Consumer Behavior Module 1 Student
Consumer Behavior Module 1 Student
By:
Camille D. Binajbaj, MBA
Isagani F. Pascua, MBA
Noemi C. Vega, MBA
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What is this module about?
This course introduces the theory of consumer behavior and relates it to the practice of
marketing. The student will explore how perceptions, learning, memory, personality, and
attitudes influence consumption behavior, how consumption changes during one’s life cycle, and
how powerful cultural and subcultural influences are on consumers.
Consumer buying behavior studies about the various situations such as what do
consumers buy, why do they buy, when do they buy, how often do consumers buy, for what
reason do they buy, and much more. Due to the changing fashion, technology, trends, living
style, disposable income, and similar other factors, consumer behavior also changes. A marketer
has to understand the factors that are changing so that the marketing efforts can be aligned
accordingly.
Understanding consumer behavior is essential for a business to find success for its current
products as well as new product launches. Every consumer has a different thought process and
attitude towards buying a particular product. If a company fails to understand the reaction of a
consumer towards a product, there are high chances of product failure.
By understanding how consumers decide on a product they can fill in the gap in the
market and identify the products that are needed and the products that are obsolete.
Understanding consumer buying behavior is the key secret to reaching and engaging your clients
and convert them to purchase from you.
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How to use this module?
This module has nine (9) lessons. Each lesson has the following parts:
Learning Outcomes
Overview of the Lesson
Reference Learning Materials/Resources
Self-assessment Tests/Learning Activities
To get the most from this module, you need to do the following:
1. Begin by reading and understanding the Learning Outcomes. These will tell
you what you should know and be able to do at the end of this module.
2. Study well the given materials and resources for each lesson. If the lesson
requires you to watch a video and/or read an article, copy the link provided to
your search engine/browser.
3. Do the required self-assessment tests. Test yourself on how much you have
learned by means of the self-check tests. This will ensure your mastery of
basic information.
4. Demonstrate what you learned by doing what the learning activities directs
you to do.
5. You must be able to apply what you have learned in another activity or in a
real situation.
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TABLE OF CONTENTS
References ……………………………………………………………………………... 77
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Course Description
This course explores consumer behavior from determining consumer needs and wants,
the process by which they are satisfied, and the environment in which the behavior occurs. It
studies consumer behavior from a marketing perspective. Learners will become familiar with
consumer behavior models of decision-making, taking a closer look at how consumers process
information, develop preferences, and make choices. It will also tackle how different marketing
tactics and strategies are used by business/organizations to influence consumers.
Learning Outcomes
Course Introduction
Long-term sales stability is not just about having a great product. It is about meeting
consumers' needs, understanding what makes them tick, and speaking to them in the ways that
make them want to engage. In order to do this, marketers turn to a variety of reports, surveys,
and tools to understand one thing - consumer behavior.
In general terms, consumer behavior is a psychologically based study of how individuals
make buying decisions and what motivates them to make a purchase. Multiple factors exist that
determine buyer behavior, such as social factors, psychological factors, and even simply personal
factors.
Consumer behavior plays an important role in marketing management. It provides
information to the marketer on the basis of which the marketer can design its marketing mix
strategies and modify it in future as per the situation. For the marketer it is important to know
how consumers will react to marketing program in order to serve them effectively.
UNIT 1
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Overview of Consumer Behavior
Learning Outcomes:
Identify the major influences in consumer behavior.
Demonstrate how knowledge of consumer behavior can be applied to marketing.
Establish the relevance of consumer behavior theories and concepts to marketing
decisions.
Overview
Marketers can make a better marketing decision if he/she is fully aware of the
importance of consumer behavior. Adapting the marketing concept begins with identifying
the needs of the consumer, and this will be better achieved through study of consumer
behavior.
Learning Materials/Resources
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Studying consumer behavior is important to help the marketers understand what
influences consumer’s buying decisions. By understanding how consumers decide on a
product, they can fill-in the gap in the market and identify the products that are needed and
that are obsolete. It also helps marketers to decide how to present their products in a way
that generates maximum impact on consumers.
1. Consumer Differentiation
In marketing, consumer differentiation is a way to distinguish a consumer from
several other consumers. This helps to make a target group of consumers with the same
or similar behavior. Though you have a targeted customer demographic in your business,
you can still have variations between individual customers. Each group of consumers are
different and their needs and wants differ from other groups. When a marketer is
knowledgeable about differentiation of each group of consumers, he can design separate
marketing programs.
Consumer differentiation will help to tailor your strategies to the needs of varying
customer groups. When consumer differentiation is done, you can expand the width and
breadth of your services. You will be able to effectively serve a wider group of people.
2. Retention of Consumers
“Consumer behavior is of most importance to marketers in business studies as the
main aim is to create and retain customers” says Professor Theodore Levitt (Kumar,
2004).
Consumer behavior is not just important to attract new customers, but it is very
important to attract new customers, but it is very important to retain existing customers as
well. When a customer is happy about a particular product, he/she will repeat the
purchase. Therefore, marketing the products should be done in such a way that it will
convince customers to buy the product again and again.
Thus, it is very evident that creating customer and retaining them is very
important. This can be done only by understanding and paying attention towards the
consumer’s buying behavior.
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4. Predicting Market Trend
Consumer behavior analysis will be the first to indicate a shift in market trend.
For example, the recent trend of consumers is towards environment friendliness and
healthy food. This changing market trend was observed by many brands including
McDonalds. Based on the consumer behavior, McDonald’s brought healthy food options.
By conducting consumer behavior study, a company saves a lot of resources that
might otherwise be allocated to produce a product that will not be sold in the market. For
example, in summer, a brand will not waste its resources for producing a product that will
not sell in summer. Based on consumer behavior, the company decides on production
strategy which will save on warehouse costs and marketing costs.
5. Competition
One of the most important reasons to study consumer behavior is to find out
answers to some of the questions:
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provide information about the latest trends in technology, while with the second
demographic, you will need to spend more time educating the customer, finding out what
his specific needs are, and even teaching him how to use the features of his new
electronic device.
Cultural Factors
Consumer behavior is deeply influenced by cultural factors such as: buyer culture,
subculture, and social class.
