PAPER 202: CONSUMER BEHAVIOUR

Marks: 100 [Terms and Examination 70]

[Internal Assessment -30]

Course Objective
This course aims at enabling students to understand why and how consumers make consumption
and buying decisions. This would enable them to make better strategic marketing decisions.
UNIT – I
Concepts – Significance – Dimensions of Consumer Behaviour – Application of knowledge of
Consumer Behaviour in marketing decisions.
UNIT – II
Industrial and individual consumer behaviour models - Howard- Seth, Engel – Kollat, Webstar
and wind Consumer Behaviour Models – Implications of the models on marketing decisions.
UNIT – III
Psychological Influences on consumer behaviour – motivation – perception – personality -
Learning and Attitude- Self Image and Life styles – Consumer expectation and satisfaction.
UNIT – IV
Socio-Cultural Influence, Cross Culture - Family group – Reference group – Communication –
Influences on Consumer behaviour
UNIT – V
High and low involvement - Pre-purchase and post-purchase behavior – Online purchase decision
process – Diffusion of Innovation – Managing Dissonance - Emerging Issues – case studies.

REFERENCES
1. Assel, Consumer Behavior - A Strategic Approach, Biztranza, 2008.
2. David L. Louden and Albert J Della Bitta, Consumer Behavior, McGraw Hill, New Delhi 2002.
3. Frank R. Kardes, Consumer Behaviour and Managerial Decision Making, 2nd Edition. Indian
Edition, 7th Edition 2005.
4. Jay D. Lindquist and Joseph Sirgy, Shopper, Buyer and Consumer Behavior, Biztranza,2008.
5. Leon G.Schiffman and Leslie Lasar Kanuk, Consumer Behavior, Pearson Education,India,
2002.
6. Paul Peter et al., Consumer Behavior and Marketing Strategy, Tata McGraw Hill,
7. Sheth Mittal, Consumer Behavior- A Managerial Perspective, Thomson Asia (P) Ltd.,2003.
 Consumer Behaviour

Meaning and Definition:

A consumer is a person or group of individual who buys goods and/or services for their own use.

Consumer behaviour is the study of how individual customers, groups or organizations select, buy,
use, and dispose ideas, goods, and services to satisfy their needs and wants. It refers to the actions
of the consumers in the marketplace and the underlying motives for those actions.

Marketers expect that by understanding what causes the consumers to buy particular goods and
services, they will be able to determine—which products are needed in the marketplace, which are
obsolete, and how best to present the goods to the consumers.

The study of consumer behaviour assumes that the consumers are actors in the marketplace. The
perspective of role theory assumes that consumers play various roles in the marketplace. Starting
from the information provider, from the user to the payer and to the disposer, consumers play these
roles in the decision process.

The roles also vary in different consumption situations; for example, a mother plays the role of an
influencer in a child’s purchase process, whereas she plays the role of a disposer for the products
consumed by the family.

Studying consumer behavior is important because it helps marketers understand what influences
consumers’ buying decisions. By understanding how consumers decide on a product, they can
fill in the gap in the market and identify the products that are needed and the products that are
obsolete. Studying consumer behavior also helps marketers decide how to present their products
in a way that generates a maximum impact on consumers. Understanding consumer buying
behavior is the key secret to reaching and engaging your clients, and converting them to purchase
from you.
A consumer behavior analysis should reveal:
 What consumers think and how they feel about various alternatives (brands, products, etc.);
 What influences consumers to choose between various options;
  Consumers’ behavior while researching and shopping;
 How consumers’ environment (friends, family, media, etc.) influences their behavior.

Difference between Consumer and Customer:

 Meaning: While a consumer is the one who consumes goods or services and is the end-user, a
customer is the one who actually buys it. A consumer can be a customer but the reverse is not
true.
 Target Audience: A consumer could be anybody. Be it an individual, or a company, maybe a
family or a mass. But a customer is more like a single entity or a company as a whole.
 Selling Purposes: While a consumer does not hold the right to sell the product, he got to
someone else. However, a customer is eligible to do so.
 Reason: While the reason behind a consumer purchase is consumption, exclusively, on the other
hand, the reason behind a customer purchasing it could either be consumption or sell it again to
someone else.
 Transaction: A consumer might or might not have to hold a monetary transaction for the purpose
of getting the goods. Nonetheless, a consumer must undergo a transaction if he wishes to take the
product or service.

