Consumer Behaviour

Module 1 Understanding Consumer Decision Making

Consumer behaviour
Consumer behaviour is the study of consumers and the processes they use to choose, use
(consume), and dispose of products and services, including consumers’ emotional, mental,
and behavioural responses. By understanding how consumers decide on a product, they can
fill in the gap in the market and identify the products that are needed and the products that
are obsolete. A consumer behaviour analysis should reveal:

 What consumers think and how they feel about various alternatives (brands, products,
etc.);
 What influences consumers to choose between various options;
 Consumers’ behaviour while researching and shopping;
 How consumers’ environment (friends, family, media, etc.) influences their behaviour.
Definition: According to Engel, Blackwell, and Mansard, ‘consumer behaviour is the actions
and decision processes of people who purchase goods and services for personal
consumption’.
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;
a. Need identification to buy the product
b. Information search relating to the product
c. Listing of alternative brands
d. Evaluating the alternative (cost-benefit analysis)
e. Purchase decision
f. 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 are marketing, personal, psychological,
situational, 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/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: Consumers buying behaviour is not only influenced by status of a
consumer, but it also reflects it. Those consumers who own luxury cars, watches and
other items are considered by others as persons of higher status.
8. Spread - effect: Consumer behaviour has a spread effect. The buying behaviour of one
person may influence the buying behaviour 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, neighbours, colleagues. This is one
of the reasons why marketers use celebrities 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. 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 colourful dresses, but as they grow up as teenagers and young adults,
they may prefer trendy clothes.
Factors influencing consumer behaviour
1. Psychological Factors: The human psychology plays a crucial role in designing the
consumer’s preferences and likes or dislikes for a particular product and services.
Some of the important psychological factors are:
 Motivation: The level of motivation influences the buying behaviour of the
consumers. Usually, the basic needs and the security needs are more pressing
needs than the other and hence, these needs become a motive that directs the
consumer behaviour to seek satisfaction.
 Perception: The perception is the process through which the individual selects,
organize and interpret the information to draw a meaningful conclusion. Such
as, Apple iPhone is perceived as a premium brand and consumers are
motivated to buy it to get associated with the elite class of the society.
 Learning: The individual’s learning depends on the skills, knowledge and
intention. The skills are developed through practice while the knowledge and
intention are acquired with the experience.
2. Attitudes and Beliefs: The individuals have certain beliefs and attitudes towards
products on which their purchase decisions rests. These attitudes and beliefs are the
tendency to respond to a given product in a particular way
3. Social Factors: The human beings live in a complex social environment wherein they
are surrounded by several people who have different buying behaviours. Hence, the
social factors influence the buying behaviour of an individual to a great extent. Some
of the social factors are:
 Family: The family members play a crucial role in designing one’s preferences
and behaviour. It offers an environment wherein the individual evolves,
develop personality and acquire values.
  Reference Groups: A reference group is a group with which an individual like
to get associated. It is observed, that all the members of the reference group
share common buying behaviour and have a strong influence over each other.
 Roles and status: An individual’s position and role in the society also influences
his buying behaviour. Such as, a person holding a supreme position in the
organization is expected to purchase those items that advocate his status.
4. Cultural Factors: It is believed that an individual learns the set of values, perceptions,
behaviours, and preferences at a very early stage of his childhood from the people
especially, the family and the other key institutions which were around during his
developmental stage. Thus, the behavioural patterns are developed from the culture
where he or she is brought up.
5. Personal Factors: There are several factors personal to the individuals that influence
their buying decisions. Some of them are:
 Age: The consumer buying behaviour is greatly influenced by his age, i.e. the
life cycle stage in which he falls. The people buy different products in different
stages of the life cycle. Such as the purchase of confectionaries, chocolates is
more when an individual is a child and as he grows his preferences for the
products also changes.
 Income: The income of the person influences his buying patterns. The income
decides the purchasing power of an individual and thus, the more the personal
income, the more will be the expenditure on other items and vice-versa.
 Occupation: The occupation of the individual also influences his buying
behaviour. The people tend to buy those products and services that advocate
their profession and role in the society
6. Economic Factors: The last but not the least is the economic factors which have a
significant influence on the buying decision of an individual. These are:
 Personal Income: The personal income of an individual influences his buying
behaviour as it determines the level to which the amount is spent on the
purchase of goods and services
 Family Income: The family income refers to the aggregate of the sum of the
income of all the family members. The income remaining after meeting all the
basic necessities of life can be used for the purchase of shopping goods, luxury
items, durable goods, etc.
 Income Expectations: An Individual’s expectation with respect to his income
level in the future influences his buying behaviour today. Such as, if a person
expects his income to increase in the future, then he will spend more money
on the purchase of the luxury goods, durables and shopping goods
 Consumer Credit: The credit facility available to the consumer also influences
his buying behaviour. If the credit terms are liberal, and EMI scheme is also
available, then the customers are likely to spend more on the luxury items,
durable goods, and shopping goods.
Consumer decision making process
1. Problem or Need Recognition: Consumer decision
making process begins with an unsatisfied need or
problem. Every day we face multiple problems which
individuals resolve by consuming products or
services. Consumer problem can be routine or
unplanned. For example – run out of milk or cooking
oil, car indicating low level of fuel, are some of the
routine problems that individuals face. Such
problems are quickly recognised, defined, and
resolved.
2. Information Search: Information search is done to
know about product or service, price, place and so
on. In the process of decision making, the consumer
engages in both internal and external information search. Internal information search
involves the buyer identifying alternatives from his memory. Internal information
search is sufficient for low involvement products or services. The amount of efforts a
buyer put in information search depends on various factors like market, competition,
difference in brands, product characteristics, product importance, and so on.
3. Alternatives Evaluation: At this step the buyer identifies and evaluates different
alternatives to choose from. It is not possible to examine all the available alternatives.
So, buyer develops evaluative criteria to narrow down the choices. Evaluative criteria
are certain characteristics that are important to buyer such as price of the product,
size, colour, features, durability, etc. Some of these characteristics are more important
than others. To narrow down the choices the buyer considers only the most important
characteristics.
4. Purchase Decision: The earlier mentioned evaluation step helps the consumer in
arriving at a purchase intention. In the decision evaluation stage, the consumer forms
preferences among the brands in the choice set. However, factors can intervene
between the purchase intention and the purchase decision. A buyer who decides to
execute a purchase intention will be making up to five purchase decisions brand
decision, vendor decision, quantity decision, timing decision and payment method
decision.
5. Post-purchase Use and Evaluation: Once the buyer decides to purchase a product or
service there can be several types of additional behaviour associated with that
decision such as decisions on product uses and decision on services related to the
product purchased. The level of satisfaction experienced by the buyer after his
purchase will depend on the relationship between his expectations about the product
and performance of the product. If the buyer is satisfied then he will exhibit a higher
probability of repeat purchase of the product or service. The satisfied buyer will also
tend to say good words about the product or service. Whereas a highly dissatisfied
buyer will not buy the product or service again and spread negative words about
service and company
Buyer roles
Buying roles refer to the activities that one or more person(s) might perform in a buying
decision
1. Initiators: First identifies the need to buy a particular product or service to solve an
organisational problem. They are usually the ones who request that something be
purchased. They may be users or others in the organization. For example- for office
equipment's, the initiative may be taken by administrative department
(Users – Those who will use the product or services. In many cases the users initiate
the buying proposal and help define the product requirements)
2. Influencers: Those family members who provide information and advice and thus
influence the purchase Their views influence the buying centre’s buyers and deciders.
The wife tells her family about the new eatery that has opened in the neighbourhood
and her favourable description about it influences her husband and teenaged children.
3. Deciders: Family members who have the power to unilaterally or jointly decide
whether or not to buy a product or service. The husband and wife may jointly decide
about the purchase of a new refrigerator
4. Approvers: People who authorize the proposed actions of deciders or buyers are
approvers. They could also be personnel from top management or finance
department or the users in case of organization. In case of family, it could be either of
the parent or any elder member.
5. Buyers: Those family members who actually buy a particular product or service. A
housewife may be the person who actually buys all the foodstuffs, rations, which are
consumed by all the family members. In case of organizations, purchase department
Holds the formal authority to select the supplier and to arrange terms of condition.
6. Users: Those family members who use or consume a particular product or service. All
family members may use the car, watch the television, and listen to the stereo music
system
7. Gate Keepers: Those family members who control the flow of information about a
product/service thus influencing the decisions of other family members. The teenage
son, who wants a racing bicycle, may withhold from his father much of the relevant
information on all brands except the one that he fancies, thereby influencing his
father’s decision in favour of his preferred brand.
Levels of consumer decision making
1. Extensive decision-making process –This type of decision-making process is used
when the product is a very high involvement product, possible a high investment
product as well. Typical examples include buying a house for a consumer, or buying a
new manufacturing plant in case of industries. In both cases, there are multiple people
involved, and the decision making is extensive as the customer wants to get maximum
benefits. There are also risks involved in such endeavours, hence extensive decision
making is done.
2. Limited decision-making process –Buying a television or buying a car will be a limited
decision-making process. When you are buying such white goods, the investment is
 nominal and not very high. At the same time, you have some experience with the
product as you regularly watch television and you regularly sit in cars. Thus, you do
not spend as much time on buying these products. The speed of the limited decision
making is dependent on the customer experience and his knowledge about the
product as well as the amount of time he has to make the decision.
3. Routine decision-making process –Routine decision making happens in day to day life
like buying a soap or shampoo. In this case, the customer is more likely to stick to a
single brand for a long time. He is unlikely to switch to different brands because he
wants to invest minimum time in routine decision making. There are a lot of things
which influence the routine decision-making process, like regular advertising by FMCG
companies. This is because, the routine things are brought over and over again. And
once the company gets such a customer, they are likely to reap long term profits from
the same customer.
Consumer decision models
1. Howard Sheth Model
The Howard Sheth Model is an approach for analysing the impact of the social,
psychological and marketing factors on the buying behaviour or preference of the
consumers and the industrial buyers into a logical order of information processing.
John Howard and Jagadish Sheth introduced the Howard Sheth Model in the year 1969. The
concept was published in their book ‘The Theory of Buyer Behaviour’. This model suggests
three levels of decision making
1. Extensive Problem Solving- This is the initial stage of decision-making, where the
buyer is new to the market. He/she has no or little information about the brands and
has no preference for a particular product or service. Thus, a consumer is an
information seeker at this level, who check out different brands available in the
market, before making a buying decision.
2. Limited Problem Solving- At this level, the buyer has inadequate or incomplete
information about the product, market or the brands operating in it. Sometimes the
buyer is confused among the various alternatives. Therefore, to make a buying
decision, he/she look for a comparative study of the different brands and the products
available in the market.
3. Routinized Response Behaviour- The habitual response behaviour stage is where the
buyer is entirely aware of the products offered by different brands and the features,
pros and cons of each product. He/she is capable of evaluating and comparing the
multiple options available in the market. Here, the buyer decides in advance, which
product is to be purchased.
To understand the Howard Sheth Model and have an idea of its arrangement there are four
types of Variables in this Model
Beginning with the stage of extensive problem solving, the buyer slowly converts into a
regular customer of the organization, at the routinized response behaviour level. This whole
process of buyer’s decision-making functions on four pillars of this model or the four essential
elements of this model.

