Consumer Behavior

Consumer Behavior and Buying Process and

Factors influencing Consumer behavior
Consumer behaviour is about understanding what goes on it
consumers’ mind when they buy or decide not buy

Consumer behaviour is--understanding the customer’s mind and

mental processing that goes in the mind regarding purchase behavior.
How consumers make choices What, which, when, how much, where,
how to pay etc.
It is important for marketers to understand: ‘why do consumers behave
the way they do’
Knowledge about consumer behaviour helps in designing appropriate
marketing strategy in terms of segmentation, targeting and 4Ps. Thus, it
helps in sales and profits of the company and making the company
successful.
Buying a 1” drill or 1” hole. Consumers do not buy features, they buy benefits,
solutions to their problems.

Consumers vary in terms of: buy different products, have different influences,
different situational factors, and other various factors
Consumer buying behavior, despite its variety and complexity is not completely
random.
There are some patterns in their behavior—marketers can use frameworks to
understand patterns of buying behavior and design right marketing strategies
accordingly.
There are frameworks for understanding how Consumers Make decisions-are various
consumer behavior models.
 Stimuli – Response
Positive or negative
Marketing Stimulus Consumer Decides
response by
(4Ps) in mind (How??)
Consumer

Marketer needs to understand

- Consumer Perspectives
Consumer may behave from different Perspectives in different situations
Perspective Assumption

Economic Perspective Rational Consumer

Perfect knowledge
Utility maximization

Passive Perspective Passivity or indifference

Manipulation
Absence of cognitive thinking
Open to manipulation

Emotional Perspective Emotions

Affect driven
Behaviour open to manipulation
through emotions

Cognitive Perspective Perceptions, learning thinking reasoning

Information seeking& processing
Actively involved in decision making
Avoid and minimize risk
• Depending on the type of Product- Buying Decision Making can be:
• Cognitive Vs Emotional
• High involvement vs low involvement
• Compensatory vs non-compensatory
Cognitive purchase decision (driven by mind, information based)- example-insurance policy.
Emotional purchase decision (driven by heart, liking) example– dress, jacket, home décor items
Combined purchase decision-both cognitive and emotion component-smart phone.
Th h w t t wh th ’ b y LARG LY t t
combination of the two. It depends on the type of product.

Utilitarian product- for utility of product –information based decision- –software, drill machine, washing
machine—objectively evaluate the alternatives- rational cognitive decision making
Hedonic product-for feeling of pleasure from product- shows emotional decision-such products show who they
are, aspire to be, intend to make a statement to peers and social groups. Sports car, luxury products, Clothing,
shoes, accessories-
Cognitive vs Emotional Decision Making is of concern for the marketer primarily because cognitive decision making
often is slower, more systematic, and more exhaustive than emotional decision making. Consumers seek out a
High vs. Low involvement--Involvement of customer in decision making
High involvement-- buyer is fully engaged, decision making is effortful, takes more time, efforts, money,
consequences of choice are significant and can be risky if wrong decision is taken –so the involvement of
customer in decision making is high. Example Buying of a smart TV or car.
In low involvement, less effort, time, money and risk example chewing gum, sandwich
Involvement depends upon type of product:
Low Involvement—bread, candy, paper towel, auto re-order with online retailers for routine grocery items
High Involvement– Car, House, Wedding Dress, laptop, major surgery
Whether a high or low involvement-it may change over time. Changes in Involvement- 1st time purchase of car or
insurance and 2nd time purchase
Level of Involvement for Same product may differ across customers
Low income person takes longer in buying of a TV and high income decides quickly.
Marketers:
High involvement/cognitive-offer easy Returns, Guarantee, Product Comparisons
Low involvement-offer easy visibility, availability, simple rationale in ads- Water, Candy
Problem Solving Situations and Types of Decision Making
• Depending on-Frequency of purchase, perceived risk involved, price of product brand familiarity--
amount of time and effort put in by consumers can be high, moderate or low
• Extensive problem solving-- Consumer engages in extended problem solving If the product is-High
Risk in case of wrong decision due to high price or staying with the product for long time (MRI
equipment), non-familiarity with the product-purchasing for the first time, infrequently bought product,
wide choice in product differentiation (furniture). Consumer applies elaborate and multi-dimensional
evaluative criteria. This approach is used for high involvement products. Cognitive-software,
emotional-luxury watch, wedding dress
• Limited problem solving- familiarity with the product-- 2nd phone, if the product is moderately
expensive and for moderate time duration like buying of jeans, it becomes limited problem-solving
decision. It involves the use of moderate information-seeking efforts, lesser time and perceived risk
associated with purchase.
• Habitual/Routine buying-routine problem solving-- It involves little or no effort to acquire external
information or evaluate alternatives; typically used for frequently purchased or low unit value
products-low involvement products like soap, bread, chips. Consumer directly buys them almost
skipping the information search and evaluation of alternatives stages. Decisions are routinized.
Consumers are familiar with product and its evaluation.
Problem Solving Situations and Types of Decision Making
Extensive problem solving—buying a car
Limited problem solving-moderate amount of time and effort, previous experience, moderate risk-
TV
Habitual/Routine buying-little effort- bread, salt
Consumer Decision Making Process-5 Stages
 Consumer Buying Decision Making Process-5 Stages

