CONSUMER BEHAVIOUR

By Roger D. Blackwell
 Chapter # 1 1

Consumer Behavior And

Consumer Research
 2

• Consumer Behavior Define

Consumer behavior is defined as the
activities people undertake when
obtaining, consuming and disposing of
products and services.
 3

• Why do we study consumer?

Why did you select this institute?
Why did you select your preferred television
brand?
Why did you select your preferred residential
area?
Why do you watch a particular channel?
Why do you shop from a particular store?
Why do you like particular dress designer?
 4

• Consumer Behavior Helps Analyze

Consumers’ Increasing Influence
– Consumer is King.
– Business succeed or fail because of
consumer preferences or rejections.
– Consumer Behavior knowledge helps people
to make right decisions.
– Government can be influenced by consumer
association and societies.
 5

• Who determines what consumers can

buy?
– All the organizations involved in taking a
product from inception to final consumption.
Historical background of businesses from
manufacturing focus to consumer focus
orientation
 6

• How do we study Consumer Behavior?

– Market Research (Secondary Data, Primary
Data Tools)
 7

• Principles of Consumer Behavior

– The Consumer Is Sovereign
– The Consumer Is Global
– Consumers Are Different; Consumers Are
Alike
– The Consumer Has Rights
 8

Chapter # 2
How Consumers Analysis Affects
Business Strategy
 9

From Market Analysis To Market

Strategy
• Market Analysis
Analysis of market trend, company potentials,
competitive forces, micro and macro
environments.
• Market Segmentation
Identify groups with similar preferences.
• Marketing Mix Strategies
Developing the four P’s of marketing on the
basis of analysis and segmentation
 10

• Implementation
Efficiently and effectively transforming the
strategies into practical designs Which shall
reveal the desire results.
• The Seven R’s of the Marketing Mix
These R’s help marketers understand their
target markets requirements.
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Organization Consumer

Research Conduct Participate

Rate Distribution Shopping
Resources Commit Payments
Retailing Selected Outlets Expected Outlets
Reliability Channel Efficiency Conformance
Reward Loyal Consumers Consumption
Relationship Channel, Consumers Brand, Shops
 12

Consumer Loyalty & Retention Strategies

• Consumer Loyalty Program

• Strengthening Consumer Relationship
 13

Global Marketing Strategy

• Global Market Analysis and Strategy

• Can Marketing be Standardized
– Companies use Glocal approach
• Intermarket Segmentation
• Localization Base on Differences
 14

Chapter # 3
The Consumer Decision Process
 15

• Consumer Decision Process Model

– Need Recognition
– Search For Information
– Pre-Purchase Evaluation
– Purchase
– Consumption
– Post-Consumption Evaluation
– Divestment
 16

Consumer Decision Process Model

• Need Recognition
– Influence memory
– Memory is influenced by Environmental
Influences and Individual Differences
– Environmental Influences are Culture, Social
Class, Personal Influences, Family and
Situation
– Individual Differences are Consumer
Resources, Motivation, Knowledge, Attitudes,
Personality, Values and Lifestyle
 17

• Search For Information

– Depending on the intensity of need recognition,
consumers enter into search
– Search is initially done through information already
existing in memory
– External source is used when consumers are not
confident on internal source
– External source follow the sequence Stimuli,
Exposure, Attention, Comprehension, Acceptance,
Retention
– Stimuli is either marketer dominated or non marketer
dominated
– Retention then in future become internal source
 18

• Pre-Purchase Evaluation of Alternatives

– Search identifies different alternative solutions to
consumers
– Search is dominated by external source if internal
source is not adequate
– Individual differences play an important role at Pre-
Purchase Evaluation Stage
 19

• Purchase
– Individual differences/ Preferences play the
most important role at the time of purchase
– Pre-Purchase evaluation of Alternative also
help consumers prioritize the alternative at the
time of purchase
– At this stage consumers select particular retail
outlet for purchasing purpose
– A consumer may switch retailers based upon
schemes, sales, or right assortment of brands
– A consumer may buy an entirely different
product or brand due to Point of Purchase
Influences or salesmanship
 20

