UNIT V: CONSUMER BEHAVIOUR PDF

UNIT V: CONSUMER BEHAVIOUR Unit UNIT TITLE: CONSUMER BEHAVIOUR Code: Duration: Locatio SESSION 1: MEANING AND IMPORTANCE OF CONSUMER BEHAVIOUR n: Learning Outcome Knowledge Evaluation Performance Teaching and Classro...

UNIT V: CONSUMER BEHAVIOUR Unit UNIT TITLE: CONSUMER BEHAVIOUR Code: Duration: Locatio SESSION 1: MEANING AND IMPORTANCE OF CONSUMER BEHAVIOUR n: Learning Outcome Knowledge Evaluation Performance Teaching and Classro Evaluation Training Method om or 1. Meaning and 1.Explain the meaning 1.Understanding the Interactive Lecture: Compa Constituents of and definition of term Consumer 1.Explaining ny’s Consumer Behaviour Consumer Behaviour Behaviour in themeaning and premise marketing definition of s 2.Consumer 2.Discuss the 2.Identify consumer Consumer Behaviourv/s Constituents of and buyer the two Behaviour and Consumption Behaviour consumer Behaviour major components their v/s Buyer Behaviour and types of of buying components; the consumers and buyers behaviour significance of 3.Importance of 3.Distinguishing Consumer studying Consumer 3.Substantiate between Consumer behaviour Behavior: importance of behaviour; Activity: Consumer behaviour; Consumption Identify various Behaviour and Buyer types of consumers Behaviour and buyers in the 4..Explaining the market significance of Consumer behaviour SESSION 2:FACTORS AFFECTING CONSUMER BUYING BEHAVIOR 1. Factors affecting Discuss various 1.Determination of Interactive Lecture: Consumer Buying cultural factors, social cultural and sub Explanation of Behaviour factors and cultural factors cultural factors, psychological factors 2. Determination social factors and influencing consumer ofsocial factors psychological behaviour 3. Determination factors with ofpsychological examples factors in consumer Activity: behaviour Collect informationregardi ng cultural factors, social factors and psychological factors influencing consumers in a Shopping Mall SESSION 3: ROLES OF BUYING BEHAVIOUR  Different roles played Identify and Understanding of the Interactive Lecture: Discus by consumer understand the various eight roles played by Explain the roles with cultura buying roles played people in the suitable examples. social by consumer in consumer decision Activity: Undertake a psycho different kinds of process role play of the influen purchase situations. different roles in the consum buying process. SESSION 4: STAGES OF BUYING BEHAVIOUR Understand the Comprehend the various Recognize the five Interactive Lecture: stages in the aspects to be considered stages involved in Explain the stages of consumer while making making a decision consumer decision decision making purchasing decisions. of purchase. making process with process suitable examples. Activity: Prepare a flowchart after of the stages involved in purchasing a high involvement and a low involvement product.. (Note: The location would depend upon the topic under discussion, wherein it will be the classroom for the theoretical interactions and the student will be required to visit field/retail outlet or the marketing department of an organization to observe and comprehend the concepts related to marketing.)  Learning Objectives After reading this unit, the students will be able to: UNIT V: BUYING BEHAVIOUR 1. Comprehend the meaning of Consumer Buying Behaviour 2. Identify consumer and buyer the two major components of buying behavior 3. Distinguish between Consumer behaviour; Consumption Behaviour and Buyer Behaviour 4. Recognize the importance of Consumer behaviour 5. Understand the factors affecting Consumer Buying Behaviour 6. Know the different roles of consumer 7. Comprehend the various stages of consumer buying process SESSION I Consumer Behaviour The marketing mix strategies of a marketer spin around various queries regarding consumer behavior, like what type of product consumer purchases in general; what factors persuade him to buy a good; why does he buy a specific brand from a particular shop; why does he shift his preferences from one brand to another or from one store to another; what is his reaction to a new product introduced in the market and through which stages he passes before making a decision to purchase a product. The knowledge of the consumers’ demographic profile and buying habits is very essential for the marketers to make their marketing plans for achieving sales targets. From the behavior which consumers displays in searching for, purchasing, using, evaluating, and disposing of products and services, marketers get idea to satisfy their needs. According to Schiffman and Kanuk consumer behaviour is defined as the study of how individuals make decisions to spend their available resources (time, money, effort) on consumption-related items. It includes the study of ‘what they buy’, ‘why they buy’, ‘when they buy’, ‘where they buy’, ‘how often they buy it’ and ‘how often they use it." This definition is quite comprehensive because it starts before actual buying and goes even after purchase of the product. The goal of studying consumer behaviour is to satisfy their needs, while utilizing their time, money, and effort in best possible way. Constituents of consumer Behaviour: Consumer behavior encompasses two constituents, namely consumer and buyer. 