“Consumer behaviour may be defined as that behaviour exhibited by people in planning, purchasing and using economic goods and services. If the marketing executives possess an adequate understanding of consumer behaviour, the overall effect of their marketing effort would be enormously successful.”
Consumer behaviour is the decision process and physical activity individuals engage in when evaluating, acquiring, using, or disposing of goods and services.
According to Engle Blackwell and Kollat, consumer behaviour refers to those acts of individual’s directly involved in obtaining and using economic goods and services including the decision processes that precede and determine these acts.
The consumer is the King. All attention is paid to him in marketing management. A marketer should know who are the people that consume the product and why they do so. A marketer not only studies the consumer behaviours, he is also concerned with changing buyer behaviour. The study of when, why, how, and where people do or do not buy a product is consumer behaviour.
Learn about: 1. Meaning of Consumer Behaviour 2. Definitions of Consumer Behaviour 3. Scope 4. Importance 5. Classification 6. Factors that Constituted to the Development of Consumer Behaviour 7. Factors Affecting 8. Determinants and Explanations 9. Approaches 10. Stages 11. Models 12. Applications.
Consumer Behaviour: Meaning, Definitions, Scope, Importance, Approaches, Applications, Factors and Models
- Meaning of Consumer Behaviour
- Definitions of Consumer Behaviour
- Scope of Consumer Behaviour
- Importance of Consumer Behaviour
- Classifications of Consumer Behaviour
- Factors that Constituted to the Development of Consumer Behaviour
- Factors Affecting Consumer Behaviour
- Determinants and Explanations of Consumer Behaviour
- Approaches to Consumer Behaviour
- Stages of Consumer Behaviour
- Models of Consumer Buyer Behaviour
- Applications of Consumer Behaviour
Consumer Behaviour – Meaning
The study of when, why, how, and where people do or do not buy a product is consumer behaviour. The study of consumer behaviour is the analysying of how individuals make decisions to spend their available resources (time, money, effort) on consumption-related items. It blends elements from sociology, psychology, social, economics and anthropology. It attempts to understand the buyer decision-making process, both individually and in groups.
The term consumer buying behaviour, end user behaviour and buyer behaviour all stands for the same. It includes the study of what they buy, why they buy it, when they buy it, where they buy it, how often they buy it, and how often they use it.
Let us take an example of a toothpaste. The researchers want to know what types of toothpaste consumers buy (gel, regular, striped, in a tube, with a pump); what brand (national brand, private brand, generic brand); why they buy it (to prevent cavities, to remove stains, to brighten or whiten teeth, to use as a mouthwash, to attract romance); where they buy it (supermarket, Mall, drugstore, convenience store); how often they use it (when they wake up, after each meal, when they go to bed, or any combination thereof); and how often they buy it (weekly, biweekly, monthly).
Consumer behaviour is the decision process and physical activity individuals engage in when evaluating, acquiring, using, or disposing of goods and services.
The consumer is the King. All attention is paid to him in marketing management. A marketer should know who are the people that consume the product and why they do so. A marketer not only studies the consumer behaviours, he is also concerned with changing buyer behaviour.
Buyer behaviour is an attempt to understand and predict human actions in the buying role. Buying behaviour is a process. Actual purchase is only a part of the decision process.
According to Engle Blackwell and Kollat, consumer behaviour refers to those acts of individual’s directly involved in obtaining and using economic goods and services including the decision processes that precede and determine these acts.
Psychologists explain behaviour in terms of stimulus and response. Attempts are made to explain marketing behaviour in terms of marketing stimuli and consumer response. Marketing stimuli consist of four Ps — product, price, place and promotion. Other stimuli include buyer’s environment—economic, technological, political and cultural.
All these stimuli enter buyer’s black box (as we cannot see what happens in his mind), where they are turned into buyer response — product choice, brand choice, dealer choice, purchasing time and purchasing amount. Consumer’s mind is a black box. However, thanks to the growth of psychology and the behavioural sciences, it is now possible to X-ray human mind.
The marketer wants to understand how the stimuli are changed into response inside the consumer’s black box which has two parts. First, buyer’s characteristics influence how he perceives and reacts to the stimuli. Secondly, the buyer’s decision-making process itself affects the buyer’s behaviour.
Consumer Behaviour – Definitions: By Schiffman and Kanuk, Wells and Prensky, Hawkins, Best and Coney, Belch and Belch and a Few Others
It is quite evident that knowing consumer needs and desires is a road to success for the marketers, but the question is how? It is not a simple task. At the first instance, we can feel that whatever consumer is telling may be perceived as correct but actually he may not act otherwise. They may respond to your message but may be influenced at the last moment by their friends, family members or by their other reference groups.
According to the American Marketing Association, “Consumer Behaviour is defined as the dynamic interaction of affect and cognition, behaviour and environmental events by which human beings conduct the exchange aspects of their lives”.
More generally, consumer behaviour is the psychology behind marketing and the behaviour of consumers in the marketing environment. Two major psychological disciplines come into play when observing and trying to explain consumer behaviour. The first is ‘Cognitive Psychology’. It is the study of all knowledge related (mental) behaviours.
The attention, perception, memory and decision making are the various aspects of cognitive psychology that play an important role in consumer behaviour. The second psychological discipline that has theories to explain certain phenomenon of consumer behaviour is ‘Social Psychology’. It is the study of the manner in which the personality, attitude, motivation and behaviour of an individual influence and are influenced by social groups.
It studies characteristics of individual consumers such as demographics, psychographics 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.
In marketing jargon, a consumer problem refers to a ‘discrepancy’ between the ‘ideal, situation and reality’. Thus, problems can range greatly in severity. One problem, for example, is that you are hungry. The problem is easily solved by eating.
