MODULE-5

STUDYING CONSUMER BEHAVIOR

Traditional Organizational Chart versus Modern
Customer-Oriented Company Organization
Chart
Customers
 Customers
 Current customers of a given product
 Customers of competitors
 Current noncustomers of the product category
 Buyers vs. Users
 Initiator
 Influencer
 Decider
 Purchaser
 User
An Understanding of Customers

 Who buys and uses the product?

 What customers buy and how they use it?
 Where customers buy?
 When customers buy?
 How customers choose?
 Why they prefer a product?
 How they respond to marketing programs?
 Will they buy it (again)?
Customer Value
 The customer’s perception of the total: the total benefits to
be derived from a product or service versus the total
perceived costs of acquisition and ownership
 Customer typically have some implicit preconception about
the “right” ratio of benefits to costs
 Having compared available alternatives, customers select
the one that they think will give them best value
 Value is a relative concept; it is perceived relative to
competitor offerings
Customer Value
 Customer Value = Perceived Benefits/
Perceived Costs
 Perceived Benefits = Functional Benefits + Social
Benefits + Personal Benefits + Experiential Benefits

 Perceived Costs=Monetary Costs + {Time Costs+

Psychological Costs + Behavioral Costs}

Shopping Costs or
Transaction Costs
Buying behavior of Consumer
market vs industrial market
 Consumer market or individual buying behavior;individuals &
households who themselves consume goods n services.
Roles-initiator,influencer,buyer,user

 Business buying behavior; Businesses,organisations and

groups that buy and consume goods and services during the
course of their operations.
Consumer Buying Behavior

 Individual buying behavior:-

 Refers to the buying behavior of people
who buy goods and services for
personal /organizational use.
 These people make up the consumer
market.
 The central question for marketers is:
 “How do consumers respond to various
marketing efforts the company might use?”
Model of Buyer Behavior
Factors Influencing
Consumer Behavior
Culture
 Culture is the most basic cause of a person's
wants and behavior.
 Culture is learned.
 Culture reflects basic values, perceptions, wants,
and behaviors.
 Cultural shifts create opportunities for new
products or may otherwise influence consumer
behavior.
 Subcultures are of interest to marketers.
INDIAN CULTURE
 Family,society,relations. India comprise different
segments of consumers, based on class, status, and
income
 High degree of value orientation
 Values of nurturing, care and affection
 Traditional products along side modern products.
For example, hair oils and tooth powder existing
with shampoos, gel and toothpaste.
 Surprised by the two extremes. On one hand the
luxury hotels are charging international rates and
then there are the economy Indian hotels that charge
Indian rates of as low as per night.

12
Examples-Indian culture traits
adopted by brands…
 MTR-South,North,snacks,main course,icecream etc.
 known for their "home-cooked" taste. Namma MTR customers to experience
the wide MTR range. a novel concept kitchen where customers can interact
with specialist chefs to learn about MTR products and watch live
demonstrations. This concept kitchen also works as an ideal platform for
feedback, allowing them to understand and address consumer needs.
 DABUR FOOD PRODUCTS(Hommade)
 GOLD MASTER CARD-(Family oriented approach)
 Surf excel-(Brother –Sister Relation,Daag Ache hain-blaming other for any
mishappening when she falls into the puddle)
 Bank of India-Rishto ki Jamapunji (friendship)
 Airtel-Kuch Bandhan atoot hote hai jaise airtel ka network(Father –Son)

13
SUBCULTURE
Subcultures therefore can be defined as a distinct cultural
group that exists within a layer, complex society as an
identifiable segment in terms of its beliefs customs and
values. For ex–MDH,TRENT
Group(Westside),Marico(Parachute-Gel n oil).
 Racial or nationality subcultures: Multiracial comprised of citizens
who come from different nationalities or belong to different races.
Aspiration and beliefs- consumption priorities, spend/save patterns,
purchase behaviour, use of credit, social mores and customs etc.
 Religious subcultures: custom, have important rites of passage
(like birth, marriage and death) performed in different ways and have
different festivals. Religion subcultures may suggest important "taboo "
in consumption terms, certain foods are prohibited among the
different groups, consumption of liquor or non-vegetarian foods may
be specifically prohibited by some religious norms.

