1. Consumer Behavior
SYBMS
SEMESTER 3

2. Unit 1 – Introduction To Consumer Behavior
 Meaning of Consumer Behavior, Features and Importance
 Types of Consumer (Institutional & Retail), Diversity of consumers and their
behavior- Types Of Consumer Behavior
 Profiling the consumer and understanding their needs
 Consumer Involvement
 Application of Consumer Behavior knowledge in Marketing
 Consumer Decision Making Process and Determinants of Buyer Behavior, factors
affecting each stage, and Need recognition.

3. What is consumer behavior?
 Consumer behavior is the study of individuals, groups, or organizations and the
processes they use to select, secure, use, and dispose of products, services,
experiences, or ideas to satisfy their needs and wants.

4. Importance of Consumer Behavior
 To design the best possible product or service that fully satisfies consumer's needs
and demands.
 To decide where the service or product would be made available for easy access of
consumers.
 To decide the price at which the consumers would be ready to buy that product or
service.
 To find out the best method of promotion that will prove to be effective to attract
customers to buy a product.
 To understand why, when, how, what and other factors that influence buying
decision of the consumers.

5. Disciplines involved in Consumer Behavior
Psychology
Sociology
Social
psychology
Cultural
anthropology
Economics

6. Psychology
 It is the study of the individual which includes motivation , perception , attitudes,
personality and learning theories.
 Example: someone may buy a Reid and Taylor suiting just because Amitabh
Bachchan endorses it and he feels that his personality would resemble Amitabh’s
after wearing it.

7. Sociology
 It is the study of groups.
 The influences of group memberships, family and social class on consumer
behavior.
 Example: someone might eat at a restaurant just because the mennmbers of the
social group to which he belongs insists in him in doing so,even if he personally
dislikes eating at that place.

8. Social Psychology
 It is the combination of sociology and psychology and studies how an individual
operates in a group,
 It also studies how those whose opinions they respect as peers,refrence groups,
their families and opinion leaders influence individuals in their consumption
behavior.

9. Cultural Anthropology
 It is the study of human beings in society.
 It explores the development of core beliefs,values and customs that individuals
inherit from their grandparents.
 It also studies subcultures and help compare customers of different nationalities
and cultures.
 Examples: people in India drink more tea than coffee and its just the opposite in
US.

10. Economics
 It is the study of how customers spend their funds, how they evaluate alternatives
and how they make decisions to get maximum satisfaction from their purchases.
 Example: people might buy tide because its cheaper than Ariel or Surf excel and
gives more of less same results.

11. Consumer Involvement
 Consumer involvement refers to degree of information processing or extent of
importance that a consumer attaches to a product.
 The degree of involvement has a very significant effect on consumer behavior.
 When more expensive products are to be purchased, the consumer gets more
involved in purchase process but he may not be equally involved in a product
which is just a rupee or two priced.

12. Examples
 CAR- As it is a expensive product so consumer will get highly involved resulting
in higher involvement.
 BOOK- The book purchased by a student for preparing competitive exam may
not be as expensive as car, yet the customer gets highly involved because it is a
important product.
 MEDICINE- When a medicine is being purchased, which may not be very
expensive, yet the customer may be highly involved in checking that it shouldn’t
react him.

13. Low- involvement High- involvement
Brand beliefs are formed first by passive
learning
Brand beliefs are formed by active learning
Consumer makes purchase decision Consumer evaluates various brands
There may or may not be post-purchase
evaluation
Consumer makes purchase decision
High and Low involvement Hierarchy

14. LEVELS OF INVOLVEMENT
Habitual decisions Simple decisions Lengthy decisions
eg. Tea, toothbrush, eg. Skin cream, eg. Cars, diamond,
Washing powder. Torch, snacks. Property.
HIGH
INVOLVEMENT
LOW
INVOLVEMENT
SOME
INVOLVEMENT

15. Major Dimensions Of Involvement
Moderating Factors
Opportunity to Process
 Ability to process
Person
Stimulus/Object
Situation
Intensity
Direction
Persistence
Search
Information
Processing
Decision or
Persuasion
Involvement
Variable
Involvement
Properties
Response
Factors

16. INVOLVMENT VARIABLES
 PERSON- The variable related to person refer to personal needs, values, interests
& experiences etc. For example: a person interested in computers is very likely to
have personal interest in computer related magazines to learn about new
development.
 STIMULUS/OBJECT- refers to product or stimuli that consumer perceives to be
closely related to his/her values, experience and interest. For example: in case of
computers, one should not expect the same level of involvement for all consumers.

