Notes: UNIT I

Consumer behavior is the study of individuals, groups, or organizations and all the activities
associated with the purchase, use and disposal of goods and services. Consumer behaviour consists of
how the consumer's emotions, attitudes, and preferences affect buying behaviour. Consumer behaviour
emerged in the 1940–1950s as a distinct sub-discipline of marketing, but has become an
interdisciplinary social science that blends elements from psychology, sociology, social
anthropology, anthropology, ethnography, ethnology, marketing,
and economics (especially behavioural economics).
The study of consumer behaviour formally investigates individual qualities such
as demographics, personality lifestyles, and behavioural variables (such as usage rates, usage
occasion, loyalty, brand advocacy, and willingness to provide referrals), in an attempt to understand
people's wants and consumption patterns. Consumer behaviour also investigates on the influences on
the consumer, from social groups such as family, friends, sports, and reference groups, to society in
general (brand-influencers, opinion leaders).
Consumer behaviour entails "all activities associated with the purchase, use and disposal of goods and
services, including the consumer's emotional, mental and behavioural responses that precede or follow
these activities." The term consumer can refer to individual consumers as well as organisational
consumers, and more specifically, "an end user, and not necessarily a purchaser, in the distribution chain
of a good or service." Consumer behaviour is concerned with:

• purchase activities: the purchase of goods or services; how consumers acquire products and
services, and all the activities leading up to a purchase decision, including information search,
evaluating goods and services, and payment methods including the purchase experience
• use or consumption activities: concerns the who, where, when, and how of consumption and the
usage experience, including the symbolic associations and the way that goods are distributed within
families or consumption units
• disposal activities: concerns the way that consumers dispose of products and packaging; may also
include reselling activities such as eBay and second-hand markets
Consumer responses may be

• emotional (or affective) responses: refer to emotions such as feelings or moods,

• mental (or cognitive) responses: refer to the consumer's thought processes, their
• behavioural (or conative) responses: refer to the consumer's observable responses in relation to the
purchase and disposal of goods or services.
• Understanding purchase and consumption behaviour is a key challenge for marketers.
Consumer behaviour, in its broadest sense, is concerned with understanding both how purchase
decisions are made and how products or services are consumed or experienced. Consumers are
active decision-makers. They decide what to purchase, often based on their disposable income
or budget. They may change their preferences related to their budget and a range of other
factors.
• Some purchase decisions involve long, detailed processes that include extensive information
search to select between competing alternatives.[14] Other purchase decisions, such as impulse
buys or habitual purchases, are made almost instantaneously with little or no investment of time
or effort in information search.
• Some purchase decisions are made by groups (such as families, households or businesses) while
others are made by individuals. When a purchase decision is made by a small group, such as a
household, different members of the group may become involved at different stages of the
decision process and may perform different roles. For example, one person may suggest the
purchase category, another may search for product-related information while yet another may
physically go to the store, buy the product, and transport it home. It is customary to think about
the types of decision roles; such as:
 • The Initiator
• the person who proposes a brand (or product) for consideration (something in return);
• The Influencer
• someone who recommends a given brand;
• The Decider
• the person who makes the ultimate purchase decision;
• The Purchaser
• the one who orders or physically buys it;
• The User
• the person who uses or consumes the product.

Meaning and Definition:

Consumer behaviour is the study of how individual customers, groups or organizations select, buy,
use, and dispose ideas, goods, and services to satisfy their needs and wants. It refers to the actions of
the consumers in the marketplace and the underlying motives for those actions.

Marketers expect that by understanding what causes the consumers to buy particular goods and
services, they will be able to determine—which products are needed in the marketplace, which are
obsolete, and how best to present the goods to the consumers.

Nature of Consumer Behaviour:

1. Influenced by various factors:
The various factors that influence the consumer behaviour
are as follows:
a. Marketing factors such as product design, price, promotion, packaging, positioning and
distribution.

b. Personal factors such as age, gender, education and income level.

c. Psychological factors such as buying motives, perception of the product and attitudes
towards the product.

d. Situational factors such as physical surroundings at the time of purchase, social

surroundings and time factor.

e. Social factors such as social status, reference groups and family.

f. Cultural factors, such as religion, social class—caste and sub-castes.

