CONSUMER BEHAVIOR

There are two types of buyers −

 Industrial (organizational) buyer

 Individual consumer

Customer behaviour study is based on consumer buying behaviour, with the customer
playing the three distinct roles of user, payer and buyer.

The term customer refers to the purchaser of a product or service whereas the term consumer
refers to the end user of a product or service.

Major corporations, from Ford to Apple, have spent billions (if not trillions) of dollars studying
consumer behavior. They want to know how consumers make buying decisions and what
influences those decisions.

Consumers are generally users of a variety of products.

Consumer behavior means how individuals make decisions to spend their available resources
like time, money, effort on consumption of different products and services. It includes 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.
The consumer behaviour refers to those actions and related activities of persons involved
specifically in buying and using economic goods and services. An understanding of the
consumer behaviour will help us in understanding different market segments and evolve
strategies to effect penetration with these markets.
Who makes the buying decision?
Who influences the buying decision?
What motivates the buyers and people to take action?

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.

Consumer behavior can be broadly classified as the decisions and actions that influence the
purchasing behavior of a consumer.

Consumer behavior is the series of behaviors or patterns that consumers follow before making
a purchase

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Most of the purchasing is based on emotions and reasoning. The study of consumer behavior
not only helps to understand the past but even predict the future.

Understanding consumer behavior is important for all companies, especially before the launch
of a product or service. If the company fails to read the customer’s mind, it may end up in
losses. Consumer behavior is usually very complex because each one has a different attitude
towards purchase, consumption and disposal of a product.

Buyer or consumer behavior is the attitude displayed by a person while buying, consuming and
disposing a product or service. Customer behavior could be affected by several factors. It also
involves searching for a product, evaluation on various parameters, and finally consumption.
The post-purchase behavior of the consumer is studied later, which reveals customer
satisfaction or dissatisfaction.

The factors which influence consumer behaviour

 Psychological (motivation, perception, learning, beliefs and attitudes)

 Personal (age and life-cycle stage, occupation, economic circumstances, lifestyle,
personality and self concept)
 Social (reference groups, family, roles and status)
 Cultural (culture, subculture, social class system).

Generally speaking, there are four types of consumer buying behavior:

 Routine response: ...

 Limited decision making: ...
 Extensive decision making: ...
 Impulsive buying:

Factors Influencing Consumer Behavior

Purchasing Power purchasing capacity, purchasing ability,

Group Influenceinfluential group consisting of family members, classmates, immediate

relatives and the secondary influential group consisting of neighbors and acquaintances

Personal Preferences likes, dislikes, priorities, morals and values

Economic Conditions economic situation prevailing in the market.vehicles, houses and other
household appliances.

Marketing Campaigns

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4 types of consumer buying behavior

Complex and expensive purchases are likely to involve more buyer deliberation and more
participants.

High involvement Low involvement

Significant differences Complex buying behavior Variety seeking behavior
between brands (motor cycle ) (washing detergent)
Few differences between Dissonance buying behavior Habitual buying behavior
brands (floor tiles) (toothpaste)
Complex buying behavior

Customers are highly involved in a purchase and observe significant differences between in
brands then consumer undertake complex buying behavior when he buys a risky and expensive
purchase infrequently such as, cars, computers.Customer seek more info about products in
terms of quality, durability, reliability

For example, a person buying a personal computer may not know what attribute to look for.
Many of the product features like “.memory” “disc storage”, “screen resolution” carry no
meaning to him or her.

Variety seeking behavior

An example occurs in purchasing cookies. The consumer has some beliefs, chooses a brand of
cookies without much evaluation, and evaluates it during consumption. But next time, the
consumer may reach for another brand out of boredom or a wish for a different taste. Brand
switching occurs for the sake of variety rather than dissatisfaction.

Dissonance buying behavior:- Customers are highly involved in a purchase and observe
insignificant differences between in brands then consumer undertake Dissonance buying
behavior for ex. Buying furniture .buyer buy anywhere without considering brands here
consumer is highly involved in the purchase but there are few differences between brands. Like
consumer while buying a floor tiles buy them quickly as there are few differences between
brands.

Habitual Buying Behaviour:

Many products are bought under conditions of low consumer involvement and the absence of
significant brand differences. Consider the purchase of salt. Consumers have little involvement
in this product category. They go to the store and reach for the brand. If they keep reaching for
the same brand, it is out of habit, not strong brand loyalty.

BUYER ROLES

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  INITIATOR First individual who suggests product/service should be
evaluated/purchased.
 INFLUENCER Provides view and advice which are valued by others and can
subsequently influence the final decision.
 DECIDER -The individual who will take the decision in the buying process at what,
how , when and where to buy (store choice), etc.
 BUYER The individual who actually makes the purchase
 USER The individual who consumes or users the service/product.

