Module I:

Introduction to Consumer Behaviour

Meaning

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.

Definition

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

Components of Consumer Behaviour

Consumer behavior refers to the study of how individuals, groups, or organizations select,
buy, use, and dispose of goods, services, ideas, or experiences to satisfy their needs and
wants. There are several components that influence consumer behavior, each of which can be
explained with examples:

1. Cultural Factors:

 Culture: Culture refers to the set of values, beliefs, customs, and behaviors that are
shared by a group of people. For example, in some cultures, it is customary to bargain
while making a purchase, while in others, fixed pricing is the norm.

 Subculture: Subcultures are smaller groups within a culture that share specific
characteristics. For instance, within the larger culture of 'youth', there are subcultures
like 'gamers' or 'hip-hop enthusiasts', each with unique consumption patterns.

2. Social Factors:

 Reference Groups: Reference groups are groups that an individual identifies with and
uses as a standard to guide behavior. For example, a teenager might be influenced to
buy a certain brand of sneakers because their favorite celebrity wears them.

 Family: Family influences buying decisions, such as parents buying products for their
children. For instance, a family might choose a minivan for its safety features and
spacious interior to accommodate the entire family.

3. Personal Factors:

 Age and Life Stage: Different life stages prompt different consumption patterns. For
example, a person who has just started working might prefer budget-friendly options,
while someone more established in their career might opt for premium products.
  Occupation: A person's occupation can influence their buying behavior. For instance,
a construction worker might need sturdy and durable work boots, whereas an office
worker might prioritize comfortable and stylish shoes.

4. Psychological Factors:

 Motivation: Motivation drives a person to satisfy a need. For instance, hunger can
motivate someone to buy food.

 Perception: Perception is how individuals interpret the information and stimuli around
them. If a product is perceived as high quality, it might justify a higher price for
consumers.

 Attitude: Attitudes are evaluations of a particular product or brand. Positive attitudes

can lead to brand loyalty. For example, someone who is environmentally conscious
might prefer to buy from eco-friendly companies.

5. Social and Situational Factors:

 Social Status: People often buy products to reflect their social status. For instance,
owning a luxury car might be a status symbol for some individuals.

 Situational Factors: These are temporary conditions that affect how buyers behave.
For example, a person might buy an umbrella on a rainy day, a situation prompting
the need.

6. Cognitive Factors:

 Learning: Learning from past experiences and information can influence future
buying decisions. For instance, a customer might switch brands if they had a negative
experience with a product.

 Memory: Memory plays a role in consumer behavior. Ads and marketing efforts often
aim to create a memorable impression, so consumers remember the brand when
making a purchase decision.

Four domains of consumer behaviour:

Consumer behavior can be broadly categorized into four domains, each focusing on different
aspects of consumer decision-making and behavior. Here are the four domains of consumer
behavior, along with examples for each:

1. Cognitive Domain:

 Definition: The cognitive domain of consumer behavior deals with how consumers
perceive, process, and evaluate information before making a purchase decision.
  Example: Before buying a smartphone, a consumer might research various brands,
compare features, read reviews, and evaluate prices. This information processing and
analysis are part of the cognitive domain.

2. Affective Domain:

 Definition: The affective domain involves emotions, feelings, and attitudes that
influence consumer decisions and preferences.

 Example: A consumer might choose a particular brand of chocolate because it

reminds them of their childhood and evokes positive emotions. Similarly, brand
loyalty often develops in the affective domain due to emotional connections
consumers have with certain brands.

3. Behavioral Domain:

 Definition: The behavioral domain focuses on the observable actions and decisions
made by consumers, including actual purchase behavior and post-purchase activities.

 Example: A consumer going to a store and buying a specific brand of sneakers

represents the behavioral domain. Likewise, behaviors such as brand switching, repeat
purchases, and word-of-mouth recommendations fall within this domain.

4. Decision-Making Domain:

 Definition: The decision-making domain involves the process through which

consumers make choices, considering various factors and constraints.

 Example: When deciding which car to buy, a consumer might consider factors like
budget, fuel efficiency, safety features, and brand reputation. The final decision,
influenced by these factors, falls under the decision-making domain.