2. Undergoes a constant change:

Consumer behaviour is not static. It undergoes a change over a period of time depending on
the nature of products. For example, kids prefer colourful and fancy footwear, but as they
grow up as teenagers and young adults, they prefer trendy footwear, and as middle-aged and
senior citizens they prefer more sober footwear. The change in buying behaviour may take
place due to several other factors such as increase in income level, education level and
marketing factors.
3. Varies from consumer to consumer:
All consumers do not behave in the same manner. Different consumers behave differently.
The differences in consumer behaviour are due to individual factors such as the nature of the
consumers, lifestyle and culture. For example, some consumers are technoholics. They go on
a shopping and spend beyond their means.

They borrow money from friends, relatives, banks, and at times even adopt unethical means
to spend on shopping of advance technologies. But there are other consumers who, despite
having surplus money, do not go even for the regular purchases and avoid use and purchase
of advance technologies

4. Varies from region to region and country to county:

The consumer behaviour varies across states, regions and countries. For example, the
behaviour of the urban consumers is different from that of the rural consumers. A good
number of rural consumers are conservative in their buying behaviours.

The rich rural consumers may think twice to spend on luxuries despite having sufficient funds,
whereas the urban consumers may even take bank loans to buy luxury items such as cars and
household appliances. The consumer behaviour may also varies across the states, regions and
countries. It may differ depending on the upbringing, lifestyles and level of development.

5. Information on consumer behaviour is important to the marketers:

Marketers need to have a good knowledge of the consumer behaviour. They need to study
the various factors that influence the consumer behaviour of their target customers.

The knowledge of consumer behaviour enables them to take appropriate marketing

decisions in respect of the following factors:
a. Product design/model

b. Pricing of the product

c. Promotion of the product

d. Packaging

e. Positioning

f. Place of distribution

6. Leads to purchase decision:

A positive consumer behaviour leads to a purchase decision. A consumer may take the
decision of buying a product on the basis of different buying motives. The purchase decision
leads to higher demand, and the sales of the marketers increase. Therefore, marketers need
to influence consumer behaviour to increase their purchases.

7. Varies from product to product:

Consumer behaviour is different for different products. There are some consumers who may buy more
quantity of certain items and very low or no quantity of other items. For example, teenagers may
spend heavily on products such as cell phones and branded wears for snob appeal, but may not spend
on general and academic reading. A middle- aged person may spend less on clothing, but may invest
money in savings, insurance schemes, pension schemes, and so on.

Characteristics of consumer behavior:

1. Consumer Behaviour involves Products, Services, Activities, and Ideas:
In the scope of consumer behaviour, not only products (like toilet soaps), are included but
also the services (flying by an airliner), and activities (getting children vaccinated for polio),
and ideas (saying no to drugs). Thus consumer behaviour rotates around offerings.

2. Consumer Behaviour involves more than Buying:

Consumer behaviour is not restricted only to buying the offering. It includes buying (acquiring
the offering), using, and disposing. Usage has many connotations – first, it has important
symbolic implications for the consumer. The saree and the jewellery being put on by ladies in
the wedding influence marketing strategies and tactics.

Usage can also influence other behaviours. Secondly, it may also influence other behaviours.
Not satisfied the product or services may lead to consumer complaints and protests. Finally,
consumer behaviour also evaluates as how do consumers get rid of an offering, they
previously acquired.

In India, people from older generation still do not throw things, once acquired. People still
prefer to use old thing after getting repaired. In case of cars, the car companies attach value
to the old cars taken by the automobile companies in exchange of a new car. However, the
new generation philosophy is to throw the things like that of westerners.

3. Consumer Behaviour is a Dynamic Process:

Consumer Behaviour is dynamic because the thinking, feelings, and actions of individual
consumers, targeted groups, and the society at large are constantly changing. Maruti Suzuki
produces number of cars, as needs and wants may change at different times for different
consumer groups.

