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.

The study of consumers helps firms and organizations improve their marketing
strategies by understanding issues such as how

 The psychology of how consumers think, feel, reason, and select between
different alternatives (e.g., brands, products, and retailers);
 The psychology of how the consumer is influenced by his or her environment
(e.g., culture, family, signs, media);
 The behavior of consumers while shopping or making other marketing decisions;
 Limitations in consumer knowledge or information processing abilities influence
decisions and marketing outcome;
 How consumer motivation and decision strategies differ between products that
differ in their level of importance or interest that they entail for the consumer;
and
 How marketers can adapt and improve their marketing campaigns and
marketing strategies to more effectively reach the consumer.

One "official" definition of 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 needs and the impacts that these
processes have on the consumer and society." Although it is not necessary to
memorize this definition, it brings up some useful points:

 Behavior occurs either for the individual, or in the context of a group (e.g.,
friends influence what kinds of clothes a person wears) or an organization
(people on the job make decisions as to which products the firm should use).
 Consumer behavior involves the use and disposal of products as well as the
study of how they are purchased. Product use is often of great interest to the
marketer, because this may influence how a product is best positioned or how
we can encourage increased consumption. Since many environmental problems
result from product disposal (e.g., motor oil being sent into sewage systems to
save the recycling fee, or garbage piling up at landfills) this is also an area of
interest.
 Consumer behavior involves services and ideas as well as tangible products.

 The impact of consumer behavior on society is also of relevance. For example,

aggressive marketing of high fat foods, or aggressive marketing of easy credit,
may have serious repercussions for the national health and economy.

There are four main applications of consumer behavior:

  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 (1) companies that
introduce new products must be well financed so that they can stay afloat until
their products become a commercial success and (2) it is important to please
initial customers, since they will in turn influence many subsequent customers’
brand choices.
 Social marketing involves getting ideas across to consumers rather than selling
something. Marty Fishbein, a marketing professor, went on sabbatical to work
for the Centers for Disease Control trying to reduce the incidence of
transmission of diseases through illegal drug use. The best solution, obviously,
would be if we could get illegal drug users to stop. This, however, was deemed
to be infeasible. It was also determined that the practice of sharing needles
was too ingrained in the drug culture to be stopped. As a result, using
knowledge of consumer attitudes, Dr. Fishbein created a campaign that
encouraged the cleaning of needles in bleach before sharing them, a goal that
was believed to be more realistic.
 As a final benefit, studying consumer behavior should make us better
consumers. Common sense suggests, for example, that if you buy a 64 liquid
ounce bottle of laundry detergent, you should pay less per ounce than if you
bought two 32 ounce bottles. In practice, however, you often pay a
size premium by buying the larger quantity. In other words, in this case,
knowing this fact will sensitize you to the need to check the unit cost labels to
determine if you are really getting a bargain.

There are several units in the market that can be analyzed. Our main thrust in this
course is the consumer. However, we will also need to analyze our own firm’s
strengths and weaknesses and those of competing firms. Suppose, for example, that
we make a product aimed at older consumers, a growing segment. A competing firm
that targets babies, a shrinking market, is likely to consider repositioning toward our
market. To assess a competing firm’s potential threat, we need to examine its assets
(e.g., technology, patents, market knowledge, awareness of its brands) against
pressures it faces from the market. Finally, we need to assess conditions (the
marketing environment). For example, although we may have developed a product
that offers great appeal for consumers, a recession may cut demand dramatically.

Consumer Research Methods

Market research is often needed to ensure that we produce what customers really
want and not what we think they want.
Primary vs. secondary research methods. There are two main approaches to
marketing. Secondary research involves using information that others have already
put together. For example, if you are thinking about starting a business making
clothes for tall people, you don’t need to question people about how tall they are to
find out how many tall people exist—that information has already been published by
the U.S. Government. Primaryresearch, in contrast, is research that you design and
conduct yourself. For example, you may need to find out whether consumers would
prefer that your soft drinks be sweater or tarter.

Research will often help us reduce risks associated with a new product, but itcannot
take the risk away entirely. It is also important to ascertain whether the research
has been complete. For example, Coca Cola did a great deal of research prior to
releasing the New Coke, and consumers seemed to prefer the taste. However,
consumers were not prepared to have this drink replace traditional Coke.

Secondary Methods. For more information about secondary market researchtools and
issues, please see my handout.

Primary Methods. Several tools are available to the market researcher—e.g., mail
questionnaires, phone surveys, observation, and focus groups. Please seemy
handout for advantages and disadvantages of each. The below flow chartsuggests
appropriate choices for different types of information needs.

https://hbr.org/2006/10/the-new-indian-consumer#
WHen India opened its economy to the global marketplace in the early 1990s, many
multinational corporations rushed in to pursue its middle-class consumers—an estimated 200
million people—only to confront low incomes, social and political conservatism, and resistance
to change. It turned out that the Indian consumer was a tough one to figure out and win over.

