Consumer Behaviour

Dr. Poonam Madan

Consumer Behavior

Course Description
Consumer behavior is a fascinating interdisciplinary field of study that
focuses on the behavior that consumers display in searching for,
purchasing, using, evaluating and disposing of products and services that
they expect will satisfy their needs and desires.
Consumer behavior focuses on how individuals make decisions to spend
their available resources including time, money and effort on consumptionrelated items.
For marketers to be successful in todays dynamic and rapidly evolving
marketplace, they need to know everything they can about consumers
including the personal and group influences that affect consumer decisions
and how these decisions are made. That involves what consumers buy,
why they buy it, when they buy it, where they buy it, how often they buy it,
how they evaluate it after the purchase and the impact of such evaluations
on future purchases.

Remember
Remember Me?
Me?
I'm the fellow who goes into a restaurant, sits down and patiently
waits while the waitresses do everything but take my order. I'm
the fellow who goes into a department store and stands quietly
while the sales clerks finish their little chitchat. I'm the man who
drives into a gasoline station and never blows his horn, but waits
patiently while the attendant finishes reading his comic book.
"Yes, you might say, I'm a good guy. But do you know who else I
am? I am the fellow who never comes back, and it amuses me to
see you spending thousands of dollars every year to get me back
into your store, when I was there in the first place, and all you had
to do to keep me was to give me a little service; show me a little
courtesy."
Source: From a Better Business Bureau bulletin submitted by An
Arkansas Reader to Dear Abby

Introduction
Consumer psychology needs a special
attention in the present highly competitive
and consumer-oriented marketing system.
Consumer is the cause & purpose of all
production and marketing activities.

Why Consumer Behaviour?

Think about this:

Why does one consumer buy Brand X and another
purchase Brand Y?
Why do some consumers use money off coupons and
others do not?
Why will some people pay a high price for a product
although others will only buy the same product if it is on
sale?

Your Behaviour

Activity:
Think back to a purchase decision you have
made (for example for a computer). Map out the
decision steps that you took.

Decisions Decisions

Consumer behaviour is the process

individuals or groups go through to select,
purchase, use, and dispose of goods,
services, ideas, or experiences to satisfy
their needs and desires. (Salmon)
Buying behaviour is never simple. It is
affected by many different factors, and yet
understanding it is the essential.
(KBM, 2006:197).

This study draws on concepts from

various other disciplines
Psychology
Sociology
Anthropology
Economics
Marketing

Consumer Behavior
Consumer behavior focuses primarily on buyers
and buying.
But, often you buy for others (significant others,
spouses, friends, children)
To buy, you have to engage in activities other than
buying e.g., searching, learning to search, using,
knowing how to use, and disposing.
so buyer behavior cannot be the whole story

Meaning of Consumer/Buyer Behavior

Consumer is the most important person in business. His
attitude, behavior, needs and reactions play an important
role in regard to marketing plans and policies of companies.
Companies study the behaviours of consumers constantly
for their benefits.
Consumer behavior is comparatively new area within the
scope of business management.
The purpose of study of consumer behavior is to
understand human actions and reactions (consumer
behaviour) in the best possible manner.

Concept of Consumer Behavior

Individuals or groups acquiring, using and
disposing of products, services, ideas, or
experiences
Includes search for information and actual
purchase
Includes an understanding of consumer
thoughts, feelings, and actions

Acquisition, Consumption and

Disposal
Acquisition
Receiving
Finding
Inheriting
Producing
purchasing

Consumption
Collecting
Nurturing
Cleaning
Preparing
Displaying
Storing
Wearing
Sharing

Acquisition, Consumption, Disposal

Disposal
Giving
Throwing away
Recycling
depleting

Consumption and Consumer

Behavior
Consumption
Activities, thoughts and feelings (of individuals and
groups) directed toward achieving satisfaction
(often using market offerings).

Consumers
Those who engage in consumption activities

Consumer Behavior (Brief definition)

How consumers go about achieving satisfaction.

What Does it Mean to Study

Consumer Behavior?
It is a study of the feelings, thoughts, and
behaviors of consumers.
Specifically, from a managerial point of view, it is
a study of how people respond to marketing
entities such as products, advertisements,
promotion, price etc.

Consumer Behavior
referred to as the study of when, why,
how, where and what people do or do not
buy products.
It blends elements from psychology,
sociology, social psychology, anthropology
and economics.
It attempts to understand the buyer
decision making process, both individually
and in groups.

Consumer Behavior
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.

Consumer Behavior
Consumer 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 reaffirmation of the importance of the customer
or buyer.

What is Consumer Behaviour?