Culture. Basically, culture is the part of every society and is the important cause of
person wants and behavior. The influence of culture on buying behavior varies from country to
country therefore marketers have to be very careful in analyzing the culture of different
groups, regions or even countries.
Social Class. Every society possesses some form of social class which is important to the
marketers because the buying behavior of people in a given social class is similar. In this
way, marketing activities could be adapted according to different social classes. It should
be noted that social class is not only determined by income but there are various other
factors such as: wealth, education, occupation, etc.
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Social Factors
Social factors also impact the buying behavior of consumers. The important social
factors are reference groups, family, role, and status.
Roles and Status. Each person possesses different roles and status in the society
depending upon the groups, clubs, family, organization, etc. to which he belongs. For
example: a woman is working in an organization as a finance manager – she is playing two
roles, one of finance manager and other of mother. Therefore, her buying decisions will be
influenced by her role and status.
Personal Factors
Personal factors can also affect the consumer behavior. Some of the important
personal factors that influence the buying behavior are lifestyle, economic situation,
occupation, age, personality, and self-concept.
Age. Age and lifecycle have potential impact on the consumer buying behavior. It is
obvious that the consumers change the purchase of goods and services with the passage
of time. Family lifecycle consists of different stages such young singles, married couples,
unmarried couples, etc. which help marketers to develop appropriate products for each
stage.
Occupation. The occupation of a person has significant impact on his buying behavior.
For example, a marketing manager of an organization will try to purchase business suits,
whereas a low-level worker in the same organization will purchase rugged work clothes.
Economic situation. Consumer economic situation has great influence on his buying
behavior. If the income and savings of a customer is high, then he will purchase more
expensive products. On the other hand, a person with low income and savings will
purchase inexpensive products.
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Personality. Personality changes from person to person, time to time and place to
place. Therefore, it can greatly influence the buying behavior of customers. Personality is not
what one wears, rather it is the totality of behavior of a man in different circumstances.
It has different characteristics such as dominance, aggressiveness, self-confidence, etc.
which can be useful to determine the consumer behavior for particular product or service.
Psychological Factors
There are four important psychological factors affecting the consumer buying
behavior. These are:
Motivation. The level of motivation also affects the buying behavior of customers. Every
person has different needs such as physiological needs, biological needs, social needs,
etc. The nature of the needs is that some of them are most persuasive while others are least
persuasive. Therefore, a need becomes a motive when it is more persuasive to direct the
person to seek satisfaction.
Beliefs and Attitudes. Customer possesses specific belief and attitude towards various
products. Since such beliefs and attitudes make up brand image and affect consumer
buying behavior therefore, marketers are interested in them. Marketers can change the
beliefs and attitudes of customers by launching special campaigns in this regard.
Consumer Behavior
https://www.youtube.com/watch?v=60eRK7AwgwM
UNIT 2
Consumer Decision Buying Process
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Learning Outcomes:
Describe the decision-making process.
Understand how to influence different stages of the consumer decision-making
process.
Overview
This unit will present the stages by which the consumer undertakes when deciding
which product or service to buy. Also included in this unit is the discussion of the
different types of consumer behavior and what marketers must do to understand the
consumers ‘buying process.
Learning Materials/Resources
Consumer Classification
Understanding human needs is critical for effective marketing. However, these
needs are not always easily detectable. People are not aware of their own underlying
motivations or of the forces that determine their own behavior.
When it comes to marketing, there is one aspect every business should be aware
of: not all consumers are created equal. Just like there are different types of goods, services,
and products, there are different types of consumers. They have different motivations for
purchasing, different modes of engaging and different mindsets. In order to market a brand
successfully, a business needs to understand the different type of consumer and how to
adapt effective marketing strategy for them
Loyal Consumers
Loyal consumers are likely to comprise a small segment of your consumer base.
However, because of their loyalty, they are valuable to every business. Once they have
found the right company to do business with, they will remain loyal, often becoming a
promoter of the brand by sharing their experience with their friends, family and extended
social network.
According to recent study, only between 12 and 15 percent of consumers are loyal
to a single retailer. However, that small group tends to generate between 55 to 70 percent
of brand sales. How can a brand successfully market to a loyal consumer? The keys are
personalization, individualized attention, and repeated marketing contact. These kinds of
marketing strategies will yield the biggest return on investment.
Discount Consumers
Discount consumers are always on the hunt for discounts. Like loyal consumers,
they also have a tendency to frequent patronize the same organizations and brands.
However, they only make purchases when there is some kind of sale or discount. To
market to the discount consumer, the company need to advertise their offers and specials.
Social media is a great way to share sales and ongoing promotions, as are personalized
emails or brochures.
Impulsive Consumers
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Impulse consumers are the most difficult when it comes to maximizing marketing
strategies. These consumers often do not shop with a specific product or service in mind.
Rather, they may purchase unpredictably, buying when something strikes their fancy.
Considering the unusual nature of impulsive consumer purchasing habits, vast majority of
purchases are actually impulse purchases.
When brands figure out how to effectively market to impulse consumers, they can
drive up their sales. Keep in mind that impulse buying tends to be emotionally driven as
opposed to logically driven. This is distinct from more rationally driven consumer types,
such as discount consumers (driven by a desire to save money), and loyal consumers
(driven by loyalty to a specific brand). The key is to tap into the impulsive consumer’s
emotions.
Need-Based Consumers
Need-based consumers purchase to fulfill a need. Maybe they have run into
financial trouble and need advice. Perhaps they are going on vacation and need a new set
of luggage. They could be approaching a milestone in their life and are seeking legal
advice. In order to market to a need-based consumer, your marketing strategy needs to
anticipate these needs effectively. That means utility-centric marketing, across multiple
channels, including print, online and social media. You need to segment your consumers
by needs and adapt a marketing strategy to each of those needs, outlining how you can help
in a particular situation or promoting a specific service.
Need Recognition
Need recognition occurs when a consumer exactly determines their needs. Consumers may
feel like they are missing out something and needs to address this issue so as to fill in the
gap. When businesses are able to determine when their target market starts developing
these needs or wants, they can avail the ideal opportunity to advertise their brands.
Information Search
The information search stage in the buyer decision process tends to change continually as
consumers require obtaining more and more information about products which can satisfy
their needs. Information can also be obtained through recommendations from people
having previous experiences with products.
