Unit I: Introduction to consumer Behavior (CB)- Importance, Scope, need for

studying CB, Consumer research process.

A customer is the most important visitor on our premises. He is not dependent on us. We are dependent
on him. He is not an interruption on our work. He is the purpose of it and not an outsider on our
premises. He is a part of it. We are not doing him a favor by serving him. He is doing us a favor by giving
us an opportunity to do so.

Definition: Consumer Behavior is the interplay of forces that take place during a consumption process,
between the customers’s self and his environment. It is the study of how individuals make decisions on
how to spend their available resources (time, money, and effort) on consumption related items. To
understand this behavior marketers focus on the following aspects:

 Who buys the product or service?

 How do they buy the product or services?
 Where do they buy them from?
 How often do they buy them?
 When do they buy them?
 Why do they buy them?
 How often do they use them?

Process Of Consumer Behavior:

CB is an ongoing process. It is a long decision making process. Stages in Consumer Behavior are:

 Pre- Purchase
 Purchase
 Post Purchase

Pre – Purchase Stage: It can be seen through consumer perspective as well as marketing perspective.

 In Consumer Perspective:
 How does a customer decide to buy the product?
 Why he /she needs a product?
 What are the best sources of information for buying the product?
 What different alternative services/products are available in the market?
 In Marketers Perspective
 How are consumers attitude formed toward products/services
 How consumer attitude can be changed?
 What methods consumers’ use to which product or services are better or best.
Purchase Stage: These are those stages which are seen at the time of making final purchase.

 In Consumer Perspective:
 Is acquiring a product stressful or a pleasant experience?
 How much is the level of stressfulness or pleasantness?
 What does the purchase say about the customer?

 In Marketer’s Perspective:
 How do situational factors such as time, store display affect consumer’s purchase
decision.

Post Purchase Stage: It reflects all those issues/problems good or bad experience faced by the
consumer after making the final purchase.

 In Consumer Perspective:
 Did the product provide the desired functions effectively
 How is the product being used?
 What were the environmental consequences of the act of disposal?
 In Marketer’s Perspective:
 What determines whether a consumer will be satisfied with a product?
 Whether he/she will buy it again
 Whether the consumer tells others about his experience and influence their purchase
decision?

BUYING ROLES:

Consumer plays different buying roles. The person who buys a product may not be consuming it.
Example if Naresh buys a saree for his mother, he is the buyer and his mother is the consumer. Likewise
it is true that a person who purchases the product may not be the decision maker, eg, if father buys a
milk powder, child is the user, mother decider and father buyer.

Sometimes more than one person takes a decision to buy a product eg. Husband and wife may together
take a decision to buy the car or the whole family may decide which place to visit for the winter
vacation. A consumer behavior generally occurs in context of multi person in relation with household
playing different tasks and roles as discussed below:

1. Initiator : One who determines that some need or want is not being fulfilled and authorizes a
purchase to rectify the situation
2. Influencer: Influence’s the decision. He has the greatest expertise in acquiring and evaluating
the information.
3. Decider: The person or person{s} who actually determine which product or service to be chosen
4. Buyer: He is the person who actually makes the purchase.
5. User (s): User is a person or persons most directly involved in the use or consumption of the
purchased product.
 INTERDISCIPLINARY OR MULTIDISCIPLINARY NATURE OF CONSUMER BEHAVIOR:

Consumer Behavior is multidimensional or interdisciplinary nature in which several social sciences have
contributed in their respective ways. The concept of consumer behavior is the best blend of contribution
made by the different types of social sciences like:

 Psychology: The aspects like motivation, perception, personality, attitudes, values and learning
are important subject matters of both psychology as well as of Consumer Behavior. All these
aspects help in understanding the consumer behavior and helps to draw conclusion regarding
the consumption pattern, their actions and responses.
 Sociology: It is the study of how people behave in group. Individuals forming groups have
different actions and responses as contrast with individual actions and responses. There is direct
effect of group, family and friends circle on consumer behavior.
 Social Psychology: It is the combination of sociology and psychology
 Cultural Anthropology: Anthropology is the study of one’s cultural beliefs, attitudes, values,
perception and customs
 Economic: It is the study of how consumers spend their funds, how they evaluate different
purchase options and how to get maximum satisfaction from their purchases.

Determinants of Consumer Behavior:

One’s behavior either as an individual or as a consumer is being affected by many factors. Some of which
may be economic, psychological, sociological which are further being affected by many other sub-
factors.

