University of Dhaka

Faculty of Business Studies

Department of Marketing

Consumer Behavior & Consumer Markets

Submitted to

Dr. Abul Kalam Azad

Nadeem Nafis 41119044

Who is Consumer?
Consumer is a person engaged in evaluating, acquiring and using goods and services to satisfy his needs and wants. Consumer is the key figure in market and around him all the activities are carried on.

Types of consumer:
The consumer can be further divided in to two classes.

1: Personal Consumer
Personal consumer is that consumer who purchases goods and services for his own personal consumption or uses. We can say that consumer is also called to be the ultimate or final person because when the marketer produces the goods then he hand over the goods to personal consumer for final consumption.

For example:

Mr. X buys shaving cream for his personal use so he is said to be personal consumer.

2: Organizational Consumer:
Organizational consumer consists of the government agencies, business organization, non governmental organization (NGO), firms and different types of manufacturing companies who purchases the goods and services in order to run the business of the firm or business concern or business organization.

For example:

A manufacturing organization let suppose Bannu woolen mills purchases raw materials in order to produce woolen cloths in winter season. The main purpose of the purchase and selling of Bannu woolen mills just to operate the mill or business of the concern is getting profit or not.

Why Consumers Buy?

Customers make purchases in order to satisfy needs. Some of these needs are basic and must be filled by everyone on the planet (e.g., food, shelter) while others are not required for basic survival and vary depending on the person. It probably makes more sense to classify needs that are not a necessity as wants or desires. In fact, in many countries where the standard of living is very high, a large portion of the populations income is spent on wants and desires rather than on basic needs. When we mention the consumer we are referring to the actual buyer, the person spending the money. But is should also be pointed out that the one who does the buying is not necessarily the user of what is bought and that others may be involved in the buying decision in addition to the actual buyer. While the purchasing process in the consumer market is not as complex as the business market, having multiple people involved in a purchase decision is not unusual. For example, in planning for a family vacation the mother may make the hotel reservations but others in the family may have input on the hotel choice. Similarly, a father may purchase snacks at the grocery store but his young child may be the one who selected it from the store shelf. So understanding consumer purchase behavior involves not only understanding how decisions are made but also understanding the dynamics that influence purchases.

Consumer Markets
Markets dominated by Consumer markets products and services designed are typically split into for the general consumer. four primary categories: consumer and transportation

products, food and

beverage products, retail products,

products. Industries in the consumer markets often have to deal with shifting brand loyalties and uncertainty about the future popularity of products and services.

Consumer Market & Consumer Market Types

Consumer Markets of today are experiencing rapid changes and is flooded with new opportunities and new challenges. The significant changes in the consumers' buying behavior, urbanized lifestyle and growth of service sector are the main reasons behind the changed scenario in the consumer market. The Consumer Market can be classified into following type of markets:

Consumer Products Market

This market comprises of the markets for different consumer products. This includes market for consumer durables, FMCG (Fast Moving Consumer Goods), consumer electronic goods, domestic electrical appliances, cosmetics, jewelry, furniture, air conditioners, bicycles and apparels. In Consumer Products Market aggressive marketing is required because the customers of consumer product market lack in loyalty and tend to shift from one brand to another very quickly. The consumer products market is characterized by high level of competition among the sellers. The companies are continuously engaged in modification of business models and business activities to match up with the changing consumer needs. Moreover,

the norms of WTO ( World Trade Organization) is resulting in various mergers, alliances and tie-ups among the companies. The companies are being compelled to go for these alliances to remain competitive and to exist in the market because, losing the competitive edge will ensure complete market exit.

Food and Beverages Market

This market consists of the sub-markets like markets for dairy products, bakery products, packaged food products, Beverages, Confectionary, Beer, Alcohol, meat and poultry products. This type of Consumer Market is full of growth opportunities because of changing lifestyle of present era. Consumer Awareness and Brand Loyalty of customers help this market to grow to a different high.

Retail Market
The Retail Market comprises of the Supermarkets, Departmental Stores, Food Chain Outlets, Specialty Stores and Franchise Sores. This type of Consumer Market is discovering new business opportunities with each passing day because of the rapidly changing lifestyle and spending pattern of the people. Even in the suburban areas and in small towns, Departmental Stores are coming up from the big retail chain houses as westernized lifestyle and western culture is making their presence felt all over the world. This type of market generates low profit margins but has high growth potential. To utilize this growth potential, companies need to modify their business activities in accordance with the changing lifestyle and changing consumption trends of the customers. If the customers receive enough value for money, only then they will be loyal to the brands and will make repeated purchase.

 Transportation Service Market

This type of Consumer Market consists of Postal Services, Courier Services and Logistic Services. Transportation Service Market is generally dominated by a large no. of medium and small enterprises and a few no. of large enterprises. Companies in this type of market essentially require brand name and strong distribution network and significant amount of capital investment. With emergence of technology based advanced facilities like ecommerce and with the increasing use of internet, new horizons are opening for this type of market. The companies can utilize the advantages of reduced costing, improved customer relationship and accelerated movement of materials and can go for strategic tie ups with international business houses. This way, they can make proper use of the new business opportunities which has been generated by the rising level of Foreign Direct Investment and Economic Growth around the world.

Categories of Consumer Products

In addition to categorizing by type of offering, most products intended for consumer use can be further categorized by how frequently and where they are purchased.

Convenience Products
These are products that appeal to a very large market segment. They are generally consumed regularly and purchased frequently. Examples include most household items such as food, cleaning products, and personal care products. Because of the high purchase volume, pricing per item tends to be relatively low and consumers often see little value in shopping around since additional effort yields minimal savings. From the marketers perspective the low price of convenience products means that profit per unit sold is very low. In order to make high profits marketers must sell in large volume. Consequently, marketers attempt to distribute these products in mass through as many retail outlets as possible.

