Consumer Behaviour

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Learning Objectives
1) To understand
the evolution of the marketing concept, the most prominent tools
used to implement marketing strategies,
the relationship between value and customer retention,
the objectives of socially responsible marketing.
the efficacy of Internet and related technologies in improving
marketing transactions
by adding value that benefits both marketers and customers.
2) To understand
consumer behaviour in times of economic uncertainty, and how
marketing is evolving to serve the modern, connected customer

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Maslows Hierarchy of Needs

Self
Actualisation

Higher Order

Esteem
Social

Safety

Lower Order

Physiological

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How Can A Car Help Express Its Owners Characteristics?

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THE ADVERTISEMENT invites prospective owners to

Take On the Machine
and
appeals to Ego and Esteem needs,
which are pervasive psychological needs in our society.

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The tagline in Porsches Boxster ad appeals to prospective owners

psychology by addressing conflicts about paying for performance,
stating that unfulfilled dreams cost a lot more and assures them
that of all the emotions you can expect while driving a Boxster,
regret will never be one of them
Why people buy cars ?
-Need personal transportation
-But
the types of cars people choose are determined not by needs alone,
but also by how cars express their owners characteristics

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Digital Revolution has introduced several drastic changes

into the business environment

Consumers have more access to

information than ever before

Consumers have more power than

ever before

Marketers can offer more services

and products than ever before

Exchange between marketers and

customers is extremely interactive
and instantaneous

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Experiential Marketing

Physical Consumption

Physiological Experience

Application Based Consumption

Application Experience

Non-reality Consumption

Fantasy Experience

Conspicuous Consumption

Social Experience

Risk-free Consumption

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Well-being Experience

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According to Loudon and Bitta, a customer is

someone who regularly purchases from a particular
store or company.
An individual who uses Colgate Toothpaste or who
uses INDANE cylinders can be viewed as a customer
of these firms.
But an individual who purchases any Toothpaste or is
inclined to any of the gas services whichever is
available and at a cheaper rate can be attributed to a
consumer.

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Who is a Consumer?
A Consumer is an individual who purchases, uses,
maintains, and disposes of products and services
Who is an User?
According to Merriam Webster Dictionary an user is the one
who can exercise right to the enjoyment of property
How is it meaningful in Consumer Behaviour?
They all have their own independent identity in terms of
behavioural pattern

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Seven Os of Consumer Behaviour

What They Buy?

Object

Why They Buy?

Objective

When They Buy?

Occasion

Where They Buy?

Outlet

How Often They Buy?

Occurence

How often They Use It?

Operation

How They Evaluate?

Output

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13

Definition
The study of consumer behavior describes what products
and brands consumers buy, why they buy them, when
they buy them, where they buy them, how often they
buy them, how often they use them, how they evaluate
them after the purchase, and whether or not they buy
them repeatedly.

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Valentine & Gordon ( 2000) has defined

CONSUMER in six (6) different ways

Marginalised

Statistical

Secretive

Sophisticated

Satellite

Multi-Headed

Source : Valentine Virginia & Gordon Wendy ( 2000), The 21 st Century

Consumer: A New Model of Thinking, International Journal of Market Research

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 Marginalised > sellers market, consumer has less choice,

passive recipients
Statistical

> shifted to buyers market, research

methods developed

Secretive

> bundle of hidden motivations, motivational

research

Sophisticated > someone who consumes advertising as well

as goods and services, awareness of
brands
Satellite

> how to leverage a brand strength, brand

potential can be maximally utilised

Multi-Headed > consumer making a brand choice on two

different occasions depending on need,
ambience, perceptions about other
factors also play an important role

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Demographic / Economic
Suppliers
Marketing Planning System

Marketing
Intermediaries

Product
Political
/ Legal

Marketing
Information
Systems

Place

Target
Consumers

Price

Mktg Organising &

Implementation
System

Technical
/ Physical

Promotion

Competitors

Marketing Organisation System

Publics

Social / Cultural
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Commonly, Consumers are of two types

Personal Consumer

: buying goods and services for

personal / own use , for the use of household when they are
referred to as End Users
Organisational Consumer : include profit and non-profit
businesses, government agencies
Consumer

Behaviour

refers

to

all

the

Psychological,

Physiological and Socio-psychological reasons of individual

consumers responding to marketing appeals

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Importance of Consumer Behaviour

Consumers may be irrational and have no idea what they
want, but is a fact that some products sell better than others
and that some advertising works better than others

Therefore, in order to be able to sell, we need to understand

what makes some marketing plans work better than others
when trying to persuade consumers to buy

Consumer Behaviour

WHO ELSE IT HELPS?