1. Input Variables
The stimulus inputs refer to the idea or information clue about the brand and its product in
terms of product quality, distinctiveness, price, service offered and availability. These can be
further classified as follows:
a. Significant Stimuli: The significant stimuli are the physical traits of the product and
the brand. It includes the product’s price, quality, availability, distinctive
characteristics and service.
b. Symbolic Stimuli: The marketing strategies like advertisement and publicity creates a
psychological impact on the buyer’s perception of a product’s rhetorical and visible
features.
c. Social Stimuli: The social stimuli comprise of the various environmental factors which
are considered as a source of information for the buyers. It includes family, social class
and reference groups.
2. Hypothetical Constructs
The hypothetical constructs depict the central part of the model. It includes all those
psychological variables which play a vital role in the buyer’s decision-making process. It can
be further bifurcated into the following two categories:
 a. Perceptual Constructs- These components define the consumer’s procurement and
perception of the information provided at the input stage. It is an essential element
since it drives the buyer’s brand selection and purchases
b. Learning Constructs- The learning constructs define the buyer’s knowledge, opinion,
attitude and end decision on product or brand selection like Motive, Choice Criteria,
Attitude etc.
3. Output Variables
The output or as we say, the result of the buyer’s decision-making can be seen in the form of
his/her response towards the input variables. It consists of five major components which are
arranged systematically below:
a. Attention: The buyer’s level of concentration and alertness with which he/she
understands the information provided, is termed as attention.
b. Brand Comprehension: The awareness of the buyer regarding a particular brand and
its products is known as brand comprehension.
c. Attitude: The buyer’s evaluation of a brand in terms of individual likes and dislikes,
determines his/her behaviour, interest and awareness towards it.
d. Intention: The aim or objective of the buyer for purchasing a product can be seen as
the buying intention.
e. Purchase Behaviour: All the above elements result in the actual purchase of a product
by the buyer.
4. Exogenous Variable
There are certain other external factors which influence the buying behaviour of an individual
or a firm by hampering the product purchase of a preferred brand. The exogenous variables
are the environmental forces or components of this model like Importance of Purchase,
personality Variables, Social Class, Culture, Organization etc.
2. The Engel Kollat Blackwell Model of Consumer Behaviour
The Engel Kollat Blackwell Model of Consumer Behaviour was created to describe the
increasing, fast-growing body of knowledge concerning consumer behaviour. This model, like
in other models, has gone through many revisions to improve its descriptive ability of the
basic relationships between components and sub-components. It consists of four distinct
stages;
a. Information Input Stage: At this stage the consumer gets information from marketing
and non-marketing sources, which also influence the problem recognition stage of the
decision-making process. If the consumer still does not arrive to a specific decision,
the search for external information will be activated in order to arrive to a choice or
in some cases if the consumer experience dissonance because the selected alternative
is less satisfactory than expected.
b. Information Processing Stage: This stage consists of the consumer’s exposure,
attention, perception, acceptance, and retention of incoming information. The
consumer must first be exposed to the message, allocate space for this information,
 interpret the stimuli, and retain the message by transferring the input to long-term
memory.
c. Decision Process Stage: The central focus of the model is on five basic decision-
process stages: Problem recognition, search for alternatives, alternate evaluation
(during which beliefs may lead to the formation of attitudes, which in turn may result
in a purchase intention) purchase, and outcomes. But it is not necessary for every
consumer to go through all these stages; it depends on whether it is an extended or a
routine problem-solving behaviour.
d. Variables Influencing the Decision Process: This stage consists of individual and
environmental influences that affect all five stages of the decision process. Individual
characteristics include motives, values, lifestyle, and personality; the social influences
are culture, reference groups, and family. Situational influences, such as a consumer’s
financial condition, also influence the decision process.
3. Hedonic Consumption Model for Aesthetic Products
Hedonic, or experiential perspective, as it is also called (Hirschman and Holbrook 1982), does
not limit its scope of interest only to attitudes, but many other aspects of consumer behaviour
are included. Hirschman and Holbrook make a point that we could classify products into
utilitarian and aesthetic.
On one side the utilitarian consumption which places more emphasis on the usefulness,
practicality, functionality, and fulfilment of basic needs. Utilitarian usually are products that
add ease every day; e.g. basic car, fridge, phone. Utilitarian needs are bought without second
guessing and have little emotional and sensory attachment.
Hedonic consumption is products bought
by a consumer that satisfies their emotional
and sensory needs, after basic needs have
been met (food, shelter or clothing). The
emotional pleasure received from products
vary for all individuals. Examples of Hedonic
consumption in a lot of cases would be
designer watches or luxurious cars, all of
which exceed the basic need.
In the process of practical consumption, consumers often start from the functional type and
purpose of the product, pay attention to the utility and perform attributes of the product,
and pursue the practical value to meet the actual needs. Hedonistic consumption refers to
viewing consumption as an act of providing entertainment for the purpose of obtaining
pleasure from consumption experience. It focuses on the emotional and irrational aspects
of buying behaviour. Holbrook and Hirschman (1982) first defined hedonistic product and
believed that hedonistic product is the aspect of consumption experience that includes
emotion, fantasy and sense. They concluded from the four aspects of psychological
construction, the product category, the product function and individual difference that
hedonistic product is based on such emotions and experiences as beauty, pleasure,
imagination and entertainment.
 Module – 2 Individual determinants of consumer behaviour
Personality
Personality consists of the inner psychological characteristics that both determine and reflect
how we think and act, which together form an individual’s distinctive character.
The personality implies psychological and social character that an individual acquires by
hereditary biological endowment which provides him the basis for development and social
growth of environment within which he springs forth.
Personality may be described as an amalgam of the psychological characteristics that both
determine and reflect how we respond to our environment. Although personality tends to be
consistent and enduring, it may change abruptly in response to major life events, as well as
gradually over time.
Characteristics of Personality:

