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Unit: 1 Consumer behavoiur-I

Compiled by ASHOK GAUR 1

C.P.PATEL & F.H.SHAH COMMERCE COLLEGE(MANAGED BY SARDAR PATEL EDUCATION TRUST)

BCA, BBA (ITM) & PGDCA PROGRAMMEBBA (ITM) SEM -VII (Consumer Behaviour- I)

UNIT: 1 Understanding Consumer Behaviour

Unit -1 Understanding Consumer Behaviour

Sr. No. Topics

1. Introduction

2. Development of marketing concept

3 Need for understanding consumer Behaviour

4. Factors influencing consumer Behaviour

5. Consumer decision making

6. Model of consumer Behaviour

Reference books:(Schiffman, L.G. and Kanuk, L.L., Consumer Behavior, Eight Edition, 2004, Prentice Hall, India.)

1. Introduction to Consumer Behaviour

The term consumer behaviour is defined as the behaviour that consumer display in searching

for, purchasing using, evaluating and disposing of products and services that they expect will

satisfy their needs.

Consumer behaviour focuses on how individuals make decisions to spend their available

resources (time, money, effort) on consumption-related items that includes what they buy, why

they buy, when they buy it, where they buy it, how often they buy it, how often they use it, how

they evaluate it after the purchase and the impact of such evaluations on future purchases, and

how they dispose of it.

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.

Two different kinds of consuming entities: the personal consumer and the organizational

consumer.

Personal Consumer Buys goods and services for his or her own use, for the use of the

household or as a gift for a friend. The products are bought for final use by individuals, who are

referred to as end users or ultimate consumers.

Organizational Consumer Includes profit and non-profit businesses, government agencies

(local, state, national) and institutional (e.g. schools, hospitals, and prisons), all of which buy

products, equipment, and services in order to run their organizations.

2. Development of the marketing concept

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size, family life cycle, gender, lifestyle, personality, religion, generation, geography, nationality,

and social class. The behavioral dimensions take forms of benefits, uses, use occasion, usage

rates, and loyalty status.

b) Select target market: The marketer then selects one or more markets to enter. The

segment(s) that should be targeted should be viable; there should be a fit between the market

attractiveness and the companys objectives and resources. The marketer would be able toassess the viability of a segment on the basis of the following criteria, viz., measurability,

substantialability, accessibility, differentiability, and actionability.

c) Position the product offering in the mind of the customers:The marketers should be able

to communicate the distinct and/or unique product characteristics.

3. Designing the Marketing Strategy:

There exists interrelatedness between the Consumer, the Environment and the Marketing

strategy.

a) Consumer:The consumer has his needs and wants as well as product preferences;

Thus, there exists an interplay of Cognition (knowledge about products and alternatives), Affect

(feelings of favorableness and unfavorableness) and Behavior (action: buy or not to buy).

b) Environment:This refers to forces in the environment, which make the environment complex

and dynamic.

c) Marketing strategies:This implies setting up of goals and then achieving them through the

design of an appropriate marketing mix.

The knowledge of consumer behavior can be applied to develop a best fit between consumer

needs and wants, the environment in which the firm operates; and, the firms goals and

objectives.

4. Designing the Marketing Mix:

4 Ps The study of consumer behavior may be applied to design the 4 Ps.

a) Product: The term product includes both tangible products and intangible services. The

issues to address consist of name (brand), size, shape, features, labeling, packaging,

accessories and supplementary products, terms of sale and services, after sales etc.b) Price:This includes the pricing of the product offering. The major components include, form

of payment, terms and conditions of payment, discounts, price sensitivity, differential prices and

customer reaction, imagery (price increase and customer reaction, price decrease and customer

reaction).

c) Place and Distribution: This includes the marketing channel, and comprises decisions

regarding choice of channel (direct or indirect), location, accessibility and availability of product

offering, wholesaling, retailing, logistics etc.

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d) Promotion: This includes marketing communication, and the major issues comprise

decisions on communication/promotion mix, the message and media strategy (the content,

appeal and context).

5. Application in Governmental and Non-profit Organizations and Social Marketing:

The knowledge of consumer behavior finds relevance even in Governmental and Non-profit

Organizations and Social Marketing. Governmental and Non-profit Organizations have thesociety as its customers and need to understand them so as to be able to serve them better.

Social marketing involves propagation of ideas; attempts at such circulation and spread of ideas

for moral and social upliftment can be more successful if there is a proper understanding of the

these consumers (i.e., the public and society)

-The subject of Consumer Behavior is viewed as the edifice of the marketing concept, an

important orientation in marketing management.