Those activities directly involved
in obtaining , consuming and
disposing of products and
services, including the decision
processes that precede and follow
these actions

A new product must satisfy

consumer needs, not the
needs and expectations of
management.
Understanding and adapting to
consumer motivation and
behaviour is not an option it
becomes a necessity for
competitive survival

Consumer Behavior
Consumer Behavior may be defined as
the interplay of forces that takes place
during a consumption process, within a
consumers self and his environment.
- this interaction takes place between three
elements viz. knowledge, affect and behavior;
- it continues through pre-purchase activity to
the post purchase experience;
- it includes the stages of evaluating, acquiring,
using and disposing of goods and services.

Consumer Behavior
Consumer behavior explains the reasons and
logic that underlie purchasing decisions and
consumption patterns;
it explains the processes through which buyers
make decisions.
The study includes within its purview, the
interplay between cognition, affect and behavior
that goes on within a consumer during the
consumption process: selecting, using and
disposing off goods and services.

Consumer Behavior
What do we study?
Primarily, three aspects
Affect/Cognition:
Feelings (I love the restaurant)
Thoughts (Rs. 250 for a bowl of soup? Why is it so expensive?)

Behavior:
Action (Going to the restaurant)

Environment:
Context (The lighting in the restaurant)

In other words, we will be examining consumers

affective/cognitive and behavioral responses in the
environmental context.

CB is study of interplay between

cognition, affect and behavior
Cognition: This includes within its ambit the knowledge, information
processing and thinking part; It includes the mental processes involved in
processing of information, thinking and interpretation of stimuli (people,
objects, things, places and events). In our case, stimuli would be product or
service offering; it could be a brand or even anything to do with the 4Ps.

Affect:
This is the feelings part. It includes the favorable or
unfavorable feelings and corresponding emotions towards a stimuli (eg.
towards a product or service offering or a brand). These vary in direction,
intensity and persistence.
Behavior:
This is the visible part. In our case, this could be the
purchase activity: to buy or not a buy (again specific to a product or service
offering, a brand or even related to any of the 4 Ps).

The interaction is reciprocal between each of the three towards each other and
with the environment.

What is Consumer Behavior?

Consumer Behavior:
The study of the processes involved when individuals or
groups select, purchase, use, or dispose of products,
services ideas, or experiences to satisfy needs and
desires

Role Theory:
Identifies consumers as actors on the marketplace
stage

Consumer Behavior is a Process:

Exchange: A transaction in which two or more
organizations give and receive something of value

MEET THE NEW CONSUMER

and smile when you do because
she is your boss. It may not be the
person you thought you knew.
Instead of choosing from what you
have to offer, she tells you what
she wants. You figure it out how to
give it to her.
-Fortune Editor

Consumer Behavior Involves

Many Different Actors
Consumer:
A person who identifies a need or desire,
makes a purchase, and then disposes of the
product
Many people may be involved in this sequence
of events.
Purchaser / User / Influencer
Consumers may take the form of organizations
or groups.

Consumer
The consumer includes both personal
consumers and business/ industrial/
organizational consumers.

Types of Buyers/Consumers
1. Friendly/co-operative
buyer.
2. Timid/reserved/shy buyer.
3. Silent buyer.
4. Undecided buyer.
5. Price or quality conscious
buyer.
6. Argumentative buyer.
7. Suspicious buyer.

8. Impatient buyer.
9. Bargain buyer.
10. Impulsive buyer.
11. Over-cautious buyer.
12. Slow-thinking buyer
13. Rude/ill-mannered
buyer.
14. Clever/intelligent
buyer.

Consumer Types
Personal consumer
Buys for individual
Consumption.
Buying decisions are influenced
by
Cognitive, Personal, cultural
,social
Influence, Situational
factors

Organizational Consumer
Buying for organizational consumption
Buying decisions are influenced by
Quality , service , attitude of the suppliers
Financial considerations etc . Besides this ,
Environmental , organizational,
interpersonal
Factors influence the decisions.
The buying decision involves four decision
Makers. End User, Influencer, Decision
makers ( management ) & commercial
Buyer.
Satisfaction of all our groups is essential

Consumer types according to loyalty

Personal consumer & Business Consumer

Solus Users

Dual users

Flirts

Degree of commitment towards product or service brands.

High

Medium

Low

The Global Consumer

American products like Levi jeans are in
demand around the world.

Consumer Buying Behavior

Consumer Buying Behavior refers to the
buying behavior of final consumers
-individuals & households who buy goods
and services for personal consumption.
The central question for marketers is:
How do consumers respond to various
marketing efforts the company might use?