THE BUYER’S CHARACTERISTICS

 Beliefs/attitudes- How you express your values and beliefs through words and actions
 Values  -Principles in our lives that guide our decision making e.g. honesty, loyalty,
equality etc.
 Learning  is the process of acquiring new, or modifying existing, knowledge, behaviors, skills,
values, or preferences.
 Motives/needs  a state of physiological or psychological stimulation which influences how
we behave.
 Perception --interpreting information in a way to produce a meaningful experience of the
world is called perception. What an individual thinks about a particular product or service is
his/her perception towards the same.
 Lifestyle -way a person lives in a society and is expressed by the things in his/her
surroundings. It is determined by customer interests, opinions, activities

THE BUYER’S DECISION-MAKING PROCESS

 Problem solving
 Information search
 Alternate evaluation
 Purchase 
 Post purchase
 Evaluation

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 A Conceptual Model for Consumer Buying Decision Process & Consumer Behaviour

Models of Consumer Buying Behaviour

I. Traditional models
 Economic model: The economic model of consumer behavior focuses on the idea that
a consumer's buying pattern is based on the idea of getting the most benefits while
minimizing costs. Thus, one can predict consumer behavior based on economic
indicators such as the consumer's purchasing power and the price of competitive
products. For instance, a consumer will buy a similar product that is being offered at a
lower price to maximize the benefits; an increase in a consumer's purchasing power
will allow him to increase the quantity of the products he is purchasing.

 Learning model: This model is based on the idea that consumer behavior is governed
by the need to satisfy basic and learned needs. Basic needs include food, clothing and
shelter, while learned needs include fear and guilt. Thus, a consumer will have a
tendency to buy things that will satisfy their needs and provide satisfaction. A hungry
customer may pass up on buying a nice piece of jewelry to buy some food, but will
later go back to purchase the jewelry once her hunger is satisfied.

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  Psychoanalytic model: The psychoanalytical model takes into consideration the fact
that consumer behavior is influenced by both the conscious and the subconscious
mind. The three levels of consciousness discussed by Sigmund Freud (id, ego and
superego) all work to influence one's buying decisions and behaviors. A hidden
symbol in a company's name or logo may have an effect on a person's subconscious
mind and may influence him to buy that product instead of a similar product from
another company.

 Sociological model: The sociological model primarily considers the idea that a
consumer's buying pattern is based on his role and influence in the society. A
consumer's behavior may also be influenced by the people she associates with and the
culture that her society exhibits. For instance, a manager and an employee may have
different buying behaviors given their respective roles in the company they work for,
but if they live in the same community or attend the same church, they may buy
products from the same company or brand.
Contemporary models
 Howard-Sheth Model
 Engel-Kollat-Blackwell Model
 Nicosia Model
 Stimulus-Response Model
 Howard-Sheth model (1969)
It is one of the most comprehensive models of consumer buying behavior and it uses the
concept of stimulus-response in order to explain buyer’s brand c

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Input variables: The input variables are the stimuli come from the environment. The input
variables consist of informational cues about the attributes of a product or brand (i.e. quality,
price, distinctiveness, service and availability).Significant Stimulies are the actual elements
constituting a brand that the buyer confronts.EG.price, quality, service, availability.They
influence the consumer directly through the brand's attributes. Symbolic Stimulies are created
by manufacturer representation of their products in symbolic form.ge.advertisemnet, publicity.
They derive from the same factors as they are portrayed in the mass media and by salespeople,
influencing the consumer in an indirect way. Social stimulies are created by the social
environment.eg.reference group, social classes. These are influences that are internalized by
the consumer before they can affect the decision process.
Output variables: The five output variables in the right hand portion of the model are buyer's
observable responses to stimulus inputs. They are arranged in order from Attention to Actual
Purchase. The purchase is the actual, overt act of buying and is the sequential result of the
attention (buyers total response to information intake), the brand comprehension, brand
attitude (referring to the evaluation of satisfying potential of the brand) and the buyer intention
(a verbal statement made in the light of the above externalizing factors that the preferred brand
will be bought the next time the buying is necessitated.
Hypothetical constructs: Hypothetical constructs have been classified in two groups -
perceptual constructs and learning constructs. The first deals with the way the individual
perceives and responds to the information from the input variables, accounting for stimulus
ambiguity and perceptual bias. The second deals with the stages from the buyer motives to his
satisfaction in a buying situation. The purchase intention is an outcome of the interplay of
buyer
motives, choice criteria, brand comprehension, resultant brand attitude and the confidence
associated with the purchase decision. The motives are general or specific goals impelling to
action, impinging upon the buyer intention are also the attitudes about the existing brand
alternatives in the buyer's evoked set, which result in an arrangement of an order of preference
regarding brands. Brand comprehension and the degree of confidence that the buyer has about
it, choice criteria and buying intentions, converge upon the intention to buy
Exogenous variables: The model also includes some exogenous variables which are not
defined but are taken as constant. They can significantly affect buyer decisions. Some major
exogenous variables included in the model are importance of purchase, personalty variables,
culture, social class, financial status.

