Consumer Behaviour - MKT 531, MBM (Third Semester)

UNIT - 1 Introduction
Concept of Consumer Behavior

Any individual who purchases goods and services from the market for his/her end-use is called a consumer.
In simpler words a consumer is one who consumes goods and services available in the market.

 ‘Consumer behaviour is the decision process and physical activity, which individuals engage in when
evaluating, acquiring, using or disposing of goods and services’. - Louden, D. L. and Bitta, A. J.
 ‘Consumer behaviour is the actions and decision processes of people who purchase goods and services
for personal consumption’. - Engel, Blackwell and Mansard

Consumer behaviour is the study of how individual customers, groups or organizations select, buy, use, and
dispose ideas, goods, and services to satisfy their needs and wants. It refers to the actions of the consumers in
the marketplace and the underlying motives for those actions.

Consumer behavior is the study of how people make decisions about what they buy, want, need, or act in
regards to a product, service, or company. It is critical to understand consumer behavior to know how potential
customers will respond to a new product or service. It also helps companies identify opportunities that are not
currently met.

Consumer behavior is the study of consumers and the processes they use to choose, use (consume), and dispose
of products and services, including consumers’ emotional, mental, and behavioral responses. Consumer
behavior incorporates ideas from several sciences including psychology, biology, chemistry, and economics.

Consumer Behavior as a Multidisciplinary Science

Consumer behaviour is a complex and a multidimensional process. Consumer behavior is a discipline that has
borrowed extensively from other social sciences. In an attempt to understand the process of consumption
holistically, it relies on significant contributions from sociology, anthropology, and psychology.
.
1. Sociology and the Discipline of Consumer Behaviour: Sociology can be defined as the study of social
systems. Social systems are the manifestations of the interactions between different individuals that get
institutionalized into different types of groups. These groups can range from small primary groups such as
family, friendship group, and neighbourhood group, to large secondary groups such as socio-economic class and
society. These groups have evident and not-so-evident goals, values, and norms of behaviour that are confirmed
by members of the groups.
All of these groups prescribe certain forms of behaviour for its members and prohibit some other forms of
behaviour. The behavioural prescriptions and taboos of society tend to be encyclopedic in nature and therefore
necessarily include consumption behaviour. For example, societal behavioural prescriptions and taboos clearly
state the eligible age for marriage, the acceptable ways in which one can get married (instances of social
behaviour), and at the same time, prescribe what should be worn by the bride and groom, what kind of goods
should be gifted, how the marriage reception should be organized (instances of consumer behaviour). Therefore,
the same values, norms, and other forms of prescription and taboo influence social as well as consumer
behaviour.
As individuals grow, they internalize the socially acceptable consumption behaviour and their consumption is
guided by their internalized preferences. If they do not adopt the socially acceptable mode of consumption, they
indulge in proscribed behaviour. Therefore, it can be said that social groups impact on the consumption
behaviour in two ways. First, they create internal preferences through the process of internalization and second,
they impose sanctions on deviant consumption behaviour.
2. Anthropology and the discipline of consumer behaviour: Anthropology is the study of man in his cultural
setting. Culture is the central theme in the discipline of anthropology, especially social anthropology. It studies
both aspects of culture material culture as well as non-material culture. It not only studies man as enveloped by
his cultural setting but also as a contributor to the culture. Anthropology studies both the material and the non-
material aspects of culture and in doing so; it tries to understand man holistically.

Anthropology defines culture as a way of life. Products and brands used by a community are an important aspect
of its material culture. Therefore, anthropological perspective becomes very important in understanding the
impact of culture on consumer behaviour. The anthropological perspective is also evident in the description of
the neighbourhood community and village community and its impact on consumption.

3. Psychology and the Discipline of Consumer Behaviour: Psychology can be defined as the science of
behaviour and cognitive processes. A cognitive process is the process by which people acquire, represent,
memorize, retrieve, and use information. Therefore, psychology is concerned with all forms of behaviour, its
organization into different forms of personality and attitudes, and the cognitive processes behind it. It is evident
that all forms of consumption are specific types of behaviour and hence, the theories developed in the
generalized context of psychology can be easily applied to understand consumer behaviour.

The discipline of consumer behaviour is replete with such applications that have led to the formulation of some
very successful marketing strategies. Freud’s psychoanalytical theory of personality is the most important
example of such an application. His concepts of id, ego, superego, and conscious and unconscious mind are
widely used to understand consumers. Another example is Maslow’s hierarchy of needs that is also used and
applied to understand consumers.