At this level, consumers tend to consider risk management and prepare a list of the features
of a particular brand. This is done so because most people do not want to regret their
buying decision. Information for products and services can be obtained through several
sources like:
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Commercial sources: advertisements, promotional campaigns, salespeople, or packaging
of a particular product
Personal sources: The needs are discussed with family and friends who provided product
recommendations
Evaluation of Alternatives
This step involves evaluating different alternatives that are available in the market along
with the product lifecycle. Once it has been determined by the customer what can satisfy
their need, they will start seeking out the best option available. This evaluation can be
based upon different factors like quality, price or any other factor which are important for
customers. They may compare prices or read reviews and then select a product which
satisfies their parameters the most.
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Purchase Decision
When all the above stages have been passed, the customer has now finally decided to
make a purchasing decision. At this stage, the consumer has evaluated all facts and has arrived
at a logical conclusion which is either based upon the influence from marketing
campaigns or upon emotional connections or personal experiences or a combination of both.
A consumer’s buying decision depends on the type of products that they need to
buy. The behavior of a consumer while buying a coffee is a lot different while buying a
car. Consumer buying behavior is determined by the level of involvement that a
consumer shows towards a purchase decision. The amount of risk involved in a purchase
also determines the buying behavior. Higher priced goods tend to high higher risk, thereby
seeking higher involvement in buying decisions.
The consumer is highly involved in the purchase process which might be due to
high price and infrequent purchase. In addition, there is a low availability of choices with
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less significance differences among brand. Consumers will be forced to buy goods that do
not have too many choices and therefore consumers will be left with limited decision
making. Based on the products available, time limitation or the budget limitation,
consumers buy certain products without a lot of research.
Dissonance can occur when the consumer worries that they will regret their
choice. For example, a consumer who is looking for a new collapsible table that can be
taken in a camping, quickly decides on the product based on few brands available. The main
criteria will be based on price and convenience, but after the purchase the consumer will
seek confirmation that he has made the right choice.
Marketers should run after-sale service camps that deliver focused messaging.
These campaigns should aim to support consumers and convince them to continue with
their choice of their brand. These marketing campaigns should focus on building repeat
purchases and referrals by offering discounts and incentives.
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UNIT 3
Cultural and Environmental Influences on Consumer
Learning Outcomes:
Understand the concept of culture and how it influence consumer behavior.
Understand how environmental forces affect consumer behavior.
Overview
This unit provides the students the importance of culture, sub-culture and social
class in understanding the consumer behavior.
Learning Materials/Resources
Meaning of Culture
For the purpose of studying consumer behavior, culture can be defined as the sum
total of learned beliefs, values and customs that serve to guide and direct the consumer
behavior of all members of that society.
Howard and Sheth have defined culture as “A selective, man-made way of
responding to experience, a set of behavioral patterns”. Thus, culture consists of traditional
ideas and in particular the values, which are attached to these ideas. It includes knowledge,
belief, art, morale, law, customs, and all other habits acquired by man as a member of
society. An accepted concept about culture is that it includes a set of learned beliefs, values,
attitudes, habits, and forms of behavior that are shared by a society and are transmitted from
generation to generation within that society.
Characteristics of Culture
1. Culture is learned. It is not biological; we do not inherit it. Much of learning culture is
unconscious. We learn culture from families, peers, institutions, and media. The process
of learning culture is known as enculturation. While all humans have basic biological need
such as food, and sleep, the way we fulfill those needs varies cross-culturally.
a. Formal learning. Parents and elders teach children the proper way to behave. For
instance, you have been taught that you need to study to be successful and happy in
life. This learning may influence your response both as a student and individual
towards education.
b. Informal learning. We learn by imitating the behavior of our parents, friends, or by
watching television and film actors in action.
c. Technical learning. Instructions are given about the specific method by which
certain things to done such as painting, dancing, singing, etc.
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2. Culture is shared. Because we share culture with other members of our group, we are
able to act in socially appropriate ways as well as predict how others will act. Despite the
shared nature of culture, that does not mean that culture is homogeneous (the same).
3. Culture is based on symbols. A symbol is something that stands for something else.
Symbols vary cross-culturally and are arbitrary. They only have meaning when people in
a culture agree on their use. Language, money, and art are all symbols. Language is the
most important symbolic component of culture.
4. Culture is integrated. This is known as holism, or the various parts of a culture being
interconnected. All aspects of a culture are related to one another and to truly understand
a culture, one must learn about all of its parts, not only a few.
5. Culture is dynamic. This simply means that cultures interact and change. Because most
cultures are in contact with other cultures, they exchange ideas and symbols. All cultures
change, otherwise, they would have problems adapting to changing environments. And
because cultures are integrated, if one component in the system changes, it is likely that
the entire system must adjust.
Elements of Culture
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Power Distance Index
The power distance index considers the extent to which inequality and power are
tolerated. In this dimension, inequality and power are viewed from the viewpoint of the
followers – the lower level.
High power distance index indicates that a culture accepts inequity and power
differences, encourages bureaucracy, and shows high respect for rank and authority.
Low power distance index indicates that a culture encourages organizational
structures that are flat and feature decentralized decision-making responsibility, participative
style of management, and place emphasis on power distribution.
Masculinity vs Femininity
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The masculinity vs femininity dimension is also referred to as “tough vs. tender,” and
considers the preference of society for achievement, attitude towards sexuality, equality,
behavior, etc.
Masculinity comes with the following characteristics: distinct gender roles, assertive,
and concentrated on material achievements and wealth-building.
Femininity comes with the following characteristics: fluid gender roles, modest,
nurturing, and concerned with the quality of life.
Cultural Influences
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Race is the socially constructed meanings assigned to the perceived differences
between people based on physical traits (skin color, facial features, and hair types). What
differences we recognize and the meanings we assign those differences are all culturally
determined and not biologically created. These physical features do not determine a person’s
actions or explain their behavior.
Ethnic group refers to people who identify themselves as a distinct group based on
cultural features such as common origins, language, customs, and beliefs. Ethnic groups can
be historically constituted (a group of people who shared a territory, language, or religion) or
they can be more recently claimed (African Americans). Just because people choose to see
themselves as members of a specific ethnic group does not mean that all members of that
group are the same or share beliefs and values. Ethnicity, because it is a marker of group
membership, can be used to discriminate.
