Unit – I

Consumer Behavior

Meaning and Introduction

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. 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.

Consumer behavior is the study of how individual customers, groups or

organizations select, buy, use and dispose ideas, goods and services to satisfy their
needs and wants. It refers to the actions of the consumers in the marketplace and
the underlying motives for those actions. By studying consumer behavior,
marketers understand what causes the customers to buy particular goods and
services. They will be able to determine which products or services are in demand,
which are obsolete and how best can goods be presented to the customers.
Understanding the psychological factors, as well as social factors of a marketing
consumer, helps marketers better understand the elements that influence customers
buying decisions.

An example of consumer behavior would be when someone goes to the grocery

store and decides what types of food they want. The person is making decisions
based on their personal preferences, considering factors such as cost, convenience,
nutritional value, and taste. This behavior then influences how much time they
spend in the store, which items they purchase, and even if they return later for
more items.
The study of Consumer Behavior includes:

1. How a consumer feel about alternate brands, products, or services

2. The parameters that help consumers to differentiate several brands
3. Behaviors during research and shopping and what they want
4. How a consumer is inspired by the media and culture of the organization
5. Marketing strategies for improving the influence of brands on the consumers

Definitions of Consumer Behavior:

Authors How to define consumer behavior Findings

Faison and “The assumption that people have series of needs Needs
Edmund (1977) which lead to drive state.”

Engel, et al. “Those acts of individuals directly involved in Acts,

(1986) obtaining, using, and disposing of economic goods individuals
and services, including the decision processes that
precede and determine these acts”

Kotler (1994) Consumer behaviour is the study of how

people buy, what they buy, when they buy and why
they buy.

Solomon et al. Consumer is the study “of the processes involved Process, needs,
(1995) when individuals or groups select, purchase, use, or individuals,
dispose of products, services, ideas, or experiences to group
satisfy needs and desires”

Schiffman (2007) “the behavior that consumers display in searching

for, purchasing, using, evaluating, and disposing of
products and services that they expect will satisfy Acts, needs
their needs”
According to Engel, Blackwell and Mansard, “Consumer behavior is the actions
and decision processes of people who purchase goods and services for personal
consumption”.

According to Louden and Bitta, “Consumer Behavior is the decision process and
physical activity which individuals engage in when evaluating, acquiring, using or
disposing of goods and services”.

Consumer Motives: It is an internal state that drives people to identify and buy
products or services that fulfill conscious and unconscious needs or desires. The
fulfillment of those needs can then motivate them to make a repeat purchase or to
find different goods and services to better fulfill those needs.

Identification of buyer’s motive help marketer to develop better marketing mix.

Motives which controlling human activities are as follows:

a) Biological motives – food, thrust, sleep etc.

b) Social Motives – complex in nature and includes achievement, rejection,
autonomy, favor, affiliation, conflict, differences.

Classification of motives: two types

a) Rational vs Emotional motives

Rational motive related to mind of consumer and emotional motive related
to heart. When consumer keeps all alternatives and chose the one which
provide the maximum satisfaction is called rational motive. E.g price, size,
weight, durability, warranty, guarantee, mode of payment etc.
Emotional motive includes choosing goals on the basis of personal criteria
involving pride, affection, love, fear, relation and also researchers found that
purchase motivated by emotional motives does not give maximum
satisfaction most of the time.

b) Product vs Patronage motives

 Patronage motives are based on loyalty and encourage consumers to purchase from a
particular business or to buy a particular brand. Loyalty is influenced by positive previous
experiences or a close identification with the product or business.
Product buying motives are a consumer purchasing a particular product, often motivated
by the physical and psychological features—for instance, the design, colour, size,
package, quality, price etc. In contrast, a Patronage motive influences a person to
purchase products from a specific seller or producer.

Nature of Consumer Behavior:

1. Influenced by various factors

 Marketing factor such as product design, price , promotion,

packaging, positioning and distribution.
 Personal factors such as age, gender, education and income level.
 Psychological factors like buying motives, perception of the product
and attitude towards the product.
 Situational factors such as physical surroundings at the time of
purchase, social surroundings and time factor.
 Social factors such as social status, reference groups and family.
 Cultural factors such as religion, social class caste and sub-caste.

