A

REPORT
ON
CHAPTER PRESENTATION
OF

Analyzing Consumer Market

& Buyer Behavior

PRESENTED BY:
TEJAS SACHALA
JIGNESH GAMIT
PARESH SIDHDHAPURA
DIGESH SHAH
CHANDRAJIT KHANIYA
KARTIK PATEL

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INTRODUCTION
 The aim of marketing is to meet and satisfy target customers’ needs & wants better
than competitors

 Studying consumers provides clues for developing marketing activities

 Marketers are always looking for emerging trends that suggest new marketing
opportunities

CONSUMER BEHAVIOR

Definition of consumer behaviour :

“Consumer behaviour is the study of when, why, how, and where people do or do
not buy products”.

Conceptual Background:

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 re-discovery
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 a social function but if Arrow’s
possibility theorem is used for a social function, social welfare function is achieved. 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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Belch and Belch define consumer behaviour as 'the process and activities people engage in
when searching for, selecting, purchasing, using, evaluating, and disposing of products and
services so as to satisfy their needs and desires'.'
STANDARD MODEL FOR CONSUMER BEHAVIOR :
BLACK BOX MODEL:
The black box model shows the interaction of stimuli, consumer characteristics, decision
process and consumer responses.[1] 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.

ENVIRONMENTAL FACTORS BUYER'S BLACK BOX

BUYER'S
RESPONSE
Marketing Environmental Buyer
Decision Process
Stimuli Stimuli Characteristics

Problem
recognition
Economic Attitudes
Information Product choice
Product Technological Motivation
search Brand choice
Price Political Perceptions
Alternative Dealer choice
Place Cultural Personality
evaluation Purchase timing
Promotion Demographic Lifestyle
Purchase decision Purchase amount
Natural Knowledge
Post-purchase
behaviour

PROCESS ACCORDING TO BLACKBOX MODEL :

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Information search

Once the consumer has recognised a problem, they search for information on products
and services that can solve that problem. Sources of information include:

 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,
organises, and interprets information to create a meaningful picture of the world'

The selective perception process

Stage Description

- 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.

Information evaluation

At this time the consumer compares the brands and products that are in their evoked
set. How can the marketing organization increase the likelihood that their brand is part of the
consumer's evoked (consideration) set?

Consumers evaluate alternatives in terms of the functional and psychological benefits

that they offer. The marketing organization needs to understand what benefits consumers are
seeking and therefore which attributes are most important in terms of making a decision.

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Purchase decision

Once the alternatives have been evaluated, the consumer is ready to make a purchase
decision. Sometimes purchase intention does not result in an actual purchase. The marketing
organization must facilitate the consumer to act on their purchase intention.

The provision of credit or payment terms may encourage purchase, or a sales

promotion such as the opportunity to receive a premium or enter a competition may provide
an incentive to buy now. The relevant internal psychological process that is associated with
purchase decision is integration.

Postpurchase evaluation

It is common for customers to experience concerns after making a purchase decision.

This arises from a concept that is known as “cognitive dissonance”. The customer, having
bought a product, may feel that an alternative would have been preferable. In these
circumstances that customer will not repurchase immediately, but is likely to switch brands
next time.

To manage the post-purchase stage, it is the job of the marketing team to persuade the
potential customer that the product will satisfy his or her needs. Then after having made a
purchase, the customer should be encouraged that he or she has made the right decision.it is
not effected by advertisement.

Internal influences

Consumer behaviour is influenced by: demographics, psychographics (lifestyle), personality,

motivation, knowledge, attitudes, beliefs, and feelings. consumer behaviour concern with
consumer need consumer actions in the direction of satisfying needs leads to his behaviour of
every individuals depend on thinking process

External influences

Consumer behaviour is influenced by: culture,sub-culture, locality, royalty, ethnicity, family,

social class, reference groups, lifestyle, and market mix factors.

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WHAT INFLUENCES CONSUMER BEHAVIOR?
• Cultural factors

• Social factors

• Personal factors

• Psychological factors

CULTURAL FACTORS

Cultural factors

 Culture, Subculture and Social class are particularly important influences on

consumer buying behavior

 Culture is the fundamental determinant of a person’s wants and behavior

 Each culture consists of smaller subcultures that provide more specific identification
and socialization for their members

 Subcultures include nationalities, religions, racial groups and geographic regions

 Social classes are relatively homogeneous and enduring divisions in a society, which
are hierarchically ordered and whose members share similar values, interests and
behavior

 Social classes reflect not only income, but other indicators such as occupation,
education and area of residence

Culture: Culture is the set of basic value, perception, wants and behaviours learned by a
member of society from family and other institution. Culture is the most basic cause of a
person’s wants and behaviour. Every group or society has a cultural influence on buying
behaviour.