1. Consumer-"Consumer" and "Customer" the interchangeably used terms are different in meaning. The term "consumer" is used to represent a situation where a product can be consumed, and "customer" is used to deal with situation where the product is purchased and may not be directly consumed. For instance consumers of items like food, drugs, etc. but customers of garments, consumer durables, cars, etc. There may be a) Individual consumer is the person who buys goods and services etc. for personal or household use. b) Organizational/Business/Industrial Consumer is the person who buys goods and services etc. for processing them for the ultimate users including personal/individual consumers. For example, if the purpose is to use furniture for self and family, one acts as an individual consumer. But if furniture is purchased by the office, it is organizational purchase. 2.Buyer/User The term "buyer" refers to one who buys product. But buyer might not be the user of product. For example, Manish buys a blazer for her father. Manish is the buyer but the ultimate user is his father. Importance of studying Consumer Behavior: The study of consumer behavior is very relevant for effective marketing management. It helps significantly in the formulation of production and marketing strategies in the following manner- 1. Knowledge of consumer behavior helps to determine the marketing mix- The management keeps on exploring -what type of product consumer purchases in general; what factors persuade him to buy a good; why does he buy a specific brand from a particular shop; why does he shift his preferences from one brand to another or from one store to  another or what is his reaction to a new product introduced in the market. These facts give signals to producers about marketing mix to be arranged for their product and to serve consumers in better manner. 2. To assess consumer’s actions or reactions- The consumer seeks value for money. He wants to pay fewer prices, but expects superior features in the product. This has led many marketers to introduce quality products at prices which are affordable to the customers. 3. To meet diversified consumer preferences –With globalization customers got more availability of more choices compared to pre-1991 era. For example, the customer now has many brands of cars to choose from like Hyundai, Honda, Mercedes, BMW etc 4. A guide to planning and implementing marketing strategies - Knowledge of consumer behaviour can serve as a great help to formulate and implement marketing strategies to achieve goals of the firm. 5. To address special needs, personalities, and lifestyles of consumers- Consumer prefer differentiated products to reflect their special needs, personalities, and lifestyles. The study of consumer behavior helps to satisfy such special needs. For example, when Onida 21 was introduced, it was advertised on the television ‘for the elite classes.’Similarly Maggi introduced their ketchups with emphasis on "It's different" 6. To identify market segmentation. This also helps to classify market segments to market the products effectively. For example LIC provides its insurance cover to suit the needs of different types of customers- Jeevan Suraksha (Financial security and post-retirement benefits), Asha Deep II (Medical covers), Jeevan Shree (to retain key individuals in the organisation), Jeevan Surabhi (Money back with rising insurance cover), Jeevan Mitra (double benefit endowment plan), Money Back (for periodic cash flows), and Bima Kiran (for low-cost, high insurance cover). 7. To remain updated with technological advancement and bring new products to the market at faster pace-Studying consumer behavior is  imperative to get to know consumers’ expectations and address them quickly. Thus, identification of target market before production is essential to deliver the desired consumer satisfaction and delight by bringing product to the market at faster pace. Knowledge Assessment - I State whether the following statements are true or false: 1. From the consumers behaviour displayed in searching , purchasing, using, evaluating, and disposing of products, marketers get a fair idea to satisfy their needs 2. The goal of studying consumer behaviour is to satisfy customers’ needs, while utilizing their time, money, and effort in best possible way. 3. Consumer is the person who purchases the product but may not directly consume it. 4. Industrial Consumer buys goods and services for processing them for the ultimate users and earns profit. 5. Consumer wants to pay less price, but expects superior features of the product. 6. The study of consumers behaviour helps to classify market segments to market the products effectively Answers: 1. True, 2. True 3. False, 4. True, 5. True, 6. True SESSION II: FACTORS AFFECTING CONSUMER BUYING BEHAVIOR Factors affecting Consumer Buying Behavior: To satisfy their needs, consumers tend to buy goods and services and come to a decision to make the best use of their resources (time, money, effort). Consumer behaviour is the study of What to buy, Why to buy, When to buy, Where to buy, How often to buy and Use it. In this buying process, many factors influence the decision-making. Most of these factors are inter-dependent and inter-related, and can be divided into four main categories 1. Cultural Factors: Culture is a combination of values and beliefs, religions and customs, which influence consumer behaviour directly or indirectly. In a society, the cultural study