TOPIC 4: Consumer Behaviour

What is Consumer Behaviour?

Consumers make many buying decisions every day, and the buying decisions is the focal
point of the marketer’s effort.

Consumer behavior is defined as the actions a person takes in purchasing and using products
and services, including the mental and social processes that come before and after these
actions.

An understanding of consumer behaviour helps to develop an effective marketing strategy. In

this topic, we will explore the factors and trends shaping consumer behaviour and the ways
marketers can use this information.

Overall Model of Consumer Behaviour

This model captures the general structure and process of consumer behavior.

Consumer behaviour is hardly ever so simple, structured, conscious, mechanical, or linear. A

quick analysis of your own behaviour and that of your friends will reveal that on the contrary,
consumer behaviour is frequently complex, disorganized, nonconscious, organic, and
circular. Remember this model is only a starting point for our analysis. It is meant to aid you
in thinking about consumer behaviour. As you look at the model and read the following
lecture, continually relate the descriptions to the rich world of consumer behaviour that is all
around you.
Sociocultural Influences – Culture & Subculture

Culture is a complex whole that includes knowledge, belief, art, law, morals, customs, and
any other capabilities and habits acquired by humans as members of society.

Culture includes almost everything that influences an individual’s thought processes and
behaviours. Growing up in a society, a child learns basic values, perceptions, wants, and
behaviours from the family and other important institutions. Every group or society has a
culture, and cultural influences on buying behaviour vary greatly from country to country.

For example, Japanese customers place great emphasis on the way a product is packaged.
Packaging is regarded as an integral component of the product and an essential representation
of its quality in Japanese culture. In contrast, Chinese consumers typically consider
packaging as serving a protective role only. They view additional expenses and efforts in
packaging as unnecessary and wasteful.

Subculture is a group of people with shared value systems based on common life experiences
and situations.

Subculture members are also part of the larger culture in which they exist, and they generally
share most behaviours and beliefs with the core culture.

Examples of subcultures include nationalities, religions, racial groups, and geographic

regions. We are all members of several subcultures. Each subculture may influence different
aspects of our lifestyle. Our attitudes toward new products or imported products may be
strongly influenced by our regional subculture, our taste in music by our generation
subculture, our food preferences by our ethnic subculture, and our alcohol consumption by
our religious subculture.

Many subcultures make up important market segments, and marketers often design products
and marketing programmes tailored to their needs.

Sociocultural Influences – Demographics & Social Status

Demographics describe a population in terms of its size, distribution, age, income, education,
and occupation.

Demographics influence consumption behaviours both directly and by

affecting other attributes of individuals, such as their personal values and decision styles.
Consider the demographics of the café (aka high-end coffeeshop) crowd:

A phrase commonly heard around students and young adults is, “Do you want to get some
coffee?” Today’s most devoted café patrons are 18- to 34-year-olds and those with mid to
high annual incomes. Most drink coffee away from home and head straight for café like
Starbucks. The younger folks are attracted to the coffee-bar atmosphere, music selections and
overall coffee experience.

Marketers frequently segment based on a combination of two or more demographic

descriptors, describe their target markets on the basis of demographics and use that
information to select appropriate media and develop effective promotional themes.
Social class is the relatively permanent, homogeneous divisions in a
society into which people sharing similar values, interests,
and behaviour can be grouped.

Social class can be formed by members of similarities in demographic factors such as

income, occupation, education level etc.

Like it or not, all of us are largely defined, at least in the eyes of others, according to a
complex set of criteria—how much we earn, what we do for a living, who our parents are,
where and how long we attended school, how we speak, what we wear, where we live, and
how we react to the issues of the day.

There are three major social class categories: upper class, middle class and lower class.

To some degree persons within social classes exhibit common values, attitudes, beliefs,
lifestyles and buying behaviours.

While social class does not explain all consumption behaviours, it is certainly relevant for
some product categories.

For example: Purchasing a pair of Jeans

Upper Class may buy a pair of Designer Jeans >S$1,500

Middle Class, Uniqlo
Lower Class random brand found online

Sociocultural Influences – Reference Groups

It’s a group whose presumed perspectives or values are being used by an individual as the
basis for self-appraisal or as a source of personal standards.

