Consumer Behaviour

Introduction-
Customer- refers to purchaser of a product and services.

VS.

Consumer –the end users of a product and services.

Consumer behavior is the study of how individuals make decisions to spend their
available resources –money, time and effort on consumption related items.

Definition-

According to Engel, Blackwell, and Mansard,

“Consumer behaviour is the actions and the decision processes of people who
purchase goods and services for personal consumption”.

Consumer buying behaviour refers to the study of customers and how they behave
while deciding to buy a product that satisfies their needs. It is a study of the actions
of the consumers that drive them to buy and use certain products.

Why is studying of consumer behaviour is most important for marketers?

OR
Why is Consumer Behaviour Important in Marketing?

By understanding how buyers think, feel and decide, businesses can determine how
best to market their products and services. This helps marketers predict how their
customers will act, which aids in marketing existing products and services.

A careful study of consumer behaviour will facilitate the marketer in determining

the size, form, colour, package, brand etc.

The study of consumer buying behaviour is most important for marketers as they
can understand the expectation of the consumers. It helps to understand what
makes a consumer buy a product. It is important to assess the kind of products
liked by consumers so that they can release it to the market. Marketers can
understand the likes and dislikes of consumers and design base their marketing
efforts based on the findings.
Consumer buying behaviour studies various situations such as what do consumers
buy, why do they buy, when do they buy, how often do consumers buy, for what
reason do they buy, and much more.

Scope of consumer behavior

Consumer behavior is a crucial aspect of marketing that involves understanding the

needs, preferences, and decision-making processes of consumers.

The scope of consumer behavior is broad and encompasses various aspects of

marketing, such as product development, pricing, promotion, and distribution.

Product Development
 By understanding consumer behavior, businesses can develop products that
meet the needs and preferences of their target customers.

 Includes identifying the features and benefits that are most important to
customers and designing products that align with these preferences.

 Consumer behavior research can also help businesses identify gaps in the
market and opportunities for innovation.

Pricing
 Effective pricing strategies require an understanding of consumer behavior.

 By analyzing consumer behavior data, businesses can identify the price

points that are most likely to be accepted by their target audience.

 Includes considering factors like consumer demographics, purchasing habits,

and perceptions of value.

Promotion

 Advertising and promotion techniques are developed based on the behavior

of the target audience.
  By analyzing consumer behavior data, businesses can identify the most
effective communication channels and messaging strategies for their
products.

 Includes considering factors like consumer demographics, media

consumption habits, and purchasing behavior.

Distribution

 Identifying the best distribution channels for their products is another key
aspect of consumer behavior. By analyzing consumer behavior data,
businesses can identify the most effective distribution channels for their
target audience.

 Includes considering factors like consumer purchasing habits, geographic

location, and online behavior.

Overall, the scope of consumer behavior is broad and includes various aspects of
marketing. By understanding consumer behavior, businesses can develop effective
strategies that meet the needs and preferences of their target audience, which can
lead to increased sales and profitability.

Importance of consumer behavior

Consumer behavior is an important aspect of marketing that helps businesses
understand their target customers. By studying consumer behavior, businesses can
identify what motivates customers to buy their products or services, which can help
them, develop effective marketing strategies.

There are several reasons why consumer behavior is important for

businesses:

Understanding Customer Needs

  One of the primary reasons why consumer behavior is important is because
it helps businesses understand the needs and preferences of their target
customers.

 By analyzing consumer behavior data, businesses can identify the features

and benefits that are most important to customers, which can inform product
development and marketing strategies.

Developing Effective Marketing Strategies

 Effective marketing strategies require an understanding of consumer
behavior.

 By way of analyzing consumer behavior data, businesses can identify the

most effective communication channels and messaging strategies for their
target audience.

 This can help businesses develop advertising and promotion techniques that
resonate with their target audience, leading to increased sales and
profitability.

Identifying Opportunities for Growth

 Analyzing consumer behavior data can also help businesses identify

opportunities for growth.

 Through identifying gaps in the market and understanding consumer needs

and preferences, businesses can develop innovative products and services
that meet the needs of their target audience.

 It can help businesses stay ahead of their competitors and increase their
market share.