can be made by over viewing religion, customs, language, traditional arts, work-patterns of people. Culture is prescriptive, socially shared, facilitator of communication, subjective, cumulative and dynamic. The thinking patterns are passed from generation to generation. These factors make an important basis for market segmentation, product development, advertising, etc. The consumption habits, eating habits, food-preferences, etc. signal the producers about what should be produced and supplied in the market. For example, in India, beef preparations are generally not found on the menu cards of most restaurants and food chains, as Hindus do not eat beef. Similarly a sub-culture consisting of psychological, social or geographical source of consumer group indicates their unique demand-pattern in consumption-behaviour. For example, in north India, people prefer wheat- chapati as staple food whereas in the south, people prefer rice. In any society, social class of individuals and families with similar values, interests and behavior creates almost identical demand patterns. 2.Social Factors: Social factors like family and reference groups also play significant role in determining consumer behavior in the following manner. (a) Family Consumer buying decisions are influenced by many social factors like the economic condition of the family, its role and status in society, and the reference group of people. People with high incomes have a high purchasing power and are status-conscious. They generally purchase branded products from malls and expensive markets. On the contrary, the ordinary people, belonging to middle or lower income groups purchase products from local markets. Similarly, the urban population's buying behaviour will be different from the rural-population's buying behaviour, as they have greater exposure and choices. (b)Reference Groups A reference group comprises of two or more persons realizing common goals, group values, attitudes and behaviour. Friends or other people with whom one identifies himself constitute a reference group. While making purchases, such reference groups play a vital role as recommendations are made by the group- members, who may also become a source of information. Marketers, sometimes, use the ‘reference group-influence’ by suggesting in advertisements that a specific reference group buys this particular brand of products and is highly satisfied. For example: Amway products, Patanjali products are promoted by organic product users. The group member who provides information about a specific sphere that interests members of a group is called an opinion-leader. The opinion-leader can exert maximum influence when consumers have high-product involvement but low product knowledge. ( c) Roles and Status: An individual has many roles to play in their lives; at their workplace, they have different duties as compared to the duties they are expected to fulfill at home. Roles and status help marketers to prepare their products and market them not only as per the customer's requirements, but keeping in view the status those individuals enjoy, so that the customers are targeted at the right place. For example, fully automatic washing machines are beneficial for a working woman, and are advertised accordingly. (d) Age and life-cycle stage This is an important determinant of the goods demanded by a consumer. If the consumer is young, he/she will demand more of trendy clothes, recreational facilities like gyms and spas, grooming products such as deodorants, cosmetics, etc. Elderly consumers will demand more of medicines, healthy-foods walking sticks, health-care facilities etc. (e) Education and Occupation The level of education and occupation of the consumer also decides his/her consumption behaviour. For example, a business executive may go for expensive business suits, electronics like laptops and smart phones, or memberships of clubs, whereas a clerk will buy simple clothes and ordinary, cheaper goods. (f) Economic conditions People in the high income bracket have higher purchasing power. They buy expensive and trendy goods. On the contrary, people in the low-income groups buy simple and relatively cheaper goods. (g) Lifestyle Lifestyles are identified by observing activities, interests, opinions, and demographics. The activities of individuals like work, hobbies, vacations, social activities and community service, shopping, sports etc. indicate a lot. People's interests can be observed from their preferences of food, fashion, recreation, media choice etc. 3. Psychological Factors To effectively market a product, marketers need to go to a psychological level of a consumer. The study of a consumer's thinking helps to find out- How consumers think, feel, reason, react to different environments and select between different alternatives (e.g., brands, products, and retailers) The behaviour of consumers while shopping or making other marketing decisions The extent of consumer knowledge or information processing abilities which influence decisions and marketing outcome What motivates consumers and their decision making strategies for different products How can marketers adapt and improve their marketing campaigns and marketing strategies to more effectively reach the consumer. Under this category, the following variables can be identified:  (a) Motivation A need becomes a motive when it is