Consumer Behaviour PDF

S O CONSUMER BEHAVIOUR H M T  Introduction  Consumer behaviour is a rapidly growing discipline of study. It means more than just how a person buys products. S O  It is a complex and multidimensional process and reflects the totality of consumers’ H decisions with respect to...

S O CONSUMER BEHAVIOUR H M T  Introduction  Consumer behaviour is a rapidly growing discipline of study. It means more than just how a person buys products. S O  It is a complex and multidimensional process and reflects the totality of consumers’ H decisions with respect to acquisition, consumption and disposal activities. M  Organisations realise that their marketing effectiveness in satisfying consumer needs and T wants at a profit depends on a deeper understanding of consumer behaviour.  Our consumption related behaviour influences the development of technology and introduction of new and improved products and services.  Definition of Consumer Behaviour “Consumer behaviour refers to the actions and decision processes of people who purchase goods S and services for personal consumption.” O  James F Engel, Roger D Blackwell and Paul W Miniard. H M “Consumer Behaviour” (Dryden Press, 1990) Consumer behaviour refers to “the mental and emotional processes and the physical activities of people who purchase and use goods and T services to satisfy particular needs and wants.”  Bearden et al. “Marketing Principles and Perspectives.” S O “The behaviour that consumers display in searching for, purchasing, using, evaluating and disposing of, if products and services that they expect will satisfy their needs.” H M  Leon G Schiffman and Leslie Lazar Kanuk, ‘Consumer Behaviour’, Prentice-Hall of T India, 4th ed. 1991  NEED TO STUDY CONSUMER BEHAVIOUR  Behaviour is the interaction with the surrounding ambiance, inherent in living creatures and mediated by their external and inner activeness. Thus consumer behaviour is the actions of S consumers in the market place and the underlying motives for those actions. O  Marketers expect that by understanding what causes consumers to buy particular goods and H services, they will be able to determine which products are needed in the market place, and which M are obsolete and how best to present those goods to the consumer. T  The study of consumer behaviour is the study of how individuals make decisions to spend their available resources (time, money, effort) on consumption-related items. In the words of Walters and Paul “consumer behaviour is the process whereby individuals decide what, when, where, how and from whom to purchase goods and services.”   The needs of studying consumer behavior have significant bearing on marketing decisions. S  It yields important information and insight into what consumers are O thinking. H  With these insights, marketing firms M may enhance their particular marketing T campaigns to successfully connect with consumers.  Need to study consumer behavior help marketers in many ways some points are as follows   1.Perception: Studying consumer behavior helps marketers understand consumer perceptions about a particular product or range of products. Uncovering and correcting erroneous perceptions about a particular product may give marketers an additional competitive advantage over competitors.  2. Attitudes: Consumer attitudes very often determine consumer beliefs about certain products. Discovering consumer attitudes allows marketers in tune with their campaigns to resonate with a particular consumer niche and S deepen marketing reach. O  3. Cultures: Changing population demographics around the world affect the way marketing campaigns are H designed. Understanding cultural nuances and subtleties may allow marketers to help further define their particular target market. M  4. Lifestyles: Consumer lifestyles also determine what products appeal to certain consumer markets. T Understanding consumer lifestyles is also a key component of consumer behavior that lets marketers make the appropriate appeals in promoting lifestyle products and further consumption of lifestyle products.  5. Experience: Like consumer attitudes, experience also covers consumer responses to certain products. By studying consumer behavior, marketing professionals can tap into consumer experiences with similar products to promote consumption and gain competitive advantage over competitors.  Consumer behaviour has two aspects:  The final purchase activity which is visible to us and the decision process which may involve the interplay of a number of complex variables not visible to us. S O In fact, purchase behaviour is the end result of a long process of consumer decision making. H M The study involves what consumer’s buy, why they buy it, how they buy it, when they T buy it, where they buy it, how frequently they buy it and how they dispose of the product after use.  Nature of Consumer Behaviour 1. Process: Consumer behaviour is a systematic process relating to buying decisions S of the customers. O The buying process consists of the following steps; H  Identification to buy the product. M  Information search relating to the product. T  Listing of alternative brands.  Evaluating the alternative (cost-benefit analysis)  Purchase decision.  Post-purchase evaluation by the marketer.  