The knowledge of Consumer Behavior helps the marketer understand and predict the

consumption patterns and consumption behaviors of people. It helps them gain insights as to

why a consumer behaves differently to another consumer; as well as, why a consumer behaves

differently in different times and buying situations.

The study helps them understand the internal (individual determinants) and external

(environmental factors) forces that impel people to act out different consumption patterns and

behaviors.

The study helps the marketer in:

a) Analyzing the environment: identifying opportunities and fighting threats

b) Segmenting, targeting and positioning

c) Designing the marketing-mix

d) Designing the marketing strategy

e) Governmental and Non-profit Organization and Social Marketing

4. Consumer Decision Making Process

The most important environment in which firms operate is their customer environment because

the basic belief of marketing oriented company that the customer is the centre around whichthe business revolves. Therefore, marketing people need to understand the processes that their

customers go through when making decision.

The consumer decision making process involves series of related and sequential stages of

activities. The process begins with the discovery and recognition of an unsatisfied need or want.

It becomes a drive. Consumer begins search for information. This search gives rise to various

alternatives and finally the purchase decision is made. Then buyer evaluates the post purchase

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behaviour to know the level of satisfaction. The process is explained below with the help of

diagram.

Consumer Decision MakingProcess

PostpurchaseBehavior

Purchase

Evaluationof Alternatives

Information Search

Problem Recognition

Cultural, Social,Individual andPsychological

Factorsaffect

all steps

1. Need Recognition

When a person has an unsatisfied need, the buying process begins to satisfy the needs. The

need may be activated by internal or external factors. The intensity of the want will indicate the

speed with which a person will move to fulfill the want. On the basis of need and its urgency,

forms the order of priority. Marketers should provide required information of selling points.

2. Information Search

Identified needs can be satisfied only when desired product is known and also easily available.

Different products are available in the market, but consumer must know which product or brand

gives him maximum satisfaction. And the person has to search out for relevant information of the

product, brand or location. Consumers can use many sources e.g., neighbors, friends and

family. Marketers also provide relevant information through advertisements, retailers, dealers,

packaging and sales promotion, and window displaying. Mass media like news papers, radio,

and television provide information. Now a days internet has become an important and reliable

source of information. Marketers are expected to provide latest, reliable and adequate

information.

3. Evaluation of Alternatives

This is a critical stage in the process of buying. Following are important elements in the process

of alternatives evaluation

a. A product is viewed as a bundle of attributes. These attributes or features are used for

evaluating products or brands. For example, in washing machine consumer considers price,

capacity, technology, quality, model and size.

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b. Factors like company, brand image, country, distribution network and after-sales service also

become critical in evaluation.

c. Marketers should understand the importance of these factors to consumers of these factors to

consumers while manufacturing and marketing their products.

4. Purchase Decision

Outcome of the evaluation develops likes and dislikes about alternative products or brands inconsumers. This attitude towards the brand influences a decision as to buy or not to buy. Thus

the prospective buyer heads towards final selection. In addition to all the above factors,

situational factors like finance options, dealer terms, falling prices etc., are also considered.

5. Post- Purchase Behaviour

This behavior of consumer is more important as for as marketer is concerned. Consumer gets

brand preference only when that brand lives up to his expectation. This brand preference

naturally repeats sales of marketer. A satisfied buyer is a silent advertisement. But, if the used

brand does not yield desired satisfaction, negative feeling will occur and that will lead to the

formation of negative attitude towards brand. This phenomenon is called cognitive dissonance.

Marketers try to use this phenomenon to attract user of other brands to their brands. Different

promotional-mix elements can help marketers to retain his customers as well as to attract new

customers.

4. Factors influence consumer behavior.

Consumer behaviouris an attempt to understand & predict human actions in the buying role. It

has assumed growing importance under market-oriented or customer oriented marketing

planning & management. Consumer behaviour is defined as all psychological, social &

physical behaviour of potential customers as they become aware of, evaluate, purchase,

consume, & tell others about product & services.

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1. Cultural factors

Cultural factors exert the broadest and deepest influence on consumer behavior. The roles

played by the buyers culture, sub culture and social class are particularly important.

a. Culture- Culture is the most fundamental determinant of a persons wants and behavior. The

growing child acquires a set of values, perceptions, preferences, and behavior through his or

her family or other key institutions.

b. Sub-culture- Sub-culture includes nationalities, religions, racial groups, and geographical

regions. Many sub-cultures make up important market segments, and marketers often design

marketing programs tailored to their needs.

c. Social class- Social classes are relatively homogenous and enduring divisions in a society,

which are hierarchically ordered and whose members share similar values, interests, and

behavior. Social classes do not reflect income alone but also other indicators such as

occupation, education, and area of residence.

