Consumer Behaviour

UNIT-1
INTRODUCTION TO CONSUMER BEHAVIOUR

• How many times throughout the day do people make product decisions?
If you stop thinking about it, many product decisions are made every
day, some without much thought.
• What should I wear?
• What should I eat?
• What am I going to do today?
• Many product decisions are answered routinely every day and they help
move the economy of cities, countries and ultimately the world.
• Product decisions also shape life of the consumer. How can simple
decisions be so important? Why do marketers spend millions of
dollars to uncover the reasons behind these decisions?
• To define consumer behavior: it is the study of consumers
and the processes they use to choose use, and dispose of
products and services.
• A more in-depth definition will also include how that
process impacts the world.
• Consumer behaviour incorporates ideas from several
sciences including psychology, biology, chemistry and
economics.
• Consumer behaviour marketing is so much more than creating a
catchy phrase or a jingle people will sing for days.
• Understanding consumer behaviour is a vital aspect of marketing.
• Consumer behaviour is the study of how people make decisions
about what they buy, want, need, or as regards a product, service,
or company.
• It is critical to understand consumer behaviour to know how
potential customers will respond to a new product or service.
• It also helps companies identify opportunities that are not currently
met.
Definition:
Some selected definitions of consumer behaviour are as follows:

According to Engel, Blackwell, and Mansard, ‘consumer behaviour

is the actions and decision processes of people who purchase goods and
services for personal consumption’.

According to Louden and Bitta,‘consumer behaviour is the decision

process and physical activity, which individuals engage in when
evaluating, acquiring, using or disposing of goods and services
Factors affecting consumer behavior
• Why do we need to learn about consumer buying
behavior?
• The simple answer is that no longer can we take the customers
for granted.
• Consumer buying behaviour determines how our consumers
decide to buy our product and what are the various factors
responsible for this decision?
• To fully understand how consumer behaviour affects
marketing, it's vital to understand the two factors that affect
consumer behaviour: psychological, personal, and social.
What are internal influences on consumer buying behaviours?

The major internal influences include:

1. Personality: Personality affects the way consumers search for
information about products or services that they want to buy, such as
whether a customer is an active info seeker or a passive info
receiver.
• Personality sways consumers’ lifestyle choice, while lifestyle not only
influences their opinions and attitudes towards products and services
in general but also motivates them to take certain activities, which
may bring about the need or desire to purchase relevant products and
services.
2. Motivation: Motivation relates to consumers’ desire to obtain a certain
product or service, such as having the plan to purchase a product for a long
time or being prompted to buy a product by an advertisement on media.
• A consumer’s motivation can be affected by number of factors, such as
financial resource (e.g., whether he can afford the purchase), time constraints
(e.g., if he needs to make the purchase within a certain time frame), overall
value (e.g., if the product or service is worth his money), and perceived risk
(e.g., what will be the consequence if he makes a bad purchase decision).
• The motivation is also closely tied to consumers’ purchase involvement.
• Highly motivated consumers will want to get mentally and physically
involved into purchase process and are more likely to be influenced by
promotional campaigns.
3. Experiences:
• Get profile of your customer’s past experiences with the similar
product or service and even purchase process can have an impact
on the future purchase decision.
• When searching for the products or services, consumers often
compare the incoming information to a frame of reference
previously formed, and those who do not fit into the frame are
filtered out.
• Consumers’ experiences on certain products or services are
directly associated with their expectations.
• While experience is the memory of what has happened in the
past.
• The expectation is an imagination about what will be
happening in the future.
• If what happens does not match with what was envisaged, the
consumers will feel disappointed hence the experience will be
negative, which could prevent them from having future
purchase of the similar products or services.
What are external influences on consumer buying behaviours?

The major external influences include the followings:

1. Family influence:
Family influence affects a consumer’s buying behaviour both ways:
(a) The influence on the consumer’s personality, attitudes and evaluation
criteria towards products and services.
(b) The influence on consumer’s purchase decision-making process as
the family members are usually the first to be consulted with when the
consumer plans to purchase a product or service.
2. Influence from friends and colleagues: Friends and colleagues
may not necessarily get involved in the purchase decision-making
process like family members would do, but often serve as important-
sounding boards for the ideas of products or serves purchase;

