Consumer Behaviour

Introduction to Consumer Behaviour

Module - 1
Introduction to Consumer
Behaviour

Understanding consumer behavior is vital for

businesses to succeed. It involves analyzing how

people make decisions to purchase products or

services and identifying factors that influence

these decisions.
Consumer Behaviour

Consumer behavior refers to

the study which analyzes
how consumers make
decisions about their wants,
needs, buying or act with
respect to a product, service
or organization
3
 Consumer Behavior

◦ Consumer behavior 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 behavioral responses. Understanding

consumer behavior is crucial for businesses to create effective marketing

strategies that can influence consumers’ decision-making processes.

Consumer Behaviour

• Consumer behavior can be defined as the study of psychological,

physical and social actions when individuals buy, use and dispose of

products, services, ideas, and practices.

Consumer Behaviour

The study of individuals, groups, or organizations and the

processes they use to select, secure, use, and dispose of

products, ser vices, experiences, or ideas to satisfy their

needs and wants.

IMPORTANCE OF CONSUMER BEHAVIOR

 It is very critical to understand the behavior of consumers to analyze the

behavior of potential consumers towards a new product or service.

 It is also very useful for companies to identify opportunities which have

not yet been met.

Unlocking the secrets of consumer
behavior is key to business success.
By diving deep into what motivates
people to buy, we can identify the
hidden factors that drive purchasing
decisions and craft strategies to win
over our target audience.
 The Psychology of Consumer Behavior

Emotion Color Cognitive Bias Social Proof

Consumers purchase products The color of packaging can Consumers often look to others
Our brains prefer familiar
and services based on how they influence buying decisions. Red for validation before making a
things, which means consumers
feel about them, not just based packaging can stimulate purchase. Online reviews can
may choose products they
on rational thought. appetite, while green and blue be a powerful tool in driving
recognize over new, unknown
packaging may imply eco- consumer behavior.
products.
friendliness and calmness,
respectively.
Importance of Understanding Consumer Behavior
Significance of consumer behavior for marketers:

• Enables identification of customer needs and wants

• Facilitates effective market segmentation and targeting
• Guides product development and innovation
• Influences pricing strategies and decisions
• Drives effective promotional and communication strategies
• Aids in building strong customer relationships and loyalty
Factors Influencing Consumer Behavior
Internal factors that shape consumer behavior:

Personal Factors
Phycological
Factors
Demographics, age,
Perception, Motivation, Gender, income,
Learning, Beliefs, Occupation, Education,
Attitudes, and Emotions Lifestyle, Personality and
Values
Factors Influencing Consumer Behavior
External factors that influence consumer behavior:

Situational
Social factors Factors

Physical environment,
Family, reference Time, and Urgency.
groups, social class,
culture, and subculture.
The Consumer Decision-Making Process
T h e f i v e s t a g e s o f t h e co n s u m e r d e c i s i o n - m a k i n g p r o ce s s :

1. Need recognition: Recognizing a problem or need that requires a solution.

2. Information search: Gathering information about available options and alternatives.

3. Evaluation of alternatives: Assessing and comparing the benefits and attributes of different options.

4. Purchase decision: Making a final decision and selecting a specific product or brand.

5. Post-purchase behavior: Evaluating the chosen product's performance and satisfaction level.
Types of Buying Behavior
The four types of consumer buying behavior:

Habitual Variety-
Dissonance- seeking
Complex reducing buying
behavior buying
buying buying behavior
behavior behavior
Complex buying behaviour:

 Complex buying behaviour occurs when the consumer is highly involved with

the purchase and when there are significant differences between brands.

 Such tasks are complex because the risk is high (significant financial

commitment), and the large differences between brands or products require

gathering a substantial amount of information prior to purchase.

Complex buying behaviour:

 Marketers who wish to influence this buying task must help the consumer

process the information as readily as possible.

 This may include informing the consumer about the product category and its

important attributes, providing detailed information about product benefits,

and motivating sales personnel to influence final brand choice.

Complex buying behaviour:

 This behaviour can be associated with the purchase of a new home or a

personal computer.

