Consumer Behaviour
INTRODUCTION
All of us are consumers. We consume things of daily use, we also consume and buy
these products according to our needs, preferences and buying power. These can be
consumable goods, durable goods, speciality goods or, industrial goods.
What we buy, how we buy, where and when we buy, in how much quantity we
buy depends on our perception, self concept, social and cultural background and our
age and family cycle, our attitudes, beliefs values, motivation, personality, social
class and many other factors that are both internal and external to us. While buying,
we also consider whether to buy or not to buy and, from which source or seller to
buy. In some societies there is a lot of affluence and, these societies can afford to buy
in greater quantities and at shorter intervals. In poor societies, the consumer can
barely meet his barest needs.
The marketers therefore tries to understand the needs of different consumers and
having understood his different behaviours which require an in-depth study of their
internal and external environment, they formulate their plans for marketing.
Management is the youngest of sciences and oldest of arts and consumer
behaviour in management is a very young discipline. Various scholars and
academicians concentrated on it at a much later stage. It was during the 1950s, that
marketing concept developed, and thus the need to study the behaviour of consumers
was recognised. Marketing starts with the needs of the customer and ends with his
satisfaction. When every thing revolves round the customer, then the study of
consumer behaviour becomes a necessity. It starts with the buying of goods. Goods
can be bought individually, or in groups. Goods can be bought under stress (to satisfy
an immediate need), for comfort and luxury in small quantities or in bulk. For all
this, exchange is required. This exchange is usually between the seller and the
buyer. It can also be between consumers.
Consumer behaviour can be defined as the decision-making process and physical
activity involved in acquiring, evaluating, using and disposing of goods and services.
This definition clearly brings out that it is not just the buying of goods/services
that receives attention in consumer behaviour but, the process starts much before
the goods have been acquired or bought. A process of buying starts in the minds of
the consumer, which leads to the finding of alternatives between products that can
be acquired with their relative advantages and disadvantages. This leads to internal
and external research. Then follows a process of decision-making for purchase and
using the goods, and then the post purchase behaviour which is also very important,
because it gives a clue to the marketers whether his product has been a success or
not.
To understand the likes and dislikes of the consumer, extensive consumer
research studies are being conducted. These researches try to find out:
➢ What the consumer thinks of the company’s products and those of its
competitors?
➢ How can the product be improved in their opinion?
➢ How the customers use the product?
➢ What is the customer’s attitude towards the product and its advertising?
➢ What is the role of the customer in his family?
The following key questions should be answered for consumer research. A market
comes into existence because it fulfils the needs of the consumer. In this connection,
a marketer has to know the 70’s framework for consumer research. Taking from a example of soap.\
Consumer behaviour is a complex, dynamic, multidimensional process, and all
marketing decisions are based on assumptions about consumer behaviour.
Marketing strategy is the game plan which the firms must adhere to, in order to
outdo the competitor or the plans to achieve the desired objective. In formulating the
marketing strategy, to sell the product effectively, cost-benefit analysis must be
undertaken.
There can be many benefits of a product, for example, for owning a motor bike
one can be looking for ease of transportation, status, pleasure, comfort and feeling
of ownership. The cost is the amount of money paid for the bike, the cost of
maintenance, gasoline, parking, risk of injury in case of an accident, pollution and
frustration such as traffic jams. The difference between this total benefit and total
cost constitutes the customer value. The idea is to provide superior customer value
and this requires the formulation of a marketing strategy. The entire process
consists of market analysis, which leads to target market selection, and then to the
formulation of strategy by juggling the product, price, promotion and distribution, so
that a total product (a set of entire characteristics) is offered. The total product
creates an image in the mind of the consumer, who undergoes a decision process
which leads to the outcome in terms of satisfaction or dissatisfaction, which reflects
on the sales and image of the product or brand.
