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MBM 4th Semester

Service Marketing, MKT 541

Unit-3: Consumer Behaviour

Concept of Consumer Behaviour

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 behaviour 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 behaviour 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.
Nature/ Characteristics of Consumer Behavior
1. Systematic Process: Consumer behaviour is a systematic process relating to buying decisions of
the customers. The buying process consists of the following steps: Need identification to buy the
product, information search relating to the product, evaluating the alternative, purchase
decision and post purchase evaluation by the marketer.
2. Influenced by various factors: Consumer behaviour is influenced by a number of factors the
factors that influence consumers include marketing, personal, psychological, situational, social
and cultural etc. 
3. Different for different customers: All consumers do not behave in the same manner. Different
consumers behave differently. The different in consumer behaviour is due to individual factors
such as nature of the consumer's lifestyle, culture etc. 
4. Different for different products: Consumer behaviour is different for different products there are
some consumers who may buy more quantity of certain items and very low quantity of some
other items. 
5. Vary across regions: The consumer behaviour vary across States, regions and countries. For
instance, the behaviour of urban consumers is different from that of rural consumers. Normally
rural consumers are conservative (traditional) in their buying behaviour.
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6. Vital for marketers: Marketers need to have a good knowledge of consumer behaviour they need
to study the various factors that influence consumer behaviour of the target customers. The
knowledge of consumer behaviour enables marketers to take appropriate marketing decisions. 
7. Reflect status: Consumer buying behaviour is not only influenced by status of a consumer coma
but it also reflects it. Those consumers who owned luxury cars, watches and other items are
considered by others as persons of higher status. 
8. Result in spread effect: Consumer behaviour as a spread effect. The buying behaviour of one
person may influence the buying behaviour of another person. For instance, a customer may
always prefer to buy premium brands of clothing, watches and other items etc. This may
influence some of his friends, neighbors and colleagues. This is one of the reasons why marketers
use celebrities like Shahrukh Khan, Sachin to endorse their brands.
9. Undergoes a change: The consumer behaviour undergoes a change over a period of time
depending upon changes in age, education and income level etc, for example, kids may prefer
colorful dresses but as they grow up as teenagers and young adults, they may prefer trendy
clothes. 
10. Information search: Search for information is common consumer behaviour. Consumers cannot
purchase goods and services if they are unaware that a good or service exists. When a consumer
decides to buy a certain item, his decision must be based on the information he has gathered
about what products our services are available to fulfill his needs. There might be a product
available that would be better suited to the consumers needs, but if he is an aware of product, he
will not buy it. 
11. Brand loyalty: Brand loyalty is another characteristic of consumer behaviour. Brand loyalty is
the tendency of a consumer to buy product products or services from a certain company that one
likes or equates with having high quality goods and services. For example, if Naina's first car was
a Honda as a teenager and the car lasted 200,000 miles, she might have a tendency to buy Hondas
again in the future due to her previous positive experience. This brand loyalty may be so strong
that she forgoes the information search all together when considering for next vehicle.

AIDA Framework to Understanding the Decision Making Process

What is the AIDA Model in Marketing?

The AIDA model was developed by the American businessman, E. St. Elmo Lewis, in 1898. The
original main purpose was to optimize sales calls, specifically the interaction between seller and
buyer concerning the product.

The AIDA Model, which stands for Attention, Interest, Desire, and Action model, is an advertising

effect model that identifies the stages that an individual goes through during the process of
purchasing a product or service. The AIDA model is commonly used in digital marketing, sales
strategies, and public relations campaigns.

The AIDA model is just one of a class of models known as hierarchy of effects models

or hierarchical models, all of which imply that consumers move through a series of steps or stages
when they make purchase decisions. These models are linear, sequential models built on an
assumption that consumers move through a series of cognitive (thinking) and affective (feeling)
stages culminating in a behavioural (doing e.g. purchase or trial) stage
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The steps involved in an AIDA model are:

Let us consider ways to use the AIDA model by looking into each part of the hierarchy. The AIDA
model is based on four individual stages that attract interested parties who are deciding on a product
or service.

1. Attract Attention: The product must attract the consumer's attention. This is done via the
advertising materials. It is a type of “eyecatcher.” Examples: a window designed in a striking way, a
sensational YouTube clip, or a themed newsletter, or a graphic on a landing page.

2. Maintain Interest: In the first phase, the attention of the potential customer is piqued; their
interest in the product or service should be aroused. Example: detailed information on the product is
presented, for example, the product description on a website, a product brochure or flyer, photos, or
video clip of the product.

3. Create Desire: If interest in the product is aroused, it is the seller’s task to persuade the customer
that they want to own this product. In the best-case scenario, the advertisement or the product itself
creates the desire to purchase. Example: the seller provides clear examples of the advantages of the
product or service, taking into account the daily lives of the target group. In the online shop, a bullet
point list can generate the desire to buy. This desire to buy can also be awakened by an advertising
medium that specifically addresses the emotions of the customer.

4. Take Action: As soon as the desire to buy is aroused, this must be transferred into an action, that
is, the purchase. Example: In the case of online shops, this would ultimately be the shopping cart
process, in which a customer is lead to a conversion. The customer can be encouraged to buy the
product with a call-to-action.

