly as a result of the time pressures felt
by the consumers.

Examples of temporal influences:

• Whether the product is seasonal
• Whether the product is urgently required
• Time available for shopping limited/excess
• How long the previous product lasted or was expected to last

4. Task Definition
Task definition is the reason the consumption activity is occurring. Major distinction
between purchase for self vs. gift.

Consumers give gifts for many reasons:

• Social expectations
• Ritualized situations
• To elicit return favors

Examples of task influences:

• Is the product utilitarian or used as a status symbol?
• Is it a gift or for oneself?
• Must the product be long-lasting or tough? or decorative?
• Is the product intended for several uses?

5. Antecedent States
Antecedent states are features of the individual person that are not lasting characteristics.

Moods. Moods tend to be less intense than emotions and may operate without the individual’s
awareness. Although moods may affect all aspects of a person’s behavior, they generally do not
completely interrupt ongoing behavior as an emotion might.

Consumers actively manage their mood states, often seeking situations, activities, or objects that
will alleviate negative moods or enhance positive ones.

Examples:
• Feeling and triggers buying sweets or seeing a funny movie.
• Feeling rejected triggers buying games software.

67
Momentary Conditions. As with moods, individuals attempt to manage their momentary
conditions, often through the purchase or consumption of products and services. Thus, a great
deal of marketing is directed toward momentary conditions.
Examples:
• Can’t eat ice cream because teeth hurt
• Can’t buy a book because the credit card was left at home
• Buy more groceries because he or she is hungry before shopping

Ritual Situations

A ritual situation can be described as a set of interrelated behaviors that occur in a

structured format, which have symbolic meaning, and that occur in response to socially defined
occasions. They are important to marketers as they define consumption e.g., anniversaries,
seasonal gifts, etc. The same with traditions and rituals being continued and developed e.g.,
Valentine’s day.

68
 Self-Assessment Test:
Let us do some self-check questions!

Directions: On a separate paper (you can use notebook), answer the

following questions to evaluate your understanding and mastery of the lesson.

---------------------------------------------------------------------------------------------------------------------

Name: _________________________________ Date:_____________

Course/Year/Section: _____________________ Score: ____________

Activity 8-1
Directions: Match the idea/concept in column A with its closest description in column B. Write
the letter of your answer on the space provided before each number.
Column A Column B
_______1. Communication Situation a. less intense than emotion
b. other individuals present in a specific situation
_______2. Purchase Situation
_______3. Atmospherics c. seasonal gifts
d. marketer attempts to place ad in appropriate
_______4. Colors media contexts
_______5. Aromas e. sum of all the physical features
f. characteristics of an individual who is not
_______6. Social surroundings lasting.
g. opportunity to develop interpersonal
_______7. Temporal perspectives relationships
_______8. Moods h. create feelings of excitement and arousal
i. the scented environment produced a greater
_______9. Antecedent states intention to revisit the store
_______10. Ritual situations j. the effect of time on consumer behavior
k. the reason the consumption activity is
occurring
l. influences a variety of consumption behaviors

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Name: _________________________________ Date:_____________
Course/Year/Section: _____________________ Score: ____________

Activity 8-2
Telling your Story. Narrate your experience(s) about purchasing a t-shirt/dress in a shopping mall
and an ordinary supermarket or ‘palengke’. Compare and contrast the “situational influences” of
the two places.

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 UNIT 9
Consumerism and Consumer Behavior

Learning Outcomes:
• Define consumerism and its importance.
• Discuss the rights and protection of consumers.
• Describe how to be a smart consumer.

Overview
Consumerism is the idea that increasing consumption of goods and services
purchased in the market is always a desirable goal and that a person’s wellbeing and
happiness depend fundamentally on obtaining consumer goods and material possessions.
In an economic sense, it is related to the predominantly Keynesian idea that consumer
spending is the key driver of the economy and that encouraging consumers to spend is a
major policy goal. From this point of view, consumerism is a positive phenomenon that
fuels economic growth.
Consumerism also refers to a tendency of people living in a capitalist economy to
engage in a lifestyle of excessive materialism that revolves around reflexive, wasteful, or
conspicuous overconsumption. In this sense, consumerism is widely understood to
contribute to the destruction of traditional values and ways of life, exploitation of
consumers by big business, environmental degradation, and negative psychological effects.

Learning Materials/Resources

Consumerism has its roots in Britain’s Industrial Revolution in the 18th century. During
the revolution, the availability of consumer products substantially increased with the rise of
the use of machines.
Over the years, buying goods became a way of life and spread to other countries. In
the 1950s, after World War II, the American consumer was even praised as a patriotic citizen
for aiding the recovery of the country’s battered economy.
The consumerist culture now involves people spending more on consumer items like
cars, gadgets, and clothes, instead of savings or investments. Consumers also buy these items
often so as to keep up with trends and are constantly looking to upgrade the quality of
products and services.