Shopping Products
These are products consumers purchase and consume on a less frequent schedule compared to convenience products. Consumers are willing to spend more time locating these products since they are relatively more expensive than convenience products and because these may possess additional psychological benefits for the purchaser, such as raising their perceived status level within their social group. Examples include many clothing products, personal services, electronic products, and household furnishings. Because consumers are purchasing less frequently and are willing to shop to locate these products, the target market is much smaller than that of convenience goods. Consequently, marketers often are more selective when choosing distribution outlets to sell their products.

Specialty Products
These are products that tend to carry a high price tag relative to convenience and shopping products. Consumption may occur at about the same rate as shopping products but consumers are much more selective. In fact, in many cases consumers know in advance which product they prefer and will not shop to compare products. But they may shop at retailers that provide the best value. Examples include high-end luxury automobiles, expensive champagne, and celebrity hair care experts. The target markets are generally very small and outlets selling the products are very limited to the point of being exclusive. In addition to the three main categories above, products are classified in at least two additional ways:

Emergency Products
These are products a customer seeks due to sudden events and for which pre-purchase planning is not considered. Often the decision is one of convenience (e.g., whatever works to fix a problem) or personal fulfillment (e.g., perceived to improve purchasers image)

Unsought Products
These are products whose purchase is unplanned by the consumer but occur as a result of marketers actions. Such purchase decisions are made when the customer is exposed to promotional activity, such as a salespersons persuasion or purchase incentives like special discounts offered to certain online shoppers. These promotional activities often lead customers to engage impulse Purchasing.

Buyers and Consumers: Consumer Market and Business Market

Different Types of Buyers and Consumers - The characteristics of buyers and the factors that influence their purchasing decision.

The different types of buyers and consumers are combined within several major categories, the consumer market and the business market. Amid these two major categories, the consumer/buyer market is comprised of individuals and households that purchase goods and services for personal consumption, whereas the business market encompasses organizational entities that purchase goods and services for the use in the production of other products and services or for the purpose of reselling or renting them to others at a profit. Business markets possess a smaller amount of large buyers, unlike the consumer market, and whose consuming traits are more geographically concentrated. Dependent on the type of buyer and consumer, characteristics through decision processes may differ. For instance, the consumer markets behavior is influenced by four key sets of buyer characteristics: cultural, social, personal and psychological. Culture, is defined by social class and group wants and behaviors; social, incorporates the factors of influences by family and small groups that determine ideal brands and products; personal adopts the different age groups and lifestyles, and psychological, utilizes motivators and perception of beliefs and attitudes. Additionally, the business markets behavior is influenced by a buying center that displays three types of buying situations: straight rebuys, modified rebuys, and new tasks.

Consumer Behavior
Consumer behaviour is the study of when, why, how, and where people do or do not buy a product. It blends elements from psychology, sociology, social anthropology and economics. It attempts to understand the buyer decision making process, both individually and in groups. It studies characteristics of individual consumers such as demographics and behavioural variables in an attempt to understand people's wants. It also tries to assess influences on the consumer from groups such as family, friends, reference groups, and society in general. Customer behaviour study is based on consumer buying behaviour, with the customer playing the three distinct roles of user, payer and buyer. Relationship marketing is an influential asset for customer behaviour analysis as it has a keen interest in the rediscovery of the true meaning of marketing through the re-affirmation of the importance of the customer or buyer. A greater importance is also placed on consumer retention, customer relationship management, personalisation, customisation and one-to-one marketing. Social functions can be categorized into social choice and welfare functions. Each method for vote counting is assumed as social function but if Arrows possibility theorem is used for a social function, social welfare function is achieved. Some specifications of the social functions are decisiveness, neutrality, anonymity, monotonicity, unanimity, homogeneity and weak and strong Pareto optimality. No social choice function meets these requirements in an ordinal scale simultaneously. The most important characteristic of a social function is identification of the interactive effect of alternatives and creating a logical relation with the ranks. Marketing provides services in order to satisfy customers. With that in mind, the productive system is considered from its beginning at the production level, to the end of the cycle, the consumer.

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Model of Consumer Behavior (Black Box Model)

The black box model shows the interaction of stimuli, consumer characteristics, decision process and consumer responses. It can be distinguished between

interpersonal stimuli (between people) or intrapersonal stimuli (within people). The black box model is related to the black box theory of behaviourism, where the focus is not set on the processes inside a consumer, but the relation between the stimuli and the response of the consumer. The marketing stimuli are planned and processed by the companies, whereas the environmental stimulus are given by social factors, based on the economical, political and cultural circumstances of a society. The buyers black box contains the buyer characteristics and the decision process, which determines the buyers response. The black box model considers the buyers response as a result of a conscious, rational decision process, in which it is assumed that the buyer has recognized the problem. However, in reality many decisions are not made in awareness of a determined problem by the consumer.

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Marketers Need to Understand

y y y

why consumers make the purchases that they make? what factors influence consumer purchases? the changing factors in our society.

Consumer Buying Behavior refers to the buying behavior of the ultimate consumer. A firm needs to analyze buying behavior for:
y

Buyers reactions to a firms marketing strategy has a great impact on the firms success.

The marketing concept stresses that a firm should create a Marketing Mix (MM) that satisfies (gives utility to) customers, therefore need to analyze the what, where, when and how consumers buy.

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Factors Affecting on Consumer Behavior

As we discussed the decision-making process for consumers is anything but straight forward. There are many factors that can affect this process as a person works through the purchase decision. The number of potential influences on consumer behavior is limitless. However, marketers are well served to understand the KEY influences. By doing so they may be in a position to tailor their marketing efforts to take advantage of these influences in a way that will satisfy the consumer and the marketer (remember this is a key part of the definition of marketing).