Enhancing Customer Satisfaction

 By understanding consumer behavior, businesses can also enhance customer

satisfaction.
  Through identifying the features and benefits that are most important to
customers, businesses can develop products and services that meet their
needs and preferences.

 It can lead to increased customer loyalty and positive word-of-mouth, which

can help businesses attract new customers and increase their customer base.

Concept of Consumer behavior

7 o‘s frameworks –
Basically-Noted that consumer behavior who, what, why, how, when, where, and
how often facets of consumer behavior and also considers uses which consumers
makes use of the goods they buy and evaluation of these goods after use.

1. Occupants (Who is the consumer)

2. Object of Purchase (What does the consumer buy)
3. Objective- (Why is the consumer buying)
4. Occasion- ( When do they buy)
5. Outlets (Where do they buy)
6. Operations ( How do they buy)
7. Organization (Who is involved)

Who is the consumer (Occupants?)

1. Demographic profile is the study of -age, income, sex, occupation and

qualification.
2. For Example- Frooti drinkers revealed only 5-12 years age drinks. Teenagers
likes to soft drinks did not drink frooti because they found too kid dish.
3. Psychographic study the lifestyle of the consumer by activities, interests and
opinions of the consumer.
4. Geographic Profiles-is the region which consumers belongs.

What does the consumer buy (object of purchase)-

 1. What product proposition the consumer is buying. (Why the product
better than similar products) means what are the features, size, colors
and flavors.
2. Example-soft drink concentrated or dilute, or soft drink coco cola vs.
lime vs. orange and brand name coke vs. Pepsi.

Why is the consumer buying (objective?)

1. What benefits is he seeking, what motives he is trying to satisfy.

2. For example Fair and lovely caters very strong motives of women,
based on the desired to look fair, in a country obsessed with fair skin.
Consumer looking for sun protection to their cream.

When do they buy (occasion)

1. Buying rate and buying frequency of consumers of consumer

2. Consumer buys the product on Occasion or service for desired
benefits (seasonal offer).
3. For example items likes refrigerators, air conditioners are brought
during Diwali.

Where do they buy (outlets?)

1. Types and nature of outlets from where the customer makes a choice.
2. (Retail shop, grocery store, whole Sheller’s shop, and shopping
malls).

How do they buy (operation?)

1. What kind of background information do consumers collect before

buying and from whom do they seek information.
2. Example-before buying a car the consumer collects lots of
background information from friends and does lots of deliberation
before buying. Also when enters a dealer’s show room he asks the
dealer or salesman many questions.
 3. Background information collect from friend.

Who is involved (organization)-?

1. Organization of information sources is the key player in the decision

process. Describes the various roles played by people in the purchase
process.

What Is Consumer Behaviour?

According to Engel, Blackwell, and Mansard,

“Consumer behaviour is the actions and the decision processes of people who
purchase goods and services for personal consumption.

Consumer buying behaviour refers to the study of customers and how they behave
while deciding to buy a product that satisfies their needs. It is a study of the actions
of the consumers that drive them to buy and use certain products.

Why is studying of consumer behaviour is most important for marketers?

OR
Why is Consumer Behaviour Important in Marketing?

By understanding how buyers think, feel and decide, businesses can determine how
best to market their products and services. This helps marketers predict how their
customers will act, which aids in marketing existing products and services.

A careful study of consumer behaviour will facilitate the marketer in determining

the size, form, colour, package, brand etc.

The study of consumer buying behaviour is most important for marketers as they
can understand the expectation of the consumers. It helps to understand what
makes a consumer buy a product. It is important to assess the kind of products
liked by consumers so that they can release it to the market. Marketers can
understand the likes and dislikes of consumers and design base their marketing
efforts based on the findings.
Consumer buying behaviour studies various situations such as what do consumers
buy, why do they buy, when do they buy, how often do consumers buy, for what
reason do they buy, and much more.

