Consumer Buying Behavior

What is CBB?
 “The study of individuals, groups, or organizations and the processes they use to select, secure, use,
and dispose of products, services, experiences, or ideas to satisfy needs and the impacts these
processes have on consumers and society.”
 P & G: P&G created disposable diaper market in Japan when it was introduced Pampers. The product
was an unmodified version of the American product and was marketed using the same approach
used in USA. However, Japanese competitors soon reduced P&G’s share to less than 10 percent.
“We really don’t understand the consumer,” explained P&G’s CEO
 On the basis of consumer research, P&G redesigned diapers to much thinner. It also introduced pink
and blue diaper. Advertising changed to indirect approach from direct approach. P&G now is very
successful in Japanese market.
Diversity in Consumer Behavior-
 There are various reasons for diversity in Consumer Behavior. Some of them are:
 Age
 Family Size
 Education
 Culture/Religion
 Psychology
 Geographic Location etc
Classification of Indian Population

Total Rural Urban

Total Population 1,21 83 38

Male 62 42 20

Female 59 41 18

Literacy Details-

Total Rural Urban

Literate 76 48 28

Literacy 73 67 84
Percentage
(2011)
 Literacy 65 59 80
Percentage
(2001)

Applications of Consumer Behavior-

 Social Marketing: it is the application of marketing strategies and tactics to later or create behavior
that have positive effect on the targeted individuals or society as a whole.
 Informed Individuals:
 Availability of information resources.
 Companies strategies to educate customers.
Customers are using products/services round the clock, during their work and sleep hours also
Marketing Strategy & Consumer Behavior-
 Market Analysis

Market
Segmentation

Marketing Strategy

Consumer
Decision Process

Outcomes

Outcomes-
 Individual :
◦ Need satisfaction/dissatisfaction/delight
 Firm :
 ◦ Sales
◦ Market Share
◦ Customer Satisfaction
 Society :
◦ Economic Outcome
◦ Social Welfare
 CBB-2

INDIVIDUAL ASPECTS OF CONSUMER BEHAVIOUR-

 Perception
 Learning
 Motivation and Involvement
 Personality
 Attitudes
PERCEPTION-
 “Perception is the process of selecting, organizing and interpreting or attaching meaning to events
or situations in the environment.”
 It is mental process, whereby an individual selects data/information from environment, organizes it
and then draws significance or meaning from it.
 Perception is basically a cognitive or thinking process and individuals activities, emotions, feelings
etc. are based on his or her perceptions of their surroundings.
 Sensation-
 Sensation may be defined as an immediate direct response of a physical sensory organ.
 Sensation is related to a very elementary or basic behavior which is based on physiological
functioning.
 Perception is something more than sensation.
 Perception is determined by both physiological and psychological factors.
THRESHOLD-
 ABSOLUTE THRESHOLD: the point at which an individual senses a difference between
‘something’ and ‘nothing’ is referred to as the absolute threshold for a particular stimulus.
 Differential Threshold: the minimal difference that can be noticeable between two similar stimuli
is known as the differential threshold.
 This concept was developed by German Scientist, Ernst Weber in 19th Century.
INTERNAL FACTORS-
 Selective Attention
 Selective Exposure
 Selective Retention
 Expectation
 Subliminal Perception
 CONSUMER IMAGERY-
 Brand and Self Image:
 Actual Self Image
 Social Self Image
 Ideal Self Image
 Expected Self Image
LEARNING-
 Learning can be defined as a relatively permanent change in behavior occurring as a result of
experience.
 It involves change
 Its continuous process
 It is based on some form of experience
 Elements of Learning-
 Motive
 Cues
 Response
 Reinforcement
 Retention
TYPES OF LEARNING PROCESSES-
 ROUTINES: Many of the consumer behavior occurs without the involvement of extensive
consideration and reflection.
 LEARNING PROCESS: There are different learning processes, which influences purchase
behavior. One such type of learning is CONDITIONING, here behavior becomes dependent on
certain stimuli or events in the environment.
Motivation-
 Motivation: Motivation is the driving force
among individual consumers that impel them to
action.
 Definition: Motivation may be defined as psychological forces that determine the direction of
person’s behaviour, a person’s level of effort, and a person’s level of persistence in the face of
obstacles.
 In another words, motivation is the process that account for an individual intensity, direction, and
persistence of effort towards attaining a goal.
 A motive is a construct representing an unobservable inner force that stimulates and compels a
behavioral response and provides specific direction to that response.
 INVOLVEMENT-
 Involvement: Involvement is a reflection of strong motivation in the form of high perceived personal
relevance of a product or service in a particular context.
 In other words, involvement consists of
differences in the intensity of interest with
which consumers approach their dealings
with the marketplace.
 Involvement can vary in individuals depending on different situations
 Involvement is related to some form of arousal.
Involvement can be of 3 types

