Consumer Behaviour : Consumer Behaviour Slide 2: A CUSTOMER IS THE MOST IMPORTANT VISITOR ON OUR PREMISES,
HE IS NOT DEPENDENT ON US,
WE ARE DEPENDENT ON HIM.
HE IS NOT AN INTERRUPTION ON OUR WORK, HE IS THE PURPOSE OF IT.
HE IS NOT AN OUTSIDER ON OUR BUSINESS
HE IS A PART OF IT.
WE ARE NOT DOING HIM A FAVOUR BY SERVING HIM,
HE IS DOING US A FAVOUR BY GIVING US THE OPPORTUNITY TO DO SO.
MAHATMA GANDHI Slide 3: Consumer behaviour refers to the actions of consumers in the market place& underlying motives for those actions.
Marketers need to understand why customer buy a particular goods & services they will be able to determine-
Which products are needed in the market place,
Which are obsolete,&
How best to present the goods to the consumers. product
It attempts to understand the buyer decision making process, both individually and in groups.
It studies characteristics of individual consumers such as demographics and behavioural variables in an attempt to understand people's wants.
It also tries to assess influences on the consumer from groups such as family, friends, reference groups, and society in general. Slide 4: Consumer behaviour refers to the behaviour that consumer display in searching for, purchasing, using, evaluating & disposing of products & services that they expect will satisfy their needs.
Study of consumer behaviour is the study of how individuals make decisions to spend their available resources like time, money & effort on consumption related items.
It is the study of the processes involved when individuals or groups select, purchase, use or dispose of products, services, ideas, concepts or experiences to satisfy consumer needs & desires. Slide 5: Customer behaviour study is based on consumer buying behaviour, with the customer playing the three distinct roles of user, payer and buyer.
Relationship marketing is an influential asset for customer behaviour analysis as it has a keen interest in the re-discovery of the true meaning of marketing through the re-affirmation of the importance of the customer or buyer.
A greater importance is also placed on consumer retention, customer relationship management, personalization, customization and one-to-one marketing. Social functions can be categorized into social choice and welfare functions. Slide 6: Consumers behaviour assumes that consumers are actors in the market place. The common assumption is that a consumer is a person who identifies a need or desire , make a purchase & then disposes of the product during the three stages of the consumption process i.e. Pre-purchase, purchase & post purchase process.
Pre –purchase process involves arousal of motives for problem recognition & information search, . it explains how consumer decides that he needs a product & what are the best sources of information to learn more about alternative choices.
Marketer at this stage needs to know how consumer attitudes are formed at this stage & changed due to influence of marketing programs &what are the various cues & stimuli input that the consumer uses to make a product choice.
Purchase process involves the mental evaluation &decisions made at the point of purchase. The consumer evaluates the sources of information in internal memory as well as tries to collect from various external sources.
It also attempts to find out the experience of consumers in collecting purchase information & what meaning does the purchase carry about the customer. Slide 7: Post-purchase process involves the activities that consumer undertakes after the purchase & includes how he uses the product, his degree of satisfaction &action taken after the purchase is made. Main Applications of Consumer Behaviour : Main Applications of Consumer Behaviour The most obvious is for marketing strategy—i.e., for making better marketing campaigns. For example, by understanding that consumers are more receptive to food advertising when they are hungry, we learn to schedule snack advertisements late in the afternoon.
By understanding that new products are usually initially adopted by a few consumers and only spread later, and then only gradually, to the rest of the population, we learn that –
companies that introduce new products must be well financed so that they can stay afloat until their products become a commercial success and
it is important to please initial customers, since they will in turn influence many subsequent customers’ brand choices. Slide 9: A second application is public policy. In the 1980s, Accutane, a near miracle cure for acne, was introduced.
Unfortunately, Accutane resulted in severe birth defects if taken by pregnant women. Although physicians were instructed to warn their female patients of this, a number still became pregnant while taking the drug.
To get consumers’ attention, the FDA took the step of requiring that very graphic pictures of deformed babies be shown on the medicine containers. Slide 10: Social marketing involves getting ideas across to consumers rather than selling something.