Influenced by Various Factors:  Consumer behaviour is influenced by a number of factors. S O  The factors that influence consumers include marketing, personal, psychological, situation based, social, cultural. H M T  Different for all Customers: All consumers do not behave in the same manner. Different consumers behave S differently. O The difference in consumer behaviour is due to individual factors such as nature of H the consumer’s life style, culture, etc., M T  Different for Different Products:  Consumer behaviour is different for different products. S O  There are some consumers who may buy more quantity of certain items and very low or no quantity of some other items. H M T  Region Bounded:  The consumer behaviour varies across states, regions and countries. For instance, S the behaviour of urban consumers is different from that of rural consumers. O Normally, rural consumers are conservative (traditional) in their buying behaviour. H M T  Vital for Marketers Marketers need to have a good S knowledge of consumer behaviour. O They need to study the various factors H that influence consumer behaviour of M their target customers. T The knowledge of consumer behaviour enables marketers to take appropriate marketing decisions.  Reflects Status: The consumer buying behaviour is no S only influenced by the status of a consumer, but it also reflects it. O H Those who own luxury cars, watches M and other items are considered by T others as persons of higher status.  Spread-effect: Consumer behaviour has a spread-effect. S The buying behaviour of one person may influence the buying behaviour of another O person. H For instance, a customer may always prefer to buy premium brands of clothing, M watches and otheritems etc. This may influence some of his friends, neighbours, T colleagues. This is one of the reasons why marketers use celebrities like Shahrukh Khan, Sachin to endorse their brands.  Standard of Living:  Consumer buying behaviour may lead to higher standard of living. The more a S person buys the goods and services, the higher is the standard of living. O H M Behaviour Keeps on Changing: T The consumer’s behaviour undergoes a change over a period of time depending upon changes in age, education and income level. Etc. for instance, kids may prefer colourful dresses, but as they grow up as teenagers and young adults, they may prefer trendy clothes.  Scope of Consumer Behaviour  Consumer behaviour was a relatively new field of study during the second half of S 1960s without a history or research of its own. O It is in fact a subset of human behaviour and it is often difficult to draw a distinct line H between consumer-related behaviour and other aspects of human behaviour. M T The discipline of consumer behaviour has borrowed heavily from concepts developed in other disciplines of study such as psychology, sociology, social psychology, cultural anthropology and economics.  1. Psychology 1. Psychology is the study of the individual which includes motivation, perception, S attitudes, personality and learning theories. O All these factors are critical to an understanding of consumer behaviour and help us H to comprehend consumption related needs of individuals, their actions and responses M to different promotional messages and products and the way their experiences and T personality characteristics influence product choices  2. Sociology is the study of groups. When individuals formgroups, their actions are sometimes quite different from the actions of those very individuals when they are operating alone. S O The influences of group memberships, family and social class on consumer behaviour are important for the study of consumer behaviour. H M T 3. Social psychology is a combination of sociology and psychology and studies how an individual operates in a group. It also studies how those whose opinions they respect such as peers, reference groups, their families and opinion leaders influence individuals in their consumption behaviour.  4. Cultural anthropology 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, which influence their purchase and consumption behaviour. S O It also studies subcultures and helps compare consumers of different nationalities and cultures. H 5. Economics: An important aspect of the study of economics is the study of how consumers M spend their funds, how they evaluate alternatives and how they make decisions to get maximum T satisfaction from their purchases. Despite the fact that consumer behaviour, as a field of study, is relatively of recent origin, it has grown enormously and has become a full-blown discipline of its own and is used in the study of most programmes of marketing study  Applications of Consumer Behaviour  Consumer behaviour principles are applied in many areas of marketing as discussed below: S Consumer behaviour study helps in identifying the unfulfilled needs and wants of consumers. O  This requires examining the trends and conditions operating in the marketplace, consumers’ lifestyles, H income levels and emerging influences. M  This may reveal unsatisfied needs and wants. T  Example: The trend towards increasing number of dual income households and greater emphasis on convenience and leisure have led to emerging needs for household gadgets such as washing machine, mixer grinder, vacuum cleaner and childcare centres etc.  Mosquito repellents have been marketed in response to a genuine and unfulfilled consumer need.  2. Selecting target market:  A review of market opportunities often helps in identifying distinct consumer S segments with very distinct and unique wants and needs. O  Identifying these groups, learning how they behave and how they make purchase decisions H enables the marketer to design and market products or services particularly suited to M their wants and needs. T  For example, consumer studies revealed that many existing and potential shampoo users did not want to buy shampoo packs priced at 60 or more and would rather prefer a low priced sachet containing enough quantity for one or two washes. This finding led companies to introduce the shampoo sachet which became a good seller.  