17. INVOLVEMENT PROPERTIES
 INTENSITY: Involvement intensity refers to the severity of involvement as
experienced by the consumer and is generally categorized as high or low.
 DIRECTION: Direction refers to the focus of involvement and involvement
variables will strongly affect this focus. The focus could be a product, service, ad
or purchase decision.
 PERSISTENCE: Persistence describes the length of time the consumer remains
involved with purchase decision.

18. RESPONSE FACTORS
 Response factors concern how a consumer behaves under involvement condition
of different intensity.
 These factors includes different pattern of information search, information
processing, evaluation of alternatives and post-decision actions.
 One may expect that consumer is high in enduring involvement for a product will
undertake regular, ongoing search for information & low involvement will result
in little search for information.

19. Different Types Of Consumers
 A product manufacturing company needs to understand the type of consumers it is
targeting with its goods because it is essential to be confident a market exists for
the products they intend to introduce into the market.
 Knowing the types of consumers for goods is also important because it enables the
company to appropriately present the product to the potential purchaser, hence
increasing sales and profitability.

20. Seasonal Consumers
 Many consumers purchase and consume products on a seasonal basis. They shop
at certain times when the need for them arises.
 Cash flow for a business selling seasonal products can be very difficult. Long
periods of the year may be without sales, so it is vital to quickly and effectively
target seasonal consumers.
Examples of products that rely on seasonal consumers:
 Umbrellas during the rainy season
 Cold or icy drinks during the hot seasons
 Christmas trees and decorations in December
 Beach wear in summer.

21. Personal Consumers
 These types of consumers are individual consumers who purchase goods for the
sole purpose of personal, family or household use.
Examples
 Going to the supermarket and shopping for goods which are to be used in the
house
 Purchasing a car that you intend to use personally
 Purchasing clothes for personal use from a clothing mall
 Purchasing a mobile phone for personal communication.
 Manufacturers selling products to personal consumers are constantly looking for
ideas for upgrades and add-ons to enhance the appeal of their goods to individuals.

22. Organizational Consumer
 Organizational consumers purchase products for organizations, governments or
businesses, They often buy in bulk and may place long-term recurring orders. For
this reason, an organizational consumer is generally highly prized and sought after.
 Products and services sold to organizational consumers are often required to meet
very strict standards. They may need to be adapted to meet the specific
requirements of the buyer, and specific prices are negotiated.
 Manufacturers and service providers who target organizational consumers are
expected to be flexible in their approach to negotiating a sale, but rigid in
maintaining quality.
 Goods may be offered for resale at a profit to the organizational purchaser. Or an
organization may buy raw materials that are aimed at producing other goods which
will later be offered for sale to other consumers.

23. Impulse Buyers
 Impulse buyers are consumers who make unplanned buying decisions.
 Impulse buyers make swift buying decisions and immediately purchase when they
'connect' with the product and its features. There is often some kind of emotional
appeal.
 Products impulse consumers purchase are not initially in their plans, so product
placement is very important. Manufacturers who target impulse buyers need their
goods to be featured prominently in a store.
For example:
 Chocolates near the check-out counter
 Cookies at eye level on the shelf
 Bright, eye-catching novelty items where children can spot them.
 Service providers can also target impulse buyers, often by offering significant
discounts or immediate service.

24. Need Based Consumers
 Need based consumers are those types of consumers who buy goods and services when
they need them and not any other time. Many of the products in a hardware store, for
instance, are sold to need based consumers.
 A need for a certain product will necessitate buying it because it is needed immediately
for a certain purpose. The challenge for marketers is to create a sense of 'need' to
promote the sale of products and services.
Examples:
 Paint when a wooden house needs to be protected from the weather
 Light bulbs when we need to see at night
 Heaters or air-conditioning if we need to be comfortable in our homes.
 Life insurance sales increase if we are convinced we need to be sure our families are
taken care of if we die.