Personality-
 Personality can be described as the psychological characteristics that both determines and reflect
how a person responds to his or her environment.
 How Personality is help full in marketing: Because no two people are exactly the same, marketers
can look for certain similar personality traits in different consumers. These consumers can then be
grouped together based on this identified personality.
 Product/Brand Personality includes: manly, adventurous, sporting, stylish, mature, etc.
 Colour can influence our emotions, our actions and how we respond to various people, things and
ideas.
 Nature/characteristics of Personality.
Personality reflects individual differences: Because the inner characteristics that constitutes an
individuals personality are a unique combination of factors, no two individuals are exactly alike
Example: Hero Honda- Splender and Hero Honda- Karizma
Personality is consistent and enduring: Personality is a set of response tendencies that are
consistent and endure over time. Consistency means that the characteristics contributing to an
individual's personality tend to carry over to a variety of situations. Examples: Raymonds, Maruti
800.
Personality is subject to change: Personality is,however, subject to change over time, in
response to situations and events in life and, also, as part of a gradual maturing process.
Examples: Godrej shaving creams, Mc Donald’s.
ATTITUDE-
 A learned orientation toward an object or situation, which provides a tendency to respond favorably
or unfavorably to the object or situation.
 It like , likes or dislike
 Its an overall evaluation that allows one to respond
THEORIES OF ATTITUDE-
 Affective Cognitive Consistency Theory: is about the consistency between a person’s over all
attitude towards an object and on his beliefs about its relationship to his more general values.
 According to this theory Attitudes are related to one aspect of cognitive structure between the object
and the goal.
THEORIES OF ATTITUDE-
 Cognitive Dissonance Theory: is motivating state of affairs just as hunger impels us to eat, so does
dissonance impel a person to change his opinions or his behavior.
 In this theory, individual gets additional information in three ways:
 One information is overshadowing other
 Both information’s are in opposite direction
 Both information’s are not related to each other
CBB-3
External Influences on Buying Behavior-
External Influences-
• Reference Groups
• Family
• Social Class
• Culture
 Group-
“A group may defined as two or more people who interact to accomplish either individual or
mutual goals.”
Types of Group-
• Groups can be classified in a number of ways like by Structure, Regularity of Contact, Size,
Membership etc.
• Primary and Secondary Group
• Formal and Informal Group
• Membership Group
• Consumer Relevant Group
Consumer Relevant Group-
• The Family
• Friendship Group
• Social Group
• Shopping Group
• Work Group
• Consumer Action Group
Reference Group-
“A reference groups is any person or group that serves as a point of comparison (or reference) for
an individual in forming either general or specific values, attitudes, or behavior.”
• Normative Reference Group: these reference groups influence our broadly defined values and
behavior.
• Comparative Reference Group: these are benchmarks for narrowly defined or specific attitudes or
behavior.
• Amplified Reference Group: these are people with whom we don’t interact, but still they play
important role in our decision making.
• Positive Reference Group: a positive reference group inspires the members to behave in a manner
coinciding with its values. It has a positive influence on its members.
• Negative Reference Group : is one which inspires an individual to behave exactly opposite to its
own values.
Marketing Applications-
• Informational Influence
• Comparative Influence
• Normative Influence
FAMILY-
• “Family can be defined as two or more persons related by blood, marriage or adoption who
reside together.”
• INDIAN FAMILY STRUCTURE
• Joint Family
• Nuclear Family
• Extended Family
• Western Family Structure
• Married Couple
• Nuclear Family
• Extended Family
• Live in Relationship
FAMILY LIFE CYCLE-
• Young Singles
• Newly Married
• Full Nest I (Children below 6 yrs)
• Full Nest II (Children 6-12 yrs)
• Full Nest III (Teenage Children)
• Married Couple Without Children
• Unmarried Couple
• Young Single Parents
• Middle Aged Single Parents
 Family Roles-
• Influencer
• Expert
• Gate Keeper
• Deciders
• Buyers
• Users
• Maintainers
• Disposers
Functions of Family-
• Economic Well Being
• Emotional Support
• Suitable Lifestyle for the Family
• Socialization of Family Member