As a final benefit, studying consumer behavior should make us better consumers. Consumer purchases are influenced strongly by or there are four factors. : Consumer purchases are influenced strongly by or there are four factors. Cultural Factor
Psychological Factor. Cultural Factor : Cultural Factor Cultural factor divided into three sub factors (I) Culture (II) Sub Culture (III) Social Class
Culture is the most fundamental determinant of a person’s wants and behavior. Whereas lower creatures are governed by instinct, human behavior is largely learned. The child growing up in a society leans a basic set of values, perceptions, preferences and behaviors through a process of socialization involving the family and other key institution
The set of basic values perceptions, wants, and behaviours learned by a member of society from family and other important institutions. Culture is the most basic cause of a person’s wants and behaviour. Every group or society has a culture, and cultural influences on buying behaviour may vary greatly from country to country. Slide 13: Sub Culture :-
A group of people with shared value systems based on common life experiences and situations.
Each culture contains smaller sub cultures a group of people with shared value system based on common life experiences and situations. Sub culture includes nationalities, religions, racial group and geographic regions. Many sub culture make up important market segments and marketers often design products.
Almost every society has some form of social structure, social classes are society’s relatively permanent and ordered divisions whose members share similar values, interests and behaviour.
Social Classes have several characteristics. First, Person with in each social class tend to behave more alike than persons from two different social classes. Second, persons are perceived as occupying inferior or superior positions according to their social class. Third, a person’s social class is indicated by a number of variables, such as occupation, income, wealth, education , and value orientation, rather than by any single variable , fourth, individuals are able to move from one social class to another up or down during their lifetime. Social Factors : Social Factors A consumer’s behaviour also is influenced by social factors, such as the (I) Groups (II) Family (III) Roles and status
Two or more people who interact to accomplish individual or mutual goals.
A person’s behaviour is influenced by many small groups. Groups that have a direct influence and to which a person belongs are called membership groups.
Some are primary groups includes family, friends, neighbours and coworkers. Some are secondary groups, which are more formal and have less regular interaction. These includes organizations like religious groups, professional association and trade unions. Slide 15: Family:-
Family members can strongly influence buyer behaviour. The family is the most important consumer buying organization society and it has been researched extensively. Marketers are interested in the roles, and influence of the husband, wife and children on the purchase of different products and services.
Members of the buyer’s family can exercise a strong influence on the buyer’s behavior. we can distinguish between two families in the buyer’s life . The family of orientation consists of one’s parents. From parents a persons acquires an orientation towards religious, politics, and economics and a sense of personal ambitions, self –worth, and love. Even if the buyer no longer interacts very much with his or her parents, the parents influence on the unconscious behavior of the buyer can be significant. In countries where parents continue to live with their children, their influence can be substantial.
In case of expensive products and services, husband and wives engage in more joint decision making. The market needs to determine which member normally has the greater influence in the purchase of a particular products or services. either the husband or the wife , or they have equal influence . The following products and services fall under such:
Husband – dominant: life insurance, automobiles, television Wife – dominant: washing machines, carpeting, non –living – room furniture, kitchenware Equal: Living – room furniture, vacation, Housing, outside entertainment. Slide 16: Roles and Status :-
A person belongs to many groups, family, clubs, organizations.
The person’s position in each group can be defined in terms of both role and status.
For example. M & “X” plays the role of father, in his family he plays the role of husband, in his company, he plays the role of manager, etc. A Role consists of the activities people are expected to perform according to the persons around them. Personal Factors : Personal Factors It includes
I) Age and life cycle stage (II) Occupation (III) Economic situation (IV) Life Style (V) Personality and self concept.
Age and Life cycle Stage:-
People changes the goods and services they buy over their lifetimes. Tastes in food, clothes, furniture, and recreation are often age related. Buying is also shaped by the stage of the family life cycle.