Growing Consumerism
Consumerism is rife in many economically developed countries. The mass production
of luxury goods, the saturation of media with advertisements and promotions for branded
products and services, and even rising levels of personal debts signal that more people are
buying goods excessively.
Growing consumerism can also be seen with people buying goods and services to
publicly display economic power, buying them “just for fun and pleasure” and buying

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without a plan or a budget, according to Dr Joicey Wei Jie, lecturer in the marketing
programme at SIM University’s (UniSIM) School of Business.

Benefits of Consumerism
When a greater proportion of citizens buy goods and services in excess of their needs,
they consume more, they spend more, and that can create a cycle of demand leading to
greater production and to greater employment, which leads to even more consumption.
Consumerism views the consumer as the target of economic policy and a cash cow for
the business sector, with the sole belief that increasing consumption benefits the economy.
Saving can even be seen as harmful to the economy because it comes at the expense of
immediate consumption spending.
Consumerism also helps shape some business practices. Planned obsolescence of
consumer goods can displace competition among producers to make more durable products.
Marketing and advertising can become focused on creating consumer demand for new
products rather than informing consumers.

Trade-offs for Increasing Consumerism

The rise of consumerism has had a detrimental impact on the planet. For example,
clothes and apparel from the fashion and textiles industries are made using extensive
amounts of water, energy, chemicals, and raw materials , all of which place heavy demands
on Earth’s natural resources.
Environmental problems are frequently associated with consumerism to the extent that
consumer goods industries and the direct effects of consumption produce environmental
externalities. These can include pollution by producing industries, resource depletion due to
widespread conspicuous consumption, and problems with waste disposal from excess
consumer goods and packaging.

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 According to studies, increasing consumerism may also result in “a shift away from
values of community, spirituality, and integrity, and toward competition, materialism and
disconnection”.
Consumerism is often associated with globalization in promoting the production and
consumption of globally traded goods and brands, which can be incompatible with local
cultures and patterns of economic activity. Consumerism can also create incentives for
consumers to take on unsustainable levels of debt, which can contribute to financial crises
and recessions.

Search and Open Resource:

If you have access to the internet, watch the video of the learning resources below to better
understand the topic:

History of Consumerism
https://www.youtube.com/watch?v=Y-Unq3R—M0

The Problem with Consumerism

https://www.youtube.com/watch?v=x0ckvo2Z5BU

Motives of Consumerism

• To make the consumers aware of their rights and unite them into one force.
• To check unfair trade practices like monopoly power and fight against exploitation.
• To effectively implement consumer protection law.
• To educate the consumers with the latest and complete information.
• To fight against anti-social practice like black market, hoarding, adulteration, etc.

Rights of Consumers

Forty-five years ago, the last week of October was declared Consumer Protection
Week, as a period for planning and enforcement of government action toward controlling
fraudulent trade practices and unreasonable price increases. It has since been expanded to
cover the whole month of October as Consumer Welfare Month, and the focus broadened to
include consumer education and awareness as well.
Consumer protection is a constitutional mandate. Article XVI, Section 9 declares: “The
State shall protect consumers from trade malpractices and from substandard or hazardous
products.” It was in this light that the Consumer Act of the Philippines (Republic Act. No.
7394) was passed in 1992.
Consumer protection is the core of consumerism. Consumer protection means
protecting the consumers from the evils of marketing. It strikes a balance in the buyer-seller
relation.
Consumers have eight basic rights under the law, namely, the rights to: (1) basic needs,
(2) safety, (3) information, (4) choice, (5) representation, (6) redress, (7) consumer
education, and (8) healthy environment.

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Source: https://twitter.com/piadesk/status/1049361421383999490

Search and Open Resource:

If you have access to the internet, watch the video of the learning resources below to better
understand the topic:

SUPER CONSUMER and Consumer Rights in the Philippines

https://www.youtube.com/watch?v=eEWmhgCwjwI

Consumer Rights in the Philippines

https://www.youtube.com/watch?v=H0Zefu3Er2A

Consumer Responsibilities
https://www.youtube.com/watch?v=aTVFD-jp7dc

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 Self-Assessment Test:
Let us do some self-check questions!

Directions: On a separate paper (you can use notebook), answer the

following questions to evaluate your understanding and mastery of the lesson.

---------------------------------------------------------------------------------------------------------------------

Name: _________________________________ Date:_____________

Course/Year/Section: _____________________ Score: ____________

Activity 9-1
1. In your own point of view as a consumer, list down at least five (5) benefits of
consumerism.

2. Does consumerism provide consumers with absolute protection? Why or why not?

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Name: _________________________________ Date:_____________
Course/Year/Section: _____________________ Score: ____________

Activity 9-2
Search any article/case related to consumerism on the internet. Provide a brief reaction regarding
the article/case. Note: (Include the website of the article used as reference).

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aff.html
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https://builtvisible.com/understanding-customer-value/
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theory/#:~:text=Hofstede's%20Cultural%20Dimensions%20Theory%2C%20developed,is%20done%20ac
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20has%20five%20basic%20characteristics,we%20do%20not%20inherit%20it.
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%20decision.
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examples-02236451
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consumer-behaviour/29826

* “Consumer Behavior”(NEUST – CMBT Workbook)

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