Types of consumer behavior

There are four main types of consumer behavior:
1. Complex buying behavior
This type of behavior is encountered when consumers are buying an expensive, infrequently
bought product. They are highly involved in the purchase process and consumers’ research before
committing to a high-value investment. Imagine buying a house or a car; these are an example of
a complex buying behavior.
2. Dissonance-reducing buying behavior
The consumer is 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. Imagine you are buying a lawnmower. You will choose one based on price and
convenience, but after the purchase, you will seek confirmation that you’ve made the right choice.
3. Habitual buying behavior
Habitual purchases are characterized by the fact that the consumer has very little involvement in
the product or brand category. Imagine grocery shopping: you go to the store and buy your
preferred type of bread. You are exhibiting a habitual pattern, not strong brand loyalty.
4. Variety seeking behavior
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.

Nature of Consumer Behaviour:

1. Influenced by various factors:
The various factors that influence the consumer behaviour are as follows:
a. Marketing factors, such as product design, price, promotion, packaging, positioning and dis-
tribution.
b. Personal factors, such as age, gender, education and income level. Age factor is a significant
issue in buying decision of the product.
c. Psychological factors such as buying motives, perception of the product and attitudes towards
the product. Say for beer and other drinks consumption of which depends on perception of the
consumers.
d. Situational/ seasonal factors such as physical surroundings at the time of purchase, social
surroundings and time factor.
e. Social factors such as social status, reference groups and family. Many a time you can what our
peer groups or friend circles purchase we prefer to buy the same products. This also depends on
our social status and family choice
f. Cultural factors, such as religion, social class—caste and sub-castes. Our cultural factor and
religious status influence to a great extent that we buy.
g. Purchasing power, Last but not least, our purchasing power plays a significant role in influencing
our behavior. Unless you are a billionaire, you will consider your budget before making a purchase
decision. The product might be excellent, the marketing could be on point, but if you don’t have
the money for it, you won’t buy it.
h. Group influence, Peer pressure also influences consumer behavior. What our family members,
classmates, immediate relatives, neighbors, and acquaintances think or do can play a significant
role in our decisions. Social psychology impacts consumer behaviour. Choosing fast food over
home-cooked meals, for example, is just one of such situations. Education levels and social factors
can have an impact.

2. Undergoes a constant change:

We need to understand that consumer behaviour is not static in any circumstances. It undergoes a
change over a period of time depending on the nature of products. For example, kids prefer
colourful and fancy footwear, but as they grow up as teenagers and young adults, they prefer
fashionable footwear, and as middle-aged and senior citizens they prefer more normal/ formal
footwear. The change in buying behaviour may take place due to several other factors such as
increase in income level, education level and marketing factors. When we earn more we prefer to
spend more, it is our general tendency among all of us.

3. Varies from consumer to consumer:

All consumers do not behave in the same manner. Different consumers behave differently. The
differences in consumer behaviour are due to individual factors such as the nature of the
consumers, lifestyle and culture. For example, some consumers are technology savvy. They go on
a shopping and spend buying laptop, computer and other electronics modern products but even if
some is rich but do not comfortable with technology, they won’t buy these items.

They borrow money from friends, relatives, banks, and at times even adopt unethical means to
spend on shopping of advance technologies. But there are other consumers who, despite having
surplus money, do not go even for the regular purchases and avoid use and purchase of advance
technologies.

4. Varies from region to region and country to county:

The consumer behaviour varies across states, regions and countries. For example, the behaviour
of the urban consumers is different from that of the rural consumers. A good number of rural
consumers are conservative in their buying behaviours.

The rich rural consumers may think twice to spend on luxuries despite having sufficient funds,
whereas the urban consumers may even take bank loans to buy luxury items such as cars and
household appliances. The consumer behaviour may also varies across the states, regions and
countries. It may differ depending on the upbringing, lifestyles and level of development.

5. Information on consumer behaviour is important to the marketers:

Marketers need to have a good knowledge of the consumer behaviour. They need to study the
various factors that influence the consumer behaviour of their target customers.

The knowledge of consumer behaviour enables them to take appropriate marketing

decisions in respect of the following factors:

a. Product design/model
b. Pricing of the product
c. Promotion of the product
d. Packaging
e. Positioning
f. Place of distribution

6. Leads to purchase decision:

A positive consumer behaviour leads to a purchase decision. A consumer may take the decision of
buying a product on the basis of different buying motives. The purchase decision leads to higher
demand, and the sales of the marketers increase. Therefore, marketers need to influence consumer
behaviour to increase their purchases.