Other problems can be significantly more severe – for example, a consumer is scared that he will be rejected by his wife because he is growing bald. Note that problems can be solved in one or the other way. Baldness could be addressed by obtaining a wig, medical treatment, buying a fancy car (as an alternative way to achieve attractiveness), or some other creative way.
According to Schiffman and Kanuk, “Consumer Behaviour encompasses all of the behaviours that consumers display in searching for, purchasing, using, evaluating and disposing of products and services that they expect will satisfy their needs”.
Wells and Prensky defines, “Consumer behaviour is the study of consumers as they exchange something of value for a product or service that satisfies their needs”.
Hawkins, Best and Coney describes, “The field of consumer behaviour 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 needs and the impacts that these processes have on the consumer and society”.
Belch and Belch define the term ‘Consumer Behaviour’ as, “Consumer behaviour is the process and activities people engage in when searching for, selecting, purchasing, using, evaluating, and disposing of products and services so as to satisfy their needs and desires.” Solomon holds, “Consumer behaviour is the process involved when individuals or groups select, purchase, use, or dispose of products, services, ideas or experiences to satisfy needs and wants.”
Leon G. Schiffman and Leslie Lazar Kanuk opine, “Consumer behaviour can be defined as the behaviour that consumers display in searching for, purchasing, using, evaluating, and disposing of products and services that they expect will satisfy their needs.”
On the basis of above definitions, it can be concluded that consumer behaviour is the study of actions a person takes in purchasing and using products and services, including the mental and social processes that precede and follow these actions.
Consumer Behaviour – Scope
To define the scope of a subject it is important to set certain parameters or framework within which it shall be understood. It can be explained through a detailed study of framework. This framework is made up of three main sections – the decision, process as represented by the inner-most circle, the individual determinants on the middle Circle and the external environment which is represented by the outer circle. The study of all these three sections constitutes the scope of consumer behavior.
The scope of consumer behavior is the wide variety of activities consumers engage in as they research, buy, use, and dispose of products. This is a topic of interest for marketers and other researchers who examine how consumers behave in the market. This information can be important for the development of products and ad campaigns that meet the needs of consumers effectively. Psychologists and anthropologists study consumer behavior for more theoretical reasons, with an interest in how it interacts with other aspects of human behaviors.
Consumers move through a variety of steps as they buy products. The scope of consumer behavior examines the decisions consumers make and how they make them, looking at the what, when, where, why, and how of product consumption. For example, companies want to know why consumers buy products, and what kinds of needs are satisfied through consumption. These can include basic needs like hunger and shelter along with the desire for psychological fulfillment through products that provide pleasure or meaning.
Companies also want to know when consumers make purchases, looking at the frequency of purchases and the conditions under which they occur. Study on the scope of human behavior, for example, informs the use of end cap displays near cash registers to tempt people into last- minute purchases.
Research on consumers’ shows that small items like candy bars that may not have been on a consumer’s list of planned items might be added to a shopping basket if presented at the end of the shopping process. Scope of consumer behavior is wide and depends upon psychology, environment around customer, global business situation etc.
Consumer behavior is the study of individuals, groups, or organizations and the processes they use to select, secure, and dispose of products, services, experiences, or ideas to satisfy needs and the impacts that these processes have on the consumer and society. It blends elements from psychology, sociology, social anthropology and economics.
It attempts to understand the decision-making processes of buyers, both individually and in groups. It studies characteristics of individual consumers such as demographics and behavioral 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.
Consumer Behaviour – Importance: Relevance and Understanding
The relevance and importance of understanding consumer behaviour is rooted in the modern marketing concept. In order to operation alive this concept, management attempts to solve some consumption problems of consumers.
However, no businessman can possibly help consumers solve their consumption problems unless he understands them and unless he makes an attempt to comprehend the buying process and the factors influencing it.
Consumer behaviour is dynamic. Therefore, it is necessary to continuously study, analyse and understand it and monitor this understanding to the marketing management so that effective decisions can be take in respect of products, price, promotion and distribution. The profit position of a product hinges on the kind of pre disposition- positive/negative—that a consumer has developed towards it.
It is essential to study and analyse it in order to understand why he/she has developed such a predisposition? Besides, the Indian marketing conditions, in particular the role of the Government and the steadily emerging consumer movement, necessitates that marketers in India must understand consumer behaviour—their needs, aspirations, expectations and problems.
It will be extremely useful in exploiting marketing opportunities and in meeting the challenges that the Indian market offers.
Thus, in substance, it may be said that in the interest of effective marketing decisions, marketers must develop an understanding of their consumer’s behaviour, the buying process and the factor influencing this process.
Consumer Behaviour – Classification
Buyer Classification and Buyer Behaviour:
The buyers/consumers primarily are divided in three categories.
The term “Buyer” is widest and it encompasses all kinds of buyers irrespective of their being:
(i) House-hold Consumer
(ii) Industrial Consumer or
(i) House-hold Consumer – Those buyers are the house-hold consumers, who buy the products and services for catering the needs of personal and family consumption. The motive of purchase for these consumers is non-commercial.
(ii) Industrial Buyer – These are the buyers who buy the products and services in order to manufacture products. The quantum of their purchase depends on the demand of the product to be manufactured/produced.
(iii) Re-Seller – These buyers buy any product or service so as it can be re-sold. The motive of these buyers too is commercial.
On the basis of purchase motive, the above classification makes it clear that there is a difference between consumer and the buyer. These are not one but different.