The sequence of acquisition, consumption, and disposition can occur over time in a dynamic
sequence. The sequence can be over in a matter of hours to years. Suppose a family has
acquired a new Tata Indica car. Its usage will provide the family whether it drives well, is
economical, impresses others, and does minimal harm to the ecological environment – all
these will affect when, whether, how, and why the family will dispose of the car by selling or
junking it.
Disposition of the car will affect when, whether, how, and why its members acquire another
car in the future. Consumer behaviour is a process which includes issues that influence the
consumer before, during, and after a purchase.

4. Consumer Behaviour involves Interactions among Many People:

Consumer behaviour does not mean action of a single individual. Interactions may take place
among a group of friends, a few co-workers, or an entire family. The individuals may take
different roles.

For example, to buy a car the adult son may gather the information, the younger daughter
may influence the buying decision, parents may finally be the buyers. The car may be used by
one or all the members in the family. Similarly several family members may be involved in
disposing the car.

5. Consumer Behaviour involves Many Decisions:

Consumer behaviour needs understanding whether (to acquire/use/ dispose of an offering),
what (to acquire/use/dispose), why (to acquire/use/dispose of an offering or not)), when
(time), where (place), how (ways of acquiring, using, and disposing), how much (volume), how
often (frequency), and how long (till what time) consumers will buy, use or dispose of an
offering.

6. Consumer Behaviour involves Exchanges:

Consumer behaviour involves exchanges between human beings. People give something of
value to receive something of value. Indeed, the role of marketing is to help society to create
value through exchanges by formulating and implementing marketing strategies.

Scope of consumer behavior:

• Demand Forecasting
Consumer behaviour helps in the forecasting of the demands for the business. Every business
identifies the needs and wants of the customers by understanding their behaviour.
Forecasting helps them to find out the unfulfilled demands in the market easily. If the
company knows what their consumer wants, they can design and produce the product
accordingly.
The behaviour of the consumer plays an important role in forecasting the demand for the
products. In addition, it helps the company to identify the market opportunity available to
them.
• Marketing Management
Effective business managers know the importance of marketing towards the success of the
business. Understanding consumer behaviour is essential for the long-running success of any
marketing program. A better understanding of consumer needs and wants to help the
business to plan and execute their marketing strategies accordingly.
 Proper understanding of the behaviour of the consumer makes the company know its
customers in a better way. That ultimately helps businesses to strategize and implement
marketing in a better way.
• Non-profit and Social Marketing
In today's world, every non-profit business-like government sector, religious sector,
university, the charitable institution runs the business's overall activity by
implementing proper marketing plans for the business. Also, they contribute to solving
the problems of society. Thus, a transparent consumer behaviour process and
decision-making contributed efforts towards the success of the business.
• Select Target Market
Consumer behaviour helps the organisation to select its target group from the market.
Studying and identifying consumer behaviour helps them to know the consumer
segments with distinct features and wants. It helps in segmenting the overall market
into different groups.
• Market Mix
Proper development and designing all-important elements like product, price, place,
and promotion are essential for every business. It helps them to identify the likes and
dislikes of the customers. This allows marketers to design optimum marketing mix
plans and improve the effectiveness of marketing strategies. The proper
implementation of a marketing mix helps organisations to attract more customers,
thereby increasing profit.
Application of consumer behavior:
1. ANALYSING MARKET OPPORTUNITY :
Consumer behaviour study helps in identifying the unfulfilled needs and wants of consumers.
This requires examining the trends and conditions operating in the marketplace, consumers'
lifestyles, income levels and emerging influences.
The trend towards increasing number of dual income households and greater emphasis on
convenience and leisure have led to emerging needs for household gadgets such as washing
machine, mixer grinder, vacuum cleaner and childcare centres etc.
Mosquito repellents have been marketed in response to a genuine and unfulfilled consumer
need.
2. SELECTING TARGET MARKET :
A review of market opportunities often helps in identifying distinct consumer segments with
very distinct and unique wants and need.
Identifying these groups, learning how they behave and how they make purchase decisions
enables the marketer to design and market products or services particularly suited to their
wants and needs.
For example, consumer studies revealed that many existing and potential shampoo users did
not want to buy shampoo packs priced at Rs. 60 or more and would rather prefer a low priced
sachet containing enough quantity for one or two washes. The finding led companies to
introduce the shampoo sachet which became a good seller.
3. MARKETING MIX :
Once unsatisfied needs and wants are identified, the marketer has to determine the right mix
of product, price, distribution and promotion. Here too, consumer behaviour study is very
helpful in finding answers to many perplexing questions.
4. USE IN SOCIAL AND NON-PROFITS MARKETING :
Consumer behaviour studies are useful to design marketing strategies by social,
governmental an not-for-profit organisations to make their programmes such as family
planning, awareness about AIDS, crime against women, safe driving, environmental concerns
and other more effective.
UNICEF (greeting cards), Red Cross and CRY etc. make use of consumer behaviour
understanding to sell their services and products and also try to motivate people to support
these institutions.
Importance of consumer behavior in marketing decisions:

