Chapter one

Consumer behavior and consumer research

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, and
how the consumer's emotions, attitudes and preferences affect buying behavior.
Consumer behavior emerged in the 1940s and 50s as a distinct sub-discipline of
marketing, but has become an inter-disciplinary social science that blends elements
from psychology, sociology, social anthropology, anthropology, ethnography,
marketing and economics. The study of consumer behavior formally investigates
individual qualities such as demographics, personality lifestyles, and behavioral
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. Also investigated are the influences on the consumer, from groups
such as family, friends, sports, and reference groups, to society in general,
including brand-influencers and opinion leaders.

Consumer behavior entails all activities associated with the purchase, use and
disposal of goods and services, including the consumer's emotional, mental and
behavioral responses that precede or follow these activities. The term, consumer
can refer to individual consumers as well as organizational consumers, and more
specifically, "an end user, and not necessarily a purchaser, in the distribution chain
of a good or service.

Definition of Consumer Behavior According to American Marketing Association,

consumer behavior can be defined as "the dynamic interaction of affect and

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cognition, behavior, and environmental events by which human beings conduct the
exchange aspects of their lives."

As a field of study, consumer behavior is an applied social science. Consumer

behavior analysis is the "use of behavior principles, usually gained experimentally,
to interpret human economic consumption." As a discipline, consumer behavior
stands at the intersection of economic psychology and marketing science.

Consumer behavior 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
 Behavioral (or conative) responses: refer to the consumer's observable
responses in relation to the purchase and disposal of goods or services.

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Research has shown that consumer behavior is difficult to predict, even for experts
in the field; however, new research methods, such as ethnography, consumer
neuroscience, and machine learning are shedding new light on how consumers
make decisions. In addition, customer relationship management (CRM) databases
have become an asset for the analysis of customer behavior. The voluminous data
produced by these databases enables detailed examination of behavioral factors
that contribute to customer re-purchase intentions, consumer retention, loyalty and
other behavioral intentions such as the willingness to provide positive referrals,
become brand advocates or engage in customer citizenship activities.

What is consumer research?

Consumer research is the practice of identifying the preferences, attitudes,

motivations, and buying behavior of the targeted customer. Using a variety of
customer research methods to gather this information, shared traits among the
different customer groups are identified and categorized into customer segments
and buyer personals, which are then used to create marketing campaigns targeting
a specific segment or personal.

Consumer research is the key to improving your product and successfully

marketing to customers who want to do business with you. Interviews, surveys,
and other customer research methods are some of your best friends when it comes
to helping your company consistently increase its revenue year on year.

Research methods used

To gain insights into consumer behavior, researchers uses the standard battery of
market research methods such as surveys, depth interviews and focus groups.
Increasingly, researchers are turning to newer methodologies and technologies in
an effort to seek deeper understandings of why consumers behave in certain ways.
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These newer methods include ethnographic research (also known as participant
observation) and neuroscience as well as experimental lab designs. In addition,
researchers often turn to separate disciplines for insights with potential to inform
the study of consumer behavior. For instance, behavioral economics is adding
fresh, new insights into certain aspects of consumer behavior.

Behavioral economics studies the effects of psychological, cognitive, emotional,

cultural and social factors on the decisions of individuals and institutions and how
those decisions vary from those implied by classical economic theory.

1. Interviews

Interviewing customers who are going through different stages of their journey
with your product can be time-consuming. Even though interviews may prove to
be a significant challenge, they can also be one of the most eye-opening and
valuable consumer research methods your startup can undertake.

Interviews offer a high level of insight into the mind of the customer with very
specific details on their needs, wants, and motivations as they relate to your
product. This information is invaluable for any startup, but it isn’t always easy to
obtain. The data collected from interviews can be used across all aspects of your
marketing strategy for a 12-month period. After this time, you should begin the
process again to account for changes in your business and changes to your
customer base.

2. Surveys

Surveys might be the most commonly used consumer research method, and for
good reason too. Surveys don’t necessarily offer the same level of insight as

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interviews, but they are much easier to get customers to participate in and provide
feedback due to their simple nature. They are a quick and easy way for customers
to provide feedback and feel their needs are valued by a company.

Surveys are conducted in a number of ways with varying degrees of effectiveness,

but generally speaking, the response rate for surveys is much higher than
interviews. Having a larger sample size makes it easier for a startup to recognize
similar characteristics and patterns among consumers.

3. Ethnographic research

Ethnographic research or ethnography has its origins in anthropology. However,

marketers use ethnographic research to study the consumer in terms of cultural
trends, lifestyle factors, attitudes and the way that social context influences product
selection, consumption and usage. Ethnographic research, also called participant
observation, attempts to study consumer behavior in natural settings rather than in
artificial environment such as labs.

Different types of ethnographic research are used in marketing

including

 Observed product usage:- observing regular product usage at home or work,

to gain insights into how products are opened, prepared, consumed, stored,
disposed etc. to gain insights into the usefulness of packaging, labeling and
general usage
 Day-in-the-life studies:- extended visits during product usage situations to
gain insights into norms and consumer expectations

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  Accompanied purchase or shop-along:- researcher accompanies a shopper on
a purchase expedition to gain insights into consumer responses to
merchandising and other sales tactics.