The
The Nature
Nature of
of Consumer
Consumer Behavior
Behavior and
and
Decision
Decision Making
Making

Consumer
Consumer Behavior:
Behavior:

The
Themental
mentaland
andemotional
emotionalprocesses
processesand
and
physical
physicalactivities
activities people
peopleengage
engagein
inwhen
when
they
theyselect,
select,purchase,
purchase,use,
use,and
anddispose
disposeof
of
products
productsor
orservices
servicesto
tosatisfy
satisfyparticular
particular
needs
needsand
anddesires.
desires.

Defining
Defining Consumer
Consumer Behavior
Behavior

Consumer Behavior is the Process

Involved When Individuals or Groups
Select, Use, or Dispose of Products,
Services, Ideas or Experiences
(Exchange) to Satisfy Needs and
Desires.

Consumer Behaviour

Definition:
Study of
and the
secure,
services,
needs

individuals, groups or organisations

processes they use to select,
use and dispose of products,
experiences, or ideas to satisfy

Consumer Behaviour Defined

The American Marketing Association has defined consumer behaviour as, The
dynamic interaction of affect and cognition, behaviour, and the environment by
which human beings conduct the exchange aspects of their lives.
Peter D. Bennett, ed. Dictionary of Marketing Terms, 2nd ed. 1995.
Consumer behaviour refers to the actions and decision processes of people
who purchase goods and services for personal consumption.
James F. Engel, Roger D. Blackwell and Paul W. Miniard,
Consumer Behaviour (1990).
Consumer behaviour refers to the mental and emotional processes and the
observable behaviour of consumers during searching for, purchasing and post
consumption of a product or service. (Authors).

OTHER DEFINITIONS
The behavior that consumers display in
searching for, purchasing, using, evalauting and
disposing of products and services that they
expect will satisfy their needs.
Schiffman and Kanuk
..the decision process and physical activity
engaged in when evaluating, acquiring, using or
disposing of goods and services."
Loudon and Bitta

Definitions of Consumer
Behaviour (cont.)
Those behaviours performed by
decision-making units in the purchase,
usage and disposal of goods and
services (Kotler & Levy)

10

Definitions of Consumer
Behaviour (cont.)
Those actions directly involved in
obtaining, consuming, and disposing
of products and services, including the
decision processes that precede and
follow these actions
(Engel, Blackwell & Miniard)

11

consumer behaviour is the study of the

processes involved when individuals or groups
select, purchase, use or dispose of products,
services, ideas or experiences to satisfy needs
and desires.
Solomon,Bamossy .
the behavior that consumers display in
searching for, purchasing, using, evaluating, and
disposing of products and services that they
expect will satisfy their needs
Schiffman ANDKanuk

Definition of Consumer/Buyer behaviour

Consumer behavior is the process whereby

individuals decide what, when, where, how and
from whom to purchase goods and services.
Walters and Paul

Buyer behaviour is all psychological, social

and physical behaviour of potential customers
as they become aware of, evaluate, purchase,
consume and tell others about the products
and services.
Webster

Nature of Consumer Behavior:

The subject deals with issues related to cognition, affect and
behavior in consumption behaviors, against the backdrop of
individual and environmental determinants. The individual
determinants pertain to an individuals internal self and include
psychological components like personal motivation and
involvement, perception, learning and memory, attitudes, selfconcept and personality, and, decision making. The
environmental determinants pertain to external influences
surrounding an individual and include sociological,
anthropological and economic components like the family,
social groups, reference groups, social class, culture, subculture, cross-culture, and national and regional influences.
The subject can be studied at micro or macro levels depending
upon whether it is analyzed at the individual level or at the
group level.

Nature of Consumer Behavior (contd.)

The subject is interdisciplinary. It has borrowed heavily
from psychology (the study of the individual: individual
determinants in buying behavior), sociology

(the study of groups: group dynamics in buying

behavior), social psychology (the study of how
an individual operates in group/groups and its
effects on buying behavior), anthropology (the
influence of society on the individual: cultural
and cross-cultural issues in buying behavior),
and economics (income and purchasing power).

Nature of Consumer Behavior (contd.)

Consumer behavior is dynamic and interacting

in nature. The three components of cognition,
affect and behavior of individuals alone or in
groups keeps on changing; so does the
environment. There is a continuous interplay or
interaction between the three components
themselves and with the environment. This
impacts consumption pattern and behavior and it
keeps on evolving and it is highly dynamic.

Nature of Consumer Behavior (contd.)

Consumer behavior involves the process

of exchange between the buyer and the
seller, mutually beneficial for both.

Nature of Consumer Behavior (contd.)

As a field of study it is descriptive and also analytical/ interpretive.
It is descriptive as it explains consumer decision making and
behavior in the context of individual determinants and environmental
influences.
It is analytical/ interpretive, as against a backdrop of theories
borrowed from psychology, sociology, social psychology,
anthropology and economics, the study analyzes consumption
behavior of individuals alone and in groups.
It makes use of qualitative and quantitative tools and techniques for
research and analysis, with the objective is to understand and
predict consumption behavior.