Figure 1.1 gives in detail the shaping of consumer behaviour, which leads a
consumer to react in certain ways and he makes a decision, keeping the situations in
mind. The process of decision-making varies with the value of the product, the
involvement of the buyer and the risk that is involved in deciding the product/
service.
The figures shows the consumer life style in the centre of the circle. The
consumer and his life style is influenced by a number of factors shown all around the
consumer. These are culture, subculture, values, demographic factors, social status,
reference groups, household and also the internal make up of the consumer, which
are a consumers’ emotions, personality motives of buying, perception and learning.
Consumer is also influenced by the marketing activities and efforts of the marketer.
All these factors lead to the formation of attitudes and needs of the consumer.
Fig. 1.2 Marketing strategy and consumer behaviour.
Marketing Strategy and Consumer Behaviour
(i) Marketing Analysis
(a) Consumer
(b) Company
(c) Competition
(d) Condition
(ii) Marketing Segmentation
(e) Identify product related needs
(f) Group customers with similar need sets
(g) Describe each group
(h) Select target market
(iii) Marketing Strategy
(i) Product
(j) Price
(k) Distribution
(l) Communication
(m) Service
(iv) Consumer Decision Process
(n) Problem recognition
(o) Information search—internal, external
(p) Alternative evaluation
(q) Purchase
(r) Use
(s) Evaluation
(v) Outcomes
(t) Customer satisfaction
(u) Sales
(v) Product/Brand image
Then follows the process of decision-making, as shown in the rectangle which
consists of the problem recognition, information search (which is both internal and
external) then the evaluation and selection procedure, and finally the purchase. After
the purchase and use of the product the customer may be satisfied or dissatisfied with
the product. This is known as post-purchase behaviour. The existing situations also play
an important role in the decision-making process. The dotted line show the feedback.
◆ MARKET ANALYSIS
Market analysis requires an understanding of the 4-Cs which are consumer,
conditions, competitor and the company. A study is undertaken to provide superior
customer value, which is the main objective of the company. For providing better
customer value we should learn the needs of the consumer, the offering of the
company, vis-a-vis its competitors and the environment which is economic, physical,
technological, etc.
A consumer is anyone who engages himself in physical activities, of evaluating,
acquiring, using or disposing of goods and services.
A customer is one who actually purchases a product or service from a particular
organisation or a shop. A customer is always defined in terms of a specific product or
company.
However, the term consumer is a broader term which emphasises not only the
actual buyer or customer, but also its users, i.e. consumers. Sometimes a product is
purchased by the head of the family and used by the whole family, i.e. a refrigerator
or a car. There are some consumer behaviour roles which are played by different
members of the family.
Role Description
Initiator The person who determines that some need or want is to be met (e.g.
a daughter indicating the need for a colour TV).
Influencer The person or persons who intentionally or unintentionally influence
the decision to buy or endorse the view of the initiator.
Buyer The person who actually makes a purchase.
User The person or persons who actually use or consume the product.
All the consumer behaviour roles are to be kept in mind but, the emphasis is on
the buyer whose role is overt and visible.
(a) The Consumer
To understand the consumer; researches are made. Sometimes motivational research
becomes handy to bring out hidden attitudes, uncover emotions and feelings. Many
firms send questionnaires to customers to ask about their satisfaction, future needs
and ideas for a new product. On the basis of the answers received, changes in the
marketing mix is made and advertising is also streamlined.
(b) The External Analysis (Company)
The external analysis may be done by the feedbacks from the industry analyst and
by marketing researches. The internal analysis is made by the firm’s financial
conditions, the quantum of the sales, force and other factors within the company.
The study of these factors leads to a better understanding of the consumer and
his needs.
(c) The Competition
In the analysis of the market, a study of the strengths and weaknesses of the
competitors, their strategies, their anticipated moves and their reaction to the
companies’ moves and plans is to be made. The company after getting this
information, reacts accordingly and changes its marketing mix and the offering is
made in a manner which can out do the competitor. This is a very difficult process
and it is easier said than done. To have correct information about the competitors
and to anticipate their further moves is the job of the researcher.
