Consumer Behavior and Market Types

Consumer Behavior

• Consumers are final users, individual households buying goods and services for personal consumption.
• Human behavior is influenced by internal and external factors.
• Consumer behavior encompasses actions consumers take when making purchasing decisions.

Types of Markets

• Consumers: Personal purchases
• Resellers: Buying and selling goods
• Wholesalers: Selling goods in bulk
• Retailers: Selling goods in units
• Businesses: Using goods/services for operations
• Institutions: Providing services
• Government: Public use
• International: Overseas transactions

Importance of Consumer Behavior for Business

• Improved Marketing Strategies: Understanding customer needs and preferences allows for tailored marketing campaigns, resulting in more effective advertising, promotions, and sales.
• Product Development and Innovation: Insights into customer behavior help identify market gaps, develop products to meet unmet needs, and improve existing offerings.
• Enhanced Customer Experience: Personalized customer experiences, including service interactions and overall shopping experiences, build customer loyalty and satisfaction.
• Increased Customer Loyalty: Strong customer relationships and understanding needs strengthens customer loyalty and repeat business.
• Competitive Advantage: Understanding consumer behavior better than competitors provides a significant competitive edge in the marketplace.

Consumer Decision-Making Stages

• Pre-Purchase:

  • Problem Recognition: Consumer identifies a need or want.
  • Information Search: Consumer gathers information about potential solutions.
  • Evaluation of Alternatives: Consumer reviews choices based on factors like price, quality, and brand.

• Purchase:

  • Purchase Decision: Consumer selects a product or service from a vendor.
  • Actual Purchase: Consumer completes the transaction.

• Post-Purchase:

  • Post-purchase Behavior: Consumer's feelings and actions after purchase.
    • Customer Satisfaction: Consumer's level of happiness with the product/service.
    • Product Use and Disposal: How the product is used and disposed of.
    • Post-Purchase Dissonance: Anxiety or regret after a purchase, especially for high-involvement purchases.
    • Word-of-Mouth: Sharing experiences with others, affecting purchasing decisions.
    • Repeat Purchases: Repurchasing the same product or service.

Consumer Buying Decision Process

• Need Recognition: State of deprivation, desire for a product or service.
• Information Search: Personal and Non-Personal.
• Evaluation of Alternatives: Options and their criteria.
• Purchase Decision: Final choice.
• Post-Purchase Behavior: Satisfaction, Retention, Dissatisfaction.

Purchasing Behavior Segmentation

• High Involvement: Complex buying, Variety seeking, Dissonance reducing.
• Low Involvement: Habitual buying.
• Complex Buying Behavior: High involvement & significant differences between brands (expensive, infrequent, risky purchases)
• Dissonance-Reducing Buying Behavior: High involvement but little difference between brands (post-purchase anxiety)
• Variety-Seeking Buying Behavior: Low involvement & high brand perception differences (desire for change/novelty)
• Habitual Buying Behavior: Low involvement, little perceived difference between brands (routine purchases, low effort).

Approaches to Consumer Behavior

• Managerial Approach: Focuses on practical applications for business, including marketing strategies, product development, and customer relationships.
• Holistic Approach: Considers consumer behavior within a broader social and cultural context.

Factors Affecting Consumer Behavior

• Cultural: Norms, values, traditions, and behaviors shared by members of a society.
• Social: Class (AB, C, DE), Groups (Membership, Aspirational), Family (most important consumer buying organization), Roles & Status.
• Personal: Age & Life Cycle, Occupation, Lifestyle, Personality, Beliefs & Attitudes, Learning, Perception, Motivation.
• Psychological: Beliefs, Attitudes. Learning, Perception, Motivation.

Consumer Behavior Models

• Pavlovian (Classical Conditioning): Association of stimuli with a response.
• Economic Model: Pricing affects purchasing decisions.
• Input-Process-Output (IPO): Environmental stimuli, internal processing, and resulting responses.
• Psychological Model: Learning, perception, beliefs, and attitudes.
• Howard-Sheth: Complex decision-making process, including inputs, constructs, and outputs.
• Nicosia: Model for testing new products, focusing on consumer attitude and firm message.
• Engel-Kollat-Blackwell (EKB): External factors influence consumer decision-making.
• Expectation Confirmation: Post-purchase perceptions and satisfaction.

Stimulus Ambiguity

• Occurs when a stimulus can be interpreted in multiple ways.
• Causes confusion, varied responses, and potential negative perception.

Other Relevant Concepts

• Significance Stimulus: Elements in the environment or marketing mix capable of capturing a consumer's attention and influencing their perceptions, attitudes, or behavior.
• Overt Search (Actual): Deliberate consumer effort to seek information about a product/service to make a purchase decision.