• CONSUMPTION
– Consumption can occur immediately or be
delayed due to schemes, sales or other
incentives
– How consumption is done will determine the
performance of a product
– How carefully consumers use a product will
determine its durability
 21

• Post-Consumption Evaluation
– This stage analysis the satisfaction level of
consumers
– When performance falls short of expectation,
consumers are dissatisfied
– When performance meets expectation,
consumers are satisfied
– When performance exceeds expectation,
consumers are highly satisfied or delighted
 22

• DIVESTMENT
– At this stage consumers decide to remarket,
trade in, recycle or dispose it outright
– In developing societies remarketing of
S.M.C.G Products play an important role in
their purchase decision
– In F.M.C.G Products packaging and its
environmental friendliness is very important
 23

• How Organizations Use CDP Model

– Identify relationships between variables that
affect consumer decision making
– Identify topics for additional research
– Develop and implement marketing mix
strategies
 24

CONSUMER PROBLEM SOLVING

• Extensive Problem Solving (EPS)
– When decisions have to be taken on complex
issues which require extensive time and
effort, usually when purchasing the product
for the first time. (Automobile)
• Midrange Problem Solving (MPS)
– Moderate time and effort is given for these
products (Selection Of Movies)
• Limited Problem Solving (LPS)
– Minimum time and effort is required when
deciding for these products (Toothpaste)
 25

CONSUMER REPEAT PURCHASE

It depends upon satisfaction or dissatisfaction
extent of consumers.
• Repeat purchases may also occur in habitual
buying procedures
• Repeat purchases are also influenced by EPS,
MPS and LPS
• Impulse and variety seeking behaviors influence
purchasing
• Purchasing is influenced by Degree Of
Involvement, Perceptions of differences among
brands, consumer state mood and time
availability
 Chapter # 4
Pre-Purchase Processes: Need
Recognition, Search and
Evaluation
• Need Recognition
– When there is a difference between desired
states and actual states need recognition is
initiated
– Speed of recognition depends on degree of
discrepancy
– If the discrepancy is higher then the threshold
need shall be recognized
– If the discrepancy is lower then the threshold
need shall not be recognized
– Companies can identify opportunities if need
recognition is properly researched upon
– Generic versus Selective Need Recognition
• Search
– Need recognition does not automatically
means consumers will enter into search
– Intensity or emergency will determine the
need to search
– Search starts with exploring internal source
– Internal search is determined by
• Existing Knowledge, Ability to Retrieve the Stored
Knowledge
– If internal source is sufficient consumer
moves to decision
– If internal source is not sufficient consumer
moves to external source
• How Much Do Consumers Search?
– It depends upon products an consumers psyche
– Categories of Products On Time and Effort Basis
• Convenience Products
• Shopping Products
• Specialty Products
– Consumers enter into extensive search if benefit
outweigh the cost of acquiring information search
– Companies must researched upon search stage, it
will reveal the search pattern of consumers. This will
help companies establish price, invest in promotional
activities
– Company should give equal importance to search as
the consumers do
• Pre-Purchase Evaluation
– Based upon judgment dislike alternatives are rejected
– Consideration set or Evoked Set
• Alternatives selected out of the whole range make up the
consideration set
– Construction of Consideration Set
• Based upon internal memory (retrieval set) alternatives are
considered, some times external sources may also affect
consideration of alternative.
• When purchasing a product for the first time construction
may be done based upon conversation with friends, going
through yellow pages or scanning through all brands in a
store etc
– Qualifying The Consideration Set
• Alternative which wins the evaluation is qualified for
proceeding to purchase
• Constructing New Evaluations
– The Categorization Process
• Making sophisticated categories of product or
generalized categories depend upon involvement
of consumers
• Companies may use brand image of one product
category into another product category for gaining
advantage
– The Piecemeal Process
– Identifying elements upon which products are
evaluated by consumers
– Non compensatory evaluation and
compensatory evaluation depend upon product
category
Chapter # 5
Purchase
• Purchase Stage of CDP Model
– Whether to buy
– When to buy
– What to buy (product type and brand)
– Where to buy (type of retailer and specific
retailer)
– How to pay
• To Buy Or Not To Buy
– At this stage consumer may proceed with
purchase or aborting/deferring the purchase
decision
– Fully Planned Purchase
– Partial Planned Purchase
– Unplanned Purchase
• Purchase Factor
– Timing Factor
• Insuring availability of product when it is required
– How To Pay
• Facility to pay through cheques of credit cards
• Retailing And The Purchase Process
– It is the point where buyer and sellers meet
– It explains the efforts of supply chain staff
– Why People Buy
• For fun, for avoiding boredom, fantasy experience
or to relieve depression. Basically people buy for
making purchases of products they require
• Purchase Decision Process
– Type Of Retail Concept
• Internet, Direct Mail, Catalog or Location Based
Retailers
– Type Of Location Based Retailers
• Functions performed by consumers
• Services offered in a location based retailers
• Determinants Of Retailer, Success Or
Failure
– Location
– Nature and Quality
– Price
– Advertising and Promotion
– Sales Personnel
– Services Offered
– Physical Store Attributes
– Nature of Store Clientele
– Store Atmosphere
– Post-Transaction and Service and satisfaction
The Changing Retail Landscape:
1. Location Based Retailing
a. Value Oriented Retailers
Maintain large assortment at lower prices.
b. The Shopping Mall
2. Direct Marketing
a. Direct Selling
b. Direct Mail Ads
c. Direct Mail Catalogs
d. Telemarketing
e. Direct Response Ads
f. The E-Commerce Era
a. Money and Time Budgets