We will break these influences down into three main categories: Internal, External and Marketing. However, those interested in learning more about customer buying activity may want to consult one or more consumer behavior books where they will find additional methods for explaining consumer buying behavior. For the most part the influences are not mutually exclusive. Instead, they are all interconnected and, as we will see, work together to form who we are and how we behave. For each of the influences that are discussed we will provide a basic description and also suggest its implication to marketers. Bear in mind we only provide a few marketing implications for each influence; clearly there are many more.

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Consumer behavior refers to the selection, purchase and consumption of goods and services for the satisfaction of their wants.

1. Initially the consumer tries to find what commodities he would like to consume.

2. Then he selects only those commodities that promise greater utility.

3. Then consumer makes an estimate of the available money which he can spend.

4. Lastly, the consumer analyzes the prevailing prices of commodities and takes the decision about the commodities he should consume.

Meanwhile, there are various other factors influencing the purchases of consumer such as

Social, Cultural, Personal Psychological

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Cultural Factors
Cultural factors exert the broadest and deepest influence on consumer behavior. The marketer needs to understand the role played by the buyer's culture, subculture, and social class.

I. Culture
Culture is the most basic cause of a person's wants and behavior. Human behavior is largely learned. Growing up in a society, a child learns basic values, perceptions, wants, and behaviors from the family and other important institutions. A person normally learns or is exposed to the following values: achievement and success, activity and involvement, efficiency and practicality, progress, material comfort, individualism, freedom, humanitarianism, youthfulness, and fitness and health. Every group or society has a culture, and cultural influences on buying behavior may vary greatly from country to country. Failure to adjust to these differences can result in ineffective marketing or embarrassing mistakes. For example, business representatives of a U.S. community trying to market itself in Taiwan found this out the hard way. Seeking more foreign trade, they arrived in Taiwan bearing gifts of green baseball caps. It turned out that the trip was scheduled a month before Taiwan elections, and that green was the color of the political opposition party. Worse yet, the visitors learned after the fact that according to Taiwan culture, a man wears green to signify that his wife has been unfaithful. The head of the community delegation later noted, "I don't know whatever happened to those green hats, but the trip gave us an understanding of the extreme differences in our cultures." International marketers must understand the culture in each international market and adapt their marketing strategies accordingly.

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II. Subculture
Each culture contains smaller subcultures or groups of people with shared value systems based on common life experiences and situations. Subcultures include nationalities, religions, racial groups, and geographic regions. Many subcultures make up important market segments, and marketers often design products and marketing programs tailored to their needs. Here are examples of four such important subculture groups.

III. Social Class

Almost every society has some form of social class structure. Social Classes are society's relatively permanent and ordered divisions whose members share similar values, interests, and behaviors. Social class is not determined by a single factor, such as income, but is measured as a combination of occupation, income, education, wealth, and other variables. In some social systems, members of different classes are reared for certain roles and cannot change their social positions. Marketers are interested in social class because people within a given social class tend to exhibit similar buying behavior. Social classes show distinct product and brand preferences in areas such as clothing, home furnishings, leisure activity, and automobiles.

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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.

I. Groups
Many small groups influence a persons behavior. Groups that have a direct influence and to which a person belongs are called membership groups. In contrast, reference groups serve as direct (faceto- face) or indirect points of comparison or reference in forming a person's attitudes or behavior. Reference groups to which they do not belong often influence people. Marketers try to identify the reference groups of their target markets. Reference groups expose a person to new behaviors and lifestyles, influence the person's attitudes and self-concept, and create pressures to conform that may affect the person's product and brand choices. The importance of group influence varies across products and brands. It tends to be strongest when the product is visible to others whom the buyer respects. Manufacturers of products and brands subjected to strong group influence must figure out how to reach opinion leaderspeople within a reference group who, because of special skills, knowledge, personality, or other characteristics, exert influence on others. Many marketers try to identify opinion leaders for their products and direct marketing efforts toward them. In other cases, advertisements can simulate opinion leadership, thereby reducing the need for consumers to seek advice from others. The importance of group influence varies across products and brands. It tends to be strongest when the product is visible to others whom the buyer respects. Purchases of products that are bought and used privately are not much affected by group influences because neither the product nor the brand will be noticed by others.

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II. Family
Family members can strongly influence buyer behavior. The family is the most important consumer buying organization in society, and it has been researched extensively. Marketers are interested in the roles and influence of the husband, wife, and children on the purchase of different products and services. Husband-wife involvement varies widely by product category and by stage in the buying process. Buying roles change with evolving consumer lifestyles. Such changes suggest that marketers who've typically sold their products to only women or only men are now courting the opposite sex. For example, with research revealing that women now account for nearly half of all hardware store purchases, home improvement retailers such as Home Depot and Builders Square have turned what once were intimidating warehouses into femalefriendly retail outlets. The new Builders Square II outlets feature decorator design centers at the front of the store. To attract more women, Builders Square runs ads targeting women in Home, House Beautiful, Woman's Day, and Better Homes and Gardens. Home Depot even offers bridal registries. Similarly, after research indicated that women now make up 34 percent of the luxury car market, Cadillac has started paying more attention to this important segment. Male car designers at Cadillac are going about their work with paper clips on their fingers to simulate what it feels like to operate buttons, knobs, and other interior features with longer fingernails. The Cadillac Catera features an air-conditioned glove box to preserve such items as lipstick and film. Under the hood, yellow markings highlight where fluid fills go. Children may also have a strong influence on family buying decisions. For example, it ran ads to woo these "back-seat consumers" in Sports Illustrated for Kids, which attracts mostly 8- to 14- year-old boys. "We're kidding ourselves when we think kids aren't aware

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of brands," says Venture's brand manager, adding that even she was surprised at how often parents told her that kids played a tie-breaking role in deciding which car to buy. In the case of expensive products and services, husbands and wives often make joint decisions.