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Subculture: Each culture contains smaller subcultures. Subculture is a group of people with
shared value system based on common life experiences and situations. Subcultures include
nationalities, religions, racial groups, and geographic regions. For example of important
subcultures include Hispanic, African American, Asian and Mature consumers.

Example: Kellogg India

 When Kellogg launched its cornflakes in the Indian market, the response from the
consumers was not very encouraging.

 The company conducted a market research and discovered that Indians prefer hot milk
with cornflakes whereas the ‘Crispiness’ benefit that it was claiming could be
delivered only when the cornflakes were mixed with cold milk

SOCIAL FACTORS

Reference Groups

Humans are inherently social animals, and individuals greatly influence each other.

A useful framework of analysis of group influence on the individual is the so called reference
group—the term comes about because an individual uses a relevant group as a standard of
reference against which oneself is compared. Reference groups come in several different
forms.

• The aspirational reference group refers to those others against whom one would like
to compare oneself. For example, many firms use athletes as spokespeople, and these
represent what many people would ideally like to be.

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 • Associative reference groups include people who more realistically represent the
individuals’ current equals or near-equals—e.g., coworkers, neighbors, or members of
churches, clubs, and organizations. Paco Underhill, a former anthropologist turned
retail consultant and author of the book Why We Buy has performed research
suggesting that among many teenagers, the process of clothes buying is a two stage
process. In the first stage, the teenagers go on a "reconnaissance" mission with their
friends to find out what is available and what is "cool." This is often a lengthy
process. In the later phase, parents—who will need to pay for the purchases—are
brought. This stage is typically much briefer.
• Finally, the dissociative reference group includes people that the individual
would not like to be like. For example, the store literally named The Gap came about
because many younger people wanted to actively dissociate from parents and other
older and "uncool" people. The Quality Paperback Book Club specifically suggests in
its advertising that its members are "a breed apart" from conventional readers of
popular books.

Reference groups come with various degrees of influence. Primary reference groups come
with a great deal of influence—e.g., members of a fraternity/sorority. Secondary reference
groups tend to have somewhat less influence—e.g., members of a boating club that one
encounters only during week-ends are likely to have their influence limited to consumption
during that time period.

 A person’s reference groups consist of all groups that have a direct or indirect
influence on the person’s attitudes or behavior

 Groups having a direct influence on a person are called membership groups

 Marketers try to identify target customers’ reference groups

 An Opinion leader is the person in informal, product-related communications who

offers advice or information about specific product such as which of several brands is
best or how a particular product may be used

 Marketers try to reach opinion leaders by identifying demographic and psychographic

characteristics associated with opinion leadership

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EXAMPLE: NESTLE

 Prior to the launch of its KitKat Kubes, a variant of the popular KitKat brand, Nestle
hired an agency to create a buzz among opinion leaders in the age 16 to 25 market

 A database of about 20,000 was sent text messages and then this database was
whittled down to 100 opinion leaders by a phone questionnaire

 The opinion leaders were sent a large box of KitKat Kubes

Family

Family member can strongly influence consumer’s behavior. Husband- wife

involvement varies widely by product category and by stage in the buying process. In the
United States, the wife traditionally has been the main purchasing agent for the family,
especially in the areas of food, household products, and clothing.

Children may also have strong influence on family buying decision. For example children
as young as age six may influence on the family car purchase decision. “By six, they know
the names of cars,” says an industry analyst. Chevrolet recognizes this influence in marketing
its Chevy Venture minivan.

 It is the most influential group on any person’s attitudes

 The members of the family play different roles such as influencer, decider, purchaser
and user in the buying process of any product

 A person’s orientation towards religion, politics and economics are all based on the
values acquired from the parents and family members

For example:

 Husband dominant: Life insurance, automobiles, television

 Wife dominant: Washing machines, carpets, kitchen-ware

 Equal dominance: Housing, Vacation tour, outside entertainment

Roles and Statuses

 A person participates in many groups- family, clubs, organizations

 A person’s position in each group can be defined in terms of role and status

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  A role consists of the activities a person is expected to perform. Each role carries a
status

 Eg. A Supreme court justice has more status than a sales manager and a sales manager
has more status than office clerk

 People choose products that communicate their role and status in society

 Company presidents often drive Mercedes, wear expensive suits, and drink Chivas
Regal scotch

PERSONAL FACTORS

• Age & stage in life cycle

• Occupation & economic circumstan ces

• Personality & self concept

• Life style & Value

Age & Stage in the Life cycle

 People buy different goods, fund services over a life time. Taste in food, clothes,
furniture and recreation is often age related.

