CHAPTER 3

CONSUMER AND BUSINESS MARKETS

3-1. Customer Buyer Behavior
Consumer buyer behavior refers to the buying behavior of final consumer- individuals and
households who buy goods and services for personal consumption. All of these final consumers
make up the consumer market. Consumers or buyers behaviors involves the activities of people
engaged when selecting, purchasing, using and disposing products, so as to satisfy the need and
desire.
Customer behavior is that subset of human behavior that is concerned with decisions and acts of
individuals in purchasing and using products. Consumer behavior can be defined as, "the
activities and actions of people and organization that purchase and use economic goods and
service, including the influence on these activities and actions". "It is the process where by
individuals decide whether, what, when, where, how and from whom to purchase goods and
services"
3-2. Characteristics Affecting Consumer Behavior
Consumer purchases are influenced strongly by cultural, social, personal, and psychological
characteristics.
A. CULTURAL FACTORS
These factors exert the broadest and deepest influence on consumer behavior. They include
Culture: Culture is a set of symbols and artifacts created by a society and handed down from
generation to generation as determinants and regulators of human behavior. The symbols may be
intangible (attitudes, beliefs, values, language) or tangible (tools, housing, products, works of
art). Thus, everybody gets hungry, but what, when and how people eat vary among cultures. For
example, in the Ukraine, raw pig fat is considered a delicacy. Similarly in Ethiopia raw beef
meat is delicacy. Marketing executives must be alert to the changes in cultural trends so that they
can adjust their planning to be in step with, or even a little ahead of, the times.
Sub Culture: Sub cultures are groups in a culture that exhibit characteristic behavior patterns
sufficient to distinguish them from other groups with in the same culture. The behavior patterns
that distinguish subcultures are based on the factors such as race, nationality, religion, and urban-
rural identification.
A subculture takes on importance in marketing if it constitutes significant part of the population
and specific purchasing patterns can be traced to it. Many sub cultures make up important market
segments, and marketers often design products and marketing programs tailored to their needs.
Social class: Social class is a ranking within a society determined by the members of the
society. Social classes exist in virtually all societies, and people's buying behavior is often
strongly influenced by the class to which they belong or to which they aspire. Marketers are
interested in social class because people within a given social class tend to exhibit similar buying
behavior.
B. SOCIAL FACTORS
A consumer's behavior also is influenced by social factors, such as the consumer's small groups,
family, and social roles and status.
Reference Groups: A person's behavior is influenced by many small groups. Reference group is
a relatively small social group to which a person belongs or aspires to belong and that provide
guidance to acceptable beliefs, values, attitudes and behavior.
Types of Reference groups
1. Membership Groups: Groups that have a direct influence and to which person belongs are
called membership groups.
a. Primary Groups: These are groups who have a regular but informal interaction such as
family, neighbors, friends and co-workers.
b. Secondary Groups: These groups are more formal and have less regular interaction.
These include organizations like religious groups, professional associations, and trade
unions.
2. Aspirational Groups: These are groups to which a person like to belong but is not the
member of that group.
3. Dissociative Groups: A group whose values are rejected by the individual.
The importance of reference group influence varies among products and brands. Marketers of
products and brands where group influence is strong must determine how to reach and influence
the opinion leaders. Group influence is strong for products that are visible to others whom the
buyer respects.
Family: A family is a group of two or more people related by blood, marriage, or adoption living
to gather in a household. During their lives many people will belong to at least two families the
one in to which they are born and the one they form at marriage. The birth family primarily
determination core values and attitudes. The marriage family, in contrast, has a more direct
influence on a specific purchases. For example, family size is important in the purchase of a car.
Marketers are interested in the roles and influence of the husband, wife, and children on the
purchases of different products and services.
Roles and status: A person participates in many groups throughout the life. The person's
position in each group can be defined in terms of roles and status. A role consists of activities
that a person is expected to perform according to the persons around him or her. Each role carries
the status reflecting the esteem given to it by society. People often choose products that show
their status in society.
C. PERSONAL FACTORS
A buyer's decisions are also influenced by personal factors such as age and life cycle stage,
occupation, economic circumstances, life style and personality and self-concept.
Age and Life cycle Stage: People buy different goods and services over their lifetime.
Consumption is also shaped by the stage of the family life-cycle-the stages through which
families might pass as they mature over time. Table B 2 lists the stages of family life cycle.
Marketers often define their target markets in terms of life-cycle stage and develop appropriate
products and marketing plans for each stage.
Occupation: A person's buying behavioral pattern is also influenced by his occupation. For
example, a company president will by expensive suits, credit card membership etc. the marketer
tries to find out the different occupational group of the segment and draft the plan accordingly.