Major Factors Influencing Consumer Behaviour

1. Psychological Factors
2. Social Factors
3. Cultural Factors
4. Personal Factors
5. Economic Factors

Consumer behaviour is influenced by many different factors. A marketer should

try to understand the factors that influence consumer behaviour.
Here are 5 major factors that influence consumer behaviour:

1. Psychological Factors
Human psychology is a major determinant of consumer behaviour. These factors
are difficult to measure but are powerful enough to influence a buying decision.
Some of the important psychological factors are:

i. Motivation
When a person is motivated enough, it influences the buying behavior of the
person. A person has many needs such as social needs, basic needs, security needs,
esteem needs, and self-actualization needs. Out of all these needs, the basic needs
and security needs take a position above all other needs. Hence basic needs and
security needs have the power to motivate a consumer to buy products and
services.

ii. Perception
Consumer perception is a major factor that influences consumer behaviour.
Customer perception is a process where a customer collects information about a
product and interprets the information to make a meaningful image of a particular
product.
Consumer perceives according to involvement of the situation.

Example-for a professional tennis player, the choice of a tennis racquet is made a

great care. He sees the weight, size, grip, tension of the strings, etc. The racquet is
his most important professional tools. Similarly, a professional photographer to
buy a camera with the right specification and attributes. For another person, a
tennis racquet may only means of entertainment or in the case of camera the
recording of family events by a camera.

When a customer sees advertisements, promotions, customer reviews social media

feedback, etc. relating to a product, they develop an impression (opinion) about the
product. Hence consumer perception becomes a great influence on the buying
decision of consumers.

Cognitive thinking (thought process)

iii. Learning
When a person buys a product, he/she gets to learn something more about the
product. Learning comes over a period of time through experience. A consumer’s
learning depends on skills and knowledge. While skill can be gained through
practice, knowledge can be acquired only through experience.
Learning can be either conditional or cognitive. In conditional learning the
consumer is exposed to a situation repeatedly, thereby making a consumer to
develop a response towards it.
Whereas in cognitive learning, the consumer will apply his knowledge and skills to
find satisfaction and a solution from the product that he buys.

iv. Attitudes and Beliefs

Consumers have certain attitudes and beliefs which influence the buying decisions
of a consumer. Based on this attitude, the consumer behaves in a particular way
towards a product. This attitude plays a significant role in defining the brand
image of a product. Hence, marketers try hard to understand the attitude of a
consumer to design their marketing campaigns.

2. Social Factors
Humans are social beings and they live around many people who influence their
buying behaviour. Humans try to imitate other humans and also wish to be socially
accepted in the society. Hence their buying behaviour is influenced by other people
around them. These factors are considered as social factors. Some of the social
factors are:
i. Family
Family plays a significant role in shaping the buying behaviour of a person.
A person develops preferences from his childhood by watching family buy
products and continues to buy the same products even when they grow up.
ii. Reference Groups
A reference group is a group of people with whom a person associates
himself. Generally, all the people in the reference group have common
buying behaviour and influence each other.
iii. Roles and status
A person is influenced by the role that he holds in the society. If a person is
in a high position, his buying behaviour will be influenced largely by his
status. A person who is a Chief Executive Officer in a company will buy
according to his status while a staff or an employee of the same company
will have different buying pattern.
3. Cultural factors
A group of people is associated with a set of values and ideologies that belong to
a particular community. When a person comes from a particular community,
his/her behaviour is highly influenced by the culture relating to that particular
community. Some of the cultural factors are:

i. Culture
Cultural Factors have a strong influence on consumer buying
behaviour. Cultural Factors include the basic values, needs, wants,
preferences, perceptions, and behaviours that are observed and learned by a
consumer from their near family members and other important people
around them.

ii. Subculture
Within a cultural group, there exist many subcultures. These subcultural
groups share the same set of beliefs and values. Subcultures can consist of
people from different religion, caste, geographies and nationalities. These
subcultures by itself form a customer segment.

iii. Social Class

Each and every society across the globe has the form of social class. The
social class is not just determined by the location income, but also other
factors such as the occupation, family background, education and residence.
Social class is important to predict the consumer behaviour.