• A typical consumer decision-making process consists of five stages:

1. Need Recognition
2. Information gathering
3. Evaluation of alternatives
4. Purchase
5. Post purchase
•
First three steps can be grouped as pre-purchase stage. So, we can say there are:
Pre-purchase phase Purchase Phase Post- Purchase Phases
• It starts from the point, consumer experiences the need which can be fulfilled by a product, collecting
information about alternatives and evaluating them to make final purchase decision.
 Consumer Decision Making Process-5 Stages

• However, it must be remembered that not all purchase decisions follow all these
steps or do so in this order. Also, the time duration of this process as well as the
length of these stages may vary depending on the product, the consumer and the
situation. For example, the decision-making process for a cold drink, biscuit may
comprise only a few seconds. However, the decision-making process for
purchasing a house may take several months or years. Similarly, when a car tyre
bursts on the highway and has to be replaced immediately, it is an emergency
situation, and the car owner will quickly choose from the brands of tyres which are
available at the nearest outlet. On the other hand, if car owner was replacing the
tyre in the normal course, he or she may seek out more information on the various
brands and spend considerable effort in evaluating the alternatives before
choosing.
• Marketers need to understand character of each phase
 Consumer Decision Making Process-Stages

1.Need Recognition-Gap between existing state and desired state of consumer

Gap must be big enough and important to trigger a need—Seek solution

Need trigger--stimulated by a consumer’s depleted assortment or by marketing efforts

of company like advertising, discounts
e.g., empty toothpaste tube, Fridge Repair cost, B’day, Diwali
 Information gathering
• For examples, collecting information about various brands of laptops. It can be:

• Internal and External sources

• Internal-own memory & experiences
• External sources are:
• Personal sources-family, friends
• Commercial sources- advertising, dealers, displays
• Public sources--reviews, online resources
• Amount of search, small amount or big amount of information (depends upon type of product-ball pen vs car)
• Information search activity makes consumer aware of brands in the market (awareness set), information about
the brands and evaluation criterion helps in shortlisting of the brands (consideration set)-Options that are to be
considered in more details. It leads to strong contenders for purchase-(choice set)
• Perceived benefits vs perceived costs of search-e.g., buying a house vs a toy
 Evaluation of Alternatives
• Consumers may compare the different alternatives based on attributes like price, features,
reliability etc. It is important for marketers to understand the criteria or parameters on which
consumers will evaluate the products and the order of importance of these criteria. Through
evaluation criteria, consumer is able to find out the most suitable among the alternatives

• Consumer evaluation/buying criteria can be:

Little or Detailed, few dimensions or many dimensions in purchase criteria sandwich vs
mobile phone
Tangible or intangible dimensions-fuel economy of a car vs style of a car
Relative importance of evaluative criteria dimensions
Subjective or objective (subjective-style, liking for a brand, objective-price, mileage) or we
can say attribute based criteria like-price, durability, engine power vs. affect based criteria
like-how would brand makes the customer feel-wearing a designer shirt.
• Determinant Attributes important attribute which differentiates it from competing brands-
nutrition, stitching quality of dress- Advertise it to put it in evoked set

