Consumer Behavior – Definition

• Consumer Behavior may be defined as “the decision process

and physical activity that individuals, groups, or organizations
engage in when evaluating, acquiring, using, or disposing of
goods and services”.
• The study of consumer behavior focuses on how individuals
make decisions to spend their available resources (time, energy,
effort) on consumption-related items.
• It is a study of individuals, groups, or organizations and the
processes they use to select, secure, use, and dispose of
products, services, experiences, or ideas to satisfy needs and the
impacts that these processes have on the consumer and society.
1
 Consumer Behavior Roles

• Initiator – the individual who determines / reveal that some need

or want is not being met and authorizes a purchase to rectify the
situation.
• Influencer – a person who by some intentional or unintentional
word or action influences the purchase decision, the actual
purchase, and/or the use of the product or service.
• Buyer – the individual who actually makes the purchase
transaction.
• User – the person most directly involved in the consumption or
use of the purchase.

2
 Significance of Consumer behavior

• Consumer Behavior plays a significant role in our lives. The

goods we purchase and the manner in which we use them
significantly influence how we live our daily lives.
• Consumers decisions are significantly affected by their
behavior or expected actions.
• The micro perspective seeks application of this knowledge to
problems faced by the individual firm or organization.
• The societal perspective applies knowledge of consumers to
aggregate-level problems faced by large groups or by society
as a whole.

3
 Contd…

• All marketing decisions are based on assumptions

about consumer behavior
• Consumer behavior theory provides the manager with
the proper questions to ask
• Marketing practice designed to influence consumer
behavior influences the firm, the individual, and society

4
 Profile of Indian Consumer

• Owing to its large population size and growing

disposable incomes, India offers a profitable
investment opportunity to the marketers
across the world.
• Today’s marketing is consumer-oriented and
therefore the global marketers need to
understand Indian consumers if they want to
successfully harness this opportunity

5
• Today, the Indian consumer is:
1. Socially Connected: Recent researches establish that the
Indian consumer is no more living in isolation. He has mass
presence in social media and is increasingly networked.(65
Million Users on FB)
2. Environmentally Aware: Indians are now better educated and
increasingly aware of their environment. They are also well
aware of the dangers of environmental degradation. The lesson
for marketers here is to invest in environmental researches and
offering an environment-friendly products.

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• Style-Conscious: From impulse buying products to the
high involvement products like cars and smartphones,
the purchases are largely influenced by style. The
marketers therefore need to blend utility with style.
• Low Brand Loyalty: Indian consumer today is exposed
to a large array of brands offering similar products. The
competition among brands brings greater discounts and
better sales promotion offers for the customers. So, the
marketers must keep innovating to differentiate from
their competitors.

7
• Informed Purchases: Indian consumer no longer depends on
whatever information the marketers provide him about the
product. Today’s consumer explores all possible information
sources in order to review, compare and contrast every product
alternative available to him before making his purchases.
• Time Poor: Though Indian consumers have improved incomes at
their end, they are short of time now due to increased work
hours. Dual income families are quite common in India today. The
consumers are more conscious about getting value for their time
rather than value for their money. The marketers therefore need
to offer them speedy delivery with greater convenience. 

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• Diversity, the Hallmark:Indian consumers are not
a homogeneous lot. They are marked by great
diversity.
Religious diversity:
• The one billion people of India belong to seven
different religious groups—Hindus, Muslims,
Christians, Sikhs, Buddhists, Jains and Zoroastrians.
In addition, there are other persuasions and there
are sects, sub-sects, castes and sub-castes.

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• Linguistic diversity:
• The same diversity is seen in the matter of
language. Sixteen languages have been
specified in the Constitution of India as
national languages. In addition, there are
hundreds of dialects.