 Marketers should also consider critical life events or transitions-marriage, childbirth,

illness, relocation, etc.-as giving rise to new needs.

Occupation & Economics Circumstances

 Product choice is greatly affected by economic circumstances: spendable income,

savings & assets, debts, borrowing power, and attitudes towards spending and saving.

 If economic indicators point to a recession, marketers can take steps to redesign,

reposition and reprice their products or introduce or increase the emphasis on discount
brands so that they can continue to offer value to target customers.

Personality & Self-Concept

 A set of distinguishing human psychological traits that lead to relatively consistent

and enduring responses to environmental stimuli is called Personality.

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  Personality is often described as self-confidence, dominance, autonomy, sociability,
defensive & adaptability.

 Brand Personality is the specific mix of human traits that may be attributed to a
particular brand.

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Outside marketing stimuli and the ultimate purchase decisions. Four key psychological
processes :

1. motivation,

2. perception,

3. learning, and

4. memory

– fundamentally influence consumer behavior.

MOTIVATION
 A person has many needs at any given time

 Some needs are biogenic; they arise from physiological states of tension such as
hunger, thirst, or discomfort

 Other needs are psychogenic; they arise from psychological states of tensions such as
the need for recognition, esteem, or belonging

 A need becomes a motive when it aroused to a sufficient level of intensity

 Three of the best-known theories of human motivation-

1) Abraham Maslow

2) Fredrick Herzberg

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 1) Abrahm Maslow:

Abrham maslow sought to explain why people are driven by particular needs at
particular times. His answer his that human needs are arranged in a hierarchy from
most to least pressing-physiological needs, safety needs, social needs, esteem needs,
and self-actualisation needs. People will try to satisfy their most important needs first.
When a person succeeds in satisfying an important need, he will then then try to
satisfy the next-most-important need.

2) Frederick Herzberg:

Two-factor theory distinguishes between:

 Motivators (e.g., challenging work, recognition, responsibility) that give positive

satisfaction, arising from intrinsic conditions of the job itself, such as recognition,
achievement, or personal growth, and

 Hygiene factors (e.g. status, job security, salary and fringe benefits) that do not give
positive satisfaction, though dissatisfaction results from their absence. These are extrinsic
to the work itself, and include aspects such as company policies, supervisory practices, or
wages/salary.

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 Essentially, hygiene factors are needed to ensure an employee is not dissatisfied.
Motivation factors are needed to motivate an employee to higher performance, Herzberg also
further classified our actions and how and why we do them, for example, if you perform a
work related action because you have to then that is classed as movement, but if you perform
a work related action because you want to then that is classed as motivation.

Unlike Maslow, who offered little data to support his ideas, Herzberg and others have
presented considerable empirical evidence to confirm the motivation-hygiene theory. Their
work, however, has been criticized on methodological grounds. Nevertheless, Herzberg and
his associates have rendered a valuable service to science and to management through their
efforts to apply scientific methods to understanding complex motivational problems at work
and have stimulated others to continue the search.

PERCEPTION
 A motivated person is ready to act. How the motivated person actually acts is
influenced by his or her view or perception of the situation

 In marketing perception are more important than the reality, as it is perceptions that
will affect consumers’ actual behavior

There are three perceptual process

1) Selective Attention: Average person may be exposed to over 50 to 100 brand

communication a day.

Because a person cannot possibly attend to all these, most stimuli will be screened
out- a process called selective attention.

2) Selective Distortion: Selective distortion is the tendency to interpret information in

a way that will fit out perception.

Consumer will often distort information to be consistent with prior brand and product
beliefs.

3) Selective Retention: People will fail to register much information to which they are
exposed in memory, but tend to retain information that supports their attitudes and
beliefs

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LEARNING :
Learning induces changes in our behavior arising from experience. Most human behavior is
learned, although much learning is incidental. Learning is theorists believe that learning is
produced through the interplay of drives, stimuli, cues, responses and reinforcement. Two
popular approaches to learning are classical conditioning and operant conditioning.

MEMORY:
All the information and experiences we encounter as we go through life can end up in our
long-term memory. Cognitive psychologists distinguish between short-term memory- a
temporary and limited repository of information-and long term memory- a memory
permanent, essentially unlimited repository.

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CONSUMER DECISION-MAKING PROCESS

1. NEED RECOGNITION
 Difference between the desired state and the actual condition.

Example:

 By seeing a commercial for a new pair of shoes, stimulates your recognition that you
need a new pair of shoes.