It’s a group affects consumer purchases because it influences the information, attitudes and
aspirational level that helps set the consumer's standards. For example, one of the first
questions you may ask your friends before attending an important social function could be
"What are you going to wear?"

Consumers have many reference groups but three groups have clear marketing implications.

Membership group - A membership group is one to which a person actually belongs. For
example the alumni club of your secondary school.
Aspiration group - one that a person wishes to be a member of or identify with. For example,
your favourite sports team or athlete.
Dissociative group - one that a person wishes to maintain a distance from due to differences
in values or behaviour. For example, a die-hard fan of Manchester United will not want to be
associated with anything to do with Liverpool.
Reference groups have been found to influence a wide range of consumption behaviors such
as learning new products, services, brands and the latest promotions. There are two ways that
reference groups can exert influence over others:
Opinion Leaders

Individuals who exert direct or indirect social influence over others.

Examples of opinion leaders in the local food scene:

LadyIronChef (Singapore Blog) - Wiki.sg SethLui.com Career Information 2023 | Glints
Increasingly brands are using such key opinion leaders to exert influence over consumers.

Word-of-Mouth

People influencing each other during conversations.

This is a powerful and authentic information source for consumers because it involves family
and friends who are normally viewed as trustworthy.

Sociocultural Influences – Family

Family can exert a strong influence over consumer behaviour and this influence can result
from three sources:

1. Consumer Socialisation
Its the process by which people acquire the skills, knowledge and attitudes necessary to
function as consumers. Children learn how to purchase by interacting with adults in purchase
situations and engaging in their own purchase and usage experiences.

Eg, if a child comes from a family that is very frugal, he is likely to grow up to become a
frugal consumer as well.

2. Family Life Cycle

It describes the distinct phases that a family progresses through from formation to retirement,
each phase bringing with it identifiable approaches and behaviours.

Eg, if you are a swinging single and planning to purchase a Tesla, you will probably buy a
model S or 3. But if you are married with children you may consider a model X or Y so that
you can accommodate more people in the car!

3. Family Decision Making

Family members assume different roles for different products and services and this
knowledge is important to companies. Five roles of individual family members exist in the
purchase process:
 Information gatherer
 Influencer
 Decision-maker
 Purchaser
 User
Eg, younger children may be the 'influencer' on which new cartoon character–based cereal
they prefer and request the parents. Usually the mother will be the 'decision-maker' and more
likely focus on other factors like price and nutrition value. The 'purchase' could be the father
who pays for the cereal.
The family decision-making process often varies across market segments such as stages in
the family life cycle or subculture. Therefore, a marketer must analyse family decision
making within each of the firm’s defined target markets.

Psychological Influences – Motivation

Motivation is the energizing force that stimulates behaviour to satisfy a need. Once a need is
met, it is no longer a motivator, so a higher-level need becomes the motivator.

Maslow's hierarchy of needs is often used to explain the concept of motivation.

Maslow identified five levels of needs and they are arranged in a hierarchical order starting
from the most basic physiological needs at the bottom – these are the needs for food, water,
shelter, oxygen; all the way to self actualisation needs on top. His theory states that once a
need is met it is no longer a motivator and the next higher level need will become the
motivator.

Different products try to arouse different needs to stimulate problem recognition and to
motivate consumers into action.

Maslow’s theory is a good guide to general behaviour. Numerous examples exist of

individuals who sacrificed their lives for friends or ideas, or who gave up food and shelter to
seek self-actualization. However, we do tend to regard such behavior as exceptional, which
indicates the general validity of Maslow’s overall approach. It is important to remember that
any given consumption behaviour can satisfy more than one need. Likewise, the same
consumption behaviour can satisfy different needs at different times.

Take a look at this career advertisement by Singapore Police Force (SPF). A number of
motives could cause one to join the SPF, money respect, learn self-defense etc. The ad also
attempts to appeal to self-actualization with the caption "they are our protectors".