III. Roles and Status

A person belongs to many groupsfamily, clubs, organizations. The person's position in each group can be defined in terms of both role and status. A role consists of the activities people are expected to perform according to the persons around them. We discussed the Consumer Buying behavior its model and characteristics that can influence the decision for buying process. Today we will be continuing the same topic and will discuss the remaining factors that influence the buying process and decision of consumers. So our todays topic is:

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Personal Factors
A buyer's decisions also are influenced by personal characteristics such as the buyer's age and lifecycle stage, occupation, economic situation, lifestyle, and personality and self-concept.

I. Age and Life-Cycle Stage

People change the goods and services they buy over their lifetimes. Tastes in food, clothes, furniture, and recreation are often age related. Buying is also shaped by the stage of the family life cyclethe stages through which families might pass as they mature over time. Marketers often define their target markets in terms of life-cycle stage and develop appropriate products and marketing plans for each stage. Traditional family life-cycle stages include young singles and married couples with children.

II. Occupation
A person's occupation affects the goods and services bought. Blue-collar workers tend to buy more rugged work clothes, whereas white-collar workers buy more business suits. Marketers try to identify the occupational groups that have an above-average interest in their products and services. A company can even specialize in making products needed by a given occupational group. Thus, computer software companies will design different products for brand managers, accountants, engineers, lawyers, and doctors.

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III. Economic Situation

A person's economic situation will affect product choice. Marketers of income-sensitive goods watch trends in personal income, savings, and interest rates. If economic indicators point to a recession, marketers can take steps to redesign, reposition, and reprice their products closely.

IV. Lifestyle
People coming from the same subculture, social class, and occupation may have quite different lifestyles. Life style is a person's pattern of living as expressed in his or her psychographics. It involves measuring consumers' major AIO dimensions

activities (work, hobbies, shopping, sports, social events), interests (food, fashion, family, recreation), and opinions (about themselves, social issues, business, products). Lifestyle captures something more than the person's social class or personality. It profiles a person's whole pattern of acting and interacting in the world. Several research firms have developed lifestyle classifications. It divides consumers into eight groups based on two major dimensions: self-orientation and resources. Self-orientation groups include principle-oriented consumers who buy based on their views of the world; status-oriented buyers who base their purchases on the actions and opinions of others; and action-oriented buyers who are driven by their desire for activity, variety, and risk taking. Consumers within each orientation are further classified into those with abundant resources and those with minimal resources, depending on whether they have high or low levels of income, education, health, self-confidence, energy, and other factors.

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Consumers with either very high or very low levels of resources are classified without regard to their self-orientations (actualizers, strugglers). Actualizers are people with so many resources that they can indulge in any or all self-orientations. In contrast, strugglers are people with too few resources to be included in any consumer orientation.

V. Personality and Self-Concept

Each person's distinct personality influences his or her buying behavior. Personality refers to the unique psychological characteristics that lead to relatively consistent and lasting responses to one's own environment. Personality is usually described in terms of traits such as self-confidence, dominance, sociability, autonomy, defensiveness, adaptability, and aggressiveness. Personality can be useful in analyzing consumer behavior for certain product or brand choices. For example, coffee marketers have discovered that heavy coffee drinkers tend to be high on sociability. Thus, to attract customers, Starbucks and other coffeehouses create environments in which people can relax and socialize over a cup of steaming coffee. Many marketers use a concept related to personalitya person's self-concept (also called self-image). The basic self-concept premise is that people's possessions contribute to and reflect their identities; that is, "we are what we have." Thus, in order to understand consumer behavior, the marketer must first understand the relationship between consumer self-concept and possessions. For example, the founder and chief executive of Barnes & Noble, the nation's leading bookseller, notes that people buy books to support their self-images:

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The 5 Dimensions of Brand Personality

How many times have you heard the proclamation, the consumer owns the brand? It would probably be safe to say youve heard it numerous times (and uttered it a few more) because it happens to be true. No matter the product or service that an organization is offering to its target market, their success or failure is dependent upon the consumers buying of what theyre selling. Consumers make purchasing decisions based on any number of associations they have with individual brands, and companies spend millions on advertising and marketing activities so that they can influence what those associations might be. Just as we each choose our friends based on their personalities, brands can elicit the same sort of response in consumers. In light of this, wouldnt it be interesting to know which human personality traits consumers tend to apply to brands? Well, its good thing for us that someone has studied this and given us a few answers:

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1st Dimension SINCERITY

Consumers interpret sincere brands as being down-to-earth, honest, wholesome, and cheerful. Sure, some people find Rachael Ray annoying, but more people find her endearing the kind of woman you can sit down with for a chat at the kitchen table.

2nd Dimension EXCITEMENT

The most exciting brands are daring, spirited, imaginative, and on the cutting edge. Not only are Burton snowboards on the cutting edge of technology and performance, the products bearing the Burton name are designed with their audience in mind. Funky graphics and forward-thinking designs make Burton a leader in their competitive industry.

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3rd Dimension COMPETENCE

Reliability, intelligence, and success are the traits associated with these brands. Even in these trying economic times, there are a few financial services firms that still manage to play well in consumer minds. Charles Schwab is the stable, successful, smart guy next door who can tell you what to do with your 401k allocations.

4th Dimension SOPHISTICATION

A brand that is sophisticated is viewed as charming and fit for the upper classes. When it comes to esteem and seemingly eternal longevity, the Chanel brand is unequaled. In good times and bad, this brand remains strong as a symbol of a life lived in all the right places, doing all the right things.

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5th Dimension RUGGEDNESS

Interestingly, consumers pick up on this personality dimension quite well. Rugged brands are seen as outdoorsy and tough. The North Face has built an empire by outfitting people who actually do scary outdoorsy things, and those who just like to look good on the streets of NYC.