2. Undergoes a constant change

Consumer behavior is not static. It undergoes a change over a period of time

depending on the nature of products. For example, kids prefer colorful and
bright footwear, but as they grow up to teenagers and young adults, they
prefer trendy footwear, and as a middle-aged and senior citizen they prefer
sober footwear. The change in buying behavior may take place due to
several other factors such as increase in income level, education level and
marketing factors.

3. Varies from consumer to consumer

 All consumers do not behave in same manner. Different consumers behave
differently. The difference in consumer behavior are due to individual
factors such as nature of the consumers, lifestyle, and culture. For example,
some consumers are technoholics. They go on shopping and spend beyond
their means.

They borrow money from friends, family, relatives , banks and at times even
adopt unethical means to spend on shopping of advance technologies. But
there are other consumers who, despite having surplus money, do not go
even go for the regular purchases and avoid use and purchase of advance
technologies.

4. Varies from region to region and country to country

The consumer behavior varies across states, regions and countries. For example,
the behavior of urban country is different from that of the rural country. A good
number of rural consumers are conservative in their buying behaviors.

The rich rural consumers may think twice to spend on luxuries despite having
sufficient funds , whereas the urban consumers may even take bank loans to but
luxury items such as cars and household appliances.

5. Information on the consumer behavior is important to the marketers

Marketers need a good knowledge about the consumer behavior. They need to
study the various factors that influence the consumer behavior of their target
consumers.

6. Leads to purchase decision

A positive consumer behavior leads to a purchase decision. A consumer may

take the decision of buying a product on the basis of different buying
 motives. The purchase decision leas to a higher demand, and the sales of the
marketers increase. Therefore, marketers need to influence consumers to
increase their purchases.

7. Varies from product to product

Consumer behavior is different for different products. There are some

consumers who may buy more quantity of certain items and very low or no
quantity of other items. For example, teenagers may spend heavily on
products such as cell phones and branded wears of snob appeal, but may not
spend in general and academic reading. A middle-aged person may spend on
clothing, but may invest money in savings, insurance schemes, pension
schemes and so on.

8. Improves standard of living

The buying behavior of the consumers may lead to higher standard of living.
The more of a person buys the goods and services, the higher is the standard
of living. But if a person spends less on goods and services, despite having a
good income, they deprive themselves of higher standard of living.

9. Reflects status

The consumer behavior is not only influenced by the status of a consumer,

but it also reflects it. The consumers who owns luxury cars, watches and
other items are considered to a higher level. The luxury items also give a
sense a pride to the consumer.

Importance of Consumer Behavior

There are many reasons that show why consumer behavior is important, including
–
  Effective Marketing Strategies – A business can create effective marketing
strategies only when it knows what motivates consumers and what
influences their purchase decisions.
 Successful Product Development – Product and service development
should always align with customer needs and preferences. Only this can
ensure success with product launches.
 Higher Levels of Customer Loyalty – Delivering products and services
that meet customer expectations often leads to a higher level of customer
loyalty.
 Competitive Edge – Companies that are able to respond to changing
consumer preferences and trends tend to perform better and gain a
competitive edge in the market.
 Proactive Measures – Consumer behavior research is vital to identifying
potential risks in the market which can prepare businesses to take proactive
measures and address customer needs earlier than others.
 Customer Retention – A business that aligns its strategies to consumer
needs experiences higher levels of customer retention.


Characteristics of Consumer Behavior

Consumer behavior is a multifaceted field of study involving various factors
related to individuals or groups of people, Its ultimate aim is to analyze people and
their buying decisions and all the motivations behind the purchase decision. So,
consumer behavior is about analyzing all the characteristics so that buyers can be
served well.

Here are the key characteristics of consumer behavior –

  Consumer behavior is a dynamic concept as it evolves over time in tune
with the ever-changing needs, tastes, and preferences of people.
 Various factors – both internal and external – such as those related to
economic, social, and tech, play a key role in shaping consumer behavior.
 Psychological factors have a big role to play in affecting consumers, their
behavior, and their reach to marketing strategies.