1.Time-Using Goods
Watching television, Fishing

2. Time-Saving Goods
Services hired to take care of routine
work thus increasing the time
available for leisure.
b. Polychronic Time Use

c. Monochronic Time Use

d. Time Prices
Products require less time to shop.

e. Cognitive Resources
The time available with consumers for processing
information.

Integrated Marketing Solutions

 Chapter # 6

POST PURCHASE PROCESSES:

CONSUMPTION AND EVALUATION
Consumption:
It represents consumers’ usage of the purchased product.

Consumption Behaviors:
a. Consumers/Users of the product:
Represents the current status of the product
b. Nonusers:
Represents the future potential growth of the product
Factors to be considered of users:

1. When a product is consumed:

The frequency of consumption
The time of consumption

2. Where is it consumed
The place of consumption

3. How is it consumed

4. How much is consumed

Heavy, Moderate and Light Users
Consumption Experiences:

a. Feeling at the time of consumption

b. How Rewarding or punishing was the experience

• Positive Reinforcement
• Negative Reinforcement
• Punishment
c. Did Performance meet expectations

Consumption Norms and Rituals

Compulsive Consumption
Post-Consumption Evaluations

a.The importance of Customer

Satisfaction
1.It influences repeat buying
2.It shapes Word-of-Mouth Communication
3.Dissatisfaction leads to complaints
4.Implications for Competitive Strategy
Competitive brands may take advantage and
attract dissatisfied consumers through offering
better deals
b. What determines satisfaction

1.Expectancy disconfirmation model

Satisfaction depends on a comparison of pre-
purchase expectations to actual outcomes.
2. Negative disconfirmation

3. Positive disconfirmation

4. Confirmation
 Chapter # 7

DEMOGRAPHICS, PSYCHOGRAPHICS
AND PERSONALITY
ANALYZING AND PREDICTING
CONSUMER BEHAVIOR

1.Analyzing the Demographics

Size, structure and distribution of a
population
a. How is the population makeup
changing?
b. How do people spend time, choose
friends, allocate financial resources to
products or retailers and support social
programs?
DEMOGRAPHIC ANALYSIS

Demographic analysis in social policy

Demographics and industrial demand

CHANGING STRUCTURE OF CONSUMER

MARKETS

Firms that fail to plan generally plan to fail.