aroused to a sufficient level of intensity and a motive is a need that is sufficiently pressing to drive the person to act. Thus, motivation drives the consumers to develop a purchasing attitude. It works at a subconscious level and is often difficult to measure. For example a buyer goes to a nearby restaurant and orders pizza for herself, because hunger was the motivating factor for her to purchase pizza. Recognition and self-esteem also influence the buying decision of individuals. Individuals prefer to spend on premium brands and unique merchandise for others to look up to them. Certain products become their status symbol and people know them by their choice of picking up exclusive products. (b) Perception What a person thinks about a particular product or service is his/her perception towards it. For someone a Dell Laptop might be the best laptop while for others it could be just one of the best brands available. Thus, we understand that individuals with the same needs might not purchase similar products due to difference in perception. Individuals, even, perceive similar situation differently due to difference in the way they interpret information. ©Learning Learning comes only through experience. An individual comes to know about a product and service only after he/she uses the same. An individual who is satisfied with a particular product/service will show a strong inclination towards buying the same product again. (d)Beliefs and Attitudes Beliefs and attitude play an essential role in influencing the buying decision of consumers. Individuals create a certain image of every product or service available in the market. Every brand has an image attached to it, also called its brand image. Consumers purchase products/services based on their opinions which they form towards a particular product or service. A product might be really good but if the consumer feels it is useless, he would never buy it. (e)Personality Personality is the collection of inner psychological attributes that characterize the outer behavior an individual in terms of individual differences. Personality traits like dominance, self-confidence, sociability or adaptability of a person influence his decision making up to great extent whereas an individual’s personality may change gradually but plays a vital role in his buying and consumption behaviour. Thus to conclude, we can say that consumer behavior is an outcome of numerous cultural, social and psychological factors. Knowledge Assessment - II Fill in the blanks: 1. In a society, the----------- can be made by over viewing religion, customs, language, traditional arts, work-patterns of people. 2. The cultural factors make an important basis for ------------------, product development, advertising. 3. Recognition and ---------------- also influence the buying decision of individuals. 4. Roles and status help marketers to prepare and market their products not only as per the customer's requirements, but keeping in view------------- those individuals enjoy. 5. An individual who is satisfied with a particular product will show a ---------------- towards buying the same product again. 6. Individuals with the same needs might not purchase similar products due to difference in ----------------------. 7. To effectively market a product, marketers need to go to ------------- of a consumer Answers: 1.cultural study 2. market segmentation 3.self-esteem4.the status 5.strong inclination 6.perception 7. psychological level SESSION 3: DIFFERENT BUYING ROLES Individuals or group of consumers play diverse roles in different kinds of purchase situations. There exists no hard and fast role that buyers need to play; it is possible to characterize roles in the context of purchase decision. It has been observed that there are eight different roles played by people in the consumer decision process. Initiator: The initiator is a person who first gets the thought or gives the suggestion/idea of buying the particular product. A child might play the role of an initiator in the purchase process of a chocolate. Influencer: The influencer is a person who directly or indirectly has some influence on the final buying decision of others. The parents play the role of influencers in the purchase process of a chocolate. Gatekeeper: The gatekeeper is a person who permits the flow of certain information and restricts flow of some set of information. Parents play the role of a gatekeeper in the selection of movies for children. Decider: The decider is a person who finally determines part or the whole of the buying decision, ie. all quantity like whether to buy, what to buy, how to buy, when to buy or where to buy are considered. In the event of buying baby products, the mother plays the role of the decider. Buyer: The buyer is the person who actually purchases and pays for the purchase. In a typical family decision making process, father plays the role of the buyer who is involved in the economic transaction process. User: The user is the person who actually uses or consumes the services or products. In most of the grocery product purchase, the entire family uses the product. In a typical purchase of washing machine, the housewife plays the role of user. Preparer: The preparer is the person who changes the product to usable form for consumption. For example, in a typical family consumption of food items, mother plays