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Psychological Factors
A person's buying choices are further influenced by four major psychological factors: motivation, perception, learning, and beliefs and attitudes.

I. Motivation
A person has many needs at any given time. Some are biological, arising from states of tension such as hunger, thirst, or discomfort. Others are psychological, arising from the need for recognition, esteem, or belonging. Most of these needs will not be strong enough to motivate the person to act at a given point in time. A need becomes a motive when it is aroused to a sufficient level of intensity. A motive (or drive) is a need that is sufficiently pressing to direct the person to seek satisfaction. Psychologists have developed theories of human motivation. Two of the most popularthe theories of Sigmund Freud and Abraham Maslowhave quite different meanings for consumer analysis and marketing.

II. Maslow's Theory of Motivation

Abraham Maslow sought to explain why people are driven by particular needs at particular times. Why does one person spend much time and energy on personal safety and another on gaining the esteem of others? Maslow's answer is that human needs are arranged in a hierarchy, from the most pressing to the least pressing. Maslow's hierarchy of needs is shown in Figure. In order of importance, they

are physiological needs, safety needs, socialneeds, esteem needs,

and self-

actualization needs. A person tries to satisfy the most important need first. When that need is satisfied, it will stop being a motivator and the person will then try to satisfy the next most important need. For example, starving people (physiological need) will not take an interest in the latest happenings in the art world (self-actualization needs), nor in how they are seen or esteemed by others (social or esteem needs), nor even in whether they are breathing clean air (safety needs). But as each important need is satisfied, the next most important need will come into play.

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III. Perception
A motivated person is ready to act. How the person acts is influenced by his or her own perception of the situation. 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 a meaningful picture of the world. People can form different perceptions of the same stimulus because of three perceptual processes: selective attention, selective distortion, and selective retention. People are exposed to a great amount of stimuli every day. For example, the average person may be exposed to more than 1,500 ads in a single day. It is impossible for a person to pay attention to all these stimuli. Selective attentionthe tendency for people to screen out most of the information to which they are exposedmeans that marketers have to work especially hard to attract the consumer's attention. Even noted stimuli do not always come across in the intended way. Each person fits incoming information into an existing mind-set. Selective distortion describes the tendency of people to interpret information in a way that will support what they already believe. Selective distortion means that marketers must try to understand the mind-sets of consumers and how these will affect interpretations of advertising and sales information.

IV. Learning
When people act, they learn. Learning describes changes in an individual's behavior arising from experience. Learning theorists say that most human behavior is learned. Learning occurs through the interplay of drives, stimuli, cues,

responses, and reinforcement.

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V. 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. Buying behavior differs greatly for a tube of toothpaste, a tennis racket, an expensive camera, and a new car. More complex decisions usually involve more buying participants and more buyer deliberation. Figure shows types of consumer buying behavior based on the degree of buyer involvement and the degree of differences among brands.

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Consumers

Buying

Characteristics

(How

Consumers Buy)

Traditionally, consumer researchers have approached decision making process from a rational perspective. This dominant school of thought views consumers as being cognitive (i.e., problem-solving) and, to some but a lesser degree, emotional.i Such a view is reflected in the stage model of a typical buying process (often called the consumer information processing model) depicted in Figure 1.

nformation Search

valuation and Selection of Alternatives

ecision mplementation

ost-purchase valuation

Figure 1

The Consumer Information Processing Model

Source: Adopted from Kotler (1997), Schiffman and Kanuk (1997), and Solomon (1996)

roblem ecognition

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In this model, the consumer passes through five stages: problem recognition, information search, evaluation and selection of alternatives, decision implementation, and postpurchase evaluation.

Problem/Need Recognition

In this information processing model, the consumer buying process begins when the buyer recognizes a problem or need. For example, Doug may realize that his best suit doesnt look contemporary any more. Or, Kathleen may recognize that her personal computer is not performing as well as she thought it should. These are the kinds of problem that we as consumers encounter all the time. When we found out a difference between the actual state and a desired state, a problem is recognized. When we find a problem, we usually try to solve the problem. We, in other words, recognize the need to solve the problem. But how?

Information Search

When a consumer discovers a problem, he/she is likely to search for more information. Kathleen may simply pay more attention to product information of a personal computer. She becomes more attentive to computer ads, computers purchased by her friends, and peer conversations about computers. Or, she may more actively seek information by visiting stores, talking to friends, or reading computer magazines, among others. Through gathering information, the consumer learns more about some brands that compete in the market and their features and characteristics. Theoretically, there is a total set of brands available to Kathleen, but she will become aware of only a subset of the brands (awareness set) in the market. Some of these brands may satisfy her initial buying criteria, such as price and processing speed (consideration set). As Kathleen

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proceeds to more information search, only a few will remain as strong candidates (choice set).

At a glance sources of information are

y y y y

Personal sources Commercial sources Public sources Personal experience

The relevant internal psychological process that is associated with information search is perception. Perception is defined as "the process by which an individual receives, selects, organizes, and interprets information to create a meaningful picture of the world". The selective perception process Stage Description
y

Selective exposure consumers select which promotional messages they will expose themselves to.

Selective attention consumers select which promotional messages they will pay attention to.

Selective comprehension consumer interpret messages in line with their beliefs, attitudes, motives and experiences.

Selective retention consumers remember messages that are more meaningful or important to them.

The implications of this process help develop an effective promotional strategy, and select which sources of information are more effective for the brand.

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Evaluation and Selection of Alternatives

How does the consumer process competitive brand information and evaluate the value of the brands? Unfortunately there is no single, simple evaluation process applied by all consumers or by one consumer in all buying situations.