7. Varies from product to product:

Consumer behaviour is different for different products. There are some consumers who may buy
more quantity of certain items and very low or no quantity of other items. For example, teenagers
may spend heavily on products such as cell phones and branded wears for snob appeal, but may
not spend on general and academic reading. A middle- aged person may spend less on clothing,
but may invest money in savings, insurance schemes, pension schemes, and so on.

8. Improves standard of living:

The buying behaviour of the consumers may lead to higher standard of living. The more a person
buys the goods and services, the higher is the standard of living. But if a person spends less on
goods and services, despite having a good income, they deprives themselves of higher standard of
living.

9. Reflects status:
The consumer behaviour is not only influenced by the status of a consumer, but it also reflects it.
The consumers who own luxury cars, watches and other items are considered belonging to a higher
status. The luxury items also give a sense of pride to the owners.

10. Result in spread effect: Consumer behaviour as a spread effect. The buying behaviour of one
person may influence the buying behaviour of another person. For instance, a customer may
always prefer to buy premium brands of clothing, watches and other items etc. This may influence
some of his friends, neighbors and colleagues. This is one of the reasons why marketers use
celebrities like Shahrukh Khan, sachin to endorse their brands.

11. Brand loyalty: Brand loyalty is another characteristic of consumer behaviour. Brand loyalty
is the tendency of a consumer to buy product products or services from a certain company that one
likes or equates with having high quality goods and services.

12. Information search: Search for information is common consumer behavior. Consumers
cannot purchase goods and services if they are unaware that a good or service exists. When a
consumer decides to buy a certain item, his decision must be based on the information he has
gathered about what products our services are available to fulfill his needs.

Importance of consumer behaviour:

1) Production policies: The study of consumer behaviour effects production policies of enterprise.
Consumer behaviour discovers the habits, tastes and preferences of consumers and such discovery
enables and enterprise to plan and develop its products according to these specifications. It is
necessary for an enterprise to be in continuous touch with the changes in consumer behaviour so
that necessary changes in products may be made.

2) Price policies: The buyer behaviour is equally important in having price policies. The buyers
of some products purchase only because particular articles are cheaper than the competitive articles
available in the market.

3) Decision regarding channels of distribution: Consumer Behavior Analysis not only tells what
consumers want to buy but also from where they prefer to buy. There may be different categories
of consumers. First category only shops online, Second category only want products from
prestigious offline stores and the third category may settle for the ordinary stores. Therefore,
consumer behaviour also inform us how much we should focus on a certain distribution channel.

4) Decision regarding sales promotion: Study of consumer behaviour is also vital in making
decisions regarding sales promotion. It enables the producer to know what motive prompt
consumer to make purchase and the same are utilized in promotional campaigns to awaken desire
to purchase.

5) Exploiting marketing opportunities: Study of consumer behaviour helps the marketers to

understand the consumers’ needs, aspirations, expectations, problems etc. This knowledge will be
useful to the marketers in exploiting marketing opportunities and meeting the challenges of the
market.

6) Consumer do not always act or react predictably: The consumers of the past used to react to
price levels as if price and quality had positive relation. Today, weak value for money, lesser price
but with superior features. The consumers’ response indicates that the shift had occurred.

7) Highly diversified consumer preferences: This shift has occurred due to availability of more
choice now. Thus study of consumer behaviour is important to understand the changes.

8) Rapid introduction of new products: Rapid introduction of new product with technological
advancement has made the job of studying consumer behaviour more imperative. For example, the
information Technologies are changing very fast in personal computer industry.
9) Implementing the "Marketing concept": This calls for studying the consumer behaviour, all
customers need have to be given priority. Thus identification of target market before production
becomes essential to deliver the desired customer satisfaction and delight.

Applications of consumer behaviour:

1) Analyzing market opportunity: Consumer behaviour study help in identifying the unfulfilled
needs and wants of consumers. This requires examining the friends and conditions operating in
the Marketplace, consumers’ lifestyle, income levels and energy influences. This may reveal
unsatisfied needs and wants. Mosquito repellents have been marketed in response to a genuine and
unfulfilled consumer need.

2) Selecting target market: Review of market opportunities often helps in identifying district
consumer segments with very distinct and unique wants and needs. Identifying these groups,
behave and how they make purchase decisions enable the marketer to design and market products
or services particularly suited to their wants and needs. For example, please sleep revealed that
many existing and potential shampoo users did not want to buy shampoo fax price at rate 60 for
more and would rather prefer a low price package containing enough quantity for one or two
washers. This finding LED companies to introduce the shampoos sachet, which become a good
seller.