Indigenous people are groups who have a long-standing connection with some
territory that predates colonial or outside societies prevailing in the territory. Indigenous
peoples are groups that were in a territory before Europeans or colonists arrived, thus Native
Americans are an indigenous group. They are frequently called First Peoples, and often
suffer from discrimination.
Age is both a biological fact as well as being culturally constructed. While we can
reckon how many years old an individual is, what that means in terms of rights and
responsibilities is culturally constructed. Most societies have obligations and responsibilities
that are assigned based on individuals reaching specific ages, examples are driving,
drinking, and voting.
Subcultural analysis enables marketers to segment their markets to meet the specific
needs, motivations, perceptions, and attitudes shared by members of a specific subcultural
group. Example, Chinese-Filipino as a sub-culture. Differentiates itself from the mainstream
Filipino culture when they avoid wearing the color black or all white during important
celebrations, as these colors are associated with mourning.
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UNIT 4
Social Factors Affecting Consumer Behavior
Learning Outcomes:
Identify and understand the social factors that affect consumer buying decisions.
Describe the different types of consumer roles.
Explain how culture, subcultures, social classes, families, and reference groups
affect consumers’ buying behavior.
Overview
This unit provides the students how social factors such as groups, and family plays
an important role in the buying decisions of consumers.
Learning Materials/Resources
Social Factors
Social factors play an essential role in influencing the buying decisions of
consumers. Human beings are social animals. We need people around to talk to and discuss
various issues to reach better solutions and ideas. We all live in a society and it is really
important for individuals to adhere to laws and regulations of society.
1. Reference groups
Every individual has some people around who influence him/her in any way.
Reference groups comprise of people that individuals compare themselves with. Every
individual knows some people in the society who become their idols in due course of time.
Co-workers, family members, relatives, neighbors, friends, seniors at workplace often form
reference groups.
a. Primary Group – consists of individuals one interacts with on a regular basis. This
includes friends, family members, relatives, and co-workers who influence the buying
decisions of consumers due to the following reasons:
b. Secondary Groups – share indirect relationship with the consumer. These groups are
more formal and individuals do not interact with them on a regular basis. Examples:
religious associations, political parties, clubs
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2. Role in the Society
Each individual plays a dual role in the society depending on the group he belongs to.
An individual working as Chief Executive Officer with a reputed firm is also someone’s husband
and father at home. The buying tendency of individuals depends on the role he plays in the
society.
3. Social Status
An individual from an upper middle class would spend on luxurious items whereas an
individual from middle to lower income group would buy items required for his/her survival.
There are five distinct roles played by members of a family while making a purchase
decision. A look at these provides further insight into how family members interact in their
various consumption-related roles.
The initiator. This is the first person to suggest that a specific product should be bought.
This is also the one who collects information about the product or service. Teenagers often
act as initiators.
The influencer. The family member or family members who influences the final decision
either explicitly or implicitly in the sense that his/her suggestions and wishes are reflected in
the family’s decision.
The decision maker. The one who takes the actual decision and makes the final choices
between alternatives.
The purchaser. The one who buys the products. Some purchasers are forced to carry out the
instructions of the decision maker, whereas others have the authority to choose for family
members and thus assert their preferences.
The user. The family member who actually uses or consumes the product.
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Marketers are inclined to direct their marketing messages exclusively at women as
though they alone are responsible for the purchasing decision and dominate family decision
making. However, there are indications that men play an increasingly important role in
family decision making and that they even act as purchasers of items previously regarded as
exclusively in the female domain. Modern children are very knowledgeable and it is
generally accepted that they too have a role to play in family decision-making.
Wife-dominant, where the wife decides what should be bought. Example: grocery, food,
home decoration.
Husband-dominant, where the husband dominates the decision such as purchasing phones,
cars, insurance.
Joint Decisions or Syncratic, where decisions are usually made jointly by husband and
wife. With the changing role of women, this type of decision has become prominent.
Example, in deciding the schools for children, vacations.
The buying behavior of a family member is also influenced by his position in the
family life cycle stage. Different stages in the life cycle show family influence on consumer
behavior with respect to a family member’s position in the life cycle stage. The family life
cycle stages and consumption patterns pf each stage can be understood with the table below:
UNIT 5
Personal Factors Affecting Consumer Behavior
Learning Outcomes:
Identify and understand the individual factors that affect consumer buying
decisions.
Describe how these factors affect the consumer buying decision.
Overview
Consumer behavior helps us understand the buying tendencies and spending
patterns of consumers. Not all individuals would prefer to buy similar products. It deals
with as to why and why not an individual purchases particular products and services.
Personal factors play an important role in affecting consumer buying behavior.
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Learning Materials/Resources
PERSONAL FACTORS
Some of the important personal factors that influence the buying behavior are age,
economic condition, occupation, lifestyle, personality and self-concept.
Age
Age and lifecycle have potential impact on the consumer buying behavior. It is obvious
that the consumers change the purchase of goods and services with the passage of time.
Family lifecycle consists of different stages such young singles, married couples,
unmarried couples, and others which help marketers to develop appropriate products for
each stage.
Example:
Teenagers would be more interested in buying bright and loud colors as compared to a
middle aged or elderly individual who would prefer decent and subtle designs.
A bachelor would prefer spending lavishly on items like beer, bikes, music, clothes,
parties, clubs and so on. A young single would hardly be interested in buying a house,
property, insurance policies, gold etc. An individual who has a family, on the other hand
would be more interested in buying something which would benefit his family and make
their future secure.
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Economic Condition
Consumer economic situation has great influence on his buying behavior. The buying
tendency of an individual is directly proportional to his income/earnings per month. How
much an individual brings home decides how much he spends and on which products?
Example:
Individuals with high income would buy expensive and premium products as compared to
individuals from middle-income and lower-income group who would spend mostly on
necessary items. You would hardly find an individual from a low-income group spending
money on designer clothes and watches. He would be more interested in buying grocery
items or products necessary for his survival.
Occupation
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The occupation of an individual plays a significant role in influencing his/her buying
decision. An individual’s nature of job has a direct influence on the products and brands he
picks for himself/herself.
