Transcript What is Consumer Behavior?

By
Sunita Sen
Schiffman & Kanuck
“Consumer behavior refers to the behavior that
consumer display in searching for, purchasing, using,
evaluating and disposing of goods and services that
they expect will satisfy their needs & study of
consumer behavior is the study of how individual
make decisions to spend their available resources like
time, money, efforts on consumption related items.
.
 Includes
all things in the environment that
influence thoughts, feelings, and actions of
consumers .

Comments from other consumers

Advertisements

Price information

Packaging

Product appearance
 Customer
– regular purchaser of a particular
store or company
 Consumer
– potential purchases of products
and services ‘offered for sale’.
 purchasing
for the purpose of individual or
household consumption.

Personal Consumer: Who buys goods and services for his
personal use (e.g. haircut, toothbrush, towel, etc.), or
Household consumption (e.g. sugar, furniture, telephone
service etc.), or a birthday present for a friend (e.g. A pen
set, greeting card, etc.)
These are the “end users” or “ultimate users”.

Organizational Consumer: This includes profit and non-profit
organizations, government agencies (like schools, hospitals),
organizations requiring equipment and services to run their
organizations (e.g. raw materials, technology, advertising
services to communicate to their customers).
1.
Psychology: It is the study of the individual, which
includes motivation, perception, attitudes, personality and
learning theories.
2.
Sociology: It is the study of groups. The influences of
group memberships, family and social class on consumer
behavior are important for the study of consumer behavior.
3.
Social Psychology: It is a combination of psychology and
sociology and studies how an individual operates in a
group. It also studies how peers, reference groups, their
families and opinion leaders influence individuals in their
consumption behavior
4.
Cultural Anthropology: It is the study of human beings in
society. It explores the development of core beliefs,
values and customs that individuals inherit from their
parents and grandparents. This helps to compare
consumers of different nationalities and cultures.
5.
Economics: It is the study of how consumers spend their
funds, how they evaluate alternatives, and how they
make decisions to get maximum satisfaction from their
purchases.

Thinking, feelings, and actions of individual
consumers, targeted consumer groups, and
society at large are constantly changing.

Requires ongoing consumer research and
analysis of important trends.

Makes development of marketing strategies
difficult and exciting.

Shorter product life-cycle increases importance of
constant innovation.
 Interactions
among people’s thinking, feelings
and actions, and the environment

Marketers need to understand:

What products and brands mean to consumers?

What consumers must do to purchase and use them?

What influences shopping, purchase, and consumption?
 Exchange
between people involves giving up of
something of value and receiving something in
return.
 Role
of marketing in society is to help create
exchanges by formulating and implementing
marketing strategies.
1.
Analyzing Market Opportunity: Consumer
behavior study helps in analyzing the
unsatisfied needs and wants (e.g. trends like
consumer’s lifestyles, income levels, etc.)
2.
Selecting Target Market: A review of Market
opportunities enabled the marketers to design
products and promotion strategies for specific
segments of consumers as per their
requirement only. E.g. Shampoo sachet.
3.
Marketing Mix Decisions: Right mix of
product, price, distribution and promotion.
4.
5.
6.
7.
Product: Size, shape, features, Packaging,
Warranties and Accessories etc. E.g. Nestle
introducing different flavors in Maggi
noodles.
Price: How the Company’s product is
perceived by the consumer.
Promotion: Different promotional efforts
for personal and organizational consumer.
Distrbution:
 Need
Recognition
 Pre-purchase Search
 Evaluation of Alternatives
 The
realization
that there is a
difference between
actual and desired
states

The higher the gap,
the stronger the
need (or bigger the
problem)
 Depending
on need intensity two states on
individual’s are:


Heightened attention
Active information
 Sources




of information search
Personal
Commercial
Public
Experiential
 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

Evoked Set

Objective characteristics (features and
functionality of the product)
Subjective characteristics (perception
and perceived value of the brand by
the consumer or its reputation).
“evoked set”: “The evoked set”
(“consideration set”) is the set of brands
or products with a probability of being
purchased by the consumer (because he
has a good image of it or the information
collected is positive).
 “inept set” is the set of brands or
products that have no chance of being
purchased by the shopper (because he
has a negative perception or has had a
negative buying experience with the
product in the past).
 “inert set” is the set of brands or
products for which the consumer has no
specific opinion.