Awareness set Consideration set/ Choice set

Evoked set
Evaluation of Alternatives
 Purchase Phase—which Brand, where, when, how much vol., how to pay

Many factors intervene-- Mkters to anticipate Barriers and minimize them

High-end Sofa…wide choice in fabric and trimming- customer is confused-postpones

purchase
Camera—salesperson recommends brand other than what the customer had decided
to buy, so the customer may change his mind and buys the recommended brand
Ready to eat item- cues like display to influence the decision of which brand is bought

Situational influences also-have an impact on the purchase decision process

social surroundings (presence of others with you while purchasing engagement ring)

physical surroundings (decor and music of retail store)

temporal effects (time of day)

 Post- purchase- Cognitive Dissonance
• The marketer’s job is not over when the consumer purchases the product.

• Post-purchase evaluation involves comparison between the expectations and actual performance of the product
or brand.
• For some purchases, consumers start having anxiety if the choice they made was correct or if they should have
chosen a different product to fulfill their unsatisfied need. It is called Cognitive Dissonance. Consumer often
experience cognitive dissonance after the act of purchase.

• Post- purchase state of discomfort in consumer’s mind -thinking whether it was the right purchase decision,
consumers may question appropriateness of their decision, psychological tension, or anxiety. It is more likely for
products that are:

• Expensive.
• Infrequently purchased.
• Do not work as intended.
• Associated with high levels of risk.
 Post- Purchase
• Firms attempt to reduce dissonance by reinforcing the decision:

• Marketing Efforts to manage post-purchase Cognitive Dissonance and give Satisfaction

• Advertising for reassuring customers that they have made the right purchase decision
• Periodically make contact with customers and thank them for their support.
• By offering warranties, money back, return policies- less likely to feel cognitive dissonance
• Build realistic expectations, not too high and not too low.
• Demonstrate correct product use—improper usage can cause dissatisfaction. if product
requires after care, firm may recommend after-sale care instructions of the product (leather
sofa, appliance, tags for apparel)
• Encourage customer feedback, which cuts down on negative word of mouth and helps
marketers adjust their offerings.
• Stand behind the product or service by providing money-back guarantees and warranties.
 Post-purchase
• Post-purchase evaluation involves comparison between the expectations
and actual performance of the product or brand.
• Post-purchase evaluation may result in-Satisfaction-product performance is
as expected,
• Delight-actual product performance exceeds expectations,
• Dissatisfaction-performance is short of expectation, feels disappointment.
• Customer dissatisfaction-if the company is setting unrealistically high
expectations which product does not fulfill- results in dissatisfaction and -ve
word of mouth. Setting expectations too low-lead to low sales
Purchaser Decision-Making Process for Yacht
Problem Recognition:
What do they want?
Who are the purchasers?
- Retirement adventure
- Successful entrepreneurs
- Second home, vacation
- High networth individuals
home
- Recent retirees
- Travel in luxury
- Highly active people
- Lifelong dream to own a
- Often lived around boats
Information Search: boat
- To stay active
Where do they look for information?
- Magazines
- Clubs
- From friends and family
- Advertisements - Newspapers, billboards,
Purchaser Decision-Making Process for Yacht

Evaluation of Alternatives:
- Model - sail-boat / power-boat
- Design - traditional /
contemporary
- Interior - spacious / luxury
- Speed - fast / moderate
- Firm - boutique / mid size / large
- Price - comfortable / no limit
Postpurchase Behavior:
- Extra benefits
- Address cognitive
Purchase Decision:
dissonance
- Decide on the maker
- Continuous support
- Decide the model, interiors
- Maintenance and repair
- Financing decision
- Docking and storage
- 15% down payment
facilities
 Consumer Decision Making Unit

Set of individuals who influence or take part in decision to buy.

Decision making unit (CDU)- Marketers need to know who are the persons in CDU, their roles and
plan Mktg Efforts towards each of them.