Following are the differentiations found in the behaviour of buyers who buy with business and non-business motives and these are worth keeping in mind by the sellers:
1. The demand of non-commercial buyers depends on the level of consumption while the demand of commercial buyers is indirect. Demand of these buyers depends on products meant for production in low scale.
2. The demand of non-commercial buyers mostly centralised while it is decentralised in the commercial buyers’ viz., it is divided into the persons working in these institutions. They all decide jointly.
3. The buying behaviour of non-commercial buyers depends on the facilities, concessions, rebates etc., and on personal relations alike while the buying behaviour of commercial buyers is based on reciprocity.
4. Non-Commercial buyers do not always known to the characteristics and price of the products bought by them because they receive no information related. The commercial buyers on the other hand are more known because of having sufficient information with them.
5. All non-commercial buyers i.e., Consumer markets are decentralised among numerous resellers while commercial and industrial markets are centered among a certain buyers.
The consumers can be classified in following classes on the basis of their buying behaviour:
1. Habit Determined Group – It is the class of buyers who habitually buy any product of special brand because he is fully satisfied with the utility of that brand.
2. Cognitive Group – The buyer of this class are influenced by the conscious claims and their buying behaviour is based on those claims. There are some buyers also who are price cognitive and their buying behaviour is based on the price of product or on savings they made. For example, MARUTI Company.
3. Emotional Reactors Group – It is the class of those buyers much affected by the images and ideals of the products. For example- L.G. Company.
4. New Group – Those persons fall in this class who still have not made psychological decision.
5. Impulsive Group – The class pertains to those buyers who buy the goods on their physical properties. No affect goes on them of the brands.
Consumer Behaviour – Factors that Constituted to the Development of Consumer Behaviour
(i) Expanding consumer choices
(ii) Less predictable purchase behaviour
(iii) Preference for differentiated products that reflect individuals special needs, lifestyles and personality
(iv) Market segmentation
(v) Shorter PLC – New product ideas are needed and more frequently as a consequence of shorter PLC.
(vi) Increased interest in consumer protection
(vii) Public policy legislation
(viii) Growth of services marketing
(xi) Nonprofit marketing
(x) Growth of International Marketing
(xi) Development of computers and sophisticated methods of statistical analysis
(xii) Environmental concerns
Consumer Behaviour – 4 Major Factors: Personal, Social, Cultural and Psychological Factors
These are Unique to a particular person. Young people purchase things for different reasons than older people. This can be best understood by taking a portion of the study conducted to depict the new trends based on the following categorization. The study has divided the consumer population into two broad categories namely – male and female.
Each of these has been further sub divided into the new generation men and boys and women and girls. This helps in making a comparison between the buying behaviour and preferences of the previous or older generation with the new one.
i. Generation I-man – this buyer is supposed to be an experimenter, who does not desire to stick to tried products and, in fact, likes those products which create good impression.
ii. Generation I-boy – he is a buyer who rates peer approval before buying and hates hard sell.
iii. Generation I-woman – she is a liberated buyer who is hard working, having self-esteem and values gadgets that save time.
iv. Generation l-girl – she likes to try new products and distrusts heavy advertising.
Consumer wants, learning, motives etc., are influenced by opinion leaders, person’s family, reference groups, social class, and culture and peer pressure. Social factors also take into account the economic back ground of a family or individual consumer. It is a fact that the buying behaviour of a rich family will differ from that of a middle class or poor family.
To understand this better an example can be considered. Marriages are performed with a lot of fervour and enthusiasm in India. The recent trends have shown a sudden growth in the area of “event management” due to the increasing demand of consumer to have the BEST. Lack of time, small and nuclear families, greater resources have changed the complete scenario of performing marriages.
This has led to sudden spurt of matrimonial sites, catering business, detective services, complete event handling etc. Any change in society has to be noticed by the seller of products and services, as these changes greatly affect the marketer.
Culture is a set of values, traditions, or beliefs which guide the individual’s behaviour. Growing up in a society, every individual learns these beliefs from his or her family, friends, neighbours, and the society at large. Culture impacts the way we dress, eat, live, and work. It manifests through various symbols or rituals which are unique to a society. For example, beef is not accepted in Hindu society and likewise pork in Muslim society. The failure to adjust to these differences can result in ineffective marketing or embarrassing mistakes.
For example, business representatives of a US community trying to market itself in Taiwan found this out the hard way. Seeking more foreign trade, they arrived in Taiwan bearing gifts of green baseball caps. It turned out that the trip was scheduled a month before Taiwan elections, and that green was the color of the political opposition party.
Worse yet, the visitors learned after the fact that according to Taiwan culture, a man wears green to signify that his wife has been unfaithful. The head of the community delegation later noted, ‘I don’t know whatever happened to those green hats, but the trip gave us an understanding of the extreme differences in our cultures.’ International marketers must understand the culture in each international market and adapt their marketing strategies accordingly.
Psychological factors include the following parameters, which affect the buying pattern of a consumer.
A motive is an internal energizing force that orients a person’s activities toward satisfying a need or achieving a goal. Actions are effected by not one but, in fact, a set of motives. If marketers can identify motives then they can develop a better marketing mix keeping in mind the Maslow’s hierarchy of needs which talked about the following needs.
Maslow’s Hierarchy of Needs:
Abraham Maslow, who is considered to be a pioneer of the motivational work, designed the first theory of motivation, which has following set of five needs –
a. Basic needs – this is the first set of needs which includes the basic needs such as food, clothing and shelter.
b. Safety needs – after the first set of needs is satisfied, the person graduates to next level of needs where there is a need for job and personal security.
c. Love and Belonging needs – once the two above mentioned needs are satisfied, the individual, starts looking for a sense of belonging and need to socialize.
d. Esteem/Ego needs – at this level of needs, money stops being a motivating factor. The individual starts looking for better status and recognition.
e. Self-Actualization needs – according to Maslow, not everyone reaches the last need on the ladder. This is that point in life where one desires to do what please him/her.