 Buying decisions are always heavily influenced by cultural and social

influences as consumers’ choices and tastes reflect unique beliefs, values,
and social groups they are part of.
 Not all consumer decisions are rational and sometimes emotions have a big
influence in driving buying choices.
 Marketing and advertising do have a big influence on consumer behavior
as they can help create awareness and shape perceptions.
 External factors can impact consumer behavior as more price-sensitive d
ecisions are witnessed during recession times and more sustainable products
are bought during environmental concerns.
 The growth of digital channels, social platforms, and the availability of
online reviews are shaping consumer behavior.

Scope of Consumer Behaviour

 Demand Forecasting
 Marketing Management
 Non-profit and Social Marketing
 Selecting Target Market
 Market Mix
 Educating Customers
 Assists in Designing Product Portfolio

Demand Forecasting
Consumer behaviour helps in the forecasting of the demands for the business.
Every business identifies the needs and wants of the customers by understanding
their behaviour. Forecasting helps them to find out the unfulfilled demands in the
market easily. If the company knows what their consumer wants, they can design
and produce the product accordingly.
The behaviour of the consumer plays an important role in forecasting the demand
for the products. In addition, it helps the company to identify the market
opportunity available to them.

Marketing Management
Effective business managers know the importance of marketing towards the
success of the business. Understanding consumer behaviour is essential for the
long-running success of any marketing program. A better understanding of
consumer needs and wants to help the business to plan and execute their marketing
strategies accordingly.
Proper understanding of the behaviour of the consumer makes the company know
its customers in a better way. That ultimately helps businesses to strategize and
implement marketing in a better way.

Non-profit and Social Marketing

In today's world, every non-profit business-like government sector, religious
sector, university, the charitable institution runs the business's overall activity by
implementing proper marketing plans for the business. Also, they contribute to
solving the problems of society. Thus, a transparent consumer behaviour process
and decision-making contributed efforts towards the success of the business.

Select Target Market

Consumer behaviour helps the organisation to select its target group from the
market. Studying and identifying consumer behaviour helps them to know the
consumer segments with distinct features and wants. It helps in segmenting the
overall market into different groups.

Market Mix
Proper development and designing all-important elements like product, price,
place, and promotion are essential for every business. It helps them to identify the
likes and dislikes of the customers. This allows marketers to design optimum
marketing mix plans and improve the effectiveness of marketing strategies. The
proper implementation of a marketing mix helps organisations to attract more
customers, thereby increasing profit.

Educating Customers
Consumer behavior helps the marketer to know how consumers spend their buying
decisions. By understanding the customer's behavior, a marketer can easily get an
idea of how they can improve their buying decision. The market can guide and
suggest a way to save their money and give them better options. Customers
become aware of the opportunities available to them as per their behavior.

Assists in Designing Product Portfolio

Designing a product portfolio is a challenging part of every business. Every
business should design a portfolio that consists of all classes of the product.
Consumer behavior helps in identifying the class and needs of the customers. It
helps companies to design the product which fulfils the requirements of their
customers. In this way, a business can design the optimum portfolio and serve its
customers better.

APPLICATIONS OF CONSUMER BEHAVIOUR :

1. ANALYSING MARKET OPPORTUNITY :

Consumer behavior study helps in identifying the unfulfilled needs and wants of
consumers. This requires examining the trends and conditions operating in the
marketplace, consumers' lifestyles, income levels and emerging influences.

The trend towards increasing number of dual income households and greater
emphasis on convenience and leisure have led to emerging needs for household
gadgets such as washing machine, mixer grinder, vacuum cleaner and childcare
centers etc.

Mosquito repellents have been marketed in response to a genuine and unfulfilled

consumer need.

2. SELECTING TARGET MARKET :

A review of market opportunities often helps in identifying distinct consumer

segments with very distinct and unique wants and need.

Identifying these groups, learning how they behave and how they make purchase
decisions enables the marketer to design and market products or services
particularly suited to their wants and needs.

For example, consumer studies revealed that many existing and potential shampoo
users did not want to buy shampoo packs priced at Rs. 60 or more and would
rather prefer a low priced sachet containing enough quantity for one or two
washes. The finding led companies to introduce the shampoo sachet which became
a good seller.

3. MARKETING MIX :

Once unsatisfied needs and wants are identified, the marketer has to determine the
right mix of product, price, distribution and promotion. Here too, consumer
behaviour study is very helpful in finding answers to many perplexing questions.