There can be one or more of the following roles in the decision-making unit:

Influencer (provides information about a product or service)

Gate keeper (controls flow of information)
Decision maker (enjoys power to take decision
Purchaser (makes actual purchase)
User (consumers)
Breakfast Cereal for children –Advtg focus at mother and emphasizes nutrition, Packaging-cartoons,
games, shapes of cereal to influence kids, display at lower shelves for kids, car for the family-CDU
includes husband, wife and teenaged children, more people involved in decision making for-smart
phone for teenaged child, Vacation trip, Car, Wallet, groceries, book, laptop
What influences consumer
behaviour?
 Factors Influencing Consumer Behaviour
• Knowing these influences is useful in designing of marketing strategy/
marketing communication for consumers
• Social factors comprise of-Reference Groups, family influences, social
class
• Cultural and sub-cultural influences
Personal Factors: Age, income, education, personality, life-style etc.
Psychological Factors-Motivation, perceptions, learning, attitude
Situational factors
Marketing activities of firms-(various activities of the firm influencing
consumers to purchase their brand)
 Key factors that influence consumer behaviour
Cultural Factors
• Culture and sub-culture –Shared Beliefs, values like family customs, festival shopping
• Marketers--different types of ready to eat products or different advtg to match with cultural values,
different flavors of Maggi, D ’ , wh h I h t fb fb I t ,
they launched the McAloo Tikki
• (a) Culture. The shared values, beliefs, norms, and customs that influence consumers’ b h
preferences. It includes elements like language, religion, social class, and reference groups. The culture in
which the consumer grows up influences the purchase behaviour.
• (b) Subculture. Smaller groups within a culture that share distinct characteristics or values. Examples include
ethnic groups, religious groups, and regional communities. Consumers of different states show some
differences in their purchase behaviour.

• Some products are less sensitive to cultural factors

• Example – detergent powder is less sensitive to cultural difference as

• compared to food ( North Indian, South Indian, etc.)

 Key factors that influence consumer behaviour
Social Factors
• (a) Reference Groups. Groups of people that individuals compare themselves to or seek
approval from. These groups can influence purchasing decisions and brand choices. Office
colleagues, neighbours, relatives, friends influence purchase behaviour for certain products
or celebrity ad influences buying of clothes
• (b) Family. Family dynamics and roles play a significant role in consumer decisions.
Consumers start learning shopping behaviour from the family. Conservative family, modern
family environment. Different family members might have varying influences on purchase
choices of product like car, laptop, type of grocery items.
• (c) Social Class. Consumers of a social class generally show some similarities in their
purchase beh and products bought. Similarity of consumer behavior in a class helps
marketers use it in predicting behavior of consumers in a class. It could be predicted that
lower income consumers will buy Nirma
3. Personal Factors
(a) Age and Life Stage. Different age groups have different preferences and needs. Life
stage (e.g., young adult, middle-aged) also impacts consumption patterns.
(b) Occupation and Income. These factors influence the purchasing power and types of
products or services consumers can afford.
(c) Lifestyle and Personality. Consumer lifestyles and personalities impact their buying
decisions. Some consumers might be more adventurous while others prefer familiarity
and routine.
Personality is ’ t tb h t t t
ty t t ft ’ f-concept, the way people see
themselves and the way they believe others see them.
Examples Car, Motorcycle, Raymond
Lifestyle refers to way of living-- Furniture, Apparel, Home-care Products
Consumers buy products, brands for their images which fit their lifestyle
 Key factors that influence consumer behaviour
4. Psychological Factors
• (a) Motivation. The driving force behind consumer behavior. Needs and wants trigger
consumers to seek products or services that fulfill those desires.
• (b) Perception. How consumers interpret and make sense of information about
products. Perception can affect how they perceive value, quality, and benefits.
• (c) Learning and Memory. Past experiences and learning influence decision-making.
Positive experiences can lead to brand loyalty, while negative experiences can deter
future purchases.
• (d) Attitudes and Beliefs ’ tt t b f t w t b
can heavily impact their purchase decisions.
 Psychological Influences