One dominant view, however, is to see the evaluation process as being cognitively driven and rational. Under this view, a consumer is trying to solve the problem and ultimately satisfying his/her need. In other words, he/she will look for problem-solving benefits from the product. The consumer, then, looks for products with a certain set of attributes that deliver the benefits. Thus, the consumer sees each product as a bundle of attributes with different levels of ability of delivering the problem solving benefits to satisfy his/her need. The distinctions among the need, benefits, and attributes are very important. One useful way to organize the relationships among the three is a hierarchical one (Figure 2). Although simplified, Figure 2 is an example of how a bundle of attributes (i.e., a product or, more specifically, personal computer) relates to the benefits and underlying needs of Kathleen.

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Und lyin

ds

l s B s

B n is

P t ilit

t ti

Pi

l R

Figure 2

Hierarchical View of Needs, Benefits, and Attributes

F m this i tt i t s l t

th im

is ssi ,

mi ht

t t only to the extent that they lead to a certain set of

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judgment on importance of benefits and attributes, consumers develop a set of attitudes (or preferences) toward the various brands. One may express his/her preferences of the brands in terms of ranking, probability of choice, and so forth.

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Decision Implementation

To actually implement the purchase decision, however, a consumer needs to select both specific items (brands) and specific outlets (where to buy) to resolve the problems. There are, in fact, three ways these decisions can be made: 1) simultaneously; 2) item first, outlet second; or 3) outlet first, item second.ii In many situations, consumers engage in a simultaneous selection process of storesiii and brands. For example, in our Kathleens personal computer case, she may select a set of brands based on both the products technical features (attributes) and availability of brands in the computer stores and mailorder catalogs she knows well. It is also possible, that she decides where to buy (e.g., CompUSA in her neighborhood) and then chooses one or two brands the store carries. Once the brand and outlet have been decided, the consumer moves on to the transaction (buying).

Post-purchase Evaluation

Post-purchase evaluation processes are directly influenced by the type of preceding decision-making process. Directly relevant here is the level of purchase involvement of the consumer. Purchase involvement is often referred to as the level of concern for or interest in the purchase
iv

situation, and it determines how extensively the consumer

searches information in making a purchase decision.v Although purchase involvement is viewed as a continuum (from low to high), it is useful to consider two extreme cases here. Suppose one buys a certain brand of product (e.g., Diet Pepsi) as a matter of habit (habitual purchase). For him/her, buying a cola drink is a very low purchase

involvement situation, and he/she is not likely to search and evaluate product information extensively. In such a case, the consumer would simply purchase, consume and/or dispose of the product with very limited post-purchase evaluation, and generally maintain a high level of repeat purchase motivation (Figure 3).

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Figure 3

Low Involvement Purchase

Source: Hawkins, Best, and Coney (1983)

However, if the purchase involvement is high and the consumer is involved in extensive purchase decision making (e.g., personal computer), he/she is more likely to be involved in more elaborate post-purchase evaluation often by questioning the rightness of the decision: Did I make the right choice? Should I have gone with other brand? This is a common reaction after making a difficult, complex, relatively permanent decision. This type of doubt and anxiety is referred to as post-purchase cognitive dissonance (Figure 4).

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Elaborate Post-purchase Evaluation

Source: Adopted from Hawkins, Best, and Coney (1983)

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According to the research, the likelihood of experiencing this kind of dissonance and the magnitude of it is a function of:vi y y y y The degree of commitment or irrevocability of the decision, The importance of the decision to the consumer, The difficulty of choosing among the alternatives, and The individuals tendency to experience anxiety.

Because dissonance is uncomfortable, the consumer may use one or more of the following approaches to reduce it:vii y y y y Increase the desirability of the brand purchased. Decrease the desirability of rejected alternatives. Decrease the importance of the purchase decision. Reject the negative data on the brand purchased.

If the dissonance about the purchase is not reduced, the anxiety may transform into a dissatisfaction (general or specific). Certainly, this negative experience leads to a new problem recognition (Figure 1), and the consumer will engage in another problem solving process. The difference, however, is that in the next round of process, memory of the previous negative experience and dissatisfaction will be used as part of information. Therefore, the probability for the unsatisfactory brand to be re-selected and repurchased will be significantly lower than before.

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The Hierarchy of Effects

Another widely-used model in marketing that attempts to explain consumer decision making process is called the hierarchy of effects model. Although different researchers developed slightly different models, the basic idea is the same: people experience a sequence of psychological stages before purchasing a product. Such a model is provided in Figure 5. viii

P u rc h a s e

C o n v ic tio n

P re fe re n c e

L ik in g

K n o w le d g e

A w a re n e s s

U n a w a re n e s s

Figure 5

A General Model of the Hierarchy of Effects Source: Adopted from Delozier (1976)

Originally conceived to explain how advertising affects consumers purchase decisions, the hierarchy of effects (HOE) model focuses on consumer learning that takes place as

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he/she processes information from the external world. The HOE model begins with the state where a consumer has no awareness about the brand (unaware) then develops awareness triggered by external stimuli, such as advertising message or word of mouth. As he/she obtains and processes more information, the consumer develops more specific knowledge about the brand. The knowledge, then, is used as basis to form a liking (or disliking), leading to a preference of brand(s) relative to the others. However, people need to be pushed beyond the preference stage to actually buy the brand of preference. The preference stage, after all, simply means that the consumer has formed a preference psychologically. Now it takes conviction for him/her before actually buying the brand.

By now, you might have realized at least two points. One, it seems reasonable that not all the consumers are at the same stage. For example, Susan may be in the unawareness stage relative to Samuel Adams beer, but Melissa may be in the preference stage. Two, it also seems reasonable that not all people at one stage move onto the next stage. For example, some consumers who have formed preference to Contadina pasta may not form any conviction to buy the product. Furthermore, some people may need more time before moving onto the next stage than others.

