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Consumer Buying Behaviour

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The most important thing is to forecast where customers are moving, and be in front of them.

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Consumer Behavior Chapter 4 Version 3e Processes a consumer uses to make purchase decisions, as well as to use and dispose of purchased goods or services; also includes factors that influence purchase decisions and the product use 1

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Types of buyer <ul><li>Individual buyer </li></ul><ul><li>Business buyer </li></ul>

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Influence of Social science on buyer behaviour studies <ul><li>Economics: Human is a rational buyer who wants to take maximum utility out of fixed/minimum price. </li></ul><ul><li>Psychology: Acc. To psychology any human activity is directed towards meeting certain needs. ( maslow`s Need Hierarchy) </li></ul><ul><li>Sociology & anthropology: Effect of reference group, society, role in society, etc. </li></ul>

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Buying Behaviour Model <ul><li>The Economic Model: A man divide his fixed income in a certain rational way. </li></ul><ul><li>Learning model: Behaviour can be manipulated by the drives, stimuli etc. </li></ul><ul><li>Psychoanalytical model: Consumer has the set of deep rooted motives that drives him to purchase or not to purchase </li></ul><ul><li>Sociological Model </li></ul>

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<ul><li>Nicosia Model: This Model establish the link between consumer and the firm. </li></ul><ul><li>--- Advertising message of the firm influence the predisposition of the consumer </li></ul><ul><li>The consumer develops the attitude for the product </li></ul><ul><li>Search for the information </li></ul><ul><li>If all these activities have positive impact, purchase the product. </li></ul>

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<ul><li>All the activities are divide into four basic fields: </li></ul><ul><li>Field one—it has two subfields: Firm & consumer </li></ul><ul><li>Advertising message by the firm </li></ul><ul><li>Depending upon the situation consumer develops the attitude. </li></ul>

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<ul><li>Field two: Search & evaluation </li></ul><ul><li>Field three: Act of purchase </li></ul><ul><li>Field four: use of purchase item </li></ul><ul><li>Feedback of field is used to know the sales result </li></ul>

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The Howard-Sheth Model <ul><li>Inputs in the form of stimuli </li></ul><ul><li>Output beginning with the attention given to stimulus & ending with purchase </li></ul>

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Factors Influencing Consumer Behavior Cultural Culture Social Reference Groups Family Roles & Status Personal Age & Life-Cycle Stage Occupation Economic Situation Lifestyle Personality & Self-Concept Psychological Motivation Perception Learning

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Maslow’s Hierarchy of Needs Psychological needs (food, water, shelter) 1 Safety needs (security, protection) 2 Social needs (sense of belonging, love) 3 Esteem needs (self-esteem, recognition) 4 Self- actualization (self-development and realization) 5

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Characteristics Affecting Consumer Behavior <ul><li>Perception is the process by which people select, organize, and interpret information to form a meaningful picture of the world from three perceptual processes </li></ul><ul><ul><li>Selective attention </li></ul></ul><ul><ul><li>Selective distortion </li></ul></ul><ul><ul><li>Selective retention </li></ul></ul><ul><li>Psychological Factors </li></ul>

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Characteristics Affecting Consumer Behavior <ul><li>Attitudes describe a person’s relatively consistent evaluations, feelings, and tendencies toward an object or idea </li></ul><ul><li>Psychological Factors </li></ul>

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Buying motives <ul><li>Product motives (emotional & rational) </li></ul><ul><li>Patronage motives </li></ul>

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Buying habits <ul><li>Buying habits vary according to the type of goods----- </li></ul><ul><li>Convenience goods </li></ul><ul><li>Shopping goods </li></ul><ul><li>Specialty goods </li></ul>

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Buying process <ul><li>Problem recognition </li></ul><ul><li>Awareness </li></ul><ul><li>Comprehension </li></ul><ul><li>Attitude </li></ul><ul><li>Legitimization </li></ul><ul><li>Trial ( depend on the product category) </li></ul><ul><li>Adoption </li></ul><ul><li>Post purchase behaviour </li></ul>

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Five stage Consumer Decision-Making Process Chapter 4 Version 3e 2 Postpurchase Behavior Purchase Evaluation of Alternatives Information Search Need Recognition Cultural, Social, Individual and Psychological Factors affect all steps