Study of Consumer Behavior

Based on this perspective, one can conclude that, there are three aspects that are imperative for a marketer to
understand consumer behaviour, namely (i) sociology of consumption, (ii) psychology of consumption, and (iii)
addressing consumers. Each of these aspects comprise of various micro factors. Let us understand them briefly
here.
i) Sociology of Consumption
Sociology of consumption comprises the following micro factors.
a) Social groups: All social groups prescribe behaviour patterns for their members based on the group norms,
values, and beliefs. These also have a major influence on the consumption pattern of their members. Studying
the norms and beliefs of such groups can aid marketers to infer consumer behaviour pattern of members of these
groups.
b) Family: Primary groups such as family, neighbourhood, and community play an indispensable role in
influencing product and brand consumption pattern of any individual. The basic structure of the personality is
formed in the family that also determines an individual’s preferences including his preferences for products and
brands. Family also affects consumption pattern as it is the basic unit of income generation and consumption.
c) Class: Class is also an important influence for consumption because the level of consumption and the brands
people consume depend on their class position. Usually, each class has a distinctive culture that affects the style
of consumption.
d) Culture: Culture can be defined as the way of life of a group of people. The culture of a group consists of
values, norms, beliefs, and symbols. It imposes constraints on the behaviour of its members, including their
consumption behaviour. Recognizing the group from which a member belongs to might help the seller close the
deal successfully.

ii) Psychology of Consumption

Psychology of consumption comprises the following micro factors.
a) Motivation: As explained earlier, the process of consumption starts with the emergence of need and
motivation. Therefore, understanding the kind of campaigns that motivate people to consume a brand being
marketed is important.
b) Learning: One of the basic aims of marketing is to teach and modify behaviour patterns, especially those
behaviour patterns that relate to product and brand consumption. Understanding different theories on learning
and their related concepts can help one understand how consumers learn to consume different brands and
products.
c) Perceptions: Adoption of a particular product is dependent on the consumer’s perceptions about it. Getting an
insight into the principles of perception and how they are applied to make brand communication more effective
for particular set of audience can be relevant to a marketer.
d) Memory: In the process of decision-making, consumers search for cues from their memory based on their
experiences. The positive feedback from their memory storage is one of the important sources of favourable
decisions.
e) Attitude: One of the aims of a marketing campaign is to change the consumer’s attitude if he has negative
attitude towards the brand or to keep his attitude from changing if he has positive attitude towards the brand.
Therefore, a marketing executive being aware of attitude formation models and their characteristics could work
in favour of them.
f) Personality: Personality refl ects an individuals’ uniqueness and the choices he makes for the products and
brands he chooses. Studying this can give an idea to the marketers about how to influence the consumption
pattern of different personality types together and separately.

iii) Addressing Consumers

The module of addressing consumers comprises the following micro factors.
a) Consumer decision models: Over a period of years, numerous models have been derived to understand the
process of decision-making that consumers follow. These models explain consumer decision processes from
different perspectives. Understanding them might enable marketers to predict the consumer pattern of different
individuals.
b) Researching consumers: Consumer research is a form that concentrates on understanding the preferences,
attitudes, and behaviours of consumers in a market-based economy, and it aims to understand the effects and
comparative success of marketing campaigns.

Application of Consumer Behavior

Consumer behavior principles are applied in different areas like product marketing, branding, service
marketing, social marketing, consumer protection.

1. Consumer behavior and product marketing: In every case of marketing, the starting point is the
recognition of a consumer’s needs. It is apparent that marketers would not be able to recognize consumer needs
unless they have knowledge of consumer behaviour. In the next stage, the market is segmented and the marketer
takes a decision on the relevant segment(s) of consumers to target. He describes his target group geographically,
demographically, psychologically, and sociologically. This understanding serves as a springboard for the
formulation of pricing and promotion policies. Once again, the discipline of consumer behaviour plays a crucial
role in segmentation and targeting based on the marketer’s knowledge about the consumer.