For a prudent seller, it is very important to know the level of needs a consumer has reached. It is very interesting to note that only when the need is satisfied, the consumer would feel happy. The seller may give the best from his/her side, but if that is not up to the expectations of the consumer; it would not lead to buying satisfaction. There is, accordingly, a Need to determine what level of the hierarchy, the consumers are at, in order to determine, what motivates their purchase.
ii. Perception of the Consumer:
Perception is the process of selecting, organizing and interpreting information inputs to produce meaning. Every thinking individual has a different perception. For example, while choosing an advertisement, the producer must be careful about its tone.
For example it may be negative for the competitor by highlighting the weakness of competitor’s product or it may be positive where the merits of own product are pitched rather than a focus on the rival’s product. Many consumers do not appreciate distortions and misleading facts.
iii. Ability and Knowledge:
Ability is an individual’s capacity to learn. Learning, changes a person’s behaviour, caused by information and experience. Therefore, consumers’ behaviour can be changed about product. When making buying decisions, buyers must process information. Knowledge may be defined as a familiarity, awareness, or understanding of someone or something, such as facts, information, descriptions, or skills, which is acquired through experience or education.
It is done by perceiving, discovering, or learning. Knowledge can refer to a theoretical or practical understanding of a subject. It can be implicit or explicit. The philosopher Plato defined knowledge as “justified true belief”. Knowledge relates to the familiarity with the product and expertise.
Attitude means manner, disposition, feeling, position, etc., with regard to a person or thing, a tendency or orientation, especially of the mind which may result in a negative attitude or a positive attitude.
Multi component model is the most influential model of attitude. These components are also known as taxi CAB that will get you where you want to go.
a. Cognitive component – The cognitive component of attitudes refer to the beliefs, thoughts, and attributes that we would associate with an object.
b. Affective component – The affective component of attitudes refers to feelings or emotions linked to an attitude object. Affective responses influence attitudes in a number of ways. For example, many people are afraid of spiders and they develop a hate for spiders.
c. Behavioural component – The behavioural components of attitudes refer to past behaviours or experiences regarding an attitude object.
It is sum totals of all physical and mental attributes in a person, and normally includes attributes such as, Work holism, Self-confidence, Adaptability etc. Personality can be defined as a dynamic and organized set of characteristics possessed by a person that uniquely Influence, his/her environment, cognitions, emotions, motivations, and behaviours in various situations.
The word “personality” originates from the Latin word “persona”, which means “mask”. Personality also refers to the pattern of thoughts, feelings, social adjustments, and behaviours, consistently exhibited over time that strongly influences one’s expectations, self-perceptions, values, and attitudes. It also predicts human reactions to other people, problems, and stress.
According to Gordon Allport, there are two major ways to study personality:
a. Nomothetic psychology – it deals with general laws that can be applied to several different people, such as the principle of self-actualization or the trait of tightfistedness.
b. Idiographic psychology – this is an attempt to understand the unique aspects of a particular individual. These are specific to every individual such as being a philanthropic.
A trait is a distinguishing characteristic or quality, which is possessed by and part of an individual’s personal nature. Traits are also known as dispositions. Gordon Allport was an early pioneer in the study of traits, which he referred to as dispositions.
According to Allport there are three types of traits namely, “cardinal” traits which are those that dominate and shape a person’s behaviour, such as a need for money, desire for fame etc., the second traits are “central” traits such as honesty and finally “secondary” traits which are seen only in certain circumstances such as particular likes or dislikes which are shared with very close friends.
Trends in big cities in India have seen a shift towards personal independence and individualism and a preference for a healthy and natural lifestyle.
Consumer Behaviour – Determinants and Explanations: Howard and Sheath’s Endogenous and Exogenous Variables
It is obvious that the social environment provides stimulus to buyer behavior and psychological frame intervenes in the input processing. The intervening variables in the consumer’s decision-making process have been divided by Howard and Sheath into endogenous and exogenous variables.
According to them endogenous variables include motivation, perception and learning, whereas the exogenous variables include personality, social class, culture, organization, and financial status of an individual. The former are found within the individual and condition his/her mind and the latter are located within his decision-making environment and influence him.
It is important for a marketer to understand all these variables so as to know as to why a consumer behaves in the manner he/she does and how his/her mind is conditioned and influenced. One of the best way to get an explanation of this behavior is to study the various factors and theories of consumer behavior as derived from the behavioral sciences, namely, economics, psychology and sociology.
Some of these have been discussed here:
i. Studying Buyer Behaviour:
What motivates the buyer? What induces him to buy? Why does he buy a specific brand from a particular shop? Why does he shift his preferences from one shop to another or from one brand to another? How does he react to a new product introduced in the market or a piece of information addressed to him? What are the stages he travels through before he makes the decision to buy? These are some of the questions that are of perennial interest to the marketing man.
Because, it is around these questions that the product and promotion strategies of the marketing man ultimately revolve. In all his marketing strategies and plans, he makes assumptions as to how the buyers would behave and respond to his marketing programmes. Knowledge of the buyer and his buying motives and buying habits, is thus a fundamental necessity for the marketing man.
How does the marketing man make these assumptions? And how does he influence the buyer’s behaviour through his marketing action? This is the main burden of the buyer behaviour study.
ii. Problems in Buyer Behaviour Study:
It needs to be emphasised at the very outset that there is no unified, well defined, tested and universally established theory of buyer behaviour. What we have today are certain ideas on buyer behaviour. Some of these ideas have taken their cue from economics, others from psychology, and yet others have drawn cue from several of the social sciences simultaneously.