Economic Determinants: Economic considerations are very powerful and influence the
consumer behavior to a great extent. The human beings want to maximize their satisfaction
through their limited resources. Economic model is based on the assumption that the price of the
product affect its demand. The important economic factors are income and liquid assets. Income
is the most powerful economic factor to influence consumer behavior because it gives him
purchasing power from the marketer's point of view. Here the disposable income is important
than the gross income. Out of disposable income, a major share is spent to meet the basic needs
like food, shelter, education etc.
Life Style: People coming from some sub culture, social class and occupation may lead quite
different life styles. A person's life style is the person's pattern of living in the world as expressed
in the person's activities, interests and opinions. Life style portrays the person's interaction with
the environment. Life style show a person's way of being and acting in the world. Marketer will
search for relationships between their products and life style groups.
Personality and self-concept: Personality is defined broadly as an individual's pattern of traits
that influence behavioral responses. For example, we speak of people as being self confident,
domineering, introverted, flexible, and/or friendly, and as being influenced (but not controlled)
by these personality traits in their responses to situations.
D. PSYCHOLOGICAL FACTORS
A person's buying choices are further influenced by four major psychological facts: motivation,
perception, learning, and beliefs and attitudes.
Motivation: Psychology can help in understanding how the consumer learnt about a brand and
how his memory influences his buying habits. Abraham Maslow's model (Need hierarchy
Theory) explains the various needs. The human factor always moves towards satisfying certain
basic needs as explained by Maslow. Therefore, a study of why and how a consumer is
motivated to buy certain products and services, helps us in understanding the consumer behavior.
Perception: Since behavior can take many forms, a person gathers information from the
environment to help in making a choice. Perception is the process of receiving, organizing, and
assigning meaning to information or stimuli detected by our five senses. It is in this way that we
interpret or give meaning to the world around us. Perception plays a major role in the stage of the
buying-decision process where alternatives are identified.
What we perceive-the meaning we give to something depends, on the object and our experiences.
Every day we come in contact with an enormous number of marketing stimuli. However, with
the aid of selective perception techniques we are able to deal with the commercial environment.
Why do people perceive the same situation differently? All of us learn by the flow of information
through our five senses: sight, hearing, smell, touch and taste. However, each of us receives,
organizes, and interprets this sensory information in an individual way. Perception is the process
by which people select, organize and interpret information to form meaningful picture of the
world.
Learning: Learning involves changes in behavior resulting from observation and experience
learning theorists say that most human behavior is learned. Learning occurs through the interplay
of drives, stimuli, cues, responses and reinforcement. A drive is a strong internal stimulus that
calls for action. Cues are minor stimuli that determine when, where, and how the person
responds.
The practical significant of learning Theory for marketers is that they can build up demand for a
product by associating it with strong drives, using motivating cues, and providing positive
reinforcement.
Beliefs and Attitudes: Through doing and learning, people acquire beliefs and attitudes. These,
in turn, influence their buying behavior. A belief is a descriptive thought that a person has about
something. These beliefs may be based on real knowledge, opinion or faith, and may or may not
carry an emotional charge. Marketers are interested in the beliefs that people formulate about
specific products and services, because these beliefs make up product and brand images that
affect buying behavior. If some of the beliefs are wrong and prevent purchase, the marketer will
want to launch a campaign to correct them.
A consumer's attitudes do not always predict purchase behavior. A person may hold very
favorable attitudes towards a product but not by it because of some inhabiting factor. Changing
strongly held attitudes can be difficult or impossible.
3-3. Types of Buying Decision Behavior
There are four types of consumer buying behavior based on the degree of buyer involvement and
the degree of differences among brands.
 Complex Buying Behavior: Consumers undertake complex buying behavior when they
are highly involved in a purchase and perceive significant brand differences. Consumers
may be involved when the product is expensive, risky, purchase infrequently, and highly
self-expressive (e.g. Car). Typically the consumer has to learn about the product
 Dissonance-reducing Buying Behavior: It occurs when consumers are highly involved
with an expensive, infrequent, or risky purchase, but see little difference among brands.
For example a consumer buying carpeting may face a high-involvement decision because
carpeting is expensive and self-expressive. Yet buyers may consider most carpet brands
in a given price range to be the same. In this case, because perceived brand differences
are not large, buyers may shop around to learn what is available, but buy relatively
quickly. They may respond primarily to a good price or purchase convenience. After the
purchase, consumer might experience post-purchase dissonance (after sale discomfort)
when they notice certain disadvantage of the purchased carpet or hear favorable things
about brands not purchased. To encounter such dissonance, marketer’s after-sale
communications should provide evidence and support to help consumers feel good about
their brand choices.