 For instance, realtors’ Web sites typically offer extensive photographs and
videos and full descriptions of each available home. And a computer sales
representative is likely to spend time providing information to customers who
have questions.
Habitual Buying Behaviour

• Habitual buying behaviour is a pattern of buying that repeats itself

over time. It is the pattern of spending that people find themselves

drawn to and which they can’t seem to break from.

Importance of Habitual Buying

 Habitual buying consumer behaviour may also be due to fact that customer finds the product

best fit for his use and keeps on buying it without looking for alternative. And it doesn’t mean

that there is less number of choices in front of customer and he has to choose it anyhow. The

customer repeatedly chooses the product without giving much thought as the product does not

have much difference with others. Repeated purchase is known as habit buying. And the

products they purchase are also cheap and there is no hazard in buying it.
Habitual Buying Behaviour - Examples

 One of the simplest example of habitual buying is purchase of goods of daily

needs. The purchase of milk or bread in the nearby store is the example of

habitual buying behavior.

 Despite several brands of beverages or cola items, people develop preferences

of a few brands or flavours. This is another example of habitual buying

Habitual Buying Behaviour - Examples

 Companies put in a lot of effort in ensuring that habitual buying

behaviour of a customer is created. This habit formation is done using

continuous efforts in delivering customer needs, improving relations

and thereby enhancing customer loyalty.

Dissonance Reducing Buying Behaviour

 In this situation, the involvement of buyers will be very high but the perceived

differences between the brands will be very low. Dissonance is the discrepancy

between what you want and what you actually do. It is a type of consumer

behaviour in which the consumer feels more satisfied with the purchase they

have made after comparing it to what they originally intended to buy.

Dissonance Reducing Buying Behaviour

 After the purchase, the consumer may feel post-purchase dissonance. Post-

purchase dissonance is the feeling of dissatisfaction with a product or

service after the purchase. It is often caused by the customer not

understanding what they are getting for their money, or if it’s worth it in

general.
Variety Seeking Buying Behaviour

 Variety-seeking buying behaviour is a type of consumer behaviour in which

consumers tend to buy more items when they see a wider variety of products. It is

characterized by low involvement and low brand loyalty from the consumer. The idea

behind this behavioural approach is that consumers want to buy different products

or services on different occasions with each purchase being relatively small.

Variety Seeking Buying Behaviour

 This approach does not focus on price alone but also considers other

factors such as product attributes, convenience, location, etc. This makes

it easy for consumers to choose which product they want without feeling

pressured into purchasing more than one item at a time.

Variety Seeking Buying Behaviour

 Many food manufacturers thrive off of this type of consumer behaviour to help

them make more profitable commercial decisions because the manufacture only

needs to choose between a large or small variety and each product can be priced

at different levels. This leads to increased sales and profits for the business

because it means that the customers are willing to pay more for different products.
The Consumer Decision-Making Process

Awareness Interest Desire

The consumer begins to develop a
The consumer becomes aware The consumer becomes
desire for the product or service
of a product or service and interested in the product or
and may start looking for deals or
considers purchasing it. service and may start
discounts.
researching it online.

Action
The consumer makes the decision to purchase the product or service and takes action to buy it.
The Role of Culture in Consumer Behavior

1 Values and Beliefs

Culture shapes the values and beliefs of consumers, which impacts their buying behavior. For instance, some cultures value
individualism, while others emphasize collectivism.

2 Language and Symbols

Marketers must be aware of language and cultural symbols to ensure that their marketing messages are accurately conveyed and do
not offend customers of different cultures.

3 Fashion and Trends

Cultural trends and fashion have a significant impact on consumer behavior. For example, cultural trends have affected the use of
certain colors or styles in clothing, jewelry, and decor items.
Why is consumer behavior so important?
 Businesses invest a lot of time and resources in their product or service.
Hence, it is absolutely essential that their offerings cater to the needs of their
customers. Or they will incur huge amounts of losses.

 So, in order to make sure that the products, as well as the brand, are well-
accepted by the consumers, it is important to first know what consumers
want and are likely to buy.
Better marketing and communications

 As living standards, trends, and technology keep changing, consumers’

choices also keep varying. Understanding how these factors affect customers’

buying habits helps organizations design their messaging accordingly. Thus,

having insights into consumers’ purchase behavior can help marketers in

meeting their objectives

Improve customer retention

 It is far more beneficial to retain an existing customer than to gain new

customers. It’s easier to sell new products and services to your existing

customers than to find new ones.