The basic underlying objective of Marketing is to sell goods and services to as many people as
possible to make more profit. Earlier it was relatively easy to fulfil the objective, but at present
time it has become very challenging to do so as consumers are getting bombarded with a
huge pool of information about the products or services being offered. It has become a
necessity to undergo proper research to sell a product or service or to convince consumers to
buy a product or service. Below Mentioned are some of the points highlighting the value of
the Study of Consumer Behaviour.

1. Staying relevant in the Market:

Looking at the rapid changes happening in the current situation, one of the biggest challenge
being faced by the Organisation right now is staying relevant in the Market. One of the main
reason for this rapid change is the constant shift in consumer behaviour. Consumers today
have an enormous supply of information resulting in rapid switches between different
products different companies etc. to Overcome the issue, it is of great importance to regularly
study consumer behaviour to get to know the changes in consumer attributes to stay relevant
in the market.

2. To Create and Retain Customers:

According to Professor Theodore Levitt one of the main aims of consumer behaviour is to
create and retain customers. If the consumers are satisfied with the product, he or she will
buy the same product again. Therefore, the product should be marketed by an organisation
in such a way that it convinces a customer to buy the product. Consumer behaviour helps
marketers in this regard to know what ticks the consumers the first time to buy a particular
product and what satisfies them enough to keep buying the particular product or services
again and again.

3. Innovate new Products:

In an organisation, continuous strive for improvement in success rate largely depends on the
innovation in the offered product or services line. To accurately predict and ace innovation,
the need for study of Consumer behaviour is a must. Researching the same not only enables
to make new products/services satisfying the needs and wants of consumers but also to
tweak the present line of offerings to fulfil the consumer's needs and demands.

4. To Optimize Marketing Strategies:

The theories and concepts of Consumer behaviour help marketers to optimize their sales and
to create efficient marketing strategies. Moreover, these theories provide marketers with
information on the consumer’s behaviour on expenditure. The study helps to know what
influences the consumers to spend more money on a product. These two factors ultimately
help decision makers to plan strategies that should be practised by the marketers for
successful marketing of a product.

5. Improve Customer Service

Each individual consumer will have individual and different customer service needs,
understanding this distinct difference between each consumer's needs requires an extensive
and detailed consumer behaviour study. It will not only help to bifurcate different types of
consumers but will also help to target each group based on different strategies.

Conclusion

In a nutshell, consumer behaviour plays an important role for sales folks or marketers. As
products are made to cater to consumer’s needs and demands, the products should be
carefully marketed for the successful achievements of organizational goals. The study of
consumer behaviour helps in analysing different factors that have an influence on the buying
decision of the consumers. Consumer behaviour analysis has emerged as an important tool
to understand customers. By looking into consumer psychology and the forces behind
customer buying behaviour, companies can craft new products, marketing campaigns
and increase profitability.