3. Marketing-mix decisions:  Once unsatisfied needs and wants are identified, the marketer has to determine the S right mix of product, price, distribution and promotion. O  Here too, consumer behaviour study is very helpful in finding answers too many H perplexing questions. M T  Price: The second important component of marketing mix is price. Marketers must decide what price to charge for the product or service. S O These decisions will influence the flow of revenue to the company. H  Should the marketer charge the same, higher, or lower price in comparison to competition? Is the consumer price sensitive and would a lower price stimulate sales? M  Should there be any price discounts? Do consumers perceive lower price as being indicative of poor quality? T To answer such questions, the marketer must understand the way the company’s product is perceived by consumers, the importance of price as a purchase decision variable and how different price levels would affect sales. It is only through consumer behaviour study in actual buying situations that the marketer can hope to find answers to these important issues.  (c) Distribution: (c) Distribution: The next decision relates to the distribution channel, that is, where and how to offer products and services for sale. S O  Should the products be sold through all the retail outlets or only through selected ones? H  Should the marketer use only the existing outlets, which also sell competing M brands, or should newexclusive outlets selling only the marketer’s brands be created? T  Is the location of retail outlets important from consumers’ point of view?  Should the company think of direct marketing? The answers to these questions are furnished by consumer behaviour research.  Case study  Example: S  When Eureka Forbes introduced its vacuum cleaners many years ago, few stores knew O anything about this product and most were not willing to buy it. Consumer awareness H about the product was also low and no retail shops carried the product. M Under these circumstances, the company decided to sell the product only through personal T selling, with salespeople calling directly on the consumer at her/his home. These salespeople had enough time to explain and demonstrate the vacuum cleaner and convince prospects about its usefulness. Retail outlets would not have been suitable for this sales approach. This strategy was based on understanding of consumer behaviour and yielded good results.  (d) Promotion: Promotion is concerned with marketing communications to consumers. S The more important promotion methods are advertising, personal selling, sales promotion, publicity and direct marketing. O The marketer has to decide which method would be most suitable to effectively reach the consumers. Should it be advertising H alone or should it be combined with sales promotion? M The company has to know the target consumers, their location, what media do they have access to and what are their media preferences, etc. In most cases of industrial products there is very little or no advertising. T Brochures containing technical specifications are often posted to clients and the salespeople make follow-up visits. Consumer products get the maximum share of advertising. Pharmaceutical industry exclusively uses personal selling for prescription drugs. Insurance companies use both advertising and personal selling  4. Use in social and non-profits marketing:  Consumer behaviour studies are useful to design marketing strategies by social, S governmental and not-for-profit organisations to make their programmes such as family planning, awareness about AIDS, crime against women, safe driving, O environmental concerns and others more effective. H M T  UNICEF (greeting cards), Red Cross and CRY etc. make use of consumer behaviour understanding to sell their services and products and also try to motivate people to support these institutions.  Types of Consumer Behaviour There are four main types of consumer behaviour: S 1. Complex buying behaviour:This type of behaviour is encountered when consumers O are buying an expensive, infrequently bought product. They are highly involved in the purchase process and consumers’ research before committing to invest. H M Imagine buying a house or a car; these are an example of a complex buying behaviour. T 2. Dissonance-reducing buying behaviour:The consumers highly involved in the purchase process but has difficulties determining the differences between brands. ‘Dissonance’ can occur when the consumer worries that they will regret their choice.  3. Habitual buying behaviour: Habitual purchases are characterized by the fact that the S consumer has very little involvement in the product or brand category. O Imagine grocery shopping: you go to the store and buy your preferred type of bread.You are H exhibiting a habitual pattern, not strong brand loyalty. M T 4. Variety seeking behaviour: In this situation, a consumer purchases a different product not because they weren’t satisfied with the previous one, but because they seek variety. Like when you are trying out new shower gel scents.  Consumer Behaviour Model  1. Economic model: The economic model of consumer behaviour focuses on the S idea that a consumer's buying pattern is based on the idea of getting the most benefits while minimizing costs. O H  Thus, one can predict consumer behaviour based on economic indicators such as M the consumer's purchasing power and the price of competitive products. T  For instance, a consumer will buy a similar product that is being offered at a lower price to maximize the benefits; an increase in a consumer's purchasing power will allow him to increase the quantity of the products he is purchasing.  