Business firms and professional researchers have studied the subject extensively, contributing a large assortment of information on buyer behaviour. However, a universally accepted theory of the subject is yet to emerge. It is with this understanding of the limitations of the buyer behaviour studies that we have to proceed further with the topic.
iii. Buyer-A Riddle:
The buyer is a riddle. He is a highly complex entity. His needs and desires are innumerable; and they vary from security needs to aesthetic needs. These needs and desires are often at different stages of emergence and actualization. Some are latent, some manifest, while some others are highly dominant. The buyer has his own ways and means of meeting these needs. Some of these needs are within his means; he can easily meet them. Some others may be beyond realisation.
iv. Buyer’s Perception of Information is Selective:
The buyer is exposed to a world of information -about new products, new services, and new uses for existing products, new ideas and new styles. His attitude towards this literal bombardment of information is also peculiar. He may ignore certain pieces of information, whereas he may actively seek out some other information. He may read certain messages, but may not digest them.
He may merely overhear some message about some product and it may register in his mind. In other words, he filters the information in a rather unconscious manner. His perception is selective in the sense that he perceives and retains only what he would normally like to perceive and retain. This selective perception is actually his defense mechanism against the information explosion to which he is constantly exposed.
v. The Buyer Does Not Follow Rigid Rules while Taking Buying Decisions:
When the buyer takes a buying decision, there is no rigid rule to bind him. Sometimes, the decision is taken on the spot. That does not necessarily mean that it is an irrational decision. Sometimes he may decide after a long search, after evaluating the various alternatives available and reassuring himself with the opinion of those who have already purchased the product.
Still he may feel later that his purchase was impulsive or even foolish! He may go to a shop after having taken the decision to buy a product; but he may not still buy. For no apparent reason, he may postpone the purchase or even drop the very idea of purchasing the product.
The buyer is also influenced by the social environment in which he lives -his society, his neighbors, his friends, his job, his colleagues. Every component of his social environment leaves some imprint on him and influences him in his day-to-day life. They influence his buying behaviour too.
It would be amply clear from the above that buyer behaviour is a complex subject. The buyer is not a passive being to allow himself to be manipulated easily by the marketing man. He is dynamic and downright difficult.
Influence of Social Sciences on Buyer Behaviour Studies:
Major social sciences like Economics, Psychology, Sociology and Anthropology have influenced the buyer behaviour studies. It is essential to have an idea of the nature of this influence.
I. Influence of Economics:
The economists described man as a rational buyer and viewed the market as a collection of homogeneous buyers. Under a set of given conditions, the buyers behave in a similar fashion and every buying decision is a logical process with the ultimate intention of obtaining optimum value for the money they spend. Price is regarded as the strongest motivation for the ‘economic man’. The economic man’s behaviour, in short, is rational.
Though the model of economic man may help us understand certain aspects of buyer behaviour, it certainly cannot answer all the puzzles of buyer behaviour. The main problem with the concept of economic man is the assumption that markets are homogeneous. Markets are actually a collection of heterogeneous buyers. And the marketing process is intended to match these heterogeneous segments of demand with heterogeneous segments of supply.
II. Influence of Psychology:
The next major influence on buyer behaviour came from Psychology. According to psychologists any human activity is directed towards meeting certain basic needs. And these needs have been categorized’ in different ways by different psychologists.
The broadest influence on the buyer consists of the buyer’s cultural characteristics, particularly the buyer’s culture, subculture, and social class. We will look at the role played by each of these.
A consumer’s behaviour in influenced not only by broad cultural factors but also by social factors, such as the consumer’s reference groups, family, and social roles and statuses.
A buyer’s decisions are also influenced by personal outward characteristics, notably the buyer’s age and life-cycle stage, occupation, economic circumstances, life style, and personality and self-concept.
Maslow’s Hierachy of Needs:
The physiological needs art’ the basic needs they include the need to satisfy hunger, thirst, sleep, etc. For people who are well-off, the physiological needs are met as a matter of routine, whereas for the poor, a major part of their life is spent in striving to meet these needs. Safety needs include needs relating to physical safety and economic and social security. Social needs come next in the ladder.
They include the need for love and the need to belong, Esteem needs come next in the hierarchy. They include the need for self-esteem, the need for recognition by society and the need to be held in esteem by other self-actualization needs include the need for self-development and the need to attain complete fruition of one’s capabilities and endowments. The actions of individuals are guided by their need structure and need level.
III. Influence of Sociology and Anthropology:
Sociology and Anthropology lent further dimensions to the subject of buyer behaviour. According to scholars in these fields, buying is a process that involves the activities of groups of people. The motive force behind this activity is group pressure.
Sociologists and Anthropologists have tried to establish a logical connection between buyer behaviour differences and the social environment of the buyer. As a result, several new concepts like social stratification, reference groups, role-orientation, opinion leadership, etc., have come to be used for giving causal explanations of buyer behaviour.
Consumer Behaviour – Approaches: Managerial and Consumer Perspective
Managerial and Consumer Perspective on Consumer Behaviour:
Marketer’s, marketing plan is driven by their perception of why and how do consumers behave as they do and how they are likely to respond to the various marketing mix elements. But in reality, in most of the markets, buyers differ enormously in terms of their buying dynamics.
So the marketer has got a mammoth task of identifying these complex differences. For, if one were to consider the consumer markets, buyers typically will differ in terms of their age, income, educational levels and geographical locations. Apart from this, the more fundamental differences will be in terms of their personality, lifestyles and their expectations.