14
 Geographical and regional subcultures: different consumption
patterns in clothing, housing patterns and food habits on account of
climatic conditions. While cottons may be the most preferred fabric in
North West India, silk predominates in South.
 Age subcultures: for ex-The youth market is distinctive enough in
terms of its spending patterns, demographics, psychographic, profiles etc.

15
Social Class
 Society’s relatively permanent and ordered
divisions whose members share similar
values, interests, and behaviors.
 Measured by a combination of: occupation,
income, education, wealth, and other
variables.
Social Factors
 Groups:A reference group is any individual or collection of people whom
the individual uses as a source of attitudes, beliefs, values of behaviour.
 Family:
 Most important consumer buying organization
A family is a group of at least two people formed on the basis of marriage,
cohabitation, blood relationship, or adoption. Eg-Married couple
Nuclear family
Extended family

Single parent family

Multigenerational family
Variations of family in different countries
 Roles and Status:
 Role = Expected activities
 Status = Esteem given to role by society
Personal Factors
 Age and Life-Cycle Stage
 People change the goods they buy over their
lifetimes.
 Occupation
 Occupation influences the purchase of clothing
and other goods.
 Economic Situation
 Some goods and services are especially income-
sensitive.
Personal Factors
 Lifestyle: Pattern of living as expressed via a
person’s activities, interests, and opinions.
Lifestyle Lifestyle
determinants How we live
Demographics
Impact on
Activities
Subculture
behavior
Interests
Social class Likes/dislikes Purchases
Motives Attitudes  How
Personality Consumption  When
Emotions Expectations  Where
Values feelings  What
Household life  with whom
cycle Consumption
Culture  Where
Past experiences  with whom
 How
 When
 What
Personality and Self-Concept
 Personality refers to the unique psychological
characteristics that lead to relatively consistent
and lasting responses to one’s own
environment.
 Generally defined in terms of traits (dogmatism-
degree of rigidity, inner
directedness,otherdirectedness,variety novelty
seeking).
 For ex- Brand personality-image of
brand,peception for a brand,personailty like
image of a brand.Brand personailty can be
defined on the basis of gender,location,color…
 Self-concept ;suggests that people’s
possessions contribute to and reflect their
identities. How individuals perceive
themselves and what behavior they
exhibit as consumers. Consumer provide
descriptions of themselves as opposed to
having descriptions made by outsiders.
 For ex-offerings according to customers
in service sector.
Psychological Factors
 Motivation-a motive (or drive) is a need that is sufficiently pressing to direct the
person to seek satisfaction.
• What turns consumer on-the force that activate and direct their behavior
• Motivation is the reason for behavior. A motive is a construct representing an
unobservable inner force that stimulates and compels a behavioral response and
provides specific direction to that response.
Motives-
1. Positive vs. Negative-positive influences attract consumer towards desired goals,
while negative ones direct them away from undesirable consequences.
The products or services gives a positive satisfaction like books increase knowledge,
energy drinks juices etc…
Negative-insurance( FOR PROTECTING LOVED ONES),DEODORANTS,JOINING GYMS
FOR WEIGHT LOSS,FIRE EXTINGUISHER.
2. Physiological(biological needs like hunger, thirst etc
vs.Psychogenic(achivement,affiliation,status)
For ex-sharing food(hunger) with friends(affiliation) in taj(status

 Maslow’s hierarchy of needs explains why people are driven by needs at particular
times.
Maslow’s Hierarchy of Needs
Perception
Process by which people
select, organize, and
interpret information to
form a meaningful picture of
the world.
People can form different perceptions
of the same stimulus. for ex-Store
image,colors,price,product factors makes the
perception
Learning
 A relatively permanent change in behavior due to
experience.
 Interplay of drives, stimuli, cues, responses, and
reinforcement.
 Strongly influenced by the consequences of an
individual’s behavior
 Behaviors with satisfying results tend to be repeated.
 Behaviors with unsatisfying results tend not to be repeated.
Beliefs and Attitudes
 A belief is a descriptive thought that a person
holds about something.
 An attitude is a person’s consistently
favorable or unfavorable feelings, evaluations,
and tendencies toward an object or idea.
Functions of attitude can be used in ads like
ego defensive function in cosmetics & utility
function in insurance.
Buyer Decision Process
1.Need Recognition

Buyers recognize a
need or problem as
a result of internal
or external stimuli.