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MODEL OF C B
 CULTURE
an organized body of conventional
understandings  which includes knowledge,
belief, art, morale, laws, custom and any other
capabilities and habits as acquired by man as a
member of society."
Internal Influences
Perception
Learning
Memory
Motives
Emotions
Attitudes
Personality

Module 3
 Perception
The process through which individuals are:
• exposed to information,
• attend to the information, and
• Comprehend (interpret) the information

Exposure:
consumers receive information through their senses
Attention:
consumers allocate processing capacity to a stimulus
Comprehension:
consumers interpret the information to obtain meaning from
it
• Stimuli
• Attention – selective attention
 CONSUMER INVOLVEMENT

The process through which individuals are influenced by

the
•perceived personal importance and/or interest are evoke
by a stimulus
•Personal importance increases as perceived risk
increases.
•As involvement increases, consumers have greater
motivation to comprehend and elaborate on information
salient to the purchase.
Higher levels of involvement are expected to
result in
•A greater depth of information processing
•Increased awakening
•More extended decision making

Factors which can influence purchase

involvement:
•Situation
•Product
•Personality
•Communication
 Perceptual Selection
Consumers exercise selectivity as to the aspects of
environment they choose to perceive. An individual
may look at some things and ignore others.Eg.
Entering into a supermart.
Which stimulus gets selected depends on two factors:
1) Consumer’s previous experience as it affects
expectations.
2) Their motives at that time. (Needs, desires and
interests)
 Individual Characteristics
• Learning
A series of activities by which stimuli are
perceived, transformed into information and
stored.
The four activities in the series are:
exposure attention interpretation memory.

• Expectations
 Perceptual Encoding
• It is a process of assigning mental symbols to
sensations. These symbols can be numbers,
pictures or other representations.
• They are used to remember stimuli and do
subsequent thinking about them.
• It is a highly individualized process that is used
to derive personal meaning from stimulus
experiences.
 Stereotypes

Individuals tend to carry biased pictures in their minds of the

meaning of various stimuli which are termed as stereotypes
Marketers must be aware of possible stereotypes because these
images reflect people’s expectation
Eg Benetton white man black man ad.
 Opinion Leaders
• Individuals who are perceived to be knowledgeable about
various topics and whose advice is taken seriously by others
• They are considered Important in the information search and
evaluation stage
• A role taken on by different people in different situations
because they have perceived expertise in that area
• Unlike paid advertising, word of mouth communication from
opinion leaders is respected because they offer both positive
and negative information about a product’s performance
Marketing implications of opinion leaders

• Opinion leaders influence the diffusion of innovation : (the rate

that new ideas are widely accepted by markets) by encouraging
product interest as well as trial
• Products are endorsed by spokesperson or representatives that
are:
– Credible
– Attractive
– Trustworthy
• Market to opinion leaders,
for example: marketer
– Offer free samples to potential opinion leaders
– Encourage them to talk to others
Characteristics of individuals who adopt an innovation
at varying points of time
• Innovators (2.5%) – venturesome risk takers, capable of
absorbing the financial and social costs of adopting an
unsuccessful product.

• Are cosmopolitan in outlook and use other innovators rather

than local peers as a reference group.

• Younger, better educated and more socially mobile than their

peers. Use extensive use of commercial media, sales
personnel, and professional sources in learning of new
products.
• Early Adopters (13.5%) – tend to be opinion leaders
in local reference groups.

• Are successful, well educated, and somewhat

younger than their peers.

• Are willing to take a calculated risk on an innovation

but are concerned with failure.

• Use commercial, professional, and interpersonal

information sources and they provide information to
others.
• Early Majority (34%) – tend to be cautious about
innovations. Adopt sooner than most of their social
group but after the innovation has proven successful
with others.

• Are socially active but seldom leaders. Tend to be

somewhat older, less well educated, and less socially
mobile than the early adopters.

• Relies heavily on interpersonal sources of

information.
• Late Majority (34%) – are skeptical (doubtful) about
innovation.

• Often adopt more in response to social pressures or a

decreased availability of the previous products than
because of a positive evaluation of the innovation.

• Tend to be older and have less social status and

mobility than those who adopt earlier.
• Laggards (16%) – locally oriented and engage in
limited social interaction.