A person’s occupation affects the goods and services bought. Blue collar workers tend to buy more rugged work clothes, whereas white-collar workers buy more business suits. A Co. can even specialize in making products needed by a given occupational group. Thus, computer software companies will design different products for brand managers, accountants, engineers, lawyers, and doctors. Slide 18: Economic situation :-
A person’s economic situation will affect product choice
Life Style :-
Life Style is a person’s Pattern of living, understanding these forces involves measuring consumer’s major AIO dimensions.
i.e. activities (Work, hobbies, shopping, support etc) interest (Food, fashion, family recreation) and opinions (about themselves, Business, Products)
Personality and Self concept :-
Each person’s distinct personality influence his or her buying behaviour. Personality refers to the unique psychological characteristics that lead to relatively consistent and lasting responses to one’s own environment. Psychological Factors : Psychological Factors It includes these Factors.
I) Motivation (II) Perception (III) Learning (IV) Beliefs and attitudes
Motive (drive) a need that is sufficiently pressing to direct the person to seek satisfaction of the need
The process by which people select, Organize, and interpret information to form a meaningful picture of the world. Slide 20: Learning:-
Changes in an individuals behaviour arising from experience.
Beliefs and attitudes :-
Belief is a descriptive thought that a person holds about something
Attitude, a Person’s consistently favourable or unfavourable evaluations, feelings, and tendencies towards an object or idea TYPES OF BUYING MOTIVES : TYPES OF BUYING MOTIVES Consumers have different kinds of needs & they do not pursue all their needs at all points of time.
Marketer in order to be successful, should understand the needs, wants, buying motives & feelings of potential customer. The important types of buying motives are –
Inherent &Learned Buying Motives,
Emotional &Rational Buying Motives,
Psychological & social Buying Motives. Inherent &Learned Buying Motives : Inherent &Learned Buying Motives Inherent motives are those which arise from the basic needs of consumers such as comfort & safety. These are more instinctive in nature &influence the consumer the maximum. If these motives remains unsatisfied , customer is under tension. These motives are stronger ,more useful & urgent.
Learned motives are those motives which customer acquires or learns from the environment in which he lives or from his learning as he grows up in the society. These motives are social status, social acceptance economic, political acievement,fear,& security.
Both these motives provide direction to company’s marketing activities. Emotional &Rational Buying Motives : Emotional &Rational Buying Motives Emotional motives are those , which are affected by consumer feelings & are often judged by using feelings or affective part of consumer’s attitude. In this case heart dominates over head & mind. The motives are hunger, thirst, ego, prestige, pleasure, love & affection.
Rational buying motives those where a consumer is rational & his decision is based on logic & justification while taking buying decision. In this case mind dominates over heart. Often consumer takes more time in making rational purchase.
While buying over the counter (OTC) medicine a consumer is more rational whereas in the case of buying a chocolate , a consumer is more driven by emotional motives. Time Spent in Purchasing : Time Spent in Purchasing Emotional motives - purchaser needs little time in making emotional purchases because he immediately decides for the purchase.
Rational motives – the purchaser has to consider many factors like price,quality,after sales service & other related matters & hence takes time in making decisions for rational purchases. Dominance : Dominance Emotional buying motives are dominated by the feelings of the heart whereas in rational buying motives head &mind dominates. Nature of Product : Nature of Product Emotional purchases are generally of the goods which are low-priced & non –durable in nature.
In rational purchasing , the product is mostly durable in nature & comparitively of high price. Psychological & social Buying Motives : Psychological & social Buying Motives Psychological are those motives which are driven by internal psychological process like learning, perception & attitude.
Social motives are those motives are affected by the society in which he lives. He cannot purchase any thing without the sanction &recognition of society. Different Buying Roles : Different Buying Roles There are eight different roles played by people in consumer decision process.
INITIATOR : a person who first suggests or thinks of the idea of buying the particular product. child plays role of initiator in the purchase of a chocolate.
INFLUENCER : a person who explicitly or implicitly has some influence on the final buying decision of others. mother plays role of influence in the purchase of chocolate.