25. Discount Driven Consumers
 Discount driven consumers are the type of consumers who purchase goods and
services primarily for the discounts on offer. They may not engage in any buying
activity until they hear or see large discounts being offered on products they like.
 Discount driven buyers are price sensitive and would rather wait to purchase
products when they come with discounts as opposed to when they are sold for full
price.
 Coupons and stock-take sales are popular with this type of consumer.
 An increasing number of manufacturers, retailers and service providers offer
discounts during recession or harsh economic climates.

26. Habitual Consumer
 Habitual consumers are those who feel compelled to use certain brands or types of
goods.
 Marketers work hard to create brand loyalty among this type of consumer. It may
be as simple as always choosing the same brand of deodorant, the same brand of
soda, or shopping in the same store for groceries or clothes.
 Cigarettes and alcohol are classic examples of products that target habitual
consumers. A beer drinker can be expected to always buy the same type of beer,
and smokers have been known to leave a store and go to a different sales outlet if
their brand of cigarette is not available.
 Advertising often encourages a persona associated with a specific product to
appeal to habitual consumers.

27. Types of Consumer Buying Behavior
Complex Buying
Behavior
Dissonance-
Reducing
Buying
Behavior
Habitual Buying
Behavior
Variety-
Seeking
Buying
Behavior

28. Complex Buying Behavior
 Complex buying behavior is exhibited by the consumers, when the involvement
level in a purchasing is high and also there are different brands available in the
market that represent different values. In such cases the product searched for
buying is relatively expensive and risky. The product also covers the aspect of self
expression and the frequency of purchase is also occasionally.
 For example, if a consumer wants to purchase a personal computer, then he cannot
get the clear idea of computer through his RAM, Processor etc. Instead, he first
tries to make his beliefs about the categories of different brands of computers.
After which he develops his attitudes and finally purchase a certain personal
computer on the basis of his learning process.

29. Dissonance Reducing Buying Behavior
 Dissonance Reducing Buying Behavior represents such case in which the
involvement of the consumers is high, but the available brands show less
differences. The purchase of the product is relatively quicker in this kind.
 For example, customers who want to purchase the newly arrived LED TVs will
not find many differences between the brands but the price of the product and its
technicality will make them involve more.

30. Habitual Buying Behavior
 Habitual Buying Behavior is one of the types of Consumer Buying Behavior in
which the involvement of consumers in the purchase is low along with the few
differences among the alternative brands. In this case the products offered are
cheap and purchased frequently.
 For example, if a consumer purchases sugar from the market, he exhibits habitual
behavior in such a way that he does not inquires different brands and prices of
sugar. Instead, he buys it simply from the first shop without making any extra
efforts.

31. Variety-Seeking Buying Behavior
 The fourth type of Consumer Buying Behavior is variety-seeking buying behavior
in which the involvement of consumer is low, but the brands exhibit much
perceived difference. In such situations, consumers are switched more from one
product to another.
 For example, a consumer wants to buy a cookie, so he does not try to learn
different brand and specifications of cookies, rather, he simply buys a certain
brand of cookie and make use of it to make an evaluation, and the next time he
may buy another brand of cookie. This switching of consumer from one brand to
another is not based on the dissatisfaction, but on the base of testing the variety.

32. Application of Consumer Behavior knowledge in
Marketing
1) Analyzing market opportunity
 Consumer behavior study helps in identifying the unfulfilled needs and wants of
consumers.
 This requires examining the trends and conditions operating in the marketplace,
consumers' lifestyles, income levels and emerging influences.
 This may reveal unsatisfied needs and wants. the trend towards increasing number
of dual income households and greater emphasis on convenience and leisure have
led to emerging needs for household gadgets such as washing machine, mixer
grinder, vacuum cleaner and childcare centres etc.
 Mosquito repellents have been marketed in response to a genuine and unfulfilled
consumer need.

33. 2)Selecting target market
 A review of market opportunities often helps in identifying distinct consumer
segments with very distinct and unique wants and need.
 Identifying these groups, learning how they behave and how they make purchase
decisions enables the marketer to design and market products or services
particularly suited to their wants and needs.
 For example, consumer studies revealed that many existing and potential
shampoo users did not want to buy shampoo packs priced at Rs. 60 or more and
would rather prefer a low priced sachet containing enough quantity for one or
two washes. The finding led companies to introduce the shampoo sachet which
became a good seller.

34. 3) Marketing-mix decisions
 Once unsatisfied needs and wants are identified, the marketer has to determine
the right mix of product, price, distribution and promotion.
 Here too, consumer behavior study is very helpful in finding answers to many
perplexing questions.