(d) The Conditions
The conditions under which the firms are operating has also to be seriously
considered. The factors to be studied are the economy, the physical environment, the
government regulations, the technological developments, etc. These effect the
consumer needs, i.e. the deterioration of the environment and its pollution may lead
to the use and innovation of safer products. People are health conscious and are
concerned with their safety. Hence, in this case, safer products have a better chance
with the consumer. In case of recession, the flow of money is restricted greatly. This
leads to the formulation of different marketing strategies.
(e) Market Segmentation
The market is divided into segments which are a portion of a larger market whose
needs are similar and, they are homogeneous in themselves. Such segments are
identified with similar needs.
1. Geography
2. Population
3. Urban-Rural
4. Sex
5. Age factor
6. Literacy level
7. Incentive level
8. Linguistic diversity
9. Religion
10. Dress, food
11. Habits and fashion
Indian
Consumer
Fig. 1.3 Characteristic features of Indian consumer.
(f) Need Set
By need set, it is meant that there are products which satisfy more than one need.
An automobile can fill the transportation needs, status need, fun needs or time
saving needs. So the company tries to identify the need sets which its product can
fulfil. Then we try to identify the groups who have similar needs, i.e. some people
need economical cars, others may go for luxury cars.
(g) Demographic and Psychographic Characteristics
These groups are identified and they are described in terms of their demographic
and psychographic characteristics. The company finds out how and when the product
is purchased and consumed.
(h) Target Segment
After all the above preliminary work is done, the target customer group known as
the target segment is chosen, keeping in mind how the company can provide superior
customer value at a profit. The segment which can best be served with the
company’s capabilities at a profit is chosen. It has to be kept in mind that different
target segments require different marketing strategies and, with the change in the
environmental conditions the market mix has to be adjusted accordingly.
Attractiveness of the segment can be calculated by marking the various criterion
INTRODUCTION
All of us are consumers. We consume things of daily use, we also consume and buy
these products according to our needs, preferences and buying power. These can be
consumable goods, durable goods, speciality goods or, industrial goods.
What we buy, how we buy, where and when we buy, in how much quantity we
buy depends on our perception, self concept, social and cultural background and our
age and family cycle, our attitudes, beliefs values, motivation, personality, social
class and many other factors that are both internal and external to us. While buying,
we also consider whether to buy or not to buy and, from which source or seller to
buy. In some societies there is a lot of affluence and, these societies can afford to buy
in greater quantities and at shorter intervals. In poor societies, the consumer can
barely meet his barest needs.
The marketers therefore tries to understand the needs of different consumers and
having understood his different behaviours which require an in-depth study of their
internal and external environment, they formulate their plans for marketing.
Management is the youngest of sciences and oldest of arts and consumer
behaviour in management is a very young discipline. Various scholars and
academicians concentrated on it at a much later stage. It was during the 1950s, that
marketing concept developed, and thus the need to study the behaviour of consumers
was recognised. Marketing starts with the needs of the customer and ends with his
satisfaction. When every thing revolves round the customer, then the study of
consumer behaviour becomes a necessity. It starts with the buying of goods. Goods
can be bought individually, or in groups. Goods can be bought under stress (to satisfy
an immediate need), for comfort and luxury in small quantities or in bulk. For all
this, exchange is required. This exchange is usually between the seller and the
buyer. It can also be between consumers.
Consumer behaviour can be defined as the decision-making process and physical
activity involved in acquiring, evaluating, using and disposing of goods and services.
This definition clearly brings out that it is not just the buying of goods/services
that receives attention in consumer behaviour but, the process starts much before
the goods have been acquired or bought. A process of buying starts in the minds of
the consumer, which leads to the finding of alternatives between products that can
be acquired with their relative advantages and disadvantages. This leads to internal
and external research. Then follows a process of decision-making for purchase and
using the goods, and then the post purchase behaviour which is also very important,
because it gives a clue to the marketers whether his product has been a success or
not.