4. Consumer neuroscience

Consumer neuroscience (also known as neuro-marketing) refers to the commercial

use of neuroscience when applied to the investigation of marketing problems and
consumer research. Consumer neuroscience employs sophisticated bio-metric
sensors, such as electroencephalography, functional magnetic resonance imaging
and eye tracking, to study the ways that consumers respond to specific stimuli such
as product displays, brands, packaging information or other marketing signals.

Importance of Consumer Behavior

Understanding consumer behavior is important for any organization before

launching a product. If the organization failed to analyses how a customer will
respond to a particular product, the company will face losses. Consumer behavior
is very complex because each consumer has different mind and attitude towards
purchase, consumption and disposal of product (Solomon, 2009). Understanding
the theories and concepts of consumer behavior helps to market the product or
services successfully. Moreover, studying consumer behavior helps in many
aspects. As there is constant change in the living standards, trend, fashion and
change in technology; consumer’s attitude towards the purchase of product varies
(Kumar, 2004). Understanding these factors is of utmost importance because the
marketing of products is largely dependent on these factors. Thus, consumer
behavior serves as a successful tool for marketers in meeting their sales objectives.

The study of consumer behavior helps to understand how the buying decision is
made and how they look for a product. Moreover, the understanding consumer
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behavior also helps marketers to know the what, where, when, how and why of the
consumption of product consumption (Kumar, 2004). These help marketers or
organizations to know the reason behind the purchase of product by consumers and
how it satisfies them. Among other factors, the basic needs like shelter and hunger
along with craving for psychological fulfillment tends consumer to buy a certain
product or services.

Importance of Consumer Behavior to business managers

The main purpose behind marketing a product is to satisfy demands and wants of
the Consumers. Study of consumer behavior helps to achieve this purpose. As
consumers are the most important person for marketer or sales person, therefore it
is important for them to consider the likes and dislikes the consumers so that they
can provide them with the goods and services accordingly (Solomon, 2009). The
more careful analysis helps in more exact prediction about the behavior of
consumers of any product or services. The study of consumer behaviors helps
business manager, sales person and marketers in the following way.

 To design the best possible product or service that fully satisfies consumer’s
needs and demands.
 To decide where the service or product would be made available for easy
access of consumers.
 To decide the price at which the consumers would be ready to buy that
product or service.
 To find out the best method of promotion that will prove to be effective to
attract customers to buy a product.

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  To understand why, when, how, what and other factors that influence buying
decision of the consumers.

Importance of Consumer Behavior to Marketers

It is important for marketers to study consumer behavior. It is important for them

to know consumers as individual or groups opt for, purchase, consumer or dispose
products and services and how they share their experience to satisfy their wants or
needs (Solomon, 2009). This helps marketers to investigate and understand the
way in which consumers behave so that they can position their products to specific
group of people or targeted individuals.

In regard to the marketer’s view point, they assume that the basic purpose of
marketing is to sell goods and services to more people so that more profit could be
made. This principle of making profits is heavily applied by almost all marketers.
Earlier, the marketers were successful in accomplishing their purpose. However,
today, as the consumers are more aware about the use of product and other
information of the product, it is not easy to sell or attract customer to buy the
product (Kumar, 2004). Thus, in order to sell a product or service or to convince
consumers to buy product, the marketers have to undergo through proper research
to win them over.

The following are some of the points discussed that explains the value to marketers
of understanding and applying consumer behavior concepts and theories.

1. To understand Buying Behavior of consumers

2. To create and retain customers though online stores
3. To Understand the factors influencing Consumer’s buying Behavior
4. To understand the consumer’s decision to dispose a product or services

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 5. To increase the knowledge of sales person influence consumer to buy
product

1. To understand Buying Behavior of consumers

The study of consumer behavior helps marketers to recognize and forecast the
purchase behavior of the consumers while they are purchasing a product. The study
of consumer behavior helps the marketers not only to understand what consumer’s
purchase, but helps to understand why they purchase it (Kumar, 2004). Moreover,
other questions like how, where and when they purchase it are also answered. The
consumption and the reasons behind disposition of that particular product or
services help marketers to be fully aware of the product that is marketed. The
consumer behavior studies also help marketers to understand the post purchase
behavior of the consumers. Thus, the marketers become fully aware about every
phase of consumption process i.e., pre-purchase behavior, behavior during
purchase and post purchase behavior. Many studies in the past shows that each
consumer behaves differently for a product i.e., they buy the product for different
reasons, pays different prices, used the product differently and have different
emotional attachments with the product (Solomon, 2009).

2. To create and retain customers though online stores

Professor Theodore Levitt says that consumer behavior is of most importance to

marketers in business studies as the main aim is to create and retain customers
(Kumar, 2004). If the consumers are satisfied with the product, he or she will buy
the same product again. Therefore, the product should be marketed by markers in
such a way that convince customer to buy the product. Thus, creating customer and
the retaining those customers are important. These can be done through

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understanding and paying close attention towards the consumer’s behavior while
making purchase decision or buying a product in market place. Moreover, the
information published on the websites largely influence the customer’s buying
behavior. Such information on published sources arouse consumer to buy a product
or service. Moreover, updating such information will help the consumer to retain to
a product or re try the product if the product has dissatisfied them (Solomon,
2009).