 Personality reflects Individual Differences- Personality enables marketers to

categorize consumers into different groups on the basis of one or several traits.
 Personality is Consistent and Enduring- Both qualities are essential if marketers are
to explain or predict consumer behaviour in terms of personality.
 Personality May Change- Marketers need to believe that the personality may change
after certain life events like marriage or job promotion and accordingly target the
consumers
 Personality is something which is unique in each individual- Personality refers to
internal as well as external qualities, some of which are quite general. But it is unique
to each individual. It is not possible for any other individual to reproduce or imitate
the qualities of the personality of the individual.
 Personality refers particularly to persistent qualities of an individual- Every
individual has certain feeling as well as other permanent traits and qualities.
Personality is mainly composed of the persistent or permanent qualities that exhibit
themselves in form of social behaviour and attempt to make adjustment with the
environment
 Personality represents a dynamic orientation of organism to environment-
Personality represents the process of learning. It takes place in reference to the
environment. We do not acquire all the traits of personality all at once.
 Personality is greatly influenced by social interactions- Personality is not an individual
quality. It is a result of social- interaction. In other words, it means that when we come
in contact with other members of the society, we acquire certain qualities while we
exhibit certain others. All these come to form personality.
 Consistency- There is generally a recognizable order and regularity to behaviours.
Essentially, people act in the same ways or similar ways in a variety of situations.
 Personality has Multiple expressions- Personality is displayed in more than just
behaviour. It can also be seen in our thoughts, feelings, close relationships, and other
 social interactions. Actually, personality is the unique combination of patterns that
influence behaviour, thought, motivation, and emotion in a human being.
Personality Theories
Three theories of personality are prominent in the study of consumer behaviour:
1. Freud’s Theory
This theory was given by Sigmund Freud. Freud’s psychoanalytical theory stresses
the unconscious nature of personality as a result of childhood conflicts. According to
this theory, the human personality system consists of the id, ego, and superego and
conflicts are derived from these three components. He said that all behaviour within
an individual cannot be explained, much lies in the subconscious.
 Id − According to Freud’s psychoanalytic theory of personality, the id
operates based on the pleasure principle, which stresses on immediate
fulfilment of needs. The id is the personality component made up of
unconscious psychic energy which satisfies basic urges, needs, and desires.
The id operates on one principle, directing behaviour to achieve pleasure and
to avoid pain. The id is entirely unconscious with no objective reality.
 Ego − Ego is that state of awareness which thinks of you as separate from the
other. It always thinks of the glories of the past and hopes of the future and
focuses on guiltiness. It always thinks of what was and what could be.
 Super Ego − The superego provides guidelines for making judgments. It is the
aspect of personality that holds all our moral standards and ideals that we
acquire from both parents and society.
2. Neo-Freudian Theory
There were a group of psychologists who believed that social interaction and
resultant relationships formed the basis for the growth and development of
personality. Here, they disagreed with their contemporary, Freud, who believed that
personality was Biological and rooted in genetics, and Was groomed as a result of
early childhood experiences.
It is also known as the Socio - Psychological Theory. This group of researchers who
laid emphasis on the process of socialization came to be known as the Neo. To form
a personality, social relationships are very important. Marketers also tend to use
Neo-Freudian theories while segmenting markets and positioning their products.
Based on this, consumers are classified into three personality types
 Complaint Personalities − They prefer love and affec on and so they move
towards them and so they prefer known brands.
 Aggressive Personalities − They tend to move against others and they show
off their need for power, success etc which is quite manipulative.
 Detached Personalities − They are not much aware of brands and are more
self-reliant and independent.
Self-Concept
Self-concept is defined as the way, in which we think, our preferences, our beliefs, our
attitudes, our opinions arranged in a systematic manner, and also how we should behave and
react in various roles of life.
Self-concept is the composite of ideas, feelings, emotions, and attitudes that a person has
about their identity and capabilities.
Self-concept is a complex subject, understanding of someone’s psychology, traits, abilities
sometimes are really difficult. Consumers buy and use products and services and patronize
retailers whose personalities or images relate in some way or other to their own self-images.
Traditionally, individuals are considered to be having a single self-image which they normally
exhibit. Such type of consumers is interested in those products and services which match or
satisfy these single selves. However, as the world became more and more complex, it has
become more appropriate to think of consumers as having multiple selves. Below are some
of the major aspects of Self-concept

 Self-Concept is Organized- We all have various views about ourselves. We all may
think we are kind, calm, patient, selfish, rude and what not. It doesn’t matter what
perception you have about yourself, but the one perception that facilitates all these
insights is an organized self-concept. When a person believes in something that
matches his self-concept he sticks to his view and does not agree to change the same
and even if it does, it takes a lot of time.
 Self-Concept is Learned- It is believed that self-concept is learned and no person is
born with a self-concept. It develops as and when we grow old. Our self-concept is
built when we meet people socially and interact with them. We are the ones who
shape or alter our self-concept and its quite natural that we may have a self-concept
different for ourselves as compared to what people think about us. For example − If
an individual think, he is very generous and helpful, it may not necessarily be the case
with others. Others may see him as a selfish person.
 Self-Concept is Dynamic- Our self-concept in life is not constant and it may change
with instances that take place in our lives. When we face different situations and new
challenges in life, our insight towards things may change. We see and behave
according to things and situations. Thus, it is observed that self-concept is a
continuous development where we let go of things that don’t match our self-concept
and hold on those things that we think are helpful in building our favourable
perception.
Personal values and consumption
Personal values and consumption values are important factors that guide consumer
behaviours and affect consumer's preference of goods or services.
The values adopted by a person become guiding forces and their relative significance reveals
what an individual will deem worthwhile and meaningful in life particularly so with
consumption related issues. Social adaptation theory sees values as a type of social cognition
that function to facilitate adaptation to the environment. Howard and Sheth (1969) also
suggest that the values affect consumption motives which, in turn, partially set the choice
criteria used by consumers. Thus, by extending this proposition can should see a distinct
relationship between values and the degree of involvement in purchasing and consumption
behaviours.
Personal values are affected by personality, cultural and social factors. Consumption values
are formed with regard to demanded benefits from preferred products. Personal values are
the components determining what is important in individuals lives. Each person has a lot of
values differing from each other.
Schwartz (1994) described personal values as “the motives that lead people’s lives, the
significance of which varies depending on conditions and the goals they want to achieve.”
In addition to this, he suggested that personal values determine the personal tendencies and
affect all kind of choices and preferences of individuals

Personal values are formed by variables, such as security, prestige and maintaining the
position in the society. Individuals use these values to reach certain goals (prestige, enjoying
the life, recognition in society etc).
Personal values are important tools for marketing staff to analyse consumers ‟purchase
behaviours and to determine marketing divisions. consumers evaluate the features of a
product differently depending on their personal values. The features of a product have a very
important role in providing quality and satisfaction because consumers consider the features
of a product while making a purchase decision.
Modern Trends in Lifestyles of Consumer

 Beyond Human: Artificial intelligence is becoming mainstream. Consumers are

embracing AI for convenience, and businesses are integrating this technology to
automate operations and deliver personalized solutions.
 Catch Me in Seconds: With the amount of information readily available, capturing
consumer attention requires concise, relevant and multisensory content that can be
processed in an instant.
 Frictionless Mobility: Consumers want modular and personalized transportation
options that account for time, budget, weather and occasion for a seamless travel
journey.
 Inclusive for All: Brands are reframing their products and services to be accessible to
everyone. Diversity will become a measure of brand relevance.
 Minding Myself: Prioritizing mental health and searching for products positioned to
address specific well-being needs.
 Multifunctional Homes: The ability to do everything—work, shop, exercise and other
activities—from the comfort of home is shifting consumer habits to revolve around in-
home consumption.
  Private Personalization: Consumers want tailored experiences but are concerned
about the collection and sharing of personal data. Consumers will likely opt out of
digitally manufactured experiences that do not add value
 Proudly Local, Going Global: Consumers are returning to their roots. Niche brands
start their global route to success by accentuating their local credentials.
Multinationals are becoming more sophisticated in shaping their products to local
culture.
 Reuse Revolutionaries: Ethical consumers are looking for alternatives to single-use
products to reduce environmental footprint and waste. New circular business models
aim to offer more with less through sharing, reusing, refilling and renting.
 We Want Clean Air Everywhere: The impact of air pollution on health is becoming
widely known with climate activism only escalating. Businesses are facing pressures to
provide solutions that safeguard the environment and consumers from the effects of
poor air quality. The future points toward cleaner and more sustainable cities.
Learning, Memory and Perception – Role on Consumer Behaviour
Memory- Memory involves the process of acquiring information and storing it over time so
that it will be available when needed. It is well-known that memory affects the buying
behaviour. According to the book Consumer Behaviour, European Perspective, consumers’
evaluations of products are affected by their appearance, texture, taste, or smell. It is also
stated that when a product succeeds in satisfying consumers’ specific needs or desires, it may
be awarded many years of brand or store loyalty. “Your mind is like a camera with a memory,
it can take several pictures, which you can file for subsequent use.” For example, the fond
memories of a sweet that you loved as a kid.
Consumers have prior learning experiences, which are accumulated in their minds. The total
accumulation of past experiences is known as memory. Memory can be divided into sensory
memory, short-term memory and long-term memory.
Sensory Memory permits storage of the information we receive from our senses. This storage
is very temporary; it lasts a couple of seconds at most. For example, when walking to work
you pass by a French bistro cafe and you get a quick, aromatic whiff of espresso and fresh
croissants. Although this sensation lasts only a few seconds, it is sufficient to allow you to
consider whether you should investigate further. If you retain this information for further
processing, it passes into short-term memory.
Short-Term Memory (“STM”) also stores information for a limited period of time, and it has
limited capacity. This is similar to working memory in a computer; it holds the information we
are currently processing. Our memories can store verbal input acoustically (in terms of how
it sounds) or semantically (in terms of what it means). We store it when we combine small
pieces of data into larger chunks. A chunk is a configuration that is familiar to the person and
that they can think about as a unit. For example, a brand name like Nike can be a chunk that
summarizes a great deal of detailed information about the product.
Long-Term Memory (“LTM”) is the system that allows us to retain information for a long
period of time. Information passes from STM into LTM via the process of elaborative
rehearsal. This means we actively think about the chunk’s meaning and relate it to other
information already in memory. Advertisers sometimes assist in the process when they devise
catchy slogans or jingles that consumers repeat on their own and retain in their LTM.