To understand the likes and dislikes of the consumer, extensive consumer
research studies are being conducted. These researches try to find out:
➢ What the consumer thinks of the company’s products and those of its
competitors?
➢ How can the product be improved in their opinion?
➢ How the customers use the product?
➢ What is the customer’s attitude towards the product and its advertising?
➢ What is the role of the customer in his family?
The following key questions should be answered for consumer research. A market
comes into existence because it fulfils the needs of the consumer. In this connection,
a marketer has to know the 70’s framework for consumer research. Taking from a example of soap.\
Consumer behaviour is a complex, dynamic, multidimensional process, and all
marketing decisions are based on assumptions about consumer behaviour.
Marketing strategy is the game plan which the firms must adhere to, in order to
outdo the competitor or the plans to achieve the desired objective. In formulating the
marketing strategy, to sell the product effectively, cost-benefit analysis must be
undertaken.
There can be many benefits of a product, for example, for owning a motor bike
one can be looking for ease of transportation, status, pleasure, comfort and feeling
of ownership. The cost is the amount of money paid for the bike, the cost of
maintenance, gasoline, parking, risk of injury in case of an accident, pollution and
frustration such as traffic jams. The difference between this total benefit and total
cost constitutes the customer value. The idea is to provide superior customer value
and this requires the formulation of a marketing strategy. The entire process
consists of market analysis, which leads to target market selection, and then to the
formulation of strategy by juggling the product, price, promotion and distribution, so
that a total product (a set of entire characteristics) is offered. The total product
creates an image in the mind of the consumer, who undergoes a decision process
which leads to the outcome in terms of satisfaction or dissatisfaction, which reflects
on the sales and image of the product or brand.
Figure 1.1 gives in detail the shaping of consumer behaviour, which leads a
consumer to react in certain ways and he makes a decision, keeping the situations in
mind. The process of decision-making varies with the value of the product, the
involvement of the buyer and the risk that is involved in deciding the product/
service.
The figures shows the consumer life style in the centre of the circle. The
consumer and his life style is influenced by a number of factors shown all around the
consumer. These are culture, subculture, values, demographic factors, social status,
reference groups, household and also the internal make up of the consumer, which
are a consumers’ emotions, personality motives of buying, perception and learning.
Consumer is also influenced by the marketing activities and efforts of the marketer.
All these factors lead to the formation of attitudes and needs of the consumer.
Fig. 1.2 Marketing strategy and consumer behaviour.
Marketing Strategy and Consumer Behaviour
(i) Marketing Analysis
(a) Consumer
(b) Company
(c) Competition
(d) Condition
(ii) Marketing Segmentation
(e) Identify product related needs
(f) Group customers with similar need sets
(g) Describe each group
(h) Select target market
(iii) Marketing Strategy
(i) Product
(j) Price
(k) Distribution
(l) Communication
(m) Service
(iv) Consumer Decision Process
(n) Problem recognition
(o) Information search—internal, external
(p) Alternative evaluation
(q) Purchase
(r) Use
(s) Evaluation
(v) Outcomes
(t) Customer satisfaction
(u) Sales
(v) Product/Brand image
Then follows the process of decision-making, as shown in the rectangle which
consists of the problem recognition, information search (which is both internal and
external) then the evaluation and selection procedure, and finally the purchase. After
the purchase and use of the product the customer may be satisfied or dissatisfied with
the product. This is known as post-purchase behaviour. The existing situations also play
an important role in the decision-making process. The dotted line show the feedback.
◆ MARKET ANALYSIS
Market analysis requires an understanding of the 4-Cs which are consumer,
conditions, competitor and the company. A study is undertaken to provide superior
customer value, which is the main objective of the company. For providing better
customer value we should learn the needs of the consumer, the offering of the
company, vis-a-vis its competitors and the environment which is economic, physical,
technological, etc.