 People with needs, ability to buy, willingness to buy and
authority to buy.
GEOGRAPHICAL ANALYSIS

Which regions or cities are growing?

ECONOMIC RESOURCES

Consumer Confidence
Wealth
Targeting the Up Market
Targeting the Down Market
Poverty
PEROSNALITY & CONSUMER BEHAVIOR

Psychoanalytic Theory
It is the relationship between the iq, eq and
super-ego.

Personality is derived from the conflict between

the desire to satisfy physical needs and the need
to be a contributing member of society.
SOCIO-PSYCHOLOGICAL THEORY

Socio-psychological theory recognizes the

interdependence of the individual and society.

Social variables rather than biological instincts

are considered to be the most important
determinants in shaping personality.

Behavioral motivation is directed to meet those

needs.
TRAIT-FACTOR THEORY
A trait is any distinguishable, relatively
enduring way in which one individual differs
from another.

Traits are common to many individuals and

vary in absolute amounts among individuals.

Traits are relatively stable and exert fairly

universal effects on behavior regardless of the
environmental situation.

Traits can be inferred from the measurement of

behavioral indicators.
 CHAPTER # 8

CONSUMER MOTIVATION
WHAT IS CONSUMER MOTIVATION

It represents the drive to satisfy both

physiological and psychological needs
through product purchase and consumption.

TYPES OF CONSUMER NEEDS

1. Physiological Needs

2. Safety and Health Needs

TYPES OF CONSUMER NEEDS

3. The Need for Love and Companionship

4. The Need for Financial Resources and

Security

5. The Need for Pleasure

6. Social Image Needs

Conspicuous Consumption – Describes purchases motivated
to some extent by the desire to show other people just how
successful we are.
TYPES OF CONSUMER NEEDS

7. The Need to Possess

8. The Need to Give

9. The Need for Information

10.The Need for Variety

MOTIVATIONAL CONFLICT AND NEED
PRIORITIES

Motivational Conflict – The time allocated to

one need means there’s less time for fulfilling
others. These tradeoffs in our ability to satisfy
various needs cause motivational conflict.

Motivational Conflict Forms

1. Approach-approach Conflict.
2. Avoidance-avoidance Conflict.
3. Approach-avoidance Conflict.
MOTIVATIONAL INTENSITY

It means how strongly consumers are

motivated to satisfy a particular need.

Another way about motivational intensity is

through the involvement which means – the
degree to which an object or behavior is
personally relevant.

THE CHALLENGE OF UNDERSTANDING

CONSUMER MOTIVATION
MOTIVATING CONSUMERS

1. Overcoming Price Barriers

2. Provide Other Incentives

3. Implement a Loyalty Program

4. Enhance Perceived Risk

Perceived Risk represents consumers’ apprehensions about
the consequences of their behavior.

5. Arousing Consumers’ Curiosity

 CHAPTER # 9

CONSUMER KNOWLEDGE
WHAT IS CONSUMER KNOWLEDGE?

It is the subset of the total amount of

information stored in memory that is relevant
to product purchase and consumption.

TYPES OF CONSUMER KNOWLEDGE

1. Knowledge of the Product’s Existence

The percentage of people that name a given brand

first is known as top-of-the-mind awareness.
TYPES OF CONSUMER KNOWLEDGE

2. Knowledge of the Product’s Attributes and

Associations.
Product Image and Image Analysis.

3. Purchase Knowledge
a. How much does it cost?
b. When to Buy?
c. Where to Buy?

4. Consumption and Usage Knowledge

5. Persuasion Knowledge
SOURCES OF CONSUMER KNOWLEDGE

THE BENEFITS OF UNDERSTANDING

CONSUMER KNOWLEDGE

a. Lack of Knowledge
b. Undesirable Knowledge
c. Gauging the Product’s Positioning Success
d. Discovering New Uses
e. Gauging the Severity of Competitive Threats
f. Enhancing the Effectiveness of Customer
Recruitment Activities.