These are: Motivation, perceptions, learning, attitude

Motivation-Unsatisfied Needs-
Physiological needs- suppose you are feeling hungry-mkters try to convert them into wants by
reminding us to eat Subway, drink juice, eat chocolate
Safety needs -burglar alarm, vitamins, airbags in cars, organic food
Social/love needs -Haircut, makeup, greeting cards, deodorants-to look attractive, to express feelings
towards others
Esteem needs -self respect-confidence and respect from others-status, prestige you drive Ford Fusion
because you find it suitable to you, you like it or you drive BMW for status symbol
Self actualization—do your beset to achieve your potential- Nike-Just Do It
Which of these needs apply when a consumers goes to Starbucks for coffee and egg white breakfast
wrap-physiological, safety, social because Starbucks creates relationship with customers-call them by
name, make little talk, Esteem need-encourages them to sit for a while to read a book, do your work-
esteem need
Marketers add value to products by offering information to relate them to needs and nudge people
up in the hierarchy
 Perception
• perceptions influence our acquisition and consumption of goods-furniture,
clothes, health food.
• It can be how consumers perceive the importance of attributes of product,
price, or see risks in a purchase..
Marketers try to change the perceived importance of the attributes, change
beliefs about the extent to which a brand has certain attribute, reduce perceived
risk by providing free trial of a product, securing endorsements from influential
people, providing warranties. Marketers changed the perception of people
towards Hyundai cars from low quality to good quality car
Mkter- how people see risks in a purchase or importance of attributes-marketers
make it consistent with one's own attitudes and beliefs. For example, change
the perception of apartments for modern living by influencing the perception
about what is modern.
 Learning
Learning--behaviors that result from repeated experience and thinking.
For example, Consumers’ learning that North face jackets are good for sufficient
protection outdoors, organic bananas stay fresh for longer
Brands succeed when consumers learn good things about them and learn to buy
them when need arises. For example, consumers’ learning to accept and use ready
to eat food items
Consumers intentionally and unintentionally learns about products, companies,
brands and stores. The learned information helps them in making effective buying
decisions
Mkters –need to understand and influence learned behavior of consumers.
Example, consumers have the learning that Volvo car is the safest
 Key factors that influence consumer behaviour
5. Situational Factors
(a) Purchase Context. The environment or situation in which a purchase decision is made.
Factors like time pressure, social surroundings, and physical environment can influence
choices. Purchase situation-A thrifty consumer may buy a branded apparel when buying it as
wedding gift or may buy expensive brand if shopping with friends

(b) Mood and Emotion. Emotional states at the time of purchase can impact decision-making.
Marketers often aim to evoke positive emotions related to their products.
6. Marketing Influences
(d) Advertising and Promotion. Marketing messages, ads, and promotions can shape
consumer perceptions and preferences.
(e) Product Placement. Where and how products are placed in media or physical spaces can
impact consumer awareness and interest.
 Attitude
Attitude- We like dislike this class/ instructor. It is +ve or –ve feeling
towards a product and influence our purchase decision.
Consumer buy brands about which they hold positive attitude and refrain from
buying ones about which they have negative attitudes Kellogg's Cereal

Attitude change. marketers to try to change Attitude through

communication—sales people, ads, samples Tea, Coffee,
Hyundai
Changing beliefs about the extent to which a brand has certain attribute
Changing the perceived importance of the attributes
Adding new attributes
Situational factors-sometimes factors specific to the situation override or
influence the purchase.
Purchase situation-A thrifty consumer may buy a branded apparel when
buying it as wedding gift.
Sensory situation-Visual-Visually appealing Hershey’s stores of chocolates
Auditory-background music to increase costumers’ +ve feelings towards
store
Smell-body shop
Tactile- opportunity to touch and feel the products
Taste-
Temporal state-state of mind of a customer, customer gets a parking ticket
before reaching a store-bad mood, less shopping, less receptive to Sman
 Factors that influence Consumer Decision Making for Yatcht
Social Influences: Psychological Influences:
Reference Groups: Motivation - A lifelong dream
Primary group - Business partners Esteem need - To make a statement
Club members
Aspiration group - “ B t w ” Learning, Emotions and Memory -Provide
positive reinforcements and cues to
Family Influence -Husband, Wife and establish a positive association with the
Children product and company.
Social Class - Upper class Eg: Cocktail Parties, Boat Tours, Arrange
meeting with satisfied buyers.
Personal Factors:
Age - >45 years (middle age) The marketing and communication should
Financial position - Well off contain information that are aligned with
Lifestyle - Preference for luxurious the factors of influence.
products
Personality - Risk takers