Consumer buying behavior:

Consumer Buying Behavior refers to the actions taken (both on and offline) by consumers
before buying a product or service. This process may include consulting search engines,
engaging with social media posts, or a variety of other actions. It is valuable for businesses to
understand this process because it helps them better tailor their marketing initiatives to the
marketing efforts that have successfully influenced consumers to buy in the past.
What are the major factors that influence consumer buyer behavior?

A variety of factors go into the consumer buyer behavior process, including cultural, social,
personal, and psychological factors. Taken separately, they may not result in a purchase.
When put together in any number of combinations, the likelihood increases that someone
will connect with a brand and make a purchase. Let’s take a closer look at each of these
factors.

• Cultural Factors - Culture is not always defined by a person's nationality. It can also be
defined by their associations, their religious beliefs or even their location.
• Social Factors - Elements in a person's environment that impact the way they see
products.
• Personal Factors - These may include someone's age, marital status, budget, personal
beliefs, values, and morals.
• Psychological Factors - A person's state of mind when they are approached with a
product will often determine how they feel not only about the item itself but the brand
as a whole.
What are the four types of buyers?

There are four different types of buyers: the analytical, the amiable, the driver, and the
expressive buyer. They differ based on what motivates them to make a purchase.
1. The Analytical Buyer - Motivated by logic and information, this buyer will look at all the
data on competing brands and products before making an informed decision.

2. The Amiable Buyer - Warm and friendly, this buyer just wants everyone to be happy. That
is why they are often paralyzed by big decisions when there is the perception of a win/lose
outcome.

3. The Driver Buyer - Drivers are most concerned with how others view them and whether
they follow. The trendsetters, Drivers are most concerned with their appearance rather than
the relationships that are formed during a transaction.

4. The Expressive Buyer - Relationships are key to the Expressive Buyer. They cannot stand
feeling isolated or ignored during a transaction. Instead, they want to feel like your most
important asset.

It's hard to distill something as complex as consumer buying behavior into four neat and tidy
categories. Most people will find they are a combination of these types of consumer buying
behavior. To better understand this behavior, it’s important to understand the stages
involved in the consumer buying process.

What Are the Five Stages of the Consumer Buying Process?

There are five stages of the consumer buying process: finding a problem, gathering
information, finding solutions, making a purchase, and reviewing the purchase.

1. Find a Problem - In this stage, the consumer first notices when they have a problem
they want to solve. This could be anything from wanting an outfit for an upcoming
event to needing a leaky pipe in their house fixed.
2. Gather Information - Next, consumers will want to figure out what might be causing
their problem and how to fix their problem. They might turn to the internet for
recommendations or more information about what might be causing their problem.
For our examples, the person shopping for a new outfit might search for the best
fabrics to wear to an outdoor wedding. The person with a leaky pipe might look into
what causes a leaky pipe to see if they can fix the problem on their own.
3. Find Solutions - Once the consumer has finished gathering information, they will look
for more specifics on how to fix their problem. They will start comparing brands and
looking at reviews from others to help them decide on a solution. The person shopping
might look for places with the nicest formal wear at the lowest prices. The person with
the leaky pipe might look at reviews for the best plumbers in their area.
4. Make a Purchase - This is where the consumer will make a decision and spend money
on a solution. For our examples, that would mean buying a new outfit and hiring a
plumber.
 5. Review the Purchase - Some consumers may leave a review on your website, some
don’t. In either case, the consumer will personally review the product or service they
received and determine whether they would recommend it to others or purchase
from their chosen business again.

Industrial buying behavior:

The purchasing activities of industrial buyers consist of various steps/phases in buying
decision making process. The importance of each step depends upon the type of buying
situation. The industrial marketers should understand both (step in decision-making process
and the type of buying situations) to market the product or service. In 1967, Robinson, Faris,
and Wind developed a process “buy-phases” having eight steps in buying-decision process in
industrial market. These phases or steps in industrial buying process are elaborated as
follows:

1. Recognition of Need of Industrial Buyer

A smart marketer recognizes the need/problem of industrial buyer originated within the
firm. If the material supplied by the existing supplier is not satisfactory in terms of quality, or
the material is not available as per requirement, or the machine supplied by him breaks down
too often, the buying organisation recognizes the problem. If an industrial marketer
identifies a problem in the buying organisation and suggests how the problem could
be solved, there will be a better possibility of it being selected as a supplier.