Improve customer retention

 Businesses who are able to retain their customers and create strong

relationships manage to create strong new brand loyalty for their businesses.

Customer loyalty can prove to be a promoter of your business and spread

positive word of mouth. Satisfied customers share their happy experiences

with their friends and family.

Increase customer loyalty

 Understanding customer behavior helps in finding out ways to boost

customer loyalty, which in turn, will lead to higher sales and a strong brand.

Analyzing trends in sales can aid in offering discounts as well as suggesting

the best products and services to them.

Better plan inventory

 Researching customer attitudes helps companies plan inventory and stock

raw materials. In the case of a service-based business, the management team

can better plan their human resources. If businesses see a trend in demand

for specific products, they are likely to send more purchase orders to their

suppliers. Consumer behavior data can help them to balance demand and

supply.
Increase sales

 A company always aims to satisfy specific market niches. Even if the

company operates in different sectors, it should target potential buyers in

each segment. If you know your customers well, you can have better

conversations with a high probability of closing the deal.

Increase sales

 Knowing who you are selling to makes it possible to clearly define your

objectives in the market. Learning more about consumer behaviors helps to

define the main customers that come directly to the company. Your inventory

should be stocked with products that meet the requirements of your

potential buyers.
Research competition
 Studying consumer buying behavior helps in understanding the competitive

market. You can plan on how to position your products and services to offer

competitive advantages. Find out answers to questions like:

 Is the customer already using a competitor brand?

 What drives a consumer to buy from your competitor?

 Are potential customers happy with the competitor brands?

 What are the gaps between your products and that of competitors?
 Marketing Strategies
Segmentation and Targeting

Marketers divide the market into segments based on

customer behavior, preferences, and attitudes, which allows
them to tailor marketing messages to specific subsets of
customers.

1 2 3

Persuasion and Influence Value Proposition

Marketers attempt to persuade and influence A value proposition is the promise a company makes to
consumers by using methods such as celebrity deliver a unique benefit or advantage to a customer. It
endorsements, emotional appeals, and scarcity tactics. is a key element in the marketing strategy.
The Impact of Technology on Consumer Behavior

Online Shopping Social Media Advertising Augmented Reality

The ability to shop online has made it easier Advertising on social media platforms allows Augmented reality allows consumers to
and more convenient for consumers to find businesses to target specific audiences, visualize how a product might look or work in
and purchase products. making it easier to reach potential customers. their environment, enhancing their purchasing
experience.
Consumer Decision-Making Models

The Consumer
The Engel-Kollat-
Decision Journey (CDJ)
Blackwell (EKB) Model
Model

Nicosa model Howard – Seth Model

 Market
segmentation
and targeting

The Role of
Customer
Experience
&
Consumer Behavior
Product
Pricing Satisfaction development
strategies & in
innovation
Marketing Strategy

Market
analysis and
strategy
 Researching Consumer behaviour
Marketers must link the price to the real and perceived value of the product, but they also must take into
account supply costs, seasonal discounts, and prices used by competitors.

Surveys Focus groups Observation Data analysis

and and interviews and and market
Questionnaires ethnography research
Ethical Considerations in Consumer Behavior

• Respecting consumer privacy and data protection.

• Avoiding deceptive advertising and manipulative tactics.

• Providing accurate and transparent information

about products and services.
• Promoting fair pricing practices.
 Ethical Considerations in Consumer Behavior
Marketers must link the price to the real and perceived value of the product, but they also must take into
account supply costs, seasonal discounts, and prices used by competitors.

Providing accurate Avoiding Respecting

and transparent deceptive consumer
information about advertising & privacy & Promoting fair
products and manipulative data pricing
services. protection practices.
tactics.
Conclusion and Key Takeaways
1 Understand Your Customers 2 Adapt to Cultural 3 Utilize Technology
Differences
Technology can enhance the
Marketing strategies must be built on Marketers must be aware of the customer experience and help
an understanding of customer cultural differences that shape businesses reach new customers.
behavior, values, and attitudes. customer behavior and adjust their Businesses must remain up-to-date
strategies to suit local markets. with the latest technology trends to
stay ahead.