Socialization of Family Members – Children

• Observation
• Co-shopping
• Direct Experience
• Application:
- Child Models
- Children as Influencers
SOCIAL CLASS-
“A group consisting of number of people who have approximately equal position in society.
These positions may be achieved rather than described, with some opportunity for upward or
downward movement of other class”

Two Level Social Class-

• Blue Collar and White Collar
or
• Lower and Upper Class

Four Level Social Class-

• Upper Class
• Upper Middle
• Lower Middle
• Lower
Five Level Social Class-
• Upper Class
• Upper Middle Class
• Lower Middle Class
• Working Class
• Lower Class
Six Level Social Class-
• Upper-Upper
• Lower-Upper
• Upper-Middle
• Lower-Middle
• Upper-Lower
• Lower
Social Class-
Factors Deciding Social Class-
• Occupation
• Education
• Income
• Social System
• Lifestyle
• New Wealthy Class
• Mobility
Applications in Marketing-
 • Advertising
• Market Segmentation
• Distribution
• Product Development
CULTURE-

“Culture can be defined as a set of learned beliefs, values, attitudes, habits and forms of behavior
that are shared and are transmitted from generation to generation within that society.”
Culture is also called as personality of the society.
CULTURE-
• Religion
• Rituals
• Culture is shared
• Culture is learned
CHARACTERSTICS OF INDIAN CULTURE-
• Liberty and Equality
• Influence of Religion
 • Respect of Elders
• Respect to Religious Leaders
• Importance of Cross Culture
• Care of Tomorrow
INDIAN CORE VALUES VIS-VIS CORE VALUES OF OTHER MARKETS-
• Individualism
• Cleanliness
• Languages
• Work
• Pleasure and Holidays
• Morality and Sex
• Value of Time
CULTURE AND MARKETING-
• Geographical Factor
• Languages
• Religion
• Segmentation
• Advertising
PDF-1: modelsofconsumerbehaviour
• The Economic Model

• Learning Model

• Psychological Model

• The Sociological Model

• The Howard Sheth Model of buying behaviour

• The Nicosia Model

• The Engle-Kollat-Blackwell Model

• Engle, Blackwell and Miniard (EBM) Model

• Webstar and Wind Model of organizational buying behaviour

• The Sheth Model of Industrial buying

Traditional Models
• Learning Model
• The Economic Model
• Psychological Model • The Engle-KollatBlackwell Model

• The Sociological • Engle, Blackwell and Miniard (EBM)

Model Model
Contemporary Models
• Webstar and Wind Model of
• The Howard Sheth Model of buying organizational buying behaviour
behaviour
• The Sheth Model of
• The Nicosia Model

This model assumes that with limited purchasing power and a set of needs and tastes, a consumer will allocate his/
her expenditure over different products at a given prices so as to maximize utility. Bases for Economic Model:

• Price Effect

• Substitution Effect

• Income Effect Criticism:

 • Fails to explain how does the consumer actually behave.

• Incompleteness in the Model.

• Lack of broader perspective.

This model help marketers to promote association of products with strong drivers and cues, which would lead to
positive reinforcement from the consumers.

In marketing context, ‘learning’ will help marketers to understand how consumer learn to respond in new marketing
situations, or how they have learned and respond in the past in similar situations.

As Consumers also learn to discriminate and this information will be useful in working out different marketing
strategies.

This model based on the work of psychologists who were concerned with personality. The view was human needs
and motives operates on buying.
This theory was developed by Sigmund Frued. Acc. To him human behaviour is the outcome of
• Id
 • Super Ego
• Ego

This model is concerned with personality and says that human behaviour to a great extent is directed by a
complex set of deep seated motives.

Helps the marketer to know how buyers influenced by symbolic factors in buying a product.