the role of preparer. Maintainer: Members who service or repair the product so that it will provide continued satisfaction is a maintainer. Disposer: The disposer is the person who finally disposes the package of the product. For example mother plays the role of a disposer after the product is consumed by the family. The task of the marketers is to understand the buying process and the role of the participants in the buying process. He should initiate all of them to make a purchase of his product at different stages and through different strategies. The study of consumer behavior will be incomplete if one discusses only about single role of the consumer. In certain purchase decisions might involves at least one person acting one role, on other occasions a single individual can play several roles at the same time. The important ones that are played by the consumer are. KNOWLEDGE ASSESSMENT 1. ------------of consumers play diverse roles in different kinds of purchase situations. 2. The ---------is a person who first gets the thought or gives the suggestion/idea of buying the particular product. 3. The ---------play the role of influencers in the purchase process of a chocolate. 4. ---------is a person who directly or indirectly has some influence on the final  buying decision of others 5. Parents play the role of a in the selection of movies for children. 6. Decider is a person who finally determines ---------of the buying decision. 7. Father plays the role of the-------- who is involved in the economic transaction process. 8. -----------is the person who actually uses or consumes. 9. The------------ is the person who changes the product to usable form for consumption. 10.The --------is the person who finally disposes the package of the product. ANSWERS: 1. Individuals or group 2. Initiator 3. Parents 4. Influencer 5. Gatekeeper 6. Part or the whole 7. Buyer 8. User 9. Preparer 10. Disposer ACTIVITY: Prepare a list of ten products where the child plays an important role in the buying process SESSION IV: THE CONSUMER DECISION PROCESS Consumers undertake a step-by-step process while purchase a decision. The amount of time and effort they devote to a particular purchasing decision depends on the necessity of the desired good or service to the consumer. Purchases where high levels of social or economic issues are said to be associated are the high-involvement purchase decisions. Routine purchases that have little risk to the consumer are low-involvement decisions. Consumers generally spend more time and effort to make purchase decisions for high- involvement products than to those for low-involvement products. Fox example, a person purchasing air conditioner/refrigerator will probably compare prices, visit dealer showrooms, read online reviews and ask for advice from friends before making the final decision. People might not invest huge effort in choosing between two brands of chocolates. They will also go through the steps of the consumer decision process but on a smaller scale. Purchase decisions can be thought-based (cognitive) or feeling based (emotive). It is observed that both cognition and emotion affect every purchase decision with either one of them dominating the decision at a given point of time. For example we can analyze different consumer purchase decision as follows: Classification of Consumer Purchase Decisions Thought-based Feeling-based Example: Example: Buying a home Jewellery Example: Example: Buying a car Snacks THE CONSUMER DECISION PROCESS Problem recognition (Need identification) Information Search Evaluation of Alternatives Purchase Decision and Action Post-Purchase Evaluation CONSUMER DECISION PROCESS STAGES 1. Problem Recognition –During the first stage of the consumer decision making process, the consumer becomes aware of the difference between the actual state (where we are now and the ideal state (‘where we want to be’)). This stage motivates the individual to achieve the desired state of affairs. Here they may also play a role through creating a new ideal state or by increasing dissatisfaction with the actual state. The factors as mention 2. Information Search – In the second stage, the consumer gathers information related to his/her fulfillment of a desired state of affairs. This search identifies alternative means of problem solution. High- involvement purchases may invite large information searches, while low- involvement purchases require little search activity. The search may include internal or external sources of information. During the internal search existing information feelings and experiences similar to the problem solving situation are recalled from the consumer’s memory. An external search collects information from outside sources, which may include family members, friends, store displays, sales personal, advertisements and product reviews. The external search may be a general ongoing search or a specific pre-purchase search. The search identifies the other existing brands for consideration and possible purchase. The number of brands that a consumer actually considers in making a purchase decision is known as the evoked set. Marketers seek to influence consumer decisions during the process of search by providing persuasive information about their goods or services in a format useful to consumers. 