Marketing communications often stimulate

need recognition.
Need Recognition
 A need recognition is a result of an imbalance
between actual and desired states.
 Need recognition is triggered when a consumer is
exposed to either an internal or an external
stimulus.
 Stimulus is any unit of input affecting one or more
of the five senses: sight, smell, taste, touch,
hearing.
 Marketers can also create wants. Wants are the
recognition of an unfulfilled need and a product that
will satisfy it.
2.Information search
 For some types of purchases, consumers will search for more
information before they are willing to make
a decision.
 Search & involvement: the amount of time and effort a buyer invests in
the search, evaluation, and decision processes of consumer behavior.
 Routine response behavior: the type of decision making exhibited by
consumers buying frequently purchased, low-cost goods and
services; requires little search and decision time.
 Limited decision making: the type of decision making that requires a
moderate amount of time for gathering information and deliberating
about an unfamiliar brand in a familiar product category.
 Extensive decision making: the most complex type of consumer
decision making, used when buying an unfamiliar, expensive product
or an infrequently bought item; requires use of several criteria for
evaluating options and much time for seeking information.
Information Search
 Information Sources  Information Sources
 Personal
 Public
 Family, friends,
 Mass media
neighbors or work articles or news
programs, Internet
acquaintances searches,
 Commercial consumer rating
 Advertising, organizations
salespeople,  Experiential
dealers, Web sites,  Using, handling, or
packaging, and examining the
displays product
 Influences on Intensity of
Information Search
 Personal factors - ability to process product information,
physical energy and mobility to search out alternative
information .. Shopping propensity -special sales, return
policies.

• Social factors - social pressures for right” choice,

time pressure on the purchase

• Environmental Factors
– availability of product substitutes, supplier
alternatives and resources to search
– Product life (long or short?)
3.Evaluation of Alternatives
 Some decisions involve a careful, logical, and
systematic evaluation by the consumer.
 Other decisions – such as impulse buys – are
made with virtually no thought at all.
 Friends, consumers guides, or salespeople may
or may not influence the decision.
 Marketers must study how targeted consumers
make evaluations, so they will be in a better
position to influence evaluations.
Purchase Decision
 Intentions to purchase a particular brand are
not always acted upon.
 Factors that influence the purchase decision:
 Attitudes of others
 Unexpected situational
factors
Post purchase Behavior

 Consumer satisfaction is a function of

consumer expectations and perceived
product performance.
 If Performance Is BELOW
Expectations = Disappointment
 If Performance EQUALS
Expectations = Satisfaction
 Performance Is GREATER
than Expectations = Delight
Cognitive Dissonance
 Cognitive Dissonance: after making a purchase,
buyers often doubt whether they made the right
decision.
 Marketers can minimize dissonance by:
 Reassuring consumers they made the right choice and
minimizing the potential for product misuse (product
literature and instructions).
 Offering mechanisms for lodging complaints
Being responsive to problems and questions.
CONSUMER ADOPTION
PROCESS
 The stages through which an individual
consumer passes in arriving at a decision to
try (or not to try), to continue using (or
discontinue using) a new product
 Stages in Adoption Process

NAME OF WHAT HAPPENS DURING

EXAMPLE
STAGE THIS STAGE

Consumer is first exposed XYZ sees an ad for a new MP3 player in the
Awareness to the product innovation. magazine she is reading.