 Products and advertisements can act as powerful retrieval cues.

 They are used by consumers to retrieve memories about past experiences and are
often valued for their ability to do this.
 Marketing strategies are often used to evoke nostalgia.
 Slogans of brands are memorable
Learning
Learning is a change in behaviour that is caused by experience. Learning can occur through
simple associations between a stimulus and a response or via a complex series of cognitive
activities.
Learning Theories

 Behavioural Theories: behavioural theory is based on observable behaviours

(responses) that occur as the result of exposure to stimuli.
 Cognitive Theories: Learning is based on mental information processing, it is also
often in response to problem solving.
Elements of Consumer Learning

 Motivation: “It is the processes that lead people to behave as they do”. It occurs when
a need arises that a consumer wishes to satisfy. Motivation is based on needs and
goals. It acts as a spur of learning. Uncovering consumer motives is one of the prime
tasks of marketers, who then try to teach motivated consumer segments why and how
their products will fulfil the consumer’s needs.
 Cues: “It is a stimulus that suggests a specific way to satisfy a silent motive”. If motives
serve to stimulate learning, cues are the stimuli that give direction to these motives.
In the marketplace, price, styling, packaging, advertising and store displays all serve as
cues to help consumers fulfil their needs in product-specific ways. Cues serve to direct
consumer drives when they are consistent with consumer expectations. Marketers
must be careful to provide cues that do not upset those expectations.
 Response: “Response means how individuals react to a drive or cue or how they
behave”. Learning can occur even when responses are not overt. The automobile
manufacturer that provides consistent cues to a consumer may not always succeed in
stimulating a purchase. A response is not tied to a need in a one-to-one fashion. If the
manufacturer succeeds in forming a favourable image of a particular automobile
model in the consumer’s mind, when the consumer is ready to buy, it is likely that he
or she will consider that make or model.
 Reinforcement: “A positive or negative outcome that influences the likelihood that a
specific behaviour will be repeated in the future in response to a particular cue or
stimulus”. It increases the likelihood that a specific response will occur in the future
as the result of particular cues or stimuli. Through positive reinforcement, learning has
taken place.
Companies and customers gain new knowledge of the surrounding products and markets by
learning and experiencing. If a customer buys a product which he/she isn’t satisfied with, most
likely he/she won’t buy it again. Free samples such as free sweets and drinks at the
supermarket are also a good way to promote the product. Their idea is to try to make the
customers familiar with the product in a practical way.
Commercials are also very effective when the buying pattern is considered. Their goal is to
make the product desirable, trendy, and good-looking. learning is defined as a permanent
change in behaviour occurring as a result of past experience.
Learning can be done under high involvement or low involvement situations. In a high
involvement learning situation, the consumer is motivated to learn. If a person wants to buy
a gadget, he tries to learn about it and is motivated. If a person wants to buy a camera, he
learns about cameras. In a low learning situation, there is no motivation to learn about the
product. Learning situations are of degrees and, depend on situations as well. In low
involvement learning, consumers do not have any focused attention on the advertisements
like cigarette Ads, one only glance at the advertisements.
Perceptions
The perceptions consumers have of a business and its products or service have a dramatic
effect on buying behaviour. That’s why businesses spend so much money marketing
themselves, honing their customer service and doing whatever else they can to favourably
influence the perceptions of target consumers. With careful planning and execution, a
business can influence those perceptions and foster profitable consumer behaviours.
As a consumer, perception becomes shaped by advertising, word of mouth, past
experiences, social media, pricing, quality and customer service. Through these efforts,
brands can redefine themselves as not just a product but also as a part of the consumer's
lifestyle choices.
Consumers make choices based on price, need, opportunity, packaging, brand ethics and
more. Shifting how consumers perceive these things can dramatically impact whether they
purchase any given brand and why. If consumers perceive that a product or a brand is a bad
choice, whether it’s based on ethos, quality or price, then it really doesn’t matter if it
actually is a bad choice because customer perception dictates consumer action, and that
action becomes reality.
Importance of perception

 Better competitive edge.

 Important to determine the kind of image a brand wants to build.
 Affect brand image
 Perceptions influence purchasing decisions
 Brand loyalty- Sometimes what the brand is offering may differ from what the
customer perceives. It can cause unfavourable reactions from one or other parties.
Make sure that the brand is in complete sync with the customers to boost their
perception about its products and services. Once gain his faith, it becomes possible to
earn his loyalty gradually
 Increase in sales figures- An important advantage of positive customer perception is
that it leads to an increase in sales because the customers react favourably to the
company and its products.
  Customer retention- When already have a good and loyal customer base because of
positive customer perception, it becomes easier for a brand at customer retention.
 Strengthens the bond- An important advantage of good customer perception is that
it strengthens the bond between the brand and its customers. An individual is likely
to visit the place at least once if his interactions over there have been favourable.
Problems with Bad perception
1. Loses credibility- False promises will create a negative impact on the customer, and
you will lose your credibility in the market. An important disadvantage of wrong
customer perception is that making false promises loses the trust of the common man.
2. Customer service impact- An important disadvantage in this scenario is that once a
customer makes up his mind negatively about brand, will need to work extra hard to
remove this preconceived notion from his mind.
3. Complacency- If a customer complaint, it is taken lightly or passed to some other
employee who forgets to pay timely attention to it. This can cause serious
repercussions as it will cause negative customer perception. Maintain a strict vigil on
your employees so that they can work efficiently towards maintaining a positive
impact.
Factors Influencing Customer Perception
1. Personal experience- Customer perception is highly influenced by the personal
experience that a customer had while buying and using a particular product. If the
quality, customer service, price, logo, colour, discounts, etc. were able to make an
excellent impression on the minds of the customers, they would build a good
perception of the brand
2. Advertising- Customers get to see the products first through advertisements and
therefore become one of the biggest factors that influence customer perception. The
advertisement and campaigns that a company runs will help to build a positive
customer perception.
3. Influencers- People generally buy things when another person has tried and tested
them. Such people who have bought it first and tried the product become influencers.
When people hear about a great product that the influencer has tried out, it will
influence the person to buy it and test it out, as the recommendation has come from
a known person whom they trust.
4. Customer reviews- Many people look into customer reviews before buying a product.
This shows that customer reviews are an important factor in defining customer
perception. If the consumers see that a product has a lower number of stars it means
that the product does not have good customer reviews. The impression that it creates
on the consumer’s mind is negative.
5. Social Media- Social media has become the strongest medium to manage customer
perception. When a social media audience gets consistent communication regarding
a product, the users build an image of the product. Social media can be used to post
content, images, videos, etc. which helps to build the kind of perception intended by
the company.
Motivation and Consumer behaviour
Motivation is the reason, conscious or nonconscious, for behaving a particular way in a certain
situation. Brands are constantly in search of new ways to motivate consumers to engage with,
promote, and ultimately buy their products and services.
According to various theories, motivation may be rooted in the basic need to minimize
physical pain and maximize pleasure, or it may include specific needs such as eating and
resting, or a desired object, hobby, goal, state of being, ideal, or it may be attributed to less-
apparent reasons such as altruism, morality, or avoiding mortality.
The place of motivation in Buying Behaviour- Following diagram shows that a given instance
of buying behaviour is the result of three factors multi plied by each other, the ability to buy
something, the opportunity to buy it and the motivation i.e. the wish, the need or the desire
to do so.

Motivation Process: The motivational process is the steps that take to get motivated. It is a
process, that when followed produces incredible results.

Behavioural Models of Motivation- Maslow’s “Need Hierarchy Theory”

One of the most widely mentioned theories of motivation is the hierarchy of needs theory
put forth by psychologist Abraham Maslow. Maslow saw human needs in the form of a
hierarchy, ascending from the lowest to the highest, and he concluded that when one set of
needs is satisfied, this kind of need ceases to be a motivator. As per his theory this needs are:
1. Physiological needs: These are important needs for sustaining the human life. Food,
water, warmth, shelter, sleep, medicine and education are the basic physiological
needs which fall in the primary list of need satisfaction. Maslow was of an opinion that
until these needs were satisfied to a degree to maintain life, no other motivating
factors can work.
 2. Security or Safety needs: These are the needs to be free of physical danger and of the
fear of losing a job, property, food or shelter. It also includes protection against any
emotional harm.
3. Social needs: Since people are social beings, they need to belong and be accepted by
others. People try to satisfy their need for affection, acceptance and friendship.
4. Esteem needs: According to Maslow, once people begin to satisfy their need to
belong, they tend to want to be held in esteem both by themselves and by others. This
kind of need produces such satisfaction as power, prestige status and self-confidence.
It includes both internal esteem factors like self-respect, autonomy and achievements
and external esteem factors such as states, recognition and attention.
5. Need for self-actualization: Maslow regards this as the highest need in his hierarchy.
It is the drive to become what one is capable of becoming, it includes growth,
achieving one’s potential and self-fulfilment. It is to maximize one’s potential and to
accomplish something.
As each of these needs are substantially satisfied, the next need becomes dominant. From
the standpoint of motivation, the theory would say that although no need is ever fully
gratified, a substantially satisfied need no longer motivates.
Beliefs & Attitudes and its impact on Consumer Behaviour
Consumer attitudes are a composite of a consumer’s

 beliefs about
 feelings about
 and behavioural intentions toward some object- within the context of marketing,
usually a brand or retail store. These components are viewed together since they
are highly interdependent and together represent forces that influence how the
consumer will react to the object.
Consumer attitude may be defined as a feeling of favourableness or unfavourableness that
an individual has towards an object. As we, all know that an individual with a positive
attitude is more likely to buy a product and this results in the possibility of liking or disliking
a product. Consumer attitude basically comprises of beliefs towards, feelings towards and
behavioural intentions towards some objects.
Characteristics of Attitudes