As per this model, an individual buyer is a part of the institution called society, gets influenced by it and in turn, also
influences it in its path of development.

The interactions with all the set of society leave some impressions on him and may play a role in influencing his
buying behaviour.

The marketers, through a process of market segmentation can work out on the common behaviour patterns of a
specific class and group of buyers and try to influence their buying pattern.
It attempts to throw light on the rational brand behaviour shown by buyers when faced with situations involving
incomplete information and limited abilities.
The model refers to three levels of decision making:

• Extensive problem solving

• Limited problem solving

• Routinized response behaviour

The model has borrowed the learning theory concepts to explain brand choice behaviour when learning takes places
as the buyer moves from extensive to routinized problem solving behaviour.
The model makes significant contribution to understand consumer behaviour by identifying the
variables which influence consumers.

• Input variables

• Output variables

• Hypothetic constructs
• Exogenous variables
Input Variables: these variables acts as stimuli in the environment.
Stimuli can be of Significative, Symbolic & Social

Significative stimuli are those actual elements of brands which the buyer confronts, where as Symbolic stimuli
are those which are used by marketers to represent their products in a symbolic form. Social stimuli are generated
by the social environment such as family, friends, groups etc.

These are which buyer’s observable responses to stimulus inputs. They appear in the sequence as below:

• Attention: Based on the importance of the buyer’s information intake.

• Comprehension: the store of information the buyer has about the brand.

• Attitude: the buyer’s evaluation of the particular brand's potential to satisfy his or her motives.

• Intention: the brand which the buyer intends to buy.

• Purchase behaviour: the act of actually purchasing, which reflects the buyer’s predisposition to buy as
modified by any of the inhibitors.
The model proposes a number of intervening variables which have been categorised into two major groups: perceptual
and learning constructs.

Perceptual Constructs include:

• Sensitivity to information: the degree to which the buyer regulates the stimulus information flow.

• Perceptual bias: refers to distorting or altering information

• Search for information: it involves actively seeking information on the brands or their characteristics.
The buyer’s learning constructs can be defined as:

• Motives are general or specific goals impelling action.

• Brand potential of the evoked set refer to the buyer’s perception on the ability of brands in his pr her evoked set
to satisfy his or her goals.

• Decision mediators are based on the motives. The buyer will have certain mental rules for matching and
ranking the purchase alternatives.
 • Predisposition refers to a preference towards brand in the evoked set which expresses an attitude towards them.

• Inhibitors refers to environmental forces like price and time pressure which may inhibit or put restrain on the
purchase of a preferred brand.

• Satisfaction the extent to which, post actual purchase will measure upto the buyer’s expectation

• Exogenous variables:
These are list of a number of external variables (external to the buyer) which can significantly influence buyer decisions.
 • There is a absence of sharp distinctions between exogenous variables and other variables.

• Some of the variables, which are not well defined, and are difficult to measure too.

• The model is quite complex and not very easy to comprehend.

This model attempts to explain buying behaviour by establishing a link between the organisation and its prospective
customer. It analyse human being as a system with stimuli as the input to the system and the human behaviour as an
output of the system.

The model suggests that message from the first influences the predisposition of the consumer towards the product or
services. Based on the situation, the consumer will have a certain attitude towards the product. This may result in a
search for the product or an evaluation of the product attributes by the consumer.
 If the customer satisfies with above it may result in a positive response, with a decision to buy the product The
Nicosia Model explains in 4 basic areas:
Field 1:- the consumer attribute and the firm’s attributes. The advt. message sent from the company will reach the
consumer attributes.

Field 2:- it is related to the search and evaluation, undertaken by the consumer, of the advertised product and also to
verify if other alternatives are variable.

Field 3:- it explains how the consumer actually buys the product.

Field 4:- it is related to the uses of the purchased items. It can also be related to an output to receive feedback on sales
results by organisation.
• The flow is not completed and does not mention the various factors internal to the consumer.

• The assumption about the consumer being involved in the decision process with no predisposition about the
various brands is restricting.

• Overlapping between firm’s attributes and consumers attributes.

• This model talks of consumer behaviour as a decision making process in the form of five steps (activities) and
other related variables which occur over a period of time.

