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CONSUMER BEHAVIOR
UNIT I
INTRODUCTION TO CONSUMER BEHAVIOR
1
BABY THOMAS 2014
1.1. Consumer
• A consumer is a person or group of people, such as a household, who are the final users of products or services.
1.2. Behavior
• Behavior is the range of actions and mannerisms made by organisms, systems, or artificial entities in conjunction with their environment, which includes the other systems or organisms around as well as the physical environment.
2 BABY THOMAS 2014
1.3. Consumer Behavior
• Consumer behavior is the study of individuals, groups, or organizations and the processes they use to select, secure, and dispose of products, services, experiences, or ideas to satisfy needs and the impacts that these processes have on the consumer and society.
BABY THOMAS 2014 3
1.4. Scope of Consumer Behavior
1. Consumer behavior is studied because success in the marketplace requires knowing, attracting, satisfying, and retaining customers.
2. Firms must segment the market into groups with relatively
homogeneous preferences and target one group.
3. Firms must position their offerings in the hearts and minds of these individuals in a favorable way.
4. Firms must examine all of the touch points that shape how a consumer will respond to their offering.
5. Consumer Behavior Determines the Economic Health of a Nation.
6. Consumer behavior determines the success of marketing programs.
7. Organisations that are customer-centric use a total marketing approach to focus their resources on satisfying customers.
8. Marketing is the process of transforming or changing an organization to have what people will buy.
9. Consumer behavior determines everyone’s economic health by making more effective consumption decisions while avoiding deceptive practices harmful to them.
10. Public policy leaders and social commentators study consumer
behavior to alleviate over-consumption and under-consumption by educating consumers about problems and providing assistance.
4 BABY THOMAS 2014
1.5. Applications of Consumer Behavior
1.5.1. Marketing Strategy
1.5.2. Regulatory Policy
1.5.3. Social Marketing
1.5.4. Informed Individuals
1-5
5 BABY THOMAS 2014
1.5.1. Consumer behavior and marketing strategy
• Marketing strategies and tactics are based on explicit or implicit beliefs about consumer behavior. Knowledge of consumer behavior can be an important competitive advantage and can greatly reduce the odds of bad decisions and market failures.
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1.5.2. Consumer behavior and regulatory policy
• Various regulatory bodies exist to develop, interpret, and/or implement policies designed to protect and aid consumer. Effective regulation of many marketing practices requires an extensive knowledge of consumer behavior.
BABY THOMAS 2014 7
1.5.3. Consumer behavior and social marketing
• Social marketing is the application of marketing strategies and tactics to alter or create behaviors that have a positive effect on the targeted individuals or society as a whole. As is true for commercial marketing strategy, successful social marketing strategy requires a sound understanding of consumer behavior.
BABY THOMAS 2014 8
1.5.4. Consumer behavior and informed individuals
• Most economically developed societies are referred to as consumption societies. Most individuals in these societies spend more time engaged in consumption than any other activity, including work or sleep. Knowledge of consumer behavior can enhance our understanding of our environment and ourselves. Such an understanding is essential for sound citizenship, effective purchasing behavior, and reasoned business ethics.
BABY THOMAS 2014 9
Principles of Consumer Behavior
1. The Consumer Is Sovereign.
2. The Consumer Is Global.
3. Consumers Are Different; Consumers Are Alike.
4. The Consumer Has Rights
10 BABY THOMAS 2014
Evolution of consumer behavior
Manufacturer Wholesaler Retailer Consumer
Manufacturing Orientation
Consumer Orientation
Selling Orientation
Marketing Orientation
1750-1850 1850-1970 1970-2000 2000+ 1750-1850 1760-1970 1970-2000 2000+
Consumers’ increasing influence
11 BABY THOMAS 2014
Factors influencing Consumer Behavior
12 BABY THOMAS 2014
Organizational factors influencing consumer behavior
• Brand
• Product features
• Advertising
• Word of mouth
• Promotions
• Retail displays
• Price
• Quality
• Service
• Store ambiance
• Convenience
• Loyalty programs
• Packaging
• Product availability
BABY THOMAS 2014 13
Culture is a shared set of beliefs, values and
patterns of behaviour common to a group of
people.
Factors Affecting Consumer Behavior
Subcultures are groups of people within a
culture with shared value systems based on
common life experiences and situations. For
example: Chinese, Indians, Malays, Eurasians
Social classes are society’s relatively
permanent and ordered divisions whose
members share similar values, interests, and
behaviors. Social classes are measured by a
combination of occupation, income, education,
wealth, and other variables. The major social
classes are upper upper class, upper middle
class, middle class, upper lower class, lower
lower class.
Membership groups have a direct influence and to which a person belongs. Aspirational groups are groups to which an individual
wishes to belong. Reference groups are groups that form a comparison or reference in forming attitudes or behavior. Opinion leaders are people within
a reference group with special skills, knowledge, personality, or other characteristics that can exert social influence on others. Family is the most important consumer-buying organization in
society. Social roles and status are the groups, family, clubs, and organizations to which a person belongs that can define role and social status.
14 BABY THOMAS 2014
Personality refers to the unique psychological characteristics that
lead to consistent and lasting responses to the consumer’s environment. Brand personality refers to the specific mix of human
traits that may be attributed to a particular brand. Self-concept
refers to people’s possessions that contribute to and reflect their identities.