Nature of Consumer Behavior (contd.)

It is a science as well as an art.

It uses both, theories borrowed from
social sciences to understand
consumption behavior, and quantitative
and qualitative tools and techniques to
predict consumer behavior.

Scope of Consumer Behavior

The study of consumer behavior deals with understanding
consumption patterns and behavior. It includes within its
ambit the answers to the following: - What the
consumers buy: goods and services
- Why
- When
- Where
- How often they buy it:
- How often they use it:

they buy it: need and want

do they buy it: time: day, week, month,
year, occasions etc.
they buy it: place
time interval
frequency of use

The scope of consumer behavior includes not only the

actual buyer but also the various roles played by him/
different individuals.

The Wheel of Consumer Behavior

Need to study ?
You cannot take the consumer for
granted any more
Therefore a sound understanding of
consumer behaviour is essential for the
long run success of any marketing
program

Why study consumer behaviour?

Better understanding of our own
consumption behaviour

Why do we study CB?

Consumer behaviour: the process individuals or

groups go through to select, purchase, and use goods,

services, ideas or experiences to satisfy their needs and
desires.

We want to understand why consumers

make the decisions that they do, so that
we will be able to predict what they will
do in a given situation, so that ultimately,
we will be able to influence that process.
Why do people buy?
It relates to value, but that is getting
ahead of ourselves.

Understand

Predict

Influence

Why to study consumer behaviour?

Build / Create Dominating or

self expressive brands.

Integrated Market Communication

Plans & strategies

Consumer Behaviour &

Research
CP=BP = Ever lasting brands

Why should Consumer Behavior be

Studied ?
Suppose, your product is not selling well. Should
you decrease the price, increase advertising, offer
consumer promotions?
If you dont know how consumers respond to these
marketing actions, how can you make the decision?
Hence, for marketing strategies to be successful,
understanding consumer behavior is absolutely
important.

Reasons for Studying Consumer

Behavior
To stay in business by attracting and
retaining customers
To benefit from understanding consumer
problems
To establish competitive advantage
because it is interesting!

Consumers behavior is studied from the point of view of :

1.Consumer as an individual :Consumer behavior study as in

individual involves motivational drive ,its measurement , need
& wants & types of need . Self concept, attitude , perception,
consumer imagery
2Consumer in his social & cultural setting : It involves cultural
influence, sub culture , cross culture , ( nationality, religion ,
etc ) psychographic [ life style ] , Social group, reference
group , geo demographic clustering etc.

Why is this important?

Out of 11000 products launched by 77
companies, only 56% are present five
years later Kuczmaski & Associates
Only 8% of new product concepts offered
by 112 leading companies reached the
market. Out of this 83% failed to reach
marketing objectives Group EFO Ltd., Marketing
News, Feb 1, 1993, Pg 2

IMPORTANCE OF
CUSTOMER BEHAVIOUR

Customer satisfaction

Customer retention

The marketing concept

Focus on needs

Customer focus

Serve needs of society

Long-term
survival

Importance of Consumer Behaviour

The center of all business a Consumer has been transforming
rapidly & have become more opaque .
Consumer consistently demand value from the products & services .
The marketer believes that brand is most important to a consumer .
A consumer is exposed to 600 market communication a day
approximately. ( Research results )
A consumer looks beyond the basic functionality of products &
services which he does not articulate.

Importance of Consumer Behaviour

Consumer behavior study help to probe the deep recesses of the
consumer mind where the needs are still not articulated. It helps
to get deeper in to the minds to get more insight & angles. It
subliminally make the consumer like the product & services &
creates a desire to buy the same. .
It helps to build a life time customer value for the organization,
which is an intangible asset
Life time Customer =
Value

Profit X Frequency X Retention period

of Purchase

Groups Interested in
Consumer Behavior
Marketing
organizations

Marketing
strategies

Public
Policy

Consumer
activities
Consumers

Government
and political
organizations

Approaches to the Study of Consumer

Behavior
Approach

Interpretive

Core
Disciplines

Cultural anthropology

Primary
Objectives

Understand consumption and its

meaning

Primary
Methods

Long interviews & focus groups

Approaches to the Study of Consumer

Behavior (contd)
Approach

Traditional

Core
Disciplines

Psychology & Sociology

Primary
Objectives

Explain consumer decision

making and behavior

Primary
Methods

Experiments & Surveys

Approaches to the Study of Consumer

Behavior (contd)
Approach

Marketing Science

Core
Disciplines

Economics & Statistics

Primary
Objectives

Predict consumer choice and

behavior

Primary
Methods

Math-modeling & Simulation