Psychological Influences – Personality

Personality is the unique psychological characteristics that lead to consistent behaviours or

responses to the environment and often revealed in a person's self-concept.
Personality is usually described in terms of traits such as self confidence, dominance,
sociability, autonomy, defensiveness, adaptability and aggressiveness.

Personality characteristics are often revealed in a person's self-concept which is the way
people see themselves and the way they believe others see them. People normally have an
actual and ideal self-concept.

Actual self-concept is how they see themselves, whereas ideal self-concept is how the want
others to see them. These self-concepts are reflected in the products and brands that we buy.

Sometimes consumers choose products that fit their personality. For example, a timid person
might forgo a flashy car because “it’s just not me.” Other times, consumers use products to
boost an area of their personality where they feel weak. Thus, a timid person who wants to
feel more assertive might drive a powerful, flashy sports car. Clearly, products and brands
help consumers express their personality.

Brand personality is a set of human characteristics that become associated with a brand. What
do you think of and feel when you hear or see these brand names? – APPLE, DISNEY

People assign personalities to brands whether marketers want them to or not. Therefore,
marketing managers increasingly try to manage the brand personalities of their products.

P/S: If you are keen to find out how marketers communicate Brand Personality, join our
Marketing specialisation to learn more about Brand Insights & Strategies!

Psychological Influences – Lifestyle

Lifestyle is a mode of living that is identified by how people spend their time and resources,
what they consider important in their environment and what they think of themselves and the
world around them.

Individuals’ desired lifestyles influence their needs and desires and thus their purchase and
use behaviour. Desired lifestyle determines many of a person’s consumption decisions, which
in turn reinforce or alter that person’s lifestyle.

Marketers can use lifestyle to segment and target specific markets. For example a fashion
brand such as Zara can segment their target market into different shopping lifestyle such as
mimalist, trendy, traditional etc.

Consumers are seldom explicitly aware of the role lifestyle plays in their purchase decisions.
For example, you would not think, “I’ll have a Starbucks coffee at a Starbucks outlet to
maintain my lifestyle.” However, consumers pursuing an active, social lifestyle might
purchase Starbucks in part because of its convenience, its “in” status, and the presence of
others at Starbucks outlets. Thus, lifestyle frequently provides the basic motivation and
guidelines for purchases, although it generally does so in an indirect, subtle manner.

Psychological Influences – Learning

Learning is changes in an individual’s behaviour arising from repeated experience and
reasoning.

Consumers must learn almost everything related to being a consumer—product existence,

performance, availability, values, preference, and so forth. Marketing managers, therefore,
are very interested in the nature of consumer learning and memory.

Consumers learn in various ways, which can be broadly classified into high- versus low-
involvement learning.

 High-involvement learning occurs when an individual is motivated to acquire the

information. For example, prior to purchasing your laptop, you are probably highly
motivated to learn relevant materials related to the different computer brands.
 Low-involvement learning occurs when an individual is paying only limited or
indirect attention to an advertisement or other message. Low-involvement learning
tends to be limited as a result of a lack of elaborative activities. For example, while
watching your favourite YouTube, you are interrupted by a commercial for a product
you don't need. You will have little motivation to learn the material presented in the
commercial.
Consumers learn which information sources to go to for information about products and
services, which evaluative criteria to use when accessing alternatives, and more generally
how to make a purchase decisions.

We learn from every purchase encounter and adjust our behaviour accordingly. For example,
your positive or negative experience with your current laptop brand will have some impact on
your future purchase. In addition we can also learn through thinking, reasoning and mental
problem solving without direct experience.

Situational Influences

Situational influence are all those factors particular to a time and place that do not follow
from a knowledge of the stable attributes of the consumer and the stimulus and that have an
effect on current behaviour.

Consumers often react and behave very differently depending on the situation. There are five
situational influences that can impact consumer behaviour.

1. Purchase Task
The reason for engaging in the purchasing decision, the reason for the buying activity.

 For self-use or gift?

 Type of relationship? E.g. Mom vs Mother-in-Law

2. Social Surroundings
Other individuals present with you when making a purchase decision.

 Boyfriend? Girlfriends? They might influence your purchase decision.

3. Physical Surroundings
Store decorations, music, aromas, lightings, crowding etc.
 Electro or dance music may get you into the mood of buying gym wear!