Example:
Tim was working with an organization as Chief Executive Officer while Jack, Tim’s friend
now a retired professor went to a nearby school as a part time faculty. Tim always looked
for premium brands which would go with his designation whereas Jack preferred brands
which were not very expensive. Tim was really conscious about the clothes he wore, the
perfume he used, the watch he wore whereas Jack never really bothered about all this.
That is the importance of one’s designation. As a CEO of an organization, it was really
essential for Tim to wear something really elegant and unique for others to look up to him.
A CEO or for that matter a senior professional can never afford to wear cheap labels and
local brands to work.
An individual’s designation and his nature of work influence his buying decisions. You
would never find a low-level worker purchasing business suits, ties for himself. An
individual working on the shop floor cannot afford to wear premium brands every day to
work.
College goers and students would prefer casuals as compared to professionals who would
be more interested in buying formal shirts and trousers.
Lifestyle
Lifestyle of customers is another import factor affecting the consumer buying behavior.
Lifestyle refers to the way a person lives in a society and is expressed by the things in
his/her surroundings. It is determined by customer interests, opinions, activities etc and
shapes his whole pattern of acting and interacting in the world.
Example:
It is really important for some people to wear branded clothes whereas some individuals
are really not brand conscious. An individual staying in a posh locality needs to maintain
his status and image.
An individual’s lifestyle is something to do with his style, attitude, perception, his social
relations, and immediate surroundings.
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Personality
Personality changes from person to person, time to time and place to place. Therefore, it
can greatly influence the buying behavior of customers. Actually, personality is not what
one wears; rather it is the totality of behavior of a man in different circumstances. It has
different characteristics such as: dominance, aggressiveness, self-confidence etc which can
be useful to determine the consumer behavior for particular product or service.
Example:
A fitness freak would always look for fitness equipment whereas a music lover would
happily spend on musical instruments, CDs, concerts, musical shows etc.
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UNIT 6
Psychological Factors Affecting Consumer Behavior
Learning Outcomes:
Identify and understand the psychological factors that affect consumer buying
decisions.
Explain how these factors affect consumer behavior.
Overview
When we talk about psychological factors that influence consumer decisions, we
are referring to the workings of the mind or psyche: motivation, learning and socialization,
attitudes and beliefs. Psychological Factors are the factors that talk about the psychology
of an individual that drive his actions to seek satisfaction. Some of the important
psychological factors are motivation, perception, learning, beliefs and attitudes.
Learning Materials/Resources
PSYCHOLOGICAL FACTORS
1. Motivation
A motive is the inner drive or pressure to take action to satisfy a need. A highly
motivated person is a very goal-oriented individual. Whether goals are positive or negative,
some individuals tend to have a high level of goal orientation, while others tend to have a
lower level of goal orientation. People may display different levels of motivation in
different aspects of their lives.
The level of motivation influences the buying behavior of the consumers. It is very
well explained by Maslow through his need hierarchy theory comprising of basic needs,
security needs, social needs, esteem needs and self-actualization needs. Usually, the basic
needs and the security needs are more pressing needs than the other and hence, these needs
become a motive that directs the consumer behavior to seek satisfaction.
Motivation starts with an unmet need, as does all consumer problem solving. One of
the best-known theories about individual motivation is the work of A. H. Maslow, known
as the hierarchy of needs. Maslow developed a model that lays out five different levels of
human needs. These needs relate to one another other in a “need hierarchy,” with basic
survival-oriented needs at the lower levels of the hierarchy, building up to higher
emotional needs associated with love, self-esteem, and self-fulfillment. This hierarchy of
needs is shown in Figure 1 (on the next page).
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Physiological needs are at the first level of Maslow’s hierarchy: hunger, thirst, and other
basic drives. All living beings, regardless of their level of maturity, possess physiological needs.
Physiological needs are omnipresent and recur throughout nature.
Safety and security are second in Maslow’s hierarchy. Safety and security needs imply a
continued fulfillment of physiological needs, as well as the absence of the threat of physical
harm. Safety and security encompass both physical and financial security because financial
security is linked to a person’s ability to have her physiological needs met. Health and physical
well-being and protection from accidents are also associated with this level of need. This is
considered an extension of the more basic needs.
Love and belonging are third in Maslow’s hierarchy of needs. Love encompasses the
needs for belonging, friendship, human intimacy, and family. They involve a person’s interaction
with others and the need to feel accepted by social groups, large or small.
Esteem is the fourth level. Esteem includes the need to feel good about oneself, to be
respected and valued by others, and to have a positive self-image.
Self-actualization is the fifth and highest level in Maslow’s needs hierarchy. Also
described as self-fulfillment, this is the need humans feel to reach their full potential and to
accomplish all that they can with their talents and abilities. Different people may express this
need in very different ways: for one person, self-actualization might involve musical or artistic
pursuits, for
32
another, it is parenting, and for a third the focus might be athletics. At different points in their
lives, individuals might express this need through different pursuits.
In his work, Maslow asserts that these five levels of needs operate on an unconscious level.
In other words, people may not even be aware that they are concentrating on one particular level
of need or an assortment of needs. Maslow’s theory suggests that lower levels of need must be
met before an individual can focus on the upper levels of needs. At the same time, a person may
experience several different needs simultaneously. How an individual is motivated to act
depends on the importance of each need.
For motivation to be useful in marketing practice, it is helpful for marketing managers to
understand how motivation plays into a specific purchasing situation—what triggers consumers
to set goals, take action, and solve their need-based problems.
Perception
Perception is how you interpret the world around you and make sense of it in your brain.
You do so via stimuli that affect your different senses—sight, hearing, touch, smell, and taste.
The consumer perception towards a particular product and the brand also influences his
buying decision. The perception is the process through which the individual selects, organize and
interpret the information to draw a meaningful conclusion. Such as, Apple iPhone is perceived as
a premium brand and consumers are motivated to buy it to get associated with the elite class of
the society.
Using different types of stimuli, marketing professionals try to make you more perceptive
to their products whether you need them or not. Consumers today are bombarded with all types
of marketing from every angle—television, radio, magazines, the Internet, and even bathroom
walls. It’s been estimated that the average consumer is exposed to about three thousand
advertisements per day.