4. Personal Factors
Factors that are personal to the consumers influence their buying behavior. These
personal factors differ from person to person, thereby producing different
perceptions and consumer behaviour.
Some of the personal factors are:
i. Age
Age is a major factor that influences buying behaviour. The buying choices
of youth differ from that of middle-aged people. Elderly people have a
 totally different buying behaviour. Teenagers will be more interested in
buying colourful clothes and beauty products. Middle-aged are focused on
house, property and vehicle for the family.
ii. Income
Income has the ability to influence the buying behaviour of a person. Higher
income gives higher purchasing power to consumers. When a consumer has
higher disposable income, it gives more opportunity for the consumer to
spend on luxurious products. Whereas low-income or middle-income group
consumers spend most of their income on basic needs such as groceries
and clothes.

iii. Occupation
Occupation of a consumer influences the buying behaviour. A person tends
to buy things that are appropriate to this/her profession.

For example, a doctor would buy clothes according to this profession

while a professor will have different buying pattern.

iv. Lifestyle
Lifestyle is an attitude, and a way in which an individual stay in the society.
The buying behaviour is highly influenced by the lifestyle of a consumer.
For example when a consumer leads a healthy lifestyle, then the products
he buys will relate to healthy alternatives to junk food.

5. Economic Factors
The consumer buying habits and decisions greatly depend on the economic
situation of a country or a market. When a nation is prosperous, the economy is
strong, which leads to the greater money supply in the market and higher
purchasing power for consumers. When consumers experience a positive economic
environment, they are more confident to spend on buying products.
Whereas, a weak economy reflects a struggling market that is impacted by
unemployment and lower purchasing power.
Economic factors bear a significant influence on the buying decision of a
consumer. Some of the important economic factors are:
i. Personal Income
When a person has a higher disposable income, the purchasing power
increases simultaneously. Disposable income refers to the money that is left
after spending towards the basic needs of a person.
When there is an increase in disposable income, it leads to higher
expenditure on various items. But when the disposable income reduces,
parallels the spending on multiple items also reduced.

ii. Family Income

Family income is the total income from all the members of a family. When
more people are earning in the family, there is more income available
for shopping basic needs and luxuries. Higher family income influences
the people in the family to buy more. When there is a surplus income
available for the family, the tendency is to buy more luxury items which
otherwise a person might not have been able to buy.

iii. Consumer Credit

When a consumer is offered easy credit to purchase goods, it promotes
higher spending. Sellers are making it easy for the consumers to avail credit
in the form of credit cards, easy instalments, bank loans, hire purchase, and
many such other credit options. When there is higher credit available to
consumers, the purchase of comfort and luxury items increases.

iv. Liquid Assets

Consumers who have liquid assets tend to spend more on comfort and
luxuries. Liquid assets are those assets, which can be converted into cash
very easily. Cash in hand, bank savings and securities are some examples of
liquid assets. When a consumer has higher liquid assets, it gives him more
confidence to buy luxury goods.

v. Savings
A consumer is highly influenced by the amount of savings he/she wishes to
set aside from his income. If a consumer decided to save more, then his
expenditure on buying reduces. Whereas if a consumer is interested in
saving more, then most of his income will go towards buying products.
Consumer Research Paradigm

Consumer behavior as a field study-

Consumer behavior has been referred to as “All the psychological, social,
and physical behavior of all potential consumers as they became aware of
evaluate, purchase, consume and tell others about products and services”.

Positivism Approach-marketer predicts the consumer behavior, and then

they could influence it.

Interpretivism approach-or post-modernism or experimentalism- This is

studying the view of understanding consumption behavior and the
interpretations of such behavior is known as interpretivism or post-
modernism. Likes subjective aspects of consumer behavior such as the
effects of moods, emotion, types of situation.

Treated each purchase experiences as unique because behavior shows at

particular moment of time.

Product differentiation- consumers also had a preference for differentiated

products so as to match their special needs, personality and lifestyles.
Fundamental difference between one product and another.

Market segmentation-
 Grouping of the consumer regarding their age, sex, income and
education.
 A process of dividing the total potential market in to smaller,
homogenous segmented, according to needs at a profit.
 Market segmentation is used to sub-divide the market of the product in
order to capture more and more sales effectively.
 Product positioning-Marketing strategy adopted so as to position the
product with a specific image in the mind of the people. Put in
subconscious mind of consumer.