• Tend to be relatively dogmatic and oriented toward

the past.
•
Laggards adopt innovations only with reluctance.
 Diffusion of Innovation
• When a new product comes out, it is likely to first be
adopted by consumers who are more innovative than
others—they are willing to pay a premium price for
the new product and take a risk on unproven
technology.
• It is important to be on the good side of innovators
since many other later adopters will tend to rely for
advice on the innovators who are thought to be more
knowledgeable about new products for advice.
 Motivation
• Motivation is the reason of behavior.
• A motive is a construct representing an
unobservable inner force that stimulates and
compels a behavioral response and provides
specific direction to that response. A motive is
why an individual does something.
• McGuire’s 16 motives & their implications for
marketing
 Attitude
• An attitude is an enduring (continuing) organization of
motivational, emotional, perceptual and cognitive
processes with respect to some aspect of our
environment.
• Attitudes serve four key functions for individuals:
Knowledge function
Value-expressive function
Utilitarian / Adjustment function
Ego-defensive function
 Attitude components

Three components –

cognitive (beliefs): the belief of a individual affect its

attitude.
affective (feelings) : the feeling of the individual
effects its attitude
behavioral (response tendencies):
 Strategies for changing attitude and intentions

1. Low-involvement strategies
• Link the product or service to an involving issue (linking breakfast to
problem of deficient performance of children)
• Link the product to a presently involving personal situation.
(message targeted to customer when they are engage in activity related to product.
E.g. sun scream ads on midday in summer weekends )
• Develop (customers)high-involvement advertisements.
• Change the importance of product benefits. (if customer understand
the importance of product for them then they become more involved.)
• Reveal or introduce important product characteristics. This will
increase customer involvement.
2. High-involvement strategies
• Change existing beliefs about the consequences of behavior. (consumer have
incomplete belief about consequence of purchasing a brand, modifying these belief
will increase purchase intention)
• Change consumer’s evaluation of the consequences of a particular action .
(measures taken to increase customer evaluation of consequences of products)
• Introduce new belief/ evaluation combinations.(add or delete attributes to
generate positive consequences)
• Change existing normative beliefs.(customer hold favorable attitude but don’t
take action due to belief that other will not react favorably)
• Change motivations to comply with subjective norms. (ads may stress the
importance of being an individual product and no opinion of friends are required)
• Introduce new normative components. (introducing additional individual which
may become important for purchase.)
 Communication Characteristics that
Influence Attitude Formation and Change
• Source Characteristics:
1. Source Credibility
2. Celebrity Sources
3. Sponsorship
• Appeal Characteristics:
1. Fear Appeals
2. Humorous Appeals
3. Comparative Ads
4. Emotional Appeals
5. Value-Expressive versus Utilitarian Appeals
Levels of Consumer Decision Making

Extensive Problem
Solving

Limited Problem
Solving

Routine Response
Behaviour

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 Factors That Affect the Type of Decision Making
Process Used

• Importance of the decision

• Extent of previous experience
• Existence of well-established decision
criteria
• Amount of information at hand about each
alternative
• The number of alternatives available
• Model of consumption being followed

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Copyright © 2006 Pearson Education
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Consumer Decision Making – The Process

• Need Recognition
• Pre-purchase Search
• Evaluation of Alternatives

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 Need or Problem Recognition
• The realization that there is a difference
between actual and desired states
– The higher the gap, the stronger the need (or
bigger the problem)

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 Types of Problems
• Active Versus Inactive problems
– Active: those you are aware of
– Inactive: those that you are not yet aware of (but
exist)
• Those that require immediate solutions and
those that do not require immediate solutions

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Problem Recognition and Marketing Strategy

• Identify existing consumer problems and find

solutions for these
• Lower the actual state
• Increase the desired state
• Increase the importance of the gap between actual
and desired states
• Convert inactive problems to active problems
• Convert problems into ones requiring an immediate
solution

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 Pre-Purchase Search
• Types of Information Sources
• Types of Information Sought
• Factors Affecting Extent of Information Search

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Figure 14-3: Types of Information
Sources
PERSONAL IMPERSONAL

Friends Newspaper articles

Neighbors Magazine articles
Relatives Consumer Reports
Co-workers Direct-mail brochures
Computer salespeople Information from product
Calling the electronics store advertisements
Internal web site

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 Types of Information Sought
• Brands or alternatives available
• Evaluative criteria to be used
– Generally, product features
• Ratings of brands on evaluative criteria