4. USE IN SOCIAL AND NON-PROFITS MARKETING :

Consumer behavior studies are useful to design marketing strategies by social,

governmental and not-for-profit organizations to make their programs such as
 family planning, awareness about AIDS, crime against women, safe
driving, environmental concerns and other more effective.

UNICEF (greeting cards), Red Cross and CRY etc. make use of consumer
behavior understanding to sell their services and products and also try to motivate
people to support these institutions.

Need for Studying Consumer Behavior:

 Comprehending consumer needs:

Businesses utilize consumer behavior research to gain valuable insights into the needs, desires,
and motivations of their target audience. Consequently, understanding empowers companies to
create products and services that successfully cater to consumer demands, resulting in enhanced
customer satisfaction.
 Fabricating effective marketing strategies:

Leveraging the study, businesses can discern the most efficient marketing techniques and
channels to reach their target audience. Furthermore, this knowledge aids in the development of
targeted and compelling advertising campaigns, pricing strategies, and promotional activities that
connect with consumers and boost sales.

 Consumer Differentiation: Market exhibits considerable differentiations. Each segment

needs and wants different products. For every segment, a separate marketing program is
needed. Knowledge of consumer differentiation is a key to fit marketing offers with
different groups of buyers. Consumer behavior study supplies the details about consumer
differentiations.

 Creation and retention of consumers: Marketers who base their offerings on a

recognition of consumer needs finds a ready market for their products. Company finds it
easy to sell its products. In the same way, due to continuous study of consumer behavior
and attempts to meet the changing expectations of consumer, can retain its customers for
a longer period.

 Useful for dealers and salesman: study of consumer behavior is not important for
company alone. It is equally helpful for dealers and salesman to perform their tasks in an
effective manner to meet their needs and wants. Consumer behavior thus improves the
entire distribution system.

 Minimizing the risks and failures: understanding the consumer behavior helps
businesses in minimizing the risks associated with product failures and unsuccessful
market campaigns. Through the analysis of consumer preference, feedback, and behavior
–companies can make informed decisions concerning product design, features, packaging
and marketing strategies, consequently minimizing the likelihood of failure.

 Building strong brand relationships: the research assists in establishing long term
relationships with customers. Through understanding customer preferences, values and
purchasing consumer behavior, - companies can customize their brand messaging,
communication and offerings, enabling them to forge a powerful emotional bond with
customers.

Consumer Research Process:

The consumer research process can be broken down into the following steps:

1. Develop research objectives: The first step to the consumer research process
is to clearly define the research objective, the purpose of research, why is the
research being conducted, to understand what? A clear statement of purpose
can help emphasize the purpose.

2. Collect Secondary data: Collect secondary data first, it helps in understanding

if research has been conducted earlier and if there are any pieces of evidence
related to the subject matter that can be used by an organization to make
informed decisions regarding consumers.

3. Primary Research: In primary research organizations or businesses collect

their own data or employ a third party to collect data on their behalf. This
research makes use of various data collection methods
(qualitative and quantitative) that helps researchers collect data first hand.

Qualitative Consumer Research:

Qualitative research is descriptive in nature, It’s a method that uses open-ended
questions, to gain meaningful insights from respondents and heavily relies on the
following market research methods:

Focus Groups: Focus groups as the name suggests is a small group of highly
validated subject experts who come together to analyze a product or service. Focus
group comprises of 6-10 respondents. A moderator is assigned to the focus group,
who helps facilitate discussions among the members to draw meaningful insights

One-to-one Interview: This is a more conversational method, where the researcher

asks open-ended questions to collect data from the respondents. This method heavily
depends on the expertise of the researcher. How much the researcher is able to probe
with relevant questions to get maximum insights. This is a time-consuming method
and can take more than one attempt to gain the desired insights.

Content/ Text Analysis: Text analysis is a qualitative research method where

researchers analyze social life by decoding words and images from the documents
available. Researchers analyze the context in which the images are used and draw
conclusions from them. Social media is an example of text analysis. In the last decade
or so, inferences are drawn based on consumer behavior on social media.