Selective Attention refers to the process where individuals pay attention to information that is of
use to them or their immediate family members. An individual in a single day is exposed to
numerous advertisements, billboards, hoardings etc but he is interested in only those which
would benefit him in any way. He would not be interested in information which is not relevant at
the moment.
Selective Distortion - Consumers tend to perceive information in a way which would be in line
to their existing thoughts and beliefs.
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Selective Retention - Consumers remember information which would be useful to them, rest all
they forget in due course of time. Michael wanted to purchase a watch for his wife and thus he
remembered the RADO advertisement which he had seen several days ago.
The marketers lay emphasis on managing the perceptual processes: Selective Attention,
Selective Distortion, and Selective Retention. In selective attention, the marketer tries to gain the
attention of the customer towards his offerings. Different people have different perceptions about
the same product depending on their individual beliefs and attitudes which give rise to selective
distortion. Thus, the marketer should try to understand the attitudes and beliefs of individuals
and design the marketing campaigns to retain the consumers.
Learning
Learning comes only through experience. An individual comes to know about a product
and service only after he/she uses the same. An individual who is satisfied with a particular
product/service will show a strong inclination towards buying the same product again.
Learning is an experience and practice that actually brings about changes in behavior. For
example, in order to learn to play tennis, you might learn about the rules of the game and the
skills tennis players need. You would practice the skills and participate in tennis games to gain
experience. Learning can also take place without actually participating in the physical
experience. You can learn about something conceptually, too. In other words, you could learn to
play tennis by observing experts and reading about how to play without actually doing it. This is
called nonexperiential learning.
Consumer decisions can be influenced by both experiential and nonexperiential
learning. Take an example of buying wine. Suppose you are at a winery and you are considering
buying a bottle of zinfandel, which you have never tried before. If you taste the wine and
discover you don’t care for the strong spicy flavor, you have learned experientially that you do
not like zinfandel. On the other hand, you could ask the tasting-room host about the flavor of
zinfandel, and she might say that it resembles strong ginger ale, in which case you might decide
not to buy the wine because you don’t like ginger ale. In this second case, you have learned
about the product non-experientially.
Marketing relies heavily on nonexperiential learning, using tactics like customer
testimonials, case studies, and blogger reviews to teach new customers through the experiences
and opinions of others. Consumers themselves seek out resources for nonexperiential learning
when they read book and product reviews on Amazon, film reviews on Rotten Tomatoes, and
restaurant reviews on Yelp.
Another characteristic of learning is that the changes may be immediate or anticipated. In
other words, learning may be taking place even if there is no evidence of it. We can store our
learning until it’s needed, and we do this often with purchasing decisions. For example, a person
might read up on product reviews for the latest set of tablet computers even though she doesn’t
expect to buy one soon. Eventually she may be in the market, and at that point she can put her
learning to use.
34
chocolate is bitter,” or “dark chocolate is delicious,” or “dark chocolate is good for
baking.” An attitude is a consistent view of something that encompasses the belief as well
as an emotional feeling and a related behavior. For example, an attitude about dark
chocolate might be expressed as a belief “dark chocolate is delicious”, a feeling “dark
chocolate makes me happy,” and a behavior “I eat dark chocolate every afternoon as an
energy booster”.
Beliefs and attitude play an essential role in influencing the buying decision of
consumers. Individuals create a certain image of every product or service available in the
market. Every brand has an image attached to it, also called its brand image.
Consumers purchase products/services based on their opinions which they form
towards a particular product or service. A product might be really good but if the consumer
feels it is useless, he will never buy it.
People have beliefs and attitudes about all sorts of things: food, family, politics,
places, holidays, religion, brands, and so on. Beliefs and attitudes may be positive,
negative, or neutral, and they may be based on opinion or fact. It is important for marketers
to understand how beliefs and attitudes may affect consumer behavior and decision
making. If an incorrect or detrimental belief exists among the general population or a target
audience, marketing efforts may be needed to change people’s minds.
When consumer attitudes present a major stumbling block, marketers have two
choices: either they can change consumers’ attitudes to become with their product, or they
can change the product to match attitudes. Often it is easier to change the product than to
change consumers’ attitudes. Attitudes can be very difficult to change, chiefly because they
are intertwined with a pattern of beliefs, emotions, and behaviors. Changing the attitude
requires changing the whole pattern. As a rule, it is easier for marketing to align with
existing attitudes rather than trying to alter them.
Marketers may also look for opportunities to reshape or create new attitudes in
moments when consumers may be more open-minded, as with a product redesign or a new
product introduction.
35
Search and Open Resource:
If you have access to the internet, watch the video of the learning resources below to
better understand the topic:
36
UNIT 7
Consumer Behavior and Marketing Strategy
Learning Outcomes:
Discuss the concept of marketing strategy.
Explain the concepts of segmentation and targeting.
Describe the role of marketing in building and managing customer relationships.
Explain how marketing creates value for the consumer, the company, and society.
Understand the process of designing and evaluating the marketing strategies based
on fundamentals of consumer buying behavior.
Overview
Long-term sales stability is not just about having a great product. It's about
meeting consumers' needs, understanding what makes them tick, and speaking to them in
the ways that make them want to engage.
According to a Salesforce report, 76% of consumers expect companies to
understand their needs and expectations. This means that if you don't understand what a
consumer wants before they can tell you, they're probably taking their business
elsewhere.
Successful organizations build their marketing strategies with consumer behavior
insights as the foundation. They're not generating products and marketing plans based on
their ideas alone; they are bringing external information into the fold to find out what
customers want and how they want it, then interacting with them accordingly. This is the
essence of creating a positive customer experience (CX), and CX means everything to
fostering a loyal customer-base.
Learning Materials/Resources
Marketing Strategy
Marketing strategies and tactics are normally based on explicit and implicit
beliefs about consumer behavior. Decisions based on explicit assumptions and sound
theory and research are more likely to be successful than the decisions based solely on
implicit intuition.
Knowledge of consumer behavior can be an important competitive advantage
while formulating marketing strategies. It can greatly reduce the odds of bad decisions
and market failures. The principles of consumer behavior are useful in many areas of
marketing, some of which are listed below:
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2. Selecting Target Market
Example
Consumer studies show that many existing and potential shampoo users did not want to
buy shampoo packs priced at P50 or more. They would rather prefer a low price
packet/sachet containing sufficient quantity for one or two washes. This resulted in
companies introducing shampoo sachets at a minimal price which has provided
unbelievable returns and the trick paid off wonderfully well.