Engel-Kollat-Blackwell model (1978)

The Engel-Kollat-Blackwell model is essentially a conscious problem solving and learning
model of consumer behaviour.This model has a good description of active information seeking
and evaluation processes of consumer. This model shows components of decision making and
the relationship and interaction among them. .In their model of consumer behaviour, they view
consumer behavior as a decision process and identify five activities occurring in this decision
process over a period of time. They are
 Problem recognition/Need recognition
 Information search

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  Evaluation of alternatives
 Choice

Problem recognition: the consumer will recognize a difference between his or her actual
state and what the ideal state should be. This may occur on account of external stimuli.
Information search: Initially the information available with the consumer may be consistent
to other beliefs and attitudes held by him or her. While being involved in an information
seeking or search stage, the consumer will try to gather more information from various
sources. The individual gets exposure of the stimuli which may catch his or her attention, be
received and stored or retained in memory. This method of information is selective in nature
and the consumer will accept the information, which is conclusive to what is perceived by
them.
Alternative evaluation: Now the individual will evaluate the alternate brands. The methods
used for
evaluating the various products will depend on the consumer’s underlying personality. The
consumer also has certain predetermined beliefs about the various brands in terms of
the characteristics associated with the different brands.
Choice: the consumer’s choice will depend on his or on normative compliance and
anticipated circumstances. Normative compliance relates to the extent to
which the consumer is influenced by other people like friends, family members etc.
Outcome: The outcome may either be positive or negative

Nicosia model
This model was developed in 1966, by Francesco Nicosia, an expert in consumer motivation
and behavior. The Nicosia model tries to explain buyer behavior by establishing a link
between the organization and its (prospective) consumer. The model suggests that messages
from the firm first influences the predisposition of the consumer towards the product or

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service. Based on the situation, the consumer will have a certain attitude towards the product.
This may result in a search for the product or an evaluation of the product attributes by the
consumer. If the above step satisfies the consumer, it may result in a positive response, with a
decision to buy the product otherwise the reverse may occur.
The Nicosia model groups the above activity explanation into four basic areas-fields one has
two sub areas–the consumers attribute and firms attributes. Depending on the way, the
message is received by the consumer, a certain attribute may develop. This newly developed
attribute becomes the input for area two. The second area or area two is related to the search
and evaluation, undertaken by the consumer, of the advertised product and also to verify if
other alternatives are available. In case the above step results in a motivation to buy the
product /service, it becomes the input for third area. The third area explains how the
consumer actually buys the product. And area four is related to the uses of the purchased
items. This fourth area can also be used as an output to receive feedback on sales results to
the firm.

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Factors Influencing Consumer Behavior-Lawson’s model (Fig.2.3)

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 Models of consumer behavior Traditional models:

 Economic Mode
 Learning Mode
 Psychoanalytic Mode
 Sociological Mode

 12. Economic model Law of principal of maximum utility Law of equimarginal utility
enables a consumer to secure the maximum utility from limited purchasing power Price
effect Substitution effect Income effect

Learning model The response of satisfaction reinforces the relationship Learns to associate
connection between stimulus and response which becomes habit Understanding the response
of consumer at the market place

Psychoanalytical model Personality of consumers and their responses Consumer behavior is

directed by a complete set of deep seated motives

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Sociological model As his role, status, interaction, influence, group relation, lifestyle,
income, occup- ation, place of residence, social class etc.

Contemporary models

 Harward seth mode

 Nicosia
 Webster and wind
 Engel, balckwell and minard mode

 The Engel-Kollat-Blackwell (EKB)

model. First developed in 1968.

A key feature of the EKB model is the differences between high and low involvement as part
of the buying process.

High involvement is present in the high risk purchase

Low involvement is present in the low risk purchase.

 Consumers are seen as active agents following rules of behaviour, fairly easy to follow and
implement because they require only a limited amount of information and capability of
elaboration For instance, a consumer, being aware of a certain need and believing a certain
good category satisfies it, might fix a maximum price he/she can afford and search for the best
good available under such a constraint.

Howard & Sheth model

The model claims that a person’s purchase decision is often influenced by more than one
individuals.

A family buying decision involves multiple influences from its members .

This theory shows the concept of role structure, that is individuals members of the family takes
on roles such as collecting information, deciding on the information budget, etc.

The theory also states that retailers /businesses are not only dealing with a homogeneous unit
but a collection of individuals with different goals, needs, motives and interests.

Acoording to the model, the ' inputs ' (stimuli) that the consumer receives from his or her
environment are:

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  significative - the 'real' (physical) aspects of the product or service (which the co
make use of)
 symbolic - the ideas or images attached by the supplier (for example by advertising)
 social - the ideas or images attached to the product or service by 'society' (for example,
by reference groups)

 The 'outputs' are what happens, the consumer's actions, as observable results of the input
stimuli. Between the inputs and outputs are the 'constructs', the processes which the consumer
goes through to decide upon his or her actions. Howard and Sheth group these into two areas:

perceptual - those concerned with obtaining and handling information about the product or
service learning - the processes of learning that lead to the decision itself

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