Purchase!
 Consumer
Buying Decision Process and his
decision process may also depend or be
affected by such things as the quality of his
shopping experience or of the store (or
online shopping website), the availability of
a promotion, a return policy or good terms
and conditions for the sale.
 If
the experience with the product was
average or disappointing, the consumer is
going to repeat the 5 stages of the Consumer
Buying Decision Process during his next
purchase but by excluding the brand from his
“evoked set”.
Consumer Decision Making Model
Extensive
Problem Solving
Limited Problem
Solving
Routine Response
Behaviour
1.
Extensive Problem-Solving: It is usually initiated by the motive
that is fairly central to the self-concept and the decision is
perceived to carry a fair degree of risk.
2.
Limited Problem Solving: It usually involves recognizing a
problem for which there are several solutions. There is limited
amount of external search and more internal search, simple
decision rules are followed on a few attributes and a little postpurchase evaluation is required.
3.
Routinized Problem Solving: When a consumer buys a brand he
has bought before, it usually involves little or no information
seeking and is performed quickly. There is a likelihood that
repeat purchases are made on the basis of habits or
routines.
Limited Problem Solving: If the item being purchased is low value and
frequently bought, it follows that the buyer will spend less time and
effort and will have less involvement with the purchase.
Extended Problem Solving: An expensive high
risk infrequent purchase will require a lot of
detailed information and careful analysis before
deciding which one to purchase.
A
process by which individuals acquire the
purchase and consumption knowledge and
experience that they apply to future related
behavior.
Simplified model of consumer learning:

There are two approaches to the study of
learning,

Behavioural approach: learning takes place in
response to events/happenings in a person’s
external environment.
Classical conditioning
 Operant conditioning


Cognitive approach to learning: learning takes
place as a result of a person’s conscious and
deliberate information processing and storage
activity

Pairing a stimulus
with another
stimulus that elicits
a known response to
produce the same
response when used
alone.
Strategic Applications of Classical Conditioning:

Repetition : Signs, symbols, logos, colours and jingles
help facilitate consumer learning through the process
of association
Cosmic variation
 Substantive variation


Stimulus Generalization: This is defined as
phenomenon that occurs when a stimulus is so similar
to another stimulus, that the former evokes the same
response as the Latter. Example “me too” products.


The inability to perceive differences between slightly dissimilar
stimuli.
Stimulus Discrimination: the ability to differentiate
a particular stimulus from among similar stimuli.
The Pavlovian Theory has implications for
marketers. Consumers respond to learning
via classical conditioning when:
 -The level of perceived risk is low (and
cognitive effort is not required)
 Products are low on differentiation
 Purchases are routine; convenience goods
and impulse items
 learning
based on a trial-and-error
process, with habits forced as the result
of positive experiences (reinforcement)
 The
Operant Conditioning Theory has
implications for marketers. Consumers
respond to learning via instrumental
conditioning when:



Trial can be attempted before purchase
Purchases are linked to desirable affective
experiences
There is higher involvement and greater
cognitive activity
 Make
the product the ultimate
reward
 Provide samples and free trials
 Provide non-product rewards
 Practice relationship marketing
 Reinforcement Schedules
 Shaping

Learning through problem
solving, which
enables individuals to gain some control
over their environment.
 Factors
that can affect a consumer's
ability to process, store and retrieve
knowledge are familiarity with the
information, relevance of the
information, interest in the information,
the form in which it is provided etc.
 Central
and Peripheral Routes to
Persuasion
 highly
involved consumers are best reached
through ads that focus on the specific
attributes of the product (the central route)
 uninvolved consumers can be attracted
through peripheral advertising cues such as
the model or the setting (the peripheral
route).
a
person’s level of involvement
during message processing
determines which route to
persuasion is likely to be effective
Involvement
HIGH
LOW
Central Route
Peripheral
Route
Message
Arguments
Influence
Attitudes
Peripheral
Cues
Influence
Attitudes
 For
low-involvement purchases, marketing
communication through TV is the right
media; consumers learn via repetition, i.e.
exposure to the same message over TV again
and again.
 On
the other hand, in cases of highinvolvement purchases, the print media acts
as right choice while selection of media.
Monadic models
1. Economic model
2. Response
hierarchy model
3. Black box model
Eclectic or
multivariable
models:
1. Howard Sheth
model
2. Nicosia
3. Engel, Blackwell
and Miniard
model
4. Product adoption
model
Elasticity model:
1.


As price increases, other things remaining
constant, demand of the commodity will go
down.
Purely economic model
Response Hierarchy model:
2.


Purely Psychological model
Defines sequence of mental stages that
consumer passes through before buying
Cognitive
Affective
Behaviour
3. The Black Box Model:


Stimulus – response model
The stimuli that is presented to the consumer by the
marketer and the environment is then dealt with by the
buyer’s black box. The buyer’s black box, comprises
two sub components, viz., the buyer’s characteristics
and the buyer decision process.
 Represents
a major revision of an earlier
systematic effort to develop a
comprehensive theory of buyer decision
making.
 This model depicts and creates a distinction
among three stages of decision-making.