15
Factors Affecting Consumer Behavior
Psychological Factors
Motivation: A motive is a need that is sufficiently pressing to direct the
person to seek satisfaction.
Abraham Maslo ’s Hierar h of Needs
• People are driven by particular needs at particular times.
• Human needs are arranged in a hierarchy from most
pressing to least pressing.
• Perception is the process by which people select, organize, and interpret information to form a meaningful picture of the world.
• Learning is the changes in an individual’s behavior arising from experience.
5-16
Factors Affecting Consumer Behavior
Beliefs and Attitudes
• Belief is a descriptive thought that a person has about something based on knowledge, opinion and faith.
• Attitude des ri es a perso ’s relati el o siste t e aluatio s, feeli gs, a d tendencies toward an object or idea.
BABY THOMAS 2014
BUYING ROLES
BABY THOMAS 2014 17
Initiator
Influencer
Decider
Buyer
User
Five roles people might play in a buying decision
A person who first suggests the idea of buying the product
A person whose view or advice influences the decision
A person who decides on any component of a buying decision: whether to buy, what to buy, how to buy, or where to buy
The person who makes the actual purchase
A person who consumes or uses the product or service
1
2
3
4
5
5-18
Buying Decision Process
Five stages in the buyer decision process
1. Need recognition
2. Information search
3. Evaluation of alternatives
4. Purchase decision
5. Post-purchase behavior
BABY THOMAS 2014
5-19
The Buyer Decision Process
Need Recognition
• Need recognition occurs when the buyer recognizes
a problem or need triggered by:
• Internal stimuli
• External stimuli
BABY THOMAS 2014
5-20
The Buyer Decision Process
Information Search
Information search is the amount of information needed
in the buying process and depends on:
• The strength of the drive,
• The amount of information you start with,
• The ease of obtaining the information,
• The value placed on the additional information, and
• The satisfaction from searching.
BABY THOMAS 2014
5-21
The Buyer Decision Process
Information Search
Sources of information:
• Personal sources—family and friends
• Commercial sources—advertising, Internet
• Public sources—mass media, consumer
organizations
• Experiential sources—handling, examining, using
the product
BABY THOMAS 2014
5-22
Sources and Role of Information
BABY THOMAS 2014
5-23
The Buyer Decision Process
Evaluation of Alternatives
Evaluation of alternatives is how the consumer
processes information to arrive at brand choices.
BABY THOMAS 2014
5-24
The Buyer Decision Process
Purchase Decision
• The purchase decision is the act by the consumer to
buy the most preferred brand.
• The purchase decision can be affected by:
• Attitudes of others
• Unexpected situational factors
BABY THOMAS 2014
5-25
The Buyer Decision Process
Post-Purchase Decision
• The post-purchase decision is the satisfaction or
dissatisfaction the consumer feels about the
purchase.
• Relationship between:
• Co su er’s e pe tatio s
• Produ t’s per ei ed perfor a e
BABY THOMAS 2014
5-26
The Buyer Decision Process
Post-Purchase Decision
• The larger the gap between expectation and
perfor a e, the greater the o su er’s dissatisfaction.
• Cognitive dissonance is the discomfort caused by a
post-purchase conflict
BABY THOMAS 2014
5-27
The Buyer Decision Process
Post-Purchase Decision
• Customer satisfaction is a key to building profitable
relationships with consumers—to keeping and
growing consumers and reaping their customer
lifetime value.
BABY THOMAS 2014
Complete model of consumer behavior
Search
Need recognition
Alternative evaluation
Purchase
Stimuli (marketer dominated, other)
External search
Memory
Internal search
Exposure
Attention
Comprehension
Acceptance
Retention Outcomes
Dissatisfaction Satisfaction
Individual differences • resources • motivation & involvement • knowledge • attitudes • personality, values, lifestyle
Influences • culture • social class • family • situation
Start
28 BABY THOMAS 2014
Need Recognition (& reminding)
Preferred State
Marketing helps consumers recognize
(or create) an imbalance between present status
and preferred state
• When a current product isn’t performing properly
• When the consumer is running out of an product
• When another product seems
superior to the one currently used
29 BABY THOMAS 2014
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.
Personal sources (friends and family)
Public sources (rating
services like Consumer Reports)
Marketer-dominated sources (advertising
or sales people)
The evoked set: a group of
brands from which the buyer can choose 30 BABY THOMAS 2014
Buyer Behavior: The Decision Making Unit
• 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
Other people often influence a consumers 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. (Kotler et al, 1994).
Note: teens are increasingly assuming more of these roles
Think about your past purchase– who was in which role? 31 BABY THOMAS 2014
Wife Dominant
Husband Dominant
Joint
100 50 0 75 25
Women’s clothing
Pots & pans
Child clothing
groceries
vacations
TV sets
Family car Sport equipment
Lawn mower
Paint wallpaper
lamps
Men’s leisure clothing
Men’s business clothing
camera
Financial planning
furniture
refrigerator
luggage
carpet
NonRx
Toys/games
stereo
hardware
Extent of role specialization
Relative influence of husbands & wives
Information search
Final decision
Davis & Rigaux, 1974 32 BABY THOMAS 2014
Decision Processing
33 BABY THOMAS 2014
CONSUMER BEHAVIOR
UNIT I
INTRODUCTION TO CONSUMER BEHAVIOR
34
BABY THOMAS 2014