3. Evaluation of Alternatives-The third step in the consumer decision making process is to evaluate the evoked set of options identified during the search step. The result of the evaluation stage helps in choosing a brand or product in the evoked set or might also result in a decision to start search for additional alternatives, when all those which were identified during the initial search seem to be unsatisfactory. To complete this analysis, the consumers develop a set of evaluation criteria to guide the selection. These criteria can either be objective facts or subjective impressions. Marketers can attempt to influence the outcome from this stage in numerous ways. Initially, they can try and educate  consumers about attributes that they view as important in evaluating a particular class of goods. They can also identify which criteria evaluate are important to an individual and attempt to show why a specific brand fulfills those criteria. They can try to help a customer in expanding his/her evoked set to include the product they are offering. 4. Purchase Decision and Action The search and alternative evaluation stages of the decision process result in the final purchase decision and the act of making the purchase. At this stage, the consumer has evaluated each alternative in the evoked set based on his/her personal set of evaluative criteria and lowered the alternatives down to one. Marketers can smooth the purchase decision and action by helping consumers through providing finance, delivery, and installation and so on. 5. Post-Purchase Evaluation- The purchase act might result in one of two: Satisfaction – The buyer feels satisfied at the reduction of the gap between the actual and the ideal states or might experience dissatisfaction with the purchase. Consumers are generally satisfied if purchases meet with their expectations. Dissatisfaction – Sometimes, however, consumers experience some post purchase anxieties, called cognitive dissonance. It is a thought that one has not made the right decision. The consumer attempts to reduce this anxiety by searching for additional information that supports his/her choice. The marketer can help by providing supportive information to the buyer and also by positive marketing communications. The consumer buying process enables the consumers take informed decisions. Higher the extent of satisfaction, higher the possibility of repurchase. Marketers usually look to reduce dissatisfaction as a dissatisfied consumer not only shies away from a purchase but also affects others. KNOWLEDGE ASSESSMENT 1.Purchases where high levels of social or economic issues are said to be associated are the ----------purchase decisions 2. -------------purchases that have little risk to the consumer are low-involvement decisions 3. Consumers generally spend ------------to make purchase decisions for high- involvement products than to those for low-involvement products. 4. Purchase decisions can be-----------------.  5. In the stage of ----------the consumer becomes aware of the difference between the actual state and the ideal state. 6. An ---------search collects information from outside sources. 7. The number of brands that a consumer actually considers in making a purchase decision is known as the-------. 8. The search and alternative evaluation stages of the decision process result in the--------------. 9. Consumers experience some post purchase anxieties, called ------------- 10. Consumers are generally satisfied if purchases meet with their-------------. 10. ANSWERS: 1. High-involvement 2. Routine 3. More time and effort 4. Cognitive or emotive 5. Problem recognition 6. External 7. Evoked set 8. Final purchase decision 9. Cognitive dissonance 10. Expectations ACTIVITY: Prepare a flowchart to identify the steps involved in consumer decision making process of a high involvement and a low involvement product. Exercise Questions: 1. Discuss the activities of both final and intermediate users in the study consumer behaviour. 2. How does consumer behaviour help in determining the marketing mix by the firms? 3. What do you understand by ‘value for money’ in consumer behavior? 4. Why is the study of Consumer Behavior important for a firm? 5. What do you mean by a ‘reference group’? Explain ‘reference group- influence’ used by marketers to promote a product. 6. ‘Cultural factors and sub- cultural factors are very helpful in studying consumer behavior.’ Do you agree with the statement? Discuss. 7. How does economic condition and life style indicate consumers' purchasing behavior? 8. Explain various social factors which influence consumer behavior in a society. 9. Why do marketers need to study psychological factors related to consumer behavior. 10.How does motivation drive consumers to develop a purchasing attitude towards a product? Explain. 11.Discuss the role played by personality to determine consumer behavior in a market. 12. Describe the various roles played by a person in the buying process 13.Give examples of the roles played by a child and mother in the process of buying. 14.Describe the various stages of the consumer decision making process 15.Differentiate between the decision making process of high involvement and low involvement products. 16. How do the personal variables affect the process of decision making? 17.Why is it important to study the post purchase behaiour 18.What factors are likely to increase the pre-purchase search for information.