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Copyright © 2006 Pearson Education
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 Factors that Increase the Level of
Pre-purchase Search
• Product Factors: Higher search when
– It is a long-lasting or infrequently used product
– There are frequent changes in product styling
– Large volume is purchased
– The price is high
– There are many alternative brands
– There is much variation in features
» continued

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 Factors that Increase the Level of
Pre-purchase Search
• Situational Factors: Higher search when:
– Experience is lower
– Previous experience was unsatisfactory
• Social Acceptability: Higher search when:
– Purchase is a gift
– Product is socially visible in use

» continued

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 Factors that Increase the Level of
Pre-purchase Search
• Value-Related Factors: Higher search when:
– Purchase is discretionary
– All alternatives have both positive and negative
qualities
– No agreement among users exists
– Conflicting information is available
– Other considerations exist
» continued

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 Factors that Increase the Level of
Pre-purchase Search
• Consumer Factors: Higher search when:
– Consumers are well-educated, have higher
income levels and are younger
– Consumers are low in dogmatism and risk
perception
– Level of involvement is high
– Shopping is seen as an enjoyable activity
» continued

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 Evaluation of Alternatives – Types of
Consumer Choice Processes
• Affective choices
– More holistic; an overall evaluation
– based on how one feels about a purchase
• Attribute-based choices
– Have pre-determined evaluative criteria
– May require both external and internal search
– Complicated decision rules may be used

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 Nature of Evaluative Criteria
• Can be tangible or intangible
• Include surrogate indicators
– Attributes that are used as indicators of another
attribute
• Are often ranked in order of importance

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 Consumer Decision Rules
• Procedures used by consumers to facilitate
brand or other consumption-related choices

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 Consumer Decision Rules
• Compensatory
– Brands evaluated in terms of each relevant criteria
and the best brand (or one with the highest score)
is chosen
• Non-compensatory
– Positive evaluations do not compensate for
negative evaluations

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 Non-Compensatory Consumer
Decision Rules
• Conjunctive Decision Rule
– Product attributes are identified
– a minimally acceptable cutoff point is
established for each attribute
– brands that fall below the cutoff point on
any one attribute are eliminated from
further consideration.
» continued

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 Non-Compensatory Consumer
Decision Rules
• Disjunctive Decision Rule
– consumers identify product attributes
– establish a minimally acceptable cutoff
point for each attribute
– accept the brand that meets or exceeds the
cutoff for any one attribute

» continued

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 Non-Compensatory Consumer
Decision Rules
• Lexicographic Decision Rule
– Product attributes are identified
– Product attributes are ranked in terms of
importance
– brands are compared in terms of the attribute
considered most important
– Brand that scores highest on the first attribute is
chosen
– If there is a tie, the scores on the next attribute
are considered
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Copyright © 2006 Pearson Education
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 Issues in Alternative Evaluation
• Lifestyles as a Consumer Decision Strategy
• Incomplete Information
• Non-comparable Alternatives
• Series of Decisions
• Consumption Vision
– Mental picture of the consequences of using a
particular product

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Coping with Missing Information

• Delay decision until missing information is

obtained
• Ignore missing information and use
available information
• Change the decision strategy to one that
better accommodates for the missing
information
• Infer the missing information

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Information Search and Marketing
Strategy
• Get products into consumers’ evoked set
• Limit information search if your brand is the
preferred brand
• Increase information search if your alternative
is not the preferred brand
• Use point-of-purchase advertising effectively

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 Alternative Evaluation and
Marketing Strategy
• Identify decision rule used by target market and use
suitable promotional messages
• Influence the choice of evaluative criteria
• Influence the rating of your product on evaluative
criteria used
• Use surrogate indicators effectively
• Use ‘consumption vision’