 Economic Determinants: Economists were the first ones to study consumer behavior and
consumption pattern. According to them the following are the factors affecting consumer
behavior:
 Personal Income: In marketing terms, we are more concerned with “disposable
income”. It is the amount of money that a consumer has at his disposal for spending or
saving or both. Any change in the disposable income will have direct effect on
consumer’s buying decisions. Increase in disposable income leads to more consumption
where as decrease in disposable income leads to less consumption.
 Family Income: In some cases buying behavior is influenced by family income rather
than the individual income
 Consumer Credit: Consumer credit is a facility extended by a marketer. Easy availability
of consumer credit makes the consumer to go in for those consumer durables which he
would postpone otherwise.
 Psychological Determinants: The following are the psychological determinants:
 Motivation: Motivation is an active driving force that exists to reduce the state of tension and
bring a person in high spirit. When a consumer is in high spirit his spending behavior changes. It
leads the individual to act in a particular way.
  Perception: Perception leads to thoughts and thoughts lead to action. The variables like color,
size, shape, contrast, intensity, frequency all depends upon one’s perception which leads to
affect consumer behavior. Perception certainly affects consumer behavior. Advertising
messages, slogans, colors, size etc has got impact on one’s buying behavior.
 Attitude: Attitudes are formed as a result of direct experience with the product, information
acquired from others or exposures of mass media.
 Learning: Listening is the ability to understand and respond effectively to oral communication.
Listening and learning go side by side.
 Personality: Personality is an organized behavior of an individual to react to given stimulus in a
set of manner
 Sociological Determinants: Sociologists and social-psychologist have attempted to explain the
behavior of group of individuals and the way it affects the consumer behavior while making
purchase decision.

Group of individual may be in form of:

 Family: Family being a primary group is vital because it links the individual with a wider society
and it is through this that the individual learns the roles. The family influence on individual’s
personality, attitude. The family influences the decision making process involved in purchase.
 Reference Group: Every individual in this world is not only the member of his family but also the
member of some group or groups outside the family circle. This group can be called as
“Reference Group”. There are professional groups and social groups that influence the
individual opinions, beliefs and aspirations. These groups provide an individual with a sense of
identity accomplishment and stability.
 Opinion Leaders: They are also known as influencers, which play key role in influencing the
buying behavior of their followers. The belief, preference, attitude, action and behavior of the
leader sets a trend and a pattern for others to follow in a given situation. Marketers very often
try to catch hold of the opinion leaders through advertisements and other means of
communication.
 Social Class and Caste: In fact to a large extent, buying behavior is also influenced by the social
class and the caste to which they belong. Social class is larger group than family and reference.
 Culture: Culture includes cognitive elements, beliefs, values, norms, signs. While designing the
marketing mix it is but essential to determine the broad cultural values that are relevant o the
product as the most effective means of conveying these values.

REASONS FOR THE DEVELOPMENT OR IMPORTANCE OF CONSUMER BEHAVIOR:

Consumer is the focus of marketing efforts. It is consumer behavior, positive or negative, that makes or
break the business, his behavior can run or ruin the business. Recently consumer behavior has
developed as a separate marketing discipline. There are a number of reasons for this development.
  Technological Developments: The technological development has lead to introduction of good
number of new products and many of them became unsuccessful due to lack of information
about consumer behavior.
 Consumer Protection Movements: High degree of sensitivity towards consumer protection and
setting up consumer forums at different level has lead to detailed study of consumer behavior.
 Environment Concerns : These days due to increased public concerns regarding environment
deterioration resource shortage and population explosion have made both marketers and
public policy makers aware of the potentially, negative aspects of these things . It has enabled
marketers to introduce or develop new products which are environment friendly and socially
accepted which can only be possible through in-depth study of consumer behavior.
 Understanding Consumer Behavior is essential for public policy formulation : For any public
policy formulation it is essential to understand the needs, aspirations and mental state of the
consumers. Consumers will not accept if they are not presented and planned with an
understanding of consumer behavior
 Present marketing is customer oriented marketing: In the present 21 st century customer
expectations, desires likings and preferences have entirely changed. He wants the best branded
goods and services available at global level meeting not only ISI standard but of ISO standard
which is not possible without having a proper understanding of consumer behavior.

CONSUMER RESEARCH PROCCESS:

Consumer Research has got a well defined process which is generally undertaken by the researcher
under the following steps:

 Defining the research objective: lt leads to setting objectives for the research which is to be
seen by marketing people of the organization. While doing this exercise company will set the
task for research which may include:
 Determining the specific population of the targeted consumer
 Suggesting segmentation
 Locating the consumption pattern

It would be desirable if the research could also concentrate on:

 Consumer Profiles and personality

 Consumer Perception
 Consumer Values
 Consumer Attitude
 Consumer Preference

All these information can be easily collected by the market researcher either through secondary or
primary data.
  Collection and evaluation of secondary data:

Secondary data is that data which has already been collected and is available what might have been
collected by any private or government agencies. The sources of secondary data may be :

 Published reports from Market Research organizations and Market analysis.

 Audit Reports
 Government published reports, statistics census findings
 Annual reports of the companies.

The study and analysis of secondary data will indicate the size of the market and the type of primary
research needed.

