Consumer Behavior PDF

Consumer Behavior: Consumer behavior refers to the study of how individuals or groups make decisions to purchase, use, and dispose of goods and services. It explores the factors that influence their buying patterns, including psychological, social, and cultural elements. Þ What do consumers buy?:...

Consumer Behavior: Consumer behavior refers to the study of how individuals or groups make decisions to purchase, use, and dispose of goods and services. It explores the factors that influence their buying patterns, including psychological, social, and cultural elements. Þ What do consumers buy?: Consumers buy products and services that fulfill their needs, wants, or solve specific problems. The items purchased vary based on personal preferences, lifestyle, and circumstances. Þ Why do they buy, when do they buy?: Consumers buy to satisfy functional needs, emotional desires, or social influences, often motivated by promotions, convenience, or timing such as seasonal trends or life events. They may purchase impulsively or after thorough research depending on the situation. Þ How often do consumers buy?: The frequency of consumer purchases depends on the nature of the product—some are bought regularly like groceries, while others are occasional purchases such as electronics or luxury goods. Þ For what reason do they buy?: Consumers buy products for various reasons, including solving problems, enhancing comfort, expressing identity, or keeping up with trends. Their motivations can be practical, psychological, or emotional. Consumer Behavior - The study of individuals and organizations and how they select and use products and services. - Consists of how the consumer’s emotions, attitudes, and preferences aFect buying behavior. - It is mainly concerned with psychology, motivations, and behavior. Two Consumer Entities 1. Personal Consumer o End user = individual who buys goods and services for his or her own use, for household use, for the use of a family member, or for a friend. 2. Organization Consumer o A business, government agency, or other institution (profit or nonprofit) organizations that buys the goods, services, and/or equipment necessary for the organization to function. o Need to run organizations. IMPORTANCE: § The study of consumer buying behavior is most important for marketers as they can understand the expectation of the consumers. § It helps to understand what makes a consumer buy a product. § It is important to assess the kind of products liked by consumers so that they can release it to the market § “Marketers can understand the likes and dislikes of consumers and design base their marketing eForts based on the findings.” The study of consumer buying behavior is crucial for marketers because it provides deep insights into consumer expectations, enabling them to tailor their oFerings eFectively. By understanding the factors that influence consumer decisions—such as product features, brand loyalty, or external influences—marketers can create strategies that align with consumer desires. Additionally, analyzing consumer preferences allows marketers to predict which products are likely to be successful. By identifying the types of products consumers like or dislike, businesses can introduce or modify products to better meet market demand, reducing the risk of product failure. This knowledge also helps marketers design targeted campaigns that appeal to consumers' specific preferences, enhancing the overall eFectiveness of their marketing eForts. TYPES OF CUSTOMER/MARKET 1. Personal Consumer 2. Organizational Consumer Market Þ Market is a composition of systems Þ Institutions Þ Procedures Þ Social relations or infrastructures whereby parties engage in exchange. Deeper Meaning for Market: A market is more than just a place where goods and services are bought and sold; it’s a complex system that involves various components working together to facilitate exchanges. This includes systems such as supply chains, logistics, and distribution networks that ensure products reach consumers eFiciently. Institutions like banks, regulatory bodies, and businesses play a key role in establishing rules, managing transactions, and ensuring fair practices in the market. Procedures refer to the established processes for transactions, from pricing strategies to sales contracts, all of which ensure smooth and standardized exchanges. Social relations and infrastructures encompass the human element and the physical structures needed for market functioning. Social relationships—like trust between buyers and sellers or consumer loyalty—help sustain long-term exchanges, while infrastructures such as roads, telecommunications, and digital platforms support the physical and digital flow of goods and services. Together, these elements create a dynamic environment where parties engage in economic activity. Þ An aggregate of people who, as individuals or organizations, have needs for products in a product class and who have the ability, willingness, and authority to purchase such products. Þ Most markets rely on sellers oFering their goods or services to buyers in exchange for money. Personal Consumer/Consumer Market - Consist of purchaser and household members who intent to consume or benefit from the purchased product. - Ex. Housing, food, clothing, furniture, recreational equipment, and so on. Characteristic of Consumer Market - “Target the interest, likes, and dislikes opinion and values of the consumer.” 