Quantitative Consumer Research

In the age of technology and information, meaningful data is more precious than
platinum. Billion dollar companies have risen and fallen on how well they have been
able to collect and analyze data, to draw validated insights.

Quantitative research is all about numbers and statistics. An evolved consumer who
purchases regularly can vouch for how customer-centric businesses have become
today. It’s all about customer satisfaction, to gain loyal customers. With just one
questions companies are able to collect data, that has the power to make or break a
company. Net Promoter Score question, “On a scale from 0-10 how likely are you to
recommend our brand to your family or friends?”

4. Collect and analyze data: Data is collected and analyzed and

inference is drawn to understand consumer behavior and purchase pattern.

 5. Prepare report: Finally, a report is prepared for all the findings by analyzing
data collected so that organizations are able to make informed decisions and
think of all probabilities related to consumer behavior. By putting the study into
practice, organizations can become customer-centric and manufacture products
or render services that will help them achieve excellent customer satisfaction.

Completing this process will help you:

 Attract more customers

 Set the best price for your products
 Create the right marketing message
 Increase the quantity that satisfies the demand of its clients
 Increase the frequency of visits to their clients
 Increase your sales
 Reduce costs

Organizational Buying Behavior:

It refers to the buying behavior of organizations that buy products for business use, resell or to
make other products.

It is the decisions making process by which formal organizations establishes the need for
purchased products and services and identify, evaluate and chose among alternative brands and
suppliers.
Characteristics of Organizational Buying

1. Fewer, larger buyers.

2. Close supplier – customer relationship.

3. Professional Purchasing.

4. Multiple buying influences.

5. Derived demand.

6. Inelastic demand.

7. Geographically concentrated buyers.

8. Direct purchasing.
Business buying process:
Problem recognition

General need description

Product specification

Supplier search

Proposal Solicitation

Supplier selection

Order routine specification

Performance review

Difference between Consumer Buying Behavior and

Organizational Buying Behavior
Bases Consumer Buying Behavior Organizational Buying Behavior
The individual consumers buy goods and
The organizations buy goods and services
services for ultimate use or satisfy their
for their business needs. The buying
Purpose of Buying needs. The buying purpose of such
purpose of them is to earn profit by using
consumers is not to earn profit by reselling
and reselling the goods and services.
the goods and services.
Quantity Although consumers buy various kinds of Organizational buying is done in large
goods, the quantity of goods remains small. quantities. There are several reasons why
They buy only the necessary quantity of organizations must buy the goods they need
goods, which they need for regular use. in bulk. In the first place, they use large
quantities of each item and must maintain
Bases Consumer Buying Behavior Organizational Buying Behavior
inventories at a level high enough that they
will not run out of stock. Secondly, it is
cheaper and more efficient to make large-
volume purchases.
Organizational purchasing is a rational
Consumer buying takes decision by
process because the purchasing behavior of
consumers themselves. Sometimes they can
organizations is guided by objective factors
Purchase Decision consult with family members and friends.
having to do with production and
They need not fulfill any formality like
distribution. It takes long time than
organizational buying.
consumer buying.
Organizational purchase criteria are
specifically defined. Organizational buyers
Most of the consumers may not have
usually have fewer brands to choose from
adequate knowledge and information about
than do individuals, and their purchases
market situation, available goods and
Market Knowledge must be evaluated on the basis of criteria
services, etc. The educated customers may
that are specific to the overall needs of the
be aware and have knowledge about market
organization. The organizational buyers
and goods.
have full knowledge of market and
suppliers.
Consumers buy many goods to use to Organizational buyers buy limited goods to
Types of Goods satisfy personal or family needs. use to conduct business.
Finished/Usable goods, eatable items Raw material, equipment
Many individuals are involved in the buying
process. Within large organizations, rarely
is one individual solely responsible for the
Consumer buying behavior is effected by
purchase of products for the purchase of
Effect age, occupation, income level, education,
products or services. Instead, many
gender etc. of consumers.
individuals and departments may be
involved and departments may be involved
in the buying process.
The consumer buying process is very Buyers and sellers in the organizational
simple. No need to fulfill any formality. market must maintain extensive contact.
Buying Process
There is also no need to maintain extensive
contact with sellers.
Area Geographically Dispersed Geographically concentrated
Consumption Personal Consumption For production and organizational use