GATEKEEPER :a person who allows certain information to flow &restricts flow of some set of information. parents play the role of gatekeeper in the selection of tv channels for children. Slide 29: DECIDER : A person who ultimately determines any part or the whole of the buying decision, i.e. Whether to buy &what to buy , how to buy , when to buy or where to buy. An individual plays role of decider in investment decision.
BUYER : a person who actually purchases & pays for purchase.
USER : a person who actually uses or consumes the services or products. house wife plays role of user in purchase of washing machine.
PREPARER: a person who converts the product to usable form for consumption. mother plays role of prepare on family consumption of food items.
MAINTAINER : a person who service or repair the product.
DISPOSER : a person who finally disposes the package of the product. mother plays of role of a disposer after the product is consumed by the family. 7 O’S FRAME WORK FOR UNDERSTANDING CONSUMER BEHAVIOUR : 7 O’S FRAME WORK FOR UNDERSTANDING CONSUMER BEHAVIOUR Slide 31: 7O’S
FRAMEWORK OCCUPANT ORGANIZATIONS OPERATIONS OUTLETS OCCASSIONS OF BUYING OBJECTIVES OF BUYING OBJECTIVES OF PURCHASE WHO IS THE CONSUMER (OCCUPANTS) : WHO IS THE CONSUMER (OCCUPANTS) Helps to understand consumer’s geographic, demographic, psychographic & media graphic profile.
Demographic profile is the study of age,gender,income, occupation, educational qualifications of the consumer.
Psychographic profile is the study of the lifestyle of the consumer as expressed by activities , interests & opinions of the consumer.
Geographic profile is the region to which the consumer belongs .
Media graphic are the media habits of the consumer . WHAT DOES THE CONSUMER BUY(OBJECT OF PURCHASE) : WHAT DOES THE CONSUMER BUY(OBJECT OF PURCHASE) What are the features , sizes, colours ,flavours, etc that the consumer seeks?
Products – soft drinks,
Product forms – cols v/s lime v/s orange
Brands – Coke v/s Pepsi WHY IS CONSUMER BUYING? (OBJECTIVE) : WHY IS CONSUMER BUYING? (OBJECTIVE) Why of buying & explain what benefits the consumer expects the product or services to serve.
What benefit the consumer is seeking
What motive is he trying to satisfy?
Example – fairness creame WHEN DO THEY BUY OR HOW DO THEY BUY &USE ( OCCASION) : WHEN DO THEY BUY OR HOW DO THEY BUY &USE ( OCCASION) Buying rate or buying frequency of consumers & occasions on which they would buy the product or service for the desired benefits.
Example – buying during festivals WHERE DO THEY BUY (OUTLETS) : WHERE DO THEY BUY (OUTLETS) Type &nature of outlets from where the customer make choice.
Type – include retail shop, grocery store& wholesaler’s shop.
Nature of outlets – urban outlets, shopping malls, or rural shops. HOW DO THEY BUY(OPERATIONS) : HOW DO THEY BUY(OPERATIONS) What kind of background information do consumers collect before buying & from whom they seek this information.
Example – information collected before purchase. WHO IS INVOLVED (ORGANIZATION) : WHO IS INVOLVED (ORGANIZATION) Organization of information sources around the key players in the decision process. TYPES OF BUYER BEHAVIOUR : TYPES OF BUYER BEHAVIOUR HIGH INVOLVEMENT LOW INVOLVEMENT
BETWEEN BRANDS complex Complex buying
Behaviour Variety seeking buying
behaviour Dissonance reducing
Buying behaviour Habitual buying
Behaviour COMPLEX BUYING BEHAVIOUR : COMPLEX BUYING BEHAVIOUR The consumer go through complex buying behaviour when they are highly involved in purchase & aware of significant difference existing brands.
Consumers are highly involved in a purchase when it is expensive, bought infrequently, risky &highly self-expressive.
Example – purchase of PC. DISSONANCE REDUCING BUYER BEHAVIOUR : DISSONANCE REDUCING BUYER BEHAVIOUR Sometimes the consumer is highly involved in a purchase but sees little differences in the brands.