Nowadays, the AIDA formula is frequently supplemented with an “S” for "satisfaction", because the
product has to ultimately satisfy the consumer. Customer satisfaction does not lie solely with the
advertising but rather with the product itself. Therefore, the basic constellation of the four phases is
only the prerequisite for the sale. With the insertion of the “confidence” (trust) factor, a sixth element
can also be added. Many marketers also work with the AIDCAS model to optimize sales processes
and advertising.

How is AIDA used?

The AIDA model has shaped the views on marketing and sales strategies for over 100 years. The
formula can still be found in current standard marketing textbooks. Beyond that, AIDA is also used
in PR to plan and analyze the effectiveness of PR campaigns, and still provides valuable information
for the analysis of advertising messages. The benefit of this simple formula can be found in its
simplicity and flexible application possibilities in areas other than store-based or stationary sales.
In e-commerce for example, the effectiveness of the product presentation in an online shop could be
analyzed using the four aspects of the AIDA formula.

Three Stage Model of Service Consumption

The three-stage model of service consumption is a customer decision making process of the service
purchasing. There are three stages of the purchase process for service which are as follows: pre-
purchase stage, service encounter stage and post-encounter stage.
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A pre-purchase stage is a stage before making decision. In this stage, customers try to find solutions
from service providers in order to fulfill their existing needs. They try to search information and
evaluate which service provider can deliver the best solution for them in order to come up with the
right decision. In this process, marketers have to be able to identify the needs of people, what are
their expectations, what benefits or value they are looking for, in order to deliver what they need.
Moreover, marketers can use external sources to stimulate customers’ needs. Therefore, it is
necessary for marketers to do the research from time to time in order to monitor the change of
consumer attitudes and behavior in each service.

The next stage is a service encounter stage which happens when the customer uses the service.
Service encounters range from high contact to low contact according to the industry of each
company. The level of contact refers to the difference of servuction system or service marketing
system that we will discuss in detail at the end of the essay. It is very important for service providers
to observe or notice consumers at this stage in order to understand and arrange pleasant market
offerings to customers during encounters.

The last stage is a post-encounter stage, a stage after consumers use the service. Customers will
compare service performance from their experience with their expectations. If service performance
equals customer expectations, it means customers are satisfied or not with the service.

1. The Pre-purchase Stage

i. Awareness of a need – need arousal, seek solution
ii. Information search
 Clarify needs,
 Explore solutions
 Identify alternative service products and suppliers
iii. Evaluation of alternatives (solutions and suppliers)
 Review supplier information (advertising, brochures, websites)
 Review information from third parties (published reviews, blogs, satisfaction ratings)
 Discuss options with service personnel
 Get advice and feedback from third party advisors, other customers
 Make decision on service purchase

2. Service Encounter Stage

i. Request service from chosen supplier or initiate self-service (payment may be upfront or
billed later)
ii. Service delivery by personnel or self-service
 Service encounters range from high- to low-contact (high contact include airline, GOOD
restaurant, nursing home) (LOW include cable tv, internet banking)
 Understanding the servuction system
 Service marketing systems: high-contact and low-contact
 Role and script theories
 Theatre as a metaphor for service delivery: An integrative perspective
 Implications for customer participation in service creation and delivery

3. Post Encounter Stage

i. Evaluation of service performance
ii. Future intentions
 Customers have expectations prior to consumption, observe service performance, compare it
to expectations
o Positive disconfirmation if better than expected
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o Confirmation if same as expected

o Negative disconfirmation if worse than expected
 Research shows links between customer satisfaction and a firm’s financial performance

Role of Post Purchase Evaluation in Service

Post-purchase behavior is when the customer assesses whether he is satisfied or dissatisfied with a
purchase. Post-purchase behavior is the final stage in the consumer decision process when the
customer assesses whether he is satisfied or dissatisfied with a purchase. How the customer feels
about a purchase will significantly influence whether he will purchase the product again or consider
other products within the brand repertoire. A customer will also be able to influence the purchase
decision of others because he will likely feel compelled to share his feelings about the purchase.
KEY TAKEAWAYS

Key Points

 How the customer feels about a purchase will significantly influence whether he will
purchase the product again or consider other products within the brand repertoire.

 Cognitive dissonance is when the customer experiences feelings of post-purchase

psychological tension or anxiety.

 Some companies like to engage their consumers with post-purchase communications in an

effort to influence their feelings about their purchase and future purchases.

Key Terms

 Cognitive dissonance: This term is used in modern psychology to describe the state of
simultaneously holding two or more conflicting ideas, beliefs, values, or emotional reactions.

The marketers sometimes need to assure the consumer that the choice made by them is the right one.
The seller can mention or even highlight the important features or attributes and benefits of the
product to address and solve their concerns if any. A high level of post-purchase dissonance is
negatively related to the level of satisfaction which the consumer draws out of product usage. To
reduce post-purchase dissonance, consumers may sometimes even return or exchange the product.
The marketer has to watch that the customer is not dissatisfied. Through dissatisfaction, a lot of
customers or clientele is lost and the marketer suffers losses. To avoid this, a marketer has to be on
the lookout for causes of dissatisfaction and maintain and build consumer satisfaction.
This can be done by regularly monitoring consumer reaction. It can be done by interviewing the
consumer or serving questionnaires and analyzing and interpreting them carefully. Besides this, a
strict vigil is to be kept on the quality of the product. The quality should be the joint responsibility of
marketing and production. If necessary, other departments should also be involved, and an
integrated marketing procedure be followed.

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