1) Demographic Consumer Markets o Consumers’ age, income, social and economic background, gender, size of their family, ethnicity, religion, culture, education level, job type, social class, and nationality. 2) Psychographic Consumer Markets o Values, interests, opinions, attitudes, and activities of the consumers.  3) Behavioralism Consumer Markets o How people react towards certain oFers: when company oFers them certain benefits and packages. 4) Geographic Consumer Markets o Means the location of the consumers and where they are situated. o Includes population density, size of the market, region, rural, urban, and climate of the market. Organizational Consumer Þ Often referred to as business or B2B (business-to-business). Þ Purchase capital equipment, raw materials, semifinished goods, and other products for use in further production or operations or for resale to other. Similarities: 1. Similar process – both consumers and organizations have needs and wants to fulfill, they try to determine the specifications and features of the products or services that they want. 2. Both subject to social influences. o In organizational buying, a group of people (the buying center) are usually responsible for making purchases. When we purchase as individuals, social influences are generally involved (family and friends). 3. An exchange – MONEY DiZerentiate the Organizational Buyer to Consumer Buyer Organizational buyers are entities that purchase goods and services for business use, often in larger quantities and with a focus on meeting specific operational needs. They typically follow a structured procurement process, involving multiple decision-makers and criteria such as cost, quality, and supplier reliability. In contrast, consumer buyers are individual customers purchasing products for personal use, influenced more by personal preferences, emotions, and social factors. While organizational buyers prioritize long-term relationships and value-driven decisions, consumer buyers may be more impulsive and less systematic in their purchasing behaviors. DiFerences of Organizational Buyer to Consumer 1) Purchased capital equipment, raw materials, semifinished goods, and other products for use in further production or operations. 2) Require exact product specifications. 3) Apply value analysis; compare costs versus benefits of alternative materials, components, designs, or process. 4) Organizations tend to be geographically concentrated. 5) Derived demand – purchased I based on the anticipated level of demand by their customers for specific goods and services. 6) Demand is volatile. 7) Buying involves decision making by groups and enforces rules for making decisions. 8) There are far fewer organizations than final consumers. MODEL OF BUYER BEHAVIOR 8 P’s of the Marketing Mix 1) Product o This refers to the goods or services oFered by a business to meet customer needs. It encompasses features, quality, branding, and packaging that distinguish it from competitors. 2) Price o Price involves the amount customers pay for the product, which can aFect perceived value and demand. It includes pricing strategies, discounts, and payment terms, influencing profitability and market positioning. 3) Place o Place refers to the distribution channels and locations where the product is made available to customers. It includes decisions on logistics, market coverage, and retailing strategies to ensure accessibility and convenience. 4) Promotion o This encompasses the various marketing communications used to inform and persuade potential customers about the product. It includes advertising, public relations, sales promotions, and digital marketing strategies to enhance visibility and engagement. 5) People o People are the individuals involved in the marketing and delivery of the product, including employees, sales staF, and customers. Their skills, attitudes, and interactions can significantly impact customer experience and brand perception. 6) Positioning o Positioning refers to how a product is perceived in relation to competitors in the minds of consumers. It involves creating a unique image and identity that highlights the product's benefits and diFerentiates it from others in the market. 7) Processes o Processes are the operational workflows and systems involved in delivering the product to customers. This includes the eFiciency and eFectiveness of service delivery, customer service, and overall user experience. 