3) Marketing-mix decisions: Once unsatisfied needs and wants are identified, the marketer has
to determine the right mix of product, price, distribution and promotion. Where too, consumer
behaviour study is very helpful in finding answers too many preplexing questions. The factors of
marketing mix decisions are: i) product ii) price iii) promotion iv) distribution

4) Use in social and non-profits marketing: Consumer behaviour studies are useful to design
marketing strategies by social, governmental and not for profit organizations to make their
programmes more effective such as family planning, awareness about AIDS.

Scope of Consumer Behaviour:

1) Consumer behaviour and marketing management: Effective business managers realize the
importance of marketing to the success of their firm. A sound understanding of consumer
behaviour is essential to the long run success of any marketing program. In fact, it is seen as a
comers tone of the Marketing concept, an important orientation of philosophy of many marketing
managers. The essence of the Marketing concept is captured in three interrelated orientations
consumers’ needs and wants, company integrated strategy.

2) Consumer behaviour and nonprofit and social marketing: In today's world even the non-
profit organisations like government agencies, religious sects, universities and charitable
institutions have to market their services for ideas to the "target group of consumers or institution."
At other times these groups are required to appeal to the general public for support of certain causes
or ideas. Also they make their contribution towards eradication of the problems of the society.
Thus a clear understanding of the consumer behaviour and decision making process will assist
these efforts.

3) Consumer behaviour and government decision making: In recent years the relevance of
consumer behaviour principles to government decision making. Two major areas of activities have
been affected:

i) Government services: It is increasingly and that government provision of public services can
benefit significantly from an understanding of the consumers, or users, of these services.

ii) consumer protection: Many Agencies at all levels of government are involved with regulating
business practices for the purpose of protecting consumers welfare.

4) Consumer behaviour and demarketing: It has become increasingly clear that consumers are
entering an era of scarcity in terms of some natural gas and water. These scarcities have led to
promotions stressing conservation rather than consumption. In other circumstances, consumers
have been encouraged to decrease or stop their use of particular goods believed to have harmful
effects. Programs designed to reduce drug abuse, gambling, and similar types of conception
examples. These actions have been undertaken by government agencies nonprofit organisations,
and other private groups. The term "demarketing" refers to all such efforts to encourage consumers
to reduce their consumption of a particular product or services.

5) Consumer behaviour and consumer education: Consumer also stands to benefit directly from
orderly investigations of their own behaviour. This can occur on an individual basis or as part of
more formal educational programs. For example, when consumers learn that a large proportion of
the billions spend annually on grocery products is used for impulse purchases and not spend
according to pre-planned shopping list, consumers may be more willing to plan effort to save
money. In general, as marketers that can influence consumers' purchases, consumers have the
opportunity to understand better how they affect their own behaviour.

Scope of Consumer Behaviour

1. Demand Forecasting: Marketers can estimate the demand of their product if they know how
would a consumer behave and react after seeing their product.

2. Marketing: Consumer Behaviour helps to identify the need, expectations and problems of the
consumers. Therefore, they can easily build the product having those functions which the
consumers exactly want.

3. Advertising: Different consumers may have different opinions and reactions on certain form of
advertisement. Therefore, Marketers can target the customers with most prominent form of
advertisement as per their behaviour.

4. Human Behaviour: If marketers are aware about the human behaviour of their consumers and
which factors influence their behaviour, then they can make their product 100% compatible with
the requirement of consumer.

Nature of Consumer Behaviour

1. Complex Nature: Since every individual has different needs and desires, and marketers have to
target customers as per their needs. Therefore, it becomes a complex task for the marketers to find
the pattern of every individual.

2. Varies for different consumers: Different consumers have different needs and desires. Hence,
It is impossible for marketers to target each and every consumer for their products. Therefore,
Marketers try to identify their target consumers for the products and services.

3. Dynamic Nature: The behaviour and mentality of each consumer evolves with the time.
Therefore, the marketers may find any potential customer for their products and services who once
hated them.
4. Influenced by various factors: Consumer behaviour is also influenced by certain factors like
friends, family, culture, lifestyle etc. EX: People promoting different products among their peers
due to the satisfaction they achieved by using it.

5. Important for Marketers: Consumer Behaviour is very important for marketers as they have to
develop their products as per the behaviour of consumers that whether they are willing to purchase
it or not.
6. Brand Loyalty: Consumers have a tendency to buy products and services from a certain
organization which they may like due to certain reasons. They develop a brand loyalty towards
these organizations and tends to buy only their products even if their rival is performing better in
the market.