Formulation of marketing strategy is also dependent on the understanding of the behaviour in the target group.
Marketing strategy is the optimum mix of the four Ps of marketing. During the strategy formulation, marketers
decide about the product, its price, and the places where it will be made available and how the whole offering is
going to be communicated to the consumer. Therefore, marketing strategy can be defined as deciding about the
most profitable mix of product, price, promotion, and place (distribution) that could be made available to the
consumers. The optimum mix of these four dimensions in the marketing efforts depends on the extent of the
knowledge that the marketer has about the consumer. In short, consumer behaviour is applied from starting
point of marketing strategy formulation to marketing operations. Following points show the importance of
consumer behaviour knowledge to product marketing.
 Developing marketing strategy
 Analyzing market opportunity
 Selecting target market
 Marketing mix decisions
2. Consumer behavior and branding: Brand can be defined as a name or a symbol that is intended to identify,
differentiate, and describe a product or a service to distinguish it from its competitors. A brand therefore states
the origin of the product or the service, states what it is, and tells how it is different from the competing brands.
Branding protects both the consumer and the marketer from unfair competition. In due course, every brand
develops an image and a personality. Development of a brand personality and image is dependent on the product
category in which the brand operates and the interaction between the brand communication and the consumers’
response to it. Brand equity is the complete set of assets and liabilities of a brand that adds to or subtracts from
the value of the brand. What is important to understand is that brand equity belongs to the realm of perception
rather than reality. In other words, branding or development of brand equity is dependent not only on the
marketer, but also on how the consumers react to the communication and subsequently forms perceptions about
the brand. Hence, understanding of consumer behaviour is crucial for the formation of brand equity.

Assets or liabilities on which brand equity is based can be grouped as (i) name awareness, (ii) awareness of
other proprietary brand assets—trademarks, patents, etc., (iii) perceived quality, (iv) brand associations in
addition to perceived quality, and (v) brand loyalty. Each of these aspects of brand equity is important and leads
to important consequences such as customer retention, customer satisfaction, positioning of the product offering,
and product life-cycle extension. Hence, evolving the right and relevant brand equity is crucial for brand success
and development of such equity is dependent on the correct and precise understanding of consumer behaviour.

3. Consumer behavior and service marketing: Service marketing is marketing based on relationship and
value. With the increasing prominence of services in the global economy, service marketing has become a
subject that needs to be studied separately. Marketing services is different from marketing goods because of the
unique characteristics of services namely, intangibility, heterogeneity, perishability and inseparability. Services
marketing typically refers to both business to consumer (B2C) and business-to-business (B2B) services, and
includes marketing of services such as telecommunications services, financial services, all types of
hospitality, tourism leisure and entertainment services, car rental services, health care services and professional
services and trade services. 

Consumers require different levels of customer service, and understanding the differences within the customer
base will help to provide the most appropriate service for individual needs. Therefore understanding the
consumer behaviour is most important for any decision in service market as identify the needs of service
customer, price decision, promotion decision, service deliver decision managing and implementing profitable
service strategies, reviewing for positioning services in the marketplace, etc.

4. Consumer behavior and social marketing: Increasingly, the perspective of social marketing is being used
for social and developmental marketing. Social marketing is an application of the marketing perspective to sell
social change and development. Here, social practices, values, attitudes, and behaviour patterns are marketed
instead of a product. Like marketing, social marketing also starts with consumer understanding. Social
marketing is not a social change movement. Rather, it markets a more beneficial behaviour by applying the
strategies of segmentation, targeting, and positioning, with the hope that old behaviour will be replaced.

In a social marketing project, the first aim of the marketer is to identify and understand the reasons for a change
in the behaviour pattern. On the basis of this, he prepares an alternative behaviour pattern that could be marketed
to the target group through communication, promotion, and distribution. From the preceding description, it is
clear that even in social marketing, the ability to understand consumer behaviour is central. In reality, the ability
to understand consumer behaviour is more crucial for success in social marketing than in marketing. This is
because people hold social values, beliefs, and attitudes more strongly than values, beliefs, and attitudes
regarding a product. Therefore, to replace such behaviour, a more forceful campaign is needed. For this, the
marketer has to develop an exceptionally deep and penetrative insight into consumer perceptions and thinking.

5. Consumer behavior and consumer protection: Many agencies at all level of government are involved with
regulating business practices for the purpose of protecting consumers' welfare. Some government programs are
also designed to influence certain consumer actions directly and discourage others unethical business activities.
In addition to the government, there are various non-government organizations (NGOs) that are also actively
working in the field of consumer rights. These NGOs are generally of the following two types.

a) NGOs that keep a watch on marketing and advertisement agencies: Some organizations keep a watch on
whether products, brands, and different marketing tools are in accordance with societal morals, values, and laws.
In case of any violation, they fight with marketing and advertisement agencies legally. For these NGOs, though
the knowledge of consumer behaviour may not be essential, it will definitely add to their understanding of what
kind of marketing communications or tools are harmful for consumers. Therefore, they would be able to build a
more effective and efficient initiative against socially harmful marketing.