 Attitudes have an “object” – A feeling or an evaluative reaction towards an object

 Attitudes are learned – Can ‘unlearn’
 Attitudes have behavioural, evaluative and affective components: Predisposition to
act – Overall evaluation – Positive or negative feelings
 Attitudes have consistency
 Attitudes occur within a situation
 Attitudes have direction, degree, strength and centrality: Positive or negative – Extent
of positive or negative feelings – Strength of feelings – Closeness to core cultural
values
Belief plays a vital role for consumers because, it can be either positive or negative towards
an object. For example, some may say tea is good and relieves tension, others may say too
much of tea is not good for health. Human beliefs are not accurate and can change according
to situations. A consumer may hold both positive beliefs toward an object (e.g., coffee tastes
good) as well as negative beliefs (e.g., coffee is easily spilled and stains papers). In addition,
some beliefs may be neutral (coffee is black), and some may be differing in valance depending
on the person or the situation (e.g., coffee is hot and stimulates good on a cold morning, but
not good on a hot summer evening when one wants to sleep). Since a consumer holds many
beliefs, it may often be difficult to get down to a “bottom line” overall belief about whether
an object such as McDonald’s is overall good or bad.
Attitude-Behaviour Consistency- Consumers often do not behave consistently with their
attitudes for several reasons:

 Ability- He or she may be unable to do so. Although junior high school student likes
pick-up trucks and would like to buy one, she may lack a driver’s license.
 Competing demands for resources- Although the above student would like to buy a
pickup truck on her sixteenth birthday, she would rather have a computer, and has
money for only one of the two.
 Social influence- A student thinks that smoking is really cool, but since his friends think
it’s disgusting, he does not smoke.
 Measurement problems- Measuring attitudes is difficult. In many situations,
consumers do not consciously set out to enumerate how positively or negatively they
feel about mopeds, and when a market researcher asks them about their beliefs about
mopeds, how important these beliefs are, and their evaluation of the performance of
mopeds with respect to these beliefs, consumers often do not give very reliable
answers. Thus, the consumers may act consistently with their true attitudes, which
were never uncovered because an erroneous measurement was made.
 Module 3 Sociological Influences on Consumer Behaviour
Culture & Sub-Culture – Its Impact on Consumer Behaviour
Culture is part of the external influences that impact the consumer. That is, culture represents
influences that are imposed on the consumer by other individuals.
The definition of culture offered in one textbook is “That complex whole which includes
knowledge, belief, art, morals, custom, and any other capabilities and habits acquired by man
person as a member of society
Characteristics of culture

 Culture is invented: It cannot be viewed as something that just "exists" and waiting to
be discovered.
 Culture is learned: It is not like biological features or instinctive. The process of
learning cultural values begins early in life largely through social interactions among
families, friends, in settings such as educational and religious institutions.
 Culture is shared by a fairly large group of human beings living in organised societies
and works as a linking force. Generally, common religion and language are the critical
elements that largely help people share values, customs, norms and experiences.
 Culture satisfies needs: Its components are passed down through generations
because they are gratifying. Culture offers order, direction and guides societies in all
phases of life by providing tried and trusted ways of meeting the physiological,
personal and social needs and due to these reasons people feel comfortable in doing
things in the customary way.
 Cultures are similar but different: There are certain similarities among all cultures and
many elements are present in all societies such as athletic sports, adornment of body,
cooking of food, a calendar, family, government, language, religious rituals, language,
dancing, music and many others elements. There are, though, very significant
variations in the nature of these elements in different societies and may exhibit
important differences in consumer behaviour.
 Culture is not static: Some cultures are relatively more resistant to change than others
but they do change gradually and continuously. These changes, however, may be very
slow in some cultures while others may be more dynamic and receptive to changes.
 Culture is comprehensive: This means that all parts must fit together in some logical
fashion. For example, bowing and a strong desire to avoid the loss of face are unified
in their manifestation of the importance of respect.
Cultural Factors- Cultural factors comprise of a set of values and ideologies of a particular
community or group of individuals. It is the culture of an individual that decides the way
he/she behaves. In simpler words, culture is nothing but the values of an individual. What an
individual learns from his parents and relatives as a child becomes his culture.
Cultural factors have a significant effect on an individual’s buying decision. Every individual
has different sets of habits, beliefs, and principles which he/she develops from his family
status and background. What they see from their childhood becomes their culture.
Subcultures
A subculture is a group of people within a larger culture, who are categorized specifically on
the basis of their shared customs and beliefs, including religions, geographic regions,
nationalities, etc. The different sub-cultures form several markets segments whose needs can
be carefully studied by the marketer, and the strategic marketing decisions can be taken
accordingly. “A subculture is a distinct cultural group that exists as an identifiable segment
within a larger, more complex society.” Schiffman.
This means that a subculture is a “related” group of people WITHIN an overarching culture,
which shares common values and behaviours. As a result, consumers within subcultures will
have a perceived “sense of identity” and follow an “expected” set of behaviours.
Because they have willed some unique behavioural characteristics, this means that
subcultures can be used for market segmentation purposes and become target markets, for
the purpose of developing a suitable marketing strategy.
While subcultures are smaller parts of the overall culture with their
own distinct behaviours and norms, but they also contribute to the
overall culture. This occurs as consumers are members of both the
overall culture and of one or more subcultures. Keep in mind that
while subcultures are subsets of the overall culture, they are not
separate to the overall culture.
Religious Subculture Example- In this simple example from Burger
King, the short copy in the ad “Ramadan Kareem” roughly
translates to have a generous Ramadan. This is supported by the
image of mostly eaten burger, which then presents as the crescent
moon.
Example- Religion (Christianity, Hindu, Muslim, Sikhism, Jainism, etc), Gender (Male/Female)
Major Sub-Cultural Categories and Their Influences on Consumption
1. Ethnic Subculture: The ethnic subculture is based on the nationality of one’s ancestors
who have migrated to a new country. It (nationality) may form a basis for a subculture
when the members of that nationality group identify with it and base at least some of
their behaviours on the norms of the national group. Ethnic subculture is usually found
in affluent countries where people migrate from other parts of the world with the
hope of a better life and live-li-hood. “When it comes to consumer behaviour, this
ancestral pride is manifested most strongly in the consumption of ethnic foods, in
travel to homeland, and in the purchase of numerous cultural artefacts.
2. Religious Subculture: An individual’s religious affiliation influences to a great extent
his consumption pattern. Those who belong to a particular religion may buy/not buy
and use/not use certain goods and services. Religious beliefs and rituals may dictate
the use of certain items and may discourage the consumption of others. Muslims for
example, buy and consume certain specific food items heavily during the month of
‘Ramadan’ and buy lot of gifts during the ‘Eid.
 3. Regional/Geographical Subculture: The way people lead their lifestyles may also vary
according to where they live or from which part of the country they have moved to
the other part of the country. On this basis, there could be two different types of
regional or geographic subculture. One could be based on geographic region of the
country and other could be based on urban, suburban or rural distinction. Regional
subcultures clearly influence many aspects of consumer behaviour. The consumption
process also is influenced by the urban, suburban, and rural distinctions, another type
of regional subculture. The urban, and suburban people, for example, prefer ready or
instant food, prefer eating out, and enjoy their leisure in a way different from rural
people.
4. Subculture Based on Age: Subcultures may also be based on the age differences of
people living in the same country and belonging to the same main culture. It is likely
that those who belong to the teen age group will behave quite differently than those
of middle age or elderly. Because the outlooks, experiences, attitudes and other
aspects vary among people of different age groups, their consumption patterns are
likely to vary. The youth market is a significant subculture for the marketer. It is
important to marketers not only because it is lucrative, but also because many
consumption patterns held throughout life are formed at this time.
5. Subculture Based on Gender: Difference Subculture may also be formed based on
gender difference, such as subculture of males and subculture of females. Since every
society emphasizes distinct, specific roles for men and women, they are likely to
behave differently. As their behaviours vary, they consume different types of products
and respond differently to marketing appeals. There are products which are equally
used by men and women. But, different appeals in the same product are needed for
these two groups. Since characteristics, attitudes, and needs vary between these two
groups they may be considered as two different market segments.
6. Occupational Subculture: People display different patterns of purchase behaviours
according to their occupational involvement. A defence officer, for example, will show
different purchase behaviour than someone belonging to the civilians’ society.
Doctors’ for example, may look at the nutritional aspect while buying a food item.
Marketers should recognize the differences in attitudes and behaviours among people
of different occupations and formulate marketing strategies accordingly to be
successful in each specific subculture.
7. Subculture Based on Social Class: Social class may also be used as a determinant of
sub cultural differences. There could be subculture of the well-offs, subculture of the
middle class, and subculture of the poverty. People belonging to the subculture of the
rich will display altogether different buying behaviour than those of middle class and
poor. Rich will be very selective in their purchases; people of the middle class will have
substantial control over their consumption decisions; poor on the other hand will be
very careful and cautious in taking their purchase decisions.
Promotion and communication by marketers based on culture in India- Case Studies
Due to the era of globalization where the economies are expanding and integrating with the
other economies and are exposed to universal marketing mix, there is a need to understand
the fact that promotion of a product is highly affected by the cultural patterns of different
countries. Culture provides a wireframe of an individual behaviour. It plays a major role in
influencing people and captivating them to pursue to follow a particular brand. Hence, it is
indispensable for the organizations to instil the cultural blend of the specific region, in order
to continue their momentum to get hold of the target end users. When a brand is introduced
in the market, it is very important that it analyses the taste and the flavours of the particular
region in order to adapt the same in their product. In India, there is a diversified environment,
where every region and area have its own set of colours. Since, this is the very basis of the
identity or origin of an individual, and is deep rooted in the lifestyle of people which is very
evident in the food habits, the fashion, morals or beliefs hence it gets crucial in terms of
sentimental values.
Elements of culture that has an impact on marketing strategies: Language, Technology and
material culture, Communal institutions, Education, Values and attitudes, Aesthetics,
Religion, Cultural Norms, Cultural Variability
Social Class and its Relevance on Consumer Behaviour
Social class can be defined as ‘The division of members of a society into a hierarchy of distinct
status classes, so that members of each class have relatively the same status and the members
of all other classes have either more or less status
Characteristics of Social Classes