2. Social factors

a. Reference groups-A Persons reference groups consist of all the groups that have a direct

or indirect influence on the persons attitudes or behavior. Groups having direct influence on

a person are called membership groups.

b. Family- The family is the most important consumer buying organization in society, and has

been researched extensively. Family members constitute the most influential primary

reference group.

c. Role and statuses-A persons position in each group that he participates throughout his life

family, clubs, and organizations can be defined in terms of role and status. A role consist of

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activities that a person is expected to perform. Each role carries a status. Marketers are

aware of the status symbol potential of products and brands.

3. Personal factors

A buyers decisions are also influenced by personal characteristics. These include the buyers

age & stage in the life cycle, occupation, economic circumstances, lifestyle, personality & self

concept.a. Age & stage in the life cycle- People buy different goods & services over their lifetime.

They eat baby food in the early years, most foods in the growing & mature years & special

diets in the later years. Peoples taste in clothes, furniture & recreation is also age related.

b. Occupation-A persons occupation also influences his or her consumption pattern.

Marketers try to identify the occupational groups that have above average interest in their

products and services. A company can even specialize its products for certain occupational

groups.

c. Economic circumstances- Product choices are greatly affected by ones economic

circumstances. Economic stability consist of their spend able income (its level, stability and

time pattern), saving and assets (including the percentage that is liquid), debts , borrowing

power, attitude toward spending versus saving.

d. Lifestyle- People coming from the same subculture, social class & occupation may lead

quite different lifestyles. A persons lifestyles the persons pattern of living in the world as

expressed in the persons activities, interests & opinions.

e. Personality and self-concept- Each person has a distinct personality that influences his or

her buying behavior. By personality, we mean a persons distinguishing psychological

characteristics that lead to relatively consistent and enduring responses to his or her

environment. Personality can be a useful variable in analyzing consumer behavior, provided

that personality type can be classified accurately and that strong correlations exist between

certain personality types and product or brand choices.

4. Psychological factors

A persons buying choices are influenced by four major psychological factors-motivations,perception, learning, beliefs and attitudes.

a. Motivation-A person has many needs at any given time. A need becomes motive when it is

aroused to a sufficient level of intensity. Motivational researchers hold that each product is

capable of arousing a unique set of motive in consumers.

b. Learning- When people act they learn. Learning involves changes in an individuals behavior

arising from experience. Learning theory teaches marketers that they can build up demand

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behaviour for a low-cost, non-durable product (e.g. a new shampoo) may be influenced by a

manufacturers extensive sales promotion (e.g. price cuts) and may actually be a trial

purchase; if the consumer is satisfied, he or she may repeat the purchase. The trial is the

exploratory phase of purchase behaviour in which the consumer evaluates the product

through direct use. A repeat purchase usually signifies product adoption.

For a relatively durable product such as a laptop (relatively durable because of the rapid

rate of obsolescence), the purchase is more likely to signify adoption. Marketing to

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The Conservatives belong to the middle class. The conservative segment is the reflection of

the true Indian culture. They are traditional in their outlook, cautious in their approach

towards purchase; spend more time with family than in partying and focus more on savings

than spending.

The working women:-

The working woman segment is the one, which has seen a tremendous growth in the latenineties. This segment has opened the floodgates for the Indian retailers. Working women

have their own mind in decision to purchase the products that appeal to them.

Youth segments:-

The rise of generation next has been written about with unbridled optimism and enthusiasm,

based on the coming of age of liberalization children. They are global in their worldwide view

and have been exposed to enormous information unlike their parents, raised amidst a

consumption-friendly and consumption encouraging social discourse.

The new Indian consumer market structure:-

There are five types of consumer groups based on what they consume and created a

framework:

The Rich: - The rich who have most of the luxury goods like cars, PCs, air conditioners and

are generally the consumers of premium products.

The Consuming Class: - Consumers which have 70 percent of the utilitydurables like two

wheeler, refrigerators, washing machines and the bulk of regular FMCGs.

The Climbers: - Consumers which have at least one major durable in their homes either a

mixer or a sewing machine or perhaps a television set. They are main consumer of

population segment consumer goods.

The Aspirants: - Consumers who are just entering consumption and have the very basics

.Goods like a watch, a bicycle, a radio, or a table fan.

The Destitute: - Consumers who own and consume practically nothing, living as they do

from hand to mouth.Changing Indian Consumer

India has shown tremendous growth in the last two decades. Happy times for Indian consumer

as disposable income have increased considerably over the years.The Indian consumers of

today are unique in the following aspects:

1)Indian consumers have become value sensitiveand are not much price sensitive as was the

case earlier. If they feel that a particular product offers them more value and its price is high,

even then they are willing to buy the product.