 Habitual Buying Behavior: It occurs under conditions of low involvement and little
significant brand difference. For example, take Salt. Consumers have little involvement
in this product category- they simply go the store and reach a brand. Consumers appear
to have low involvement with most low cost, frequently purchased products.
 Variety-seeking Buying Behavior: Consumers undertake variety-seeking buying
behavior in situations characterized by low consumer involvement, but significant
 perceived brand differences. In such cases, brand switching occurs for the sake of variety
rather than because of dissatisfaction.
3-4. THE BUYING-DECISION PROCESS
Consumer buying process is an important process which has a vital role in consumer behavior
study. This is the first essential step to understand consumer behavior. The buying process is the
process of decision-making leading to purchase function. It represents a problem-solving
approach. The mechanism is the same as in any processing activity in which we supply some
input followed by processing activity and finally the outcome comes before us.
Stages of Buying Process
The buying process is composed of a number of stages and is influenced by an individual's
psychological framework composed of the individual's personality, motivation, perception and
attitudes. The buyer or consumer takes his buying decision for some commodities immediately
without much consideration such as items of daily use while for some other commodities mainly
luxury or durable items, he thinks much before taking a decision to purchase it. Some times he
consults others. Generally the purchaser passes through five distinct stages in taking a decision
for purchasing a particular commodity.
1) Need Recognition
A buying process starts with need arousal. A need can be activated through external and internal
stimuli. The basic needs of a common man arise to a particular level and become a derive and he
knows from his previous experience how to satisfy these needs like hunger, thirst, sex etc. This is
a case of internal stimulus. A need can also be aroused by an external stimulus such as the sight
of new product in a shop while purchasing other usual products.
2) Product Awareness/information search
After need arousal, the consumer tries to solve it and gathers the sources and information about
the product. Depending upon the intensity of need, it produces two states of an individual. The
first state is called heightened attention when the consumer becomes more receptive to the
information regarding the item he needs. He becomes alert to information bearing on the need
and its gratification. If a consumer needs to purchase a television, he will pay more attention to
TV advertisements. He keeps remembering the remarks made by friends and associates about
TVs. Of need is more intense, the individual enters a state of active information search and he
tries to collect more information about the product, its key attributes, qualities of various brands
and about the outlets where they are available. There are four consumer information sources.
Personal sources (family, friends, neighbors etc.)
i) Commercial sources (Advertisements, salesmen, dealers etc.)
ii) Public sources (mass media, consumer rating organizations)
iii) Experiential sources (handling, examining, using the product)
3. Evaluation of Alternatives
One interest in a product(s) is aroused, a consumer enters the subsequent stage of evaluation and
intention. The evaluation stage represents the stage of mental trial of the product. During this
stage, the consumer assigns relative value weights to different products/brand on the basis of
accumulated stock of product information and draws conclusions about their relative
satisfaction-giving potential value. After this evaluation, the consumer develops the intention
either to purchase or reject the product/brand. The final purchase will, however, depend on the
strength of the positive-intention that is the intention to buy. For example, the housewife, after
arousal of her interest in washing machines, she will compare the stock of information she has
accumulated about the different washing machines in the market and then evaluate the value of
each one of them before she develops the intention to buy. However, if she feels that washer
man/woman would serve the need then she may altogether reject the idea of buying any washing
machine.
4. Purchase Decisions
In the evaluation stage, the consumer ranks brands and forms purchase intentions. Generally, the
consumer's purchase decision will be to buy the most preferred brand, but two factors can come
between the purchase intention and the purchase decision. The first factor is the attitude of
others. The second factor is unexpected situational factors. The consumer may form a purchase
intention based on factors such as expected income, expected price and expected product
benefits. However, unexpected events may change the purchase intention. Thus, preferences and
even purchase intentions do not always result in actual purchase choice.
5. Post Purchase Behavior
The marketer's job does not end when the product is bought. After purchasing the product, the
consumer will be satisfied or dissatisfied and will engage in Post purchase behavior of interest to
the marketer what determines whether the buyer is satisfied or dissatisfied with a purchase? The
answer lies in the relationship between the consumer's expectations and the product's perceived
performance. If the product falls short of expectations, the consumer is disappointed; if it meets
expectations, the consumer is satisfied; if it exceeds expectation, the consumer is delighted.

Almost all major purchases result in cognitive dissonance, or discomfort caused by post purchase
conflict. After the purchase, consumers are satisfied with the benefits of the chosen brand and are
glad to avoid the draw backs of the brand not bought. However, every purchase involves
compromise consumers feel uneasy about acquiring the drawbacks of the chosen brand and
about losing the benefits of the brand not purchased. Thus, consumers feel at least some post
purchase dissonance for every purchase.