• 5 steps involved in the decision process:

• Problem Recognition

• Information Search

• Alternative Evaluation

• Choice

• Outcome

• Other related Variables included in this model:

•Information input
•Information processing
•Product – brand evaluation
•General motivating influences
•Internationalised environment influences
About the model

• The model has emphasised on the conscious decision making process adopted by a consumer.

• The model is easy to understand and is flexible.

• This model recognises that a consumer may not go through all the steps always. This is because in case of
repeat purchases the consumer may bypass some of the steps.

• One limitation, the inclusion of environmental variables and general motivating influences but not specifying
the effect of these on the buyer behaviour.

• It shares certain things with Howard-Sheth model.

• The core of the EBM model is a decision process which is augmented with inputs from information
processing and other influencing factors.

• Four sections of the Model:

• Input

• Information Processing

• Decision process and

• Variables influencing decision process.

• The EBM Model when compared to the Howardseth model is more coherent and flexible than the latter.

• This model also includes human processes like memory, information processing and considers both the
positive and negative purchase out comes.


PDF-2: Organizational Buying Behavior

Organizational Buying
Behavior
Problem Recognition
 General Description of Need
 Product Specifications
 Supplier Search
 

 Acquisition and Analysis of Proposals

 Supplier Selection
 Selection of Order Routine
 Evaluation and Feedback

Organizational Buying Process

New Task

◦ Firm has no experience in purchasing the product; requires : extensive problem solving

◦ Problem or need is different from anything previously experienced

◦ Lack well-defined criteria and supplier loyalty ◦ Business Marketer Strategy
 
Purchase Types
Straight Rebuy
A recurring requirement; buyers have substantial experience with the purchase .

◦ Continuing or recurring requirements

◦ Routine problem solving
 Operational resources
◦ Buying decision approaches
 Causal purchases
 Routine low priority

Purchase Types
Modified Rebuy
◦ Believe can derive significant benefits by reevaluating alternatives
◦ Limited problem solving
 
◦ Buying decision approaches
 Simple modified rebuy
 Complex modified rebuy
◦ Business Marketer Strategy
 In-supplier
 Out-supplier

Purchase Types
Environmental Forces Organizational Forces
 Group Forces
 Individual Forces
 
Forces Shaping Organizational Buying Behavior
Environmental Forces
◦ Economic influences
◦ Technological influences
◦ Political Influences
 
Forces on Organizational Buying
Organizational Forces
◦ Role of purchasing agents ◦ Should it be centralized?
 Benefits
◦ Better integrate purchasing
◦ Cut costs
◦ Favorable terms
◦ Specialization
 When to centralize or decentralize?

Forces on Organizational Buying

  Differing Evaluative Criteria
 Responsive Marketing Strategy
 Information-processing
 Selective processing
◦ Selective exposure
◦ Selective attention
◦ Selective perception
◦ Selective retention
 Risk-reduction strategies

ndividual Forces
Group Forces
Buying Center
◦ Different people play different roles
 ◦ New task
◦ Straight rebuy/modified rebuy

Forces on Organizational Buying

Group Forces (cont’d)

◦Buying center influences

Users
Gatekeepers
Influencers Deciders
 Buyers

Forces on Organizational Buying

 
Formal authority to sign contracts
 Member of purchasing department
 Influences the vendor selection
 Not in technical details
 Main criteria: price + terms and conditions of the contract

Buyer
Person working with the product
 Interested in benefits and unobstructed function of the product to buy

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 

 Large knowhow and preconceived opinion

User
A person with high technical knowledge and practical experience
Defines minimum requirements on technical or company standards

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 
Influencer
Controls the flow of information within the buying center
 Assistant of decision maker
 Influence by preparing the decision and the relevant documents

Gatekeeper
Right to say yes or no Mightiest person Decider

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 
Person who brings new ideas and solutions into the company

Initiator
Long decision taking process
 High risk

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 

 Complex buying center

 The specific competitive situation

Specific marketing
considerations in the industrial facilities business
Focuses on innovation
 Has to care for high flexibility in research and development
 And manufacturing and assembling

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 
Product policy
Strict bid and tender rules
 High transparency
 Add value with service offering to achieve a differentiating position
 Another aspect: financing and sourcing models

Price
Focus on negotiation phase
 Provide excellent people in the selling center
 High technical knowledge Distribution policy

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