3. To understand the factors influencing Consumer’s buying

Behavior

It is important for marketers to consider the factors that affect the buying behavior
of consumer before entering the market. There are many factors that can influence
the purchase decision of consumers such as social influence, cultural influences,
psychological factors and personal factors (Super Professeur, 2011).
Understanding these factors helps marketers to market the product on right time to
the right consumers. For example, if marketer is marketing a product which is
Halal. The marketers first consider all the factors that can influence consumers to
buy Halal products, where they can target specific areas where Halal food is more
sold. The marketers need to pay attention to cultural influences such as religion,
values and norms of the people or societies targeted and lifestyle of the targeted
consumers. The marketers can propose different strategies that convince the
targeted consumers to buy marketed products or services. Moreover, the marketers
should be ascertain the factors that influence and affects purchase decision of
consumers (Solomon, 2009). If the marketers failed to understand the factors that
might influence consumers, they will fail to convince the consumer to purchase

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that product or will fail to meet the demands of consumers. Some variables cannot
be directly observed (Super Professeur, 2011). In such case, thorough
understanding of concepts and theories of consumer behaviour helps marketers to
predict the consumer’s buying behavior to a reasonable extent. Thus,
understanding consumer’s behavior to buy a product is complex and requires
marketers to continuously understand and apply various concepts and theories for
successful marketing.

4. To increase the knowledge of sales person influence consumer

to buy product

All the products and services marketed revolve around the behavior of consumers
that how they will respond to them. Effective marketing of a product by sales
people may help to deliver right product to right people. Consumer behavior deals
with the knowledge of what the consumers need and want to buy and what goods
and services are available to satisfy their needs. Thus, consumer behavior deals
with particularly with the behavior of people i.e., consumers. It is important for
sales person to be fully aware of the customer’s requirement so that he or she could
clearly communicate the benefits of the product to the customers. Moreover, the
sales person by understanding consumer’s demand and need for a product can sell
goods that are most closely related to their requirement. Besides understanding
consumer behavior, the sales person should also have command over their spoken
language. This is because any miscommunication could harm brand reputation.
Moreover, if the consumers have more knowledge about the product than the sales
person, the sales might fail to meet their targets. Thus, analyzing consumer’s
behavior and knowledge for effective marketing of products by sales people are
important. The sales people must be fully aware of the consumer’s behavior in

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different situations so that they could help them in meeting their demands and
satisfaction (Solomon, 2009).

5. To understand the consumer’s decision to dispose a product or

services

Disposal of product involves throwing away of products by the consumers

(Solomon, 2009). This behavior of consumer is very complex and requires more
importance by the marketers. Understanding the consumer’s behavior about how
and when consumers dispose a product, the marketers or the companies can
position themselves so that this behavior could be limited (Raghavan, 2010).

Consumer behavior challenges and ethical issues

Ethical behavior refers to behavior that is ethically and morally correct according
to the society. An ethical behavior is legal in the eyes of law, is based on every
ones best interests and leads to the welfare of the society. Ethics are general
principles of right conduct that direct the decisions and activities of an individual
or an organization. Every society has general set of standards of what is good or
bad and right or wrong, and expects all members to adhere to the ethnic norms and
morals of the society. Ethics, morals and values of society may be determined on
the basis of religion, culture,, social norms, morals, traditions and laws that prevail
in society or country. An organization must study and satisfy the ethical concerns
of the society and avoid developing products and advertisement that leads to
undesirable consumer behavior or confuses or misleads the consumer or hurt his
personal or cultural sentiments. Special care must be taken when dealing with
products and advertisements meant for children as they get influenced easily. An
organization must adhere with the cultural norms and ethical standards of the

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society and must maintain high operating standards that are directed towards the
walfer of the members of the society.

The broad areas where an organization needs to serve ethically are:-

 Health and occupational safety

 Fair labor practices
 Consumer protection and fair treatment
 Environmental and legal protection

Ethical issues in consumer behavior

 Consumer privacy
 Legal regulations
 Moral and ethical values of the society
 Marketing and advertising to children
 Product, pricing and distribution issues

A marketer must comply with all the ethical concerns of the society and avoid
using strategy that violates the ethical and moral values of the society.

The following points must be kept in mind by a business to be perceived as an

ethical and socially responsible business:-

 All facts and details about the product/service must be clearly revealed to the
customer
 Consumer’s personal information must be kept private and safe
 Special care must be taken when advertising to children
 All the central, State and local laws must be complied with
 Advertisement (Tv, Radio, Newspaper, Magazine, Internet) and promotions
must not be misleading or deceptive

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 The company must be accountable and responsible for any loss, injury,
damage due to product failure
 Products must be inspected properly for quality before they are put for sale
 Pricing of products must not be discriminatory or unfair
 A business must develop ethical business practices and be socially
responsible while making business decisions
 A business must have a systematic feedback and complaint management
system
 A business must care about its customers and their environment

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