 Hunger stimulates your need to eat.

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Consumer Problems and Recognition

 Consumer problem: Discrepancy between ideal and actual state--e.g., consumer:

– has insufficient hair

– is hungry

– has run out of ink in his or her inkjet cartridge

 Problems can be solved in several ways--e.g., stress reduction <----- vacation,

movie, hot bath, medication

2. INFORMATION SEARCH
 Internal Search:

--- Memory

 External Search:

--- Friends and Relatives

--- From outside Environment

A successful information search leaves a buyer with possible alternatives, the evoked set.

Example:

Hungry, want to go out and eat, evoked set is

 Chinese food

 Indian food

 Burger king

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The information search stage

An internal search involves the scanning of one's memory to recall previous experiences or
knowledge concerning solutions to the problem-- often sufficient for frequently purchased
products.

An external search may be necessary when past experience or knowledge is insufficient, the
risk of making a wrong purchase decision is high, and/or the cost of gathering information is
low.

Determinants of External Search

3. EVALUATION OF ALTERNATIVES
Need to establish criteria for evaluation, features the buyer wants or does not want.

Rank/weight alternatives.

Example:

If you want to eat something spicy, then Indian food gets the highest rank etc…

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Buyer Behavior

Other people often influence a consumer’s purchase decision.

The marketer needs to know which people are involved in the buying decision and what
role each person plays, so that marketing strategies can also be aimed at these people.

• Initiator: the person who first suggests or thinks of the idea of buying a particular
product or service.

• Influencer: a person whose views or advice carry weight in making the final buying
decision

• Decider: the person who ultimately makes the final buying decision or any part of it

• Buyer: the person who makes the actual purchase

• User: the person who consumes the product or service

DECISION ISSUES

 Types of decisions

– Routinized response (e.g., gas, sodas)

– Limited problem solving (e.g., car service, fast food)

– Extended problem solving (e.g., new car, computer, medical procedures)

 Type of evaluation:

– Compensatory: Decision based on overall value of alternatives (good

attribute can outweigh bad ones)

– Non-compensatory: Absolutely must meet at least one important criterion

(e.g., car must have automatic transmission)

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 4. PURCHASE DECISION :
Choose buying alternative, includes product, package, store, method of purchase etc.

May differ from decision, time lapse between purchase decision and the actual purchase,
product availability.

Decision Processing

Consumer decision making varies with the level of involvement in the purchasing decision

• Extensive: problem solving occurs when buyers purchase more expensive, less
frequently purchased products in an unfamiliar product category requiring
information search & evaluation; may experience cognitive dissonance.

• Limited: problem solving occurs when buyers are confronted with an unfamiliar
brand in a familiar product category

• Routine: response behavior occurs

When buyers purchase low cost, low risk, brand loyal, frequently purchased, low personal
identification or relevance, items with which they are familiar.

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5.POSTPURCHASE BEHAVIOR

5. POST-PURCHASE EVALUATION :
It is the outcome, Satisfaction or Dissatisfaction.

This can be reduced by warranties, after sales communication etc.

Example:

After eating an Indian meal, you may think that really you wanted a Chinese meal
instead.

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TYPES OF CONSUMER BUYING BEHAVIOR:

There are four types of consumer buying behavior, they are:

1. Routine Response/Programmed Behavior

2. Limited Decision Making

3. Extensive Decision Making

4. Impulse buying

1. ROUTINE RESPONSE/PROGRAMMED BEHAVIOR

 Buying low involvement, frequently purchased, low cost items.

Examples :

Soft drinks, snack foods, milk etc.

2. LIMITED DECISION MAKING

 Buying product occasionally.

 That is when you need to obtain information about unfamiliar brand in a familiar
product category.

Example:

Clothes--know product class but not the brand.

3. EXTENSIVE DECISION MAKING :

Complex high involvement, unfamiliar, expensive and infrequently bought products.

Spend a lot of time seeking information and deciding. High degree of risk.

Example:

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 Cars, homes, computers, education.

4. IMPULSE BUYING :

 No conscious planning.

The purchase of the same product does not always elicit the same Buying
Behavior. Product can shift from one category to the next.

For example:
Going out for dinner for one person may be extensive decision making (for someone
that does not go out often at all), but limited decision making for someone else.

The reason for the dinner, whether it is an anniversary celebration, or a meal with a
couple of friends will also determine the extent of the decision making.

REFERENCE:

1. www.scribd.com

2. http://en.wikipedia.org/wiki/consumer_behaviour

3. http://marketingpr.suite101.com/article.cfm

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 4. http://www.flickr.com/photos/bragadocchio/426444706

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