Factors that affect consumer behaviour:

Consumer behavior is influenced by a variety of factors, ranging from personal and

psychological factors to social and cultural influences. Here are some key factors that affect
consumer behavior, along with examples for each:

1. Cultural Factors:

 Culture: Different cultures have distinct values, customs, and behaviors that
influence purchasing decisions. For example, the significance of gift-giving during
holidays varies across cultures.

 Subculture: Within larger cultures, subcultures based on factors such as ethnicity,

religion, or age can impact consumer behavior. For instance, subcultures like the
 "youth culture" or "urban hip-hop culture" have unique preferences in fashion and
music.

2. Social Factors:

 Reference Groups: People are often influenced by their reference groups, such as
family, friends, or celebrities. If a popular celebrity endorses a particular brand of
sports shoes, fans of that celebrity might be more inclined to buy those shoes.

 Family: Family members can influence each other's buying decisions. For instance,
parents might influence their children's choices in clothing, toys, or even cars.

3. Personal Factors:

 Age and Life Stage: Consumer preferences change with age. Young adults might
prefer the latest technology gadgets, while older individuals might prioritize health-
related products and services.

 Occupation: A person's occupation and income level impact their purchasing power
and choices. For example, a software engineer might invest in high-end electronics,
whereas a farmer might focus on agricultural equipment.

4. Psychological Factors:

 Motivation: The underlying reason for a consumer's purchase decision. For example,
hunger can motivate someone to buy food, and the need for social approval can
motivate the purchase of trendy clothing.

 Perception: How consumers interpret information influences their buying decisions.

If a product is perceived as high quality, consumers might be willing to pay a
premium price for it.

 Attitude: Attitudes reflect a consumer's overall evaluation of a product, brand, or

service. Positive attitudes can lead to brand loyalty. For example, a person who values
eco-friendly products might prefer brands that are environmentally conscious.

5. Situational Factors:

 Purchasing Situation: The reason for the purchase, such as routine shopping, urgent
need, or special occasion, can influence what and how much consumers buy. For
instance, buying gifts for a special occasion often involves careful selection and
higher spending.

 Point of Purchase: The physical location where a purchase is made (in-store, online)
can affect consumer choices. Impulse purchases are more common at physical
checkout counters, while online shoppers may be influenced by website design and
user experience.

6. Social and Cultural Influences:

  Media and Advertising: Advertisements and media portrayals influence consumer
perceptions. For example, a catchy jingle or a compelling story in an advertisement
can create a positive association with a product.

 Cultural Norms: Cultural norms and values affect what is considered acceptable or
taboo in society. For instance, certain cultures have dietary restrictions that influence
food choices.

Overview of Consumer behaviour concepts applications in making marketing decisions:

Understanding consumer behavior is crucial for businesses when making marketing

decisions. By analyzing consumer behavior concepts, companies can create effective
marketing strategies, design products that meet consumer needs, and enhance customer
satisfaction. Here's an overview of how consumer behavior concepts are applied in making
marketing decisions:

1. Market Segmentation:

 Concept: Market segmentation divides the market into distinct groups with similar
characteristics or behaviors.

 Application: By understanding consumer demographics, psychographics, and

behaviors, businesses can identify target segments. For example, a high-end fashion
brand might target affluent, fashion-conscious consumers.

2. Product Design and Development:

 Concept: Consumer preferences and needs shape product design and features.

 Application: Companies conduct market research to identify what consumers want.

For instance, smartphones with better camera features cater to consumers interested in
photography.

3. Pricing Strategies:

 Concept: Perception of value influences pricing decisions.

 Application: Premium pricing might be applied for products perceived as high

quality, while discounts and promotions can attract price-sensitive consumers.

4. Promotional Activities:

 Concept: Understanding how consumers respond to advertising and promotions.

 Application: Businesses tailor their advertising messages and channels based on

consumer behavior. For example, social media platforms might be used to target
younger, tech-savvy consumers, while TV ads might target older demographics.
5. Distribution Channels:

 Concept: Consumer preferences influence where and how they prefer to buy
products.

 Application: Online retailers cater to consumers who prefer the convenience of

shopping from home, while physical stores provide a hands-on experience for those
who prefer trying products before purchasing.

6. Brand Development and Management:

 Concept: Consumer perceptions and attitudes towards brands.