 Persons within a given social class tend to behave more alike

 Is a natural form of segmentation?
 Provides a frame of reference for consumer behaviour
 Reflects a person’s relative social status
 Social class is hierarchical
 Social class is not measured by a single variable but is measured as a weighted function
of one’s occupation, income, wealth, education, status, prestige, etc.
 Social class is continuous rather than concrete, with individuals able to move into a
higher
 social class or drop into a lower class
Social Class Classification
1. Lower Class- Lower level occupation with no authority, less income, and no education
or minimum education, For example, labour class or clerks etc.
2. Middle Class- Medium Graduates, or postgraduates, executives’ managers of
companies with authority, drawing handsome salary of which certain amount can be
saved and invested. For example, executives or middle level, managers of companies.
3. Higher Class- High Authoritative person, drawing handsome salary, very often
professionally qualified, working in a very senior position or a person born into a rich
family, with a good background of education.
Impact of social class

 Provides a sense of identity

 Imposes a set of ‘normative’ behaviour
 Classes share values, possessions, customs and activities
 Marketing response to customers of different economic means
 Marketing to the low-income consumer
 Some marketers ambivalent as not perceived as long-term customers constitutes a
substantial group
 Target with value-oriented strategies
Limitations of Social Class

 Social class is more difficult to measure than income

 Many purchase behaviours are related more to income than social class
 Consumers often use expected social class for their consumption patterns
 Dual incomes have changed consumption patterns
 Individual dimensions of social class are sometimes better predictors of consumer
behaviour
Discussion on Many Facets of Changing Indian Consumer
As India continues to evolve as an economic power in the global scenario, Consumerism is
undergoing tremendous changes in the business arena. Liberalization, Globalization and
Increasing income and purchasing power among the people of India can be attributed as the
main reasons for the prevalent market trend and changing consumer behaviour in India.
Few changes in the Indian consumer market are:

 The consumers have become more aware, demanding and quality conscious.
 Liberalization and globalization have increased competition giving rise to consumer-
oriented products and marketing techniques.
 The overall costs are rising, prices are falling and profit margins are decreasing.
Some of the key factors that have contributed towards changing consumer behaviour in India
are:

 Rapid Urbanization leading to changes in the mindset of consumers- A typical

consumer in India had very limited choices. Consumer choice was restricted by low
income, supply shortages, non-availability of products, traditional buying methods,
low competition, limited choice, import restrictions. Rapid urbanization in the country
is brought a huge change in the mindset of Indian population.
 Increasing income levels- Increasing households Income have increased the spending
capabilities of people, making India one of the top countries in the Consumer market
segment. T.V. and internet which bought about a change in marketing techniques of
businesses. Marketers strive to differentiate their products and services through
pricing, packaging, promotions, customer service and branding. With radical
 revolution in information technology consumer satisfaction was given more
importance as consumer expectations had increased and all consumers had multiple
options to satisfy their respective needs.
 Shift in approach towards family systems- India has been witnessing a shift with
respect to family systems and family influence on consumer behaviour. Joint families
are decreasing in number giving way to nuclear families. The spend ratio has increased
by leaps and bounds owing to the increasing number of nuclear family systems.
Lifestyle amenities get more priority amidst the younger generation who opt for
nuclear family structures.
However, marketers must keep the following points in mind to effective adjust to the
changing consumer behaviour in India -

 It is essential to communicate with customers.

 All marketing efforts must be directed towards the customer.
 Products and services must be developed keeping in mind the needs and desires of
consumers.
 Efforts must be made to understand the mindset of the consumer for which a
feedback mechanism must be developed.
 All strategies must aim at providing customer satisfaction and delight.
 Module 4 Group influence on consumer behaviour
Reference Groups and its impact on consumer behaviour
A reference group is any person or group that serves as a point of comparison (or reference)
for an individual in the formation of either general or specific values, attitudes, or behaviour.
This basic concept provides a valuable perspective for understanding the impact of other
people on an individual’s consumption beliefs, attitudes, and behaviour. It also provides some
insight into methods that groups can be used to effect desired changes in consumer
behaviour.
A Reference group refers to a group of people you refer to, while making buying decisions.
It is a group that serves as a reference point for an individual for his/her beliefs, attitude
and behaviour. A group consists of two or more individuals who share a set of norms, values
or beliefs and have a defined relationship such that their behaviour is interdependent.
Reference Groups are basically small in size and differ from one individual to another.
Family members, Relative, Friends, Colleagues and other close acquaintance are usually
termed as Reference Group. Common organizations like Colleges, Schools, Police Academies
and membership firms also fall under Reference Group.
Characteristics of Reference Groups

 Reference Group consists of people who share interests in common People in

reference groups are sought for before any real purchase decision is made
 Opinions or recommendations made by people in Reference Groups have a huge
impact on the approach and behaviour of a potential consumer
 Reference Groups many a times acts as the factor responsible for creating aspirations
in other
 Reference Group tends to provide ideas pertaining to products that can be purchased
with reference to specific lifestyles
 Reference Groups play an important role in setting standards pertaining to purchase
decisions made from time to time
 Reference Groups become successful when homogeneity is found in the same
members of the group
 Some Reference Group that are common to public exert pressures related to
conformity to set rules
 All members associated with the group are expected to certain rules and regulations
set through mutual understanding
Types of Reference Groups
1. Aspirational Group: These are groups in which people are not members but desires
to become one on a future date. The aspiration becomes true once they are ready to
join the group at a future point of time. The influence exerted by such group members
on consumers make them join many groups every now and then.
 2. Primary and secondary groups: Primary groups are basically ones whose members
are closely knit. Family and relatives fall in this group. Secondary groups are not as
closely knit as primary groups. They may have membership in clubs where meetings
happen, but such meeting happen only once a while. The influence exerted by both
primary and secondary group members play a crucial role in decision making process
pertaining to purchase of goods and services.
3. Non-membership and Membership Groups: As the name suggests, Membership
Groups are the one that insist on people to become members to avail benefits offered
by them. Non-membership Groups are general groups in which one associate them
for keeping self-updated about certain aspects of their interests. Such group do not
insist on any type of membership. The influence exerted by membership group on
consumers and their purchase decision are many a times higher than that of non-
membership group.
4. Formal and Informal Groups: While formal groups re bound by set rules and
regulations, informal groups lack the same. The unstructured name of informal groups
tends to exert lesser influence over consumer preference than formal groups which
are highly structured. Due to its formal nature the influence on the group members
with respect to various aspects are generally high.
Factors that Affect Reference Groups Influence
1. Information and Experience: An individual who has first-hand experience with a
product or service, or can easily obtain full information about it, is less likely to be
influenced by the advice or example of others. On the other hand, a person who has
little or no first-hand experience with a product or service, and does not expect to
have access to objective information about, is more likely to seek out the advice or
example of others.
2. Credibility, Attractiveness, and Power of the Reference Group: A reference group,
which is perceived as credible, attractive, or powerful can induce consumer attitude
and behaviour change. When consumers are primarily concerned with the acceptance
or approval of others they like, with whom they identify, they are likely to adopt their
product, brand, or other behavioural characteristics. When consumers are primarily
concerned with the power that a person or group can exert over them, they might
choose products or services that confirm to the norms of that person or group in order
to avoid ridicule or punishment
3. Conspicuousness of the Product: The potential influence of a reference group varies
according to how visually or verbally conspicuous a product is to others. A visually
conspicuous product is one that can be seen and identified by others, and that will
stand out and be noticed. Even if a product is not visually conspicuous, it may be
verbally conspicuous it may be highly interesting or it may be easily described to
others.
4. Reference Group Impact on Product and Brand Choice: In some cases, and for some
products, reference groups may influence both a person’s product category and brand
(or type) choices. Such products are called product-plus, brand-plus items. In other
cases, reference groups influence only the product category decision. Such products
 are called product-plus, brand-minus items. In still other cases, reference groups
influence the brand (or type) decision. These products are called product-minus,
brand-Plus items.
5. Reference Groups and Consumer Conformity: Marketers are particularly interested
in the ability of reference groups to change consumer attitudes and behaviour.
Family Life Cycle and Purchasing Decisions
A family is a social group and all members of family influence and get influenced by each
other. Family bonds are stronger than bonds in any other group and all members of the
family form a single decision unit in case of purchase of products and services for common
consumption. Each member influences and gets influenced by a family member depending
upon his/her role, life cycle stage, and relationship dynamics in the family.
Role of family in buying decision/ Role of Family in Buying Decision Making in India
The family is the basic shopper and main decision making for purchase of various products for
consumption whether FMCG or consumer durables. However, in the family all members do
not have equal role to play in decision making.
Marketer rightly feels that it is necessary to know the views both of user and purchaser so
that they may get better picture about consumer views to promote sales by modifying their
products if necessary. Family comprises of:

 Parents
 Siblings
 Spouse
 Grandparents
 Relatives (Cousins/Aunts, Uncles etc)
In countries like India, where children are supposed to stay with their parents till the time
they get married, the influence of parents on an individual’s buying decisions cannot be
ignored. What he sees from his childhood becomes his habit or in other words lifestyle
Generally, husband or wife or both have dominant role in purchase decision. Further their
role and dominance are not equal for all the items. In case of items for cooking or kitchen wife
may have dominant role while for some other items like garments, consumer durables both
may have equal role or their decisions may be influenced by children. An individual would
always discuss with his/her partner before any major purchase. After marriage, individuals
generally do not like spending on himself/herself; rather they do it for their partner or family.
In case of products for son or daughter they have important role if not dominant role. The
relative influence of various family members depends upon what is being purchased, who are
its users and who are financiers. Accordingly, the influence of various members differs but it
is always permutation/combination of four players.
Different Roles of family in buying decision

 Influencer – The family member or family members who provide information about a
product or service to other family members.
 Gatekeeper – Family members who control the flow and direction of the contents of
the information.
 Decider – The one with the power to select the product whether individually or jointly.
 Buyer – The one who makes the actual purchase.
 Preparer – The family member or family members who prepare the product for family
consumption.
 User – The consumers of the product or service.
 Maintainer – The members who maintain the product for continued use and
satisfaction.
 Disposer – The member who disposes of the product.
A child learns how to enjoy candy by observing an older brother or sister; learns the use
and value of money by listening to and watching his or her parents. Decisions about a new
car, a vacation trip, or whether to go to a local or an out-of-town college are consumption
decisions usually made within the context of a family setting. The family commonly
provides the opportunity for product exposure and trial and imparts consumption values to
its members. As a major consumption unit, the family is also a prime target for the
marketing of many products and services.
Family Life Cycle and Buying Roles
A household is a basic consumption unit for most consumable goods. Major items such as
housing, automobiles, electrical appliances, washing machine, etc. are used more by
households than individuals. In a household, many items can be shared and possessed,
whereas individuals sometimes do not possess many such items individually.
Family types
1. Nuclear family: It consists of two adults of the opposite sex living in a socially approved
sex relationship with their children. It consists of husband, wife, and their offspring.
2. Joint family: It includes a nuclear family and other relatives such as parents of
husband/wife, aunts, uncles, and grandparents, also.
Family Life Cycle
1. Young Singles: Young singles may live alone, with their nuclear families, or with
friends, or they may co-habitat with partners in this stage. Although earnings tend to
be relatively low, these consumers usually don’t have many financial obligations and
don’t feel the need to save for their futures or retirement. Many of them find
themselves spending as much as they make on cars, furnishings for first residences
away from home, fashions, recreation, alcoholic beverages, food away from home,
vacations, and other products.
2. Newly Married Couples: Newly married couples without children are usually better
off financially than they were when they were single, since they often have two
incomes available to spend on one household. These families tend to spend a
substantial amount of their incomes on cars, clothing, vacations, and other leisure
activities. They also have the highest purchase rate and highest average purchases of
durable good (particularly furniture and appliances) and appear to be more
susceptible to advertising.
3. Full Nest I: With the arrival of the first child, parents begin to change their roles in the
family, and decide if one parent will stay to care for the child or if they will both work
and buy day-care services. In this stage, families are likely to move into their first
home; purchases furniture and furnishings for the child; and purchase new items such
as baby food, toys, sleds, and skates. These requirements reduce families’ ability to
save, and the husband and wife are often dissatisfied with their financial position.
4. Full Nest II: In this stage, the youngest child has reached school age, the employed
spouse’s income has improved. Consequently, the family’s financial position usually
improves, but the family finds itself consuming more and in larger quantities.
Consumption patterns continue to be heavily influenced by the children, since the
family tends to buy large sized packages of food and cleaning suppliers, bicycles, music
lessons, clothing, sports equipment, and a computer.
5. Full Nest III: As the family grows older and parents enter their min-40s, their financial
position usually continues to improve because the primary wage earner’s income
rises, the second wage earner is receiving a higher salary, and the children earn from
occasional and part time employment. The family typically replaces some worn pieces
of furniture, buys some luxury appliances, and spends money on education. Families
also spend more on computers in this stage, buying additional PCs for their older
children. Depending on where children go to college and how many are seeking higher
education, the financial position of the family may be tighter than other instances.
6. Married, No Kids: Couples who marry and do not have children are likely to have more
disposable income to spend on charities, travel, and entertainment than others in
their age range. Not only do they have fewer expenses, these couples are more likely
to be dual-wage earners, making it easier for them to retire earlier if they save
appropriately.
7. Older Singles: Single, age 40 or older, may be single again (ending married status
because of divorce or death of a spouse), or never married (because they prefer to
live independently or because they co-habitat with partners), either group of which
may or may not have children living in the household. This group now has more
available income to spend on travel and leisure but feels the pressure to save for the
future, since there is no second income on which to rely as they get older.
8. Empty Nest I: At this stage, the family is most satisfied with its financial position. The
children have left home and are financially independent allowing the family to save
more. In this stage discretionary income is spent on what the couple wants rather than
on what the children need. Therefore, they spend on home improvements, luxury
items, vacations, sports utility vehicles, food away from home, travel, and product for
their grandchildren.
 9. Empty Nest II: But this time, the income earners have retired, usually resulting in a
reduction in income and disposable income. Expenditures become health oriented,
centring on such items as medical appliances and health, and medicines. But many of
these families continue to be active and in good health, allowing them to spend time
traveling, exercising, and volunteering. Many continue working part time to
supplement their retirement and keep them socially involved.
10. Solitary Survivor: Solitary survivors be either employed or not employed. If the
surviving spouse has worked outside the home in the past, he or she usually continues
employment or goes back to work to live on earned income (rather than saving) and
remain socially active. Expenditures for clothing and food usually decline in this stage,
with income spent on health care, sickness care, travel entertainment, and services.
Those who are not employed are often on fixed incomes and may move in with friends
to share housing expenses and companionship
Functions of The Family

 Economic Well-Being
 Emotional Support
 Suitable Family Lifestyles
 Socialization of Children and Other Family Members
 Module 5 Consumer rights & Indian consumer
Consumerism concept and evolution
A consumer is one who consumes goods manufactured and sold by others or created (air,
water, natural resources) by nature and sold by others.
Consumerism is the organized form of efforts from different individuals, groups, governments
and various related organizations which helps to protect the consumer from unfair practices
and to safeguard their rights. The growth of consumerism has led to many organizations
improving their services to the customer.
In other words, consumerism refers to protest against business injustices and to efforts at
correcting these injustices. Consumerism as a protest against unfair business practices and
injustices, aims at removing or uprooting them or reducing them if not eliminating them
totally.
“Consumerism is an attempt to enhance the rights and powers by buyers in relation to
sellers” -L. Massie
Evolution of Consumerism
The major causes of consumerism in India have been identified as rising prices, poor product
performance and service quality, product shortages and deceptive advertising and inflation.
Government has been very responsive to the consumer needs through legislative actions.
Economic discontent has been generated out of spiralling inflation. Thus, it has become
necessary for the consumers to stand up for their rights through effective organisation in
order to redress the grievances. The word consumerism came into existence in the year 1960.
Importance of Consumerism

 Awakening and uniting consumers.