2. Learning model: This model is based on the idea that consumer behaviour is governed by the need to S satisfy basic and learned needs. O Basic needs include food, clothing and shelter, while learned needs include fear and H guilt. M Thus, a consumer will have a tendency to buy things that will satisfy their needs and T provide satisfaction. A hungry customer may pass up on buying a nice piece of jewellery to buy some food, but will later go back to purchase the jewellery once her hunger is satisfied.  3. Psychoanalytic model: The psychoanalytical model takes into consideration the fact that consumer S behaviour is influenced by both the conscious and the subconscious mind. O The three levels of consciousness discussed by Sigmund Freud (id, ego and superego) H all work to influence one's buying decisions and behaviours. M T A hidden symbol in a company's name or logo may have an effect on a person's subconscious mind and may influence him to buy that product instead of a similar product from another company.  4. Sociological model: The sociological model primarily considers the idea that a consumer's buying pattern is based on his role and influence in the society. S O A consumer's behaviour may also be influenced by the people she associates with and the culture that her society exhibits. H M For instance, a manager and an employee may have different buying behaviours given T their respective roles in the company they work for, but if they live in the same community or attend the same church, they may buy products from the same company or brand.  II. Contemporary models Engel-Kollat-Blackwell Model S Nicosia Model O Stimulus-Response Model H Howard-Sheth model (1969) M T  Models in Tourist Behaviour  The purpose of consumer behaviour models is to attempt to present a simplified version of the relationships between the different factors that influence consumer S behaviour. O  Various models have been developed to describe consumer behaviour with the H intention of trying to control behaviour patterns. M  Tourist behaviour involves the purchase, uptake and abandonment of tourist services that T include the wider underpinning hospitality services.  The purchase of these products and services includes a series of distinct phases including planning, decision-making, purchase, engagement and post-purchase, and all of these phases involve the consumer in a diverse range of buying behaviour.   Services have been defined by Kotler and Armstrong (2017) as S ‘Any activity or benefit that one party can offer to another that is essentially intangible and O does not result in the ownership of anything. Its production may or may not be tied to a physical H product. M  The intangible nature of the service offering has a considerable effect on the T consumer during the decision-making process involved with purchase.  Factors which influence the tourists in their decisions are as follows: Their social position in terms of their position in society and their family. S Their cultural background in terms of beliefs and attitudes. O H Their personal demographic profile in terms of gender, nationality, education, M and age. T Their psychological situation in terms of state of mind, perceptions, etc. Their economic situation in terms of price and purchasing power.  Variables and underlying concepts and consider the fact that the consumer has to adapt to different sets of circumstances according to a particular purchase decision. S O Decision-making is complex and includes planned and unplanned actions. H Values are an important part of the process. M Motivation is a key part of the underlying decisions. T Self-concept and personality influence the decision-making process. Expectations and whether these will be or are in fact realised influence the decisions made.   Attitudes have a big impact on the decisions made. S Perceptions impact on the decisions made and these are often influenced by word O of mouth and also the media. H M Satisfaction has a big influence on perceptions and can often have a major effect on repeat business and future behaviour. T Trust and loyalty are seen as being major contributors to consumer behaviour in tourism and may influence the tourist in terms of first and repeat purchases.  Tourist behaviour models  Mathieson and Wall (1982) S suggest a linear five-stage model of travel buying behaviour O H M T   Gilbert (1991) suggested a model for consumer decision-making in tourism, S This model suggests that there are two levels of factors that have an effect on the consumer. O H  The first level of influences is close to the person, and includes psychological M influences such as perception and learning. T  The second level of influences includes those that have been developed during the socialisation process, and includes reference groups and family influences. S O H M T  Middleton and Clarke (2001),  Middleton and Clarke (2001), at a later date, presented an adapted model of consumer S behaviour for tourism which is termed the stimulus-response model of buyer behaviour. O H The model is shown in Figure 3.4 which is based on four interactive components, with M the central component identified as ‘buyer characteristics and decision process’. T The model separates out motivators and determinants in consumer buying behaviour and also emphasises the important effects that an organisation can have on the consumer buying process by the use of communication channels. S O H M T  Cohen et al. (2014),  It can be seen in this model that the decision process