3. Marketing-Mix Decisions
Once the unfulfilled needs and wants are identified, the marketer has to determine the
precise mix of four P’s, i.e., Product, Price, Place, and Promotion.
Product
A marketer needs to design products or services that would satisfy the unsatisfied needs
or wants of consumers. Decisions taken for the product are related to size, shape, and
features. The marketer also has to decide about packaging, important aspects of service,
warranties, conditions, and accessories.
Price
The second important component of marketing mix is price. Marketers must decide what
price to be charged for a product or service, to stay competitive in a tough market. These
decisions influence the flow of returns to the company.
Place
The next decision is related to the distribution channel, i.e., where and how to offer the
products and services at the final stage. The following decisions are taken regarding the
distribution mix:
Are the products to be sold through all the retail outlets or only through the
selected ones?
Should the marketer use only the existing outlets that sell the competing brands?
or, should they indulge in new elite outlets selling only the marketer’s brands?
Is the location of the retail outlets important from the customers’ point of view?
Should the company think of direct marketing and selling?
Promotion
Promotion deals with building a relationship with the consumers through the channels of
marketing communication. Some of the popular promotion techniques include
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advertising, personal selling, sales promotion, publicity, and direct marketing and
selling.
The marketer has to decide which method would be most suitable to effectively reach the
consumers. Should it be advertising alone, or should it be combined with sales promotion
techniques? The company has to know its target consumers, their location, their taste and
preferences, which media do they have access to, lifestyles, etc.
Regulatory Policy
State and local governments may even impose additional regulations. In fact, even
the start time of the game is regulated by the government because our time zones are
determined by our government. The government's restriction and control over business
practices is called its regulatory policy.
Regulatory policy is designed to achieve efficiency and equity, which requires the
government to intervene, for example, to maintain competitive trade practices (an
efficiency goal) and to protect vulnerable parties in economic transactions (an equity
goal). Many of the regulatory decisions of the federal government are also made largely
in the context of group politics. Business lobbies also have an especially strong influence
on the regulatory policies that affect them.
Social Marketing
Social marketing is marketing designed to create social change, not to directly
benefit a brand. Using traditional marketing techniques, it raises awareness of a given
problem or cause, and aims to convince an audience to change their behaviors.
Instead of selling a product, social marketing “sells” a behavior or lifestyle that
benefits society, in order to create the desired change. This benefit to the public good is
always the primary focus. And instead of showing how a product is better than competing
products, social marketing “competes” against undesirable thoughts, behaviors, or
actions.
2. Environmental Causes:
Anti-deforestation
Anti-littering
Endangered species awareness
3. Social activism:
Illuminating struggles that people of color, people with disabilities, etc. face, then
inspiring people to fight against mechanisms that create inequality
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Anti-bullying
Fighting gender stereotypes
Nonprofit organizations and charities run the majority of social marketing campaigns.
Government organizations, highway safety coalitions, and emergency services (police,
fire, ambulance) run them as well. But social marketing is not out of the question if you
are a commercial business. Commercial brands will sometimes run social marketing
campaigns for causes they are passionate about.
Customer Value
Customer value is the satisfaction the customer experiences (or expects to experience) by
taking a given action relative to the cost of that action.
Your internal chain of sourcing, operations, processes, sales, marketing, and customer
service all contribute to the creation of value. All of these components affect your
customers directly or indirectly in some way, informing their perception of you. This
leads to the fundamental point: The results of your efforts to create value are measured in
the customers’ perception of that value. Customers compare their perceived value of
similar products when making a decision.
40
Consumers
It is not possible to anticipate and react to customers’ needs and desires without a complete
understanding of consumer behavior. Discovering customers’ needs is a complex process, but it
can often be accomplished by marketing research.
Company
A firm must fully understand its own ability to meet customers needs. This involves evaluating
all aspects of the firm including:
financial condition
general managerial skills
production capabilities
R&D capabilities
technological sophistication
reputation
marketing skills
Competitors
It is not possible to consistently do a better job of meeting customer needs than the competition
without a thorough understanding of the competition’s capabilities and strategies. This requires
the same level of knowledge of a firm’s key competitors that is required on one’s own firm.
Conditions
The state of the economy, the physical environment, government regulations, and technological
developments affect consumer needs and expectations as well as company and competitor
capabilities.
41
Market Segmentation
42
1. Identifying product-related need sets
Organizations approach market segmentation with a set of current and potential
capabilities. The term need set is used to reflect the fact that most products in developed
economies satisfy more than one need.
Customer needs are not restricted to product features but also include types and
sources of product information, outlets where the product is available, product price, the
image of the product or firm, and even where and how the product is produced.
43
Is our marketing planning information current and accurate?
What is the current state of New Product Development? (Product)
How profitable is our product portfolio? (Product)
Are we pricing in the right way? (Price)
How effective and efficient is distribution? (Place)
Are we getting our marketing communications right? (Promotion)
Do we have the right people facing our customers? (People)
How effective are our customer facing processes?
What is the state of our business’s physical evidence?
44
Search and Open Resource:
If you have access to the internet, watch the video of the learning resource below to better
understand the topic:
UNIT 8
Situational Influences
Learning Outcomes:
Identify and discuss the four main types of situation.
Discuss the dimensions of situational influence.
Analyze how different situations affect consumer buying behavior.
Overview
Situational influences are temporary conditions that affect how buyers behave—
whether they actually buy your product, buy additional products, or buy nothing at all
from you. They include things like physical factors, social factors, time factors, the
reason for the buyer’s purchase, and the buyer’s mood. Consumers behave very
differently depending on the situation.
45
Learning Materials/Resources
1. Communication Situation
46
2. Purchase Situation
3. Usage Situation
47
4. Disposition Situation
48
1. Physical Surroundings
Store location
Interior décor
Music
Smell/aromas
Temperature (air-conditioning or heating)
Choice provided (by product category or across the categories)
Atmospherics is the sum of all the physical features of a retail environment. It influences
consumer judgments of the quality of the store and the store’s image. Atmosphere is referred to
as service scape when describing a business such as a hospital, bank, or restaurant.