Consumer is interested in XYZ reads about the MP3 player on the

the product and searches manufacturer’s Web site and then goes to
Interest
for additional an electronics store near apartment and has
information. a salesperson show a unit.
Consumer decides After talking to a knowledgeable friend, XYZ
whether or not to believe decides that this MP3 player will allow xyz to
that this product or easily download the MP3 files that xyz has
Evaluation
service will satisfy the on her computer. also feels that the unit’s
need--a kind of “mental size is small enough
trial.”

39
Stages in Adoption Process
WHAT HAPPENS
NAME OF EXAMPLE
DURING THIS STAGE
STAGE
Consumer uses the Since an MP3 player cannot be “tried” like
product on a limited a small tube of toothpaste, XYZ buys the
Trial basis MP3 player online from Amazon.com,
which offers a 30-day full refund policy.

If trial is favorable, XYZ finds that the MP3 player is easy to

consumer decides to use use and that the sound quality is
the product on a full, excellent. XYZ keeps the MP3 player.
Adoption rather than a limited
(Rejection) basis--if unfavorable, the
consumer decides to
reject it.

40
Adopter Categories

Early Laggards
Adopters
13.5% Early Late 16%
Majority Majority
Innovators 34%
34%
2.5%

Percentage of Adopters by Category Sequence

Innovators - Venturesome
• Interest in new ideas leads them out of local circle of peer
networks
• Clique of innovators regardless of geographical distance
• Control of substantial financial resources
• Ability to understand and apply technical knowledge
• Must cope with high degrees of uncertainty
Early Adopters – Respect

• More integrated part of local social system

• Greatest degree of opinion leadership
• Sought by change agents
• Respected by their peers
• Makes judicious innovation-decisions
• The persons to check with before adopting a new idea
• Are role models 42
Early Majority –
 Deliberate Interact frequently with peers
 Seldom hold leadership opinion positions
 Will deliberate for some time
 Innovation-decision period is longer
 Most numerous - one-third of the members of the system

Late Majority – Skeptical

 Adopt just after the average member of a system
 Adoption because of economic necessity
 Also increasing pressures from peers
 Skeptical and cautious in their approach
 Peer pressure necessary
 Most of the uncertainty must be removed

Laggards – Traditional
 Last in a system to adopt
 Point of reference is the past
 Many are near isolates in the social network of their system
 Interact primarily with others who have traditional values
 Suspicious of innovations and change agents
Industrial buying behavior
Business Markets and
Business Buyer Behavior
 The business market is vast and involves far
more dollars and items than do consumer
markets.
 Business buyer behavior refers to the buying
behavior of the organizations that buy goods
and services for use in the production of
other products and services that are sold,
rented, or supplied to others.
Business Markets
 Market Structure and
Demand:
 Nature of the Buying
 Contains far fewer but Unit:
larger buyers.  Business purchases
 Buyers are more involve more decision
geographically participants.
concentrated.  Business buying involves
 Business demand a more professional
is derived from consumer purchasing effort.
demand.
Types of Decisions
and the Decision Process

 Business buyers usually face more complex

buying decisions.
 Business buying process tends to be more
formalized.
 Buyers and sellers are much more
dependent on each
other.
Types of Buying Situations
 Straight rebuy:
 Fairly routine purchase decision.
 Modified rebuy:
 Requires some research and modified product
specifications, prices, terms, or suppliers.
 New task:
 Requires extensive research and evaluation of
products, suppliers, etc.
 1.New Task

Problem or need is totally different from previous experiences.

Significant amount of information is required.
Buyers operate in the extensive problem solving stage.
Buyers lack well defined criteria.
Lack strong predispositions toward a solution.

2. Modified Rebuy
Decision makers feel there are benefits to be derived by reevaluating
alternatives.
Most likely to occur when displeased with the performance of current
supplier.
Buyers operate in the limited problem solving stage.
Buyers have well defined criteria.

3. Straight rebuy—the problem or need is a recurring or continuing

situation.
 Buyers have experience in the area in question.

 Require little or no new information.

 Buyers operate in the routine problem solving stage.