The buyer will shop around to learn what is available but will buy fairly quickly because the brand differences are not pronounced.
Example – purchase of carpet. HABITUAL BUYING BEHAVIOUR : HABITUAL BUYING BEHAVIOUR Many products are bought under condition of low consumer involvement & absence of significant brand differences .
Example – salt or most low –cost,frequently purchased products.
Consumers have little involvement in this product category. VARIETY SEEKING BUYING BEHAVIOUR : VARIETY SEEKING BUYING BEHAVIOUR Some buying situations are characterized by low consumer involvement but significant brand preferences.
Brand switching occurs for the sake of variety rather than dissatisfaction. STAGES IN THE BUYING DECISION PROCESS : STAGES IN THE BUYING DECISION PROCESS Slide 45: Need recognition - the buying decision process starts with the buyer’s recognition of a problem or need. The need can be triggered by internal or external stimuli.
Information search – an aroused consumer searches for information about product. Consumer information sources are-
Personal sources (family, friends, neighbour),
Commercial sources(advertising, sales persons, dealers,)
Public sources (mass media) &
Experimental sources (handling ,examining &using the product) Slide 46: Evaluation of alternatives – the consumer evaluates the alternatives & the concepts involves are product attributes, weightage for important attributes, brand image , utility function & evaluation procedure.
Purchase decision – after choosing the brand , the consumer forms purchase intentions followed by purchase decision, vendor decision , quantity decision, timing decision & payment method decision.
Post purchase behaviour – after purchase the consumer will experience some level of satisfaction or dissatisfaction. If the product fails short of buyer’s expectation , the buyer will be disappointed & dis-satifiedied. ADOPTION PROCESS : ADOPTION PROCESS It is a mental process through which an individual passes from first learning about an innovation to final adoption.
The decision by an individual to become a regular user of the product.
The buyer goes through –
Adoption Professional Buying : Professional Buying Goods purchased by professionally trained persons. The characteristics of industrial buying are –
Direct purchasing – buy directly from producer than middle man
Reciprocity - select suppliers who also buy from them finished products
Leasing - equipment leasing instead of outright purchase TYPES OF BUYING SITUATIONS : TYPES OF BUYING SITUATIONS Straight rebuy- purchase department reorders on a routine basis, such as office stationery.
Modified rebuy- buyer wants to modify product specifications, prices, other terms of suppliers , such as new electronic components.
New task- buying for first time. This is marketer’s greatest opportunity &challenge. FACTORS INFLUENCING ORGANIZATIONAL BUYERS : FACTORS INFLUENCING ORGANIZATIONAL BUYERS ENVIRONMENT FACTORS- factors in current & expected economic environment, such as primary demand, economic, outlook, cost of money.
ORGANIZATIONAL FACTORS-specific objectives,policies,procedures, organizational structure & system.
INTERPERSONAL FACTORS- includes several participants with different status, authority, empathy & persuasiveness .
INDIVIDUAL FACTORS – personal motives, perceptions & preferences. These factors are further affected by personal characteristics like age,income,education,styles &attitudes. ORGANIZATIONAL BUYING PROCESS : ORGANIZATIONAL BUYING PROCESS Slide 52: Problem recognition – recognition of need by someone in the company that could be met by purchasing a particular product or service. New ideas may come through trade shows, advertisement, sales person.
General need decision- the features & quantity of the needed item are described by the originating department in consultation with technical service people.
Product specialization – technical specifications of the required product are developed .
Supplier search – search for the best vendors using database or directories.
Proposal solicitation - inviting bids from vendors .vendor’s salesmen may give presentation.
Supplier selection – analysis of proposals.
Order routine specification- preparation of purchase order /supplier contract which includes technical specification , quantity to be supplied, delivery schedules, price, guarantees.
Performance review- the buyer reviews the performance of the supplier. The feedback normally comes from the user department . Based on the review , the buyer may decide to continue the contract or cancel further supply .