Despite these complexities, it is imperative that the marketing manager understands the dynamics of the consumers buying process, otherwise the costs and competitive implications of failing to do so would be very high. Under the marketing approach, organisations were engaged in carrying out market researches to identify the consumer’s underlying needs and develop product or service offerings to match those needs. Apart from a wider product range, the advertising and media managers were required to work on diverse campaigns and be more creative in communicating the product benefits.
Now since the entire marketing efforts are focused on the ‘consumer’, the talking also involves using behavioural terms. In this context, the product or service is positioned to deliver a set of benefits to a specific (defined) segment of consumers. The advertising manager aims at communicating symbols and images to indicate how the brand delivers these benefits and create a favourable attitude towards the brand and thereby induce trial among the customers. It is also possible, through advertising to influence consumers to go for repurchase of products or services.
Managerial perspective on consumer behaviour tends to be more micro and cognitive in nature. The term micro is used because the manager is focusing on the individual consumer —his or her attitudes, perceptions and lifestyle and demographic features. Further, the external factors influence in terms of the reference groups, the family, social class and culture are studied in order to know how they influence the individual consumer. The cognitive nature emphasises on the thought processes of individual consumers and the factors which influence their decision-making processes.
From the marketing manager’s perspective, it is necessary to satisfy the needs of the individual consumer through suitable product or service offerings. Hence, the necessity to gather information on the consumer’s needs, thought processes characteristic features. Such information will be useful in segmenting the target market on the basis of various parameters.
However, the manager has to vary of a few risks associated with the managerial approach:
a. It would not be correct to go by a strictly cognitive approach- This is because, the consumers may not always adopt a systematic decision-making process, especially when purchasing products on impulse or habitual basis (buy toothpaste, tooth brush etc.) Such products have symbolic value and do not require the consumer to be involved in a systematic information processing.
b. It would be incorrect to overlook the dynamics of environmental factors influencing the consumers decision-making process- For instance, gifts purchased for ritual purposes would have to be culturally derived. This reason may be overlooked if only a micro view is taken, where the focus is exclusively on the individual consumer.
c. Another risk could arise if the managers were to focus more on the purchase aspect rather than on consumption- While trying to work on the consumer satisfaction level managers have realised that this can be understood by looking at the post purchase behaviour or the consumption front and not merely the purchase experience. It is for this reason that marketing managers are entering into relationship based marketing with their consumers. Moreover, to a great extent this relationship marketing will depend on the consumption experience.
Thus, it will be more helpful if the marketers were to adopt a ‘holistic approach’ to the study of consumer behaviour. For this, marketing managers will have to make efforts to understand the environmental context of the consumer’s actions, the cognitive processes involved in their decision-making process and then work out suitable marketing strategies accordingly.
Both, the managerial and consumer perspectives differ on three accounts:
(a) Managers seek product information so as to come out with product offerings, which will work as vehicles of influences. Whereas, consumers tend to evaluate information for the purpose of making better decisions on purchase choices.
(b) Marketing managers workout strategies which are product or brand specific. While the consumers have the tendency to evaluate various brands before actually purchasing products. Further, the consumers choice, although may not appear to be related but in reality could be a reflection of their desires and lifestyle. Such behaviour could be visible in their buying food items (eating Pizza, Burgers), wearing Ruf-n-Tuf jeans and Reebok shoes and owning a Blackberry cellular phone could be reflecting the individual consumer’s lifestyle and desires.
(c) Managers may view competition as a threat. Whereas, for the consumer, availability of more brands (i.e., more competition) will work as an opportunity to compare, have more choices and get few at lower prices too.
For managers, study of consumer behaviour will help to offer good quality products and acquire the necessary accurate information to ensure the building up of a loyal customer base in the long-run.
As consumers, the study of consumer behaviour will provide them insights into their own consumption-related decisions and thereby enable them to become better and wiser consumers.
Consumer Behaviour – 8 Main Stages: Problem Recognition, Description of Need, Product Specification, Information Search and a Few Others
Buyers facing new product buying decision usually go through all of these stages. When the time of re buy comes, few steps are omitted. Hence it can be said that Actual purchasing is only one stage of the process. Not all decision processes lead to a purchase. All consumer decisions do not always include all stages, determined by the degree of complexity.
Stage # 1. Problem Recognition:
This is the first stage of business buying process in which someone from the company recognizes a problem or need that can be met by acquiring a good or a service. It is the difference between the desired state and the actual condition. Deficit in assortment of products. Hunger stimulates your need to eat.
Problem recognition can be stimulated by the marketer through product information, e.g. we see a commercial for a new pair of shoes, which stimulates our recognition that we need a new pair of shoes.
In advertisements, marketers often alert customers to potential problems and then show how their products provide solutions. For example an antivirus add asks questions like, is your personal computer really safe?, or a door lock making company’s add asking, does your old locking system have 2 interlocks instead of advanced locking system with 6 interlocks?
The stage in the business buying process in which the company describes the general characteristics and quantity of a needed item.
Having detected a need the buyer prepares a general need description that explains the characteristics and quantity of that particular product or service. For complex articles buyer have to work with several professional like engineers, users, consultants, etc.- to define the item.
This is the stage where alert producer can state and help buyers define their needs and provide information about the value of different characteristics.
Stage # 3. Product Specification:
Product specifications generally includes technical specifications of the product, it’s peculiarities, unique features if any which helps to understand the buyers requirements. By showing a buyers a better way to make an object, outside sellers can turn straight re buy situations into new-task situations that give them a chance to obtain new business.