3. Influence from an environment in which a consumer lives:

Environmental influence includes the location, the cultural atmosphere
and the overall economic situation.
Customers in semi-tropical Darwin are also likely to have different
requirements for products and services than the residents in Adelaide.
4. Culture:
• Culture refers to the traditions, taboos, values and basic
attitudes of the whole society within which an individual lives.
• It is essentially associated with a certain nationality or
religious identity of an individual. Cultural norms are learnt by
an individual from childhood and their influence is so
ingrained that it is invisible in everyday behaviour.
• Culture teaches an individual the acceptable norms of
behaviour and tells him the rights and wrongs.
• When an individual deviates from acceptable norms, certain
sanctions are imposed on him.
4. Influence from Advertising:
• A well-written strategically-placed advertisement has the
power to change consumer behaviour if it delivers what is
promised.
• Advertisements can draw consumers’ attention to the problems
that they may not consciously notice or consider there is no
need to be resolved.
• And if an ad makes a convincing beneficial evaluation of the
product or service, it can help consumers to make a positive
purchase decision.
Nature of Consumer Behaviour
1. Process: Consumer behaviour is a systematic process relating to
buying decisions of the customers. The buying process consists of the
following steps;
• Identification to buy the product .
• Information search relating to the product.
• Listing of alternative brands.
• Evaluating the alternative (cost-benefit analysis)
• Purchase decision.
• Post-purchase evaluation by the marketer.
2. Influenced by Various Factors: Consumer behaviour is
influenced by a number of factors.
• The factors that influence consumers include marketing,
personal, psychological, situation based, social, cultural etc.

3. Different for all Customers: All consumers do not behave in

the same manner. Different consumers behave differently.
• The difference in consumer behaviour is due to individual
factors such as nature of the consumer’s life style, culture, etc.
4. Different for Different Products: 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 some other items.

5. Region Bounded: The consumer behaviour varies across

states, regions and countries. For instance, the behaviour of
urban consumers is different from that of rural consumers.
Normally, rural consumers are conservative (traditional) in their
buying behaviour.
6. Vital for Marketers: Marketers need to have a good knowledge of
consumer behaviour. They need to study the various factors that
influence consumer behaviour of their target customers. The knowledge
of consumer behaviour enables marketers to take appropriate marketing
decisions.
7. Reflects Status: The consumer buying behaviour is not only
influenced by the status of a consumer, but it also reflects it. Those who
own luxury cars, watches and other items are considered by others as
persons of higher status.
8. Spread-effect: Consumer behavior has a spread-effect. The buying
behaviour of one person may influence the buying behavior of another person.
For instance, a customer may always prefer to buy premium brands of clothing,
watches and other items etc. This may influence some of his friends, neighbors,
colleagues. This is one of the reasons why marketers use celebrities like
Shahrukh Khan , Sachin to endorse their brands.
9. Standard of Living: Consumer buying behaviour may lead to higher
standard of living. The more a person buys the goods and services, the higher is
the standard of living.
10. Behaviour Keeps on Changing: The consumer’s behaviour undergoes a
change over a period of time depending upon changes in age, education and
income level. Etc. for instance, kids may prefer colorful dresses, but as they
grow up as teenagers and young adults, they may prefer trendy clothes.
Strategic Applications of Consumer Behaviour
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.
• This may reveal unsatisfied needs and wants.
• 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 needs.
• 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
60 or more and would rather prefer a low priced sachet containing
enough quantity for one or two washes .
• This finding led companies to introduce the shampoo sachet which
became a good seller.
3. Marketing-mix decisions:
• 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.
(a) Product: The marketer designs the product or service that would satisfy
unfulfilled needs or wants. Further decisions regarding the product concern
to size, shape and features. The marketer has also to decide about
packaging, important aspects of service, warranties and accessories etc.
Example: Nestle first introduced Maggi noodles in masala and capsicum
flavours. Subsequently, keeping in view the consumer preferences in some
regions, the company introduced garlic, Sambar and other flavours.
(b) Price:
• The second important component of marketing mix is price.
• Marketers must decide what price to charge for the product or service. These
decisions will influence the flow of revenue to the company.
• Should the marketer charge the same, higher, or lower price in comparison to
competition?
• Is the consumer price sensitive and would a lower price stimulate sales?
• Should there be any price discounts? Do consumers perceive lower price as
being indicative of poor quality?
• To answer such questions, the marketer must understand the way the
company’s product is perceived by consumers, the importance of price as a
purchase decision variable and how different price levels would affect sales. It
is only through consumer behaviour study in actual buying situations that the
marketer can hope to find answers to these important issues.
(c) Distribution:
• The next decision relates to the distribution channel, that is, where and
how to offer products and services for sale.
• Should the products be sold through all the retail outlets or only through
selected ones?
• Should the marketer use only the existing outlets, which also sell
competing brands, or should new exclusive outlets selling only the
marketer’s brands be created?
• Is the location of retail outlets important from consumers’ point of view?
Should the company think of direct marketing?
• The answers to these questions are furnished by consumer behaviour
research.
Example:
• When Eureka Forbes introduced its vacuum cleaners many years ago, few
stores knew anything about this product and most were not willing to buy
it.
• Consumer awareness about the product was also low and no retail shops
carried the product.
• Under these circumstances, the company decided to sell the product only
through personal selling, with salespeople calling directly on the consumer
at her/his home.
• These salespeople had enough time to explain and demonstrate the vacuum
cleaner and convince prospects about its usefulness.
• Retail outlets would not have been suitable for this sales approach.
• This strategy was based on understanding of consumer behaviour and
yielded good results.
(d) Promotion:
• Promotion is concerned with marketing communications to consumers. The more
important promotion methods are advertising, personal selling, sales promotion,
publicity and direct marketing.
• 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? The
company has to know the target consumers, their location, what media do they
have access to and what are their media preferences, etc.
• In most cases of industrial products there is very little or no advertising. Brochures
containing technical specifications are often posted to clients and the salespeople
make follow-up visits.
• Consumer products get the maximum share of advertising. Pharmaceutical
industry exclusively uses personal selling for prescription drugs. Insurance
companies use both advertising and personal selling.
4.Use in social and non-profits marketing:
• Consumer behaviour studies are useful to design marketing strategies by
social, governmental and not-for-profit organisations to make their
programmes such as family planning, awareness about
• Crime against women, safe driving, environmental concerns and others
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
 Consumer Behaviour Models
(Which One Applies to Your Business )