 Application: Companies work on brand building to create positive associations. For

instance, a brand promoting eco-friendly practices might appeal to environmentally
conscious consumers.

7. Customer Experience Enhancement:

 Concept: Consumer satisfaction and post-purchase behavior.

 Application: Businesses focus on customer service and after-sales support to enhance

customer satisfaction. Positive experiences lead to brand loyalty and positive word-of-
mouth, influencing future buying decisions.

8. New Product Launches:

 Concept: Understanding consumer acceptance and adoption rates for new products.

 Application: By analyzing consumer behavior, companies can predict how a new

product will be received. Early adopters might be targeted initially, followed by a
broader marketing campaign as the product gains acceptance.

9. Consumer Retention and Loyalty Programs:

 Concept: Factors influencing customer loyalty and repeat purchases.

 Application: Loyalty programs and personalized offers are designed based on

consumer behavior data. For instance, frequent shoppers might receive exclusive
discounts to encourage repeat business.

10. Feedback Analysis and Improvement:

 Concept: Analyzing customer feedback to improve products and services.

 Application: Consumer comments and reviews are analyzed to identify areas for
improvement. This feedback loop helps businesses adapt products and services to
better meet consumer needs and preferences.
Consumer Behaviour and marketing Strategy:

The relationship between consumer behavior and marketing strategy is fundamental in the
business world. Consumer behavior provides valuable insights into how individuals and
groups make purchasing decisions, enabling businesses to develop effective marketing
strategies. Here's how consumer behavior and marketing strategy are intricately linked:

1. Understanding Customer Needs and Desires:

 Consumer Behavior: Consumer behavior research helps identify what customers

need, want, and desire.

 Marketing Strategy: Businesses can develop products and services that precisely
match consumer preferences, ensuring higher demand and customer satisfaction.

2. Segmentation and Targeting:

 Consumer Behavior: Identifies different segments of consumers based on behaviors,

demographics, and psychographics.

 Marketing Strategy: Businesses can target specific segments with tailored marketing
campaigns, products, and services. For instance, luxury brands target high-income
consumers with premium products and personalized experiences.

3. Product Development and Innovation:

 Consumer Behavior: Reveals consumer preferences, problems, and unmet needs.

 Marketing Strategy: Encourages businesses to innovate and create products that

solve consumer problems or fulfill unmet needs, gaining a competitive edge in the
market.

4. Pricing Strategies:

 Consumer Behavior: Understanding price sensitivity and perception of value.

 Marketing Strategy: Helps in setting competitive prices. For example, luxury items
are priced high to convey exclusivity, while discounts and promotions are used to
attract price-sensitive consumers.

5. Promotion and Communication:

 Consumer Behavior: Insights into how consumers respond to different marketing

messages and channels.

 Marketing Strategy: Enables businesses to design persuasive and targeted

advertising campaigns, ensuring messages resonate with the audience. For instance,
social media ads might work better for younger demographics, while email
newsletters might appeal to older consumers.
6. Distribution Channels:

 Consumer Behavior: Preferences for online or offline shopping experiences.

 Marketing Strategy: Helps in choosing appropriate distribution channels. Online

platforms are vital for reaching tech-savvy consumers, while physical stores offer a
hands-on experience for certain products.

7. Brand Perception and Loyalty:

 Consumer Behavior: Attitudes and perceptions towards brands influence purchasing

decisions.

 Marketing Strategy: Brands can enhance their image through marketing efforts,
creating positive associations. Exceptional customer experiences and consistent
messaging build brand loyalty, leading to repeat purchases and positive word-of-
mouth.

8. Post-Purchase Behavior:

 Consumer Behavior: Reviews, feedback, and post-purchase engagement.

 Marketing Strategy: Positive post-purchase experiences lead to customer advocacy

and loyalty. Addressing negative feedback promptly shows the brand's commitment to
customer satisfaction, maintaining trust and credibility.

9. Market Expansion and Globalization:

 Consumer Behavior: Understanding cultural differences and consumer behaviors in

various regions.

 Marketing Strategy: Helps businesses adapt their products, marketing messages, and
strategies to fit different cultures, ensuring successful market entry and expansion
globally.