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High involvement & low involvement situations

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Classification of Business buyers <ul><li>Buyers in agriculture sector </li></ul><ul><li>Buyers in industrial sector </li></ul><ul><li>Buyers in service sector </li></ul><ul><li>Resellers </li></ul><ul><li>Buyers in govt. sector </li></ul><ul><li>Buyers in non profit business </li></ul>

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The Buyer Decision Process for New Products <ul><li>Adoption process is the mental process an individual goes through from first learning about an innovation to final regular use. </li></ul><ul><li>Stages in the process include: </li></ul>

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Classification of consumer according to their readiness to try new products <ul><li>Innovators </li></ul><ul><li>Early adopters </li></ul><ul><li>Early majority </li></ul><ul><li>Late majority </li></ul><ul><li>Laggards </li></ul>

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Business Buyer: buying patterns <ul><li>Goes through long negotiation </li></ul><ul><li>Frequency of purchase </li></ul><ul><li>Size of order </li></ul><ul><li>Several participants in buying decision </li></ul><ul><li>Distribution channel </li></ul>

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Speciality due to characteristics of Market/product <ul><li>Buying clout </li></ul><ul><li>Concentration of Buyer </li></ul><ul><li>Direct, one to one Relation with buyer </li></ul><ul><li>Technical support to buyer </li></ul><ul><li>New product diffusion is slower </li></ul><ul><li>Buyer may buy through intermediaries </li></ul><ul><li>Closer monitoring of supply sources/ prices of products </li></ul><ul><li>Derived demand </li></ul><ul><li>More of rational buyer </li></ul><ul><li>Business buying is partnering </li></ul>

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The Indian consumer <ul><li>Demographics </li></ul><ul><li>Size of population </li></ul><ul><li>Literacy rate </li></ul><ul><li>A vast educated manpower </li></ul><ul><li>Diversity, the hallmark--- religious, linguistic, dress & food habits </li></ul><ul><li>Geographic Spread </li></ul>

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Favourable shift in consumption in past liberalization years <ul><li>According to Centre for monitoring Indian Economy : </li></ul><ul><li>Food and beverage account for large part of consumption expenditure. But share of food has declined from 50.37(1998-99)% to 45.68( 1993-94) </li></ul><ul><li>Share of transport and communication: 11.26---14.51 </li></ul><ul><li>Medical and health care—3.38-4.25 </li></ul>

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<ul><li>Consumption of furniture and household appliances- 3.05-3.25 </li></ul><ul><li>50 percent increase in education expenditure </li></ul>

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Changes in life style and buying habits <ul><li>Ready to eat food are popular now </li></ul><ul><li>Vacuum cleaner and cooking ranges have entered into households </li></ul><ul><li>Shift in woman`s attitude towards cooking </li></ul><ul><li>Yesterday`s luxuries are becoming necessities </li></ul>

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Classification of Indian consumers based on economic status <ul><li>The affluent group </li></ul><ul><li>The middle class </li></ul><ul><li>The relatively poorer section </li></ul><ul><li>The BPL section </li></ul>

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The middle class explosion <ul><li>Size--300 million </li></ul><ul><li>As The consumption community </li></ul><ul><li>Not confined to big cities </li></ul><ul><li>Constructive discontentment </li></ul><ul><li>The phenomenon of second </li></ul><ul><li>Voting for credit purchase </li></ul>

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The main segment in middle class <ul><li>The middle class male </li></ul><ul><li>The middle class woman </li></ul><ul><li>The middle class teenager </li></ul>

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The middle class male <ul><li>A security seeking class </li></ul><ul><li>A blend of traditional and non-traditional </li></ul><ul><li>Middle class male prefer ready-made </li></ul><ul><li>Travel on increase </li></ul><ul><li>Prestige conscious </li></ul><ul><li>Strong family ties </li></ul><ul><li>He is not the sole decision maker </li></ul>

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The middle class woman <ul><li>Cautious, but not averse to change </li></ul><ul><li>Quality conscious as well as cost conscious </li></ul><ul><li>Leisure seeking </li></ul><ul><li>Aware of new technology </li></ul><ul><li>Good sense of grooming </li></ul><ul><li>New self concept </li></ul>