• Consumer behaviour models contextualize behaviour analysis

results, as they explain why and how customers make purchasing
decisions.
• Consumer behaviour models explain how you can use them to
create customer-centric experiences.
• Customer behaviour models help you understand and retain your
unique customer base. These models are either traditional or
contemporary.
1.Traditional Behaviour Models

• Traditional behavior models were developed by economists

hoping to understand what customers purchase based on their
wants and needs.
• These models focus on purchasing behavior as being driven
by emotion.
Learning Model

• The Learning Model of customer behaviour theorizes that

buyer behaviour responds to the desire to satisfy basic needs
required for survival, like food, and learned needs that arise
from lived experiences, like fear or guilt.
• This model takes influence from psychologist Abraham
Maslow’s Hierarchy of Needs (pictured below).
• The bottom level of this hierarchy represents basic needs, and
ascending sections describe learned needs, or secondary desires, that
allow consumers to feel as though they’ve reached self-fulfilment.
• The Learning Model says that consumers first make purchases to
satisfy their basic needs and then move on to meet learned needs. For
example, a hungry customer would fulfil their need for food before a
learned need to wear trendy clothing.
• If you’re a multipurpose business that sells products that meet all levels
of customer needs, this model applies to you. For example, Target is a
United States-based department store that sells hundreds of products.
Super Targets are larger versions of the chain that also sell groceries.
• When a customer visits a Super Target, they first see products that
satisfy their basic needs —
• They’re probably also seeing produce first, as these items are seen as
the most nutritious and necessary for survival.
• After produce, customers move on to other that satisfy learned needs,
like purchasing their favourite cookies, clothing items, or beauty
accessories.
• You can think of it like this: If you’re a business with a significant
amount of in-store options, improve the customer experience and speak
to their buyer behavior by first leading them to the products that will
satisfy their innate needs.
• Without doing this, they may navigate through your store anxious
about meeting those needs and spend less time browsing other products
and making additional purchases.
• Once they feel comfortable, they’ll move on to satisfy the desires that
bring them joy rather than help them survive.
Psychoanalytic Model
• Sigmund Freud is the father of psychoanalysis. The
Psychoanalytic Model draws from his theories and says that
individual consumers have deep-rooted motives, both conscious
and unconscious, that drive them to make a purchase. These
motives can be hidden fears, suppressed desires, or personal
longings.
• Thus, customers make purchases depending on how stimuli from
your business, like an advertisement on Instagram, appeal to their
desires. It’s important to note that, since these desires can be
unconscious, customers don’t always know why it appeals to them;
they just know it feels right to have it.
• This model is unique in terms of application, but it’s relevant
to businesses that sell an image that accompanies their
products or services.
• For example, say you sell glasses. We all long to fit in and
feel like we’re valued and seen as capable, smart people.
Glasses are sometimes a symbol of intelligence, so you’d want
to appeal to this desire when crafting a customer experience.
• You may instruct marketing to create ad campaigns that
display pictures of people wearing your glasses in educational
settings or doing things that society labels as ‘smart.’
Sociological Model
• The Sociological Model of consumer behavior says that purchases are
influenced by an individual's place within different societal groups:
• family, friends, and workgroups, as well as less-defined groups like
millennials or people who like yoga.
• An individual will essentially purchase items based on what is appropriate
or typical of the groups they’re in.
• Check out this ad from Nike. They’re selling this shoe to the undefined
group of people who like to run, claiming that it will improve their speed
and help them fit in with the group.
•
2.Contemporary Models