A consumer is anyone who engages himself in physical activities, of evaluating,
acquiring, using or disposing of goods and services.
A customer is one who actually purchases a product or service from a particular
organisation or a shop. A customer is always defined in terms of a specific product or
company.
However, the term consumer is a broader term which emphasises not only the
actual buyer or customer, but also its users, i.e. consumers. Sometimes a product is
purchased by the head of the family and used by the whole family, i.e. a refrigerator
or a car. There are some consumer behaviour roles which are played by different
members of the family.
Role Description
Initiator The person who determines that some need or want is to be met (e.g.
a daughter indicating the need for a colour TV).
Influencer The person or persons who intentionally or unintentionally influence
the decision to buy or endorse the view of the initiator.
Buyer The person who actually makes a purchase.
User The person or persons who actually use or consume the product.
All the consumer behaviour roles are to be kept in mind but, the emphasis is on
the buyer whose role is overt and visible.
(a) The Consumer
To understand the consumer; researches are made. Sometimes motivational research
becomes handy to bring out hidden attitudes, uncover emotions and feelings. Many
firms send questionnaires to customers to ask about their satisfaction, future needs
and ideas for a new product. On the basis of the answers received, changes in the
marketing mix is made and advertising is also streamlined.
(b) The External Analysis (Company)
The external analysis may be done by the feedbacks from the industry analyst and
by marketing researches. The internal analysis is made by the firm’s financial
conditions, the quantum of the sales, force and other factors within the company.
The study of these factors leads to a better understanding of the consumer and
his needs.
(c) The Competition
In the analysis of the market, a study of the strengths and weaknesses of the
competitors, their strategies, their anticipated moves and their reaction to the
companies’ moves and plans is to be made. The company after getting this
information, reacts accordingly and changes its marketing mix and the offering is
made in a manner which can out do the competitor. This is a very difficult process
and it is easier said than done. To have correct information about the competitors
and to anticipate their further moves is the job of the researcher.
(d) The Conditions
The conditions under which the firms are operating has also to be seriously
considered. The factors to be studied are the economy, the physical environment, the
government regulations, the technological developments, etc. These effect the
consumer needs, i.e. the deterioration of the environment and its pollution may lead
to the use and innovation of safer products. People are health conscious and are
concerned with their safety. Hence, in this case, safer products have a better chance
with the consumer. In case of recession, the flow of money is restricted greatly. This
leads to the formulation of different marketing strategies.
(e) Market Segmentation
The market is divided into segments which are a portion of a larger market whose
needs are similar and, they are homogeneous in themselves. Such segments are
identified with similar needs.
1. Geography
2. Population
3. Urban-Rural
4. Sex
5. Age factor
6. Literacy level
7. Incentive level
8. Linguistic diversity
9. Religion
10. Dress, food
11. Habits and fashion
Indian
Consumer
Fig. 1.3 Characteristic features of Indian consumer.
(f) Need Set
By need set, it is meant that there are products which satisfy more than one need.
An automobile can fill the transportation needs, status need, fun needs or time
saving needs. So the company tries to identify the need sets which its product can
fulfil. Then we try to identify the groups who have similar needs, i.e. some people
need economical cars, others may go for luxury cars.
(g) Demographic and Psychographic Characteristics
These groups are identified and they are described in terms of their demographic
and psychographic characteristics. The company finds out how and when the product
is purchased and consumed.
(h) Target Segment
After all the above preliminary work is done, the target customer group known as
the target segment is chosen, keeping in mind how the company can provide superior
customer value at a profit. The segment which can best be served with the
company’s capabilities at a profit is chosen. It has to be kept in mind that different
target segments require different marketing strategies and, with the change in the
environmental conditions the market mix has to be adjusted accordingly.
Attractiveness of the segment can be calculated by marking the various criterion
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