b) NGOs that utilize advocacy tools to mobilize consumers against socially harmful consumption: Some
NGOs try to convince consumers against any consumption that they consider as either individually or socially
harmful. They use advocacy tools to not only convince the consumers but also authorities for the formulation of
laws. For these NGOs, it is essential to understand the consumer needs, values, and motives to formulate
effective advocacy programmes to convince consumers against socially harmful consumption. They have been
able to develop a service based on the understanding of the behaviour of its target group of consumers.
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Consumer Buying Process

Consumer Buying Process

Consumers go through the following five stages of the buyer decision process in taking the decision to purchase
any goods or services.

1. Need or Problem Recognition: Problem Recognition is the first stage of the buyer decision process. At this
stage, the consumer recognizes a need or problem. The buyer feels a difference between his or her actual state
and some desired state. This could be a simple as “I’m hungry, I need food.” The need may have been triggered
by internal stimuli (such as hunger or thirst) or external stimuli (such as advertising or word of mouth).

2. Information Search: Once the need is recognized, the consumer is aroused to seek more information and
moves into the information search stage. The second stage of the purchasing process is searching for
information. After the recognition of needs, the consumers try to find goods for satisfying such needs. They
search for information about the goods they want. Consumers can get information about goods from different
sources such as Personal sources, Commercial source,  Public sources, Experimental source. 

3. Evaluation of Alternatives: With the information in hand, the consumer proceeds to alternative evaluation,
during which the information is used to evaluate” brands in the choice set. Evaluation of alternatives is the third
stage of the buying process. Various points of information collected from different sources are used in
evaluating different alternatives and their attractiveness. While evaluating goods and services, different
consumers use different bases. Generally, the consumers evaluate the alternatives on the basis of attributes of the
product, the degree of importance, belief in the brand, satisfaction, etc. to choose correctly.

4. Purchase Decision: After the alternatives have been evaluated, consumers take the decision to purchase
products and services. They decide to buy the best brand and purchase the product or service. But their decision
is influenced by others’ attitudes and situational factors.

5. Post-Purchase Evaluation: In the final stage of the buyer decision process, post purchase behavior, the
consumer takes action based on satisfaction or dissatisfaction. In this stage, the consumer determines if they are
satisfied or dissatisfied with the purchasing outcome. Here is where cognitive dissonance occurs, “Did I make
the right decision.” Disposal of the product is also includes in this stage.
Organizational Buying Process

The six stages of the organizational buying-decision process are as following:

1. Problem or need recognition: The process begins when someone in the organization recognizes a problem
or need that can be met by acquiring a good or service. Problem recognition can occur as a result of internal or
external stimuli. External stimuli can be a presentation by a salesperson, an ad, or information picked up at a
trade show.

2. Determination of the product specification: Having recognized that a need exists, the buyers must add
further refinement to its description. Working with engineers, users, purchasing agents, and others, the buyer
identifies and prioritizes important product characteristics. This is usually the responsibility of the engineering
department. Engineers design several alternatives, depending on the priority list established earlier.

3. Search for qualified supplier. The organizational buyer now tries to identify the most appropriate vendor.
The buyer can examine trade directories, perform a computer search, or phone other companies for
recommendations. Marketers can participate in this stage by contacting possible opinion leaders and soliciting
support or by contacting the buyer directly. Personal selling plays a major role at this stage.

4. Analysis and evaluation of suppliers' proposals: Qualified suppliers are submitted to proposals of products
and services. Some suppliers send only a catalog or a sales representative. Proposal development is a complex
task that requires extensive research and skilled writing and presentation. The organizational buyer has analyzed
and evaluated the all received proposals of suppliers as requirements in this stage.

5. Selection of the supplier and purchase order: After the completion of the entire process (fulfilling all the
above parameters), a final decision is made and the product is purchased. In other word, the organization buying
selects the qualified supplier as analysis and evaluation of their proposals. After selection of the supplier, the
buyer now writes the finale purchase order, listing the technical specifications, the quantity needed, the
warranty, and so on.

6. Evaluation of performance: The stage of the business buying process in which the buyer rates its
satisfaction with suppliers, deciding whether to continue, modifies or drops them.  In this final stage, the buyer
reviews the supplier's performance. This may be a very simple or a very complex process. Feedback thus
obtained is properly documented for future references; regular follow-up, proper maintenance and standard
service calls are all quite essential after the deal is done.

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