is divided into pre-decision, on-site and post-decision. S O The important issues are the key underlying concepts that include motivations, perceptions and loyalty, the influences that have an effect on the final decision and the contexts that include under researched areas. This includes the new H demographic market segments including GenerationY who are said to have very different behaviour traits. M Another critical issue in relation to tourist behaviour is the role of technology. T One of the other issues that the paper discusses is the increasing role of spontaneous rather than planned decision- making which has tended to be the focus in the past consumer behaviour models. The rise of budget airlines and operators such as AirBnB S O H M T  The purchase decision process  The factors influencing tourists’ purchasing decisions are divided into the S following: O motivators – those factors that motivate a tourist to wish to purchase a particular H product M determinants – those factors that determine to what extent tourists are able to T purchase the products they desire.  What is Tourism Product ? S O H M T  We should begin with a few words about the tourism product itself. The product is complex and multi-layered in that: S O H it has both tangible elements (hotel beds, food, etc.) and intangible elements (service delivery) M it can range from a simple one-night stay in a hotel or a day trip to a theme park T to a tailor-made eight-week round-the-world itinerary.   The tourist buys an overall experience rather than a clearly defined product. The S experience has several clear phases: O H the anticipation phase before the trip commences the consumption phase during the trip M the memory phase after the trip has ended. T  The tourist is part of the production process in tourism, which means that: their attitudes, mood and expectations affect their evaluation of their tourist S experience rather than just the quality of the product they are offered by the industry O H their behaviour directly impacts on the experience of their fellow tourists with M whom they share a resort, aircraft or hotel T The tourist experience is heavily influenced by external factors, which are beyond the control of the tourist or the company that sells them a product. These external influences include weather, strikes, war and disease outbreaks.  Motivators  Motivating factors in tourism can be split into two groups: S O H those that motivate a person to take a holiday those that motivate a person to take a particular holiday to a specific destination at a M particular time. T S O H M T  The leisure motivation scale In 1983, Beard and Raghob developed a model called the ‘leisure motivation scale’, S which seeks to clarify motivators into four types, based on the work of Maslow (1943). O H The four types are as follows. M T The intellectual component, which assesses the extent to which individuals are motivated to engage in leisure activities involving mental activities such as learning, exploring, discovery, thought or imagery.   The social component, which assesses the extent to which individuals engage in leisure activities for social reasons. This component includes two basic needs – the need S for friendship and interpersonal relationships, and the need for the esteem of others. O H The competence-mastery component, which assesses the extent to which individuals engage in leisure activities in order to achieve, master, challenge and compete. M The activities are usually physical in nature. T The stimulus-avoidance component, which assesses the desire to escape and get away from over-stimulating life situations. For some individuals it is the need to avoid social contact, to seek solitude and calm conditions; for others it is the need to rest and unwind.  Determinants  These factors will determine whether an individual will be able to take any S vacation at all and if he or she takes, what type of vacation it will be. We identify and explain two types of determinants: personal and external. O H  At the same time, we also recognise that unforeseen circumstances and M opportunism, as well as rational decisions based on determinants, can also play a T role in purchase decision-making in tourism.  There are two types of determinants: S O H factors that determine whether someone will be able to take a holiday factors that determine the type of trip if the first set of determinants allow a M holiday to be taken. T  The type of trip taken can encompass a huge range of variables, including:  the destination S  when the trip will be taken  the mode of travel O  the duration H  who will comprise the holiday party or group M  the type of accommodation T  the activities undertaken during the holiday  how much will be spent on the trip  We can further subdivide determinants into those that are: S O  personal to the tourist H  external to the tourist. M T S O H M T S O H M T  The factors in Figure 5.2 can be divided into subfactors, as the following examples demonstrate S O Political factors: H government legislation and policy immigration restrictions and visa requirements M civil disorder and terrorism T nature of the political system taxation policy, e.g. airport taxes tourist taxes.  The media: S  travel media, e.g. holiday features on television, in newspapers and in guidebooks O  non-travel media, e.g. news programmes and wildlife programmes on television H  social media, which are perhaps becoming the most important of all today M Tourism organisation marketing: T  advertising campaigns of foreign destinations  brochures provided by tour operators  offers and promotions given by online travel agencies S O H M T