The HOE model is quite similar to the consumer information processing model because it also assumes that people are cognitively driven, thinking information processors. Controversy exists,ix of course, as to whether that is necessarily true. Some may claim that they often form liking and preference (emotional response or feeling) toward brands before developing cognitive judgment (knowledge or thinking) on them. Others argue that people form preference and knowledge simultaneously. Although each argument has its own support, the general model (cognition first, preference second) seems to be valid especially in relatively complex or high-involvement decision making situations (e.g., cars, computers), providing a conceptual framework for thinking about the sequence of events which begins from the initial awareness to the final action (i.e., purchasing).

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Now, so what?

We have reviewed two of the most widely accepted models of consumer decision making process. These are based on theories and research of social psychology, consumer

behavior, and marketing. As managers rather than academics, however, we have several more tough questions to ask. Here are some of them:

The idea of the information processing model seems reasonable. But, we know that we as individuals are not living in a vacuum. That is, when we are making a purchase decision, we are constantly influenced by other factors than just information, such as family, friends, cultural values, social class, or subculture. Oh, what about

physiological needs, such as sex, hunger, safety? Might these also affect which brand we choose and buy? How and where do these factors play roles in the information processing model?

What would be some of the practical implications of the information processing model for a marketing manager who is trying to market, say, mountain bikes? If he/she knows about the information processing model, what could he/she do differently in, for example, the new product introduction?

What would be the implications of the HOE model for marketing managers? For example, what should an advertising manager measure to know the effectiveness of his/her advertising campaign? Should he/she measure sales?

Under what circumstances consumers are more likely to develop liking (feeling) first, knowing (thinking) second? What would be some of the products/services in those situations? Why?

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Types of Buying Decision Behavior

Complex Buying Behavior

Consumers undertake complex buying behavior when they are highly involved in a purchase and perceive significant differences among brands. Consumers may be highly involved when the product is expensive, risky, purchased infrequently, and highly selfexpressive. Typically, the consumer has much to learn about the product category. For example, a personal computer buyer may not know what attributes to consider. Many product features carry no real meaning: a "Pentium Pro chip," "super VGA resolution," or "megs of RAM." This buyer will pass through a learning process, first developing beliefs about the product, then attitudes, and then making a thoughtful purchase choice. Marketers of high-involvement products must understand the information-gathering and evaluation behavior of high-involvement consumers. They need to help buyers learn about product-class attributes and their relative importance, and about what the

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company's brand offers on the important attributes. Marketers need to differentiate their brand's features, perhaps by describing the brand's benefits using print media with long copy. They must motivate store salespeople and the buyer's acquaintances to influence the final brand choice.

Dissonance-Reducing Buying Behavior

Dissonance reducing buying behavior occurs when consumers are highly involved with an expensive, infrequent, or risky purchase, but see little difference among brands. For example, consumers 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 to purchase convenience. After the purchase, consumers might experience post purchase dissonance (after-sale discomfort) when they notice certain disadvantages of the purchased carpet brand or hear favorable things about brands not purchased. To counter such dissonance, the marketer's after-sale communications should provide evidence and support to help consumers feel good about their brand choices.

Habitual Buying Behavior

Habitual buying behavior occurs under conditions of low consumer involvement and little significant brand difference. For example, take salt. Consumers have little involvement in this product categorythey simply go to the store and reach for a brand. If they keep reaching for the same brand, it is out of habit rather than strong brand loyalty. Consumers appear to have low involvement with most low-cost, frequently purchased products.

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In such cases, consumer behavior does not pass through the usual belief-attitude-behavior sequence. Consumers do not search extensively for information about the brands, evaluate brand characteristics, and make weighty decisions about which brands to buy. Instead, they passively receive information as they watch television or read magazines. Ad repetition creates brand familiarity rather than brand conviction. Consumers do not form strong attitudes toward a brand; they select the brand because it is familiar. Because they are not highly involved with the product, consumers may not evaluate the choice even after purchase. Thus, the buying process involves brand beliefs formed by passive learning, followed by purchase behavior, which may or may not be followed by evaluation. Because buyers are not highly committed to any brands, marketers of lowinvolvement products with few brand differences often use price and sales promotions to stimulate product trial. In advertising for a low-involvement product, ad copy should stress only a few key points. Visual symbols and imagery are important because they can be remembered easily and associated with the brand. Ad campaigns should include high repetition of short-duration messages. Television is usually more effective than print media because it is a low-involvement medium suitable for passive learning. Advertising planning should be based on classical conditioning theory, in which buyers learn to identify a certain product by a symbol repeatedly attached to it.

Marketers can try to convert low-involvement products into higher-involvement ones by linking them to some involving issue. Procter & Gamble does this when it links Crest toothpaste to avoiding cavities. At best, these strategies can raise consumer involvement from a low to a moderate level. However, they are not likely to propel the consumer into highly involved buying behavior.

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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, consumers often do a lot of brand switching. For example, when buying cookies, a consumer may hold some beliefs, choose a cookie brand without much evaluation, then evaluate that brand during consumption. But the next time, the consumer might pick another brand out of boredom or simply to try something different. Brand switching occurs for the sake of variety rather than because of dissatisfaction. In such product categories, the marketing strategy may differ for the market leader and minor brands. The market leader will try to encourage habitual buying behavior by dominating shelf space, keeping shelves fully stocked, and running frequent reminder advertising. Challenger firms will encourage variety seeking by offering lower prices, special deals, coupons, free samples, and advertising that presents reasons for trying something new.