Things are changing. Although attitudes remain complex, they have shifted substantially toward
consumerism, particularly over the past decade. The country’s recent economic performance is a
factor, of course. For three years, GDP growth has been strong and sustained, at an average
annual rate of around 8%. The population’s demographic profile also plays a role: Indians
constitute a fifth of the world’s citizens below age 20. So a youthful, exuberant generation,
weaned on success, is joining the ranks of Indian consumers.

To examine the changes in attitude, the Gallup Organization conducted two surveys of more than
2,000 respondents gauging the habits, hopes, plans, and evolution of the Indian consumer in the
decade from 1996 to 2006. (For a similar look by Gallup at Chinese attitudes, see William
McEwen et al., “Inside the Mind of the Chinese Consumer,” HBR March 2006.) In collaboration
with our colleagues Raksha Arora and Prasun Basu, we mined the data and emerged with three
key insights.
Indians are getting more materialistic.

Indians are often stereotyped as deeply spiritual people who reject materialistic values. Our
research suggests that this stereotype no longer reflects reality. For instance, almost half of
India’s urban population had adopted a “work hard and get rich” ethos by 1996; another 9% had
done so by 2006.

Indians are more motivated than ever by personal ambition and a desire for material success, and
they put in the hours it takes to achieve those goals. A recent Gallup poll of more than 30
countries showed that, with an average workweek of 50 hours, India ranks among the hardest
working nations globally. (The average in the United States is 42 hours; major European nations
such as Germany, France, and the UK have workweeks of fewer than 40 hours.)

Consumerism is becoming a way of life in India.

An analysis of Indians’ savings goals underscores the increase in materialism. Although long-
term plans remain a high priority, life’s pleasures in the here and now have gained importance
over the past decade. Indians’ desire to set money aside for electronics and durables has grown
so dramatically that it has nearly caught up with their desire to save for their children’s
education. Travel and entertainment have also gained ground.

Change in Consumer Behavior

Interestingly, this trend does not apply only to the young—it holds true for people aged 15 to 55.
And it is not merely a large-city phenomenon; people in smaller towns espouse these values as
well.

Among durable goods, high-tech luxury items are increasingly in demand. The number of
Indians who own or use mobile phones, for example, has grown 1,600%—not surprising in a
country that is adding more than 3 million subscribers a month. The number of people who own
or use computers or laptops is up 100%, albeit from a very small base. Ownership of music
systems and televisions is also on the rise.

Across products, a majority of the potential customers are entering the market for the first time.
This is great news for marketers, since it signifies an expanding market, which will get even
bigger as current owners replace or upgrade what they have.

A word of caution: Although incomes have risen over the past ten years, middle- and lower-
income groups are increasingly dissatisfied with their earnings. It is essential to remember that
30% of Indians still live on less than one U.S. dollar a day. The highest-income groups are
delighted with what their income can do for them; the middle and lower groups are much less
satisfied. In the short term, income constraints and rising costs could slow India’s transformation
from a needs-based to a wants-based market. However, a heightened desire to lead the good life
might well intensify the middle- and lower-income groups’ efforts to make more money, thus
fueling consumerism in the long run.

Foreign is passé; Indian is paramount.

Indians long believed in the overwhelming supremacy of all things foreign. Antiquated products
and technologies, well past their “sell by” date in more developed nations, were once lapped up
by Indian consumers. Now, though, with Indians succeeding on the global economic stage,
“Made in India” is no longer an apology. While Indians’ confidence in foreign companies has
remained essentially static, their faith in domestic companies has grown. In 1996, only 34% of
those surveyed expressed confidence in Indian companies; in 2006, 56% did. Indians realize that
not all foreign goods are perfectly suited to their tastes and needs. They have become discerning
consumers who want products that are made in India and for Indians.

A look at the most respected brands in India is telling. Of the top 20 named in a survey, eight are
Indian, including names like Tata, Godrej, and Bajaj. Only five of the top 20 are new foreign
brands. These have succeeded because they have customized technology to meet Indian needs.
Hutch, Nokia, and Samsung have done this particularly well. Nokia modified one of its mobile
phones by adding a built-in flashlight that truck drivers, for instance, find useful on poorly lit
highways. “Indianizing” also has to do with keeping prices at levels that are manageable for the
average Indian consumer.
Seven of the top brands come from well-established MNCs that are either thoroughly
indigenized or involved in a joint venture that gives them the advantages of both worlds—
customization of products for India with levels of quality and technology associated with
international companies. Names such as Philips and Hero Honda fall into this group.