Overview of consumer behaviour research methods:

Consumer behavior research employs various methods to understand the decision-making

processes of individuals and groups. Here's an overview of consumer behavior research
methods, along with examples for each:

1. Surveys and Questionnaires:

 Overview: Surveys and questionnaires involve asking participants a set of

predetermined questions to gather quantitative data.
  Example: A company conducting a survey to understand customer satisfaction with
their products. Questions might cover aspects like product quality, pricing, and overall
shopping experience.

2. Interviews:

 Overview: Interviews involve direct one-on-one interactions with participants,

allowing researchers to explore in-depth insights.

 Example: An interviewer talking to consumers about their preferences for organic

products and delving into the reasons behind their choices.

3. Focus Groups:

 Overview: Focus groups involve small groups of participants discussing specific

topics, providing qualitative data and diverse perspectives.

 Example: A focus group discussion on consumer perceptions of a new beverage

brand, exploring reactions, preferences, and potential improvements.

4. Observational Research:

 Overview: Observational research involves observing and recording consumer

behavior in natural settings without interference.

 Example: Researchers studying shopper behavior in a supermarket, noting which

products consumers pick up, examine, and eventually buy.

5. Experiments:

 Overview: Experiments involve manipulating variables to observe their effect on

consumer behavior in controlled settings.

 Example: A study testing the impact of different packaging designs on product sales,
where participants are exposed to different packages and their choices are observed.

6. Neuromarketing:

 Overview: Neuromarketing uses neuroscience techniques to measure physiological

and neural signals to understand consumer responses.

 Example: Using brain imaging technologies to analyze consumers' brain activity

patterns while viewing advertisements to determine emotional engagement and
preferences.

7. Ethnographic Research:

 Overview: Ethnographic research involves immersing researchers in the consumer's

environment to gain deep insights into their behaviors.
  Example: Studying the home environment of consumers to understand their daily
routines, product usage patterns, and lifestyle choices.

8. Online Analytics:

 Overview: Analyzing online behavior using web analytics tools to track website
interactions, clicks, and conversions.

 Example: E-commerce websites tracking user clicks, time spent on pages, and
shopping cart abandonment rates to optimize the user experience and increase sales.

9. Social Media Analysis:

 Overview: Analyzing social media platforms to understand consumer sentiments,

preferences, and trends.

 Example: Monitoring Twitter hashtags and Facebook discussions related to a product

launch to gauge public opinion and adjust marketing strategies accordingly.

10. Big Data Analysis:

 Overview: Utilizing large datasets to identify patterns and trends in consumer

behavior.

 Example: Analyzing vast amounts of purchase data to identify seasonal buying

patterns and optimize inventory management for retailers.

Psychographics: Values, Personality, and Lifestyles:

Psychographics in consumer behavior are typically divided into three main components:
values, personality, and lifestyles. Let's explore each of these components in more detail:

1. Values:

Values refer to the core beliefs and principles that guide an individual's behavior and
decision-making. In the context of psychographics, understanding consumers' values is
essential for predicting their preferences and choices.

 Example: A consumer who values environmental sustainability might prioritize

purchasing products from eco-friendly companies. Their value of environmental
conservation influences their preference for green products and sustainable practices.

2. Personality:

Personality traits encompass the unique set of characteristics, emotions, and patterns of
thought that define an individual. These traits play a significant role in shaping consumer
behavior.
  Example: A consumer with an adventurous personality might be more inclined to try
new and innovative products or engage in exciting experiences. Their adventurous
nature can lead them to explore unconventional or niche markets.

3. Lifestyles:

Lifestyle factors encompass a person's activities, interests, opinions, and demographics.

Lifestyles provide a holistic view of how individuals live and spend their time and money,
offering valuable insights into their consumer behavior.

 Example: A consumer with a health-conscious lifestyle might regularly purchase

organic foods, exercise equipment, and gym memberships. Their commitment to a
healthy lifestyle influences their purchasing decisions, favoring products and services
that align with their health goals.

In marketing and advertising, understanding these psychographic components allows

businesses to create detailed consumer profiles. By tailoring their messaging and products to
align with consumers' values, personality traits, and lifestyles, businesses can establish
emotional connections with their target audience. For instance, a brand promoting adventure
sports might appeal to consumers with adventurous personalities, emphasizing the thrill and
excitement their products or services offer.