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The Buyer Decision Process for New Products

We have looked at the stages buyers go through in trying to satisfy a need. Buyers may pass quickly or slowly through these stages, and some of the stages may even be reversed. Much depends on the nature of the buyer, the product, and the buying situation. We now look at how buyers approach the purchase of new products. A new product is a good, service, or idea that is perceived by some potential customers as new. It may have been around for a while, but our interest is in how consumers learn about products for the first time and make decisions on whether to adopt them. We define the adoption process as "the mental process through which an individual passes from first learning about an innovation to final adoption, and adoption as the decision by an individual to become a regular user of the product. Stages in the Adoption Process Consumers go through five stages in the process of adopting a new product: Awareness: The consumer becomes aware of the new product, but lacks information about it. Interest: The consumer seeks information about the new product. Evaluation: The consumer considers whether trying the new product makes sense. Trial: The consumer tries the new product on a small scale to improve his or her estimate of its value. Adoption: The consumer decides to make full and regular use of the new product. This model suggests that the new-product marketer should think about how to help consumers move through these stages. A manufacturer of large-screen televisions may discover that many consumers in the interest stage do not move to the trial stage because of uncertainty and the large investment. If these same consumers were willing to use a large-screen television on a trial basis for

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A small fee, the manufacturer should consider offering a trial-use plan with an option to buy.

Innovators: Adopt product at very earlier at their own risk Early adopters: Adopt products after innovators and act as a leader Early majority: Adopt product following leaders Late majority: Typical & suspicious adopt product very carefully Laggards: Orthodox people they adopt when the product is in their culture

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Influence of Product Characteristics on Rate of Adoption

The role of adoption of a new product is influenced by its characteristics. Some products gain quick acceptance while others may take a long time. Five characteristics play an important role in affecting role of adoption of an innovation. These are: Relative Advantage the degree to which the innovation seems to be superior to

existing products. Compatibility the degree to which the innovation conforms to the values and

experiences of potential consumers. Complexity - the degree to which the innovation is difficult to recognize or use. Divisibility the degree to which he innovation may be tried on small scale basis. Communicability - the degree to which the results of using the innovation can be

observed or communicated to others. In addition to the above five characteristics some other characteristics may also affect the rate of adoption. These are initial and ongoing costs, risk and uncertainty, and social approval. In designing the new product and its marketing program, the new-product marketer has to study all these factors. With the crunch in the consumer electronics industry, manufacturers are under tremendous pressure to create new products. The consumer electronics industry has seen a wave of innovation sweeping the industry, with companies experimenting with a wide range of products from handheld gadgets to portable music devices. Given the advent of new technologies and shorter product development cycles, new products are constantly

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making their ways to the shelves. Examples of such consumer electronic products include the MiniDisc, recordable CDs, the digital audio tapes, and the MP3 player

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Conclusion
World consumer is about 6.5 million & this consumer consumes 65 trillion worth of consumer goods. It is a large market for marketers to do business. However, consumer marketing involves analysis of consumer on the basis of geography, demography, culture, social, personal & psychological factors and on the basis of this consumer behavior need to be delectated. After the determination process the product should be design including marketing mix. Another thing is that buying situation & decision making process also need to understand based on product features & other factors which influences the consumers most. On the other hand new product development & adoption process need to be understand pondering the existing plus new product features & relative marketing mix. It infer that Consumer behavior analysis is a very big thing but if markers can identify then it will very profitable for him to do business.

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References
1. 2. 3. 4. http://en.wikipedia.org/wiki/consumer behavior http://www.slideshare.com http://www.scribd.com Kotler, Philip . Principles of Marketing (13th edition).

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See also Schiffman, Leon G. and Leslie Lazar Kanuk (1997), Consumer Behavior, Upper Saddle River, New Jersey: Prentice Hall. and Solomon, Michael R. (1996), Consumer Behavior: Buying, Having, and Being, Englewood Cliffs, New Jersey: Prentice Hall. For more detailed discussions and paper citations, refer to Engel, James F., Roger D. Blackwell, and Paul W. Minard (1993), Consumer Behavior, 7th ed., Fort Worth, Texas: Dryden Press. and Wilkie, William L. (1990), Consumer Behavior, 2nd ed., New York, New York: John Wiley & Sons.
ii

Hawkins, Del I., R. J. Best, and K. A. Coney (1983), Consumer Behavior: Implications for Marketing Strategy, Plano, Texas: Business Publications Inc.

Consumers may also consider non-store shopping (internet web pages, catalogues, CUC International, etc.).
iv

iii

Hawkins, Del I., R. J. Best, and K. A. Coney (1983), Consumer Behavior: Implications for Marketing Strategy, Plano, Texas: Business Publications Inc. Another type of involvement that influences the extent to which the information is processed is called product involvement. The product involvement is referred to as the importance the consumer attaches to a particular product, as opposed to the purchase situation (purchase involvement). For example, one may have a low product involvement (e.g., mustard) but have a high purchase involvement because he/she has invited important friends for a cook-out this weekend and he/she wants to make sure that he/she can impress them with a gourmet Dijon mustard, not with the usual yellow kind. A high level of product involvement also increases the extent to which the consumer is engaged in information search, evaluation, and post-purchase evaluation.
vi

Hawkins, Del I., R. J. Best, and K. A. Coney (1983), Consumer Behavior: Implications for Marketing Strategy, Plano, Texas: Business Publications Inc. Ibid.

vii

The figure is adopted from DeLozier, M. Wayne(1976), The Marketing Communications Process, New York, New York: McGraw-Hill, Inc. For a more academic treatment, see Lavidge, R. J. and Steiner (1961), A Model for Predictive Measurements of Advertising Effectiveness, Journal of Marketing, vol. 25, October, pp. 59-62. And Palda, Kristian S.(1966), The Hypothesis of a Hierarchy of Effects: A Partial Evaluatio, Journal of Marketing Research, vol. 3, February, pp. 13-24. See also Farris, Paul W. and John A. Quelch (1987), Advertising and Promotion Management: A Managers Guide to Theory & Practice, Malabar, Florida: R. E. Krueger Publishing Co.
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