 Discouraging unfair trade practices.
 Protecting against exploitation.
 Awakening the government.
 Effective implementation of consumer protection laws.
 Providing complete and latest information.
 Discouraging anti-social activities
Features of Consumerism

 Protection of Rights − Consumerism helps in building business communi es and

institutions to protect their rights from unfair practices.
 Prevention of Malpractices − Consumerism prevents unfair prac ces within the
business community, such as hoarding, adulteration, black marketing, profiteering,
etc.
 Unity among Consumers − Consumerism aims at crea ng knowledge and harmony
among consumers and to take group measures on issues like consumer laws, supply
 of information about marketing malpractices, misleading and restrictive trade
practices.
 Enforcing Consumer Rights − Consumerism aims at applying the four basic rights of
consumers which are Right to Safety, right to be Informed, Right to Choose, and Right
to Redress.
Consumer Rights under the Consumer Protection Act, India
1. Right to Safety: According to this right the consumers have the right to be protected
against the marketing of goods and services which are hazardous to life and property,
this right is important for safe and secure life. This right includes concern for
consumer’s long-term interest as well as for their present requirement. Sometimes
the manufacturing defects in pressure cookers, gas cylinders and other electrical
appliances may cause loss to life, health and property of customers. This right to safety
protects the consumer from sale of such hazardous goods or services.
2. Right to Information: According to this right the consumer has the right to get
information about the quality, quantity, purity, standard and price of goods or service
so as to protect himself against the abusive and unfair practices. The producer must
supply all the relevant
3. Right of Choice: According to this right every consumer has the right to choose the
goods or services of his or her likings. The right to choose means an assurance of
availability, ability and access to a variety of products and services at competitive price
and competitive price means just or fair price. The producer or supplier or retailer
should not force the customer to buy a particular brand only. Consumer should be
free to choose the most suitable product from his point of view
4. Right to be Heard or Right to Representation: According to this right the consumer
has the right to represent him or to be heard or right to advocate his interest. In case
a consumer has been exploited or has any complaint against the product or service
then he has the right to be heard and be assured that his/her interest would receive
due consideration. This right includes the right to representation in the government
and in other policy making bodies.
5. Right to Seek Redressal: According to this right the consumer has the right to get
compensation or seek redressal against unfair trade practices or any other
exploitation. This right assures justice to consumer against exploitation. The right to
redressal includes compensation in the form of money or replacement of goods or
repair of defect in the goods as per the satisfaction of consumer. Various redressal
forums are set up by the government at national level and state level.
6. Right to Consumer Education: According to this right it is the right of consumer to
acquire the knowledge and skills to be informed to customers. It is easier for literate
consumers to know their rights and take actions but this right assures that illiterate
consumer can seek information about the existing acts and agencies are set up for
their protection. The government of India has included consumer education in the
school curriculum and in various university course.
Consumer Protection
Consumer protection is a form of social action which is designed to attain the well-being of
the society namely consumers. A consumer is said to be a king in a free market economy.
However, with growing competition, manufacturers and service providers may be tempted
to engage in unscrupulous, exploitative and unfair trade practices like defective and unsafe
products, adulteration, false and misleading advertising, hoarding, black-marketing etc in an
attempt to expand their market share in a competitive environment. As a consequence,
consumers may have to buy unsafe products, may have to suffer from various health
disorders, due to adulteration; may have to pay higher price due to hoarding and have to get
duped by misleading advertisement. In this situation there is a need to provide adequate
protection to consumers against all such malpractices of sellers/vendors.
Both voluntary measures and law serve as tools to protect consumer’s interest. Self-
regulation, Consumer Associations, Alert consumer, and State Support are some of the means
of consumer protection.
The Consumer Protection Act 1986 (COPRA)
Sensing the pressure mounting from various consumer protection groups and consumers
themselves, the Central Government enacted a comprehensive law called the Consumer
Protection Act in 1986. This Act came into force with effect from 15.04.1987. This Act was
further amended in 1993. The Act is referred in short as ‘COPRA’.
The Consumer Protection Act 1986 seeks to protect and promote the interests of
consumers. The act provides safeguards to consumers against defective goods, deficient
services, unfair trade practices, and other forms of their exploitation. The object of the act
is to provide for the better protection of the interests of the consumer courts for the
settlement of consumer’s disputes and all matters connected there with. The Consumer
Protection Act is of great importance. It is the latest to be adopted. It is applicable to public
sector, financial, and cooperative enterprises. Recently even medical services have been
brought under its scope. The Act shall apply to all goods and services across board.
Objectives of the Consumer Protection Act 1986

 Protection of consumers against marketing of goods which are hazardous and

dangerous to life and property of consumers.
 Providing correct and complete information about quality, quantity, purity, price and
standard of goods purchased by consumers.
 Protecting consumers from unfair trade practices of traders.
 Empowering consumers to seek redressal against exploitation
 Educating the consumer of their rights and duties
 Ensuring better standard of living for consumers by providing them with quality
products at fair price.
 Putting in place right mechanism like councils and other authorities to enable the
consumers to enforce their rights.
Recent Trends in Consumer Rights Protection
On July 20th, 2020, the new Consumer Protection Act, 2019 came into force in India, replacing
the previous enactment of 1986. The new Act overhauls the administration and settlement
of consumer disputes in India. It provides for strict penalties, including jail terms for
adulteration and for misleading advertisements. More importantly, it now prescribes rules
for the sale of goods through e-commerce. Here are some of the highlights:

 An aggrieved consumer can file complaints about a defect in goods or deficiency in

services from where she lives, instead of the place of business or residence of the
seller or service provider. The new law provides for e-filing of consumer complaint as
well.
 No fees are required to be paid if the claim is within Rupees 5 lakhs (approximately
3500 USD).
 A consumer can conduct her own case via video conferencing. Engaging a lawyer is
optional.
 A concept of product liability has been introduced by the new law, thereby allowing
aggrieved consumers to claim significant compensation as a relief due to the
negligence of the manufacturer or service provider
 Misleading advertisements may be punished with imprisonment. Celebrities
endorsing a product may not be punished but can be barred from endorsing if the
advertisement is misleading.
Living Standard Measures (LSM)
The Living Standards Measure (LSM) marketing segmentation research tool is used in South
Africa to segment the population. The tool divides the population into LSM groups where ten
is the highest level for those with the most wealth and one is the lowest level of the poorest
population who own no measurable wealth.
The LSM tool groups people according to a standard of living wealth measure, rather than
income, using criteria such as degree of urbanization and ownership of cars and major
appliances or assets, as well as access to basic services such as water and electricity as
indicators.

 LSM 1 – 4 – least access to wealth: Primary to some high school completed, Mostly
Urban or Rural, Household is traditional hut to matchbox house or shack, Salary ranges
from R1,363 to R3,138 per month, Medias like TV with minimal channels, and minimal
outdoor life.
 LSM 5 – 7: High school and/or some higher education, Mostly Urban or Rural (i.e., not
suburban), Salary ranges from R4,165 to R11,263 per month, Medias like TV, all print,
daily or weekly newspapers, access to internet, low income bank transactions, and
outdoor life, ownership of number of durables plus cell phone etc.
 Level 7: full access to services, increased ownership of durables plus motor vehicle,
and participation in all economic activities.
  LSM 8 – 10 – most access to wealth: High school and higher schooling, Mostly Urban,
Salary ranges from R13,210 to R32,521 per month, Medias like Wide range of
commercial and community radio, wide range of TV channels, daily or weekly
newspapers, magazines, accessed internet, cinema and outdoor life, Full access to
services and bank accounts, full ownership of durables such as cars, furniture, and
appliances; participation in any leisure activities of interest and access to all economic
activities.
Characteristics of BOP Consumers in India
In economics term, Bottom of Pyramid markets refers to the poorest two-thirds of the human
economic Pyramid. It consists of more than four billion people in the world. These markets
are often invisible and unorganized.
As can be seen, the bottom of the pyramid market is exactly present at the bottom. The
emerging markets are the ones which are emerging from the bottom of pyramids and
transitioning to the mature markets. The mature markets, on the other hand, has reached a
state of equilibrium.
Most of the developing countries are emerging BOP markets. Asia and the Middle East
constitute the largest BOP market globally. Bottom of the pyramid market would be any
market where an individual income lies below $1500. It consists of more than four billion
people in the world. The market is characterized by the fact that people want maximum utility
and highly price-sensitive. Bottom of the pyramid marketing involves meeting the unique
needs of their constituent population.
Characteristics of the Bottom of the Pyramid Market

 Unmet Needs: The people in this market segment are also varied because some of
their needs are similar to the other market segment, yet some needs are unique to
them. For example, they have everyday needs like an efficient transportation system,
water, electricity access, health services etc. But their needs for electronics, apparels,
entertainment may vary from the others. There is a higher chance that people in the
BOP are willing to pay for it, but they may not have access to the same.
 Subsistence Livelihood: It is defined as the minimum resources one needs for their
basic survival needs. The people in the BOP are dependent on informal sectors and as
is highly volatile are living hand-to-mouth.
 Most of the products generated in this market segment like agriculture goods,
handicrafts, labour, etc. are unable to fetch a fair price and are highly prone to
exploitation by the middlemen.
 Poverty Penalty: can be explained as the poor segment's excessive price against the
price paid by the rich for the same goods and services.