Stage # 4. Information Search:
Information search means searching various sources about the product and its related details. Internal search includes memories of advertisement and brochures previously looked. External search includes other sources such as internet, television, radio, Friends and relatives (word of mouth). Marketer dominated sources; comparison shopping; public sources etc. which runs advertisement about the product. This external study must be made if you need more information of the product. A successful information search leaves a buyer with possible alternatives, the evoked set.
Stage # 5. Evaluation of Alternatives:
Various alternatives must be analyzed to establish criteria for evaluation, such as features the buyer wants or does not want. Rank/ weight alternatives or resume search.
If still buyer is not satisfied he must look for other resources like social media or should study other alternative. Marketers generally try to influence by “framing” alternatives in the minds of buyers.
Stage # 6. Purchase Decision:
It includes Choose buying alternative, includes product, package, store, method of purchase etc.
This is the closing process and is a final step toward a buying decision of a customer. After thorough analysis is made, buyer can purchase a particular product and take the decision of buying.
Stage # 7. Purchase:
Actual purchase may be different than the purchase decision. Generally it happens in case of consumer durable product that buyer takes decision of purchase but actual purchase is postponed till future date because of several contingent factors such as product availability issues, particular product may not be available, other product option is available etc. For example, in case of purchase of car, a particular model may be selected but purchase is postponed because of non-availability of a specific color.
It is the stage of post purchase of product in which customer either is satisfied or is dissatisfied with the product or producer. Generally after sales service is offered so that customer is fully satisfied with the producer. Many online shopping portals have created review options after product is purchased, so that customer can write their experience about the product as well as service offered by these portals.
So it may be observed that the actual buying process may be different and more complicated than this one but the above buying process is clearer in stating the complexity of the same.
Consumer Behaviour – Top 2 Models: Howard-Sheth Model and Engel-Kollat-Blackwell Model
The use of models has been a recent development in the study of consumer behaviour. They reflect an effort to order and integrate the various components of information that are known about consumer behaviour. Models are useful in aiding research design to give a deeper understanding of buyer behaviour.
Howard and Sheth have provided one of the most comprehensive models of consumer behaviour.
Their model uses the concept of stimulus-response to explain brand choice behaviour over time, using four major components:
i. Input variables
ii. Output variables
iii. Hypothetical constructs
iv. Exogenous variables.
i. Input Variables:
Input variables are those stimuli that come from the environment.
There are three types:
(a) Significance stimuli – These are actual elements of a brand which the buyer confronts, for example, price.
(b) Symbolic stimuli – These are generated by manufacturers representing their products in symbolic form, for example, in advertisements.
(c) Social stimuli – These are generated by the social environment, for example, in reference groups.
ii. Output Variables:
The five positions are the buyer’s observable stimulus-response inputs.
They consist of:
e. Purchase behaviour.
iii. Hypothetical Constructs:
These are intervening variables which can be categorized into two major groups – perceptual constructs and learning constructs.
There are three perceptual constructs. These deal with information processing –
(a) Sensitivity to information — the degree to which the buyer regulates the stimulus information flow.
(b) Perceptual bias — distorting or altering information.
(c) Search for information — active seeking of information about brands or their characteristics.
There are six learning constructs. These deal with the buyer’s formation of concepts.
(a) Motive — general or specific goals impelling action.
(b) Brand potential of the evoked set—the buyer’s perception of the ability of brands to satisfy goals.
(c) Decision mediators — the buyer’s mental rules for matching and ranking purchase alternatives according to his motives.
(d) Predisposition — a preference towards brands in the evoked set expressed as an attitude towards them.
(e) Inhibitors — environmental forces, such as price and time pressure, which restrain purchase of a preferred brand.
(f) Satisfaction — the degree to which the consequences of a purchase measure up to the buyer’s expectations.
iv. Exogenous Variables:
These external variables can significantly influence buyer decisions. Because such variables are external to the buyer they are not as sharply defined as other aspects of the model.
The process of operating the model begins when the buyer confronts an input stimulus and it achieves attention. The stimulus is then subjected to perceptual bias as a result of the influence of the buyer’s predisposition as affected by his motives, decision mediators and evoked set.
The modified information will also influence these variables, which in turn will influence the buyer’s predisposition to purchase. The purchase will be influenced by the buyer’s intentions and inhibitions which are confronted. After the purchase, the buyer evaluates satisfaction and satisfaction increases the buyer’s predisposition towards the brand. More information means that the buyer engages in less of an external search for information and exhibits more routine purchasing behaviour.
The Howard-Sheth model made an important contribution towards the understanding of consumer behaviour. It identifies many of the variables that influence consumers and details how they interact with one another. The model also recognizes that there are different types of consumer problem-solving and information search behaviour.
There are, however, a number of limitations to the model; there is no distinction made between exogenous and other variables, some variables are difficult to measure and it is very complex.
This model considers consumer behaviour as a decision process concerning five activities which occur over time.
i. Problem recognition
ii. Information search
iii. Alternative evaluation
These steps provide the basic code. The model also takes into account a number of other variables that influence the decision process.
These variables are grouped into five categories-
a. Information input
b. Information processing
c. Product brand evaluation
d. General motivating influences, and
e. Internalized environmental influences.
i. Problem recognition – The consumer detects a difference between his actual and an ideal state of affairs. This may occur through external stimuli, for example, an advertisement, or the activation of a motive and hunger. In order for action to occur, the consumer must perceive a sufficiently large discrepancy between actual and ideal states.
ii. Information search – The initial information may consist of beliefs and attitudes the consumer already holds. If more information is needed a consumer may look to friends, sales people or the mass media.
iii. Alternative evaluation – The standards by which products are judged are derived from the consumer’s underlying goals or motives. The consumer also has beliefs about which brands possess which characteristics and hence will respond positively or negatively towards a particular brand.
iv. Choice – The consumer’s attitude will influence his choice. Other influences will comprise normative compliance and anticipated circumstances. Normative compliance is the extent to which the consumer is influenced by others. It considers their attempts to influence and at this stage a purchase is likely to occur. However, a barrier to purchase would be unanticipated circumstances, such as a drop in income.
v. Outcomes – If the outcome is perceived as positive the result is satisfaction. The alternative to this is dissonance.