 Designing of Primary Research Program: Under this state whether the company will design
Qualitative Research or Quantitative Research depends upon the data collected through
secondary data. There would be different questionnaires and interview of QLR and QNR
 Analyzing and testing the data and arriving at conclusions: Consumer research does not end in
collecting data and presenting. Its most important is analyzing the data, testing the data and
formulating conclusions. Analysis of data is done by analysts
 Preparing the Research Report: Research report is formulation of conclusion, collection and
interpretation of data which is quite useless if it is analyzed and interpreted to resolve the
problem for which research was undertaken
 To design follow-up action: Although consumer research comes to an end as soon as the
research report is submitted to the marketer or the producer yet t will not be of any use. If
follow up action is not taken and the measures suggested in the report are implemented in the
true sense.
Various factors affecting the consumers purchase decision are as under:

STIMULI Information THE Decision RESPONSE

Processing CONSUMER Making

Consumer Consumer Culture Social Class Influence Situational

Thinking Personal Groups Variables
Process Characteristi Values Social Class Influences
Beliefs Structure Reference
cs
Perception Groups Purchase
Demographi Cross Society Occasion
Learning Cultural Family
c
Influenecs Market
Needs & Lifestyle Opinion Communic
Wants Sub- Cultural Leaders ation
Personality Influences
Traits Innovations Product
Positionnin
g

Stores
Patronage
&
Shopping
Behavior

Price

Sales
Personnel
Influence

INDIVIDUAL FACTORS ENVIRONMENTAL FACTORS

COMPARISON BETWEEN CONSUMER RESEARCH AND MARKETING RESEARCH

CUSTOMER RESEARCH MARKETING RESEARCH

STUDY PURPOSE Data collection and potentially Data collection only.
strengthening the relationship Respondents are not told the
between the customer and the research sponsors identity.
company
Respondents level of Increase respondents The respondent’s level of
involvement and expectations involvement by indicating that involvement is generally low.
the data collected will be used to
improve the company’s
offerings.
Sample size and researchers Since the survey is an A sufficient number of
attitude towards respondents opportunity to build respondents are contacted to
relationships with customers, as achieve statistical validity at a
many as possible are contacted. given confidence level. When
Respondents expect the approached, respondents do not
researcher to know their usage expect the researcher to know
habits concerning the company’s anything about them.
offerings
How the data are collected and The data collected can be linked The data are collected
analyzed to specific respondents and anonymously and aggregated
analyzed at the respondent level.
End Result Appropriate data are identified Product and service problems
to fix product and service are identified
problems and to correct
individual participants problems
Follow Up Surveys Follow up is encouraged. Linking data collected to specific
Customers who report problems respondents and using the data
expect some feedback. The in follow up contacts is
follow up may be linked to considered unethical.
information collected previously
from the same respondent.
DIFFERENT TECHNIQUES OF CONSUMER RESEARCH:

Consumer research techniques can be broadly studied into three categories.

1. Observation Method: In this method data regarding the consumer behavior is collected through
observations. By observing the person, the analyst records the observations and calculates the
results. This method simply involves “ watch and listening or both” with no attempt of probing
the reason
2. Experimental Method: Under this method small scale experiments are done for drawing
conclusions from long experiments. For example, two advertisements appearing on the same
page one one front page and the other on last page , the people will be attracted towards the
advertisement in front page. Like wise on the basis of this which is known as “split on test”,
conclusions are drawn that in a shop where things are kept in front position bring more sales as
compared to goods kept at back counters. Colored ads attract more response than black and
white.
3. Survey Method: Under this method information is gathered directly from individual in three
ways i) telephone ii) mail iii) personal interview. It is also known as “Questionnaire technique”
and is more widely used method as it I s accurate and reliable when used to gather factual data.

TYPES OF SURVEYS AND ITS TECHNIQUES:

Market Surveys can be of three types:

i) The factual survey: Under this the respondents are asked to report actual fact eg. “ what
brand of cigarettes do you smoke?” In this it is seen that sometime answer may be wrong as
respondents may answer wrongly to please the interviewer.
ii) The Opinion Survey: It is designated to gather expressions of personal opinion to record
evaluation of different things. Here the opinion and experiences of the respondents are
recorded.
iii) The Interpretative Survey: Here the respondents not only reports to the questions but also
act as interpreter. Its limitation is that personal selecting, motives and one’s attitude cannot
be interpreted. Some one’s interpretation may be vague.It depends upon the honesty,
interest and level of maturity of the respondent and even the smartness of the Interviewers.
The following are the important techniques under the Interpretative Survey:
 Personal Interview
 Mail Questionnair Survey
 Telephone Survey
Collection of Consumer Research Data:

The most important part of consumer research is the availability and collection of right data in time.
Broadly the sources can be of two types:

 External Sources: When it is found that internal sources are insufficient the organization has to
depend upon the external sources which can of the following two types
 Primary data: Information obtained through questionnaire and interview
 Secondary data: Data obtained from published material and publications.

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