Trying to connect with consumers at an “Indian” level is a mammoth task. For one thing, India is
a diverse country, with 23 official languages and more than 1,000 dialects. It’s also one of the
world’s oldest civilizations, and rather than dispense with traditional values, it has wrapped
modernity around its traditional core. For instance, 83% of Indians approve of women’s working
outside the home, and 74% approve of women’s delaying marriage to further their education or
careers (both percentages are up substantially from ten years ago); yet only 25% approve of
marriage to someone who is not an Indian, and only 5% approve of couples’ living together
without getting married.

To the outside world, the harmonious coexistence of seeming contradictions is one of the most
confusing aspects of the Indian psyche—but it also signifies the country’s openness to change
and its ability to add new dimensions without losing old ones. The companies, domestic or
foreign, that understand this complexity will be the most successful at working with and selling
to Indians and stand to reap enormous benefits of scale.

A version of this article appeared in the October 2006 issue of Harvard Business Review.

Ashok Gopal (ashok_gopal@gallup.com) is a principal at the Gallup Organization’s Singapore

office, and
 Rajesh Srinivasan (rajesh_srinivasan@gallup.com) is a principal at Gallup’s Princeton, New
Jersey, office.

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Future of Consumer Behaviour

The much acclaimed Indian consumer market, the substratum on which India’s
economic growth thrives on, is elusive in many respects. Underlying element
of “diversity” in the social, cultural, economic, political and geographical milieus of
India makes the market conditions challenging to the marketers.

This diversity is manifested in the mainstream Indian culture and the sub cultures, in
addition to the distinct socio-economic and regional divide of this nation. Politically
speaking, the federal union of Indian states divided on linguistic basis, contributed to the
evolution of unique customs and traditions in each state or region in the country.

Despite of these diversities, India is expected to be transformed into one of the leading
economies in the world within a couple of decades. Historically, the economic
liberalization policy implemented by the government of India in 1991, marked the
beginning of an unprecedented economic growth which was further intensified by the
globalization of Indian business. Consequentially, the Indian market was transformed
from traditional “seller’s market” to dynamic ‘buyer’s market- with multiplicity of product
and service categories competing for customer’s share of wallet.

The growing middle class

This increase in Indian economic activities naturally led to creation of employment and
business opportunities, which in turn resulted in a substantial rise in the disposable
incomes of the people particularly, the middle class. The on-going evolution of middle
class in India characterized by the proverbial “upward mobility” is a classic phenomenon
which is worth watching out for!

Today an ever greater section of the Indian populous is making their entry into the
middle class by virtue of their earning potential. With increasing disposable incomes,
higher levels of aspiration and propensity for a better lifestyle - the middle class is
the key beneficiary of majority of the products and services marketed in India.
Considering the size of the country and its population, the market size for goods and
services in India is huge and it is still growing!

Indian Consumers

Indian consumers are also evolving with the market - habits, lifestyles, tastes and
preferences. The advent of organized retailing malls and multiplexes has transformed
the shopping habits and purchase behaviour of the Indian consumer. Affluent and the
upper middle class in India are generally brand conscious and their purchase decisions
tend to be influenced by vanity and pride.

Interestingly, over 50% of India’s population, according to current estimates, are under
the age of 25 and furthermore the majority of them are educated too. This generation
that grew up in the post liberalization era are more receptive and adaptive to lifestyle
changes.

Market Research in India

When it comes to undertaking market research studies in India, researchers are

confronted with a series of issues that prevent them from applying a universal approach
to the Indian market:

 The magnitude of population

 Rural- urban divide
 Linguistic segregation of states and regions,
 Diversity in popular culture, customs, traditions, lifestyles, social stratification

The diversity and enormity of India’s population and the absence of an updated and
reliable sampling frame make it difficult to employ probabilistic sampling methods to
conduct nation-wide studies. Additionally secondary data sources available in India are
sometimes found to be outdated or inadequate.

The Indian market research industry is still in the evolutionary stage when compared to
the modern MR methods and techniques used in developed countries. Market research
practice in India are predominantly quantitative - traditional labour intensive field
surveys being the most common form of research. However, qualitative research
methods are gradually gaining ground. Online and mobile market research are not yet
as popular, even though India has an internet subscriber base of over 100 million users
and a mobile user base of 929 million.

With regard to the usage of marketing research, many Indian organizations use
syndicated research data to assess the market standing of their brands against
competitors. When compared to the western countries, the number of customized
marketing research studies being carried out in India in a year, is abysmally low.

Many Indian managers are not fully convinced about the utility of marketing research
findings in aiding strategic decision making, they attach more value to their past
experience and gut feel while making tactical decisions. However, change seems
inevitable. Multi-national corporations operating in India have already triggered the
process of change in the Indian business ecosystem.

The Indian consumer market is vibrant, dynamic and very much open for business. The
challenges call for innovative and pragmatic responses from the marketers.

http://www.yourarticlelibrary.com/marketing/market-segmentation/consumer-behaviour-
meaningdefinition-and-nature-of-consumer-behaviour/32301/

Consumer Behaviour: Meaning/Definition and Nature of Consumer Behaviour!