Consumer Research Process-

Consumer research provides marketers with various information useful in
making marketing decisions.
Step-I
Defining the Problem Correctly

 Consumer research starts with defining the problem correctly. The

problems have to be defined properly by asking the right questions
and then deciding on selecting the correct method to obtain answers to
the specific problems.

 First requirements will be convert this problem into a specific

question in order to collect the necessary data needed to solve it.

Step-2
Develop Research Objectives-
An Objectives, is a sentence and question that summarizes the
purpose of your study.
For Example-Consumer research purposes could include Consumer
awareness, Product image, consumer perception, consumer attitudes,
Consumer satisfaction, Consumer behavior and experience.

Step-3
Collect Research Data-
The process of gathering and analyzing accurate data from various
sources to find answer to research problems, trends and probabilities,
etc. to evaluate possible outcomes. During data collection, researchers
must identify the data types, the sources of data and what methods are
being used.
Two types of data collection-

 Primary Data collection

 Secondary Data collection

Collect Secondary data: Collect secondary data first, it helps in

understanding if research has been conducted earlier and if there are any
pieces of evidence related to the subject matter that can be used by an
organization to make informed decisions regarding consumers.

Secondary data can be obtained from various sources such as:

1. Internal Sources: The firms various financial statements like

profit and loss statements, balance sheets, sales reports,
recorded invoices, inventory records or earlier research reports.

2. External Sources: Various government publications published

annually and give information on the profile of the people in the
forms of demographic details, social status, economic status
and census survey.

3. Books and Periodicals:-Business world, Business India,

Business today, Advertising and Marketing and publication
data on products categories and industry wise-ORG, MBL,
RCG. Etc.

Step-4
Analyzing secondary data information-

 If there is enough information related to the research objectives,

write a data and present the data.
 In case there is not sufficient information to address the
objectives, decision will be taken to conduct or carry out
primary research.
Primary Research: In primary research organizations or businesses collect
their own data or employ a third party to collect data on their behalf.

This research makes use of various data collection methods

(qualitative and quantitative) that helps researchers collect data first hand.

Step-5

Take a decision related to the primary research method to be adopted.

This will be dependent on the purpose of study.
That is-
 If descriptive information is required-A Quantitative Method
of research will have to be taken.

 If the purpose of study is to obtain new product ideas or

responding of a product etc. - A Qualitative Research method
will have to be adopted.

Qualitative research
 It is based on the disciplines of social sciences like psychology,
sociology, and anthropology. Therefore, the qualitative research methods
allow for in-depth and further probing and questioning of respondents
based on their responses.
 The interviewer/researcher also tries to understand their motivation and
feelings. Understanding how your audience makes decisions can help
derive conclusions in market research.
 Qualitative research is defined as a market research method that focuses
on obtaining data through open-ended and conversational
communication.
 This method is about “what” people think and “why” they think so.

Types of Qualitative Data

1. Depth or One-on-one interviews
2. Focus groups
 3. Projective Techniques
4. Role Playing

Depth or One-on-one interviews:

 Conducting in-depth interviews is one of the most common qualitative
research methods. It is a personal interview that is carried out with one
respondent at a time. This is purely a conversational method and invites
opportunities to get details in depth from the respondent.
 One of the advantages of this method provides a great opportunity to
gather precise data about what people believe and what their motivations
are. If the researcher is well experienced asking the right questions can
help him/her collect meaningful data. If they should need more
information the researchers should ask such follow up questions that will
help them collect more information.
 These interviews can be performed face-to-face or on phone and usually
can last between half an hour to two hours or even more. When the in-
depth interview is conducted face to face it gives a better opportunity to
read the body language of the respondents and match the responses.

Focus groups:
 A focus group is also one of the commonly used qualitative
research methods, used in data collection. A focus group usually
includes a limited number of respondents (6-10) from within your
target market.
 The main aim of the focus group is to find answers to the “why”
“what” and “how” questions.
 One advantage of focus groups is, you don’t necessarily need to
interact with the group in person.
 Nowadays focus groups can be sent an online survey on various
devices and responses can be collected at the click of a button.
 Focus groups are an expensive method as compared to the other
online qualitative research methods.
  Typically they are used to explain complex processes. This method
is very useful when it comes to market research on new products
and testing new concepts.