• Contemporary models of consumer behavior focus on rational

and deliberate decision making rather than emotions or
unconscious desires.
Engel-Kollat-Blackwell (EKB) Model
The Engel-Kollat-Blackwell model of consumer behavior outlines a
five-stage decision process that consumers go through before
purchasing a product or service.
1.Awareness - During this stage, consumers view advertisements from
a business and become aware of their need, desire, or interest, to
purchase what they've just discovered.
2.Information Processing - After discovering a product or service, a
consumer begins to think about how the product or service relates to
their past experiences or needs and whether it will fulfill any current
needs.
1.Evaluation - At this point, consumers will research the product
they’ve discovered and research options from competitors to see if
there is a better option or if the original product is the best fit.
2.Purchasing Decision - A consumer will follow through with a
purchase for the product that has beat out competitors to provide
value. A consumer may also stop the process if they change their
mind.
3.Outcome Analysis - After making a purchase, a customer will use
what they’ve bought and assess whether their experience is positive or
negative. After a trial period, they’ll keep a product and maybe decide
to become repeat customers or express dissatisfaction and return to
stage three.
Black Box Model

• The Black Box model, sometimes called the Stimulus-

Response model, says that customers are individual thinkers
that process internal and external stimuli to make purchase
decisions. The graphic below illustrates the decision process
• It may look complex, but it’s a fairly straightforward path. A consumer
comes into contact with external stimuli from your business’ marketing
mix and other external stimuli, and they process it in their mind (black
box).
• They relate the external stimuli to their pre-existing knowledge, like
personal beliefs and desires, to make a decision.
• In short, this model says that consumers are problem solvers who
make decisions after judging how your product will satisfy their
existing beliefs and needs.
• Since consumers only follow through with a purchase after
understanding how a product relates to their experiences, this model
can benefit businesses selling products that go along with a lifestyle.
• Case in point: cars. Different brands sell their cars to specific types of
buyers. Jeeps and Subarus are for those that engage in outdoor activities
and need a sturdy, reliable vehicle.
• At the same time, Mercedez Benz and Lexus’ are marketed to those who
want luxurious driving experiences.
• Even though the machinery is relatively similar, these brands speak to the
pre-existing life values that customers have, and they promise that
purchasing their vehicle will uphold their values.
Hawkins Stern Impulse Buying

• The Impulse Buying theory is an alternative to the Learning Model

and EKB, as it claims that purchases aren’t always a result of rational
thought.
• When we think of impulse buying, we typically imagine picking up a
candy bar or a pack of gum right before checking out. These are
certainly impulse purchases, but Hawkins Stern categorizes them into
four different types:
• Escape Purchase - Sometimes called pure impulse, this
involves purchasing an item that isn’t a routine item or on a
shopping list. Consumers are drawn to these items through
appealing visuals.
• Reminder Purchase - A consumer makes a reminder impulse
purchase when they come across a product through in-store
setups, promotional offers, or a simple reminder that a product
exists, like a strategically placed ice cream scoop in the freezer
aisle of a grocery store.
• Suggested Purchase - Suggested impulse purchases occur when a
consumer is made aware of a product after a recommendation or
suggestion from an in-store salesperson or online algorithms.
• For example, seeing an ad that says, “Other people who bought this
shoe you’re about to buy also purchase these socks.”
• The consumer didn’t know the socks existed, didn’t plan to buy them,
but now the suggestion has told them that they need them.
• Planned Purchase - Although planned is the opposite of
impulse, these purchases occur when a consumer knows they
want a particular product but will only buy it if there is a deal
involved.
• An unexpected price drop could lead a customer to make a
planned impulse purchase.
• The Hawkins Stern Model applies to most businesses, as there
are no limits to what a customer with this purchasing behavior
will buy.
• Create a tailored customer experience by putting care into
product displays, creating AI algorithms for online shopping,
or placing items on sale to appeal to your shoppers who are
planned purchase impulse buyers.