Meaning and Definition:

Consumer behaviour is the study of how individual customers, groups or
organizations select, buy, use, and dispose ideas, goods, and services to
satisfy their needs and wants. It refers to the actions of the consumers in the
marketplace and the underlying motives for those actions.

Marketers expect that by understanding what causes the consumers to buy

particular goods and services, they will be able to determine—which products
are needed in the marketplace, which are obsolete, and how best to present
the goods to the consumers.

The study of consumer behaviour assumes that the consumers are actors in
the marketplace. The perspective of role theory assumes that consumers play
various roles in the marketplace. Starting from the information provider, from
the user to the payer and to the disposer, consumers play these roles in the
decision process.

The roles also vary in different consumption situations; for example, a mother
plays the role of an influencer in a child’s purchase process, whereas she
plays the role of a disposer for the products consumed by the family.

Some selected definitions of consumer behaviour are as follows:

1. According to Engel, Blackwell, and Mansard, ‘consumer behaviour is the
actions and decision processes of people who purchase goods and services
for personal consumption’.

2. According to Louden and Bitta, ‘consumer behaviour is the decision

process and physical activity, which individuals engage in when evaluating,
acquiring, using or disposing of goods and services’.

Nature of Consumer Behaviour:

1. Influenced by various factors:
The various factors that influence the consumer behaviour are as
follows:
a. Marketing factors such as product design, price, promotion, packaging,
positioning and distribution.

b. Personal factors such as age, gender, education and income level.

c. Psychological factors such as buying motives, perception of the product

and attitudes towards the product.

d. Situational factors such as physical surroundings at the time of purchase,

social surroundings and time factor.

e. Social factors such as social status, reference groups and family.

f. Cultural factors, such as religion, social class—caste and sub-castes.

2. Undergoes a constant change:

Consumer behaviour is not static. It undergoes a change over a period of time
depending on the nature of products. For example, kids prefer colourful and
fancy footwear, but as they grow up as teenagers and young adults, they
prefer trendy footwear, and as middle-aged and senior citizens they prefer
more sober footwear. The change in buying behaviour may take place due to
several other factors such as increase in income level, education level and
marketing factors.

3. Varies from consumer to consumer:

All consumers do not behave in the same manner. Different consumers
behave differently. The differences in consumer behaviour are due to
individual factors such as the nature of the consumers, lifestyle and culture.
For example, some consumers are technoholics. They go on a shopping and
spend beyond their means.

They borrow money from friends, relatives, banks, and at times even adopt
unethical means to spend on shopping of advance technologies. But there are
other consumers who, despite having surplus money, do not go even for the
regular purchases and avoid use and purchase of advance technologies.

4. Varies from region to region and country to county:

The consumer behaviour varies across states, regions and countries. For
example, the behaviour of the urban consumers is different from that of the
rural consumers. A good number of rural consumers are conservative in their
buying behaviours.

The rich rural consumers may think twice to spend on luxuries despite having
sufficient funds, whereas the urban consumers may even take bank loans to
buy luxury items such as cars and household appliances. The consumer
behaviour may also varies across the states, regions and countries. It may
differ depending on the upbringing, lifestyles and level of development.

5. Information on consumer behaviour is important to the marketers:

Marketers need to have a good knowledge of the consumer behaviour. They
need to study the various factors that influence the consumer behaviour of
their target customers.

The knowledge of consumer behaviour enables them to take appropriate

marketing decisions in respect of the following factors:
a. Product design/model
b. Pricing of the product

c. Promotion of the product

d. Packaging

e. Positioning

f. Place of distribution

6. Leads to purchase decision:

A positive consumer behaviour leads to a purchase decision. A consumer
may take the decision of buying a product on the basis of different buying
motives. The purchase decision leads to higher demand, and the sales of the
marketers increase. Therefore, marketers need to influence consumer
behaviour to increase their purchases.

7. Varies from product to product:

Consumer behaviour is different for different products. There are some
consumers who may buy more quantity of certain items and very low or no
quantity of other items. For example, teenagers may spend heavily on
products such as cell phones and branded wears for snob appeal, but may
not spend on general and academic reading. A middle- aged person may
spend less on clothing, but may invest money in savings, insurance schemes,
pension schemes, and so on.

8. Improves standard of living:

The buying behaviour of the consumers may lead to higher standard of living.
The more a person buys the goods and services, the higher is the standard of
living. But if a person spends less on goods and services, despite having a
good income, they deprives themselves of higher standard of living.

9. Reflects status:
The consumer behaviour is not only influenced by the status of a consumer,
but it also reflects it. The consumers who own luxury cars, watches and other
items are considered belonging to a higher status. The luxury items also give
a sense of pride to the owne