2. Determination of the Characteristics and Quantity of Needed Product

If the problem is recognized within or outside the buying organisation, then the buying firm
will try to answer questions such as: What type of products or services to be considered?
What quantity of the product needed? and so on. For technical products, the technical
departments (R&D, industrial engineering, production, or quality control) will suggest general
solutions of the needed product. For non-technical goods or services, either the user
department or purchase department may suggest products or services, based on experience
and also the quantity required to solve the problem. Nevertheless, if the
required information is not available internally within the buying organization, the same can
be obtained from the outside sources.

3. Development of Specification of Needed Product

Stage 2 and 3 are closely related. After the general solution to the problem is determined in
the second phase, the buying organisation, in the third stage, develops a precise statement
of the specifications or characteristics of the product or service needed. During this stage the
purchase department takes the help of their technical personnel, or if required, outside
sources such as suppliers or consultants. Industrial marketers have a great opportunity to get
involved at this stage by helping the buyer organisation to develop product
specifications and characteristics. It would give a definite advantage by ensuring that
the needed product includes his or her company’s product characteristics and specifications.

4. Search the Qualified Potential Suppliers

In this stage, the buying organisation searches for acceptable suppliers or vendors. Firstly,
they have to obtain information about all available suppliers and secondly, they have to
decide the qualifying suppliers. The search for potential suppliers is based on the various
sources of information like trade journals, sales calls, work-of-mouth, catalogues, trade-shows,
industrial directories. The qualifications of acceptable supplies may depend on the type of buying
organization such as government undertaking, private sector commercial organisation, or
institutions, and the buying situation, and the decision-making members. Furthermore, the factors
like quality of product or service, reliability in delivery, and service are considered in qualifications of
suppliers.

5. Obtaining and Analyzing Supplier Proposals

If the qualified suppliers are decided then the buying organisation obtains the proposals by sending
enquiries to the qualified suppliers. A supplier’s proposal can be in the form of a formal offer,
quotation, or a formal bid, submitted by the supplier to the buying organisation. It must include the
product specification, price, delivery period, payment terms, taxes and duties applicable,
transportation cost (or freight), cost of transit insurance, and any other relevant cost or free service
provided. For purchases of routine products or services, the stages 4 and 5 may occur simultaneously,
as the buyer may contact the qualified suppliers to get the latest information on prices and delivery
periods. For technically complex products and services, a lot of time is spent in analyzing proposals
in terms of comparisons on products, services, deliveries, and the landed costs: includes the price
after discount plus excise duty, sales tax, freight, and insurance.

6. Evaluation of Proposals and Selection of Suppliers

The industrial buyers evaluate the proposals of competing suppliers and selects one or more
suppliers. Further negotiations may continue with selected suppliers on prices, payment terms,
deliveries, and so on. The decision makers in the buying organization may evaluate each supplier on
a set of agreed-upon attributes or factors. Each supplier is evaluated on each attribute by giving
a weightage to each attribute proportionately or on rating scale basis. The supplier(s) who get the
highest total score receives the business or the order from the buying organisation. If a buying firm
faces a make-or-buy decision, the supplier’s proposals are compared with the cost of producing the
needed item within the buying organization. If it is decided to make the item within the buying
organization, the buying process is stopped at this stage.
7. Routine Order Selection

In this stage the procedure of exchange of goods and services between a buyer and a seller is worked
out. The activities include placement of orders (i.e. purchase orders) with the selected suppliers, the
quantity to be purchased from each supplier, frequency of order placement by buyers and delivery
schedules to be adhered to by the supplier, schedule, and the payment terms to be adhered to by
the buyer. The user department would not be satisfied until the supplier delivers the required item as
per delivery schedule, and with acceptable quality.