The Engel-Kollat-Blackwell model considers a number of variables that influence consumers and its emphasis is on the conscious decision-making process that consumers adopt.
This model depicts separate psychological systems which represent the distinct predispositions of father, mother and other family members. These lead into “family buying decisions” which may be either individually or jointly determined.
Seven family and product factors that influence whether a specific purchase will be autonomous or joint.
1. Social class
2. Life style
3. Role orientation
4. Family life cycle stage
5. Perceived risk
6. Product importance, and
7. Time pressure.
The model suggests that joint decision-making tends to prevail in middle class, closely knit families.
The three models described above are the most comprehensive of all the models of consumer’s process of choice. However, such models tend to be theoretical and are not of direct practical use to marketing practitioners.
Consumer Behaviour – Applications
The field of consumer behaviour study has gained prominence from mid-1960s onwards. As a new discipline (having no body of research of its own), the study of consumer behaviour borrowed heavily from other established disciplines, such as psychology (the study of the individual), sociology (the study of groups), social psychology (the study of how individuals behave in groups), anthropology (the study of the origin and customs of mankind) and economical (the study of the science of the production and use of goods or services).
Positivism and Interpretivism:
In the initial stages, the main thrust of consumer behaviour was from a marketing managers perspective, they were interested in knowing the specific causes of consumer behaviour and then use this consumption related information to work out suitable marketing strategies to influence consumption decisions. Since the marketers were concerned with predicting consumer behaviour, this approach came to be known as positivism.
Academicians from contributing disciplines (including marketing) were interested in the study of consumer behaviour simply to understand the consumer better. The study of consumer behaviour from the point of view of understanding consumption behaviour and the meanings behind such behaviour came to be known as interpretivism.
The interpretive approach is also known as experientalism because of its focus on the consumption experience. Inspite of the differences in these two approaches, both the approaches — positivism and interpretivism can easily be said to be complementary to each other. For prediction and understanding of consumer behaviour, it is necessary to get a strong picture of consumption related behaviour.
These two theoretical research areas are highly complementary and when used together will provide a more insightful and indepth understanding of consumer behaviour.
Usage of Consumer Behaviour Knowledge:
In most of the markets, buyers differ enormously in terms of their buying dynamics. The marketing manager will have a difficult task in coming to terms with these differences when working out various marketing strategies. For instance, in consumer markets, buyers typically differ not only in terms of their age, income, educational qualifications and geographical locations but more fundamentally in terms of their personality, life styles and their expectations.
Similarly, if one were to consider the organisational and industrial markets also, complex buying behaviour is seen. Here, there could occur differences in the goals being pursued, the criteria followed by those involved in the buying process, the formality of purchasing policies and the constraints which could take the form of delivery dates and expected performance levels.
Thus, understanding of consumer behaviour will help the marketer to take marketing strategic decisions which can be broadly applied in the following areas:
1. To obtain consumer information related to their unmet needs and wants and develop products or services accordingly:
Consumers are highly complex individuals, so through consumer behaviour study marketers will be able to identify unsatisfied consumer needs and develop and offer new products (or services) to them.
2. To identify the personal and market traits which affect consumer’s decision-making process:
Each customer is unique in relation to certain personal factors such as personality traits, gender, age, and caste, his or her socio-economic cultural environment, cultural values, reference groups influence and social class status. There are also certain market forces such as market traits (climate, topography and ecology), economic environment, government policy and technology which would influence the consumer’s decision making process. Consumer behaviour study will help to identify the role played by the personal and market factors in influencing the consumption related decisions.
3. To identify specific consumer segments with unfulfilled wants:
Consumer behaviour study will help marketers to discover the unmet needs and priorities of different consumer segments and design new products and marketing strategies to fulfill those needs. Thus, through consumer behaviour study, they will have access to consumer information which will help them (marketers) to identify the various market segments and offer suitable products.
4. Develop marketing strategies through market segmentation which will help in the redesigning and repositioning of existing products:
Consumer behaviour study have enabled marketers to go for market segmentation, i.e., offering consumers differentiated product offerings, using specific marketing mix elements and positioning the product so as to satisfy the targeted customers better than competitors.
5. Consumer behaviour information will help to evaluate marketing strategies:
Current trends have indicated that marketers need to be sensitive to the changes in consumer needs, demographic characteristics and lifestyles and develop effective marketing strategies. Evaluation of marketing strategies is more valid because of the greater value orientation on the part of the consumers today. They desire for more customised products because of their accessibility to better and more information on products and services.
6. Consumer behaviour study will help to evaluate the suitability of marketing communication elements:
Through marketing communications, consumers learn about products, their prices, availability of new products and the characteristics of alternative brands. Marketing managers can work out effective communications to inform (convey product benefits) and influence consumers purchase decisions. Thus, the key elements in the study of consumer behaviour are the marketers ‘Communication of information and influence’ and the consumers ‘Receipt of marketing information’.
7. Consumer behaviour study will help in the creation of customer value, satisfaction and retention:
In order to survive in the highly competitive market, marketers are working towards building customer relationship. The three drivers of successful relationships between marketers and customers are customer value, high levels of customer satisfaction and building a structure of customer retention.