Q1. Explain the nature of consumer Behavior.

Describe the factors contributing to the

growth of consumer behavior as a separate field of study.

Definition

Walters and Paul “Consumer behavior is the process whereby individuals decide what,
where, how and from whom to purchase goods & services.”

CB is defined as activities people undertake when obtaining, consuming and disposing of

products and services.

Scope of consumer behavior

The significance of consumer behavior among consumers can be attributed to various

factors, many of which are unique. Therefore, understanding consumer behavior is vital
for marketers to develop successful marketing plans. It focuses on understanding various
aspects of consumer buying decision process given their resources (time, effort and
money) to be spent on consumption-related items. It includes

• What they buy

• Why they buy
• When they buy
• Where they buy it from
• How often they buy it
• How often they use it
• How they dispose their products

Consumer behavior has interdisciplinary roots. Psychology – concerned with the study of
the individual, various aspects of an individual namely – motivation, perception,
attitudes, personality and learning. Sociology – concerned with the study of groups,
studies the influence of group memberships, family and social class on consumer
decision making process.
Social Psychology – studies how an individual operates in the group. It studies the
relevance and importance of reference groups and opinion leaders. Anthropology –
studies the influence of society on an individual, concerned with the development of
attitudes, values and belief systems. Economics – Basis for this marketing discipline and
provides rationality to purchase decisions.

Objectives
 1. Determine consumer influence – consumer is the king of the market, knowing
what the king wants is the primary focus of marketing & delivering it so as to
provide the best perceived value to the consumer is the prime job of the
marketer.
2. Educating consumer – gives them knowledge of their buying process and makes
them more aware and conscious, also helps them understand policies relating to
consumer protection and their right & duties as a consumer.
3. Understanding consumer needs – adapting to consumer needs and behavior is
an absolute necessity. Today consumer is global. He is different yet the marketer
has to find similarities in these differences so as to segment the consumers and
position their product offerings well.
4. Understanding consumer preferences and expectations – are tied to ongoing
processes and procedures. It is essential to have this knowledge so that
businesses can effectively manage their customers and ensure they meet their
needs and expectations
5. Understanding consumer purchasing pattern – gain comprehensive
understanding of consumer purchasing patterns which is a major objective ,
various models and strategies are available to achieve this purpose.
6. Market research – aimed at determining the level of contentment and
commitment of an existing client towards a product or service, to know whether
the consumer is satisfied with the offered product or service.
7. Formulating plans and growth strategies

Importance of consumer behavior

1. Business environment – complex business environment, experiencing intense

competition with more aggressive competition setting their base

2. Differentiation – with increasing competition & innovation, there is a need to

differentiate – for that in-depth understanding of the consumer needs & decision-
making process is required

3. Dynamic- need of continuously studying consumer behavior because it is

dynamic and involves exchanges between human beings and involves interaction
of thinking-feeling-actions
 4. Marketing tool – CB is an important marketing tool that allows marketers to
enhance their competence in various areas, by providing relevant information
about customers and target customers as well as understanding their actions and
reasons behind their actions- marketers can gain a deeper understanding of their
target audience and improve their expertise in specific domains.

5. Demographics – the question is about target consumer base, including age and
gender, preferences and the amount of money they bring in, ensuring a clear
understanding of the target audience.

6. Characteristics – investigates customer perceptions of companies in direct rivalry, their

emotions and their preferred characteristics. Identify the most well-known brands in
the industry and understand how customers feel about competitors and identify most
appealing and unappealing characteristics

7. Brand - assessing how organizations reputation influences consumer

engagement, determine if customers have a strong connection to the company
or brand

8. Preferences – important to understand the reasons behind their preferences

and purchasing decisions

Factors Affecting Consumer Behavior – 4 (PSPE)

Psychological Factors –
1. Provide extensive knowledge of human psychology
2. Such factors are difficult to quantify but significantly impact consumer’s purchase
decisions

- Motivation

influences person’s purchasing behavior, as they are influenced by various needs

such as social, basic, security, esteem, and self-actualization, it is essential to
encourage individuals in activities that align with their needs

- Perception
 our perception directly influences our views on purchasing goods & services. shapes
the overall perspective of end users towards offerings, perceptions are influenced
through promotions, reviews, advertisements, or comments about a product

- Learning

Individuals desire to learn about a product to make informed decisions, learning occurs
over time through experience and skills accumulation. Cognitive – use of existing
knowledge and abilities and conditioned learning – repeated exposure to a situation are
2options for learning, both are legitimate choices

- Beliefs and aspirations

Beneficial role in shaping the brand image and the character of the product, designing
effective strategies for selling products and services by the marketer

Social Factors
1. Humans are influenced by their society and the people they surround themselves,
which influences their purchasing decisions.

2. this is due to the drive – to mimic others and need for social acceptance, they want to
achieve the goals that are highly valued by the human race

- Family unit

Family units are responsible for significantly shaping the preferences of a person during
their formative years. Despite old age, they continue to purchase the same items they
have seen their family members purchasing

- Reference groups

Group of individuals that an individual can relate to, typically share similar patterns &
exerting influence on each other through interactions

- Social status

High ranking individuals have significant influence on their purchasing decisions due to
power they hold. For eg – ceo at a company would make consistent purchases with their
position while a staff member or employee would have a different pattern depending
upon their position

- Culture
Community is defined by shared perspectives and values among its members. The
concept of social class and subculture are a part of the cultural aspects which contribute
to the overall structure and functioning of a community

Personal Factors

- Age group
- Income level
- Job status
- Lifestyle

Economic Factors

- Purchasing power
- Family income
- Credit facility
- Liquid assets
- Savings