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2)The Indian consumers strictly follow their culture, tradition and values, as a result of which

foreign companies were forced to give an Indian touch to them in order to succeed in India.

McDonalds, MTV, Pepsi, Star TV, Coca Cola India and many more had to indianise themselves

to flourish in India.

3)The Indian consumer of today gives preference to features of a product rather than its brand

name. The trend that higher segment consumers only buy the top brands has also come to anend.

4) Even after liberalization Indian companies and brands are doing very well. It is clearly

evident from the fact that despite many foreign brands being sold in India, Raymond is still

Indias largest textile company and Haldiram is doing well despite the presence of McDonalds

and Pizza Hut.

5) The consumers today are not confined to a single brand and prefer change rather than

sticking to the same brand. Not often do we see any home with cars of the same brand or

household products of the same brand.

6)The use of credit card for shopping is a new emerging trend in India. Also consumers are

availing credit or loan from banks and other financial institutions to fulfil their needs and wants.

7) The Indian consumers have shown another major change in their buying behaviour. They just

dont want availability of products; they also want better experience, services and ambience.

This has led to the growth of shopping malls where a shopping, entertainment and better facility

is all available under one roof.

8)The rural Indian consumersare also showing signs of change. They have all the modern

amenities at their home and their standard of living is fast improving. The rural households have

earned huge money due to price rise in real estate. They are also shifting towards industrial and

services sector; hence their purchasing power is increasing.

9) There is a stiff competition in the Indian market today. Customers are the ultimate

beneficiary of the fierce competition in the market. Competition has reduced prices to a great

extent and has forced the manufacturer to maintain product quality to sustain in the highly

competitive market.10) The current urban middle and upper class Indian consumer buying behaviour to a large

extent has western influence.There is an increase in positive attitude towards western trends.

The Indian consumer has become much more open-minded and experimental in his/her

perspective.

11) The environmental awareness in India has started affecting marketing of products based

upon their eco-friendliness.

Has the Indian Consumer Changed? Examples

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Eating Out

In urban India, families that do not eat out are considered old-fashioned and conservative.

Most popular-multi-cuisine restaurants offering Indian fare, along with a form of Chinese and

Western fast food. Pizza and cheese, with Indian flavors and spice.

Health & Fitness

Indians are paying more attention to their health and striving for better fitness levels. Forexample, joining gyms or clubs. Rapid rise in sale of fruit juices, cool drinks, etc.

Metro-sexual Male

Male grooming a growing business in India and its annually growing rate is 15% Currently,

usage is restricted to the young, urban upper income male.

Women Empowerment

More women entering the workforce. There is increased use of cosmetics. Due to increasing

time pressures, Convenience gains value products like easy to cook food, home delivery,

wide choices in shops, etc. are increasing

Teen

With increased awareness through television and advertising, teens are an important

influence on family decision-making in urban India. Gadgets or products that they want newly

launched chocolate bar, instant noodles and breakfast cereals.mobile phones, the TV

remote, DVD player and computer

Marriage

Earlier, arranged marriages used to happen with elders consent. Many people nowadays

rely on individual choice and judgment. Examples: matrimonial sites proliferateshaadi.com,

bharatmatrimony.com

Luxury

India is experiencing a rise in incomes and higher consumption patterns. Demand for luxury

products is also on the rise.

Digitalization

Young people in urban areas are increasingly using the Internet.Online banking for service

payments and even for buying company shares. Success of social networking websites...

Avail Online booking of tickets for movies, trains and airlines.

Credit

Earlier, people avoided buying things (non-essential) on credit/loan. Easy availability of

credit. Rise in number of home and vehicle (Two, four wheelers) loans

Snacking

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Snacks and chocolates of wide variety available Lays, Kurkure, Perk, Cadbury Dairy Milk

chocolates, Britannia biscuits, etc

Movies and Serials

Earlier, Movies made in Bollywood (Emotions, Action, Drama) were a craze. In India, women

are mostly housewivesidle time at home..Hence, the debut of serials targeting this segment

was launched by BalajiTelefilms (EktaKapoor). Western Influences

Opening of Indian economy, mass and social media exposure and increase in overseas

travelling. Acceptance of western clothing, especially in urban India..Gifting Cards, Pub

culture

*******

Disclaimer: The study material is compiled by Ashok Gaur. The basic objective of this

material is to supplement teaching and discussion in the classroom in the subject.

Students are required to go for extra reading in the subject through Library books

recommended by Sardar Patel University, Vallabh Vidyanagar.

QUESTION BANK

(Use Ready Made QB provided by Department/ University (For SemesterPrograms)

Use probable questions (ForYearly Programs, Also refer latest question papers from library))

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