8) Performance o Performance evaluates the success of the marketing mix in achieving business objectives, such as sales growth, market share, and customer satisfaction. It involves analyzing key performance indicators (KPIs) to measure eFectiveness and drive continuous improvement. Cultural factors: Þ Set of basic values, perceptions, wants, and behaviors learned by a member of society from family and other important institutions exert the broadest and deepest influence on consumer behavior. Þ Language, Religion, Values, and social norms can shape consumer preferences and behaviors. Þ Social norms are shared standards of acceptable behavior by groups. Social factors: Þ Defined as two or more people who interact to accomplish individual or mutual goals, such as the consumer’s small groups, family, and social roles and status. Personal factors: Þ The buyer’s age and life-cycle stage, occupation, economic situation, lifestyle, and personality, and self-concept. Psychological factors: 1) Motivation – desire to act in service of a goal. o Biological, arising from states of tension such as hunger, thirst, or discomfort. o Psychological, arising from the need for recognition, esteem, or belonging. Þ Most of these needs will not be strong enough to motivate the person to act at a given point in time until that need becomes a motive (drive) when it is aroused to a level of intensity that is suFiciently pressing to direct the person to seek satisfaction of the need. 2) Perception – the process by which people select, organize, and interpret information to form a meaningful picture of the world is a motivation to a person who is ready to act. “How the person acts are influenced by his or her perception of the situation. Two persons with the same motivation and in the same situation may act quite diFerently because they perceive the situation diFerently.” 3) Learning – when people act, they learn. o Learning describes changes in an individual’s behavior arising from experience.  o Learning occurs through the interplay of drives, stimuli, cues, responses, and reinforcement. 4) Belief and attitude – through doing and learning, people acquire beliefs and attitudes. o A belief is a descriptive though that a person holds about something. o Attitudes describe a person’s relatively consistency, favorable or unfavorable evaluations, feelings, and tendencies toward an object or idea. § Marketers are interests in the beliefs that people formulate about specific products. § Marketers should usually try to fit its products into existing attitudes rather than attempt to change attitudes. Social Factors: 1) Reference Groups Reference groups are generally of two types: A. Primary Group – consist of individuals one interacts with on a regular basis. a. Friends b. Family Members c. Relatives d. Co-workers “We tend to pick up products our friends recommend.” B. Secondary Groups – secondary groups share indirect relationship with the consumer. a. Religious Associations b. Political Parties c. Clubs “More formal and individuals do not interact with them on a regular basis.” 2) Role in the Society 3) Social Status There are three diFerent processes which lead to diFerence in perception: Selective Attention – selective attention refers to the process where individuals pay attention to information that is of use to them or their immediate family members. - (Interested in only those which would benefit him in any way not be interested in information which is not relevant at the moment.) Selective Distortion – consumers tend to perceive information in a way which would be in line to their existing thoughts and beliefs. Selective Retention – consumers remember information which would be useful to them, rest all they forget in due course of time. LEARNING: Þ Learning comes only through experience. Þ An individual comes to know about a product and service only after he/she uses the same. Þ An individual who is satisfied with a particular product/service will show a strong inclination towards buying the same product again. Organization Buying Situations Þ A buying situation occurs when organization discovered that it has a need for product that could be solved by buying a product. A buying situation is simply the set of circumstance surrounding a purchase. Buying Situations Three major types buying situations: 1) Straight rebuy o In this buying situation, the buyer records something without any modifications. o Buyers are likely to skip researching suppliers and products since they have previously ordered from this specific vendor. o It is usually handled on a routine basis. o Try to maintain products and service quality. o A straight rebuy is a buying situation where a company reorders the same products in the same quantity from the same supplier. o In this purchasing situation, buyers are likely to skip researching suppliers and products since they have previously ordered from this specific vendor. - While the ‘out suppliers’ try to oFer something new or exploit any dissatisfaction recorded by the in-suppliers so that the buyer will consider them. - “If you don’t like something, change it. If you can’t change it, change your attitude.” A = 1, T = 20, T = 20, I = 9, T = 20, U = 21, D = 4, E = 5 Reactive business strategies are those that respond to some unanticipated event only after it occurs. Proactive strategies are designed to anticipate possible challenges. 2) Modified rebuy o A company wants to reorder but needs to modify some elements of their previous orders. o The change can be in terms of the: Supplier, Delivery Time, Packaging, Price, Quality or Quantity. 3) New buy/New task o A new buy also called a new task, is a buying situation in which a company places an order with a supplier for the first time. o An organizational buying situation in which the organization has had no previous experience with the purchase of product of the kind required. o This purchasing type takes longer since you need to conduct in-depth research and analysis on products from various suppliers to make the right decision.