4. Temporal Effects
Time of day or time available.

 In general, the less time there is available, the less available information will be used.
Deciding on dinner 30 minutes before the movie starts vs a planned date

5. Antecedent States
The consumer’s mood or cash on hand.

Moods or conditions e.g., cheerful, peaceful, sad, tired, having extra money from bonus,
pay-out or being broke

Consumer Decision Process

Up to now, we have focused on various psychological, sociological and situational factors

that contribute to different patterns of consumer behaviour. Of particular importance to
marketers is how these sources of influence affect the purchase decision process.

When making a purchase, the buyer goes through a Consumer Decision Process
consisting of five stages:

Step 1: Problem Recognition

Stage 1 of the consumer decision process is problem recognition. And this is when a
person perceive a difference between his ideal state and his actual state and this difference
is big enough for him to trigger a decision.

For example, you really wanted the latest iPhone and you realised that your old phone is
faulty and this caused you to make a decision to purchase a new phone.

Step 2: Information Search

Stage 2 of the consumer decision process is information search. After recognising your
problem, the consumer begins to search for information about products or services out
there that can satisfy the newly discovered need. The consumer can go through:

 Internal search - scan own memory for previous experiences with the product or with
the brand, often sufficient for frequently purchased products.
 External search
 Step 3: Alternative Evaluation
Alternative evaluation is the stage of the buyer decision process in which the consumer
uses information to evaluate alternative brands in the choice set.

For example, when buying a phone, your evaluative criteria might be based on four
attributes - camera, phone memory, screen size and price. You then narrow your phone
choices to three brands, Apple, Samsung and OPPO. These 3 brands will form your
consideration set.

Once consumers arrive at the consideration set, marketers need to know how consumers
process information to choose among alternative brands.

How consumers go about evaluating purchase alternatives depends on the individual

consumer and the specific buying situation. The evaluation may involve careful
calculations and logical thinking or little or no evaluating, buying on impulse, and relying
on intuition.

Step 4: Purchase Decision

After examining the alternatives in the consideration set, the consumer is now ready to
make his purchase decision. Purchase decision is the buyer’s decision about which brand
to purchase. The purchase intention may not be the purchase decision due to:

 Attitudes of others - for example if someone important to you think that you
should buy the cheapest phone, then the chance of you buying an expensive phone
is reduced.
 Unexpected situational factors - for example unexpected events such as
retrenchment, economic crisis or flash sales from another brand.

Step 5: Postpurchase Behaviour

The marketer’s job does not end when the product is bought. After purchasing the
product, the consumer will either be satisfied or dissatisfied and will engage in
postpurchase behaviour of interest to the marketer.

Postpurchase behaviour is the stage of the consumer decision process in which consumers
take further action after purchase, based on their satisfaction or dissatisfaction.

What determines whether the buyer is satisfied or dissatisfied with a purchase? The
answer lies in the relationship between the consumer’s expectations and the product’s
perceived performance.

If the product falls short of expectations, the customer will have doubt regarding their
purchase decision and they may be asking if they make the right decision. This feeling of
postpurchase psychological tension or anxiety is called cognitive dissonance.

The marketer’s job is to understand the buyer’s behaviour at each stage and the influences
that are operating.
Consumer Involvement and Problem-Solving
Consumer involvement is the significance (financial, social or personal) of the purchase to
the consumer.

Consumers sometimes minimise or skip steps in the purchase decision process if it is a low
consumer involvement decision. For example, when you want a bubble tea, you probably just
buy your preferred brand without much though. However, when changing a new phone, you
probably go through the entire consumer decision process before deciding your purchase.

Three Variations in Consumer Purchase Decision Process

1. Extended Problem Solving

 Items are expensive
 Serious personal consequences
 Reflect one’s social image
o For example, buying a car, house...

2. Limited Problem Solving

 Involves recognising a problem for which there are several possible solutions
 Require a little more thinking or a little more consideration
o For example, buying a handphone, laptop...

3. Routine Problem Solving

 Habitual purchase
o For example, buying grocery items such as bread, oil, rice, eggs...