Colors. Certain colors and color characteristics create feelings of excitement and arousal which
are related to attention. Brighter colors are more arousing than dull ones. Warm colors such as
reds and yellows are more arousing than cool colors as blues and grays.
Aromas. There is an increasing evidence that aroma can affect consumer shopping. Several
aroma studies have found the following:
A scented environment produced a greater intent to revisit the store, higher purchase
intention for some items, and a reduced sense of time spent shopping.
A pleasantly scented environment enhanced brand recall and evaluation particularly for
unfamiliar brands.
2. Social Surroundings
Social surroundings are the other individuals present in the particular situation.
Social influence is a significant force.
Individuals tend to comply with group expectations, particularly when the
behavior is visible.
Shopping is a highly visible activity.
The use of many publicly consumed brands are subject to social influences.
3. Temporal Perspectives
Temporal perspectives deal with the effect of time on consumer behavior. Limited
purchase time often limits search. Internet shopping is growing rapidly as a result of the time
pressures felt by the consumers.
4. Task Definition
Task definition is the reason the consumption activity is occurring. Major distinction
between purchase for self vs. gift.
5. Antecedent States
Antecedent states are features of the individual person that are not lasting characteristics.
Moods. Moods tend to be less intense than emotions and may operate without the individual’s
awareness. Although moods may affect all aspects of a person’s behavior, they generally do not
completely interrupt ongoing behavior as an emotion might.
Consumers actively manage their mood states, often seeking situations, activities, or objects that
will alleviate negative moods or enhance positive ones.
Examples:
Feeling and triggers buying sweets or seeing a funny movie.
Feeling rejected triggers buying games software.
50
Can’t buy a book because the credit card was left at home
Buy more groceries because he or she is hungry before shopping
Ritual Situations
UNIT 9
Consumerism and Consumer Behavior
Learning Outcomes:
Define consumerism and its importance.
Discuss the rights and protection of consumers.
Describe how to be a smart consumer.
51
Overview
Consumerism is the idea that increasing consumption of goods and services
purchased in the market is always a desirable goal and that a person’s wellbeing and
happiness depend fundamentally on obtaining consumer goods and material possessions.
In an economic sense, it is related to the predominantly Keynesian idea that consumer
spending is the key driver of the economy and that encouraging consumers to spend is a
major policy goal. From this point of view, consumerism is a positive phenomenon that
fuels economic growth.
Consumerism also refers to a tendency of people living in a capitalist economy to
engage in a lifestyle of excessive materialism that revolves around reflexive, wasteful, or
conspicuous overconsumption. In this sense, consumerism is widely understood to
contribute to the destruction of traditional values and ways of life, exploitation of
consumers by big business, environmental degradation, and negative psychological
effects.
Learning Materials/Resources
Growing Consumerism
Consumerism is rife in many economically developed countries. The mass
production of luxury goods, the saturation of media with advertisements and promotions
for branded products and services, and even rising levels of personal debts signal that more
people are buying goods excessively.
Growing consumerism can also be seen with people buying goods and services to
publicly display economic power, buying them “just for fun and pleasure” and buying
without a plan or a budget, according to Dr Joicey Wei Jie, lecturer in the marketing
programme at SIM University’s (UniSIM) School of Business.
52
Benefits of Consumerism
When a greater proportion of citizens buy goods and services in excess of their
needs, they consume more, they spend more, and that can create a cycle of demand leading
to greater production and to greater employment, which leads to even more consumption.
Consumerism views the consumer as the target of economic policy and a cash cow
for the business sector, with the sole belief that increasing consumption benefits the
economy. Saving can even be seen as harmful to the economy because it comes at the
expense of immediate consumption spending.
Consumerism also helps shape some business practices. Planned obsolescence of
consumer goods can displace competition among producers to make more durable
products. Marketing and advertising can become focused on creating consumer demand for
new products rather than informing consumers.
The rise of consumerism has had a detrimental impact on the planet. For example,
clothes and apparel from the fashion and textiles industries are made using extensive
amounts of water, energy, chemicals, and raw materials , all of which place heavy demands
on Earth’s natural resources.
Environmental problems are frequently associated with consumerism to the extent
that consumer goods industries and the direct effects of consumption produce
environmental externalities. These can include pollution by producing industries, resource
depletion due to widespread conspicuous consumption, and problems with waste disposal
from excess consumer goods and packaging.
According to studies, increasing consumerism may also result in “a shift away from
values of community, spirituality, and integrity, and toward competition, materialism and
disconnection”.
Consumerism is often associated with globalization in promoting the production and
consumption of globally traded goods and brands, which can be incompatible with local
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cultures and patterns of economic activity. Consumerism can also create incentives for
consumers to take on unsustainable levels of debt, which can contribute to financial crises
and recessions.
History of Consumerism
https://www.youtube.com/watch?v=Y-Unq3R—M0
Motives of Consumerism
To make the consumers aware of their rights and unite them into one force.
To check unfair trade practices like monopoly power and fight against exploitation.
To effectively implement consumer protection law.
To educate the consumers with the latest and complete information.
To fight against anti-social practice like black market, hoarding, adulteration, etc.
Rights of Consumers
Forty-five years ago, the last week of October was declared Consumer Protection
Week, as a period for planning and enforcement of government action toward controlling
fraudulent trade practices and unreasonable price increases. It has since been expanded to
cover the whole month of October as Consumer Welfare Month, and the focus broadened
to include consumer education and awareness as well.
Consumer protection is a constitutional mandate. Article XVI, Section 9 declares:
“The State shall protect consumers from trade malpractices and from substandard or
hazardous products.” It was in this light that the Consumer Act of the Philippines
(Republic Act. No. 7394) was passed in 1992.
Consumer protection is the core of consumerism. Consumer protection means
protecting the consumers from the evils of marketing. It strikes a balance in the buyer-
seller relation.
Consumers have eight basic rights under the law, namely, the rights to: (1) basic
needs, (2) safety, (3) information, (4) choice, (5) representation, (6) redress, (7) consumer
education, and (8) healthy environment.
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Source: https://twitter.com/piadesk/status/1049361421383999490
Consumer Responsibilities
https://www.youtube.com/watch?v=aTVFD-jp7dc
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