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•
CHARACTERISTICS OF CULTURE
(1) Culture is social:
• Culture does not exist in isolation. It is a product of society. It develops through social interaction. No
person can acquire culture without association with others.
• (2) Culture is shared:
• Culture is not something that an individual alone can possess. Culture in sociological sense is shared. For
example, customs, traditions, beliefs, ideas, values, morale etc. are all shared by people of a group or
society.
• (3) Culture is learnt:
• Culture is not inborn. It is learnt. Culture is often called "learned ways of behaviour". Unlearned behaviour
is not culture. But shaking hands, saying thanks' or 'namaskar', dressing etc. are cultural behaviour.
• (4) Culture is transmissive:
• Culture is transmissive as it is transmitted from one generation to another. Language is the main vehicle of
culture. Language in different form makes it possible for the present generation to understand the
achievement of earlier generations. Transmission of culture may take place by imitation as well as by
instruction.
• (5) Culture is continuous and cumulative:
• Culture exists as a continuous process. In its historical growth it tends to become cumulative. Sociologist
Linton called culture 'the social heritage' of man. It becomes difficult for us to imagine what society would
be like without culture.
• (6) Culture varies from society to society:
• Every society has a culture of its own. It differs from society to society. Culture of every society is unique to
itself. Cultures are not uniform. Cultural elements like customs, traditions, morale, values, beliefs are not
uniform everywhere. Culture varies from time to time also.
• (7) Culture is dynamic:
• No culture ever remains constant or changeless. It is subject to slow but constant change. Culture is
responsive to the changing conditions of the physical world. Hence culture is dynamic.
FAMILY LIFE CYCLE
 How Consumer Influences Drive
Marketing Decisions (Basis for Audit)
Consumer Influences
Marketing Decisions
• External Influences
– Culture & values • Market Segmentation
– Demographics, income & social class
– Reference groups & households
– Marketing activities
• Internal Influences
– Needs, motives & emotions
– Perceptions & memory
– Personality & lifestyle • Product Positioning
– Attitudes
• Situational Influences
– Physical, time, social, task & antecedent
• Decision-Process Influences
• Marketing Mix

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 Sociocultural Influences
• Our consumer behavior is affected by
our relationships with other people.
• Family
• Reference Groups
• Culture and Subculture

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 FAMILY
• How does the family affect consumer
behavior?
(consumer socialization)
• Family Life Cycle
• Who is the Decision Maker
(Husband dominant, wife dominant, and joint
decision making)

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 Reference Groups
• People to whom an individual looks as a source of
personal standards.
• Most important determinant of reference group
influence -Product’s conspicuous
• Three types of reference groups
membership group
aspiration group
dissociative group

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 Culture
• The set of values, ideas, and attitudes that are
learned and shared among the members of a group
or society.

• Examples – American culture, Latin American culture,

Japanese culture

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 Subculture

• Subgroups within a larger culture that have

unique values, ideas, and attitudes
• Racial/ethnic subcultures
• Age subcultures
• Regional subcultures

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 Country of Origin Effects:
Positive

• Many consumers may take into consideration

the country of origin of a product.
• Country-of-origin commonly:
– France = wine, fashion, perfume
– Italy = pasta, designer clothing, furniture, shoes,
and sports cars
– Japan = cameras and consumer electronics
– Germany = cars, tools, and machinery

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 Country of Origin Effects:
Negative
• Some consumers have animosity toward a country
– People’s Republic of China has some animosity to Japan
– Jewish consumers avoid German products
– New Zealand and Australian consumers boycott French
products

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 Cross-Cultural Consumer Analysis

Issues
• Similarities and • The greater the similarity
differences among between nations, the
people more feasible to use
relatively similar marketing
strategies
• Marketers often speak to
the same “types” of
consumers globally
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 Cross-Cultural Consumer Analysis

Issues
• The growing global • Growing in Asia, South
middle class America, and Eastern
Europe
• Marketers should focus
on these markets

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 Cross-Cultural Consumer Analysis

Issues
• The global teen market • There has been growth in an
affluent global teenage and
young adult market.
• They appear to have similar
interests, desires, and
consumption behavior no
matter where they live.

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 Alternative Multinational Strategies: Global
Versus Local

• Favoring a World Brand

• Are Global Brands Different?
• Multinational Reactions to Brand Extensions
• Adaptive Global Marketing
• Frameworks for Assessing Multinational
Strategies

Copyright 2010 Pearson Education, Inc. Publishing as Prentice Hall Chapter Thirteen Slide 82