Consumer Behaviour is a science which serves not only the
marketer but also others like
Entrepreneurs to take correct and timely investment
decisions and improve the chances of success of operations
Economist to take note of consumer behaviour forecasts while
planning for communities
Consumer to get an insight and understanding of rationale
behind their own behaviour
Once corrected, they become more value-oriented and emerge as
wiser users

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Consumer Behaviour

CHANGING ROLE OF PRODUCER,MARKETER & CONSUMER

Earlier Role

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Producer

Most important person in the economy,

produced what he found possible

Trader

Distributed efficiency what was

produced, faced competition but
managed it mostly by price financial
management

Consumer

Bought what was made available and

what he could afford within means

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Consumer Behaviour

CHANGING ROLE OF PRODUCER,MARKETER & CONSUMER

Current Role
Consumer

Marketer

Most important person, constantly tries

to achieve a better living standard by
acquiring goods and services
- constantly helps and leads the consumer to
determine what he wants, improvements
required, change possible

Producer
takes decision from the marketer and
consumer , tries to produce anything
consumer wants . Prioritise on Innovation,
service and relationship management

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UNDERLYING PRINCIPLES OF CONSUMER BEHAVIOUR

Consumer is Sovereign

Products or services are accepted or

rejected on the basis of the extent to
which they are perceived as relevant
to needs and lifestyle

Consumer Is Global

- World Is The Market Place; Use of

Internet has reduced the gap between
organisation and consumers

Consumers are Different

Consumers are alike

Stressing on segmentation that focusses

on the similarities within a group of
consumers, while recognizing the
differences between groups

Consumer Has Rights

- Needs that are real are expressed in the

purchases consumers make and in those
purchases they choose to forego

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Class Exercise

How does McDonalds create

value for the consumer?
How do they communicate
this value?

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The Consumers Magna Carta

Right
Safety
Right
to
Right
to
Safety
Rightto
to Safety
Safety

Right
to
Informed
Right
to
Be
Right
to
Be
Informed
Right
toBe
Be Informed
Informed

Right
Choose
Right
to
Right
to
Choose
Rightto
to Choose
Choose

Right
Right to
to Be
Be Heard
Heard

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Consumer Expectations
Fair value for money spent
Product that meets reasonable expectations
Full disclosure of product specifications
Truthful advertising
Safe products
Removal of dangerous products

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Consumerism

A social movement seeking to augment the

rights and powers of buyers in relation to sellers

Arguments For Advertising

Arguments Against Advertising

Increases standard of living

Increases consumer satisfaction
Efficient means of
distributing information
Effective

Lowers standard of living

Decreases consumer satisfaction

Low cost

High cost

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Inefficient means of
distributing information
Ineffective

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Arguments for Advertising

The lifeblood of the free-enterprise system

Stimulates competition

Provides information for comparison buying

Provides competitive information to

competition

Sales response provides a mechanism for

immediate feedback

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Provides social and economic benefits

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Arguments against Advertising

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Ambiguity
Ambiguity

Exaggeration
Exaggeration

Concealment
Concealment
of
of Facts
Facts

Employment
Employment of
of
Psychological
Psychological
Appeals
Appeals

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Exchange Processes and Consumer Behavior

Exchange

is

the

process

that involves the transfer

of

something

intangible,

tangible
actual

or
or

symbolic, between two or

more social actors.

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Prerequisites for Exchange

Two or more parties must be present
Each party has something of value to the other
Each party is capable of communication and delivery
Each party must be free to accept or reject the other's
offer
Each party must believe that it is appropriate or
desirable to deal with the other

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Elements of Exchange
Six Types of Resources Are Exchanged:

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Goods

Information

Service

Status

Money

Feelings

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Dimensions of Exchange Relations

Four types of consumer exchange relations have
been identified:

Restricted versus Complex Exchanges

Internal versus External Exchanges
Formal versus Informal Exchanges
Relational versus Discrete Exchanges

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Ethical Issues in Consumer Exchange Relations

Ethics is the study of the
normative
concerned
morally

judgments
with

right

what

and

is

wrong,

good and bad.

Free riding:

example of an

unethical action.

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Ethical Judgments

Deal with serious human injuries and benefits

may, or may not, be laid down by authority
override self interest
are based on impartial considerations

Ethical dilemma

a decision that involves the trade-off

between lowering ones personal values in exchange for

increased organizational or personal profits.

Ethical exchange
both parties know full nature of agreement
nothing intentionally misrepresented or omitted
no undue influence takes place via power.

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An Organizing Model of Consumer Behavior

The model has five primary components:
The Buying Unit
The Exchange Process
The Marketers Strategy
The Individual Influencers
The Environment

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Buying Unit
consumers, firms, government, non-profits, etc.
Individual influencers
information processing
behavioral learning
motivation and personality
beliefs, attitudes and behaviors
communications
decision making

Marketer, Who Develops Strategy

marketing mix
segmentation and positioning
employs marketing research to understand consumers

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Environmental Analysis:
The marketer assesses the impact of each of the
below facets of the environment on the firm.
situations
groups and families
culture
subculture
cross cultural issues
regulatory environment

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Managerial Applications Analysis (PERMS)

Five factors to consider when using consumer behavior
principles to develop managerial strategy :
Positioning and Differentiation
Environmental Analysis
Research in Marketing
Marketing Mix
Segmentation

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Lessons from the Consumers Movement

1.

Achieve a fair and just marketplace for all consumers

2.

Provide public oversite where:

Corporations lack the incentives to regulate their own

behavior

3.

Issue of health, safety and other special concerns

Provide resources, authority, and support for public

watchdogs

4.

Intensify the fight for affordable goods and services, fair

financial practices, and a chance at a decent standard of
living

5.

Curb wasteful overconsumption that threatens the

environment

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