Extensive Problem Solving
Limited Problem Solving
Routinised Response Behaviour

Inputs: environmental stimuli that the consumer is
subjected to, and is communicated from a variety
of sources




Significative stimuli
Symbolic stimuli
Social stimuli
Hypothetical construct can be classified as:
Perceptual construct: serve to control, filter and process
the stimuli that are received.
 Sensitivity to information.
 Perceptual bias.
 Search for information
Learning constructs: perform the function of consumer’s
concept formation. Motive, evoked set, decision
mediators, predispositions, inhibitors, satisfaction






Output:
The output variables on the right of the model represent the
buyers’ response.
Attention refers to the degr ee or level of information th at a
buyer accept s when exposed to a stimulus. It reflects the
magnitude of the buyer's information intake.
- Comprehension is the amount of information that he actually
processes and stores; here, it refers to brand comprehension
which is buyers’ knowledge about the product/service category
and brand.
- The attitude is the composite of cognition, affect and behaviour
towards the offering; the attitude reflects his evaluation of the
brand and the like/dislike based on the brand potential.
- Intention refers to the buyer’s intention to buy or not to buy a
particular offering.
- Purchase behavior refers to the actual act of buying. The
purchase behavior is a cumulative result of the other four
constituents.
 Exogenous

variables:
These
are
explained
as
Inhibitors
or
environmental forces that restrain the purchase
of a favoured brand; e.g.., importance of the
purchase, price, financial status of the buyer,
time at the disposal of the buyer, personality
traits, social pressures etc

The model describes a flow of influences where
each component acts as an input to the next

This Model concerns with the Inter-relationship
between:





The firms marketing communications
The attributes of the consumer
The consumers decision process including search and
evaluation process, Actual decision process
The feedback of the consumers response to the firm
This is a Dynamic Model.
EKB model shows the various components of
consumer decision making and the
relationships/interactions among them.
 The model consists of five parts, viz.
information input, information processing,
decision process stage, decision process
variables, and external influences.

It tries to explain clearly the interrelationships
between stages in the decision process and the
various variables.
 They attempted to relate belief-attitudeintention. An attempt was made to define the
variables and specify functional relationships
between the various constructs.
 However, the model fails to adequately explain
as to how each of these influences consumer
decision making. Critics argue that there are too
many variables; these have not been defined;
the model is vague and complex; and the validity
of the model has been questionable.



Diffusion of innovations theory popularised by Everett
Rogers tries to demonstrate how, at what rate and why
innovated products and technology are spread and what
type of consumers adopt them at various stages of product
life cycle
Categories of adopters:





Innovators: these people are willing to take risk & experience
the new ideas. They generally belong to highest social class.
Early adopters: these people have highest degree of opinion
leadership and are second fastest category of consumer to
adopt innovation.
Early majority: these people belonging to above average
status and are slower in adopting innovations.
Late majority: these people have high degree of scepticism
and adopt product after majority of people adopted the
innovation.
Laggards: they are last to adopt the innovation and show no
opinion leadership
 The
business market consists of all the
organizations, that buy goods and services
for further use in the production and supply
of other goods and services that are sold to
others.
 Also called B2B markets, the product and
service offering is bought by one business
organization and further
processed/transformed/assembled consumer
for further sale either to another business
consumer or a personal consumer.
 Characteristic






include:
Huge in terms of size and investment
Contain fewer but larger and bulkier buyers
They are geographically concentrated
It’s a derived demand and there is more
inelasticity
Demand also fluctuates very rapidly.
The buying decision is taken in a very formal and
professional manner by a group of people who
are referred to as the buying centre.




Problem recognition: The buying process begins
when someone in the organization identifies a need.
A need could be triggered off by an internal stimulus
or an external stimulus.
General need description: The product/service
requirement is laid out in very broad terms.
Product specification: Then the concerned
department/person specifies the product’s
characteristics and requirements.
Supplier search: Business organizations generate for
themselves a list of vendors. This list is drawn up
from trade directories, websites, trade shows etc. In
case of a straight rebuy or a modified rebuy, the
buyer can refer to such a database. In cases of a
new-task, he would have to search for new vendors.

Proposal solicitation: Thereafter, the buyer
would invite suppliers to submit their trade
proposals; such an invitation could be
placed in the newspapers, trade journals
and company websites. The vendors are
asked to submit details related to the
product specifications, features, price,
delivery time and period etc.

Supplier selection: After the proposals have
been submitted by the vendors, the buyer
would go in for an evaluation of the
suppliers. The buying centre would establish
the evaluative criteria, i.e. the basis on
which the vendors would be evaluated.
These
criteria
would
vary
across
products/services, buying situations etc.

Order-routine specification: Once the
buying center has taken a decision on the
selection of the vendor, the formal
requisition is made in terms of listing the
technical specifications, quantity required,
delivery terms, negotiated price, payment
terms, damages, return policies etc.

Performance review: The buyer reviews the
performance of the chosen supplier(s) on a
regular basis. This evaluation helps the
buyer later in cases of straight rebuy and
modified rebuy. On the basis of an
evaluation, the relationship/contract with
the supplier is continued or terminated.