Projective Techniques

This set of techniques is similar to those used by clinical psychologists, in order to

understand a person’s hidden attitudes, motivation and feelings.
While being used in a consumer research, it is used to understand consumer’s
knowledge in association with a particular product or brand.

Likes
Word association
Here respondents are presented with a series of words or phrases and asked
to say the first word which comes to their mind.
For Example- What is the first word or phrase will like tooth paste, coffee,
soft drink. This method is helpful to check whether the proposed product
names have undesirable association.

Role Playing-
Respondents are asked to visualize that they are a product (car, TV., say)or a
different person(financier, or vendor say) and asked to enact or perform their role-
describing their feelings, thoughts and actions.

Quantitative Research-

 Quantitative data is the type of data whose value is measured in the form of
numbers or counts, with a unique numerical value associated with each data
set. Also known as numerical data, quantitative data further describes
numeric variables (e.g. How many? How often? How much?)
 This data type can also be defined as a group of quantifiable information that
can be used for mathematical computations and statistical analysis which
informs real-life decisions.
 For example, a manufacturing company will need an answer to the question,
“How much is the production cost?”
 A quantitative data of the company’s cost of production will be collected
through this question and will inform the company’s selling cost (where
selling cost = production cost + profit).
 Types of Quantitative Research

Experimental Research
Observation
Survey

Experimental
 Experimental research is a kind of study that rigidly follows a scientific
research design. It involves testing or attempting to prove a hypothesis by
way of experimentation. As such, it uses one or more independent
variables, manipulating them and then using them on one or more
dependent variables.

 In this process, the researchers can measure the effect of the independent
variable(s) on the dependent variable(s). This kind of study is performed
over some time, so that researchers can form a corroborated conclusion
about the two variables.

 The experimental research design must be carried out in a controlled

environment.
 Throughout the experiment, the researcher collects data that can support or
refute a hypothesis, thus, this research is also referred to as hypothesis
testing or a deductive research method.

Observation
 The goal of the observational study is to collect data about what people do
and say. Observational data is helpful in several fields:

 market research
 health services research
 educational research
 user research

Observational studies are valuable in any domain where researchers want to

learn about people's actions and behaviors in a natural setting. For example,
observational studies in market research might seek out information about
 the target market of a product or service by identifying the needs or
problems of prospective consumers. In medical contexts, observers might be
interested in how patients cope with a particular medical treatment or
interact with doctors and nurses under certain conditions.

Survey

 Defined as the process of conducting research using surveys that researchers

send to survey respondents. The data collected from surveys is then
statistically analyzed to draw meaningful research conclusions.
 Surveys provide researchers with reliable, usable, primary data to inform
business decisions. They are important because the data comes directly from
the individuals you have identified in your goal. And surveys give you a
detailed, systematic way to view and analyze your data.

Step-6

 Analyzing and interpreting the data

 To work out and find out what are the results?

Step-7

Prepare report

To present the data in a written from or writing the report.

Finally, a report is prepared for all the findings by analyzing data collected so that
organizations are able to make informed decisions and think of all probabilities
related to consumer behavior.

By putting the study into practice, organizations can become customer-centric and
manufacture products or render services that will help them achieve excellent
customer satisfaction
 Qualitative research
Attributes Quantitative research methods
methods

Purpose What and Why

How/ much, many

This research method

focuses on describing Quantitative research method focuses on
Analytical individual experiences and describing the characteristics of a population.
objectives beliefs.

Types of
questions Open-ended questions Closed-ended questions
asked

Data Use un-structured methods Use highly structured methods such as

collection- such as in-depth interviews structured observation
Instrument Focus groups. using questionnaires and surveys

Form of data
Descriptive data Numerical data
produced

Participant responses affect Participant responses do not influence or

Degree of
how and which questions determine how and which questions researchers
flexibility
researchers ask next. ask next

Sample Size Small size large size

Sampling Non-Probability Probability Sampling

Aspects Subjective aspects Objectives aspects (used statistical

(Attributes) tools)