35. 3a) Product
 The marketer designs the product or service that would satisfy unfulfilled needs
or wants. Further decisions regarding the product concern to size, shape and
features.
 The marketer has also to decide about packaging important aspects of service,
warranties and accessories etc.
 Eg: Nestle first introduced Maggie noodles in masala and capsicum flavours.
Subsequently, keeping in view the consumer preferences in some regions, the
company introduced garlic, Shabhar and other flavours.

36. 3b) Price
 The second important component of marketing mix is price.
 Marketers must decide what price to charge for the product or service.
 These decisions will influence the flow of revenue to the company.
 the marketer must understand the way the company's product is perceived by
consumers, the importance of price as a purchase decision variable and how
different price levels would affect sales.
 It is only through consumer behaviour study in actual buying situations that the
marketer can hope to find answers to these important issues.

37. 3c)Distribution
 The next decision relates to the distribution channel, that is, where and how to
offer products and services for sale.
 Should the products be sold through all the retail outlets or only through selected
ones? Should the marketer use only the existing outlets, which also sell
competing brands, or should new exclusive outlets selling only the marketer's
brands be created? Is the location of retail outlets important from consumers'
point of view? Should the company think of direct maketing?
 The answer to these question are furnished by consumer behaviour research.

38. 3d) Promotion
 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? The company has to know the target consumers, their
location, what media do they have access to and what are their media
preferences, etc.
 In most cases of industrial products there is very little or no advertising.
Brochures containing technical specifications are often posted to the clients and
the salespeople make follow-up visits.
 Consumer products get the maximum share of advertising. Pharmaceutical
industry exclusively use personal selling for prescription drugs. Insurance
companies use both advertising and personal selling.

39. 4)Use in Social and Non-profits Marketing
 Consumer behavior studies are useful to design marketing strategies by social,
governmental an not-for-profit organizations to make their programmes such as
family planning, awareness about AIDS, crime against women, safe
driving, environmental concerns and other more effective.
 UNICEF (greeting cards), Red Cross and CRY etc. make use of consumer
behavior understanding to sell their services and products and also try to
motivate people to support these institutions.

40. Consumer profiling
 A consumer profile is a way of describing a consumer categorically so that they
can be grouped for marketing and advertising purposes.
 By target advertising to a specific market segment, companies and marketers can
find more success in selling a particular product and increase profits.
 As a short-hand way of talking about consumers, market segments are often
represented by consumer profiles.

41. The six elements of a customer profile
 Start with your data. Consolidate and add KPIs such as revenue per customer, email
responsiveness, product mix and purchase channel. Remove duplications and create Single
Customer Views.
 Enhance and enrich first party data using third party data. This is an optional step but it is
advisable that you ensure your data is sufficient, thorough and strong enough before proceeding
to the next step.
 Segment your customer groups so you can target your best customers or the customers you feel
represent the greatest opportunity.
 Create a rich picture of these customers on and offline (and your competitors’ customers) so you
can target them and ensure your campaign messaging, channels, locations and times of day, are
relevant.
 Deploy your targeted cross-channel campaigns to the selected customer segments.
 Measure the effectiveness of your campaigns over time by each customer group. Keep track of
changes in your competitors’ customers, spatial trends concerning where your best customers are
and where they interact with you

42. Review Questions
 Is it important to consider the behavior of consumers while deciding on the
marketing mix of the company ? Why? Explain with suitable examples
 It is said that each consumer is unique, and any study that concentrates on the
“average consumer” is meaningless. Discuss its implication.
 Why is it so important to conduct a consumer research before the launch of any
campaign?
 “It has become important for marketers to understand the psyche of the consumer
”. Comment.

43. Caselet on consumer decision making process
 NEW BALANCE, OUT OF STEP1.
 Explain the consumer decision-making process when purchasing a new pair
of sneakers.
- Consumers decision process is comprised of 5 steps:-
 Determining a need for a produce- a need for a new pair of runningsneakers
- Search for information- using the internet or reading reviews in Runner’s
World Magazine
 - Evaluation of alternatives- should I purchase the New Balance 875 or theNike’s
and others
 - Making the choice- going to a store or purchase online
 - Post choice evaluation- Did I make the right decision to purchase NewBalance
over Nike